The festive season is slated to begin at the end of the month, but with last month’s labor figures painting a grim picture, it is likely to be anything but a happy one. Many economists had feared the coming of this situation, wherein Government jobs are tapering off, while private hiring is yet to pick up pace. With the Government’s stimulus package set to come to an end, most of the jobs created by the Government to give the economy a leg up are disappearing, while private hiring has slacked off.
Companies hired only 64,000 jobs last month, as against 93,000 and 117,000 in August and July respectively. Overall the economy lost nearly 95,000 jobs, with the government initiatives coming to an end. Local governments have been cited as the biggest culprits, having cut jobs at a rate not seen in the last 30 years. The deputy director of the National Employment Law Project said that the slide in the job market was a step back, one which the economy could do without. With the $787 billion Recovery Act coming to an end, alternative means of speeding up the recovery process have yet to make an appearance. The President has repeatedly urged state and local governments to put up more infrastructure projects and tax incentives as a spur to economic recovery, but deficit concerns are forcing governments not to heed the call. In political circles, ‘stimulus’ is a word few are willing to use, and the term seems to be tied in to negative rather than positive connotations. Many central banks around the world have also cautioned their governments from promoting runaway deficits that might balloon to impossible levels.
The present employment report is the last before the elections due in November, and has not only brought down the forecasts for the coming six months, but also put pressure on the Federal Reserve, the US central bank, to generate proposals for keeping the economy moving. Though private payrolls have been growing, the pace is not enough to keep up with the estimated addition of manpower to the pool every month, let alone make a dent in the number of unemployed. The overall unemployment rate for the month has stayed level at 9.6 per cent, where it continues to totter and threaten to plunge over the double digit mark. The total number of man-hours and the length of the workweek have not changed in six months, an indication that the recovery is still not quite there, yet.One of the people closely tracking the employment scenario is John Ryding, chief economist at RDQ economics, a research agency. He says that for the unemployment rate to even remain flat, nearly 150,000 jobs have to be created every month, the bulk of which will have to come from the private sector. Government jobs have been reducing primarily due to the fact that the census work is over, and a huge number of temporary jobs have been would up. The Census Bureau dropped 77,000 jobs, state governments 7,000 and local governments 76,000. This more than offset the 64,000 jobs created by private players.
The Presidential administration is now admitting that the crisis is still on, and it remains their number one priority, even though a number of Congressmen and Senators pointed out that the Democrats’ present focus seems to be on the elections, rather than the nation’s problems.