Stagnant labor market seen as unemployment rate holds at 9.6%

  • Fri Oct 8th, 2010 8:06am
  • News

By Don Lee Tribune Washington Bureau

WASHINGTON — The nation’s bleak employment picture dimmed in September as private-sector hiring weakened and the economy lost a net 95,000 jobs over the month.

The Labor Department said Friday that the unemployment rate last month remained at 9.6 percent, but that reflected a stagnant labor force in which people did not enter or return to the labor market to look for work. In what may be a more meaningful indicator this time, a broader measure of unemployed and underemployed workers, including part-timers who can’t find full-time work, rose to 17.1 percent last month from 16.7 percent in August.

The loss of 95,000 jobs last month was more than the 57,000 jobs lost in August and considerably more than what analysts had forecast. The Census Bureau last month cut 77,000 of the remaining 83,000 on its temporary payrolls, and budget-strained state and local governments erased 83,000 jobs.

Private employers, meanwhile, added a measly 64,000 new positions last month, compared to 93,000 in August and 117,000 in July. Manufacturing shed jobs for the second straight month, and construction fell back again. Most of the private-sector job gains came in lower-paying, part-time or short-term work at temporary-help firms and eating and drinking establishments. That also explains the huge increase in the ranks of involuntary part-time workers, up more than 940,000 in the last two months to 9.5 million.

The poor jobs report increases the likelihood that the Federal Reserve, at its next meeting in early November, will decide to launch a new round of government bond purchases to lower interest rates and stimulate economic activity.

Friday’s report also has political ramifications as it is the last monthly jobs report before the midterm elections on Nov. 2, which many see as a referendum on the handling of the economy. In the September before the 2008 elections, the U.S. jobless rate was 6.2 percent.

Although private-sector employment prospects have improved from a year ago when 186,000 jobs were cut in September 2009 hiring remains too weak to bring down the unemployment rate and help the 15 million jobless workers, of whom 6.1 million have been without work for more than six months.