200,000 layoffs are only the tip of nation’s labor woes

Associated Press

WASHINGTON — Businesses slashed 200,000 jobs last month, the largest cuts in more than a decade, the Labor Department said Friday in a report offering a snapshot of how anemic the economy was even before the terrorist attacks.

The overall unemployment rate remained at 4.9 percent, but it is expected to rise sharply when figures are released for the current month.

The new report did not reflect job losses related to the Sept. 11 attacks. Since then, more than 100,000 layoffs have been announced in the aviation industry alone.

Many economists think the unemployment rate in October could surge to 5.3 percent or higher when layoffs from the attacks show up in government surveys.

"We are going to see a rise in the unemployment rates. That’s not in doubt," Treasury Secretary Paul O’Neill said.

"You can call those numbers the bin Laden numbers," Labor Secretary Elaine Chao said, referring to the man the administration has fingered in the attacks, Osama bin Laden.

For September, the cut in 199,000 jobs was the largest one-month decline since payroll jobs fell by 259,000 in February 1991, when the country was in the depths of the last recession.

Manufacturing jobs again accounted for much of the loss. Factories let go 93,000 workers last month, the 14th straight month of manufacturing job losses. Over that period, 1.1 million workers lost their jobs. Factories making industrial machinery and electrical equipment were particularly hard hit and accounted for nearly two-fifths of the manufacturing jobs cut this year.

"The job picture looks very grim," said Joel Naroff, president and chief economist of Naroff Economic Advisors Inc.

Businesses shed jobs last month, but the unemployment rate was unchanged at 4.9 percent. The rate is based on a survey of American households, and a separate survey of businesses showed the sharp reduction in nonfarm payroll jobs. Over time, the two surveys generally reflect the same trends.

The surveys were conducted the week of the Sept. 11 attacks. But a person was counted as employed even if he only worked one hour during that week. Even if workers were laid off afterward, they would still be considered employed in the report.

Many economists, who now think the nation is entering a full-blown recession because of the attacks, predict the jobless rate could climb to 6.5 percent before a recovery begins. Just last year, unemployment had fallen to a three-decade low of 3.9 percent.

"The fallout from the attacks made an already bad situation worse," said Dean Baker, an economist for the Center for Economic and Policy Research.

Service jobs, where most Americans are employed, showed a rare decline for September, with cuts of 41,000 jobs. The biggest decline in that category was in business services, which includes temporary help agencies.