Job loss: Worst in 34 years
Employers slashed 598,000 more jobs in January as unemployment rate climbed to 7.6%.
NEW YORK (CNNMoney.com) -- Employers slashed another 598,000 jobs off of U.S. payrolls in January, taking the unemployment rate up to 7.6%, according to the latest government reading on the nation's battered labor market.
The latest job loss is the worst since December 1974, and brings job losses to 1.8 million in just the last three months, or half of the 3.6 million jobs that have been lost since the beginning of 2008.
The loss since November is the biggest 3-month drop since immediately after the end of World War II, when the defense industry was shutting down for conversion to civilian production.
January's job loss was also worse than the forecast of a loss of 540,000 jobs from economists surveyed by Briefing.com
The rise in the unemployment rate also was worse than the 7.5% rate economists expected. The unemployment rate is now at its highest level since September, 1992.
As bad as the unemployment rate was, it only tells part of the story for people struggling to find jobs. Friday's report also showed that 2.6 million people have now been out of work for more than six months, the most long-term unemployed since 1983.
And that number only counts those still looking for work. The so-called underemployment rate, which includes those who have stopped looking for work and people working only part-time that want full-time positions, climbed to 13.9% from 13.5% in December. That is the highest rate for this measure since the Labor Department first started tracking it in 1994.
Some economists are worried that the labor market is poised to get worse still.
"This has just begun," said Sung Won Sohn, economics professor at Cal State University-Channel Islands. He projects an unemployment rate rising above 9% by the end of the year, while the monthly job losses could soon top 800,000.
"Hiring is falling off dramatically and layoffs are accelerating," he said. "The layoffs have become an almost popular thing to do for corporations. Many businesses are scared. They want to take precautionary steps."
January was a brutal month for layoffs, as major companies ranging from Microsoft (MSFT, Fortune 500), Boeing (BA, Fortune 500) and Caterpillar (CAT, Fortune 500) to Home Depot (HD, Fortune 500) and Starbucks (SBUX, Fortune 500) all announced substantial job cuts.
"The breadth of job losses now surpasses the prior two recessions," said John Silvia, chief economist for Wachovia.
The report showed the already battered manufacturing sector shedding 207,000 jobs last month, while the construction industry cut 111,000 jobs.
But it's not just the goods-producing sector that is losing jobs. The services sector, which now provides more than two-thirds of the nation's employment base, also reported widespread losses.
Business and professional services, the sector that includes lawyers, accountants and tech services, lost 121,000 jobs. Retailers cut 45,000 workers, while the finance sector trimmed 42,000 workers and the leisure and hospitality sector lost 28,000.
The number of temporary workers, viewed as another indicator of business and labor market strength overall, fell by 76,000.
Among the only sectors posting narrow gains in jobs were education, health services, and the government.
The jobs report comes as the Senate debates the Obama administration's proposal for a nearly $900 billion economic stimulus bill. During a debate late into the night Thursday Republicans and some Democrats questioned the bill's mix of measures and its size.
The White House released a statement saying the January report was proof that quick approval of the stimulus bill is needed.
"These numbers, and the very real suffering of American workers they represent, reinforce the need for bold fiscal action," said Christina Romer, the chair of the President's council of economic advisers. "If we fail to act, we are likely to lose millions more jobs and the unemployment rate could reach double digits."
Brian Bethune, chief U.S. financial economist for research firm Global Insight, said how quickly the stimulus plan is passed, and how effective it is in jump-starting the economy, will determine whether the recent job losses are the peak, or if they continue to climb.
He argues that stimulus needs to be for programs that get money into the economy as quickly as possible.
"Business confidence is extremely weak right now," he said. "They've taken a show-me-the-money attitude. What you need to stop more job losses is a series of very effective policies. That's the only thing that will help here."