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December's job losses push unemployment rate to 7.2 percent

BY CARRIE MASON-DRAFFEN | carrie.mason-draffen@newsday.com; PATRICIA KITCHEN

January 10, 2009

The U.S. economy continued its employment free fall in December with a loss of 524,000 jobs, fewer than some market experts had predicted but staggering nonetheless.

The Bureau of Labor Statistics, which released the jobs data Friday, characterized the losses as "large" and "widespread" across the economy.

The unemployment rate rose to 7.2 percent last month, the highest in almost 16 years, according to Bloomberg News. That compares with 4.9 percent in December 2007, when the current recession officially began.

Manufacturing lost the most jobs in December - 149,000. The professional and business-service category, which includes temporary staffing companies, came in second, with 113,000 jobs lost. Health care continued to post the highest gains, adding 32,000 jobs.

All told for 2008, the economy racked up a 2.6-million job loss, the most since 1945, Bloomberg said.

"The latest numbers are more evidence that we are in big trouble and that we need a dramatic change in economic policy," said Gregory DeFreitas, professor of economics at Hofstra University in Hempstead and director of the school's labor studies program.

Indeed, in a news conference Friday, President-elect Barack Obama underscored the need for an economic stimulus plan.

"Clearly the situation is dire," he said. "It is deteriorating and it demands urgent and immediate action."

Revised numbers in the latest report show that the hemorrhaging was worse in November and October than the original data showed. October's loss was revised to 423,000 from 320,000. And November was revised to 584,000, from 533,000.

As bleak as the job numbers are for the general population, they are downright dire for teens and minorities. Teens have a 21 percent jobless rate. African-Americans, with 12 percent unemployment, have the highest rate among minorities. Hispanics had the second highest, 9.2 percent. By contrast, Asians have a 5.1 percent jobless rate.

The reasons for the higher unemployment rates for teens and minorities, which are historically higher, are myriad, jobs experts said.

DeFreitas attributes teens' higher jobless rate in part to a trickle-down effect in an anemic job market. "If adults can't get decent-paying jobs, it's that much harder for young people to get jobs," he said.

He also noted the federal government has been cutting back on programs that provide job training for non-college-bound young people. "These folks have been really hurting," he said.

For minorities he noted that discrimination and fewer college graduates among them play a role.

James Parrott, chief economist for the Fiscal Policy Institute, an Albany-based economic-policy think tank, noted that the discrimination in part explained why blacks disproportionately work in more volatile sectors of the economy.

"Blacks are concentrated in industries that are seasonal and cyclically volatile," he said, "and so they are the among the first to lose their jobs."

Job losses

423,000 October*

584,000 November*

524,000 December