In my opinion, this is one of the toughest tasks for the Obama
Administration.

In your opinion, where will the jobs come from?

TMT

Why the September Jobs Report Is So Brutal
By Liz Wolgemuth Liz Wolgemuth
Fri Oct 2, 12:55 pm ET

Employers in the United States continue to be more interested in
cutting their payrolls than in keeping their existing employees, let
alone adding new ones. Employers slashed another 263,000 jobs last
month, the Labor Department reported today. That brings nonfarm
employment down to the level of 2004, when there were about 7 million
fewer U.S. workers.

Workers are dropping out: The unemployment rate edged up only
slightly, to 9.8 percent, but the number of workers in the labor force
fell by 571,000, suggesting the unemployment rate could have been much
worse. The ranks of the marginally attached--workers who have dropped
out of the workforce because they believe they won't find jobs or
because they have other responsibilities, such as school--have grown
by 615,000 over the year.


There are not enough jobs: A bill that would provide another 13 weeks
of federally funded unemployment benefits to hard-hit states sailed
through the House last week but may be complicated by some senators'
efforts to get benefit extensions for all states. In some states,
eligible workers have already received as many as 79 weeks of
benefits. Historically, spells of unemployment that lasted a year or
more were very rare, says Harvard economist Lawrence Katz, a Harvard
economist. These trends are the sorts that haven't been seen since the
Great Depression.


Indeed, the number of workers who have been unemployed for 27 weeks or
more--called "long-term unemployed"--rose by 450,000, to 5.4 million.
Last month, 36 percent of the unemployed had been out of work for at
least six months. The unemployed face a market in which job seekers
outnumber job openings by a ratio of 6 to 1.

Governments are now feeling the heat: While most other industries
slashed jobs throughout the recession, the government sector held up
pretty well, helping cushion capital cities from the roughest economic
patches. Last month, however, strains on local governments started to
show. Government employment fell by 53,000, with the largest
drop--24,000 jobs--in the noneducation component of local governments.


Progress has slowed: September job losses were much worse than most
economists expected--the median estimate was a loss of 175,000. The
government also revised the prior data to show 201,000 jobs were lost
in August, rather than the 216,000 originally reported, meaning the
trend of narrowing job losses really shifted last month. "Today's
report suggests that the progress toward a recovery in labor market
conditions has stalled," Ted Weiseman and David Greenlaw, economists
at Morgan Stanley, said in a morning note. "We continue to expect to
see some eventual follow through on the hiring side, given the recent
improvement in production and demand, but the September data reinforce
the fact that some important headwinds remain."


Hours fell back down: Along with payroll cuts, many employers have
slashed their workers' hours to help lower expenses, and there are now
9.2 million "involuntary" part-time workers (those who would prefer
full-time work). The average workweek edged up in August, but
September erased the gain, and the workweek is again at a record low
33.0 hours.

Construction and manufacturing are still hurting: Since the start of
the recession, 1.5 million jobs have been erased in the construction
industry. Employers in construction slashed 64,000 jobs last month,
which, at least, was fewer than they were cutting late last year and
earlier this year. The pain was greatest in nonresidential components,
where 39,000 jobs were cut. Manufacturing lost 51,000 jobs. That's
also fewer than were being cut earlier in the recession, but
manufacturing payrolls have shrunk by 2.1 million since the start of
the downturn.


The future is unclear: One of the most difficult things to understand
about September's jobs report is how far the job market reality was
from the government's stimulus forecast. The White House estimated
that with the stimulus, the unemployment rate would peak at 8 percent.
Without a clear plan to stimulate future job growth, it's unclear how
long it will take for the 15.1 million unemployed to gain re-
employment in any significant volume. Employers tend to shy away from
the risk of new hires until they are confident of the state of the
economy. Even for the long-term unemployed, "when the economy is
chugging along, firms are willing to take a chance" on hiring and
training, says Katz.


Still, the market is improving, as job losses are much less than they
were last winter. "What is still very much open to question is how
fast the move will be to stabilization of payrolls and eventually to
job growth," says Joshua Shapiro, chief U.S. economist at MFR. "We
continue to believe that the process will be a slow one and that
households will be contending with weak income growth and balance
sheet issues for some time."