Unemployment Hits 26-Year High

Signs of shoring up economy slow as joblessness jumps

0702_jobless2Employers cut 467,000 jobs from the economy in June, pushing the unemployment rate to a 26-year-high, according the Bureau of Labor Statistics. At 9.5%, the jobless rate continues to signal a tough road to economic recovery.

Still uncomfortably high, the African American unemployment rate ebbed slightly to 14.7% in June compared with 14.9% in May. Unemployment for blacks has risen significantly since the same time last year when the black unemployment rate hit 9.4%.  “Usually the black unemployment rate is double that of whites, but it’s not that much higher at this point,” said Lawrence Mishel, president of the Economic Policy Institute. With a rather bleak forecast, Mishel projects the African American unemployment rate will reach 18% by the end of 2009 or early 2010.

Even as Secretary of Labor Hilda Solis said the economy showed signs of recovering, after the release of May’s unemployment numbers, companies were still reticent last month, slashing more than the 363,000 jobs expected, in an effort to cut costs. Thursday’s announcement brings total job losses to 6.5 million since the recession began in 2007.

“The president and I are keenly aware of the challenges Americans are facing and their struggle is the single-most important focus of this administration,” Solis said. “We will not be satisfied until we are seeing robust monthly job growth.”

Professional and business services slashed 118,000 jobs, more than double the 48,000 cut in June. Manufacturers cut 136,000, down from 156,000. Construction companies got rid of 79,000 jobs, up from 48,000 the previous month. Retailers eliminated 21,000, up from 17,600. Financial activities cut 27,000, following 30,000 in June. The government cut 52,000 jobs, up from 10,000 the previous month. Leisure and hospitality cut 18,000 jobs, erasing a gain of the same size in June.

“We’ve been thrown into a much deeper abyss than anyone anticipated last November,” Mishel said. He cautions against discounting the Obama administration’s stimulus plan. The higher than expected job loses do not mean “the recovery package isn’t working or won’t work. It’s that we had such a terrible trajectory.”

Education and health services however continued to buck overall trends boosting their payrolls by 34,000 and 47,000 in June, respectively.

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