Unemployment Rate Stayed Steady in February

March 5, 2010— -- The jobless rate in America held at 9.7 percent in February and employment declined less than forecast.

Payrolls dropped 36,000 last month after a 26,000 decrease in January, according to the Labor Department. The February number is significantly better than the 68,000 jobs losses economists were expecting. Though more people entered the workforce, the unemployment rate was unexpectedly unchanged. the Labor Department says.

The Obama administration Friday touted that the 36,000 jobs lost in February was a sign of an improving job market, since economists had expected 68,000 lost jobs due to record-setting snowstorms during the month.

"The job market was strong enough to withstand the avalanche of snow that hit a major part of the country in February," said Alan Krueger, chief economist at the Treasury Department.

However Krueger also cautioned that the job market will still face future obstacles as the country's economic recovery continues.

"Recoveries do not move in straight lines," he warned. "The labor market is still facing stresses."

One sign of the snowstorms' impact on the jobs market last month, Krueger cited, could be a slight decline in the average number of hours worked per week, which dropped from 33.9 hours to 33.8 hours.

But the report has done little to ease the pain of chronic unemployment in the U.S., with many Americans going months and in some cases years chasing an elusive job.

When Doug Wood lost his job managing a Ruby Tuesday restaurant near Los Angeles in late 2008, he figured on collecting unemployment for only a couple of months until he found another spot.

He's still looking.

"In a few weeks the benefits completely run out," said Wood, 47, a resident of Norco, Calif. "I'm trying to look on the bright side of things, but I'm running out of time, and options."

Wood is one of more than 11 million Americans currently collecting unemployment insurance benefits, paid for by a mix of state and federal money. Some 40 percent of the nation's jobless, like Wood, have collected benefits for at least the past six months.

With the national jobless rate still near 10 percent, the recession grinding onward and benefits claims continuing to mount, the entire unemployment system is being stretched beyond capacity.

Since the end of 2008, some 29 states, including California, have completely run out of funds to pay unemployment claims, and have resorted to borrowing federal money. It comes to about $33 billion, according to George Wentworth, a policy analyst with the New York-based National Employment Law Project.

If jobless claims continue at current rates, the Federal Unemployment Account (FUA), part of the Unemployment Trust Fund (UTF), which is administered by the Department of Labor, could, by 2012, be facing billions in shortfalls. By that time, a projected 40 states will have borrowed approximately $90 billion, twice as much as what the government earmarked last year for the entire UTF. Private employers will likely face higher state and federal taxes to keep the Labor Department's trust funds solvent, Wentworth explained.

"This recession is pushing the country's unemployment system to the limits," Wentworth said. "With the majority of state trust funds insolvent it's time for Congress to get involved."

After single-handedly derailing a stopgap spending measure last week to extend unemployment benefits, Republican Sen. Jim Bunning of Kentucky relented this week, allowing the U.S. Senate to pass a 30-day unemployment benefits extension this week.

The $10 billion appropriation, which President Obama signed into law Tuesday, also covered the cost for an extension of unemployment benefits for laid off workers.

Bunning, who is set to retire, had repeatedly resorted to a filibuster, objecting to the addition of $10 billion to the deficit without Congress having identified a way to pay for the measure.

The dispute had already caused thousands of unemployed workers to see their unemployment benefits expire and led to a furlough of 2,000 Department of Transportation workers.

One of those affected was Joung Moon, an unemployed microbiologist in Texas whose benefits just expired, no unemployment check means she has to move out of her house.

"I don't know what's the next step," Moon told ABC News, grimacing.

The new pact extends jobless benefits for as many as 400,000 people, among other things.