Unemployment Rate Jumps to 9.7%, Highest Since June 1983

Mass layoffs are slowing but employers are still reluctant to make new hires.

September 3, 2009, 5:21 PM

Sept. 4, 2009— -- American workers continued to lose jobs in August but the number of layoffs were significantly lower than in prior months, a sign that the while the economy is not yet growing, it is nearing a recovery.

Last month, another 216,000 jobs were shed by the nation's employers. The nation's unemployment rate also jumped from 9.4 percent to 9.7 percent, higher than analysts were expecting. Since the start of the recession, 6.9 million American jobs have been lost. But it now looks like most of the carnage is over.

Don't tell that to 24-year-old John Fischer, who had to move back in with his family in St. Louis last year after losing his job as a ticket sales representative for the Houston Dynamo, a major league soccer team.

He's looking for a job in communications, public relations, marketing or anything related and has gone to seminars, networking events, resume writing clinics and job fairs. He's even volunteered as a soccer coach and a firefighter.

"My biggest challenge is that John Fischer is just a name on a piece of paper to a lot of people," he said. "I've done basically everything that I can do to try and get in front of the people who have the power to hire me."

Fischer keeps a journal detailing every application mailed, phone call made and e-mail sent. For now, it's just a diary of disappointment.

"It's very frustrating and right when I think something is going to fall in place, something happens," he said. "I had a solid, solid interview that I thought for sure I had it nailed. Then sure enough, three days later I get an e-mail saying the position had been filled."

"It's just getting to the point where I really don't know what to say anymore," Fischer added. "I'm a smart person. I don't know what is going on anymore with our economy, where our country is heading. It's pretty scary. I want to hear some answers. I want to hear some solutions."

Unemployment: Job Seekers

Unfortunately for Fischer and millions of other unemployed workers it looks like they are going to have to wait several more months to get hired in significant numbers.

Employers might have stopped firing workers but they are still extremely hesitant to hire new ones.

"I don't think we're at the stage yet where employers are doing enough hiring," said Stuart G. Hoffman, senior vice president and chief economist for The PNC Financial Services Group. "Clearly layoffs have subsided, particularly in some of the auto industry and manufacturing, but I don't think it will be until the first quarter of next year until we actual see more jobs created in the economy."

Hoffman said job losses will continue to taper off until December. Even with the stock market up and most other economic indicators showing signs of recovery, it will probably still be a bit longer for companies to hire.

"I still think businesses are very reluctant to hire. What they typically do when they sense the economy is turning around, before they hire new people, they will often hire part-time people, temps," he said, adding that overtime and number of hours worked will also likely increase.

"As they look out ahead, they don't have the confidence yet that their sales are going to improve to the point where they are going to need to employ more people," Hoffman said. "They're worried about this economy relapsing back into recession."

Peter Morici, an economics professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission, also predicted that it would take until January or February to see job growth.

Workers are being asked to do more or simply working harder today. That along with technology advances means that the economy needs to grow by at least 2 percent just to keep up with the increase in productivity.

"There is a tendency during good times to get a little too fat. But you discover in a recession that you can get by with fewer people," he said.

Young and Old Workers

Then there is the issue of more young workers entering the workforce than older workers leaving. That is exacerbated by older workers who now feel they can't retire because of the economy and losses in their investment portfolios. Morici said the economy needs to grow by at least another 1 percent to overcome that demographic trend.

"You scale back your activities for a recession, you get some new orders, why should you hire people if you don't have to?" Morici said. "You can get a little more productivity out of the people you've got because it's so expensive to hire and fire. You want to be sure."

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