The job market took an especially brutal turn last month, with employers slashing their payrolls by 533,000 jobs—a figure that sailed above economists' expectations of 320,000 jobs lost. The Labor Department also revised its employment numbers for October and September to show an additional 199,000 jobs lost over the two-month period.
There are now 10.3 million Americans who are unemployed and looking for work.
Here's what you need to know:
Who's cutting jobs? The payroll cuts were in nearly every industry. Jobs were lost in construction, manufacturing, employment services, retail, leisure and hospitality, and the financial sector. Healthcare and education were the only sectors to beef up payrolls.
What's happening to hours? Employers are not only slashing employees but also slashing employee hours. The average workweek dropped to 33.5 hours, which is the lowest average since the figure began being recorded in 1964. The number of people who were working part-time jobs involuntarily—either because their hours were cut or because they couldn't find full-time jobs—hit 7.3 million, about 2.8 million higher than a year ago.
When will it improve? Economists do not expect the job market to improve much before 2010. Joshua Shapiro, chief U.S. economist at MFR, says the labor market will continue to be "dreadful" for months. "History tell[s] that once the labor market weakens as much as it has in the past several months, job-shedding takes on a life of its own and tends to persist for a long while," Shapiro wrote in a morning note.
What is the government doing? It is clearly difficult to find a job in this market—the Labor Department reported yesterday that the number of people continuing to collect unemployment benefits hit a 26-year high. The pesident recently signed a bill that extended unemployment benefits by seven weeks, or 13 weeks in states with high unemployment rates, to provide some relief.
Congress is working on a second stimulus plan that would likely include an infrastructure spending program meant to boost employment by putting people to work building bridges, roads, and public buildings.. Some economists now expect that the stimulus will be much larger than the $500 billion figure previously suggested.
What are the experts saying?
Richard Moody, chief economist for Mission Residential Research:
"As has been the case in recent months, conditions in the labor market are even weaker than suggested by the headline numbers. . . . Accounting for these [part-time] workers (who would be working full time were they able to find full-time employment) and those discouraged job seekers who have given up looking for work puts the broader U6 measure of unemployment-underemployment at 12.5 percent in November, compared to the headline unemployment rate of 6.7 percent."
David Greenlaw and Ted Wieseman of Morgan Stanley:
"The pace of deterioration in labor market conditions has accelerated as the economy rapidly loses momentum. We now suspect that the unemployment rate will reach 9 percent before the end of 2009. This report is likely to influence the fiscal stimulus debate in Washington (note that the next employment report will not be released until Jan. 9). We suspect that there will be more and more talk of packages as large as $1 trillion. While details are still scant at this point, it appears that an infrastructure spending program along with aid to state and local governments are almost certain to be included. And, while it has not received much public focus to this point, we suspect that a large cut in payroll taxes could start to get serious consideration. Indeed, in our view, such a measure would represent the most beneficial form of stimulus at this point since it provides support for both spending and hiring."
Nigel Gault, chief U.S. economist, IHS Global Insight
"It was already clear that this would be 'one of the worst recessions' in the post-war period. After today's horrendous November employment report, it is beginning to look like the worst. The job decline of 533,000 is the biggest since the 602,000 decline in December 1974. Adjusting for the size of the economy, the percentage decline in employment (0.39percent) was the largest since May 1980. And previous months have been revised down sharply.
September payrolls now show a 403,000 decline. The original September release showed "only" a 159,000 decline. Note that the now-huge September decline preceded the extreme financial chaos triggered by the fall of Lehman Brothers on September 15. So the economy was already on its way down, and very sharply, before the financial eruptions that followed Lehman's demise."