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Posted on Sat, Nov. 07, 2009 05:59 AM
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Unemployment rate jumps into double digits

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Idled American workers, this is not your parents’ recession.

Unemployment rocketed above 10 percent in October, the first double-digit rate since the recession in the early 1980s.

But experts warned that the current job-market malaise won’t be cured as easily this time around. And at least one forecaster said Friday’s report means next year will be even worse than previously thought.

The jump in joblessness to 10.2 percent in October also brought some calls for a bigger federal response.

“We’re obviously going to need more stimulus,” said Judy Ancel, director of the Institute for Labor Studies at the University of Missouri-Kansas City.

Jobs remain hard not only to find but also to keep.

Mike Hoffman, 61, of Raytown, lost work this summer but got back on a payroll after three months. In a “double whammy,” that new job disappeared on Monday, Hoffman said while at a Missouri Career Center on Friday.

October’s unemployment rate was the first in double-digits since June 1983. The Labor Department also said payrolls shrank by 190,000 during the month.

Both numbers were higher than forecasters had guessed. The rate exceeded even the highest estimates among 81 economists quizzed by Bloomberg News.

The unemployment rate doesn’t include people without jobs who have stopped looking, or those who settled for part-time jobs. Counting those people, the unemployment rate would be 17.5 percent.

Investors, however, seemed undaunted by the report as stocks nudged higher on expectations that the Federal Reserve will hold interest rates low for some time.

The jobs report came the same day President Barack Obama signed a $24 billion extension of jobless benefits and tax credits for homebuyers, both of which help stimulate economic activity.

“I won’t let up until the Americans who want to find work can find work, and until all Americans can earn enough to raise their families and keep their businesses open,” Obama said.

Democratic Rep. Carolyn Maloney, who heads Congress’s Joint Economic committee, said her party would consider new aid to states, an “infrastructure bank” to increase construction jobs and small-business tax credits.

Concerns about double-digit unemployment reflect doubts that this economy will be able to regenerate the kinds of jobs many of America’s 15.7 million unemployed have lost.

It was easier for the 1983 economy to do that because unemployment reached double digits then mostly because economic activity had slowed.

The economy was much more industrially based then, and layoffs meant temporary idleness. Factories geared back up once the economy began to grow again.

Today’s job market, by contrast, has been racked by structural changes that mean many lost jobs won’t be coming back.

Construction crews disbanded by housing’s bust won’t be reassembling in large numbers anytime soon. And despite some factory expansions, including the addition of a third shift at the General Motors Fairfax plant, much manufacturing work around the country has shifted to machines or foreign factories.

“A lot of this unemployment is structural,” said John Silvia, chief economist for Wells Fargo. “These people have the wrong skills, and they live in the wrong places.”

They’re also getting tagged with the highest rates of unemployment.

According to Friday’s report, unemployment among construction and extraction occupations hit 19.1 percent in October. Production workers’ joblessness reached 14.5 percent.

To reach Mark Davis, call 816-234-4372 or send e-mail to mdavis@kcstar.com. Staff writer Diane Stafford and The Associated Press contributed to this story.

Posted on Sat, Nov. 07, 2009 05:59 AM
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