The vanishing American job
651,000 more losses in February point up changing workplace
As government data revealed that 651,000 more jobs disappeared in February, a sense took hold that growing joblessness may reflect a wrenching restructuring of the US economy.
The unemployment rate surged to 8.1 percent, from 7.6 percent in January, its highest level in a quarter-century. In key industries - manufacturing, financial services, and retail - layoffs have accelerated so quickly in recent months as to suggest that many companies are abandoning whole areas of business.
"These jobs aren't coming back," said John E. Silvia, chief economist at Wachovia in Charlotte, N.C. "A lot of production either isn't going to happen at all, or it's going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations. Firms are making strategic decisions that they don't want to be in their businesses."
This dynamic has proved true in past recessions as well, with fading industries pushed to the brink during downturns before others emerged to create jobs when economic growth inevitably resumed. But with job losses so enormous over such a short period of time, some economists argue that the latest crisis challenges the traditional American response to hard times.
For decades, the government has reacted to downturns by handing out temporary unemployment insurance checks, relying upon the resumption of economic growth to restore lost jobs. This time, the government needs to place a greater emphasis on retraining workers for other careers, these economists say.
The grim scorecard of contraction in the American workplace released by the Labor Department yesterday largely destroyed what hopes remained for an economic recovery in the first half of this year, and it added to a growing sense that 2009 is probably a lost cause.
Most economists now assume American fortunes cannot improve before the last months of the year, as the Obama administration's $787 billion emergency spending program begins to work through the economy.
"The current pace of decline is breathtaking," said Robert Barbera, chief economist at research and trading firm ITG. "We are now falling at a near-record rate in the postwar period and there's been no change in the violent downward trajectory."
The monthly snapshot of the national employment picture revealed an even bleaker picture as the government revised upward the job losses in December and January. The economy has shed at least 650,000 jobs a month for three straight months, the worst decline in percentage terms over that length of time since 1975.
Since the recession began, the economy has eliminated a net total of roughly 4.4 million jobs, with more than half of those positions - some 2.6 million - disappearing in the last four months alone. This rapid deterioration has prompted talk that some industries are being partly dismantled. Layoffs are multiplying because of dysfunction in the financial system, which is prompting even healthy companies to shed workers and shut down operations out of concern that they may soon lose access to credit.
"Everybody is so fearful that companies are thinking, 'What can we hang on to and what should we liquidate?' " said Martin N. Baily, a chairman of the Council of Economic Advisers under President Clinton and now a fellow at the Brookings Institution. "A lot of the reduction in employment is businesses deciding to close down operations or get out of a line of certain activity."