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Job cuts in Mass. slow in August

But unemployment rate climbs amid signs of recovery

By Robert Gavin
Globe Staff / September 18, 2009

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The Massachusetts job market showed signs of stabilizing last month, even as the state’s unemployment rate jumped above 9 percent to match the peak rate during the recession of the 1990s, the Executive Office of Labor and Workforce Development reported yesterday.

Massachusetts employers cut payrolls by just 400 jobs in August, continuing a trend of diminishing job losses that economists say precedes a turnaround. The state shed 800 jobs in July and 2,600 in June.

The unemployment rate, however, continued its climb, rising three-10ths of a point to 9.1 percent in August. The jobless rate last hit 9.1 percent in July 1991 and remained at that level for nearly a year, before dipping to 9 percent in June 1992.

Unemployment will almost certainly exceed the peak of the 1990s, despite growing evidence a recovery is underway, analysts said. The jobless rate often rises early in a recovery because businesses, uncertain of a rebound’s staying power, hire cautiously. Jobs aren’t created fast enough to keep up with the growth of the labor force.

Ironically, the state’s rising jobless rate shows Massachusetts has fared relatively well during this recession, compared to past downturns. Although the unemployment rate is the same, the state lost three times as many jobs in the 1990s recession, or more than 350,000 jobs, compared to about 115,000 jobs today.

But unlike the 1990s, the current downturn is doing more damage to the labor force in other states than in Massachusetts. Jobless workers are staying here to look for work instead of leaving, a trend reflected in a higher unemployment rate. Over the past year, the state’s labor force grew by more than 18,000 workers, according to state statistics. In the year before unemployment peaked in 1991, the labor force shrank by 35,000 workers.

“If there hadn’t been migration out of the state in the ’90s, the unemployment rate would have been much higher,’’ said Alan Clayton-Matthews, an economic analyst and professor at Northeastern University. “Today, people can’t leave. That means the labor force will be here as the economy recovers.’’

A bigger labor force can mean a faster recovery because workers are readily available when businesses start to expand, Clayton-Matthews said. Already, there’s evidence employers are beginning to tap into that pool, as temporary employment companies gained jobs for the fourth consecutive month in August.

Temporary employment is considered by economists a leading indicator of the job market. When the economy begins to turn around, companies often use temps until they feel confident enough to make permanent hires.

Health care, meanwhile, remains a solid employer, adding 1,300 jobs in August, the state reported. Professional, scientific, and technical services, a technology bellwether, added 600 jobs. Leisure and hospitality, which includes hotels and restaurants, gained 200 jobs in the fourth consecutive month of gains.

Certainly, the economy has a way to go. Manufacturing, construction, and financial services continued to lose jobs in August. So did government. In addition, said Clayton-Matthews, if unemployment stays high for too long, it will curb the consumer spending needed to create a self-sustaining recovery.

But recent trends are hopeful, said Suzanne Bump, state secretary of labor and workforce development. Stripping out government job losses, private employers have added about 11,000 jobs since April, the first sustained private sector job growth since the first quarter of 2008, she said.

In addition, the growth in the labor force suggests an improving job market, she said. Discouraged workers may be sensing more opportunities and resuming job searches. Unless workers actively look for work, they are not counted as part of the labor force - or as unemployed.

“We expect the unemployment rate to continue to rise,’’ she said. “But we expect job growth to continue to rebound.’’

Robert Gavin can be reached at rgavin@globe.com.

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