By Beth Fitzgerald
Originally published in NJBIZ - Friday, January 9, 2009
U.S. employers shed 524,000 jobs in December as the unemployment rate jumped 0.4 percentage points to 7.2 percent, bringing the nation's 2008 job losses to 2.6 million - the worst showing since World War II ended in 1945, the federal Department of Labor reported this morning.
The jobless rate, the highest since January 1993, stood at 5 percent as April. President Barack Obama warned on Thursday in a speech in Virginia that the jobless rate could hit double digits and the recession grind on "for years", unless Congress quickly passes an economic stimulus package of tax cuts and government spending, which could cost some $800 billion.
New Jersey will almost certainly report job losses when the state reports its December employment numbers on Jan. 21. Though Nov. 30, New Jersey employers shed 34,400 jobs; in a bit of good news, the state's November unemployment rate, 6.1 percent, was below the nation's.
The labor market is weak across all sectors and company size, said Frank Wyckoff, president of Snelling Personnel/The Wyckoff Group, based in Eatontown.
"We are seeing activity in selected companies within each industry that have work that has to get done," Wyckoff said. "Some companies have laid off too many people, and now they need help." Small businesses were adding jobs until the last couple of months, and Wyckoff said business owners "are waiting to see what Obama does as he takes more control over the economy."
Obama's pledge to create 3 million jobs would have a wide impact on hiring, Wyckoff said. The president-elect's plans include billions of dollars in spending on the nation's infrastructure, which mean jobs not only for construction workers and engineers, but for "materials suppliers, distribution, accounting, financial - there will be a trickle-down impact." Obama's pledge to cut health care costs by computerizing Americans' medical records in the next five years also will create jobs, Wyckoff said. "This will create lots of jobs for the support people who will actually physically do this - we are eager for this to happen."
In a report on the job numbers, Joel Naroff, chief economist of TD Bank, said the huge job losses in December were no surprise. "Firms are not waiting to see what happens, but are adjusting their labor cost structure as rapidly as possible to ride out the economic storm," he said.
"I have bee arguing that the adjustment time frame has been shortened dramatically, as firms know in real time about the state of the economy and their production and inventory situation. Thus, they are not waiting and wondering, but acting. This is causing job layoffs to skyrocket and that is likely to remain the case for a few more months. But the flip side of that is the possibility that the payroll cuts will slow rapidly sooner than expect. This report has to add pressure on Congress to actually do something."
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