Monday, August 16, 2010

Unemployment rates show no sign of decrease

There are many who criticize the unemployed for not trying to find work and accuse them of living off the system. Not since the 1930’s has the US has seen a recession this great.

I consider myself fortunate enough to work for a great company, but there are many who are not so lucky.

Those who make comments such as,”they aren’t looking hard enough”, or “if they really wanted work they would have found something by now”, are either still employed or living in a vacuum. Ask anyone out of work if they enjoy collecting their “earned” benefits.

Jobs lost in the past few years will be not be coming back. Many U.S. jobs have, or will continue to move overseas or be replaced by technology. Those jobs that do come back are not going to be hiring at previous salaries as the jobs of the next decade do not look rewarding. As an example, the number of home health aides is expected to expand by 461,000. But their median earnings come to just $20,460 — well below the median U.S. wage of $32,390. Also, future benefit packages that were expected from employers will not be as lucrative and top paying jobs of the future will be minimal. Bio-medical engineers, as an example, will account for just 12,000 of the more than 15 million new jobs expected to emerge through 2018.

The job market is grim, and the economy does not look like it will explode anytime soon. Many have lost their benefits, still looking, or just gave up. Anyone previously making $40,000 a year or more certainly does not want to live off the system, especially those with families, mortgages and car payments.

They will hold on to what little they have, they cannot afford to save, and they won’t have anything extra to spend. Consumer spending, which fuels economic and job growth, is likely to remain weak for a long time to come.

The US lost an additional 131,000 jobs in July as the unemployment rate were predicted to go to 9.6%, and held firm at 9.5 %, as 652,000 people abandoned their job searches.. The Bureau for Labor Statistics revised its figures for June downwards, reporting that 221,000 jobs had been lost compared to its original estimate of 125,000.

Even though the U.S. economy added an average of less than 100,000 jobs a month in the first seven months of 2010, it still wasn’t enough to bring unemployment down.

New Jersey lost 245,400 private-sector jobs, a 7.1 percent decline, according to the NJ Department of Labor, between February 2008, at the start of this employment recession, and January of this year, an average monthly loss of 10,225 jobs over the 24-month period. At that rate it could take a decade for the state to reclaim the nearly 250,000 private-sector jobs it has lost over the past two years.

If New Jersey adds about 30,000 jobs per year starting in 2012, it would take until 2019, to reclaim all of the private-sector jobs lost to date and to regain the last private-sector employment peak of 3.44 million jobs, set in January 2008.

Bill Cheney, chief economist at John Hancock Financial Services in Boston said, “If we don’t see significant job growth by the end of the year, the US economy could be in serious trouble.”

Until Americans know that they will not lose their job because their company is in trouble and start feeling a sense of security, there is no way that their outlook on the economy will turn around, regardless of what economists may say.

Even if the job market held at a steady pace, without consumer confidence the market will stay stagnant.

~ Joe Sinagra

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