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Economy Loses Jobs in First Decline This Year

Private sector hiring mitigates reduction of census workers

In the first monthly decline this year, the U.S. economy lost 125,000 jobs in June as large numbers of temporary hires for the 2010 census finished their work. The private sector continued to add jobs, but not fast enough to offset the federal losses.

The unemployment rate edged down to 9.5 percent, but this was due mainly to people leaving the labor force and no longer being counted among the jobless. Economists say the numbers suggest a continuation of a tepid, hesitant recovery from the recession that struck in 2007, at a pace frustrating to everyone.

Released by the Bureau of Labor Statistics, the June figures contained some good news for workers age 55 and older. Notably, the length of joblessness in this age group declined.

For those without jobs, the average duration of unemployment among older workers polled in June fell to 40.7 weeks from 44.2 weeks the month before.

The group’s unemployment rate declined to 6.9 percent from 7.1 percent in May. But as with the workforce as a whole, that was apparently due in large part to more than 450,000 older people who left the labor force in June. For some, the continued lack of job prospects became so discouraging that they stopped looking for work.

“On the face of it, things look better,” says Sara Rix, a senior strategic policy adviser at AARP. “But I don’t want to paint an over-optimistic picture.”

Indeed, the BLS reported that the number of “discouraged workers” among all age groups rose to 1.2 million from 1.1 million in May.

The number of people working less than they would like, due to their hours being cut back or their inability to find a full-time job, held steady at about 8.6 million.

Employment is “apparently going to recover later this time than it did for most of the postwar recessions because this recession is a lot bigger,” says John Abowd, the Edmund Ezra Day May Professor of Industrial and Labor Relations at Cornell University.

The nation’s pain is spread unevenly, according to an AARP Bulletin map that shows how each state is affected by joblessness, home foreclosures and budget pressures.

In a statement Friday at Andrews Air Force Base in Maryland, President Obama stressed the growth in private sector jobs, the sixth straight monthly expansion. “Make no mistake, we are headed in the right direction,” he said. “But ... we’re not headed there fast enough for a lot of Americans. We’re not headed there fast enough for me, either.”

The decline in census employment had been expected as the once-a-decade count of the nation’s population winds down. The question was, to what extent job creation in the recovering private sector would offset that loss. Many economists predicted about 110,000 new private jobs for June, but the figure came in at the more modest 83,000.

The new private jobs were scattered across such fields as temporary help services, management and technical consulting, transportation and warehousing, and health care.

Manufacturing also showed modest gains.

Private employers have added 593,000 jobs since the start of 2010, creating optimism that the economy is recovering. But this growth has made only a small dent in the recession’s overall job losses—today’s employment level is still 7.9 million jobs lower than it was in December 2007.

Employers “want to know if consumers are going to be buying, but of course consumers are not going to be buying if they don’t have good job prospects,” says Stanley W. Black, emeritus professor of economics at the University of North Carolina-Chapel Hill. “It’s a vicious cycle.”

In recent months, financial turmoil in Europe has battered American financial markets and added further to concerns about a possible second dip into recession.

“It’s going to be a long, slow climb,” says Dan Richards, an economics professor at Tufts University. “The states are cutting to balance their budgets. … That’s going to make it that much harder to get the private sector going.” Economic history, he says, shows that recessions brought on by a financial meltdown “take a lot longer to climb out of.”

John Burgess is an associate editor at the AARP Bulletin.

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