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Unemployment Holds at 9.6 Percent

Older jobless still looking for work, but many have given up

Job cuts at cash-strapped local governments and continuing reductions in temporary jobs at the U.S. Census Bureau soured the labor market in September, but the unemployment rate remained unchanged at 9.6 percent, the Labor Department announced Friday.

Private employers added a modest 64,000 positions to their payrolls in September, slightly less than in the previous month, but the gains were not enough to offset reductions at government agencies. The net result: a loss of 95,000 jobs.

The number of jobless workers, 14.8 million, was virtually unchanged from the previous month.

Among older workers, the jobs picture was mixed. The unemployment rate for people age 55 and older edged down one-tenth of 1 percentage point to 7.2 percent in September. However, the average duration of unemployment for that group rose to 42 weeks, from the 39.2 weeks reported in August. By comparison, jobless workers under age 55 had been out of work on average 32.7 weeks, up only slightly from 32 weeks in the August unemployment report.

More discouraged older workers

Perhaps the most disappointing news was a big jump in the number of older "discouraged workers," people who want to work but have given up looking. The number of people age 55 and older falling into this classification went from 261,000 in August to 332,000 in September, a rise of 27 percent.

Sara Rix, a senior strategic policy adviser at AARP, says the number of discouraged workers generally bounces up and down month to month. But overall it has grown enormously since the beginning of the recession in December 2007, when only 53,000 older people were classified as discouraged workers.

The reason for that dramatic increase is two-fold, she says. First, older workers have continued to face bleak prospects. Secondly, more unemployed older workers continued to stretch out the hunt for jobs, but are now finally giving up and exiting the workforce.

"In prior economic downturns, older workers had more resources at their disposal or they felt more secure financially and could drop out of the labor force" if they were laid off, Rix says. "But with a greater reliance on their own savings, or for those who don't save enough, or who suffered deep declines in their portfolios … and they're nervous about the future, they are remaining in the labor force longer."

More part-time workers

The number of Americans working part time because they couldn't find full-time work, or because their hours were cut, rose by 612,000, to 9.5 million in September. Over the last two months, a total of 943,000 people fell into that category, the government said.

The jobless rate varies by state. To see the situation in your state, look at AARP's "pain index."

Sophia Koropeckyj, managing director at Moody's Analytics, calls the jobs report "very disappointing" and says that the economy may not rebound until the middle of next year.

"Important industries like the professional and financial services industries, and construction and manufacturing all cut jobs," she says.

Most of the new hiring in September took place in the health care and mining industries and in food services, the government said.

"The number of people who are working part time because they can't find full-time work increased quite dramatically," Koropeckyj says. "You have people who aren't making any money because they're unemployed, and you have those who found jobs but the quality of those jobs is not good.

"This is troubling for income growth and for consumer spending. If consumers don't spend, businesses don't have much impetus to hire and that will delay a recovery in the labor market further."

Grim outlook

Over the next six months, hiring is expected to remain modest among leading U.S. companies, but capital spending is projected to increase, according to the Business Roundtable, an association of chief executive officers, which interviewed company heads for its third-quarter 2010 CEO Economic Outlook Survey.

Many of the CEOs gave more pessimistic projections than they did three months ago concerning job growth. About 31 percent of the 125 CEOs surveyed told the Roundtable that they expected to add jobs in the United States over the next six months, down from 39 percent in a June survey Twenty-three percent expected to cut jobs, up from the 17 percent who reported that in June.

Sixty-six percent said they expect increases in revenue over the next six months, down from 79 percent in June, the survey found.

Sales forecasts are down from last quarter, prompting company leaders to remain cautious, Ivan G. Seidenberg, chairman of the Business Roundtable and chairman and CEO of Verizon Communications, told reporters last month. But he noted that in the case of capital expenditures, they are devoting "slightly more in preparation for future demand."

If hiring remains low among companies in the United States, the real estate market could take another plunge, according to an International Monetary Fund report released Wednesday. It said that the depressed market could last eight years.

The IMF said falling property values, outstanding household debt and high unemployment are keeping buyers away from the burgeoning inventory of homes.

"Foreclosures are still rising," says Koropeckjy of Moody's, "and as long as that continues, housing prices will continue to fall. The economy can only plod along" until that changes.

Carole Fleck is a senior editor at the AARP Bulletin.

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