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U.S. unemployment rate jumped in June to highest in nine years By Gwendolyn Freed Star Tribune
July 04, 2003
The nation's unemployment rate unexpectedly spiked to a nine-year high of 6.4 percent last month, from 6.1 percent in May, the government reported Thursday. The country shed 30,000 jobs in June, forcing the sharpest monthly increase since the aftermath of the 2001 terrorist attacks. Stock markets fell after the news.
"Unacceptable," Minnesota state economist Thomas Stinson said of the jobs picture, adding that he also expects the state's June jobless rate to increase slightly from 4.3 percent when it's reported July 15. Most economists believed the economy started recovering 18 months ago, Stinson said. "We all wanted a recovery in employment to have started by now."
The sentiment was shared by unemployed workers at the Minnesota Workforce Center's south Minneapolis branch.
Workforce Center customer service representative Mickey Hollander took phone calls in English and Spanish, and helped job-seekers polish résumés and use the Internet to find job leads and make contacts.
In recent months, the center has been busier than usual. "I'm a little more stressed," he said. "I have to give more these days. I go home and I feel the pull of it all."
Hollander's clients aren't the only ones caught unprepared for the ongoing jobs drought. In a recent survey, 54 top economists concluded that tax cuts and stronger corporate profits should deliver an economic rebound in the second half of the year -- a forecast that in hindsight may seem like wishful thinking.
In reality, it's bad news any which way you turn, said Lawrence Mishel, president of the Economic Policy Institute, a Washington, D.C., think tank. "The labor market is continuously deteriorating," he said. "We're losing jobs, wages are growing very slowly, those who have jobs are scared of losing them and unemployment is rising. No one is escaping this, including white-collar workers."
The U.S. economy has shed more than 3.1 million private-sector jobs since the beginning of the recession in March 2001, Mishel said. "That's a 2.8 percent contraction, by far the largest since the 1930s."
It's not just the number of unemployed but also the length of their unemployment that concerns some experts. "We've had an interesting phenomenon since the boom period of the '90s," said UCLA management and public policy Prof. Daniel Mitchell. "Those who do become unemployed are having greater problems in finding new jobs than had been expected previously."
Jullianne Haahr is hoping her job search will be quick. She was laid off from the University of Minnesota's Wilson Library two weeks ago. To increase her chances, she's sending résumés all around the country. "I'm optimistic," she said. But she fears that job competition is stiffer than usual among librarians. "I went to an American Library Association conference in Toronto recently, and the first three people I met had been laid off from their jobs."
Businesses still are "shell-shocked" from the economic and political tumult during the past three years, which included recession, the stock market crash, the war in Iraq and the tensions with North Korea, said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis. "The job market is stuck in the mud, going nowhere," he said.
Not everyone is as discouraged by the unemployment report. "It's a disappointment, no question," said Phil Dow, director of equity strategy at RBC Dain Rauscher, a Minneapolis company that employs nearly 6,000 people across the country and laid off about 165 workers this spring. But he stressed that unemployment is a lagging economic indicator.
"If you are a true student of the market and the economy, you know that jobs don't get better first in an economic recovery. They get better last," Dow said. "As, and if, the economy does recover, you'll see the numbers get better."
But Sohn wonders what would happen if the unemployment rate stays high. "An interesting question is what will happen if we don't create new jobs with the economic stimulus," he said. "That's what's been happening in Japan. I hope that doesn't happen in the U.S.
"If the jobless recovery continues for the next couple, three months, we should be looking at more structural, long-term economic problems, rather than cyclical, economic issues," Sohn said.
Joblessness is tough for the employed, as well the unemployed, according to Hollander, of the Workforce Center. To keep his spirits up, he posts thank-you notes from former job-seekers in his cubicle. And to keep job-seekers positive, he makes sure to ask each client how they are doing and to really listen to the reply.
"It's very important to ask, even when the answer is not good," he said. "Because if they think you don't care, they are not going to get anywhere."
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