Payrolls Plunge by 63,000, Biggest Drop in Five Years

CNBC ^ | 07 Mar 2008 | 08:33 AM ET

[Lazamataz]

U.S. employers cut payrolls for a second straight month during February, slashing 63,000 jobs for the biggest monthly decline in nearly five years as the nation's labor markets weakened steadily, a government report on Friday showed.

The Labor Department said last month's cut followed an upwardly revised loss of 22,000 jobs in January rather than the 17,000 reported a month ago. It also said only 41,000 jobs were created in December, half the 82,000 originally reported.

"This confirms the fears that have been lurking in the financial markets in recent weeks. The probability of a U.S. recession is at more than 50 percent," said Richard DeKaser, chief economist for National City Corp. in Cleveland.

"The Fed has to be more aggressive," DeKaser added. The U.S. central bank is expected to cut interest rates again later this month and, on Friday just before the payrolls report became public, announced new measures to add liquidity to severely strained credit markets that are near seizing up.

U.S. Treasury debt prices shot up in anticipation that the Fed will cut interest rates while stock futures weakened sharply. The dollar's value was at a record low against the euro after the unfavorable employment report was issued.

The back-to-back January and February job losses were the first consecutive monthly declines since May and June of 2003.

The February jobs report was more bleak than expected. Economists surveyed by Reuters forecast 25,000 jobs would be added to payrolls last month. They had forecast that the unemployment rate would edge up to 5.0 percent.

Department officials said February's job losses were the largest for any month since March 2003, when 212,000 jobs were cut.

During February, the national unemployment rate eased to 4.8 percent from 4.9 percent in January, but that was because fewer people were in the labor force. The department said the number of people in the workforce fell by 450,000 in February.

Job losses were widespread. Some 52,000 jobs were lost in the manufacturing industries, the largest decline since July 2003 when 92,000 jobs were cut. Construction businesses eliminated another 39,000 jobs on top of 25,000 that were cut in January, a reflection of the housing industry's deepening woes.

The department said that since the housing boom peaked in September 2006, construction businesses have cut 331,000 jobs.

Retail industries also shed jobs last month, dropping 34,000 people off their payrolls, a possible reflection of concern from businesses that hard-pressed consumers are likely to begin pulling back sharply on spending.

In a statement issued with the monthly jobs data, the commissioner of the Labor department's bureau of labor statistics, Keith Hall, warned that many of this year's job losses may take a long time to come back.

"The increase in unemployment over the past 12 months was concentrated among persons who lost jobs and had no expectation of being recalled," Hall said in remarks prepared for delivery to Congress' Joint Economic Committee.

One bright spot was that the government added 38,000 jobs in February on top of 4,000 new-hires in January. Education and health services businesses added 30,000 new hires in February on top of 49,000 in January.

[VegasCowboy]

I recall these kids going out to firms and doing paper and pencil auditing/accounting work (grunt work) just so they could progress to the point where they could apply what they learned in school to the real world. Where do you get that experience now?

The ground level experience is actually better now. Before automation, the entry level auditors would sit at a table with a ten-key adding machine and a stack of client papers and do nothing but add numbers. Now, this is handled in Excel, so the entry level auditor spends his/her time analyzing the numbers, interviewing the client, and developing a better understanding of the numbers than if he/she were just being used as a human adding machine. In other words, there is still "grunt work," it is just at a much higher level.

[Night Hides Not]

Glad to hear your perspective, VC. I suspect the availability of senior positions will increase as the Boomers start retiring.

I've also grown weary of being told how "overqualified" I am. Sometimes, you can't win for losing.

[american colleen]

OK, thanks!

In my own case, my job hasn't been outsourced, it's been offshored (feels the same though) -- meaning, the company has redistributed its workforce - the world is flat. I could relocate to India and work at my job there, but... A lot more companies are going that route and cutting out the middleman (WiPro, Accenture, Tata, Infosys, etc).

The company has actually added to its payroll (hired 2 Indians for 1 American) although the jobs aren't actually in the USA.

[houston1]

my understanding is that if an H1B worker loses their job they have to leave the country, I think they can stay if they find another job but they have a limited time to do it, something like 90 days.

[chuckles]

There has been alot of discussion about the unemployment rate being "false". The truth is it has to be understood to get the "feel" for what's happening. Just as an obvious example, housing is almost shut down. The workers are mostly illegals so their job losses aren't counted in the unemployment rate, but ARE counted in the lost jobs rate. We could lose several million jobs and the unemployment rate remain unchanged if the RIGHT jobs are lost.

The reason I'm so exercised about illegals is coming to the top right now. We have convinced ourselves that they are an asset, but they drain our resources and depress our pay. I recently complained about illegals being able to get bank loans, including house loans. I was immediately pooh poohed and told they couldn't possibly hurt anything by getting a loan. Now we are seeing the effect. A larger proportion of abandoned homes are illegals that lost jobs and went to Mexico, than ever before. We loaned money to illegals with no documentation, and then act surprised when they walk away. Where are the worst offenders? California, Nevada, Arizona, and Florida. Right now, the honcho's at Citigroup are in front of congress explaining their role in the sub prime mess. One,(Prince), bragged about how they had been working with La Raza to get more homeowners in their "communities". That community apparently has been "hard" hit.

I'm not saying they are totally responsible for the housing problem, but their contribution IS substantial. Many illegals are taking good jobs and depressing the wages of Americans. The TV always seems to show pictures of fruit pickers when talking about illegals, but the reality is that are taking good jobs and depressing our economy. They put their children in our schools, fill our jails, and emergency rooms and pay little or no taxes. If and when housing turns back up, the jobs will be filled with Americans if illegals are sent home and KEPT home. Then you will see higher wages, more jobs counted, and the figures will make more sense. Right now, a home builder can release 20,000 jobs and there is almost no impact on unemployment other than the stores that sell products to them.

[expat_panama]

Unemployment is down, payrolls are down.  So now we won't have to listen to the old saw about mom's leaving their kids so the family can make ends meet.

Series Id:           Series title:        Labor force status:   Type of data:        Age:	LNS12300000 Seasonal Adjusted Employment-Population Ratio Employment-population ratio Percent 16 years and over

[american colleen]

"Guess Who's Getting the Most Work Visas"

Interesting article on H1Bs from Businessweek and just published today. There's a link to the top 200 American companies who use H1Bs.

"Many U.S. workers oppose any expansion of the program. They say H-1Bs let companies hire cheap workers from abroad, rather than Americans. They say the timing for expansion couldn't be worse, with the economy faltering. "Foreign workers are coming into the U.S., even though Americans need jobs," says Kim Berry, president of the worker advocacy group Programmers Guild. "It turns the intent of the H-1B program upside down"

[dfwgator]

I look at the size of their stomachs. From travelling around the country the last six years I would say Americans are still living pretty good.

Or you could look at it another way, gym memberships cost money.

[VegasCowboy]

I've also grown weary of being told how "overqualified" I am. Sometimes, you can't win for losing.

That's a shame. I agree, though, that the retiring of the boomers will open up lots of opportunities. Good luck!

[Diana in Wisconsin]

Well, if we’re all gonna die, can I at least choose the Leftists I take down with me?

Man, that would be sweet, LOL!

[Larry Lucido]

We're all gonna dye!!!!

Groovy, man!

[Freedom_Is_Not_Free]

[DeaconBenjamin]

I've seen a lot of large stomachs on public assistance. In fact, such recipients are overweight more likely than not. Now, you may state that the people on public assistance are doing well (e.g., "The poor in the US are richer than the middle class in other countries"), but they are not an indicator of economic prosperity.

[Hot Tabasco]

Unemployement falls to 4.8%.

Michigan just recently announced a drop in the umemployment rate to 7.1. What it didn't say is that it was probably due to people like myself who dropped off the unemployment rolls when our unemployment benefits were exhausted. My plant closed 12/4/06 so the year of UI and TRA ran out in December....

[mathluv]

I still say all of these reports are the result of a dim controlled congress - who plan on raising taxes.

[mathluv]

At Christmas time, I look at the Angel trees. How many of the kids are asking for PlayStaion, XBox, or Wii - games or consoles?

[Nailbiter]

I also did not have clue as what I would do post HS.
Junior college for 2+yrs, while holding full time job. Trade school 3 yrs. Worked 8 yrs in trade, moved to another part of trade for 4yrs.
Then into computers, no previous experience,4yrs. Then into IT for major Co.
Still in IT 9yrs later.
Amongst friends and family can name only 3 or 4 that are doing what they trained for in College.
My point to this long explanation is that with some knowledge, basic problem solving skills and good work ethic someone should be able to find employment.
May not be what you want but while paycheck is coming in , one can look for something more to his/her liking, or better payscale.

[driftless2]

I guarantee you most of the large stomachs of the people around here are not becauses of public assistance. The unemployment rate here is under four percent. Believe me, Wisconsinites love to eat.

[Vor Lady]

OK so now accounting, IT and manufacturing...

I don't know about the IT thing. My husband is a consultant and he has two contracts going because there aren't enough qualified people in the area. He's not complaining though because they are paying him lots of dollars to work both jobs. 40 hours at one; as many as he can work at the other in a week.