Little relief seen for jobless
Trickling recovery has employers reluctant to hire more workers
WASHINGTON – As the recession eases, companies are cutting fewer jobs. Yet they remain reluctant to hire, leaving potentially millions of people without any financial aid long after their unemployment benefits run out.
That grim picture was reinforced Thursday by the latest government report on jobless benefits. The number of first-time claims – a proxy for the pace of layoffs – remained below the peak levels of the spring. At the same time, though, the total number of people receiving unemployment aid topped 9.1 million.
“We are left with a bifurcated job market, with fewer newer claimants but a rising tide of long-term unemployed,” said Cary Leahey, an economist at Decision Economics. “Some will exhaust all their benefits and be at wit’s end to make ends meet.”
The National Employment Law Project, an advocacy group, projects that 540,000 people will use up their unemployment benefits by the end of September. It estimates 1.5 million will have run out by year’s end.
Those benefits include up to 53 weeks of emergency extended coverage, on top of the standard 26 weeks of aid typically provided by most states.
The loss of all unemployment aid for so many jobless Americans could lead to calls for further benefits extensions. Congress first provided federal emergency benefits last year. Those benefits were extended in February by the Obama administration’s stimulus package.
Even if the economy begins to recover this summer, as some economists expect, growth will likely be anemic, and unemployment will continue to rise. Most private economists and the Federal Reserve expect the unemployment rate to top 10 percent by year-end. The rate for June hit 9.5 percent, a 26-year high.
Job seekers are trying to pounce on any potential opportunity. J.C. Penney Co. Inc. opened a new store in New York City on Thursday, creating 500 new positions. Company officials told the Associated Press that they received 15,000 applications – an average of 30 for each opening.
Economists say job creation will be weak even if the economy begins to recover this year. The reasons include:
•Huge slack in the labor market.
•Economic growth will be weak, with consumer demand – necessary for a sustained recovery – likely to remain subdued through this year.
•Layoffs are more likely to be permanent. And it could take several years for the job market to regain its health. Some Federal Reserve policymakers project the unemployment rate could remain above 9 percent into 2011. And some economists say the jobless rate won’t return to a historically “normal” rate of roughly 5 percent until 2013 or 2014.
“We’ve got a long, tough road ahead of us in terms of unemployment,” said Mark Vitner, senior economist at Wells Fargo.