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Black Unemployment on the Rise

POSTED: September 05, 2008, 12:00 am

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The Bureau of Labor Statistics (BLS) of the U.S. Department of Labor has released its Employment Situation Summary for August and the numbers indicate Blacks are being hardest hit in this economic downturn. The nation’s unemployment rate rose to 6.1 percent last month, an increase of 592,000 Americans who joined the ranks of the unemployed. Overall some 9.4 million people are out of work.

As a group Blacks have been particularly affected by the economic slump. While white unemployment stood at 5.4 percent, Black unemployment ballooned to 10.6 percent. That is almost a full percentage point over July’s figure for Blacks. The unemployment rate for Hispanics was 8 percent. The unemployment rate for Black men was 10.3 percent and Black women 9.1 percent. The rate for Black teenagers, age 16 to 19 years old, was 28.8 percent. While all of the figures for Blacks are troubling, the latter is particularly problematic since they are for a month in which many young adults are still out of school and are in need of using their time off to earn some cash. The unemployment situation for Black teenagers has consistently been bleak.

In August the downturn pushed many more people onto the unemployment rolls. The number of people who lost their last job rose by 417,000 last month. According to BLS data, the number of long-term unemployed rose by 163,000 in August, and has increased by 589,000 over the last twelve months. These are people who have been jobless for 27 weeks or more. The ranks of the newly unemployed – jobless fewer than five weeks – increased by 400,000 over the last month.

The real story behind these numbers is how many workers are being distanced from the labor market. In August about 1.6 million people were marginally attached to the labor force. These are individuals who wanted and were available for work and had looked for employment over the last 12 months. They were not counted as unemployed because they had looked for work in the four weeks preceding the BLS survey. The numbers of the marginally attached has increased by 275,000 over the past 12 months. Among this group were 381,000 discouraged workers; people who were not currently looking for work because they believe there were no jobs available for them. The other 1.3 million people had not searched for a job in the four weeks preceding the BLS survey because of family or school obligations.

Total nonfarm employment declined by 84,000 last month. In 2008 thus far, employment has dropped by 605,000 jobs, a monthly average of 76,000 positions. Several sectors continued a downward trend in August, including manufacturing and employment services. Meanwhile, others such as health care and mining continued to add jobs.

Manufacturing lost 61,000 jobs last month with the largest declines in motor vehicles and parts. The automobile industry has been devastated as high oil prices have affected vehicle sales and as a result has also impacted parts suppliers in the industry supply chain. Over the last 12 months the automobile industry has lost 128,000 jobs. Two other industries related to home building were also experiencing a tough August. Wood products (7,000) and furniture related products (7,000) lost jobs as the home building industry was feeling the effects of tightening credit. There was an increase of 5,000 jobs in computer and electronic products manufacturing.

Employment services took a big hit in August, shedding 53,000 jobs. Two-thirds of that decrease was in temporary help services. The loss was indicative of the cutback in hiring in some segments of private industry as well as some belt tightening. Since a peak two years ago employment services has lost 419,000 jobs.

Wholesale and retail trade continued a downward trend. Like manufacturing, some of the loss was the direct result of the crisis in the American automobile industry. Within retail trade, jobs in motor vehicles and parts dealers dropped by 14,000 in August. There was good news on the health care front as jobs in the sector increased 27,000 with more than half the gain in hospital related employment.

Jobs in mining also moved in a positive direction last month. Mining gained 12,000 jobs in August across all associated industries. There was particularly strong growth in support activities (39,000) and oil and gas extraction (17,000).

The numbers were not so good in construction although the losses in the sector during July and August averaged less than during the first half of 2008. In August specialty trade contractors lost 14,000 jobs and overall the construction industry has lost 388,000 jobs since it peaked in February 2006.

The Bureau of Labor Statistics will release the September Employment Situation Summary on Friday October 3 at 8:30 a.m. (EDT).

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