Unemployment 10.2%: Capitalism continues to fail Americans

Unemployment rate hits 10.2%, worst since 1983

* By Chris Isidore, CNNMoney.com senior writer
* On 10:25 am EST, Friday November 6, 2009

The nation's unemployment rate rose above 10% for the first time since 1983
in October, a much worse jump than expected as employers continued to trim
jobs from payrolls.

The reading, reported by the government Friday, is a sign of the continued
weakness in the labor market even though the economy grew in the third
quarter following the longest and deepest downturn since the Great
Depression.

The government reported that the unemployment rate spiked to 10.2%, up from
9.8% in September. It is the highest that this rate has been since April
1983. Economists had forecast an increase to 9.9%.

There was also a net loss of 190,000 jobs in October, according to the Labor
Department, an improvement from a revised estimate of 219,000 job losses in
September. However, economists surveyed by Briefing.com had forecast a loss
of only 175,000 jobs in October. This was the 22nd straight month of job
losses.

"The only good news is the number of layoffs are dropping off, but those who
are laid off still aren't finding jobs," said David Wyss, chief economist
with Standard & Poor's.

The jump in the unemployment rate was driven up by a large drop in the
number of people who describe themselves as self-employed, as well as the
number of teenagers who have jobs. The unemployment rate for teenagers in
the labor force soared to 27.6%, up 1.8 percentage points and hitting a
third straight record high.

Both teen workers and the self-employed are not captured very well in the
government's separate survey of employers that is used to calculate the
number of people on U.S. payrolls. That explains much of the disconnect
between fewer job losses overall and the much worse unemployment rate.

The rise in unemployment was not spread evenly across the population. For
those with college degrees, the unemployment rate fell to 4.7% from 4.9% in
September, as the unemployment rate for those in management, professional,
and related occupations slipped to 4.7% from 5.2%.

But the unemployment rate for production jobs, such as factory workers,
jumped to 14.5% from 14.1%. The jobless rate for workers in construction,
maintenance or natural resources industries such as mining rose to 15.5%
from 14.3%.

"There's a real mismatch between the unemployed people out there compared to
what job openings are available," said John Silvia, chief economist with
Wells Fargo Securities. He said construction workers who lost a job when the
housing bubble burst don't have the skills to compete for jobs in sectors
that are hiring, such as health care and technology.

Government efforts to end job losses have had limited effects, although the
Obama administration estimated last month that 640,000 jobs were created or
saved by the federal stimulus package passed earlier this year. But that's
modest compared to the 7.3 million jobs that have been lost since the start
of 2008.

Christina Romer, chair of the President's Council of Economic Advisors, said
the steady decline in monthly job losses since earlier this year is a
hopeful sign for the economy.

But she acknowledged there's still significant pain for those looking for
work. "Having the unemployment rate reach double-digits is a stark reminder
of how much work remains to be done before American families see the job
gains and reduced unemployment that they need and deserve," she said.

Friday's report comes one day after Congress voted overwhelmingly to extend
unemployment benefits by up to 20 weeks. There are now a record 5.6 million
people who have been unemployed for six months or longer, as the average
time an unemployed person has been out of a job hit 26.9 weeks.

Prior to this report, most economists had believed that the unemployment
rate would keep rising and that job losses would continue into next year.
But the jump in unemployment in October took it to levels worse than what
many previously had expected to be the peak.

According to a survey of top forecasters by the National Association of
Business Economics last month, the consensus estimate among economists was
that unemployment would hit a high of 10% in the final three months of this
year and the first quarter of 2010.

The five economists with the most bearish forecasts had expected
unemployment to rise to 10.2% in the fourth quarter of this year before
hitting 10.5% in the first half of next year.

Wyss is one of those economists who had projected an unemployment rate of
10.5% in the middle of next year. He said Friday's report may force him to
raise his worst case estimate.

"Some things aren't playing out the way I expected them to," he said.
"There's just no good news in this report."

But others said they see some early signs of life for the labor market. Sung
Won Sohn, economics professor at California State University Channel
Islands, noted that the biggest increase in temporary employees in two years
took place in October.

Employers typically bring in workers on a temporary basis before deciding to
make more permanent hires. As such, he expects gains in payrolls by next
spring. "Despite the gloomy job picture, there are some encouraging signs,"
he said.

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