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The job market's big slump

The month of May had the sharpest increase in the US unemployment rate in 22 years.

from the June 9, 2008 edition

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Until April, it appeared that employers were trying to keep their workforce. But in the past two months, announced job cuts have soared, according to the Chicago outplacement firm of Challenger, Gray & Christmas. Last month, companies announced 103,522 layoffs, the highest pace since December 2006.

"I'm concerned layoffs are moving to a new level," says John Challenger, the company's CEO.

Spherion, a staffing and recruiting agency based in Fort Lauderdale, Fla., says its temporary-workers business is still "surprisingly" steady. However, "We're seeing more caution from clients on permanent and direct hiring," says William Grubbs, chief operating officer. Companies are also taking longer to make decisions on hiring, he says. "There are still pockets of strong demand, like engineering," he says, "but it is certainly a mixed message."

Advocates for the unemployed hope the latest numbers persuade Congress to pass an extension of unemployment benefits – similar to what it did in March 2002. The Senate has already passed such an extension, and the House has included it in the Iraq war funding bill. On Friday, Rep. Sander Levin (D) of Michigan and two other leading sponsors of extending the benefits wrote President Bush, asking him to clarify his position on the issue.

In an e-mail, Kevin Smith, press secretary for the office of Rep. John Boehner (R) of Ohio, told the Monitor, "Many members support extending unemployment benefits, and the House should consider this legislation as a separate matter."

An extension of the benefits, which would cost about $11 billion, would help stimulate the economy, says economist Jeffrey Kling, a senior fellow at the Brookings Institution in Washington. "It essentially puts money into the pockets of people who will spend it, and it's targeted to people who need it," he says.

That would be the case for Chicago resident Kathy Henry, who was laid off from her job at an advertising company last August when the company lost a large account. In February, the mother of three children, all of whom are living at home, saw her unemployment benefits run out. "I must have had 100 interviews, and no one wants to hire," the college graduate laments. "An extension of unemployment benefits would give me more time to look for a job, and I would be less stressed about my bills."

It would also help Michael Cottle, an information-technology consultant in Browns Mills, N.J., who was laid off in April 2007. The father of four went back to school for additional IT training and saw his unemployment benefits end last month. "In the past, I've had no trouble getting a job," he says. "But then there was not such a huge number of applicants."

Mr. Cottle estimates that he has applied for 75 jobs but has had only two interviews. "If they extended unemployment, it would give us a little extra leeway," he says. "I am actively seeking work. I haven't given up."

Some additional economic stimulus might also help Chantel Anderson, who was laid off last September from her job as an accountant at an auto dealership in Frederick, Md. In March, her unemployment benefits ran out, and she and her husband depleted their savings. Now, the mother of an 11-year-old is working from 3 p.m. to midnight.

"I don't see my daughter until the weekend because of the hours," she says. "Honestly, I was sending out 20 to 30 résumés a day, including Saturday and Sunday. But even though people are posting jobs, they aren't hiring."

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