How can US dig out from 9.5 percent unemployment?

The economy faces a climb to get back to full employment, but the worst job losses may now be in the rearview mirror. One indicator to watch for: a bump in average hours worked.

By , Staff writer

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How bad is this jobs recession?

When considered in terms of the number of jobs available at the start of the recession versus 18 months later, this is the deepest since World War II. As of June, about 1 in 6 people in the labor force is either unemployed and seeking work, wants a job but has stopped looking, or is working part time and wants a full-time job. Among those hit hard: Those with only high school educations are faring worse than they did in the 2001 recession.

What policies are needed to bring jobs back?

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President Obama is banking on his $787 billion stimulus plan, which includes tax cuts and government spending on everything from schools to clean energy. His team hopes that this, coupled with support for the banking system, will pave the way for private-sector job creation to begin again.

On the left, some economists say an additional stimulus plan may be needed. But conservative economists say the real need is to keep taxes low and make sure that government spending and regulations don't crowd out free enterprise. No one has easy answers, though, at a time when consumers are digging out from under a mountain of debt.

The Obama administration is backing other measures focused not just on the quantity of jobs but also on the quality of pay and benefits. Healthcare reform and boosting the bargaining power of organized labor are priorities for the administration.

According to Peter Morici, an economist at the University of Maryland in College Park, the recipe for a healthy job market is not to empower unions but to fix the trade deficit and banking system.

If US policymakers pushed harder for a level playing field with China on trade, Mr. Morici says, "We'd have a manufacturing renaissance." He adds that a strategy to reduce reliance on foreign oil would also help reduce the level by which imports exceed exports.

In general, such a trade imbalance is not necessarily a problem for job creation, but many economists say the large and persistent US trade gap is unsustainable. It could be hindering growth, as dollars flow abroad to pay foreign creditors instead of funding investments at home.

How will we know things are improving?

The nation's net job loss in June was 467,000 jobs - more than in May but still an improvement from job losses earlier this year. For the job market to show signs of improvement, the loss rate would have to slow again in the months ahead. Also, employers often expand hours for their existing workers before hiring new ones, so an increase in average hours worked could also indicate recovery. As of June, hours for the typical nonsupervisory worker were still at a low point of 33 hours per week.

How can job seekers find work?

John Challenger, an outplacement expert at the Chicago firm Challenger, Gray & Christmas, tells people to be persistent and creative. One example of networking: A college graduate could throw a barbecue for friends and relatives who have jobs, and hand out business cards with contact information.

Don't assume that because you've been turned down by a dozen employers, the same will happen with the next dozen.

Finally, the Labor Department offers projections about the growth rate of specific occupations in coming years (see www.bls.gov/emp). The latest report came out just as this recession was beginning, but may still offer some useful hints. Lots of the new jobs are expected to be low-paying (retail clerks, food-prep workers), but demand is also expected to rise for better paying jobs (nurses, computer software engineers, accountants, teachers).

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