Half a million jobs slashed in biggest one-month loss in 34 years
By Kevin Smith, Staff Writer© Pasadena Star News, December 5, 2008
The severity of the nation's recession became apparent Friday when the Labor Department announced that employers slashed 533,000 jobs in November, the most in 34 years.
Those cuts catapulted the U.S. unemployment rate from 6.5 percent in September to 6.7 percent in November, dramatic proof the country's economic woes are deepening.
The year-over-year snapshot is even more alarming, with the jobless rate jumping from 4.7 percent in November 2007 to 6.7 percent last month.
"We knew people were going to lose jobs because there's so much volatility and uncertainty," said Larry Harris, the Fred V. Keenan chair of finance at USC's Marshall School of Business. "Consumers simply are not able to consume anymore and so the people who service those consumers are losing their jobs in the service industry."
The net loss of more than a half-million jobs was far worse than the 320,000 job cuts economists - and many others - were forecasting.
"It's a staggering number," said Gary Kaplan, president of Gary Kaplan & Associates, a Pasadena-based executive search firm. "I'd love to think we were at a point where all of this was running its course. But as Al Jolson said ... `You ain't seen nothing yet."'
Kaplan said the private-sector side of his business - placement of executives in the corporate world - is off by about 35 percent.
But employee placement in the nonprofit and academic sectors is still holding up well, although that could change, he said.
"Even during the last two recessions these two sectors never let us down," Kaplan said. "But I'm not convinced that will be the case this time around."
The U.S. tipped into recession last December, a panel of experts declared earlier this week, confirming what many Americans already thought.
Since the start of the recession, the economy has lost 1.9 million jobs, the number of unemployed people has increased by 2.7 million and the jobless rate has risen by 1.7 percentage points. More evidence that the labor pain is far from over came Friday when General Motors Corp. said it will lay off another 2,000 workers as it cuts shifts at three car factories starting in February due to slowing demand for their products.
Orange County Container, an Industry business that makes corrugated boxes that are used for manufacturing, shipping and display, has felt the the impacts of the recession.
But owner Michael Feterik said things could be much worse.
"All of our customers are off at least 20 percent, but we also do a lot of display boxes so customers can display their products and that end has picked up," he said. "But an average box company that just makes brown boxes is probably hurting right now."
Job losses last month were widespread, hitting factories, construction companies, financial firms, retailers, leisure and hospitality, and others industries. The few places where gains were logged included the government, education and health services.
Christopher Thornberg, a principal with Beacon Economics in Los Angeles, said many of the losses represent a slowdown in seasonal hiring.
"It's not so much that we're really losing that many jobs, we're just not adding as many as we normally would this time of year," he said. "That's where a lot of these losses are coming from. But it's still a bad number."
Thornberg said California has been particularly hard hit by the downturn.
"In California the recession started in the second quarter of 2007," he said. "We started seeing job losses earlier than anyone else. We have the largest real estate bubble and California is ground zero for the subprime debacle and all of this crazy debt - all of that stuff was centered here."
Candice Slor Hynek, an associate economist at the Los Angeles County Economic Development Corp., agreed that many Southland layoffs in the mortgage and construction-related industries already occurred earlier this year.
But other sectors - including telecommunications, retail, auto dealerships and manufacturing - are also beginning to see substantial losses, she said.
"Viacom is laying off throughout their business units and that will include Paramount Pictures," she said.
AT&T also announced Thursday that it plans to cut 12,000 jobs companywide, about 4 percent of its work force.
Although affected locations and departments have yet to be announced, the cuts are expected to have some impact on the company's Colorado Boulevard operation in Pasadena, which employs about 1,100 unionized workers in addition to a non-union managerial staff.
"We know AT&T does not like the work being here in California - it costs too much," said Dennis DeMarco, executive vice president of the Communications Workers of America union, Local 9505, which represents the workers. "Even though they get all the revenue from customers here in the state, they don't want to pay the workers."
Thornberg doesn't expect the economy to begin ramping up anytime soon.
"This will carry us through 2009," he said. "We won't see any substantial growth until the end of 2009 ... or early 2010."
The Associated Press contributed to this story.
