Nation's jobless rate rises to 7.2 percent
By Kevin Smith, Staff Writer© Pasadena Star News, January 9, 2009
The nation lost a jaw-dropping 2.6 million jobs last year in the biggest decline since World War II, and prospects aren't expected to look up any time soon.
Government figures released Friday show that the U.S. unemployment rate jumped to 7.2 percent in December, underscoring the grim toll the recession has taken on U.S. companies and workers.
The 524,000 jobs that were cut last month took the jobless rate from 6.8 percent in November to 7.2 percent - its highest level in 16 years. The increase underscores the challenges President-elect Barack Obama will face when he takes office later this month.
"What a way to start the year," said Gary Kaplan, president of Gary Kaplan & Associates, a Pasadena-based executive search firm. "This was not a surprise, but I really think we're in for further staggering numbers down the road."
Kaplan's firm connects high-level executives with openings that match their skills. He said his operation has taken a heavy hit.
"In terms of new search assignments, we were off 40 percent in December compared with December of 2007," he said. "We've got a situation now where the majority of organizations are evaluating how to reduce their costs and an obvious factor is always labor. It has the greatest impact that can be felt the most quickly."
Bob Machuca, regional manager of business assistance for the Los Angeles County Economic Development Corp. and the San Gabriel Valley Economic Partnership, said local businesses are going to great lengths to avoid layoffs.
Bonuses and executive perks have frequently been cut or eliminated, he said, and some companies have implemented four-day work weeks as a way of saving money.
But it doesn't stop there.
Some manufacturing firms are resorting to unusual - but effective - steps to cut costs and avoid letting valued employees go, Machuca said.
"They're having employees take on the cleaning of the inside of the building, like vacuuming or cleaning the bathroom," he said. "And some of them are having employees come in to do landscaping on the weekends."
That might sound a little crazy, but businesses are eager to hang onto skilled employees, because once they leave it might be hard to get them back when the economy picks up again, Machuca said.
"If they can't get them back they'd have to train someone else and that can get expensive," he said.
Despite all of the economic woes, there are some bright spots. Ryan Gaytan, owner of Gaytan Foods in Industry, said his business is doing well.
"December is generally one of the slowest months of the year but we had a record December," he said. "Business was up 12 percent from the previous year."
The Industry company manufactures and delivers about 500 truckloads of private-label and house-brand snack foods a year throughout the U.S., and Gaytan said the business has a distinct advantage over bigger snack food competitors.
"When a consumer goes into a store they could get a package of potato chips for $3.49, or they could get one of ours for $1.49 where the quality is the same or even better," he said.
The recession, which just entered its second year, is already the longest in a quarter-century and is likely to stretch well into this year, industry experts say.
The fact that the country is battling a housing collapse, a lockup in lending and the worst financial crisis since the 1930s makes the downturn especially dangerous.
"Things are deteriorating rapidly," said Nancy D. Sidhu, chief economist for the Los Angeles County Economic Development Corp.
"We're seeing employment declines in every industry except health care and private education. And we can look forward to more declines in construction, manufacturing and retail, I think."
So what happens if you're one of the unlucky ones who is out of a job?
"This is a very tough market, and someone who is unemployed needs to look very hard," Sidhu said. "Unless they have a lot saved up for this kind of time ... they might not want to be too picky."
The Associated Press contributed to this report.
