Jobless rate jumps at record pace
Fri, Jan 30, 2009 (2 a.m.)
Nevada’s unemployment rate leaped to its biggest month-over-month increase in December, jumping an unprecedented full percentage point to 9.1 percent — and state economists think the job market is only going to get worse.
There were about 24,600 jobs lost in 2008, according to the state’s Employment, Training and Rehabilitation Department. This year the department’s research and analysis bureau projects 39,300 jobs will be lost.
The unemployment rate has jumped 56.9 percent since December 2007 when it was 5.8 percent; the 1 percentage point increase in December was the largest since 1976 when the federal Labor Statistics Bureau began tracking unemployment rates.
In 2010 state economists expect the pace of unemployment growth will slow slightly and job losses will be about 24,800, nearly the same loss as 2008. From 2007 to 2011, job losses will outweigh any growth.
It’s not until 2011 that state economists expect job growth — 12,600 — with all industries except two staying relatively flat or showing some growth. The exceptions are real estate and construction — two industries that are expected to continue to lose jobs. In 2008, construction lost 15,600 jobs; real estate lost 1,100 jobs.
In October the state predicted the unemployment rate would peak at 8.8 percent late this year. As the months passed and the jobless numbers steadily increased, the state said it would adjust its expectations.
“I think what the December numbers illustrate is the fact that the strength of this downturn increased considerably in the final months of last year,” said Bill Anderson, chief economist for the Employment Department. “The fact that we got to this point isn’t a surprise, but the fact that it happened so quickly is.”
The industries to be hit the hardest are construction, hospitality, retail, administrative services and manufacturing. Construction is expected to have a net loss of 38,800 jobs; hospitality, 12,200; retail, 12,100; administrative services, 8,700; and manufacturing, 6,000.
“What we’re looking at is our job losses to peak later on this year and then our losses will gradually begin to decrease,” Anderson said. “In terms of overall year-over-year job growth, under the current situation that’s not likely to happen until 2010 into 2011.”
The two industries with the best outlook for job growth from 2007 to 2011 are health care, with an addition 11,700 jobs and education, with 5,700 jobs.
So far, the recession has lasted 13 months, the fourth longest in recent history. The Great Depression lasted 25 months, the recessions in the 1970s and 1980s each lasted about 16 months.
“We have the potential by the end of this year, if the recession continues, and all accounts seem to suggest that ’09 is a recessionary year, by the time we finish ’09, (this) will be the second longest downturn, after the Great Depression,” said local economist John Restrepo, principal of Restrepo Consulting Group.
“The only metric we have to classify as a depression is 25 percent unemployment,” he said.
Restrepo is doubtful the current economy will hit that mark, based on the government’s quick response with stimulus packages and a more diversified economy than the one during the Depression.
“I think this (recession) is materially different from anything we’ve seen since the Great Depression,” he said. “That’s what we have to understand. That is not to say that Las Vegas will dry up and blow away. But it does indicate that this recession will be more prolonged than anything we’ve seen in modern times.”
There’s some optimism that while the jobless numbers are expected to continue to rise, the first few months’ increases won’t be as severe as December’s.
“There’s a lot of businesses that have already adjusted their cuts and employment and readjusted their operations to a lower level of economic activity,” said Keith Schwer, director of UNLV’s Center for Business and Economic Research. “I wouldn’t be surprised if the rate slowed down. I think business will be down, but they (already) made a lot of adjustments there. They’re not likely to go back and make that large of an adjustment in such a short period of time.”
Factors that could improve the job market are the creation of jobs at CityCenter and other businesses, unemployed people leaving town in search of work and the proposed $800 billion federal economic stimulus package, Schwer said
As high as the the jobless rate is, the numbers don’t take into account unemployed people who have given up looking for work and people who are underemployed, such as those who hold part-time jobs, despite seeking more work.
To be calculated as unemployed, the worker has to be actively seeking work.
“If you take a broader rate, it should really tell us that already 10 percent of the workforce is either unemployed or in very marginal employment,” Schwer said. “The headline unemployment rate is a little bit narrower.”
Los Angeles County served as an indicator of a significant increase in Las Vegas’ jobless rate when California released its numbers days before Nevada. The Golden State’s biggest county also posted a month-over-month 1 percentage point increase in its unemployment rate, from 8.9 percent in November to 9.9 percent in December.
“Be it by rail or truck shipments, our economies are tied together,” Schwer said. “A declining economy in Southern California means less expenditures here, and vice versa.”
The national unemployment rate for December was 7.2 percent and Nevada had the fifth highest unemployment rate of the states. The states with the highest rates were: Michigan, 10.6 percent; Rhode Island, 10 percent; South Carolina, 9.6 percent; and California, 9.3 percent. Wyoming’s rate was the lowest at 3.4 percent.
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