Unemployment data released today by the U.S. Department of Labor indicates that although job losses have slowed significantly, the economy continues to face challenges.
According to the report the U.S. economy shed 11,000 jobs in November, the smallest decline since the recession began in December 2007. The unemployment rate edged down to 10.0 percent. Retail job losses slowed to 14,500, compared to the more than 44,000 jobs lost in October.
“Today’s unemployment report gives hope to consumers and retailers that a recovery may not be far off. However, it is also a reminder that employers seeking to grow their workforces continue to face challenges,” said RILA President Sandy Kennedy. “Policymakers intent on stimulating job growth and the economy must focus on reducing the challenges employers face rather than erecting new barriers to job creation – which elements of the health care legislation under consideration threaten to do.”
The average of 87,000 jobs lost per month in the overall economy over the past three months is down considerably from the 700,000 per month pace of job loss at the depth of the recession.
The retail industry shed 14,500 jobs last month, an improvement over the more than 44,000 retail jobs lost in October and considerably better than the 90,800 jobs lost in November 2008. The retail industry averaged 33,000 job losses over the past three months, compared to an average of 70,000 over the same period last year.
Other economic data likewise show that the economy has begun to recover. Initial claims for unemployment insurance have fallen back to the level of last September before the worst part of the financial crisis, while increases in personal income and spending in October suggest improved prospects for families. The housing market remains weak but has stabilized, with home prices up over the past two quarters, and rising home sales whittling down the elevated inventory of homes for sale. Forward-looking surveys of purchasing managers suggest that the manufacturing sector has begun to expand, while orders for services firms are improving as well. Overall, GDP grew by nearly 3 percent in the third quarter of this year, and many forecasters believe it is on track for a similar increase in the fourth quarter. In sum, the economy remains weak, but a broad view of the data suggests that spending and incomes are on the rebound and that the job market is slowly turning upward as well.
“Today’s data confirm that the labor market is beginning to heal,” said Donald B. Marron, visiting professor at the Georgetown Public Policy Institute and RILA outside economist. “Layoffs have slowed dramatically in recent months, but new hiring remains restrained. Employers are adding hours but not yet jobs, though employment has increased in a few sectors, including temporary help services and department stores. We have a long way to go to get back to the strong economic performance that Americans have come to expect, but the economy and the job market are turning up.”
Health Care Reform and Jobs
Costly burdens, such as those imposed by the health care reform legislation passed in the U.S. House of Representatives, and the legislation currently under consideration in the U.S. Senate, could undermine economic recovery and cost more jobs for the retail industry, while also pushing insured retail employees from the health care plans they currently have and like.
“Congress simply should not pursue major initiatives that could add significantly to the cost and regulatory burdens faced by the retail industry, thus providing a disincentive to the hiring and business investment critical to ongoing economic recovery efforts,” said RILA president Sandy Kennedy.
Of specific concern are provisions within the Senate bill that would shift costs on to employers to pay for a public plan, reduce benefit-design flexibility and innovation, or not take into account the unique needs of the retail workforce such as separate treatment of part-time and holiday hires.