January job losses most since ‘74

The nation’s economy lost 598,000 jobs last month, the largest single month of job losses since the economy was staggering through the energy crisis of 1974, according to the monthly report released Friday by the Bureau of Labor Statistics.

The data, even worse than expected, showed the recession deepening: About 3.5 million jobs have been lost in the past year —- more than half during the past three months.

“Today’s jobs report shows the current downturn is far more severe than many have been willing to admit,” said Charles McMillion, chief economist at MBG Information Services in Washington, D.C.

The most hopeful view would be that the past three months have been almost equally bad.

Many companies moved suddenly to axe workers after the financial meltdown of the early fall, said Ed Hyland, Atlanta-based global investment specialist for JP Morgan Private Bank. “I think fear took hold. The silver lining, if you are looking for one —- and we always are —- is that there is a reasonable amount of stability. We are not seeing acceleration in the job losses.”

But each month’s losses make the overall market weaker: The unemployment rate in January rose from 7.2 percent to 7.6 percent, according to the BLS. A broader measure includes people who are too discouraged to look for a job as well as those who work part time because they can’t find full-time jobs. That rate was 13.9 percent in January, up from 9 percent a year earlier.

More than 11.6 million Americans are officially unemployed.

“The nice thing is, there is no stigma attached to it,” said Donia Crime, 36, of Tucker, who lost her job as a public relations vice president late last year.

She is searching now for a full-time job while looking into freelancing. She and her husband, whose high-tech company is seeking funding, have savings set aside which should last through May, she said. “Then we will have to cash in our IRAs. We could probably go a good year without selling everything we own.”

Much of the worst damage last month came in two blue-collar sectors —- manufacturing, which lost 207,000 jobs, and construction, which dropped 111,000. But professional and business services also took a pounding.

While joblessness is higher for lesser-educated workers, the recession has increasingly reached into the white-collar world.

Most of the U.S. economy is now in services —- from accounting to lawyering —- and as corporate and consumer spending drops, so does demand for what they do.

Shelley Sawyers, 34, was a senior conference manager.

“I knew it was coming,” she said. “I just never thought that I would be the one. But conferences are the first to go, and the company did a round of layoffs Dec. 15.”

The upside, she said, is re-routing her life. “I have been wanting to do a career change into alumni relations. Is the timing good? Probably not.”

A friend and Inman Park neighbor, Amy Burton, lost her public relations job at year’s end because the firm just didn’t have enough business.

Now, she too is networking and looking for freelancing work.

Fortunately, her expenses are limited: no land-line phone, limited cable television and, besides herself, the need to feed only Sarah Jane, her dog.

“I think there are some opportunities out there,” she said. “I think I’ll be OK. I’m pretty creative. I’d rather not go more than six months.”

The odds on that are, unfortunately, growing longer. About 2.7 million Americans have been officially unemployed more than six months —- 22.4 percent of the total.

The recession began with the collapse of the housing bubble. By mid-2008, the economy was coping with a global slowdown that chilled demand for U.S. goods as well as a credit crisis that paralyzed financial markets.

Recovery depends on reversing those forces —- as well as on the effectiveness of stimulus policy in Washington, D.C.

For now, it seems that job cuts will continue. A survey released Friday by Towers Perrin showed about 20 percent of companies have slashed their work force by at least 10 percent or plan to do it. More than 40 percent have frozen hiring or plan to do so.

“I think that number will be 50 percent or more by the end of this quarter,” said Ravin Jesuthasan, a managing principal at the Connecticut-based consulting firm.

Thirteen months after the recession began, January’s report prompted a series of sobering comparisons. It was:

> the highest unemployment rate since 1992

> the lowest proportional level of jobs since 1986

> the worst three-month job loss since 1945.

> the largest 12-month job loss since at least 1939.

“We knew manufacturing and construction were bad, now it’s clear that the corporate sector is cutting big time,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State. “Businesses are not sure about the future —- they can’t project. So they are going into preservation mode. That is the ominous thing.”

Still, some of last month’s losses look worse just because the economy is so much larger than it used to be. In December 1974, as the nation staggered through an energy crisis, the economy lost 602,000 jobs. Relative to the size of the work force back then, that was 77 percent worse than the losses of January.

“The recession in 1974-75 was the most brutal in terms of job loss, but it was quick,” Dhawan said. “This one is going to be longer.”

 MICHAEL DABROWA / Staff
UNEMPLOYMENT
Monthly unemployment rate from January 1960 to the present.
Seasonally adjusted 
     Jan. 2009: 7.6%
     June 1992: 7.8%
     Nov.-Dec. 1982: 10.8%
     May 1975: 9%
     May 1961: 7.1%
Source: U.S. Department of Labor: Bureau of Labor Statistics

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JOBS LOST 
*percent of overall jobs    
     Jan. 2009: 598,000, .44%*
     Oct. 2001: 325,000, .25%*
     Feb. 1991: 306,000, .28%*
     July 1982: 343,000, .38%*
     Dec. 1974: 602,000, .78%*
Source: GSU, Bureau of Labor Statistics