Economy loses 95,000 jobs as government layoffs exceed private hires

Jobs crisis extends to unemployed, lawmakers

WASHINGTON — There’s no relief from the jobs crisis — for everyday Americans or lawmakers facing the midterm elections.

The most rampant layoffs of teachers and other local government workers in nearly three decades more than offset weak hiring in the private sector in September, resulting in a net loss of 95,000 jobs. Unemployment remained stuck at 9.6 percent.

The jobless rate has been at or above 9.5 percent for a year and two months, the longest stretch since the Great Depression. The “underemployment” rate adds part-time workers who would rather work full time and jobless people who aren’t actively seeking work. It now exceeds 17 percent.

The glum economic picture came Friday in the Labor Department’s last monthly jobs report before the November election. Voter frustration over jobs threatens to cost Democrats control of the House and perhaps the Senate.

“We have to keep doing everything we can to accelerate this recovery,” President Barack Obama said. “The only piece of economic news that folks still looking for work want to hear is, ‘You’re hired.’ And everything we do is dedicated to make that happen.”

The combination of limp hiring by businesses and more governments layoffs expected means unemployment could rise to 10 percent again this year or next. When Obama took office in January 2009, the unemployment rate was 7.7 percent.

Republicans pointed to the weak jobs report as evidence of Democrats’ failed economic policies. They argued that the $814 billion stimulus has contributed to bloated federal deficits but done little to create jobs. Most economists say job losses would have been deeper and unemployment higher if not for the tax cuts and additional government spending.

“As Americans, we have to decide: Do we want another two years of job-killing policies out of Washington?” said House Republican leader John Boehner of Ohio.

In an Associated Press-GfK poll taken in September, 92 percent of Americans said the economy was an extremely or very important issue. And 79 percent said the economy was in bad shape, compared with 15 percent who said it was healthy.

September was the fourth straight month in which the economy has lost jobs. Layoffs of government workers, including temporary Census Bureau employees, drove the decline. Most census jobs have already expired, but others have lasted longer.

In all, the economy shed 159,000 jobs in the public sector, including 76,000 at the local level, most of them teachers. It was the largest cut by local governments in 28 years.

One reason the spike is showing up now is that teachers who were notified of their layoffs when school ended in spring fell off the payrolls in September. That’s the case for Georgia middle school teacher Candy Murdock, a mother of 13.

Despite seven years of experience and certifications in Spanish, biology and English for speakers of other languages, Murdock was laid off in the spring.

“I can’t just retire now like a lot of people are doing, because I taught part-time for so many years when my kids were young, and it doesn’t count toward retirement,” said Murdock, 56. “And I just can’t go back and retrain. I already did that once.”

More layoffs are expected from state and local governments despite a $26 billion aid package that Obama signed into law in August. The recession devastated state and local budgets.

Without any big rise in sales, companies are not adding jobs fast enough to make up for the losses. Private businesses added only 64,000 positions last month, only about half what it takes to keep up with the growing work force.

There are now 14.8 million people officially unemployed in the United States, and even that figure doesn’t capture the suffering. People out of work who have stopped looking for jobs are not counted as unemployed.

Adding those people plus others who are working part time but would prefer full-time jobs, nearly 27 million are “underemployed” — 17.1 percent of American adults, up from 16.7 percent in August and close to a record.

The persistent jobs crisis makes it all but certain the Federal Reserve will act at its Nov. 2-3 meeting to try to rejuvenate the economy. The Fed will likely buy billions more in government debt to further drive down rates on mortgages, corporate loans and other debt. The idea is that even cheaper loans might get Americans to increase spending and boost the economy.

That prospect lifted stocks on Wall Street. The Dow Jones industrial average closed above 11,000 for the first time since May. It finished up nearly 58 points to 11,006.

On Main Street, however, the outlook for the economy hasn’t brightened much in more than a year, even though the recession technically ended and the economy began slowly growing last summer.

Congress failed to pass an extension of tax cuts, enacted in 2001 and 2003 under President George W. Bush, before leaving town for the midterms. As it stands now, most Americans would face a tax increase Jan. 1.

In the private sector, hiring in September was led by 34,000 new jobs at bars and restaurants, but those tend to pay less than government work and offer fewer benefits, if any.

Factories cut 6,000 jobs last month. Construction companies sliced 21,000. Both industries tend to pay higher wages than jobs in the service sector, such as work at chain stores. Retailers added about 6,000 positions.

The recession wiped out 7.3 million jobs, the most of any downturn since World War II, and economists say it will take at least until the middle of this decade to recover them.

“The areas where private job growth was the strongest are industries that aren’t usually considered high-quality employment,” said Michael Feroli, economist at JPMorgan Chase Bank. “The labor market remains stuck in the mud.”

Associated Press Writer Dorie Turner contributed to this report from Atlanta.