The Collapse of the U.S. Economy

New Jobless Claims Up Sharply as Layoffs Persist

June 17, 2010

AP – The number of people filing new claims for jobless benefits jumped last week after three straight declines, another sign that the pace of layoffs has not slowed.

Initial claims for jobless benefits rose by 12,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. It was the highest level in a month and overshadowed a report that showed consumer prices remain essentially flat.

A rise in first-time jobless claims, combined with this week's report that said new home construction plunged in May after government incentives expired, highlighted fears about the strength of the economic rebound.

If layoffs persist, there's a concern that the June employment numbers may show a decline in private-sector jobs after five straight months of gains, said Jennifer Lee, an economist with BMO Capital Markets.

"We've definitely seen the economic recovery hit a wall," Lee said.

First-time jobless claims have hovered near 450,000 since the beginning of the year after falling steadily in the second half of 2009. That has raised concerns that hiring is lackluster and could slow the recovery.

The four-week average for unemployment claims, which smooths volatility, dipped slightly to 463,500. That's down by 3,750 from the start of January.

Kevin Logan, an economist with HSBC Securities, said many economists have been expecting claims to fall below 450,000 for several weeks now.

"The wait is getting longer and longer," said Logan. "As each week goes by, doubts about the underlying strength of the economic expansion grow."

A separate Labor report said consumer prices fell for the second straight month. The 0.2 decline in the Consumer Price Index was pulled down by falling energy prices — most notably a 5.2 percent drop in gasoline prices.

But core consumer prices, which strip out volatile energy and food, edged up 0.1 percent in May, after being flat in April. Core prices are up only 0.9 percent over the past year — below the Fed's inflation target.

Additionally, the Commerce Department said Thursday that the broadest measure of U.S. trade rose during the first quarter to the highest point in more than a year. Much of the widening deficit was due to higher prices on imported oil during the first three months of the year. Those prices have since come down.

And a private research group said its gauge of future economic activity rose 0.4 percent in May, signaling slow growth in the U.S. economy through the fall. Turmoil in stock markets and a troubled housing market weighed on the Conference Board's leading economic index, while measures related to interest rates and an increasing amount of money in the economy tugged it higher. The index is designed to forecast activity in the next three to six months.

Still, layoffs remain one of the biggest concerns for the recovery. Just this week, casino owner Wynn Resorts laid off more than 260 workers in its two Las Vegas casino hotels in a move expected to save nearly $8 million.

Economists have said they don't expect to see sustained job creation until first-time jobless claims drop below 425,000 per week.

But Julia Coronado, senior U.S. economist with BNP Paribas in New York, said she expects they will actually stabilize at around 450,000. That's because weaker segments of the economy are shedding jobs while stronger sectors are hiring.

The number of people continuing to claim benefits rose by 88,000 to 4.57 million. That doesn't include about 5.2 million people who receive extended benefits paid for by the federal government.

Congress has added 73 weeks of extra benefits on top of the 26 weeks typically provided by states. All told, about 9.7 million people received unemployment insurance in the week ending May 29, the most recent data available.

The extended benefit program expired this month. The House has approved an extension of the benefits through November. The Senate has yet to act.

On Wednesday, Senate Republicans and a dozen Democratic defectors rejected a catchall measure combining jobless aid for the long-term unemployed, aid to cash-strapped state governments and the renewal of dozens of popular tax breaks. Despite the loss, Democratic leaders predicted that a scaled-back version of the measure could pass, possibly later this week.

Adding to worries about the job market, the Labor Department said earlier this month that the economy generated only 41,000 private-sector jobs in May. That was down from 218,000 in April.

Temporary hiring by the Census Bureau added another 411,000 jobs. The unemployment rate fell to 9.7 percent from 9.9 percent.

Out-of-work Job Applicants Told Unemployed Need Not Apply

June 16, 2010

CNNMoney.com - The last thing someone who is unemployed needs to be told is that they shouldn't even apply for the limited number of job openings that are available. But some companies and recruiters are doing just that.

Employment experts say they believe companies are increasingly interested only in applicants who already have a job.

"I think it is more prevalent than it used to be," said Rich Thompson, vice president of learning and performance for Adecco Group North America, the world's largest staffing firm. "I don't have hard numbers, but three out of the last four conversations I've had about openings, this requirement was brought up."

Some job postings include restrictions such as "unemployed candidates will not be considered" or "must be currently employed." Those explicit limitations have occasionally been removed from listings when an employer or recruiter is questioned by the media though.

That's what happened with numerous listings for grocery store managers throughout the Southeast posted by a South Carolina recruiter, Latro Consulting.

After CNNMoney called seeking comments on the listings last week, the restriction against unemployed candidates being considered came down. Latro Consulting refused to comment when contacted.

Sony Ericsson, a global phone manufacturer that was hiring for a new Georgia facility, also removed a similar restriction after local reporters wrote about it. According to reports, a Sony Ericsson spokesperson said that a mistake had been made.

But even if companies don't spell out in a job listing that they won't consider someone who currently doesn't have a job, experts said that unemployed applicants are typically ruled out right off the bat.

"Most executive recruiters won't look at a candidate unless they have a job, even if they don't like to admit to it," said Lisa Chenofsky Singer, a human resources consultant from Millburn, NJ, specializing in media and publishing jobs.

She said when she proposes candidates for openings, the first question she is often asked by a recruiter is if they currently have a job. If the answer is no, she's typically told the unemployed candidate won't be interviewed.

"They think you must have been laid off for performance issues," she said, adding that this is a "myth" in a time of high unemployment.

It is not against the law for companies to exclude the unemployed when trying to fill positions, but Judy Conti, a lobbyist for the National Employment Law Project, said the practice is a bad one.

"Making that kind of automatic cut is senseless; you could be missing out on the best person of all," she said. "There are millions of people who are unemployed through no fault of their own. If an employer feels that the best qualified are the ones already working, they have no appreciation of the crisis we're in right now."

Conti added that firms that hire unemployed job seekers could also benefit from a recently-passed tax break that essentially exempts them from paying the 6.2% of the new hire's wages in Social Security taxes for the rest of this year.

Thompson said he also thinks ruling out the unemployed is a bad idea. But he said that part of the problem is that recruiters and human resource departments are being overwhelmed with applications for any job opening that is posted. So they're looking for any short-cuts to get the list of applicants to consider down to a more manageable size.

"It's a tough process to determine which unemployed applicants were laid off even though they brought value to their company and which ones had performance issues," he said. "I understand the notion. But there's the top x percent of unemployed candidates who are very viable and very valuable. You just have to do the work to find them."