The pace of layoffs slowed in April, when employers cut 539,000 jobs, fewest in six months. But the unemployment rate climbed to 8.9%, highest since late 1983, as many businesses remain wary of hiring.
The drop in business payrolls wasn’t nearly as deep as the 610,000 job cuts economists expected, helped by a burst of government hiring. The rise in the unemployment rate from 8.5% in March matched economists’ forecasts.
The new report underscored the toll the longest recession since World War II has taken on workers and companies. But the slowdown in job losses may bolster hopes that the worst of the downturn is past.
Still, companies will typically remain cautious in hiring until they are sure of an economic turnaround, making it hard for laid-off workers to find jobs.
If workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would have been 15.8% in April, highest on records dating back to 1994.
Companies also keep a tight rein on workers’ hours. The average work week in April stayed at 33.2 hours, matching the record low in March.
Since the recession began in December 2007, the economy has lost 5.7 million jobs.
As the recession eats into sales and profits, companies turned to layoffs and other cost-cutting measures to survive. Those including holding down workers’ hours, and freezing or cutting pay.
Job losses in February and March turned out to be deeper, according to revised figures. Employers cut 681,000 jobs in February, 30,000 more than previously reported. They cut 699,000 jobs in March, more than the 663,000 first reported.
The deepest job cuts of the recession — 741,000 came in January. That was the most since the fall of 1949.
Employers last month cut the fewest jobs since 380,000 in October. Nonetheless, the April job losses were widespread.
Construction companies axed 110,000 jobs, down from 135,000 in March. Factories shed 149,000 jobs, down form 167,000 the month before. Retailers cut payrolls by nearly 47,000, less than the nearly 64,000 cut in March. And job losses in financial activities dropped 40,000, down from 43,000 in the previous month.
The slower pace of job losses — along with an increase in government jobs of 72,000 — helped temper overall payroll reductions in April.
The Economic Policy Institute (EPI), which is partly funded by labor groups, says the economy faces a more challenging recovery than it did in the 1980s. While the jobless rate is lower today than the 10.8% peak in 1982, the descent has been steeper.
Unemployment rose 3.6 percentage points the first 15 months of the current downturn, vs. 3.2 percentage points during the same period in the earlier slump, the report says. Employment, or the total number of jobs, fell 3.7% in the current slide’s first 15 months, vs. 2.9% in the 1980s.
While blue-collar workers suffered in both downturns, today’s white-collar set has it tougher. Unemployment for college-educated employees has more than doubled to 4.3% the first 15 months, vs. a 0.5% rise during the Reagan-era slump.
"No matter how you cut it, things are worse than at any time since the Great Depression," says EPI economist Heidi Shierholz.
How to explain the 10.8% unemployment rate in the 1980s? Shierholz says today’s workforce includes more educated and older workers who tend to have lower jobless rates. She blames the recession’s severity on a credit crisis that could also slow the recovery.
After hitting 10.8% in late 1982, unemployment averaged 9.6% in 1983. By contrast, Federal Reserve chief Ben Bernanke testified this week that the Fed expects the jobless rate to stay high well after cresting above 9% early next year.