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Layoffs Drop, But Unemployment Up To 8.9%

The pace of layoffs slowed in April, with employers cutting 539,000 jobs, the fewest in six months. But the unemployment rate climbed to 8.9 percent as many businesses remained wary of hiring given all the economic and financial uncertainties.

The Labor Department tally wasn't nearly as deep as the 620,000 job losses that economists were expecting. The rise in the unemployment rate from 8.5 percent in March matched economists' forecasts.

If laid-off 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 percent in April, the highest on records
dating back to 1994.

One analyst thinks the "worst has passed" in terms of job losses in the recession.

Companies also keep a tight rein on workers hours. The average work week in April stayed at 33.2 hours, matching the record low set in March.

Since the recession began in December 2007, the economy has lost a net total of 5.7 million jobs.

As the recession eats into sales and profits, companies have turned to layoffs and other cost-cutting measures to survive the storm. Those including holding down workers' hours, and freezing or cutting pay.

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 got rid of 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 by 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 to temper the overall payroll reductions in April.

On Thursday, the Labor Department said weekly new jobless claims fell to 601,000, a 14-week low and much better than the jump to 635,000 that analysts expected.

However, the overall jobs situation remains tough. The 8.9 percent jobless rate is the highest since the fall of 1983; that's when the country was recovering from a severe recession that drove unemployment past 10 percent.

Meanwhile, President Barack Obama is expected to outline steps Friday to help the unemployed pursue education and training, and keep their unemployment benefits, too.

Currently, people who are out of work and want to go back to school have to give up their monthly unemployment check. And if they decide to return to school, they often don't qualify for federal grants because eligibility is based upon the previous year's income.

The president was announcing the new measures hours after the government releases its April unemployment report. The national unemployment rate stands at a 25-year high of 8.5 percent, and many analysts expect it to climb to 8.9 percent.

Under the measures Mr. Obama was scheduled to outline, according to the White House:

  • The Labor Department will encourage states to update rules during economic downturns so that the unemployed can enroll in community colleges and other education or training programs without giving up their benefits. States generally require people who collect unemployment to be actively looking for work, which can make it difficult to sign up for school or job training. Going to school will satisfy the requirement that they be actively seeking new employment.
  • The Education Department will encourage colleges to increase financial aid packages for the unemployed. Colleges can consider an unemployed worker's situation and make them eligible for Pell Grants, which help low-income students afford college, and other aid. An unemployed person could get a Pell Grant and use it to pay for education or job training without giving up unemployment benefits. Beginning in July, the maximum Pell Grant will be boosted by $500, to $5,350.

    "Our unemployment insurance system should no longer be a safety net, but a stepping-stone to a new future," Mr. Obama said in remarks prepared for delivery Friday. "It should offer folks educational opportunities they wouldn't otherwise have" and give them skills they need to "get ahead when the economy comes back."

    Mr. Obama has directed Labor Secretary Hilda Solis and Education Secretary Arne Duncan to implement the changes. Both departments also have launched a new Web site,, to help get the word out to the public.

    States also will send letters to every unemployment recipient describing available training opportunities and financial support.

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