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August Unemployment At 26-Year High

NOAH ADAMS, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Noah Adams.

ROBERT SIEGEL, host:

And I'm Robert Siegel.

The economy lost 216,000 jobs in August, according to the Labor Department, and that is the good news. A report out today shows that while the economy continues to shed jobs, those losses are getting smaller with each passing month. But the jobs report also had some sobering news. The unemployment rate in August jumped to 9.7 percent.

And as NPR's Frank Langfitt reports, many economists think it will continue to rise well into next year.

FRANK LANGFITT: In the American labor market, everything is relative. The loss of 216,000 jobs in August may not sound good, unless you compare it to last January. That month, the economy lost nearly three-quarters of a million jobs. Christina Romer, the White House's chief economist, said the August job losses aren't good, but clearly headed in the right direction. Here's how she put it on CNBC.

Ms. CHRISTINA ROMER (White House Chief Economist): It's still a terrible number, but it's certainly showing those job losses moderating.

LANGFITT: Now, the bad news. More and more people are spending more time out of work than ever before. Today's report show that the number of long-term unemployed, people out of a job for more than half a year, has risen to nearly five million. Heidi Shierholz works for the Economic Policy Institute, a labor think tank in Washington, D.C.

Ms. HEIDI SHIERHOLZ (Economic Policy Institute): In this recession, we are shattering all records related to links of unemployment.

LANGFITT: The reason comes down to basic math. Employers continue to lay off workers, but most companies are still too worried about the economy to start hiring again. And today's report suggests a return to hiring is still months away. Employers have slashed worker hours to historic lows. In August, the average work week was just 33.1 hours. Shierholz says most employers will start restoring hours to current workers before hanging out help wanted signs.

Ms. SHIERHOLZ: As the recovery starts to take hold, employers have a lot of wiggle room to expand labor without actually hiring any new people.

LANGFITT: These stark figures are taking an emotional toll on the unemployed. In the past year, the number of discouraged workers, people who aren't looking for work because they don't think there's a job out there for them, has nearly doubled.

(Soundbite of office)

Ms. CHERYL ADAMS(ph): It's crazy. It's depressing.

LANGFITT: In March, Cheryl Adams lost her job as an accounts payable clerk at a radio network in Maryland. I met her yesterday in the lobby of Montgomery Works, a local employment office. She was wearing a white T-shirt, jeans and greying dreadlocks. Adams says she does get job interviews, but competition is stiff, and she doesn't want to become one of those discouraged workers.

Ms. ADAMS: I just have to, just keep praying every day just to keep my sanity, to keep on - to, out here, look for a job 'cause I know there's one out there somewhere.

LANGFITT: Before the recession, Adams moved in with her daughter so she could spend time hunting for a new apartment. Now, without a job, Adams is trapped there. She says most of her possessions are in storage. And she spends each night on the couch.

Ms. ADAMS: It bothers me a lot because I expected to be 50 and at least be in a stable position in my own condo, townhouse, something.

(Soundbite of phone ringing)

Ms. ADAMS: Hold on, this might be a job. Hello?

LANGFITT: A glimmer of hope.

Ms. ADAMS: Yes, ma'am.

LANGFITT: A job in Northern Virginia. A school needs an administrative assistant.

Ms. ADAMS: And you do the same. Bye-bye.

LANGFITT: The interviews are this weekend. Most analysts think the country is pulling out of recession. But Heidi Shierholz, the labor economist, says hiring will lag in economic expansion for months.

Ms. SHIERHOLZ: It's not going to go fast enough that will be generating enough job growth to start bringing that unemployment rate down until probably the third quarter of next year.

LANGFITT: Shierholz predicts the unemployment rate will top out around 10.3 percent towards the end of next summer.

Frank Langfitt, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Frank Langfitt is NPR's London correspondent. He covers the UK and Ireland, as well as stories elsewhere in Europe.