Spurce: U.S. Lost 33,000 Jobs in September; Unemployment Rate Dips to 4.2% by By

Question

Spurce: U.S. Lost 33,000 Jobs in September; Unemployment Rate Dips to 4.2% by By PATRICIA COHEN

link: https://mobile.nytimes.com/2017/10/06/business/economy/jobs-report-unemployment.html?referer=https://www.google.com/

QUESTION: After reading this article briefly summarize it. Answer the following questions.

Do you think at this rate unemployment will reach a higher percentage after reading this article?Why or why not? How can the government create jobs to reduce unemployment? What rate of unemployment is acceptable in this situation?

Explanation / Answer

The NYT article by Patricia Cohen examines the impact of hurricanes Harvey and Irma (that hit southern states like Florida and Texas) on the Sep 2017 US job/employment statistics. It highlights that the month in question witnessed job losses to the tune of 33,000 while unemployment rate dipped to 4.2% (Bureau of Labor Statistics). Carl Tannenbaum, chief economist for Northern Trust, acknowledges the impact of the hurricanes on the numbers and expects employment figures to stabilize as the impact peters out. Bruce Gropper, who runs a home-care franchise in Florida, admits putting hiring on hold due to the adverse climatic conditions. Ray Perryman, president of the Perryman Group in Texas, points out a lot of manufacturing sector jobs were lost as plants had to be shut down. Jim O’Sullivan, chief United States economist at High Frequency Economics, expects payrolls to bounce back by the end of the year, citing the analogy of hurricane Katrina and its aftermath in 2005 for reference purpose. The stock market has taken the incident in its stride with President Trump tweeting that unemployment is at the lowest level in 16 years and business and manufacturing enthusiasm at the highest level in decades.

Do you think at this rate unemployment will reach a higher percentage after reading this article? Why or why not?

It appears unlikely the Sep data would be reflective of the year as a whole. Jim O’Sullivan, chief United States economist at High Frequency Economics, agrees that 'the labor market was still pushing ahead — no matter how unevenly — in what is now the ninth year of an economic expansion.' He adds that other data does not signal a weaker trend and the increase in jobless claims is offset if data from the hurricane affected states is taken out. The stock market appears to have discounted the news, with the S&P 500 benchmark index declining only slightly from record high levels. The sentiment is echoed by other observers as well.

How can the government create jobs to reduce unemployment? What rate of unemployment is acceptable in this situation?

The article does to cover much about governmental efforts to create jobs or reduce unemployment but it does mention the initiatives of corporate businesses in this regard. Retail chain Target says it would increase its base hourly pay by $1, to $11, which is higher than or equal to the minimum wage in every state. Amy Glaser, sr. VP of Adecco Staffing, says employers she worked with were raising wages and reaching into less common pools of potential employees like retirees, stay-at-home moms and people with disabilities. She adds some businesses are trying to generate and educate their workforce by offering more paid internships and apprenticeships, as also shortening the interview cycle to improve their chances. E-commerce giants like Radial are hiring additional people to staff their warehouses.

The author concludes towards the end that the hurricane Katrina experience of 2005 showed that hiring can rebound quickly after a natural disaster, as damaged communities clean up and rebuild. She cites the example of the city of New Orleans where employment gains averaged 249,000 in the six months before the terrible storm, but soared to 341,000 by the end of 2005. It seems likely that the pattern would repeat itself this time round as well and the rate of unemployment by the end of the year may not be a matter for undue concern.

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