Posted on Fri, Sep. 05, 2008
last updated: September 03, 2010 08:08:18 PM
WASHINGTON — The combination of falling home equity, the rising cost of food, health care and housing, tighter credit and eight straight months of job losses — 84,000 in August alone — has put the squeeze on middle-class families struggling to stay afloat in a slumping economy.
Although economists haven't yet labeled the economic downturn a recession, every time payrolls have declined this consistently since 1948 the economy has been officially in recession, according to the Economic Policy Institute, a Washington-based liberal think tank.
"We view this as a crisis economy for American workers," said Andrew Stettner, deputy director of the National Employment Law Project, a pro-labor advocacy group in New York. "It really adds up to a lot of hardship and a lot of uncertainty for people looking for jobs and a lot of insecurity for everyone who's already working."
For job hunters, this summer has been unforgiving. The number of people out of work for six months or more jumped by 160,000 from July to August. And the number of workers who want full-time employment but can't find it has hit 10.7 percent — a recessionary level, according to economists Jared Bernstein and Heidi Shierholz of the Economic Policy Institute.
Even college graduates are feeling the pinch. Their 2.7 percent unemployment rate is the highest since 2004, while the 9.6 percent unemployment rate for workers without a high-school diploma is the highest since 1996.
Most of the August job losses were again in the manufacturing sector, which shed 61,000 positions, the most in five years. In the past seven years, 20 percent of manufacturing jobs have disappeared despite improving U.S. export numbers, said Scott Paul, executive director of the Alliance for American Manufacturing.
"For those naive forecasters and pundits who believe that higher international shipping costs, more exports and a weaker dollar will inevitably lead to an American manufacturing renaissance, this is surely disappointing news," Paul said.
While hourly wages have grown 3.6 percent compared with last year, they're still being outpaced by inflation. The most recent inflation figures for July show that prices are up 5.6 percent over 2007 — which means less buying power for consumers.
Food and beverage costs are up 5.8 percent from July 2007 to July 2008 and have jumped 8 percent over the past three months.
Falling gasoline prices will help many families. But Ken Goldstein, an economist at the Conference Board in New York City, doesn't think that consumers dealing with rising inflation and health-care costs will notice much difference.
"It's not easing the squeeze on the household budget," Goldstein said of the falling price of gasoline.
Many companies already have cut employee health coverage or shifted more of the costs to covered workers through higher deductibles, co-pays and out-of-pocket spending. Currently, average annual worker contributions for single and family coverage are $694 and $3,281, respectively, according to the most recent data by the Kaiser Family Foundation.
But 59 percent of U.S. businesses plan to increase employee deductibles, co-payments and out-of-pocket spending limits next year, according to a new survey by Mercer, a New York-based consulting firm.
More from McClatchy:
McClatchy Newspapers 2008