San José, CA – Working people had less to celebrate over the holiday weekend as the number of jobs fell for the sixth month in a row in June. On July 3, the U.S. Department of Labor reported that there were 62,000 fewer jobs in June as compared to May and increased their estimates of job losses for previous months. All told, businesses have shed almost one-half a million jobs since January. Six straight months of job losses has always meant a recession is underway in the past. At the same time, the number of people applying for unemployment benefits jumped to more than 400,000, a level typical of a recession.

The official unemployment rate stayed at 5.5%, the same as May, but up a percentage point from a year earlier. However this was largely due to a large number of unemployed giving up on looking for work, as the number of jobs fell but the number of unemployed (and looking for work) stayed the same. One reason for giving up the job search is that more and more of the unemployed are unable to find jobs for six months or more, with almost one-fifth of the unemployed out of work for more than a half year. The median length of unemployment jumped from 8.3 weeks in May to 10 weeks in June. The median, or time where half have been unemployed longer and half shorter, was only 6.2 weeks just one year go.

The official unemployment rate also covers over the growing number of underemployed, especially workers who have to take part-time work because no full-time jobs are available. These numbers have been growing as businesses and government find it cheaper to hire part-time workers who they can pay less and offer fewer or no benefits. The percentage of workers with part-time jobs because of the state of the economy increased from 6.6% in May to 7% in June (vs. 5.6% a year ago).

Latino communities were the hardest hit in June, as the unemployment rate for Hispanics rose from 6.9% in May to 7.7%. The unemployment rate for Latinos has risen by two percentage points over the last year, more than twice the rate of the overall increase in unemployment (+ 0.9%). This sharp rise reflects both layoffs in construction, where many Latinos work, and the ‘last hired, first fired’ practice that keeps the unemployment rate for oppressed nationalities higher than whites.

In the last week of June, new claims for unemployment insurance benefits increased by 16,000 from 388,000 to 404,000. This level of claims for unemployment benefits was last seen in 2003 in the aftermath of the last recession, and is up by 100,000 claims or one-third since a year ago. More and more household name businesses from American Airlines to Starbucks are announcing major layoffs, as the slowing economy and rising prices of fuel squeeze corporate sales.

While the mainstream media did cover the dire situation in the job market, news that two-thirds of states could run out of funds to pay unemployment benefits in the next year attracted little coverage. All told, states have only $38 billion in their benefit funds, as compared to the $54 billion they held in 2001 just before the last recession. Even worse, about one-third of states could run out of money in six months, and a few, such as Michigan, are already borrowing from the federal government to pay their benefits. This lack of funding for a key safety net program is a result of the pro-business, anti-tax the wealthy policies widespread at the state level. Low unemployment insurance premiums charged to businesses increase profits, but leaves the unemployed and needed state social programs at risk during a recession.

The federal government’s tax rebates designed to stimulate the economy did manage to keep consumer spending from falling along with job losses, with one big exception: the sales of new cars tanked in June, falling about 20% from a year earlier. While the tax rebates did help many households keep a square meal on the table and fuel in the gas tanks despite the soaring cost of food and gasoline, the rebates could not support sales of cars and other big-ticket items, which typically fall during a recession. With car sales slumping despite another round of price cuts, look for even more layoffs in the auto industry in the future.

While the Bush administration is almost pathetically trying to insist that the economy will avoid a recession, some economists are calling for more and even greater spending by the federal government. Most (but not all) recessions have a ‘double-dip’ pattern, where the initial slowdown is followed by an even greater drop months later. With households burdened by debt, falling home prices and growing layoffs, while businesses are cutting back on investment in new plants and equipment because of falling sales and state and local governments having to cut spending or raise taxes, the second half of the year could be even worse than the first half. A second dip caused by a vicious cycle of less spending leading to more layoffs and then even less spending could emerge.

Even worse, corporations and governments try to put the burden of the recession on working people and the poor. Corporations are laying off while paying outrageous salaries to their top managers, or going into bankruptcy to slash wages and benefits, while often paying their managers bonuses to ‘stick around.’ State and local governments try to cut welfare and health care rather than raise taxes on the rich.

Only the federal government has the ability to try to borrow and spend blunt the affects of the downturn. However the federal government is limited by the trillions of dollars already borrowed to pay for Bush’s tax cuts and wars in Iraq and Afghanistan. It will take a massive people’s movement – to end the war, end the tax cuts for the rich and force the government to pay for social programs, infrastructure, aid to distressed state and local governments and help households in danger of losing their homes – to lessen the effects of the recession while making the rich pay.

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