San José, CA – On March 6, the Labor Department reported that the economy lost 650,000 more jobs in February. The report also said that the number of jobs lost in December and January was revised upwards by 150,000. This brought the total job losses since the recession began to 4.4 million, more than half lost in the last four months alone. The total number of jobs has shrunk by 3.2% since the recession began, the most in more than 50 years.

The official unemployment rate rose to 8.1% in February from 7.6% in January, the highest in more than 25 years. With more and more workers having their hours cut, a broader measure of unemployment including part-time workers who can’t find full-time work and those who have given up looking for work, rose to 14.8%, the highest rate on record.

Oppressed nationalities, who have historically been ‘last hired, first fired’ continue to be hardest hit by rising unemployment. African Americans had the highest rate of unemployment among the nationalities reported (the Labor Department doesn’t report unemployment figures for Native Americans) at 13.4%. Latinos saw the biggest one-month jump in unemployment, up 1.2% to 10.9%. Unemployment among Asian Americans is rising at the fastest rate, with their unemployment more than doubling, from 3% to 6.9% over the last year.

The national unemployment rate is an average, with many local areas being much harder hit. Here in California, the statewide unemployment rate topped 10% in January, when the national rate was 7.6%. Three counties had unemployment rates of over 20%, with the highest, Colusa County, having an unemployment rate of 26.7%. While Colusa is a small, rural county, Santa Clara County, home of Silicon Valley with a population of almost two million, had an unemployment rate of 9.3% in January.

The rising unemployment rate is fueling an increase in late mortgage payments. Earlier in the week the Mortgage Bankers Association reported that mortgages late at least 30 days jumped to new highs at the end of 2008, with more than 11% of all home-buyers behind on their payment or in foreclosure. Their report also noted that the problem was shifting from one of bad loans to the growing unemployment rate, as the delinquency rate on subprime adjustable rate mortgages fell (although still at more than 20%), while the delinquency rate on prime mortgages topped 5%. The location of late mortgages and foreclosures also spread from the housing bust states of California, Florida and Nevada to states where housing prices didn’t boom but which are racked by rising unemployment.

The rising unemployment rate is also causing an increase in personal bankruptcies. Over a million people filed for bankruptcy in 2008, up 31% from 2007. This was more than any year other than 2005, when many more filed to beat the new bankruptcy law, which made it harder and more expensive to file. The continued growth in mortgage delinquencies and bankruptcies is putting even more strain on the financial system. Bank loan losses, which started with subprime mortgages, have spread to prime mortgages, credit cards, auto loans and student loans.

More and more economists are saying that the soaring unemployment rate is pointing to a permanent restructuring of the U.S. economy. Many if not most of the jobs lost are not coming back: with millions of empty homes, construction will be slowed for years. Auto sales are down by almost half and more and more factory jobs being offshored; manufacturing jobs will not recover. The United States had record numbers of retail stores closed and jobs in this sector may not come back. Finally, the financial sector is downsizing dramatically and many of these jobs, from the local mortgage broker to Wall Street, are gone for good.

The current government unemployment insurance program is geared towards temporary joblessness. With more and more signs pointing to a long period of high unemployment, government jobs programs, like the 1930s Works Progress Administration (WPA), are needed.

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In addition to jump in unemployment, there was also another increase in the number of workers who are working less than full-time. In December, there were 3.1 million part-time workers due to slack business conditions, up almost 20% from December of 2006. These workers are not counted in the official unemployment statistics, but workers facing shorter hours feel the pain of smaller paychecks and sometimes loss of part or all of their benefits. Increases in the number of part-time workers due to a slower economy often foreshadows more layoffs down the road, as businesses often try to cut workers’ hours before cutting their jobs completely.

The jump in unemployment hit African Americans and Latinos especially hard. While the unemployment rate for white workers rose 0.2%, from 4.2% to 4.4%, the unemployment rate rose three times as fast, or 0.6% for Blacks and Latinos, to 9.0% and 6.3% respectively. African American teenagers were hit especially hard, with a 5% jump in the unemployment rate, from 29.7% in November to 34.7% in December. In contrast, the unemployment rate for white teenagers was less than half as much, and actually fell slightly from November to December.

Recessions in the United States typically develop in three stages. The first stage is when overproduction of either new homes (as in the last two years) and/or business buildings and machinery (which happened before the last recession in 2001) starts to drag on the economy. The second stage is when the slowdown spreads to other sectors, leading to lower corporate profits and then less hiring and more layoffs. The point where the total number of jobs starts to shrink has traditionally marked the official beginning of a recession. The third stage is when the falling number of jobs leads households to cut back on consumer purchases and falling tax revenues lead to cuts in state and local government spending, marking a full-blown recession, with rising inventories of unsold goods going hand-in-hand with growing numbers of jobless workers and cuts in schools, libraries and other government services.

While the rate of price increases, or inflation, tends to fall in most recessions as businesses find it harder to raise prices, this is not always the case. During the 1970s, there were times of ‘stagflation,’ where a recession was combined with rising inflation. While many blame this on the price of oil, even more important was the falling value of U.S. dollar, which made imports of all kinds, not just oil, more expensive. With the dollar falling and record amounts of imports, it is no surprise that price increases have been coming faster and faster, squeezing workers’ purchasing power just as unemployment is rising.

During almost all past recessions, households have cut back on borrowing for consumer purchases. With household debt at near-record levels and with banks less and less willing to lend due to rising defaults on home mortgages, this is likely to happen again in the next recession. But the impact on the economy and on household standards of living could be much worse than usual because more and more workers have already turned to borrowing to pay for health care, food, transportation and other necessities.

Corporations and their politicians have also whittled down the power of labor unions and the social safety net that once provided more protection during recessions. In 2006, only 13.1% of workers were represented by labor unions, less than half of the rate in the 1970s. At the same time, today only about one in three unemployed workers are collecting unemployment benefits, because of changes in the law and in corporate hiring that makes it more difficult for jobless workers to collect benefits.

The coming year will be challenging for working people. Corporations are stepping up layoffs while cutting back on hiring, while maintaining the perks and privileges of their executives. California’s Republican governor is preparing for a 10% across the board spending cut that will mainly affect schools, health care and welfare, while vowing to keep tax cuts for the well-to-do. Renters are being evicted from foreclosed houses while record numbers of homes stand empty. More and more children will be losing their health insurance as their parents are laid off, while the Bush administration refuses to expand health care for children, while spending billions on the wars in Iraq and Afghanistan. This contrast between working people and the rich, between human needs and corporate profits, and between politicians’ claims to be “for the people” and their anti-people actions, are part and parcel of a capitalist system. Just changing the party in power in Washington, D.C. is not enough. What is needed is a grassroots fight back to make the rich pay and to hold the politicians accountable to the people.

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