Pace of job cuts quickens in Mass.

Unemployment rate highest in 15 years as recession deepens

Massachusetts' economy unraveled quickly last month as the state shed jobs at a faster pace than the nation and the unemployment rate soared to its highest level in more than 15 years.

Massachusetts employers cut nearly 17,000 jobs in December, slashing payrolls at a 6 percent annual rate, or the rate at which jobs would be cut if it continued at the same pace over the next year. Nationally, employers cut jobs at a 4.5 percent annual rate in December.

The state's unemployment level jumped by a full percentage point last month to 6.9 percent, the highest since October 1993, the Executive Office of Labor and Workforce Development reported yesterday. The unemployment rate has risen 2.6 points since December 2007, and the number of unemployed has increased by nearly 90,000.

Adding to the dismal news, the state reported that job losses in November were worse than initially estimated. Employers cut 22,000 jobs in November, about 14,000 more than first reported. Over the past two months, the state has shed nearly 40,000 jobs, the worst two months of losses since the recession of the early 1990s.

"It's like we're on a bungee cord," said Alan Clayton-Matthews, an economic analyst and professor of public policy at the University of Massachusetts at Boston. "We're free falling, and it's not clear where the bottom is."

Job losses in December were broad. Only two major employment sectors added jobs. Information, which includes software publishers, gained 200 jobs. Government added 500.

Nearly all government job gains were reported in state government, which includes not only state agencies and the Legislature, but also courts and public authorities such as the Massachusetts Port Authority, the Massachusetts Bay Transportation Authority, and the Massachusetts Turnpike Authority.

The Patrick administration has done some hiring in the Division of Unemployment Assistance to deal with the surge in jobless workers. But overall, administration officials said, the executive branch has cut about 300 jobs since the end of November and 500 since October.

In addition, administration officials noted, the employment numbers reported yesterday are based on a survey and are not necessarily precise. With total employment of about 3.2 million in the state, 500 jobs are well within the survey's margin of error, they said.

December's steep job losses reflect the impact that the national recession is having on the state, despite hopes last year that Massachusetts might avoid the worst. Into the summer, the state continued to add jobs even as the nation shed them. But that changed in September, when the recession took a sharp turn for the worse.

Since then, major Massachusetts employers have quickened the pace of planned layoffs. This week, Bose Corp., the Framingham maker of audio products, said it would cut 1,000 US jobs, but did not disclose the number of Massachusetts workers affected. EMC Corp., the Hopkinton technology firms, this month said it would cut 600 jobs in Massachusetts. Several financial firms, including Fidelity Investments of Boston, Bank of America Corp., and Citizens Financial Group have disclosed layoffs expected to affect hundreds of Massachusetts employees.

As a result, sectors that typically drive the state's job growth are getting hit. Professional and business services, which includes scientific and technical firms, lost 7,500 jobs in December. Education and health services, which includes universities and hospitals, lost 700 jobs. Financial services, battered by the Wall Street meltdown, shed 900 jobs in December.

Over the past year, financial firms have cut 7,000 jobs. Employment in the sector is at its lowest since the end of 1997, said Elliot Winer, chief economist at the state Department of Workforce Development.

"We're really starting to feel the full force of the national recession," Winer said. "It's starting to affect all our industries."

Hardest hit: construction. With both housing and commercial real estate slumping, construction firms have cut more than 11,000 jobs, or 8.5 percent of employment over the past year. In comparison, overall state employment has declined a little more than 1 percent, or about 44,000 jobs.

Tim Fraser, president of Commonwealth Resources Inc., a staffing firm that specializes in the construction industry, said his company is now dealing with "hordes" of laid-off construction workers seeking jobs.

"There's many who I thought would never be out of work," he said. "With their quality and talent, they were always people who had jobs, but now they're finding themselves without one."

Robert Gavin can be reached at rgavin@globe.com.