As economy sheds jobs, workers toil for smaller wages
June employment losses larger than analysts predicted
WASHINGTON - Americans lucky enough to still have a job are noticing something unpleasant in their paychecks: They’re making less money.
Employers cut 467,000 jobs in June, far more than expected, and the jobless rate hit a 26-year high of 9.5 percent. Just as worrisome, wages shrank to their lowest in nearly a year.
The bleak news yesterday from the Labor Department underscored one of the big threats to an economic turnaround: Rising joblessness and falling wages for those still working could send Americans back into spending hibernation and short-circuit any recovery.
President Obama acknowledged concern. “What we’re still seeing is too many jobs lost, too many families who are worried about whether they’re going to be next in terms of job loss, or whether they can find another,’’ he told the Associated Press.
The falling wages come from furloughs, pay freezes, and pay cuts imposed by employers across the country. Many also have cut hours: The average work week in June fell to 33 hours, the lowest on records dating to 1964.
Nathan Bieber, 26, who works at Einstein Bros. Bagels in Phoenix, works 28 to 30 hours a week now, down from his previous 37 - a loss of up to $100 weekly. He’s canceled his Internet service and deferred payments on student loans six times.
His wife, who is legally blind and works at another Einstein Bros. location, has had her hours slashed from 30 to 15. They rely on her disability pay for rent and the electricity bill.
“If it weren’t for that,’’ he said, “we’d be homeless.’’
The bleak jobs news sent stocks sinking. All the major stock indexes finished down more than 2.5 percent, including a 223-point drop for the Dow Jones industrial average, its worst performance in more than two months.
Job losses had decreased every month since January, but they rose in June. The 467,000 job losses were up from 322,000 in May and far worse than the 363,000 economists were expecting.
By comparison, the rise in the unemployment rate for June was small, up just a tenth of a percentage point to 9.5 percent. Many economists predict it will hit 10 percent this year and keep rising into next year before falling.
Including laid-off workers who have given up looking for jobs or have settled for part-time work, the so-called underemployment rate was 16.5 percent in June, the highest on record dating to 1994.
The recession has taken out 6.5 million jobs in about a year and a half. All told, nearly 15 million people were considered unemployed in June.
“The job market will become the Achilles’ heel of the coming recovery,’’ said Sung Won Sohn, an economist at California State University, Channel Islands.