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Citizens for Limited Taxation

State tops US in job loss rate
Mass posts 6.2% decline since '01 peak
Thursday, March 11, 2004
Stephen J. Glain Boston Globe
WASHINGTON -- Massachusetts lost jobs faster than any other state since employment peaked in 2001, according to figures released yesterday by the US Department of Labor.

The state suffered a 6.2 percent decline in jobs between January 2001 and January 2004, the highest rate in the nation and more than three times the national average drop of 1.7 percent for the period.

Massachusetts shed jobs across the board, according to the report from the Bureau of Labor Statistics.  In the past three years, employment fell by 20 percent in manufacturing, by 25 percent in information and telecommunication, and by 15 percent in the so-called professional and business sector, which includes a range of high-end and low-end service jobs.

Employment in New England declined 3.9 percent during the three-year period, according to the report.

"This is a powerful hit in both white-collar and blue-collar jobs," said Paul Harrington, associate director at the Center for Labor Market Studies at Northeastern University.  "We have to decide how we'll reinvent ourselves.  What will be the next engine of growth?"

Sustained joblessness and its causes are evolving into a key campaign issue.  Democrats are insisting US trading partners adopt higher labor and environmental standards, while Republicans oppose regulations that would inhibit companies from operating efficiently and cheaply offshore.

For now, say analysts, the political momentum favors the Democrats.  "There is a real concern out there about jobs," said Norman Ornstein, a political analyst at the conservative American Enterprise Institute.  "For Republicans, they've been blindsided by what has become a tricky issue." President Bush, who has stayed away from the issue even in the face of government data issued last week showing no private-sector job growth in February, addressed it in a campaign speech yesterday.  Bush condemned Democratic pressure to revise or even cancel trade agreements, warning protectionism would erode US competitiveness.  "The old policy of tax and spend is the enemy of job creation," Bush told supporters.  "The old policy of economic isolationism is a recipe for economic disaster."

Most economists agree the nation's employment picture is disappointing despite strong economic growth.  Not only is job creation limping along -- the economy grew only 21,000 new jobs in February, all from the public sector -- the quality of new positions is deteriorating.  Of the 290,000 payroll jobs created since last April, according to government figures, 215,000 have been temporary with limited benefits.

At the same time, more Americans have been out of work longer than at any period since the early 1980s -- about 40 percent of the nation's unemployed have been jobless for more than 15 weeks, say economists.  If those who quit the labor market were counted in the unemployment totals, the rate would top 7 percent, compared with the official level of 5.6 percent.

The economy has averaged a mere 60,000 new jobs each month for the past five months, well below the 150,000 or so needed monthly to absorb new entries into the job market.  It is down 718,000 jobs since the recession officially ended in November 2001 and has shed 2.2 million jobs since Bush took office in January 2001.

Some economists are concerned persistent joblessness could imperil economic growth, which in the second half of last year rose by sizzling 6 percent.

"The sluggish growth in jobs is a real concern," said Sung Won Sohn, chief economist at Wells Fargo & Co.  "Unless the labor market gains some steam and momentum, both real income and confidence of consumers would be hurt."

Economists diverge, however, on exactly what is restricting employment and whether jobs lost are gone for good or will be regenerated as part of a revived, more sophisticated economy.  Because US companies are not obliged to report jobs lost to operations overseas, it is difficult to quantify the effects of trade and outsourcing on the jobless rate.

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