Fewer workers are marching in the unemployment line, but the March employment report shows that many are not yet returning to work.
U.S. employers added 120,000 jobs in March, pushing the U.S. unemployment rate down to 8.2%, the Labor Department reported today (Friday). Economists were looking for 210,000 jobs to be added in March, and the unemployment rate to stay at 8.3% as more discouraged workers reentered the job market.
Most market participants will have to wait until Monday to react to the disappointing numbers as exchanges are closed in observance of the Good Friday holiday. However, the bond market is open in a shortened trading session, and the Dow futures tumbled some 111 points following the release.
The less than stellar March employment report conflicts with several recent private surveys that show the economy is improving.
The March Employment Report Numbers
In the previous month, employers added 227,000, slightly more than expected. February capped the best six-month streak for job additions since the height of the financial crisis in 2008.
Michael Erwin of CareerBuilder recently told ABC News, "Thirty percent of employers we spoke to say they plan to hire full-time positions in the second quarter." That compares with 24% in the last survey three months ago.
Erwin added, "The numbers are going back to where they were pre-recession so that's good news employers are back to the table, they're looking to hire."
Jobless claims are now down to their lowest level in four years, after falling to 357,000 in the final week of March, the Labor Department said Thursday in advance of the monthly jobs report.
While the decline in unemployment insurance claims is good news, it does not tell the whole story.
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The March Employment Report: Here's the Real Story with the U.S. Unemployment Rate
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High Unemployment Means More Job-Killing Taxes
The unemployment problem in this country has gotten so bad it's starting to sustain itself.
Essentially, high rates of unemployment have led to tax increases that are further suppressing hiring - thus making an already-ugly unemployment problem even worse.
That's bad news for thousands of prospective employers and millions of Americans.
And many states were forced to raise unemployment taxes to cope with the extra burden.
Employers in 2010 paid 27.8% more in state jobless taxes than they did in 2009. Employers in 24 states will have to pay between $21 and $63 more per employee following another tax hike in January 2012.
"Unemployment taxes, which were a relatively low bottom-line cost in 2008, are now becoming a significant cost," Doug Holmes, president of UWC - Strategic Services on Unemployment & Workers' Compensation, told CNNMoney. "It discourages companies from electing to hire new employees."
The extra expenses hit small businesses especially hard.
"We try not to hire because we will be socked by a bigger tax bill for unemployment insurance," Margery Keskin, an executive at four small construction-related companies in New York, told CNNMoney. Keskin said she's had to take money from bonuses and profit-sharing plans to pay higher unemployment taxes.
A quarterly survey released last week by the Business Roundtable found 24% of chief executive officers (CEOs) expect to cut U.S. jobs over the next six months, up from 11% in the second quarter.
Essentially, high rates of unemployment have led to tax increases that are further suppressing hiring - thus making an already-ugly unemployment problem even worse.
That's bad news for thousands of prospective employers and millions of Americans.
Paying for the Unemployed
Sept. 30 was the deadline for states to pay more than $1 billion in interest payments for loans used to cover unemployment benefits. It was the first time since the start of the economic downturn that states had to pay interest on federal borrowing.And many states were forced to raise unemployment taxes to cope with the extra burden.
Employers in 2010 paid 27.8% more in state jobless taxes than they did in 2009. Employers in 24 states will have to pay between $21 and $63 more per employee following another tax hike in January 2012.
"Unemployment taxes, which were a relatively low bottom-line cost in 2008, are now becoming a significant cost," Doug Holmes, president of UWC - Strategic Services on Unemployment & Workers' Compensation, told CNNMoney. "It discourages companies from electing to hire new employees."
The extra expenses hit small businesses especially hard.
"We try not to hire because we will be socked by a bigger tax bill for unemployment insurance," Margery Keskin, an executive at four small construction-related companies in New York, told CNNMoney. Keskin said she's had to take money from bonuses and profit-sharing plans to pay higher unemployment taxes.
Job Cuts Ahead
These additional costs are just the latest obstacles hitting the dismal U.S. jobs environment. While businesses are already uninterested in hiring new workers, the added expenses paired with the weak economic outlook will lead some companies to trim their workforce.A quarterly survey released last week by the Business Roundtable found 24% of chief executive officers (CEOs) expect to cut U.S. jobs over the next six months, up from 11% in the second quarter.
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