The American Job Disaster Cities, States Grapple with Labor Market Free Fall

The United States is losing jobs at an alarming rate, with new waves of layoffs in the news almost every day. In some areas, local unemployment insurance funds are beginning to run out of money. Americans are now pinning their hopes on President Barack Obama's economic stimulus program.

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Visitors to a federal government job fair earlier this month in Atlanta. US President Barack Obama says the growing unemployment rate keeps him up at night.
AP

Visitors to a federal government job fair earlier this month in Atlanta. US President Barack Obama says the growing unemployment rate keeps him up at night.

The line stretches halfway around the block. Many of the roughly 1,000 people have been camping out for days here, in downtown Miami, hoping to be among the first to apply the minute the doors open at City Hall. The City of Miami's fire department is hiring for 35 new positions.

Available jobs have become a rarity in Florida, especially recession-proof jobs paying the kinds of salaries city workers earn.

The job market is fraught with uncertainty, especially here in Miami, with its tropical cityscape of glittering high-rises, palm trees and the turquoise ocean. The Miami metropolitan area, with its population of 5.4 million, has lost 60,000 jobs in the last few months. This is the greatest per capita job loss among all 363 Metropolitan Statistical Areas (MSAs) in the United States. Not too long ago, Miami was considered a booming region, with fast-paced development and virtually full employment -- and a party mood.

The construction cranes are idle today. The newly built skyscrapers are without tenants and unemployment has jumped to more than eight percent. Even the city's internationally renowned, and now financially strapped, ballet has had to lay off dancers.

The situation is almost as gloomy in the rest of the country, as the American economy slides downhill at an ever-increasing pace. Jobs are disappearing at a stunning rate -- much more quickly and drastically than even the most pessimistic prognoses had foreseen. The United States has already lost more than 3.6 million jobs since the recession began, with 1.8 million of those jobs having disappeared in the last three months alone. The current downturn marks the steepest plunge in the labor market since 1974, and the recession is not over by a long shot.

Economic experts and the president are increasingly consternated. "The economy is collapsing at an alarming rate," says President Obama. "Only a few months ago, most economists would not have believed that this was possible."

Slashing Jobs in every Sector

Meanwhile, hardly a day goes by without new announcements of major layoffs across all sectors. Aircraft manufacturer Boeing is laying off 10,000 workers. Photo giant Kodak is cutting its workforce by 4,000, while home improvement chain Home Depot is letting 6,000 people go. Retail electronics giant Circuit City has gone out of business, putting 30,000 people on the street, while department store chain Macy's has said goodbye to 7,000 employees.

The list of horror reports in the job market just keeps on growing. One of worst days was "Black Monday" in late January, when the papers published page after page of stories about layoffs. Sixty-five thousands jobs were lost in a single day -- and that figure only included the layoffs at large companies typically reported in the media.

Graphic: Free fall
DER SPIEGEL

Graphic: Free fall

Companies in industries severely shaken by the crisis, like the auto and financial industries, are no longer the only ones laying off large numbers of employees. Companies that are still profitable have also begun letting workers go, apparently as a precautionary measure -- in preparation for a prolonged recession.

Starbucks, for example, plans to lay off 7,000 employees, while pharmaceutical manufacturer Pfizer is letting 8,000 workers go. Even software giant Microsoft has announced layoffs -- the first time in the company's history -- of 5,000 employees.

Within a year, the nationwide unemployment rate has risen from 4.9 to 7.6 percent. The president has been surprisingly open in showing his concern, admitting that it keeps him up at night.

Obama's $790 billion (€632 billion) economic stimulus program, approved after a long fight with Congress, is intended to create or preserve up to 4 million jobs.

But there is great skepticism. The plan doesn't provide enough funding to create a sufficient number of new jobs, say many economists. Meanwhile, the president's political rivals claim that too much money is being wasted on ineffective measures with no impact on the labor market.

Gloom in the 'Carpet Capital of the World'

"Our problems certainly haven't been solved in Washington in the past," says David Pennington, the mayor of Dalton, Georgia. A small manufacturing city in the northwestern part of the state, Dalton prides itself on being the "Carpet Capital of the World." Dalton and the surrounding region is home to 80 percent of all carpet production in the United States. As long as the Americans were building houses at a steady rate, business in Dalton was booming. The streets are well-kept and the city boasts a carefully restored historic downtown.

But with the sharp downturn in new home construction in the United States, the demand for carpeting has plummeted. As a result, unemployment in Dalton has more than doubled in the last 12 months, from five to 11.2 percent.

President Barack Obama in Denver on Feb. 17: "The economy is collapsing at an alarming rate."
AP

President Barack Obama in Denver on Feb. 17: "The economy is collapsing at an alarming rate."

"It's actually a lot higher than that," says Brian Anderson, president of the local chamber of commerce, explaining that the figures only reflect those who file for unemployment benefits. All across the United States industrial jobs, including those at Dalton's carpet factories, are attracting immigrant workers. Most are Mexicans, and many are in the country illegally. Instead of filing for unemployment when they lose their jobs, they simply leave.

In the somewhat run-down eastern part of Dalton, where supermarkets and restaurants have Spanish names, like La Providencia or El Taco, there are many empty storefronts and boarded-up windows.

The economy is also struggling elsewhere in the city. Workers who have been laid off are less likely to go out to eat at the local pizzeria or shop for clothes at stores on Main Street.

Two of the anchor stores at the local shopping mall have already closed. Even more people have been let go, adding to the ranks of local residents with no disposable income left for consumption.

Two-thirds of the US economy depends on domestic demand. The less Americans consume, the worse the crisis will get. "We have to break this vicious cycle," says President Obama.

The unemployment office in Dalton is filled with tired faces, on both sides of the counters. Danny Cope, who manages the office, says it gets 500 calls a day. The waiting room is crowded with people, but few of them stand a chance of finding a new job. "If you've worked in a carpet factory for 20 years," says Cope, "you don't have many qualifications to do anything else."

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