Chicago job market follows nation, nosedives; Won't pick up until spring '09

Unemployment in the greater Chicago area increased significantly over the last year, but dipped slightly from July’s five-year high, according data released Tuesday by the U.S. Bureau of Labor Statistics.

Because of the ongoing financial crisis, economists said they expect the coming months to be bleak for the labor market.

The
number of unemployed people in the Chicago, Naperville, and Joliet Metropolitan area was 349,898 in August, or 7.1 percent of the civilian labor force, according to the BLS data, which includes parts of Indiana and Wisconsin.

The area unemployment rate increased 2.1 percentage points from 5.0 percent in August of 2007 and dipped 0.2 percentage points from 7.3 percent in July of this year.

Chicago’s unemployment rate was higher than the national rate of 6.1 percent, up from 5.7 percent in July and 4.7 percent a year earlier.

"The
structure of the economy in Chicago is the structure of the economy at the national level," said economist Adolfo Laurenti of Mesirow Financial in Chicago. "The two go up and down together."

Midwest
BLS economist Paul LaPorte agreed that the local employment statistics were in line with the national picture, and said the number of payroll employees in the area was down 0.1 percent for the year compared with a 0.3 percent decrease nationally.

"Some industries are suffering more than others: construction, manufacturing," Laporte said. "On the
other hand payrolls were up 8,600 in education and health services."

Education
and Health Services was one of few industries to grow over the year. It increased by 1.5 percent in the Chicago area according to the BLS data.

The
construction, financial and manufacturing industries suffered the biggest losses respectively. The number of construction jobs in the area decreased by 7,900 positions, down 3.5 percent from last year, according to the data.

"The labor market really has taken a nosedive," said John Challenger, CEO of a Chicago-based outplacement company that assists displaced workers.

"There are more people in the labor pool and at the same time the number of jobs is shrinking," said Challenger.

Laurenti
said the impacts of the labor market would be spread across skill and education levels, from construction workers to white-collar workers in he financial industry. He added that young people might be under the most duress. "This is not a good economy to look for your first job,"
Laurenti said.

Both Laurenti and Challenger expressed concern about the retail industry, which they expect to suffer from reduced
consumer spending.

Laurenti said the labor market would not get better until the spring of 2009.

"The
best case scenario would be to break even at the current level," Laurenti said. "It’s probably more likely that we will continue to lose jobs."

"It has been slow coming in," said Challenger of the rising unemployment rate, "so I think it’s going to be slow going."

Regarding
September’s market turmoil and the ensuing credit crunch, LaPorte said, "Obviously there may be some fallout. If people loose their jobs there, we’ll pick it up in our numbers."