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March 5th, 2010
12:03 PM ET

Financial Dispatch: Unemployment rate holds steady at 9.7%

Andrew Torgan
CNN Financial News Producer

It’s the report that Wall Street and Main Street have been waiting for all week: the government says the economy shed 36,000 jobs last month, while the unemployment rate held steady at 9.7%. Both readings came in better than expectations.

But the results were still worse than the previous month, as just 26,000 jobs were lost in January, according to the revised estimate.

Also, the government said the winter storms that blanketed the East Coast with several feet of snow last month possibly skewed the results. The Labor Dept.'s jobs survey was conducted in the middle of February, which coincided with blizzards that temporarily shuttered some businesses and kept many workers home without pay. Those employees would not have been counted on the government's payroll survey.

Construction continued to be one of the worst-hit sectors, cutting 64,000 jobs in February. Retailers trimmed 400 jobs after adding 41,000 positions in January. Manufacturing businesses added just 1,000 jobs, down from 20,000 new jobs the month before.

But several industries showed solid gains in employment, including health care and the service industries. Also encouraging was the addition of 47,500 temporary workers, whose hiring often signals that employers are starting to gear up again.

All told, nearly 15 million people unemployed – or roughly the populations of Pennsylvania and Nevada combined.

Still, the number of workers who were seeking full-time employment but were working only part-time hours rose, pushing the so-called “underemployment rate” up to 16.8% from 16.5% in January.

The silver lining

So is there any good news? Well if you are lucky enough to have a job, your paycheck may be starting to get bigger – and that’s a sign of improvement in the job market.

Even a small gain in income is significant. If consumers have more money in their pockets, that can help to boost consumer spending and create the demand that will prompt a resumption of hiring.

According to the government's report, average hourly earnings have risen by nearly 2% over the past 12 months. And that's not the only evidence of a turnaround in pay.

An analysis of income and employment taxes withheld from more than 130 million U.S. workers by TrimTabs Investment Research found that total salaries and wages increased by 0.7% in February compared to a year ago. This is the first increase since 2008, and it represents $42 billion extra dollars in consumers' pockets compared to a year ago.

Job creation bill heads back to Senate

It’s all still a work in progress though… and lawmakers' efforts to spur job creation were delayed once again Thursday after the House amended a $15 billion Senate bill before passing it.

The amendments mean the Senate must again approve the four-prong measure, this time with no changes, if President Obama is to sign it into law. The Senate may not take up the legislation until next week.

The bill would exempt employers from Social Security payroll taxes on new hires who were unemployed; fund highway and transit programs through 2010; extend a tax break for business that spend money on capital investments, such as equipment purchases; and expand the use of the Build America Bonds program, which helps states and municipalities fund capital construction projects.

However, the House added two provisions to pay for the infrastructure spending and corporate tax breaks. The amendments require foreign financial institutions to give the IRS more information to help it catch tax cheats, and delays a tax break for foreign interest payments. The measure passed by a 217-201 vote.

Tax breaks for job seekers

We all know that job hunting can be expensive. The costs of hiring career coaches, printing hundreds of résumés at Kinko's and flying out for job interviews can really add up, especially for someone who doesn't have an income.

But finally, there's a benefit to being unemployed: job seekers can deduct search-related expenses, including employment and outplacement agency fees, travel costs and résumé costs. Your job search doesn't even have to result in employment for you to qualify!

Check out the details on CNNMoney.com.

Follow the money… on Twitter: @AndrewTorganCNN


Filed under: Andrew Torgan • Economy • Finance • Job Market • Unemployment
soundoff (One Response)
  1. Tim Gibson

    Hot water is better than no water at all, seems to be the silver lining we often hear. Hey, could have been worse. Tell that to the wild eyed wildebeest caught in the jaws of the croc in crossing the river.

    A decline came from more than a snowball fight.

    March 5, 2010 at 12:34 pm |