Tuesday, November 20, 2001

Nevada, Hawaii
lead October rise
in unemployment

By Carlos Torres
Bloomberg News

Washington >> Nevada and Hawaii showed the largest increases in joblessness last month, reflecting declines in travel and tourism following the September terrorist attacks, a government report showed.

The unemployment rate in Nevada surged 1.5 percentage points to 6.3 percent in October, mostly due to declines in hotel and casino employment as people stayed close to home following the terrorist violence, the Labor Department said.

Las Vegas-based MGM Mirage Inc., owner of Bellagio, Golden Nugget and other casinos, said this month it fired or laid off 6,400 of its full-time workers after the attacks resulted in fewer gamblers going to its casinos.

Hawaii had the second-largest increase, a 0.9 percentage point jump to 5.3 percent, also due to the slump in tourism.

Earlier this month, the government reported that the unemployment rate for the nation as a whole rose to a five-year high of 5.4 percent in October, and companies eliminated 415,000 jobs, the most since May 1980.

Besides Nevada and Hawaii, the unemployment rate rose in 31 other states in October, the report showed. The rate fell in eight states plus the District of Columbia, led by a 0.6 percentage point drop to 4.3 percent in Arkansas, and was unchanged in the remaining nine states.

The jobless rate in New York rose to 5 percent in October from 4.9 percent the previous month. For New York City, the rate dropped to 6.2 percent from 6.3 percent. That may be a reflection of recently fired workers being discouraged about job prospects and therefore not looking for new jobs.

New York City lost 73,400 private sector jobs in October, a reflection of economic damage from the World Trade Center attack, City Comptroller Alan Hevesi's office said this month. The drop was the largest ever recorded since the Comptroller's office began compiling the seasonally adjusted monthly jobs data in 1987, said David Neustadt, a spokesman for Hevesi.

The prospects are dim for a rebound in U.S. employment. Total jobless benefit rolls soared to an 18-year high of 3.826 million for the week ended Nov. 3, Labor Department figures showed last week, a sign fired workers weren't able to find other employment.

The number of U.S. companies planning to add workers in the first quarter of 2002 declined to the lowest level in 18 years, according to a Manpower Inc. employment survey last week.

Of 16,000 employers surveyed, 16 percent said they intend to add workers from January through March. That's down from 27 percent expecting a hiring increase for the same quarter a year earlier.

Companies have been cutting payrolls in order to preserve profits as the economy slows. The economy shrank at a 0.4 percent annual pace between July and September, the largest decline since the first quarter 1991, at the end of the last recession.

Surveys show gross domestic product, the total value of all goods and services produced, will probably contract again in the final three months of the year. Two straight quarters of shrinking GDP would meet the most common definition of a recession.

The economic slowdown is evident in deteriorating state budgets. State government revenue growth has slowed "dramatically" as the U.S. economy has faltered, with 44 of 50 U.S. states suffering revenue shortfalls in the first four months of the current fiscal year, a report from the states this month showed.

More than half of the states are considering or have already enacted budget cuts, and 20 may tap reserve funds to balance this year's budgets, said the report from the National Conference of State Legislatures based in Denver.

Rising unemployment has also put a strain on state unemployment insurance trust funds. Twenty-three states currently don't have enough money in their funds to pay for more than a year's worth of benefits, according to a study by the Employment Policy Foundation, a Washington-based research group.

A 2 percentage-point increase in the insured unemployment rate from current levels, would mean as many as 35 states will fall into that category, the report said.

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