The wild card of the U.S. auto industry has left metro Louisville with a tough hand on the unemployment front.
Metro Louisville’s jobless rate jumped nearly a full percentage point in May, according to a U.S. Department of Labor report released Tuesday. The May total shot up to 10.2 percent from 9.4 percent in April.
The national unemployment rate is 9.5 percent.
The May 2008 to May 2009 losses represent the biggest percentage decline since 1990, with more than 29,500 positions lost in that time locally, according to Uric Dufrene, Sanders chair of the Indiana University Southeast business department.
The year-over-year losses are grouped into four main categories, with cuts in the construction, manufacturing, transportation and utilities, and leisure and hospitality sectors accounting for 83 percent of the losses, according to Dufrene.
“The most significant acceleration in job losses occurred in manufacturing. Most of these losses were in durable goods, or specifically transportation equipment,” he said.
“Manufacturing losses are influenced by problems related in the auto industry. Other manufacturing sectors are also impacted by the national declines in consumer spending.”
Over the past three months, Dufrene stated the car industry would be the wild card for unemployment figures nationwide, especially in Indiana, though job loss counts had started to improve during that time.
Setbacks continued to mount for U.S. automakers General Motors and Ford, with the latest news impacting the foreign market of the companies. Both corporations suspended manufacturing in Russia on Wednesday.
“Having carefully studied the state of the Russian car market and the extent of the reduction in the demand from the creditworthy population, we have decided not to force a production increase at our Russian plant this year,” Chris Gubbey, GM Russia’s president, told the Associated Press.
New Albany did receive some good news on the employment front as it pertains to manufacturing. As first reported in The Tribune last month, local industry Kemper Foods International is planning an expansion that could bring 1,000 jobs to the city within a year.
On June 18, The New Albany City Council approved on first reading a measure to use $625,000 in tax-increment finance bonds to front bonds for Kemper’s expansion. The industry would use the new employees and machinery to serve food distributors.
As for the other sectors damaged by the recession locally, Dufrene said continued declines in building permits has impacted construction employment. With businesses and consumers purchasing less, there isn’t a great demand for transportation, warehousing and shipping services, he added.
Leisure and hospitality losses also reflect the overall downturn in consumer spending, Dufrene said.
“As households continue to save more and spend less, they are forced to cut back on discretionary items like going out to eat or other forms of entertainment,” he said.
Under House Enrolled Act 1379, several changes to the Indiana unemployment insurance system went into effect Wednesday.
Claimants must now submit one job application per week and must accept any offer of suitable work that pays 90 percent of their previous wage during weeks five through eight of receiving unemployment benefits.
After eight weeks, the claimant must accept work that pays at least 80 percent of their previous wage.
Now when vouchers are filed, the filer must submit one application per week and look for work at two other places in order to remain eligible for benefits, according to a news release from the Indiana Department of Workforce Development.
Previously, claimants only had to perform three work searches a week.
Another U.S. Labor study released Thursday showed the unemployment rate for workers with an associate degree rose to 8 percent in June, nearly double the rate from the same time last year.
The jobless rate for those with a bachelor’s degree or higher dropped slightly from May to 4.7 percent, but it too was still nearly double the mark of last June.
The unemployment rate for those with less than a high school diploma was 15.5 percent for June.
Dufrene said the reports are troubling and feels the federal stimulus package hasn’t done enough to boost employment nationwide. He explained that the economic problems are due in large part to the retrenching customer and that the solution is getting consumer confidence back.
“That could have been done with a significant boost to personal income, such as a tax holiday, or anything to place more money in the pockets of consumers,” Dufrene said.
“That would have provided a tremendous stimulus to industries that are hurting the most, such as manufacturing and retail. To be sure, the current stimulus package has had an impact, but I don’t think the [President Barack Obama] administration could be satisfied with the current results.”
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