Joblessness Hits 6.8%, Highest in Over 4 Years

The nation’s unemployment rate shot up sharply in March, the government reported Friday, indicating that workers are continuing to feel the pain of the recession despite some early signs that the slump may be nearing an end.

The Labor Department’s monthly report showed the jobless rate at 6.8% of the work force in March, up from 6.5% in February. The March rate was the highest in more than four years.

The department said that the unemployment rate for California soared to 7.7% in March, up from 7.4% in February and 7% in the previous month, as the total number of residents out of work rose to 1.12 million.

The report said that industries cut their payrolls nationally by an additional 206,000 people in March, marking the sixth month in a row that the number of jobs shrank. The department revised sharply upward the job loss figure it had reported for February--to 290,000, from 185,000.

Richard W. Rahn, economist for the U.S. Chamber of Commerce, said the figures show that the economy “is still in a serious decline and likely will continue to contract unnecessarily through the fall unless something is done.” He called for tax cuts to reverse the slump.

Lane Kirkland, president of the AFL-CIO, agreed that the recession is serious. “Today’s figures show that those who say this is a mild recession and that it’s almost over are dead wrong,” he said. “The Administration and Congress ought to face up to that fact.”

The deterioration prompted new speculation that the Federal Reserve Board will take steps to push interest rates down further--possibly by reducing the discount rate, which it charges banks for overnight loans. That, in turn, would push down rates for consumer and mortgage loans.

“The economy is in a deep and serious recession, and this jobs situation is emerging as a policy problem for Washington,” said analyst Allen Sinai, chief economist at Boston Co. The Federal Reserve “should ease (interest rates) and ease soon,” he said.

But some economists suggested that the Fed is more likely to wait until next week, when the government is scheduled to publish two key reports on inflation, before deciding whether to push interest rates down.

The Fed has cut interest rates twice in the last two months, after the publication of disappointing jobs data. But it has been reluctant to move too rapidly, for fear of rekindling inflation.

The grim March unemployment figures, combined with investors’ suspicion that the Fed will not act immediately, sent the stock market plunging. The Dow Jones industrial average closed at 2,896.78 on Friday, down 27.72 points from the previous day.

Top government policy-makers have been hoping that the early end to the fighting in the Persian Gulf would boost consumer confidence enough to turn the economy around. Traditionally, however, business is slow to rehire laid-off workers.

As a result, they said, the unemployment rate probably will continue to climb well into late summer--and possibly the early fall.

The March increase in unemployment brought the total number of Americans out of work to 8.6 million, up 410,000 from February’s levels. Since the unemployment rate began rising in June, the economy has lost 1.3 million jobs.

As has been the case in previous months, the bulk of the layoffs in March was concentrated in manufacturing, construction and trade. Factory payrolls fell by 90,000, less than the 150,000-job decline in February. More industries lost jobs than added them.

And the slowdown in demand for manufactured goods continued to spill over into the service sector. The number of jobs in retail trade fell by 50,000 in March, after a big decline in February. Employment in business service industries remained exceptionally weak.

The increase in unemployment was spread across virtually all major categories of workers. The jobless rate for adult men rose to 6.5% of the work force, from 6.3% in February, as the rate for women surged to 5.7%, from 5.4%.

As is typical in such cases, the unemployment rates for blacks, Latinos and teen-agers rose sharply. The rate for blacks jumped to 12.3% in March, from 11.8% in February. For Latinos, the rate rose to 10.3%, from 9.5%, and, for teen-agers, it reached 18.7%, from 17.1%.

The continued deterioration in the job market was reflected in several other key statistics in Friday’s report:

--The number of people who are working part time because they cannot get full-time jobs continued in March at just over 6 million, its highest level since late 1983.

--The number of so-called “discouraged” workers--those who have stopped looking for work because they believe a job-search would be futile--rose to 997,000 over the quarter, up from 941,000 in the final three months of 1990.

--The length of the average factory workweek declined to 40.1 hours--down two-tenths of an hour from February levels and almost a full hour below those that prevailed last summer, signaling that businesses are cutting back further on overtime.

The figures on California showed that the state lost 221,000 jobs in March, after a gain of 105,000 in February. The unemployment rate in California has risen steadily since last summer. A year ago, it was only 5.2%--far below the 7.7% level that now prevails.

Details of California’s economy in Business.

Unemployment Percent of work force, seasonally adjusted Mar. 1990: 5.3% Feb. 1991: 6.5% Mar. 1991: 6.8% Source: U.S. Dept of Labor