The recession took a severe toll on American workers in 2008 and employment forecasts for 2009 paint an equally grim picture. This makes it all the more important to gain a realistic perspective on projected job gains and losses for this year, as well as an understanding of the options available for the newly unemployed. And while losing a job may seem disastrous, it is far from the end of the road for most skilled workers.

The Current State of Employment
Recent reports show that U.S. employment is currently undergoing steep declines. In December, the Conference Board's Employment Trends Index showed a 13 percent decrease from the same period last year. This reflects a loss of nearly 2 million jobs in the U.S. economy through November 2008, and is the latest addition to a 16-month decline across all the market indicators used for compiling the report.

According to Automatic Data Processing's National Employment Report, the private sector lost approximately 250,000 non-farm jobs in November 2008. This figure includes 118,000 losses in the manufacturing industry. While much of the decline can be attributed to ailing big businesses, November saw recessionary effects expand among smaller companies, which accounted for nearly a third of the layoffs.

"Today's employment decline clearly indicates that the recession has now widened to include businesses of all sizes," the chairman of Macroeconomic Advisors, a firm that prepares the monthly ADP employment reports, recently said in a statement.

Economists are estimating that the U.S. lost 2.4 million jobs in 2008 — the most lost in any year since the end of World War II — according to the median estimate of economists surveyed by Bloomberg News ahead of Labor Department figures due later this week.

Toward the end of 2008, the unemployment rate rose to 6.7 percent, bringing the total number of Americans without jobs to an estimated 10.3 million, according to the Bureau of Labor Statistics. Roughly 604,000 industrial manufacturing jobs were lost since December 2007, with metal products, machinery and the automotive industry taking the largest hits. Factories, which make up 12 percent of the economy, shrank last month at the fastest pace in 28 years as new orders for products reached the lowest level since records began in 1948, the Institute for Supply Management reported last week; the employment index for December registered the lowest reading since November 1982.

According to the BLS's most recent available data, the states with the highest levels of unemployment are Michigan and Rhode Island, each with 9.3 percent. California is saddled with 8.2 percent unemployment, South Carolina with 8 percent, and Ohio, Oregon and Illinois come in at 7.3 percent.

The Forecast for 2009
While the employment figures from 2008 are sobering, the prospective job market for 2009 is not likely to show much improvement. Many researchers do, however, believe the decline will steady out in 2009 and eventually begin to reverse itself in the second half of the year.

The Financial Forecast Center expects the U.S. civilian (seasonally adjusted) unemployment rate to grow from 6.7 percent at the start of 2009 to 7 percent in March, eventually reaching 7.3 percent by May of the same year. Although gloomy, these projections are on the conservative side of other estimates.

The recession may stretch into late 2009, with high unemployment continuing into early 2010, according to a recent Wall Street Journal survey of 54 economists. Deteriorating financial conditions fueled by the credit and mortgage collapses, failing banks and a distressed automotive industry have these economists predicting a peak of 8.4 percent unemployment in 2009.

"The job market is ugly and is going to stay that way. The economy is going through the heart of reductions in the workforce now," a spokesman for Decision Economics told the Wall Street Journal.

In fact, the number of people who filed for unemployment benefits between December 14 and 20 was roughly 586,000, which, according to Forex TV, was the highest single-week unemployment increase since the previous peak in 1982.

However, this may not be the only record to be broken in the coming months, as the report claims that "the broad trend is still clearly upward." While the current total number of unemployed people filing claims or receiving benefits stands at approximately 4.37 million, the current rate of increases seems to indicate that in 2009 the number will surpass the earlier all-time record of 4.713 million, which was reached in November 1982.

Economists told Forex TV that the four-week average for initial unemployment claims has risen drastically since July 2008, and they predict that this trend of sharp average increases will continue into 2009.

While unemployment is expected to peak at 8.4 percent in 2009, it may remain as high as 8.1 percent by December 2009, and there is a good chance layoffs will continue into 2010. This means the decline is anticipated to stop in 2009, but the recovery will be a slow and painful one.

An alternative that might stop the employment decline in 2009 can be seen by companies that are choosing wage freezes and benefits reductions in lieu of layoffs, according to the New York Times. This means that struggling companies will be shifting more of the financial burden onto their employees, but the process may aid in overall job preservation.

"Organizations are trying to cut costs in the name of avoiding layoffs," said a professor at the Haas School of Business at the University of California, Berkeley. "It's not just that organizations are saying 'we're cutting costs,' they're saying: 'we're doing this to keep from losing people.'"

Benefits for the Newly Unemployed
Those who lose their jobs are not necessarily left without resources or financial options. Unemployment benefits for eligible workers are provided by the Unemployment Insurance Program, managed by joint Federal and State administrations. In the majority of states, funding is derived from taxation on employers.

These benefits are intended to provide financial support to the unemployed for a given length of time. In many states, the compensation can be up to half a worker's previous wage rate as long as it does not exceed a state-determined maximum. According to the Department of Labor, the following criteria need to be met to qualify for unemployment compensation:

• You must become unemployed through no fault of your own. Getting fired for misconduct or a labor dispute, or quitting to attend school, become self-employed or for lack of a legitimate cause are invalid reasons; and

• You must meet the minimum requirements for a "base period" by having worked for a proscribed length of time (usually four out of the last five calendar quarters).

The Labor Department recommends filing a claim for unemployment insurance soon after losing a job. Once the claim is passed, most states provide up to 26 weeks of compensation, with an option for an additional 13 weeks available during periods of high unemployment.

New filings for unemployment insurance claims dropped 94,000 to a seasonally adjusted 492,000 for the week ending Dec. 27 — down from a 26-year high of 586,000 recorded the week ending Dec. 20 — according to the latest weekly claims report from the U.S. Department of Labor. Yet workers continuing to draw jobless benefits reached 4.5 million, the highest number since 1982 and an increase of 140,000 from a week ago. A year ago, the number of people continuing to draw jobless benefits was 2.7 million.

Now more than ever, it is important to file a claim as promptly as possible. The New York Times reports that thirty states are currently at risk of running out of unemployment insurance funds due to the swelling number of people seeking benefits. Indiana and Michigan have already exhausted their resources and are borrowing from the federal government to meet their unemployment needs.

Resources

The Conference Board Employment Trends Index (ETI) Signals More Strong Employment Declines to Come
The Conference Board, Dec. 8, 2008

National Employment Report
Automatic Data Processing, Dec. 3, 3008

...U.S. Employment Decreased by 250,000 Private Sector Jobs in November
Automatic Data Processing, Inc. / Macroeconomic Advisers, LLC, Dec. 3, 2008

December 2008 Manufacturing ISM Report On Business
Institute for Supply Management, Jan. 2, 2008

2008 Job Losses Probably Worst Since 1945: U.S. Economy Preview
by Shobhana Chandra
Bloomberg News, Jan. 4, 2008

Employment Situation Summary
Bureau of Labor Statistics, Dec. 5, 2008

Current Unemployment Rates for States and Historical Highs/Lows
Bureau of Labor Statistics, Nov. 21, 2008

U.S. Unemployment Rate Forecast
Financial Forecast Center, Oct. 17, 2008

Outlook Darkens as Recession Deepens (subscription required)
by Phil Izzo
The Wall Street Journal, Dec. 11, 2008

Unemployment Insurance
U.S. Department of Labor, Nov. 21, 2008

State Unemployment Insurance Benefits
U.S. Department of Labor, Dec. 2, 2008

Unemployment Insurance Weekly Claims Report
U.S. Department of Labor, Dec. 31, 2008

Jobless Claims Data Paint Bleak Picture for 2009
by Jeannine Aversa
The Associated Press, Dec. 31, 2008

Brace Yourself: 2009 Likely to be Worse than 2008, Economists Say
by John Schmid
Journal Sentinel, Jan. 4, 2009

States' Funds for Jobless Are Drying Up
by Jennifer Steinhauer
The New York Times, Dec. 14, 2008