Economic Headache

The nation's employers shed 49,000 jobs last month, and the unemployment rate jumped to 5.5 percent in May - the highest rate since October 2004.

The increase in the unemployment rate was the largest since 1986, the U.S. Labor Department reported yesterday.

As payroll declines continued, the snapshot of business conditions showed a deeply troubled economy, with job opportunities dwindling in a time of continuing hardship in the housing, credit and financial sectors.

The workforce - people at work and people wanting to work - is getting larger, at a time the number of jobs is declining. That makes the job hunt more difficult for all seekers, including recent college graduates.

They were among 828,000 new entrants into the job market who couldn't find jobs in May. With them, the workforce grew to 154.5 million, up 577,000 from April, even as payrolls have declined for five straight months.

Meanwhile, the number of unemployed also grew, to 8.5 million in May, up 861,000 from April. In May 2007, 6.9 million people were unemployed, when the unemployment rate was 4.5 percent.

Included in May's unemployment statistics are a thousand truck drivers at Jevic Transportation Inc., in Burlington County, who lost their jobs May 19 when Jevic, long a transportation leader, abruptly shut its doors.

About 55 newspaper staffers in northern New Jersey lost their jobs with Gannett Co. Inc.

Pharmaceutical companies, large and small, also cut or announced plans to cut their workforces.

Last month, Merck & Co. Inc. said it would eliminate 1,200 sales jobs, but would not specify how many would be lost at its pharmaceutical and sales-marketing headquarters in Upper Gwynedd Township. And tiny Genaera Corp., of Plymouth Meeting, said it would lay off a third of its workforce.

While Jevic and Merck cut jobs last month or announced job cuts, other regional employers say they plan to hold steady through the current economic situation, trying to avoid cuts.

"We're managing our slowdown through normal attrition," said Kimberly Wipf, executive director of human resources at AstraZeneca, in Wilmington.

Lockheed-Martin Corp., Boeing Co. and Vanguard Group Inc. plan to continue hiring - although cautiously, their human-resource directors said.

"The trend is flat to slightly uphill, unlike prior years where we've grown the business," said Christopher J. Wronsky, director of human resources at Lockheed Martin's Moorestown facility, where 5,200 work.

"Even this year, we're going to continue to hire several hundred people, but the workforce is stabilizing. We're doing more replacement hiring, and [hiring] for key critical skills," he said.

Kathy Gubanich, managing director of human resources at Vanguard, said the financial-services company strives to avoid layoffs during downturns, because it wants to continue to follow a model of lifetime employment for its workforce.

"We're still doing our summer hiring," she said.

Whether Boeing will be able to expand its staff depends, in part, on whether it wins a $10 million contract to build 144 helicopters - a decision now delayed until October.

Meanwhile, "our hiring is fairly stable, and growing, but not a great deal," said Richard S. Hendin, director of human resources for rotocraft systems and integrated defense systems at Boeing's Essington plant.

In general, the economy lost jobs in construction, manufacturing, retail and temporary-help services, although health care continued to increase. Employment also increased in education, reflecting Deborah Harnett's experiences at Temple University, where she is vice president for human resources.

"We have a strategy that is dependent on admissions," she said. "We're probably at a peak right now."

In releasing the numbers yesterday, the Labor Department's deputy commissioner, Philip L. Rones, pointed out that labor statistics tend to be volatile from April through June, as graduates enter the job market.

About 40 percent of the 8.5 million unemployed are re-entrants, such as new mothers who want to return to work, or new entrants into the labor force. These are people, who, according to government surveys, wanted to work, but couldn't find jobs.

While many recent graduates are still looking, Yashoda Khandkar, a University of Pennsylvania economics graduate, just signed an offer to work as an analyst in Boston.

A senior, she had been among the lost souls promised a job by Bear Stearns Co. Inc. upon graduation last month.

But her offer, and others, were rescinded when the investment banking firm imploded, a casualty of the ongoing credit crisis. "I'm really excited about" the new job, she wrote by e-mail. "It's great opportunity (maybe even a little better than Bear)."

While Khandkar's situation is hopeful, prospects are worsening for many American workers. Now, 18.3 percent of the unemployed remain jobless for more than six months - up from 16.5 percent a year ago.

The unemployment rate that includes discouraged workers who believe they can't find a job, and those who want full-time work, but can find only part-time jobs, has risen to 9.7 percent, up from 8.3 percent a year ago.

These statistics have driven calls from advocacy organizations like the National Employment Law Project and unions, including the AFL-CIO, for unemployment benefits to be extended beyond six months.

Meanwhile, as gasoline and food prices continue to climb, wages have increased 5 cents an hour, the Labor Department said.

Despite these pressures on family budgets, there seems to be some health in the leisure and hospitality sector, where 12,000 jobs were added in May, including 11,400 in restaurants and bars.

But that's not what Ed Iames is seeing. He is director of people development at Wawa Inc., which opened two stores in the region last month, each with about 30 employees.

"There are more opportunities with the economy," he said. "Restaurants are feeling some of the pinch. It's a place where we've been recruiting.

Restaurant managers are a great source of potential Wawa managers because Wawa, Iames said, can offer a better work-life balance. "We look at it as a great opportunity."