This growing length of time out of work tangibly increases the required growth of the economy to absorb these people and get them back to work. The average duration of unemployment grew again to 40.5 weeks, indicating that the average unemployed worker has been without a job for nine months.
Also in September, the labor force participation rate increased 0.2 percentage points, to 64.2 percent. Hourly wages increased by four cents and average weekly hours increased by 0.1 hours. These numbers by themselves are positive. Unfortunately, these improvements are coming off unexpected reductions in August and merely return these numbers to July levels.
Stresses in the jobs market are the source of much of the frustration Americans are feeling. It is also the reason why our commercial real estate recovery nationally has been well below expectations coming out of a downturn. In New York, we have been relatively lucky. Job losses have been lower than what was experience during the Savings and Loan crisis in the early 1990s and we have already gained back a significant percentage of the jobs that were lost. Unfortunately, recent announcements from financial firms mean that this trend may encounter challenging times ahead.
The government simply cannot plan the entrepreneurial innovation that leads to significant job creation but it can encourage it. The government can directly control tax and regulatory policies it imposes on businesses and Congress could act quickly to alleviate them. Unfortunately, in an election year, it is unlikely that fundamental change will be adopted. Given the magnitude of our problems, fundamental changes are indeed required. For commercial real estate, we hope that change occurs, as it would accelerate job creation and, for real estate, it’s all about jobs. Let’s hope some leadership emerges to get us there.
Robert Knakal is the chairman and founding partner of Massey Knakal Realty services and in his career has brokered the sale of more than 1,175 properties, having a market value in excess of $7.8 billion.