By JEANNINE AVERSA
and CHRISTOPHER S. RUGABER
WASHINGTON -- The nation isn't creating nearly enough jobs to reduce persistently high unemployment.
For the third straight month, the private sector hired cautiously in July. And those meager gains in the job market were nearly wiped out by tens of thousands of cuts at all levels of government.
Making matters worse: Many of the new jobs that are being created do not pay well enough to significantly jump-start spending by shoppers and stimulate the broader economy.
The unemployment rate was stuck at 9.5 percent for the second straight month, the Labor Department said Friday. Analysts said it would probably claim back into double digits because the private sector is not creating jobs fast enough.
Private employers reported a net gain of 71,000 jobs for July -- far below the 200,000 it takes for the unemployment rate just to hold steady and keep pace with the growing work force.
Counting the jobs that were lost at the local, state and federal levels in July, the net gain was only 12,000 jobs. And on top of that, 143,000 temporary jobs with the Census Bureau for the 10-year population count came to an end.
So far this year, state and local governments wrestling with budget shortfalls have shed 169,000 jobs. And further losses are on the way -- about 20,000 to 30,000 more job cuts a month expected over the rest of the year, despite $26 billion in federal aid.
Economists are especially concerned that the recovery is losing momentum as it enters the second half of this year, when the benefits of most of the government's stimulus spending will start to wear off.
For now, most of them are betting the economy will continue to grow, though at a lackluster pace, through the rest of this year. Some analysts fear the recovery could fizzle altogether, though.
"If we don't see significant job growth by the end of the year, the economy could be in serious trouble," said Bill Cheney, chief economist at John Hancock.
President Barack Obama noted that the economy has added private-sector jobs for seven straight months but said the progress "needs to come faster."
Job seekers face tough competition these days. On average, there are 4.7 people vying for each opening. That's down from the peak of 6.3 last year, but more than double the
1.8 unemployed per opening when the recession began in December 2007. Those who do have jobs are working longer and getting only scant increases in pay.
"Employers do not want to take chances," said Sung Won Sohn, an economist at California State University, Channel Islands.
In particular, the economy has struggled to add high-paying jobs, which help power the economy by putting more spending money in people's pockets.
So far this year, the economy has added 117,000 high-paying jobs in industries such as construction, manufacturing and mining. Over the past 12 months, it has lost 352,000 of these jobs.
The number of higher-paying jobs in engineering and at law firms has fallen over the past 12 months, too. Electrical engineers make an average of about $41 an hour, lawyers $62.
Arthur Santa-Maria was laid off at Intel Corp. in 2007 after 25 years as an engineer. Now, he's selling refrigerators at Sears and has all but given up on finding an engineering job, instead just trying to make a little money before retiring.
After he lost his job, the 58-year-old landed some interviews, but competition was fierce for every opening, he said. He took the Sears job even though he is paid on commission and has no health benefits.
"Usually, on Fridays and Saturdays I'll make minimum wage, but beyond that, I don't even make lunch money because no one is spending right now," he said.