Lots of bad employment news today, and we’ll start out with the lead story in The New York Times, which splashes across two columns a report that says Americans are getting fewer hours at work, setting off a chain effect of negative economic consequences.

Throughout the country, businesses grappling with declining fortunes are cutting hours for those on their payrolls. Self-employed people are suffering a drop in demand for their services, like music lessons, catering and management consulting. Growing numbers of people are settling for part-time work out of a failure to secure a full-time position.

The gradual erosion of the paycheck has become a stealth force driving the American economic downturn. Most of the attention has focused on the loss of jobs and the risk of layoffs. But the less-noticeable shrinking of hours and pay for millions of workers around the country appears to be a bigger contributor to the decline, which has already spread from housing and finance to other important areas of the economy.

The Times reports that hours worked in March fell compared to six months earlier for the first time since the 2001 recession. Average earnings declined for the sixth straight month. Combine this with the decline in overall wealth and stricter credit and things look even weaker.

The Washington Post reports on A7 that its new poll says 90 percent of Americans describe the economy negatively, the lowest rating in more than fifteen years.

Deep cuts on Wall Street

The Financial Times reports on page one that Citigroup’s CEO may cut costs by 20 percent, “deepening fears that Wall Street and the City of London are about to be hit by tens of thousands of additional job losses.”

The news comes at a time when Merrill Lynch says it will cut 4,000 jobs, about 10 percent of its total workforce, after losing $2 billion in the first quarter. The FT says so far 40,000 financial jobs have been lost. The paper says that could mean 25,000 jobs or so in the next several months. It reports that Citi alone may cut another 25,000 and that JPMorgan chase may slash more than half of the 14,000 employees it inherited from Bear Stearns.

Jobless ranks swell

The newly unemployed increased last week by 17,000, as measured by new claims for jobless benefits, which rose to a total 372,000. But the four-week average, which smoothes out some of the blips, was flat at a still elevated 376,000. The total number receiving unemployment hit the highest mark in nearly four years, according to Bloomberg.

“We’ll definitely continue to see job losses,” said Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “The labor market remains weak. Consumer spending is slower and will remain slow.”

John Thain, in vain, is wrong about the pain

Speaking of Merrill, its CEO went on a press tour yesterday, talking to both the WSJ and the NYT about his company’s bad quarter. The firm lost $2 billion in the first quarter and wrote down another $6.6 billion worth of assets yesterday, bringing its grand total to $30 billion so far.

The WSJ’s C1 Heard on the Street quotes “people familiar with the firm” as saying the company expects finally to be profitable again in the second half after three consecutive quarters of losses.

Coincidentally, Floyd Norris in his column today on the front of the Times’ business section, notes that so far Wall Street has been woefully wrong at predicting the end of the crisis.

Three months ago, at the World Economic Forum in Davos, Switzerland, I commented to one of the best-known men in American finance that he seemed pretty glum.

He agreed, and said that was true for virtually every financial executive there.

But he said, there was one exception. John Thain, the newly appointed chief executive of Merrill Lynch, was smiling a lot, he said, and with good reason.

He asserted that Mr. Thain knew that Merrill had taken at least $2 billion more in write-offs than were really needed, leaving him an ample cushion for any new problems that might appear.

If so—and Mr. Thain would not comment when I asked him about it—the optimism was misplaced. On Thursday, Merrill announced an additional $6.5 billion in new write-offs.

The Times in a C6 news story has an amazing comment from the man himself. It’s our Where’s Your Flack? Quote of the Day:

He said the reputation of Wall Street had not been harmed by the credit crisis as much as it was after the technology bubble burst.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.