U.S. Jobs Jump
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MARGARET WARNER: Last month’s big spurt in new jobs, some 300,000-plus, is a huge increase over what the country has seen in the past six months, when the average growth has been just 75,000 new jobs a month.
For a closer look at what’s happening, we turn to Lisa Lynch, former chief economist for the U.S. Department of Labor and now an economics professor and academic dean at the Fletcher School at Tufts University , and Mark Zandi, chief economist and co-founder of Economy.com, an economics research firm. Welcome to you both. Mark Zandi, you look at these numbers, what do they tell you? Is job creation on the rebound?
MARK ZANDI: It certainly is. It was a great report. It indicates that the job market broadly speaking has turned the corner after three very long lean years; I think we are going to see improvement. It’s not only the March gain — it was gain in January and February. They were both revised higher. And moreover, the job gains were very broad based across many industries: construction, wholesale, retailing, parts of financial services, even state and local governments added to payrolls. It was a very, very positive report.
MARGARET WARNER: Lisa Lynch, clearly it’s a positive report. What do you see in the numbers? Who’s getting the new jobs?
LISA LYNCH: When we’re looking as Mark just mentioned it, when we look at the numbers, we are seeing employment across the board in all sectors with one important exception and that’s in manufacturing. While we do not have any job loss in the manufacturing sector for the first time in 44 months. We did not see a pick up in the manufacturing sector. But we saw restaurant and hotel workers being added on. We saw workers in supermarkets being added on — part of that reflecting the settlement of the grocery store strike out in California.
We saw workers in the health care sector and hospitals being added on. We saw business services adding employees, mortgage brokers being added on. So, in general, with the very important exception of manufacturing, we are seeing job growth across all of these different types of occupations.
MARGARET WARNER: Mr. Zandi, we heard someone in the news summary, I think it was Democratic Senator Corzine, say well, these are new jobs, but when people take the new jobs, they’re paying less than their old jobs. Can you look at these numbers and tell whether that’s the case?
MARK ZANDI: Well, I think there is some evidence to suggest that that’s true, yes. A big share of the job growth or increase since this last summer has been in temp jobs. And temp jobs are, in fact, lower paying. Manufacturing jobs, Lisa mentioned, we haven’t created any of those and those are generally higher paying jobs. So I think that it is fair to say that the job growth, at least to date has been among occupations and in industries that are generally lower paying.
MARGARET WARNER: Do you take the fact that at least manufacturing didn’t lose any jobs? It has, as Lisa Lynch said, for 44 months. How do you read that?
MARK ZANDI: Well, I do take some solace in that. Although I think it’s fair to say that all those manufacturing jobs that we have lost over the last four years, they’re not coming back. They’re gone forever. And even in the best of times we are not going to create too many manufacturing jobs. So we shouldn’t look to manufacturing for any significant job creation. All we can really hope is that manufacturers don’t reduce their payrolls.
MARGARET WARNER: So, Lisa Lynch, now explain what would seem to the average person a conundrum here, which is that there are a lot new jobs and yet the number of officially unemployed people just as a gross number went up by one hundred plus thousand — I think 150,000. And the unemployment rate also went up 1 percent — 0.1 percent. How does that happen?
LISA LYNCH: Well, what’s happening in the economy right now is that employers are finally adding on new jobs into the economy. But we’ve had an unprecedented drop in the labor force participation rate of workers and a lot of people have gotten very discouraged about employment prospects and have stopped looking for work. So what one hopes to see then is those folks who would stop looking for work who were not counted as unemployed now as employers start advertising for new work coming back into the labor market, and when that happens, you will see up ticks in the unemployment rate.
Now the unemployment rate just moved from 5.6 to 5.7 percent. That’s a very small increase and the Bureau of Labor Statistics, in fact, said that was not a significant increase in the unemployment rate. But we should not be surprised if we actually see the unemployment rate not dropping or even increasing a little bit more. It will be not such bad news, if that’s reflecting people coming back into the labor market because they finally have an opportunity to apply for some jobs.
MARGARET WARNER: Mark Zandi, who is not benefiting or who didn’t benefit from this big, big up tick this month?
MARK ZANDI: Clearly all those folks who worked in manufacturing are still struggling. When you look across the country from Boston to the bay area of California, the real trouble is in the Midwest , in big parts of the South — the Mountain West, the Pacific Northwest. There are still large areas of the country where people are struggling. It is important to note that even though the job market is improving, it is still very soft. And if you lose your job and you are unemployed, it is very difficult to get employment. For example, just a statistic, one-fourth of all the unemployed are unemployed more than 27 weeks. And that means they are running out of unemployment insurance benefits. So that’s close to a record high. So it is still a very soft job market. It is improving and should get better but it is still very soft.
MARGARET WARNER: And, Lisa Lynch, how unusual is it that we’ve had at least nine months of really robust economic growth — and until now, the job growth just wasn’t keeping pace at all and everyone was ringing their hands and saying why isn’t it? Now we see this really big spike. One, is that unusual and two what does it tell you?
LISA LYNCH: Well, I mean it’s about time we’re seeing this job growth and economists have been predicting we see a big up tick in the employment numbers for many months.
MARGARET WARNER: For many months.
LISA LYNCH: So while this number was three times bigger than what people had been forecasting, I think it also, most people were saying it’s about time. But I think it’s important to look at that number and realize that, for the economy to keep pace with the growth of the population, we should be adding between 120 and a 150,000 jobs a month, just to keep pace with the growth of the population. So this number is over 300,000, but we have over 2 million people that net job loss since the beginning of this recession.
And we’re going to need to have many months going forward of healthy job increases of 200 to 300,000 before we are going to make a dent into the unemployed and to have an impact on those long-term unemployed that Mark was just talking about.
MARGARET WARNER: Briefly to you both, starting with you, Mark Zandi, can you look at all these numbers and the information that was released today and tell whether this growth is sustainable?
MARK ZANDI: Well, I think we should be optimistic, yes, that it is going to, we are going to create more jobs and the job market is going to improve. But it is going to be a bit of a slog. There are many waits on the job market that aren’t going to go away quickly. And while things will get better, they’ll get better relatively slowly.
MARGARET WARNER: Lisa Lynch, your view on that?
LISA LYNCH: Well, I would agree with Mark as well. And I think in particular for the fact that we have one in four people out of work for six months or more. They really need to have a job growth — an economy that’s creating a lot of jobs to pull them back in and let’s hope that we have many months going forward with job numbers like we saw today.
MARGARET WARNER: Lisa Lynch, Mark Zandi, thank you both.