TOPICS > Economy

Jobless Rate Holds Steady, Dashing Hopes for Speedy Recovery

January 8, 2010 at 4:34 PM EST
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The U.S. economy shed 85,000 jobs in December, keeping the unemployment rate at 10 percent and dampening the outlook for a quick economic recovery.
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JIM LEHRER: More Americans losing jobs and even more giving up hope of finding them — that was the gist of December’s unemployment report.

Jeffrey Brown has our story.

JEFFREY BROWN: The Labor Department numbers today fell well short of hopes in some quarters that the economy might have added workers at the end of 2009. Instead, 85,000 Americans lost their jobs last month, led again by hits in the construction and manufacturing sectors.

The unemployment rate held steady at 10 percent, but that’s because more than 660,000 people gave up looking for work.

President Obama cited the numbers this afternoon, as he announced new spending to create jobs in renewable energy.

U.S. PRESIDENT BARACK OBAMA: The jobs numbers that were released by the Labor Department this morning are a reminder that the road to recovery is never straight and that we have to continue to work every single day to get our economy moving again.

For most Americans, and for me, that means jobs. It means whether we are putting people back to work.

We have to continue to explore every avenue to accelerate the return to hiring.

JEFFREY BROWN: Overall, more than 15 million Americans are out of work now, and nearly 40 percent have been looking for a job for six months or more. That’s the highest percentage in six decades.

Economic growth in the last quarter of 2009 actually helped slow job losses from what had been happening in the summer and fall. And revised figures from November showed a net gain of 4,000 jobs, the first time that had happened in two years. But December’s renewed job losses will raise new questions about just which way things are headed.

And with me now to talk — to walk through the latest jobs picture is David Leonhardt, economics writer for The New York Times.

Welcome back

DAVID LEONHARDT, The New York Times: Thank you.

JEFFREY BROWN: First, today’s number was worse than expected?

DAVID LEONHARDT: Yes, it was.

There were definitely hopes, as you just pointed out, that we were finally going to get a positive number. It turns out revisions gave us a very slightly positive number for November. But then we got this negative number for December.

It’s funny. The negative/positive line is actually not as important as it often seems, because we really need to have more than 100,000 jobs each month just to keep up with population growth. But this gives us a sense really for how far we are from getting the job market healthy again.

JEFFREY BROWN: Yes, but the — I want to parse the expectations game a little bit more here…

DAVID LEONHARDT: Yes.

JEFFREY BROWN: … because, as you say, this revision in November actually shows that we had one month where we gained jobs.

DAVID LEONHARDT: Yes.

JEFFREY BROWN: And, as I said in the introduction, recently, numbers are not as bad, certainly, as what we saw in the past.

DAVID LEONHARDT: Exactly. So…

JEFFREY BROWN: So, it is a question of hoping, expecting, all around, a framework of numbers?

DAVID LEONHARDT: That’s right.

And one of the ways to parse it in a way that doesn’t get you too dizzy by the month-to-month stuff is to take a three-month moving average, which economists often like to do. When you do that, you don’t get into quite this much noise. And what you see is that things have continued to get better. If you look at a three-month moving average, we have lost 70,000 jobs on average over the last three months.

That is the best, by far, far better than it was earlier this year. And it’s the best, by far. It’s the best we have had so far. And, so, that eliminates a little bit of this noise. It tells you the job market is getting better, but painfully slowly.

JEFFREY BROWN: Yes, now, pain — speaking of painful, I mean, the real disconcerting part of this, it seems to me, on the human side, is showing many more people looking for work for longer periods of time, and many just giving up.

DAVID LEONHARDT: Yes.

And the official numbers even understate that, because they don’t count all the people who have given up, many of whom are also long-term unemployed.

JEFFREY BROWN: Yes, just explain that. I mean, that’s the quirk in the jobs number, right?

DAVID LEONHARDT: Absolutely.

So, to be considered officially unemployed, you must have looked for work in the last four weeks. There are a lot of people out of work who, particularly in high-unemployment areas, who would like to work, but have not looked in the last four weeks. They are not considered officially unemployed. They are not counted in the 10 percent number.

And, so, once you include those people, you really do have a large number of long-term unemployed. And our safety net systems are set up to deal with the way unemployment used to be. They are set up to deal with the manufacturing worker who is laid off for a few weeks or a few months, then goes back to work.

JEFFREY BROWN: With the expectation that they will get a job fairly soon.

DAVID LEONHARDT: That’s right.

JEFFREY BROWN: Yes.

DAVID LEONHARDT: They’re not set up to deal with this more structural unemployment. And I think that is a real concern. I think we’re going to have large numbers of people who will have spent a very long time out of the work force.

JEFFREY BROWN: You’re referring to that as a structural problem?

DAVID LEONHARDT: A structural problem, that’s right. And it’s the result of a number of things. We have had slowing education gains in this country. We put a lot of people to work in, say, the housing sector, where they are not going to be able to go back to work.

And I think there is a big question of where these people are going to end up once they are able to find jobs again. It’s a real worry.

JEFFREY BROWN: Now, a related side of this is that, as I read the report, there were gains in the private sector, but many of them are in the temp area.

DAVID LEONHARDT: That’s right.

JEFFREY BROWN: So, that — sometimes, we look at that and we say, well, that’s sort of a good sign, because that means employers are thinking maybe it’s time to start hiring people, right? So, they are hiring temps.

DAVID LEONHARDT: Right.

JEFFREY BROWN: But the problem here seems to be that a lot of these remain temps.

DAVID LEONHARDT: Yes. So, some economists believe that temps are a leading indicator that things are going to get better. Some aren’t so sure.

Obviously, we don’t want to move to an economy in which we would have vastly more temporary jobs, because then we are talking about an insecurity that will reduce the ability of people to win raises, will reduce their ability to learn on the job.

And, so, temps are a mixed blessing. At this point, though, I think we would take — we take any new jobs. And, so, an uptick in temps is seen as more good than bad.

JEFFREY BROWN: Well, what is this telling you about companies now, and whether they are — where they are in this, sticking their toes back in the water, in terms of hiring people?

DAVID LEONHARDT: They are really reluctant to hire.

And it’s — the reasons aren’t entirely clear. Some say there is a lot of uncertainty out there about government policy. Others say that they can’t get loans. Others say we just don’t know what is going to happen.

And then there’s the fact that there is always a lot of uncertainty and pessimism before things get better. And we do seem to be in the process of things getting better. So, businesses are very reluctant to hire. What’s not clear is how temporary that is going to end up being.

JEFFREY BROWN: And you mentioned government policy. Speaking of that, there is a continuing debate here in Washington about what to do and whether to do anything.

DAVID LEONHARDT: Yes.

So, I know you all have had on the show Carmen Reinhart and Ken Rogoff, who has written a book about the history of financial crises.

JEFFREY BROWN: Right.

DAVID LEONHARDT: And it shows that, on average, unemployment rises for four to five years after a financial crisis. That would take us to 2011 or 2012.

The reason people think that it’s not going to rise for that long is, in fact, this aggressive response, this big stimulus package, the Federal Reserve move. And, so, there is wide agreement, not unanimous, but wide agreement, that government policy has helped soften the downturn.

The problem is, at this point, we’re not going to get another huge stimulus package. We probably shouldn’t get another huge stimulus package, given the deficit fears that a lot of people have. So, the responses the government will have at this point are muted. And what we…

JEFFREY BROWN: So, you have the president today with the targeted green jobs.

DAVID LEONHARDT: The targeted green jobs, which really isn’t that big, right? We’re talking about, at most, I think he said tens of thousands of jobs. And that is his estimate. Relative to what we have got in the economy right now, that is not going to fix things.

So, I think we are going to see small moves by the administration to try to deal with the job market. And they will spend a lot of time talking about them to convey the sense that they are concerned about this.

JEFFREY BROWN: All right, David Leonhardt of The New York Times, thanks very much.

DAVID LEONHARDT: Thank you.