JEFFREY BROWN: Solid job growth in April and positive revisions to previous months. Today’s Labor Department figures eased worries about the U.S. economy.
In all, the economy added 165,000 jobs last month, primarily in the private sector, retail, restaurant and health care industries. The stronger-than-expected hiring helped reduce the nation’s unemployment rate a modest 0.10 percent to 7.5 percent, the lowest level since December 2008.
A further key element of today’s good news: dramatic revisions upward in the number of new jobs created in February and March by a total of 114,000. With the revisions, February payrolls increased to 332,000 jobs, while March gains stood at 138,000.
White House Council of Economic Advisers Chair Alan Krueger said the hiring numbers reflect an improving job market, in spite of federal spending cuts from the sequester, which he took the opportunity to criticize.
ALAN KRUEGER, Chairman, White House Council of Economic Advisers: Today’s report and other data coming in shows the resilience of the U.S. economy. The economy is healing from the scars of the great recession, but there’s a ways to go. We’re not back to full health. And we could put more people back to work more quickly if we had more sensible fiscal policy coming out of Washington.
JEFFREY BROWN: For its part, Wall Street celebrated today’s news, with the Dow Jones industrial average crossing at least for awhile the 15,000 mark for the first time ever. By day’s end, the Dow had gained 142 points to close just under 14,974, an all-time high. The Nasdaq rose 38 points to close at 3,378. For the week, the Dow gained nearly two percent; the Nasdaq rose three percent.
And for a closer look at today’s numbers, we’re joined once again by Lisa Lynch, Dean of the Heller School for Social Policy and Management at Brandeis University. She’s a former chief economist at the Labor Department.
Well, welcome back.
So, first, a general reaction first to today’s numbers? What do you see?
LISA LYNCH, Heller School for Social Policy and Management at Brandeis University: Sure, Jeff.
Well, it was a good report, certainly better than what many had expected and a marked improvement from the report we saw last month. We — as you summarized in the report leading up to this, we saw the unemployment rate falling, but for all good reasons, because we added more jobs in the economy, as opposed to people dropping out of the labor market.
We saw the percentage of people who are out of work for six months or more dropping down to 37.4 percent. It was over 40 percent a year ago. It’s still high, but that was an improvement. We saw wages up 1.9 percent, keeping pace with inflation. That’s good news.
And with those monthly revisions to the prior two months, we’re now averaging on a three-month moving average basis over 200,000 net new jobs in the economy. That’s taken care of people coming into the labor market.
JEFFREY BROWN: Yes. No, I just want to ask you about the revisions, because they’re very large revisions, and I think it’s hard for people to understand. How and why does that happen?
LISA LYNCH: So, the Bureau of Labor Statistics goes out and contacts a sample of employers around the country and asks them what’s happening to their employment numbers.
And then they also realize that when the economy is improving, you’re going to have new firms being created that they won’t have in their data set. So they model or they impute a value of new jobs for those new employers. And then what happens is that employers get back to them, some with a delay, and they make revisions to the numbers.
For the prior month, they will they release a preliminary number and they will do two revisions of that number in the next few months, and then at the end of the year they will go back and they will have data for all employment, not just a sample, and they will make a final round of revisions.
JEFFREY BROWN: So, does that raise the — does all that raise the question of how much we should pay attention or trust any one particular monthly number?
LISA LYNCH: Well, that’s why every economist you have ever talked to has always said it’s important to look at three months’ moving averages and never put any — too much weight on any one employment report.
JEFFREY BROWN: OK, well, that’s good advice. We will always take that.
Now, potential downside in these numbers, a lot of jobs were of the low or moderate paying and part-time work as well.
LISA LYNCH: So we saw an increase of over a quarter of a million people that were working in part-time employment who wanted full-time employment.
We also saw the length of the workweek decreasing. And, you know, we saw that a lot of the jobs that were added were in sectors like temporary employment, the retail sector, restaurants and bars that are typically lower paying and less likely to have benefits associated with them.
JEFFREY BROWN: Can you see any discernible evidence of impact from the sequester at this point? What can be said?
LISA LYNCH: A lot of people we’re sort of looking for the fingerprints of the sequester in today’s report.
JEFFREY BROWN: Yes.
LISA LYNCH: And I think it’s hard to sort of say with any kind of certainty that you see the impact of that. The fact that more people were in part-time employment, but who wanted full-time employment, that might reflect something of the furloughs, but many of the furloughs that the government agencies are putting in place won’t really come into play until next month’s report.
I think what’s harder to pull out from this, but is real in the economy, is the fact that the government isn’t making as many purchases, for example, in the defense industry. So that means when we see no growth in employment and manufacturing, part of that is linked to the fact that with the sequester the government is not buying as many of those products.
JEFFREY BROWN: Let me just ask you in our last minute to put your college dean hat on, which you probably never take off anyway, right?
LISA LYNCH: That’s right.
JEFFREY BROWN: But you got a lot of students. Students are about to graduate or they’re about to try to look for a summer job. What are you telling them? What do you see for them?
LISA LYNCH: So, you know, the bad news here is that for the fifth consecutive year in a row, they’re walking out into a job market that is still pretty grim.
The youth unemployment rate for 16-to-24-year-olds is over 16 percent. I mean, it was worse in 2010, when it was close to 20 percent. But what I tell our students is that they have to look at the job market as their fifth course that they take every semester. They have to increase the networking that they’re doing. They need to be geographically flexible.
They have to take every informational session they can, not miss an opportunity, and it’s going to be harder for them to find a job, but there are jobs out there.
JEFFREY BROWN: All right, Lisa Lynch, thanks so much.
LISA LYNCH: Thank you, Jeff.