TOPICS > Economy

New Jobs Report Disappoints as Challenges Mount for Long-Term Unemployed

December 3, 2010 at 4:25 PM EDT
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November's job numbers showed unemployment rising to 9.8 percent -- a disappointing surprise for analysts. Employers added only 39,000 jobs, compared to 172,000 in October. Jeffrey Brown discusses what's ahead for the economy and unemployed people with Lisa Lynch of Brandeis University and Paul Taylor of the Pew Research Center.
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JEFFREY BROWN: In the meantime, Americans got the latest review of the U.S. economic situation today. But the November jobs report fell well short of expectations.

The bleak news on jobs came as a jolt to those on the unemployment lines and a surprise to most forecasters. According to today’s Labor Department report, the unemployment rate climbed two-tenths-of-a-percent, to 9.8 percent in November, a seven-month high. Moreover, the rate has now topped 9 percent for 19 straight months, the longest stretch on record.

Overall, employers added only 39,000 new jobs last month. Bureau of Labor Statistics Commissioner Keith Hall summed things up at a congressional hearing.

KEITH HALL, commissioner, Bureau of Labor Statistics: We have had — we have had steady, relatively steady job growth this year. We have had about 961,000 jobs this year, which is — which is good.

But the job growth just hasn’t yet strengthened enough to start lowering the unemployment rate. We are going to have to have stronger job growth to start putting people back to work and lowering the unemployment rate.

JEFFREY BROWN: It would also take stronger growth to lower the underemployment rate of those working part-time when they want full-time employment. That rate is now at 17 percent.

With the president in Afghanistan, the administration’s response came from Vice President Biden during a meeting at the White House.

U.S. VICE PRESIDENT JOSEPH BIDEN: But, still, there’s no denying that — that the report is disappointing, because we were, quite frankly, hoping for even stronger job growth. But the bottom line is, and what this tells us and makes absolutely clear is, that, while we have made progress creating jobs, it’s — it’s clearly not enough.

JEFFREY BROWN: The subject of the Biden meeting was how to restore benefits that began expiring this week for the long-term unemployed, some two million people.

JOSEPH BIDEN: Extending that support to those hardest-hit by this crisis is not only the right thing to do, not only the right thing to do, which we always have done in similar circumstances; it is economically necessary for us to do it.

JEFFREY BROWN: Republicans want agreement to extend the Bush era tax cuts before action on other issues.

On the Senate floor, Minority Leader Mitch McConnell said it’s up to Democrats to make it happen.

SEN. MITCH MCCONNELL (R-K.Y.), minority leader: We have now had more consecutive months of 9 percent unemployment than at any time since the Great Depression. And Democrats would rather play games than do something about it. It should go without saying that Americans have had quite enough of this. It’s time to get serious.

JEFFREY BROWN: It was widely reported today that White House officials and Republican leaders are conducting private talks on a deal that could extend both the tax cuts and the jobless benefits.

And we return to the unemployment story, first with a closer look at today’s report and its implications for the long-term unemployed.

That comes from Lisa Lynch, dean of the Heller School for Social Policy and Management at Brandies University — she’s a former chief economist for the Labor Department — and Paul Taylor, executive vice president of the Pew Research Center, which did a study about the long-term unemployed.

Lisa Lynch, I will start with you. How big a surprise was this today, and what explains it?

LISA LYNCH, Heller School for Social Policy and Management at Brandies University: Well, it was huge surprise, Jeff.

The — the number that people had in their heads about job growth for this month was between 150,000 or 160,000 net new jobs. And there were some whispers of job growth of over 200,000 jobs. So, to see a number of 39,000 jobs added to the economy was discouraging.

And even the most pessimism of economists were not coming in with such a low number. I mean, the — it was a positive number, but just much too small, and much smaller than what people anticipated, not enough to keep pace with population growth. We should be adding about 120,000 jobs a month just to keep up with the people coming into the labor market.

And, with 15 million people out of work, we really should be seeing job growth numbers of 200,000, 300,000, 400,000 a month in order…

JEFFREY BROWN: Have you had a…

LISA LYNCH: … to begin to make a dent.

JEFFREY BROWN: Sorry. Have you had a chance to go through it and look at sectors to figure out where things went so off, so wrong?

LISA LYNCH: Well, we saw much lower job growth in the manufacturing sector. And, there, actually, we have seen four months of employment declines in the manufacturing sector, in spite of the fact that we have gotten news of increased demand for auto sales and growth in the manufacturing sector overall.

But we didn’t see that in terms of employment. We saw a contraction in the construction sector. And the big surprise, as we go into the holiday season, was contraction in employment in the retail sector.

JEFFREY BROWN: And that’s even though things have — at least in the last few days, what do you — Friday — Black Friday is the word I’m looking for.

(LAUGHTER)

JEFFREY BROWN: So-called Black Friday looked pretty good, right?

LISA LYNCH: Yes.

JEFFREY BROWN: But, still, the jobs number didn’t look good?

LISA LYNCH: That’s right. I mean, the employment report is referring to the number of people in employment in the beginning of November. So, it may be the case that employers in the retail sector have been a bit more cautious with respect to adding on seasonal workers for the holiday season, and added those workers closer to Black Friday or Cyber Monday.

But, you know, at this time of the year, given the increase in shopping that we have seen of individuals, it would have been expected that we would have seen higher employment in the retail sector. And we just didn’t see growth in that sector.

We did see growth in health care, and we did see growth in restaurants and bars. So, people seem to be going out and eating and drinking, and they’re using health services. But we didn’t see it in the retail sector.

JEFFREY BROWN: All right, now, Paul Taylor, you did a study on long-term unemployment. Today’s numbers would — would only suggest that those people are going to have an even harder time finding work, right?

PAUL TAYLOR, executive vice president, Pew Research Center: Yes. You know, we’re now three years into the great recession and now the jobless recovery. And what’s been most notable about this is the — yes, the extraordinary high unemployment numbers, but, of the currently unemployed, about half have been unemployed for six months or more.

That is unprecedented in modern history. Since the Bureau of Labor Statistics has been keeping figures on that, we — we — previous recessions, we didn’t even come close to that.

We did a survey earlier this year where we — look, we — we did a national sample of unemployed. And we graded them, or we looked at them by how many months they had been unemployed. And when you get to six months or more of unemployment, you see very serious impacts on your personal finances, on your career prospects, and on your psyche.

Now, obviously, unemployment is bad at any — any length.

JEFFREY BROWN: Sure.

PAUL TAYLOR: But we see sort of an inflection point.

And this is a very personal story, but just to throw a few numbers out there, because we asked some sort of personal questions. So, we asked all people who had been unemployed during the great recession, did it have — did it put a stretch on family relations? About nearly half of the long-term unemployed said yes. About 15 percent fewer of the short-term unemployed said yes.

Have you lost contact with friends? Again, more than four in 10 of the long-term unemployed said yes. Have you lost self-respect? About four in 10 of the long-term unemployed said yes. Have you sought professional help for depression or anxiety? About one-quarter of the long-term unemployed said yes, compared to about 10 percent of those with shorter spells of unemployment.

JEFFREY BROWN: And, presumably, people would have to be rethinking their job prospects for the future, not only because of a report like today, but longer-term, and just rethinking what it is they do or what they might be able to do in the future.

PAUL TAYLOR: We asked a question like that. And, again, of those who have been unemployed six months or more, seven out of 10 say they had either changed careers or contemplating changing careers.

We also asked — were able to ask people who had been unemployed for some spell during the great recession who had subsequently got jobs to rate the jobs — the new jobs they have vis-a-vis the old jobs they lost. Well, here again, the long-term unemployed who were able to find jobs were much more likely to say the new jobs were not as good as the ones they left and to feel they were overqualified.

So, again, it is a natural human reaction. You are out of work for a long time and you’re going to take whatever you can get.

JEFFREY BROWN: Now, Lisa Lynch, there is a bit of a kind of tale of two cities idea here, at least the way I see it. Today’s report, on the one hand, suggested if you do have a job, a lot of people are working harder than ever.

But then there are all these people that do not have jobs and are not working longer than ever.

LISA LYNCH: Right. I mean, for those people that are still in employment, the reality that they’re facing is probably more hours of work, more stressful work. Their productivity has been rising. Their wages have not been rising. They may have even seen cutbacks in some of their benefits. Their wealth is less, because the value of their home is down.

But they are in employment. They have pay coming in. But they are probably hesitant with respect to going out and shopping, because they are seeing friends, neighbors, children, family members that are out of work, out of work for an extended period of time, exhausting savings.

And, as Paul described, when long-term folks — long-term unemployed get back into employment, they are in jobs that are going to be paying less, on average, 10 to 20 percent less than what they were earning before they lost their job.

JEFFREY BROWN: And, briefly, Paul, that jibes with what you saw in terms of the long-term unemployed?

PAUL TAYLOR: Absolutely. And it is a group — we were able to also look at the demographics of the long-term unemployed. They are similar to the demographics of all unemployed, but there are a few differences. Older adults, blacks and blue-collar workers are most prone to these very long spells of unemployment.

In the case of the blue-collar workers, it is probably because they are dealing with structural, in addition to cyclical, changes in the economy that are affecting their jobs.

JEFFREY BROWN: All right, Paul Taylor and Lisa Lynch, thank you both very much.

LISA LYNCH: Thank you.