TOPICS > Economy

Stubbornly High Jobless Rate Offers Little Hope to Unemployed

November 4, 2011 at 12:00 AM EST
The U.S. jobs report for October brought news of slow improvement for the American economy, but also continued worries that the stubbornly high unemployment rate isn't changing fast enough. Jeffrey Brown discusses the report with Catherine Rampell of The New York Times and Ingrid Schroeder of the Pew Fiscal Analysis Initiative.
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JEFFREY BROWN: The jobs report for October came in today. It brought news of slow improvement, but also continued worries that the stubbornly high unemployment picture isn’t changing fast enough.

More Americans were working last month, although not as many as economists expected. In all, it amounted to modest improvement, as a congressional committee heard today from Keith Hall of the Bureau of Labor Statistics.

KEITH HALL, Bureau of Labor Statistics: We do have job growth and we do have job growth in a few industries. And then the unemployment rate, you know, it was essentially unchanged, but it did tick down a little. I’m not sure I would put a lot of stock into that, because it’s a very small change, but that could be an encouraging sign.

JEFFREY BROWN: The numbers behind that assessment included a net gain of 80,000 jobs in October. That was about 20,000 fewer than projected, but revised estimates from August and September showed the economy created 102,000 more jobs than initially thought.

Also headed in the right direction, the number of long-term unemployed, those out of work for 27 weeks or longer, which fell to 5.9 million.

Even so, any optimism was tempered by this exchange at today’s hearing.

REP. KEVIN BRADY, R-Texas: Commissioner, at this monthly rate at net 80,000 job growth, how long would it take for us to return to the unemployment levels before the recession?

KEITH HALL: The short answer is never. To keep up with just the population growth, you probably need — my estimate is around 130,000 jobs. So, at 80,000, you’re not quite even keeping up with population. So, in fact, over a long time, you might even see the unemployment edge back up.

JEFFREY BROWN: In October, though, the unemployment rate, taken from a different survey, dropped from 9.1 percent to 9 percent. That was the first decline since July and the lowest rate since April.

At the G-20 economic summit in France, President Obama used the numbers to press again for action on his jobs bill.

PRESIDENT BARACK OBAMA: My hope is, is that the folks back home, including those in the United States Senate and the House of Representatives, when they look at today’s job numbers, which were positive, but indicate once again that the economy is growing way too slow, that they think twice before they vote no again on the only proposal out there right now that independent economists say would actually make a dent in unemployment right now. There’s no excuse for inaction.

JEFFREY BROWN: But back at the U.S. Capitol, House Majority Leader John Boehner had a decidedly different take on who’s to blame for the congressional stalemate.

REP. JOHN BOEHNER, R-Ohio, speaker of the House: Today’s job report underscores the need for immediate action on the more than 15 bipartisan House-passed jobs bills that are gathering dust in the Democrat-controlled Senate.

And so I urge the president to call on Senate Democrats to bring these commonsense bills to a vote in the Senate. As long as these bills are stalled in the Senate, I think it’s unacceptable for the White House to be anything less than 100 percent engaged in the legislative process.

JEFFREY BROWN: In the meantime, for many Americans, the long slog to find work goes on. And the Federal Reserve warned this week that unemployment is not expected to fall much through the end of next year.

And for a closer look at all of this, we turn to Catherine Rampell, economics reporter for The New York Times, and Ingrid Schroeder, director of the Pew Fiscal Analysis Initiative. Her study “The High Costs of Long-Term Unemployment” was updated and released earlier this week.

Catherine Rampell, I will start with you.

A lot of the commentary suggests this is one of those “it could have been worse” reports. So, start with the good news today and flesh that out a bit for us.

CATHERINE RAMPELL, The New York Times: Well, the good news is that we didn’t shrink. We did add jobs, so, you know, better than a poke in the eye with a sharp stick, as they say.

And besides that, the numbers for September and August, as you mentioned, were revised upward. So that does mean that things weren’t quite as bleak as we had initially thought.

A lot of economists that I have spoken with today have said that they are hopeful we will see upward revisions to the October numbers. So, even though they were not fantastic, maybe they also underestimated job growth this past month.

JEFFREY BROWN: Now, when you look at the sectors, Catherine, what do you see? Where the jobs — the jobs that did grow, where were they?

CATHERINE RAMPELL: Actually, it was pretty widespread.

There was growth in health care. Health care has been going gangbusters during the recession, after the recession. I mean, they’re sort of immune to whatever — whatever is happening in the economy. Another bright spot was in temporary help services. That area rose by 15,000 jobs. And that’s generally a leading indicator of good things to come, because employers will often sort of dip a toe in the water by hiring a temporary worker before they’re fully ready to commit to a permanent staffer.

JEFFREY BROWN: Now, Ingrid Schroeder specifically on the problem of long-term unemployed, there was some good news in today’s numbers, right?

INGRID SCHROEDER, Pew Fiscal Analysis Initiative: Well, what we looked at in our latest release is we looked at the third quarter for 2011. And what we found was 31.8 percent of people who are unemployed have been jobless for a year or more. That’s a historic high, a rate that we haven’t seen since the end of World War II.

And just to put it in a little bit of perspective for you, it’s about 4.4. million people, roughly the population of Louisiana. So, it is still a significant problem.

JEFFREY BROWN: I said a little good news because it went down a bit. But you’re saying, big picture, it really hasn’t changed very much.

INGRID SCHROEDER: Well, what we did is we looked at the data over three months. So we looked at the third quarter, and that’s an average number of the 31.8. So, when you look at the 31.4, it’s roughly in the same area and, you know, still a significant problem.

JEFFREY BROWN: And are you seeing the numbers continue to grow, even after the recession officially ended?

INGRID SCHROEDER: So, this was pretty interesting.

We looked back at the third quarter 2009, which was at the end of the — after the official end of the recession, and the long-term unemployment then for a year or more was about 16 percent. So we’re now at almost 32 percent, which is almost double, so not surprising, because unemployment is a lagging indicator, but, still, this is significant for people who have been unemployed for a year or more.

JEFFREY BROWN: And, of course, the special problems of those out of work for a long time in terms of getting back in, talk about that a little bit.

INGRID SCHROEDER: Well, what researchers call the unemployment scarring, it is a phenomenon where employers get — feel like when people have been out of work for a long period of time, that they may lose some of their job skills and they may face depressed wages in the future. So, that can be a problem for people who have been out of work for a long time.

JEFFREY BROWN: Catherine Rampell, what were people, economists you talked to talking — saying about — today about the long-term unemployed problem?

CATHERINE RAMPELL: I mean, this is a terrible, terrible problem facing the economy, because what happens is, as was just mentioned, the longer you’re out of work, the harder it is to find work.

So even if we have seen the number of long-term unemployed tick down — and it’s not necessarily clear if that number ticked down because those people found jobs or because they just gave up looking — but the longer they are out of work, the harder it is for them to find work, whether it’s because of stigma, because they give up looking, because their skills deteriorate.

And so the longer we wait to get them back in jobs, the tougher it will be. You know, what is currently a cyclical problem could actually become a more structural problem, that it will last with the economy going forward.

JEFFREY BROWN: And, Ingrid, what are the demographics of the long-term unemployed now?

INGRID SCHROEDER: Yes, when you look into that 31.8 percent, we did a couple of different slices of the data and we looked at the long-term unemployed both by age and by education.

One of the interesting things is that, although people aged 55 and older are the least likely to become unemployed in the first place, they are actually the most likely of the age groups to stay unemployed for a year or longer. As a matter of fact, 43 percent of workers aged 55 and older have been unemployed for a year or more. That’s higher than any other age group.

JEFFREY BROWN: And are theories as to why that is?

INGRID SCHROEDER: I don’t have any theories myself, but I think just finding out sort of what the demographics are behind the people who have been unemployed for such a long time will help our policy-makers hopefully craft some solutions to address this population.

JEFFREY BROWN: Now, Catherine Rampell, I made you start out with the good news, but getting back to the glass-half-empty part of today’s numbers, still 14 million people, Americans, unemployed, and as we heard in that clip from the BLS person, nowhere near what we need, right?

CATHERINE RAMPELL: Absolutely.

Typically, when we have had a sharp recession in the United States, it’s been followed by a very sharp and sort of mirroring recovery. And we lost a lot of jobs during the recession, and one would hope that those would come back. But at this rate of growth, basically, it will take forever for those jobs to return, which, of course, is very disconcerting for both the people who are without jobs and the future health of the economy.

You know, if you have this whole pool of workers whose skills basically are lying fallow, that’s not very good for economic growth.

JEFFREY BROWN: And, Catherine, the Fed, as we said, earlier this wreak signaled that there is just a lot more to come for some time, right?

CATHERINE RAMPELL: Right.

The Fed said that they expect unemployment to hover around 8.5 to 8.7 percent next year. And sort of the story of the recession and the recovery is that those numbers keep getting worse and worse the closer you get to reaching the time that is being forecast.

And I think this is one of the problems that has been haunting the Obama administration as well. Right before Obama came into office, some of his advisers put out now somewhat of an infamous report saying that, with the Recovery Act, unemployment would be about, you know, 6 percent this year, closer to 5 percent next year.

And, of course, things turned out to be much worse than initially predicted. And since then, you know, the predicted unemployment rates have just been getting higher and higher, and it’s been increasingly difficult to push those rates down.

JEFFREY BROWN: And, Ingrid, briefly, politics aside, for people out there in the real world, that long-term — that sounds dire for people in long-term unemployment situations.

INGRID SCHROEDER: The long-term unemployment situation is significant. But, again, long-term unemployment generally is a lagging indicator. So, as the economy starts to recover, everybody is hopeful that — so will the unemployment rate.

JEFFREY BROWN: All right, Ingrid Schroeder, Catherine Rampell, thank you both very much.

INGRID SCHROEDER: Thank you.

CATHERINE RAMPELL: Thank you.