Mayday! The Grim Jobs Report Explained

Friday, June 03, 2011

The unemployment line at the FDR memorial in Washington, D.C. (Kate Ure/flickr)

Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on The Brian Lehrer Show, Peter Coy,  economics editor for Bloomberg Businessweek, and Heidi Moore, New York editor for Marketplace, discussed this morning's underwhelming jobs report and other economic news of the week.

And the beatdown goes on

For what feels like the millionth time, we're hearing that the economic recovery doesn't look so hot. Several reports came out this week rubbing our noses in it: we're not adding enough jobs, housing prices are falling, and many Americans have been out of work so long that they've given up looking—and the government has given up paying them unemployment insurance.

What a way to start your Friday. Can't we just ignore it? Heidi Moore said that's what the Obama administration is trying to do.

They really want to forget any of this is happening right now. [Chief Economist] Austan Goolsbee actually said that the administration stresses that you should not put too much faith into any one report. They're hoping it just goes away. Which actually might happen; we may just be having a short slowdown occurring for a few months and it may pick back up in the fall.

The prospect of a pickup is a lot to hope for, however. Peter Coy said that we find ourself in a stalemate, an economic Ouroboros that doesn't see anyone eager to break the cycle.

Economists call it a coordination failure, and I think that's what we're seeing now. Because employment is so weak, people don't want to spend. Because people don't want to spend, companies don't want to produce and hire. It perpetuates itself and we need to get out of it somehow.

'What you're seeing is stasis.' Uh-oh.

A moment of silence for the unemployed: not having a job makes it all the more difficult to get a job. There is perhaps no facet of the current economy that inspires more despondency. Peter Coy said that people who do have jobs are keeping them; if you're employed, you're relatively safe. If not, you're increasingly out of luck.

What you're seeing is stasis, companies sitting on their hands. The actual rate of firing is not that high. If you're out of the job market, you have a lot of trouble getting back in. There are companies that don't even look at unemployed people when it comes to making hiring decisions. They only recruit from people who have jobs. Imagine how frustrating that is for someone who's out of work, searching diligently, has skills to offer and isn't even being considered by employers.

The other kind of inflation

As if all that other bad news weren't enough, gas and food prices are on the rise as well. In part precipitated by environmental disasters overseas, unrest in the Middle East, and the stalemate in the States, it's getting more expensive to live. Heidi Moore pointed out that, strangely, the stagnant wages have kept the government from acknowledging inflation.

As we're going about our everyday lives, not everyone is getting paid more, lots are out of work, yet it costs more to meet the basic necessities of life. That's a big problem, because the only thing that really counts as inflation of the kind that will panic the Fed is to see wages go up at same time that gas prices go up. We're not seeing that, so all we're seeing is a squeeze on people's incomes.

Getting back to work

Both Moore and Coy said it was possible the economy would get better. Moore called the current situation "weird" and "volatile," and that just because the picture is bleak now doesn't mean it will stay that way. But nothing's going to change if we can't get people back to work.

One caller vented their frustration with profitable companies sending jobs overseas, or sitting on large cash reserves without adding anyone to the payroll. Moore said that we still haven't stumbled upon effective incentives for domestic job creation, and in fact it's a problem we've yet to really look at.

How do we keep corporations happy in the jobs they can create here in the U.S.? It's a problem we haven't been able to solve over past decade, so it's going to persist as long as it's ignored.

During the Great Depression, the answer was something like a public works program, which got entire swaths of people to learn new skills. Something like that might be the spur we need now, or programs in infrastructure. But lot of poeple aren't construction workers, and there have been suggestions that perhaps we could focus on the healthcare industry, train a lot more people to work in and around healthcare. But that, again, is a policy issue. Right now, there doesn't seem to be the capacity for that kind of hiring.


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Comments [17]

Rick from Manhattan

Regarding the loss of jobs, it is natural to expect jobs to move around when the world economy opened up after GATT and globalization. It is also natural to expect that the jobs with the least barrier to entry would move from industrialized countries to developing countries. Has anyone considered the thought that the real problem is not that jobs are leaving but that a number of countries, including the BRIC countries (except India), Germany and oil exporters both in OPEC and out, are amassing large trade surpluses. These surpluses mean they are selling but are not buying our goods, meaning that they to not contribute to employment here the way our consumption contributes to their employment. We have to run budget deficits to buy our output and their exports. The solution is to require balanced trade.

Jun. 03 2011 01:20 PM
mz from manhattan

I almost feel like an eventual FDResque public works program will be inevitable. because I don't see things getting better until the american worker is given as much consideration as the american corporation - and this isn't going to happen until there's an evolution of national thought away from the acceptance/expectation that corporations' purpose of profits is how things have to be. how many times have we heard about a choice a corp has had to make where people's lives were involved, but everyone shrugs and says, "well, they have to do what increases profits"? - and we're supposed to understand that, like the law of gravity, this law cannot be altered. I'm not saying profits should be disregarded, just advocating a balanced view of the role of the corporation in SOCIETY.

so, things won't get better for a long time. but someone will have to provide the jobs that corporations don't want to. this will be the government... if repubs will let it.

Jun. 03 2011 11:18 AM
mick from Manhattan

Isn't this just what Paul Krugman said would happen when the stimulus program was cut short by the Republicans in congress?

Jun. 03 2011 10:27 AM
Marcy from Brooklyn

I fall into two unemployed categories: artist and 60 and over. Freelance and artists work has dried up (fewer grants, teaching artist work) and over 60, well.... How do you see the future for either/both of these two categories?

Jun. 03 2011 10:25 AM
RJ from prospect hts

And yet, the idea of govmt investing in needed services and infrastructure that cannot be moved overseas--the dreaded "stimulus" or "FDR/Keynsian" expenditures--are attacked.

Nicole is so on target--the so-called discouraged worker has been at about 16% for at least a decade. Presidential admins have been doing this so as not to reveal the true level of unemployment in this country.

No, that the Republicans have been allowed to refocus the urgency on the "deficit" and the Fed on fears of "inflation" to gin up worries about worker salaries, heaven forbid, rising are allowed by the Democrats and the media to become the employment focus.

Jun. 03 2011 10:25 AM
Mike from Madis

I don't expect the down economy will improve
until there is some evidence of competent government.

The current evidence is that companies can commit major economic crimes and no one
will be held accountable. The perpetrators
will talk about "weak numbers", etc. etc.
but those who hire see that if they make a leap of faith in any form they can have the whole thing yanked out from under them without any fore warning AND no consequence for those responsible.

The financial system depends on:
clear rules
people playing by the rules
people not playing by the rules being removed from the game.

Jun. 03 2011 10:24 AM
Mary from nyc

I have several friends looking for work. Because the market is flooded with people looking, employers are cherry picking only those who fit into what they want to pay, making it further frustrating and demoralizing to those are looking for jobs.

Jun. 03 2011 10:23 AM

I lost my non-tenure teaching job two years ago. I'm looking for anything at this point as I realize I will probably never teach again - a job I worked very hard to get and loved.

Jun. 03 2011 10:23 AM
Jamie from Manhattan

I left a full-time job with benfits in another state to move to NYC last fall. I have only a few years of experience and found it difficult to find a job for the six months that I looked before the move. I moved to the city thinking it would be easier after I moved and would be able to make connections here. Instead, I have been unable to find anything. The process of sending resumes out into the ether has become demoralizing and feels almost useless at this point. I patch things together with part-time work below my skill level, but still cannot support myself this way.

Jun. 03 2011 10:21 AM

Gosh - 2 commentators who have actually realized that we're in a jobs crisis! It's only been going on since '08.

Have they also seen the dismal jobs creation during the Bush years' tax cuts & their unfortunate Obama continuations? They're posted all over - especially by Robert Reich & Dean Baker.

I hope they can shout their conclusions to the Clinton Cabal of out-of-date "best and brightest" economic White House advisers.

They can also check the lack of increase of Federal revenues during tax cut periods.

Just some thoughts that might be useful.

Jun. 03 2011 10:20 AM
Sheldon from Brooklyn

Yes, we were told that extending the Bush tax cuts was supposed to create jobs, jobs, jobs. What happened?

Jun. 03 2011 10:19 AM
mick from Manhattan

I have been out of work for almost 2 years. I have applied to hundreds of jobs, not in a scatter-shot way, but carefully directed toward opening for which I am well qualified. I have 20 years experience in IT computer and network support and administration...a kind of work that cannot be sent overseas. I on several occasions I have followed up and found that the people hired had less qualifications than I have. BUT they were younger. What is the older worker to do? The politicians talk about increasing the retirement age but they offer no effective prevention against age discrimination.

Jun. 03 2011 10:18 AM
joy from Manhattan

I have been out of work since early October 2010, altho I had a job for a short time earlier this year. I have been doing all the right things and yet, the only job offers have been either in lousy neighborhoods or way below my minimum salary that I would accept. I am paying for COBRA and do not know what to do anymore. I have never felt so discouraged. It is true, employers hire those who are currently in workforce. That is upside down logic to me.

Jun. 03 2011 10:18 AM

I have been unemployed for over 10 months and I seriously wonder if I will work again. I am truly tried of being nothing more than a statistic. I am a highly qualified worker and many jobs exist in the market for me but I am experiencing ageism and the only jobs that I am being considered for are ones that I will be overqualified for and the pay is half of what I was making.

Jun. 03 2011 10:17 AM

Yet again, two business reporters demonstrate how little they understand about economics.

1. We see again the standard line of the past 30 years: Forget about bad job numbers, obsess on the hand-wringing of billionaires and millionaires who feel hard-done-to if they don't get their newest tax cut.

2. The Keynesians, or neo-Keynesians, have been proved right _again_. But where does NPR and WNYC turn for comment? Moody's, Mark Zandi (who has a perfect ZERO batting average), and the Wall Street Journal, which never misses a chance to shill for its billionaire masters.

3. The guest from Bloomberg gets it partly right: The problem is demand. American's cannot buy. Why? We're losing jobs. We are seeing _declines_ in pay rates. We have ZERO job security. ZERO retirement security (thanks both to Republicans and Democrats).

4. The job creation rate must be _much higher_ than a holding tactic. We didn't just lose jobs since 2007. We failed to create jobs. Those are two separate numbers.

Jun. 03 2011 10:17 AM
Nancy from Harlem

The Republicans insist that taxes on the wealthy must remain low because those folks create jobs. OK, the taxes are low. Where are the jobs? The Obama administration should jump on this opportunity to point out the bankruptcy of the Republicans' tax position.

Jun. 03 2011 10:13 AM
mz from manhattan

you mean extending the tax cuts for the wealthy isn't creating jobs?! I'm shocked.

Jun. 03 2011 10:13 AM

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