Stephen Reader covers politics for It's a Free Country, WNYC's interactive politics site. He joined the station in 2010 and has also worked for Studio 360, WNYC's Peabody Award-winning show about art, culture, and creativity.
Mayday! The Grim Jobs Report Explained
Friday, June 03, 2011
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.