Steve Chiotakis: The nation's unemployment rate dropped to 8.6 percent in November -- that's the lowest level since March of 2009. The Labor Department report out today also reported the economy created 120,000 jobs last month.
Alan Krueger is chairman of the White House Council of Economic Advisers. He's with us now from the White House. Good morning, sir.
Alan Krueger: Good morning.
Chiotakis: So, it looks like some good news, right?
Krueger: I think that the picture we get from today's employment report is the economy is continuing to heal, from the very deep recession that started at the end of 2007 and accelerated in 2008. But the size of the hole is pretty deep; it's going to take us a while to dig our way out. But we're headed in the right direction.
And I think it's particularly fortunate that Congress passed the payroll tax cut and extended unemployment benefits at the end of last year, at the president's urging. I think it's important to continue those policies.
Chiotakis: Three hundred thousand people, though, stopped looking for work last month -- more than that actually. Which makes that rate -- that 8.6 percent unemployment rate -- look a lot better than it actually is. Why have that many people given up looking for work?
Krueger: Well, about half of the drop in the unemployment rate was due to a drop in labor force participation and about half was due to job creation. One of the things we've seen, if you look at the labor market as a whole, is that the long-term unemployed had been staying in the labor force.
And I think one of the things that has helped them to stay in the labor force is extended unemployment benefits. Unemployment benefits require people to search for a job, and on top of that, they obviously help households to meet their bills, pay for their mortgages. And that supports the economy overall.
So I think what we need to do is focus on the pace of job growth -- ultimately that's what's going to put Americans back to work. And in particular, it has to be private sector, because state and local governments are in very difficult budget situations -- they're continuing to layoff workers. What we would like to see happen is a quickening of the pace of private sector job growth.
Chiotakis: I want to change gears just a bit and talk about Europe and the ongoing debt crisis there. That has to have you guys concerned -- I mean, if things get worse there, could that drag down U.S. job growth even more?
Krueger: Developments in Europe are a major risk for the world economy; 20 percent of our exports go to Europe. If there's a slowdown in Europe, that will affect their demand for our products. I think that's one of the reasons why it's important that we strengthen our own domestic demand. And two ways of doing that are extending the payroll tax cut, and also extending unemployment benefits.
But I think you're absolutely right that it's important to monitor what's going on in Europe, and I think it's important for members of the European Monetary Union to address their problems.
Chiotakis: Alan Krueger, chairman of the White House Council of Economic Advisers. Chairman, thank you.
Krueger: Thank you very much, Steve.