Is a high unemployment rate that bad?
TEXT OF INTERVIEW
Bill Radke: Tomorrow is when government will come out with the October unemployment rate. Experts are predicting it will rise to around 10 percent. Marketplace’s economics correspondent Chris Farrell says he’d be happy if it went even a little higher. Good morning, Chris.
Chris Farrell: Good morning.
Radke: You’re hoping the unemployment rate rises?
Farrell: All right now, I know that sounds cruel. And I’m not minimizing job loss or the unemployment rate, but here’s why: It’s the way the unemployment rate is calculated. If more people are looking for jobs, the unemployment rate goes up.
Radke: So an unemployment-rate rise could just mean people are not despairing any more. They’re feeling optimistic and jumping into the pool.
Farrell: That’s right. So, you lost your job. You look for work. You’re officially counted as unemployed. Then after awhile you give up. You say it’s not worth it, no one’s returning my phone calls. They’re not answering my emails. You’re no longer counted in the unemployment rate. So that’s why if more people start looking at the economy, and the news we’ve been getting, and they start looking for work, the unemployment rate goes up.
Radke: But Chris, just because people are feeling more optimistic — if they are — does that mean there are more jobs to be had?
Farrell: Let’s hope so. Look, there are some signs that this economy is improving. Let me just run through them real quick: manufacturing, it’s doing better; industrial production, it’s running at a pretty healthy pace; and there was a report earlier this week that said employers announced the fewest job cuts in 17 months in October. Now, that’s the fewest job cuts. That means they’re still announcing jobs cuts, but again, the trend is going in the right direction.
Radke: So what are the signs we should look for that do point to hiring actually beginning to happen again?
Farrell: Well there are a couple. First of all, when we get the payroll cut number on Friday, the consensus expectation is for a job loss of 175,000. Let’s hope it comes in less than that. Secondly, temp workers. Once employers feel a little more optimistic, they don’t go out and higher full-time workers, they hire temps and they start working their existing work force harder. So those are some signs to look for to see that employers are actually working their workers more, and pretty soon might start hiring.
Radke: Marketplace’s economics correspondent Chris Farrell, thanks.
Farrell: Thanks a lot.
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