Jobless rate ticks up in jobs report
Job seekers wait in line at the Choice Career Fair held at the Doubletree Hotel in Dallas, Texas.
TEXT OF INTERVIEW
STEVE CHIOTAKIS: Right now we're gonna ask the big question. It's a simple one given the headline at the moment: a jobs report that shows more jobs lost. But the bright side came from private companies, which in August hired more people than analysts had expected. Liz Ann Sonders is chief investment strategist for Charles Schwab. She's with us live this morning from Connecticut this morning. Hi Liz Ann.
LIZ ANN SONDERS: Good morning.
CHIOTAKIS: Your first response?
SONDERS: My first response is this is quite a bit better than what the consensus was. Certainly a lot better than what many of the doomsayers felt we were going to get. You mentioned in the promo that if you net out the census workers, you actually had a 67,000 gain in private-sector jobs. But also, I think a lot of people did not pick up on fairly significant revisions up to private-sector payroll gains in the prior two months as well. So we're certainly not in clear skies yet, but this is quite a better report than I think a lot of people expected.
CHIOTAKIS: Certainly put into context. So with the unemployment rate ticking up to 9.6 percent, the August report had us down net 54,000 jobs. Does it surprise you at all that we keep losing these jobs in a so-called recovery?
SONDERS: Well again, the private-sector jobs were actually up 67,000. You have to remember the one-time nature of census workers. So I really do think in this environment you have to focus on the private sector jobs. The uptick in the unemployment rate by a tenth is not all that surprising. The reason why the unemployment rate is such a lagging indicator is cause what tends to happen towards the beginning of a payroll cycle -- in other words, when you finally start to get some traction and companies are hiring again -- you get a lot of displaced workers, discouraged workers who decide to come back into the workforce. Which has the initial effect of boosting the unemployment rate. And that's what happened this time. We had a huge influx of this prior unemployed, displaced workers deciding that the environment was improving enough that they could come back in to the workforce. Until they get a job it has the effect of boosting the unemployment rate and again, that is why it is such a lagging number. It tends to continue to rise well into a recovery.
CHIOTAKIS: You think there's anything that can bring it down, aside from just getting these jobs created?
SONDERS: Confidence. I think we are in a confidence crisis right now and I think we need to shore that up. I think you will probably see it happen a little bit more quickly because I think companies laid off more people than what the downturn in the economy justified, so I think it's just building that confidence back.
CHIOTAKIS: Liz Ann Sonders from Charles Schwab, thank you.
SONDERS: Thank you.
CHIOTAKIS: We appreciate it. Jill Schlesinger is editor at large over at CBS MoneyWatch. She's here -- as she is every Friday -- to give us a little perspective live from New York. Jill, good morning.
JILL SCHELSINGER: Good morning.
CHIOTAKIS: So why is it taking so long to get these jobs created. You heard Liz Ann talk about confidence. Is it a lack of confidence?
SCHELSINGER: Well, I think it's confidence in the short-term. But this is for two decades a problem that we've seen because basically for two decades this nation collectively went on a binge. They gave it like a huge frat party, where too many people spent more than they earned and amassed too much debt. And you know, it's hard to erase a two decade party in a couple of years.
CHIOTAKIS: Two decade party. So what were we doing over two decades that caused this problem?
SCHELSINGER: Well, we were amassing debt like crazy. And I know what everyone is thinking out there is that, "I wasn't doing that," "I didn't do that." OK. But too many people overindulged and that gave us a false sense of security. We didn't live within our means. And the rest of us goody two-shoes who had a good time at the party -- we saw our house prices rise and the stock market go up, we didn't really stop the others from going too far, and maybe we couldn't -- but a frat party with a big binge comes with a payback and that is a nasty hangover. That's where we are.
CHIOTAKIS: And this is the hangover where we are. I mean, do we put ice on our forehead? What do we do to get these jobs created?
SCHELSINGER: Well, besides the ice on the head, the splitting headache phase was last year. I think we're in the dull ache phase right now. You know, there's talk of a payroll tax holiday and some employer tax credits. In the end, I am afraid we're left with something that the instant-gratification American culture isn't used to, and that is patience until this hangover wears off.
CHIOTAKIS: And the federal government, anything?
SCHELSINGER: Probably not. No political will to get something done quickly here.
CHIOTAKIS: Jill Schlessinger in New York, we do appreciate it.
SCHELSINGER: Thank you.