Umemployment could stay this high for a decade
TEXT OF INTERVIEW
Steve Chiotakis: Stock markets had big gains despite a less-than-stellar jobless claims report yesterday. Couple that with a jobless rate of 9.5 percent, and we get an idea of how much recovery the job market's going to need. Former Labor Secretary Robert Reich is with us now to talk about what he thinks we can expect going forward. Good morning, Bob.
Robert Reich: Good morning, Steve.
Chiotakis: Why is unemployment staying so high?
Reich: Well the short answer is there's just not enough demand of the system. And employees aren't going to start hiring until they know consumers are going to start really buying again.
Chiotakis: And where does the unemployment rate need to be, Bob? I mean what should the goal be?
Reich: Well roughly about 5 percent. We got down to 4 percent in the 1990's, but most economists would be satisfied if we were back at 5 percent unemployment.
Chiotakis: How long before we get there?
Reich: Well, that's the question. I think at least three or four years at the rate we're going, Steve, which is bad enough. But there's a possibility we won't see 5 percent unemployment again for a decade. In fact, some people are predicting joblessness is going to stay high.
Chiotakis: And why is that?
Reich: Because so many employers have used the recession to do what they've wanted to do for a long time, and that's pair back payrolls using the Internet to outsource abroad and new software applications to do many of the things that people used to do. These jobs are never going to come back, and if this becomes the new normal, we could be seeing a permanent reduction in demand for workers.
Chiotakis: So what's what we have to deal with, is permanently high unemployment?
Reich: Well, I'm not that pessimistic, but I do worry that in order to get new jobs, or keep the old jobs, millions of Americans are going to have to accept lower wages. And the long-term problem will not be jobs, it will be incomes.
Chiotakis: Former Labor Secretary Robert Reich, current professor of public policy at the University of California Berkeley. Bob, thanks.
Reich: Thanks Steve.