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Hiring drops jobless rate below 9%

Job seekers fill out applications for employment during a job fair in San Francisco, Calif.

TEXT OF STORY

Kai Ryssdal: It looks like -- finally, maybe, hopefully -- the American labor market has gotten the memo about the economic recovery. Not to say there aren't still rough spots. Housing, anyone?

But today's jobs report is a good bit of news with which to head into the weekend. The Labor Department says the unemployment rate in February was 8.9 percent -- first time it's been under 9 percent in two years. And there are some signs that that decline in the rate wasn't just people not looking for work anymore, as it has been the past few months.

Still, economists aren't completely sanguine about how quickly companies are adding jobs. It's still too slow, given how bad the recession was. Marketplace's Janet Babin reports.


Janet Babin: Overall, the economy added 192,000 jobs in February. When you look past the government jobs that were lost, businesses added 222,000. That's got to be good, right?

Dan Greenaus: It's good news, and it's not good news.

That's Dan Greenhaus, chief economic strategist at Miller Tabak. On the down side, Greenhaus says wages were flat in February. And so many people remain under-employed.

Greenhaus: In February, there were about 8.3 million working part-time jobs because they can't find a full-time job. Before the recession, that number was closer to 4 million, so it's basically doubled.

Absorbing the part-timers, along with those who've stopped looking for work, is taking longer than usual. Economists call the phenomenon a jobless recovery. This past decade, it's become a trend.

But Harvard economics professor Ken Rogoff says this is latest one has been the worst.

Ken Rogoff: People have been out of work a very long time, they're experiencing psychological problems, of course economic problems, even physical problems.

Under normal circumstances, the economy recovers, and jobs are created. So what's with the jobless recoveries?

Ethan Kaplan: Wow, that's a hard question. Economists really don't have a good answer to that question.

That's Columbia economics professor Ethan Kaplan. He has a theory about why companies aren't hiring: the huge pool of people looking for work, combined with the decline in unions, he says, has shifted the balance of power.

Kaplan: They hire more people.

Less bargaining power means companies would have to pay employees more -- something they're unwilling to do just yet.

I'm Janet Babin for Marketplace.

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Thank you Janet for your insightful follow-up.

It seems to me that out-sourcing was just getting started in the 1970s and '80s. Forty years of out-sourcing seems to have created quite a different landscape, today. So very many, if not most, of our manufacturing jobs are now overseas. I am guessing that the people who were first fired during the last ten years were the ones who's jobs were no longer needed, either because of out-sourcing or because of technology (look at the upheaval the internet has caused in the publishing industry).

I surmise that if a company really needs workers, they will hire them without a second thought to the idea that high unemployment leads to lower labor costs. I suspect they simply do not need more workers because computers and the internet allow more work to be done by fewer people, and that they would prefer to send the manufacturing jobs overseas because of the cheaper labor costs.

But, I suppose I am repeating myself, here. Thank you so much for writing...I do so love your show!

Hi Bob: thanks so much for your thoughtful comments. Yes, certainly outsourcing - companies producing goods outside the US - is a factor in high unemployment. But, unfortunately, the data reveal the problem is not as simple as that. Jobless recoveries are rather new; only surfacing in post-recessions since the early 2000s. Yet, companies have been outsourcing since the 1970s and 1980s. Economists have data that show that recoveries after those recessions were NOT associated with jobless recoveries. The experts I spoke with say something changed in the early 2000s, and economists are divided over what that change is. Ethan Kaplan believes companies have realized that high unemployment is actually a benefit to them, that allows them to keep salaries low and increases productivity without raising labor costs. He also believes the decline of unions has shifted the balance of power to employers, instead of employees. So he's saying that corporations want to keep unemployement high, and therefore have been reluctant to hire. Hope this helps. Thanks again for your comments. Best, Janet Babin

And balk at paying any kind of taxes on the humongous profits, hire an army very expensive tax lawyers and lobbysts to cotinue doing so. Corporate welfare any one ?

Oh, come on! It is so obvious! Why doesn't anyone speak of this? Companies are not hiring Americans because more American workers do not help their bottom line. Producing goods in America costs more than it does to produce them in China. Indian phone workers cost less than American ones. Of the jobs that are left, computers and the internet have made it possible for one individual to do the work of what used to take many. In summary, companies produce their goods in foreign countries where the labor cost is much lower. They buy computers here, instead of hiring people. They sell the goods at the same price (what they call supply and demand, instead of what the goods cost plus a percentage), they make enormous profits, pay their top executives incredible sums, and care nothing about the rest of us. It is not a mystery.

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