Jobs: Labor market improving, but it’s not enough
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TEXT OF INTERVIEW
BOB MOON: How’s this for a sad sign of the times? Starting with the new year, the government will be changing the way it records long-term unemployment. It will track the length someone has gone without work — not just for the two years it does now, but out as far as five years. Our own Mitchell Hartman has been tracking the ups and downs of unemployment all year, and he’s here now to review our progress. Thanks for joining us.
MITCHELL HARTMAN: Good to be here, Bob.
MOON: So we end 2010 with some sobering stats: unemployment at 9.8 percent, only 39,000 jobs added last month, the government’s actually slashing payrolls, private employers are barely picking up the slack. That sounds a lot like we’re running in place. Are we making progress or not?
HARTMAN: Well, you know, I can run down for you a long list of worsts and near-worsts still at this point, what, 18 months into the recovery. Long-term unemployment, competition for the jobs that are available, the number of discouraged workers. Then again, when you look at where we were one year ago, although it may not feel like it, things are actually a lot better.
MOON: Well we know a lot of Americans don’t feel that way because in November voters threw out a lot the folks who presided over the so-called recovery so far.
HARTMAN: Right. But the labor market really is in better shape. I mean, economically at least, though obviously not if you’ve already been unemployed for a while or maybe you sit across the breakfast table from someone who has. But let me paint this picture: In December of last year, we lost 100,000 private sector jobs. Sometimes last year we were losing 700-, 800,000 a month. That is just staggering. Fast forward to this year, every single month private employees have added workers. It’s not a huge wave, but it’s not a little trickle either. It averages more than 100,000 a month. And that’s really not so bad.
MOON: Not so bad, but is it enough jobs to whittle away at unemployment?
HARTMAN: Well, no, it really isn’t. And this is what keeps economists awake at night. The problem is the layoffs in the recession were just so massive, we’re not catching up at all now. We’re barely adding enough jobs for young people entering the work force, in fact.
Gary Burtless is a labor economist at the Brookings Institution, and he says basically this has never happened after a recession going all the way back to World War II.
GARY BURTLESS: The truly extraordinary thing about the recession and the recovery so far has been that employers are not creating job openings at the pace we expect. Looking at the experience of the last year, it would probably take 25 years for the unemployment rate to get down to 5 percent, which is what full employment looks like.
MOON: OK. So seems to me this is the question: So what at this point would get employers to hire more?
HARTMAN: Well, we’re about to get more than $800 billion in federal stimulus that comes from the tax cuts and extending jobless benefits. That could add a few million jobs, that’s not nothing. Liberals have been pushing for a much more aggressive attack on unemployment: a new public works program (like in the Depression), a payroll tax holiday for employers that would make it cheaper to hire people. But with deficit hawks roosting in the high places, as it were, I wouldn’t hold your breath. Fundamentally, the economy just needs to get stronger. Consumer and business spending is still weak, so employers are incredibly cautious.
MOON: But the economy is expected to grow faster now. We’ve been hearing that in recent days. So in a year, will we say the unemployment crisis of the Great Recession is finally behind us?
HARTMAN: Probably not. I’m guessing when we do this next year, we’ll still have unemployment around 9 percent. It’s going to be awful for people who’ve already been unemployed a long time. But for the rest of us who still go to work every day, Gary Burtless says things are actually looking up.
BURTLESS: Their work week is rising, their hourly pay is improving in inflation-adjusted dollars, and their chances of getting laid off has declined.
So what we’ve got is recession-scarred survivors doing better in this leaner, meaner economy. And then the walking wounded: these people still looking desperately for work even as the economy continues to recover.
MOON: Makes me feel a little thankful, Mitchell.
HARTMAN: Me too.
MOON: Mitchell Hartman, thanks very much.
HARTMAN: You’re welcome.
MOON: We’ve got more of 2010’s top business stories in our Year in Review series, as well as our most popular slideshows, videos and other features.
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