David Brancaccio: A lot of economic gloom to go around on this Friday. Unemployment in European countries that use the single currency, has risen to 11 percent, the highest since they created the statistic 17 years ago. Manufacturing in China is looking weak. Add to this news today that not all that many jobs are being created in the United States. The government said that payrolls grew today by just 69,000 in May, much lower than forecasts. The headline unemployment rate went up by a tenth of a percent as well.
I spoke about this to the chair of the President’s economic advisors, Mr. Alan Krueger, good morning.
Alan Krueger: Good morning, David.
David Brancaccio: So when you think about somehow restoring our labor market to health, what is taking so long?
Krueger: Well, the problems in the labor market were a long time in the making. Before the recession struck, the U.S. economy was not creating enough jobs. The recession made the challenge much worse. On the other hand, we now have had 27 months in a row of private sector job growth — 4.3 million jobs have been added in that period. There are going to be ups and downs along the way. We certainly hope to see stronger job growth. I think it’s important that we take the steps that we can to strengthen our recovery, to strengthen job growth, but the situation is much better than it was at the time the president came to office.
Brancaccio: I think people will acknowledge it was a very deep economic downturn, but the administrations been in office, what you’re your fourth year.
Krueger: Well you know, when the president walked into the oval office, we were losing 800,000 jobs a month. The economy was contracting at a 9 percent annual rate. Some of the problems that were causing that economic crisis were clearly going to continue, for example, the overbuidling in housing. But very soon after the president came to office the economy began to expand, and as I said before we’ve now had 27 months of job growth. Economic and job growth in this economic recovery is a challenge, but that’s typically the case when you come out of financial crises. We face external headwinds coming from Europe, coming from spikes in gasoline prices, which are fortunately receding now. And with all of those headwinds, we have been expanding for 11 quarters in a row and as I mentioned 27 months in a row of job growth.
Brancaccio: Now when you look at the unemployement rate as opposed to the payroll growth that you did see, some of this must be — at least help me with the reading of the numbers — a larger laborforce. You must draw some encouragement from that.
Krueger: Well the numbers are volatile month to month, but that’s exactly what happened. According to the household survey, there were an additional 642,000 people in the workforce and 422,000 of them found jobs. So that’s a sign that we need faster job growth to accomodote those who join the labor force and the president has made a number of proposals to strengthen job growth. In Minneapolis today, outlining steps from a real common sense checklist, including things like providing a tax credit to small businesses that expand their employment, helping families refinance their mortgages, also helping our veterans and service members right now to get credentials that can help them gain jobs in manufacturing. And David, one bright spot has been manufacturing — half a million manufacturing jobs over the last 27, 28 months — the most since the mid-1990’s.
Brancaccio: Of course always good for the economy. Alan Krueger, chair of the President’s council of economic advisors, thank you very much for this.
Krueger: Thank you, David.
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