Jobless Rate Ticks Up To 9 Percent
STEVE INSKEEP, host:
Today, the Labor Department releases the monthly jobs report, and we'll learn what the unemployment rate was for April. Last we heard, it was 8.8 percent for the month of March.
NPR's Tamara Keith is following this story.
Tamara, good morning.
TAMARA KEITH: Good morning.
INSKEEP: What are economists expecting?
KEITH: Well, the consensus is that payrolls will increase by 175,000 to 200,000 jobs, and that the unemployment rate will either remain the same or rise slightly.
INSKEEP: Rise slightly?
KEITH: It's possible.
INSKEEP: OK. Go on.
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KEITH: Basically, the economy is chugging along, but more slowly than we would like. You know, it's - we're creating a lot more jobs than when we were shedding hundreds of thousands not that long ago, but there are a lot of people out there for whom that is cold comfort.
I spoke with Carl Van Horn about this. He's the director of the Heldrich Center for Workforce Development at Rutgers.
Professor CARL VAN HORN (Director, Heldrich Center for Workforce Development at Rutgers): The hole that was dug in the labor market was so deep, that it was like using a backhoe to empty jobs out. And now we're sort of filling it back in with jobs at the pace that a shovel would use with a person. And so although it's good news, there's still a big hole we have to fill up.
KEITH: In other words, at this pace, we're going to be shoveling for a very, very long time.
INSKEEP: And even when you're adding jobs, you have new people coming out of school, going into the labor market. You have people coming back into the labor market who maybe had dropped out when the economy was really bad.
Well, what is making it so difficult for the economy to create enough jobs to keep up with the number of people who want to work?
KEITH: Well, businesses basically don't have to create jobs, and so they're not. You know, there's still a lot of reluctance out there to hire people.
INSKEEP: Even though stocks are rising, the economy's improving by many measures, businesses are just doing with - making do with the staff they have.
KEITH: Yeah. Companies are doing what's best for their bottom lines, and Professor Van Horn says that right now they're either hanging onto their cash or they're using it for mergers and acquisitions, or even paying dividends to shareholders.
Prof. VAN HORN: Whether they return to hiring is going to resolve with the fundamental assessment they're making about, you know, will they make more money if they actually hire people.
KEITH: And thus far, that calculation is coming out in favor of caution on the hiring front. And in terms of smaller businesses, Professor Van Horn says they're reluctant, too.
Dr. VAN HORN: Even though small businesses are often an engine of economic growth, for many of them, the situation is still not positive enough that they feel comfortable to hire, or that they can raise the money from financial institutions to expand their businesses.
KEITH: And until that changes, Van Horn says we can expect to see moderate job growth like we've been seeing - progress, but not the kind of dramatic improvement that would make anyone feel great about the economy.
INSKEEP: OK, so we're not expecting anything too great out of this unemployment report, and that then raises a political question among other questions. President Obama is looking more popular here after the death of Osama bin Laden. His approval rating goes up. But, of course, the thing once that settles down, the thing that is fundamentally on a lot of people's minds is the economy.
KEITH: Yeah. And a lot of people here in Washington are looking at the unemployment rate and they're saying the president is going to have a tough case to make about the state of the economy unless that unemployment rate comes down dramatically.
Matt McDonald is a partner at Hamilton Place Strategies. He's worked mostly with Republicans in the past.
Mr. MATT MCDONALD (Partner, Hamilton Place Strategies): I think the conventional wisdom around town is that above 8 percent is a very difficult story for the president to tell in terms of making the case that he's had a positive impact on the economy. Below 8 percent, he can start to make that argument.
KEITH: So McDonald did the math, and he says payrolls would need to increase every month by 189,000, starting with a report that comes out today, in order to get the unemployment rate down to 8 percent that magic number by Election Day. And so far in this recovery, job growth just hasn't been happening at that pace.
INSKEEP: Tamara, thanks very much.
KEITH: Thank you.
INSKEEP: NPR's Tamara Keith.
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