Labor Day Check On The Jobs Market
DAVID GREENE, HOST:
All right. Well, this is Labor Day, and at the end of this week, we get the government's latest snapshot of the job market. So it seemed like a good day for an update on the state of American workers. And to that end, we turn, as we often do, to the economics editor of The Wall Street Journal, David Wessel.
David, good morning.
DAVID WESSEL: Good morning.
GREENE: And a Happy Labor Day to you.
WESSEL: Same to you.
GREENE: Well, let's step back for a moment and talk about the state of American workers. I suppose in this economy things aren't great.
WESSEL: Things are definitely not great. They're far from that. Over the past decade, over the ups and downs of the economy, once you take inflation into account, the compensation of the typical American worker - their wages and benefits - haven't risen at all. And in the more recent period, even though the economy has been growing for two years now, we still haven't recovered from the recession.
The Labor Department recently said that there were six million workers who had lost a job they'd held for at least three years, in 2009, 2010 or 2011. Of those, 45 percent hadn't found work. And of those who had found time jobs, half of them had to settle for lower wages, a third of them for wages that were 20 percent or below their old job.
Over the weekend, Ben Bernanke, the chairman of the Federal Reserve, speaking at the Jackson Hole conference that the Fed has, said that unemployment is still 2 percentage points higher than normal - that's about three million workers - and he referred to as the stagnation of the labor market and says it was a subject of grave concern, which is pretty tough words coming from the chairman of the Fed.
GREENE: Hmm. OK. So we have the Fed chairman saying he is gravely concerned. We get this jobs report coming on Friday. I mean, could it point in one direction or another?
WESSEL: Well, it will probably point in one direction or another.
GREENE: That would be a good thing.
WESSEL: The report for July was encouraging - 163,000 jobs were added. And as you say, on Friday, the government will revise that July number and give us a number for August.
Well, if the July number holds, and August comes close to that July pace, that would suggest that, finally, the pace of hiring is picking up. Unfortunately, the best guesses of the moment is that that didn't happen; that manufacturing won't add as many jobs as it did in July; that state and local governments are still paring their payrolls; and that the sectors of the economy which have been adding jobs, say, like health care, just can't pick up the slack.
We seem to be stuck in an economy that's growing, but growing so slowly that it can't bring the unemployment rate down very fast.
GREENE: Well, I hear you use words like growing. You keep talking about adding jobs. I mean, if the U.S. economy is creating jobs, why isn't that a sign that things are getting better?
WESSEL: Well, they are getting better. The problem is they're not good it's a little bit like a car going up a mountain and it's barely climbing the mountain. It's going up but it's climbing at a very slow rate. So when you look into the future and you say, how long will it be till we're back at full employment? We're talking years at this pace, and that's really very unsatisfactory.
I mean, one way to look at it is this way. When the recession began back in 2007, there were about two jobless workers for every job opening. At the worst of the recession in 2009, there were more than six unemployed people for every job. At last count, there were like 3-3.5 for every job opening. Better, but definitely not good.
GREENE: Better, but not good. Well, you mentioned the Fed chairman, one thing he's concerned about is that the unemployment rate, it seems stubbornly stuck above 8 percent. And I wonder how much of that is the unemployed just not having skills that employers are looking for at the moment?
WESSEL: Right. There's a lot of conversation at the moment about that among economists. One does hear manufacturers and others complain that they can't fill openings - at least not at the wages that they're offering. The Brookings Institution, a Washington think tank recently took a city-by-city look at job openings, and they found that the jobs that were opened tended to require more education than the local population has. And they found that unemployment was higher in areas where that gap was larger. But the bulk of the evidence is that a lot of the unemployment really is the old fashioned kind - the kind that would go away if the economy was stronger. That's what Ben Bernanke said at Jackson Hole. Ed Lazear, a labor economist who was one of George Bush's economic advisers, said exactly the same thing.
And the New York Federal Reserve has done some number crunching on this, and their number crunching suggests that at most one-third of the increase in unemployment that we've seen over the past few years can be pinned on this so-called jobs mismatch.
Well, all that adds up to something. To economists that tells you that if the government, whether it's spending a tax policy or the Federal Reserve would do a little - could put their foot on the gas a little - and get a little more going in the economy, the unemployment rate would come down. But unfortunately, it's coming, it's not happening very fast and there's a lot of debate about whether that really works.
GREENE: All right. On this Labor Day, that is David Wessel, economics editor of The Wall Street Journal.
Always good to have you on the program, David.
WESSEL: You're welcome.
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