New Jobs Numbers: Has Economic Recovery Reached A Tipping Point?

The economy added 288,000 jobs in June and the unemployment rate dropped to 6.1 percent. NPR's Marilyn Geewax and The Wall Street Journal's Sudeep Reddy discuss the latest jobs report.

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MICHEL MARTIN, HOST:

I'm Michel Martin and this is TELL ME MORE from NPR News. We're going to start the program today talking about the new jobs numbers out today. The economy added 288,000 jobs. That's better than analysts expected. The unemployment rate dipped to 6.1 percent. We're wondering about who's finding work and who is still struggling. The unemployment rate actually went down for women and African-Americans, but the rate actually went up for one group that might surprise you and that is teenagers. And some economists point out that many young people still aren't even counted in those numbers. Here to talk more about this is Marilyn Geewax. She's NPR's senior business editor back with us. Welcome back, Marilyn.

MARILYN GEEWAX, BYLINE: Hi, Michel.

MARTIN: Also back with us once again, Sudeep Reddy. He's an economics editor at the Wall Street Journal. Welcome back to you as well.

SUDEEP REDDY: Hi, Michel.

MARTIN: So, Marilyn, where was most of the growth and why did the unemployment rate go down for black people and for adult woman?

GEEWAX: This is a really good report, first of all. Let's just say that, you know, economists were making estimates and this blew by pretty much everybody's estimates. And the gains were across the board. But what helped women and minorities were - some of the hiring was most intense in education, health care, the public sector, hospitality, taverns - all kinds of things where, a lot of times, women are concentrated in those kinds of jobs. And so they benefited. Men were finding work in construction - not so much construction, as manufacturing, transportation and warehouses. So thinking, too - everybody came out better, but it really perked up the most for people who were in those more - those public-service, education, health care jobs.

MARTIN: Sudeep, anything you want to add to that and anything you want to point out about who's being left out? I just note that the report says the rates for adult men, whites, Hispanics showed little change, and the jobless rate for Asians - little change from a year earlier. Anything you want to add to all that?

REDDY: Well, Marilyn's right. We're seeing remarkably steady gains in jobs across the board. It's been a steady half-year or so, so far, and we're just going into the sixth year of the economic recovery now. We just passed the five-year mark. You would hope that once you're at this point, you'd see a lot stronger gains. This is a recovery that has been frustratingly slow. We've all felt this - felt it along the way. What you're still seeing is there are millions and millions of people who are being left behind by this. Of the 9 million people who are still unemployed, a third of them have been unemployed for six months or more - that is a very long time. And a lot of people who have been unemployed for a long time end up dropping out of the labor force. That's one of the numbers beneath the surface you see. Labor force participation has been dropping. It's at a three-and-a-half decade low. That is a really concerning thing in the long term for the labor market when people just give up hope and leave.

MARTIN: Marilyn, you've been telling us repeatedly that there has been growth, but it hasn't been enough to kind of soak up the people who have been unemployed for a long time. And we're also seeing evidence that the people who, for some reason - people who've been unemployed for a long time seem to be discriminated against in the job hunt - that they seem to be less likely to get employment the more - the longer time goes on. Do we see any evidence that the growth is starting to finally kind of impact the people who've been long-term unemployed?

GEEWAX: I think maybe we really are at that tipping point when you look at these numbers. You know, it was in June, July of 2009 - five years ago right around this time that we finally tipped from when things were just falling straight down to finally starting to bounce back up. It took a long time - that point five years ago to get to where we are now. We've basically just been grinding our way out of this deep hole. But now we seem to be poised for growth because what's happening is - while Sudeep's certainly right about - there are all these people who are still unemployed. A lot of employers are really realizing - they're looking around and saying, hey, I actually need more workers. A lot of people are going on vacation. They want to, you know - hotels are hiring, restaurants are hiring. So you're really starting to get people back in the workforce. That'll start to absorb these people who have been on the sidelines, and that's going to help do a couple of things. It'll draw some people back out of that pool of long-term unemployed, but also, wages are going to have to start going up. We really haven't seen wage growth, but at some point, if you want to hold onto your best workers, you're going to have to offer more. And we just saw in recent weeks both Gap - you know, The Gap with all its stores and IKEA.

MARTIN: The retailer.

GEEWAX: Right. The retail stores - they're starting to raise voluntarily, saying we're going to start paying more than $10 an hour. And as soon as they announced that, they're starting to see more applicants. People who are teenagers who say it isn't worth it to try to get to work, I can't afford the clothes, I can't afford the gas, I can't afford to get there. Maybe at $10 an hour - now you're thinking well, actually, I could afford that bus fair, and maybe, I will come into the workforce. So what you've got to see is this continuing growth in employment to start to get the long-term unemployed back into the workforce and to start to draw some of these people who are on the sidelines back into working. But that's going to take some wage gains, and maybe we're going to start to see a little of that.

MARTIN: If you're just joining us, we're digging into this month's jobs numbers. We're speaking with NPR's senior business editor Marilyn Geewax. That's who was speaking just now. Also with us, Sudeep Reddy of the Wall Street Journal. Sudeep, dig into that a little bit more - the picture with the young people, if you would. Marilyn was just saying that - you know, we talked a lot about the unemployment picture among young people. We find that it used to be customary for teenagers to work in the summer. Now we find that far fewer are working in the summer. What's the picture now?

REDDY: Far fewer are working in the summer. Far fewer young people who are enrolled in college are actually holding jobs than they were before perhaps it's because they have student loans to back them up and that's available to them. But we're still seeing, even while the economy recovers in the labor market recovers, one of the last groups to recover is going to be younger workers. And that's just by virtue of the fact that a lot of the people who are on the sidelines looking for work tend to be more experienced. They tend to have skills already that employers are going to want and they're not necessarily looking for huge wages. We've all heard stories of people who have taken pay cuts to go back to work and just because they will take a job that's available to them. And when you have people doing that that leaves fewer job opportunities for younger people to come into the workforce. There are some remarkable things going on in this group right now. One out of 6 young people who are under the age of 21 who have graduated from high school are not actually working or in further education. That's 1 million people who have graduated from high school who are under 21 who are not working looking for work or in school that's remarkable. They're sitting around waiting...

MARTIN: What are they doing?

REDDY: ...Hoping that the recovery will catch up to them. A lot of them - they're with their parents, a few of them might be doing jobs that aren't going to be calculated, but that's a remarkable number. When you think of how many people are being set behind by this recession and very slow recovery these are people who are going to see, for decades down the road, lower wage, lower opportunities as a result of this recession and weak recovery.

GEEWAX: Michel, I...

MARTIN: Wait, I just wanted to ask one quick question of Sudeep. You were telling us - it used to be, in the past, that young people in that situation tended to be girls. And a lot of the speculation was they were getting ready to get married - people get married at a younger age. Now that's changed. Apparently, more - this group is more likely to be boys. Is that correct?

REDDY: And there are young men who are unemployed. There are a lot of factors driving that. There are more young women who, of course, are going to school and are getting educated instead of starting families which makes a big difference in all of this.

MARTIN: Marilyn, you wanted to add?

GEEWAX: Yeah, this just brings us back to this wage issue though. When you think about what it takes to get to work it not only takes job skills but really you have to have close enough to be able to pay for a lunch you have to be able to put gas in the car or however you need to get to work. In many cases, it's childcare as well. So you have a lot of barriers to entry. And if you're only making $7 and 25 cents an hour it may not add up for you to work. The last time the minimum wage was increased, the federal minimum wage, was exactly five years ago. It was July of 2009. Since that time, we've had a lot of inflation. For example, this very week the average price was exactly five years ago it was - for a gallon of gasoline is $3 and 70. That's the highest level we've seen coming into a Fourth of July holiday weekend since 2008. So that a high barrier to entering the workforce is paying for all of that just to get to work. So really this business of adding more workers and then having to give some raises will actually start this process, one hopes, of healing this job market of offering young people enough money to have the incentive to get back into the workforce and look for those jobs so it...

MARTIN: Well, lately there's a lot of debate about that, Marilyn, because a lot of the people who are advocating against raising the minimum wage argue that it advantages current workers at expense of potential workers like young people. And I wanted to ask what's the current - what are some of the developments in - on that story? You mentioned that The Gap, a large retailer, says that they're voluntarily raising their minimum wage. Any other news on that front?

GEEWAX: Yes, well, about 20 states have raised the minimum wage and a lot of localities are doing that. Seattle recently raised its minimum wage saying we're going to push it up to like $15 an hour for a couple of years, other cities are doing like-wise. So you're starting to see all around the country this push from the bottom of states, localities and even individual employers saying we really do need to raise wages. But of course, that also, you know, when it's more expensive to hire somebody maybe you don't hire as many. So it could also have a negative impact. It's a tricky thing to heal a job market that got as battered as this one did. There're a lot of different steps that have to be taken. The good thing about today's report is that we seem to be making those steps. We're sort of slowly climbing that rung out of this deep hole - and the news is encouraging but as Sudeep certainly points out there're many, many problems to still overcome.

MARTIN: Sudeep, finally- you're kind of at the nexus of this debate about the economy kind of where you are. Tell us what are some of the conversations that people are coming having with you and your reporters about what needs to happen for the economy to really kind of pick up some steam?

REDDY: What we've been waiting on all along is for companies to step up, to feel more confident about the recovery that the conditions are going to remain robust. We're seeing that a bit but they're still all these risks on the horizon particularly overseas. Any global company has look around whether it's China, or Russia or the Middle East. And you see a lot of trouble on the horizon. At home you actually have to move from this phase of temporary support for the economy we've all gone through the stimulus and the Federal Reserve keeping interest rates really low, to doing things that will support growth in the long run. These are the things we hear about all the time like infrastructure, like immigration, overhauling the tax system, improving education, all those things are stuck right now in our policy debates. You've got Congress moving very little on this front and until you actually have a more meaningful progress on that front you're not going to see the longer-term recovery that we want at the pace we want.

MARTIN: Sudeep Reddy is an economics editor for the Wall Street Journal. Marilyn Geewax is NPR's senior business editor. Both joined us in our studios in Washington, D.C. Thank you both for coming.

REDDY: Thanks, Michel.

GEEWAX: Great to be with you.

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