Unemployment Report Indicates 'Jobless' Recovery

The July unemployment report released Friday showed further signs of a jobless economic recovery. Jacki Lyden discusses the labor market outlook with NPR's Frank Langfitt.

JACKI LYDEN, host:

The recession is over, but the American job machine is stuck in neutral. That's the message from the government's labor report for July. Yesterday, President Barack Obama addressed the disappointing jobs numbers.

President BARACK OBAMA: Climbing out of any recession, much less a hole as deep as this one, takes some time. The road to recovery doesn't follow a straight line.

LYDEN: Private-sector jobs grew by just 71,000 last month. But those gains were wiped out by the layoff of temporary census workers.�And Frank Langfitt, NPR's labor reporter, joins us here in our studios to explain where the job market is just months before midterm elections.

Hello there, Frank.

FRANK LANGFITT: Hi, Jacki.

LYDEN: So the economy had been growing slowly for months, but jobs just aren't bouncing back. What's going on?

LANGFITT: It's a classic jobless recovery. I mean, we had some growth from government stimulus earlier on. Last year, we had that Cash for Clunkers bill. So that drove people to buy more cars. That helped the economy. We had a first-time homebuyer tax credit, but that expired in the spring.

And so right now there's just not a lot of real consumer demand to drive jobs. People also feel a lot less wealthy than they did after the real estate bubble burst, and they're hoarding cash. They're not spending.

So if you're a business person right now, you look out there, you're kind of reluctant to hire a lot more people until you see strong demand for your products.

LYDEN: Were there any bright spots whatsoever in this report?

LANGFITT: There are a few. I mean, the average work week is growing. And that's good, because what businesses often do is they will add hours to their current workers before they hire new workers. So that trend is headed in the right direction.

And as you mentioned at the beginning, there was private-sector job growth. The auto sector, which had a really, really rough year last year, has improved; so has health care.

But a lot of those gains were also offset by big losses in state and local government, because their budgets are in real trouble and they're cutting back.

LYDEN: A lot of people still left behind. So on a human level, how does a sluggish job market like this affect the millions of people who remain unemployed?

LANGFITT: Dramatically. You know, most of the lost jobs were through no fault of the people who lost them. This was a man-made recession. It started with that reckless mortgage lending that we spent a lot of time talking about in 2007, the crazy risks that were taken on Wall Street.

And a lot of people out there have been unemployed for a long time. They're really frustrated. They can't find work. And we're seeing that in some of the numbers.

For instance, you know, the economy has actually grown for a whole year. But at the same time, the number of discouraged workers - these are people who are no longer looking for work because they don't think there's anything out there for them - has actually gone up nearly 400,000. So even as the economy grows, more people are actually losing hope.

LYDEN: After the labor report came out yesterday, President Obama visited a sign-making company in Washington, D.C., and he talked about the slow pace of job growth.

President OBAMA: For America's workers, families and small businesses, progress needs to come faster. Our job is to make sure that happens.

LYDEN: Frank, as we know, the midterm elections are in November. So what kind of effect could the market have on the president and his party?

LANGFITT: Considerable. You know, the economy is the biggest issue out there. And you now have more than 14 million people out of work. Many of them are expected to take their frustration out on incumbents, especially Democrats.

And economists, looking at the labor market going forward, they don't see a lot of improvement anytime soon. So between now and November, we're probably not going to see any sort of bump that's going to be terribly meaningful for voters. So the outlook for President Obama and the Democrats in Congress looks increasingly tough.

LYDEN: It will depend on whether those people vote, I suppose.

LANGFITT: Indeed.

LYDEN: Frank Langfitt is NPR's labor reporter.

Thank you again.

LANGFITT: You're welcome.

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