Persistent Uncertainty Keeps Employers From Hiring
ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
GUY RAZ, host:
And I'm Guy Raz.
The November jobs report came out this morning. Expectations had been building all week. Economists predicted a turning point, anticipating strong job creation that would start bringing down the unemployment rate. Well, that's not the way it worked out. The U.S. economy added only 39,000 jobs last month. And the unemployment rate ticked up, not down, to 9.8 percent.
NPR's Chris Arnold reports.
CHRIS ARNOLD: The government says there are more than 15 million Americans who are unemployed. And on top of that, there are always thousands more people entering the workforce: young people looking for a job for the first time or discouraged older workers who start looking again. So, bringing down the unemployment rate is kind of like trying to swim upstream against the currents. And in November, the economy lost headway.
Mr. DAVID KOTOK (Chief Economist, Cumberland Advisors): Right now, we're not swimming fast enough to accelerate.
ARNOLD: David Kotok is chief economist at the investment firm Cumberland Advisors.
Mr. KOTOK: There's a dynamic going on in this labor force. You need 120 or 130,000 net new private sector jobs each and every month just to keep up with the demographic change in the country. We haven't even reached the level which holds things steady.
ARNOLD: That's why the unemployment rate went up. In November, we couldn't even tread water.
Mr. KOTOK: The hope had built up for the last few months that we were getting there. And this report said, uh uh, not yet.
ARNOLD: There's a chance that this report will be revised upward and isn't as bad as it looks and there are other indicators that suggest that the economy is improving, although slowly. To get a sense of what employers out there are thinking, throughout the downturn, we've been checking in with Fred Pierce. He runs a factory in Londonderry, New Hampshire, called Metal Works. It makes all kinds of parts out of sheet metal. And he says he's actually feeling a little more hopeful these days.
(Soundbite of factory)
Mr. FRED PIERCE (CEO, Metal Works): Yeah, things have gotten a little bit better. I hate to say that things are much better, but we're encouraged by less sideways movement in our business and maybe a little bit of an uptick.
ARNOLD: That's not exactly an enthusiastic off-to-the-races sort of optimism. And accordingly, many businesses like this one have started to hire but not that much. Pierce had to lay off nearly half of his workforce during the recession and he's been hiring people back a few at a time. And it sounds like he's getting close to doing some more hiring again soon.
Mr. PIERCE: Yeah, we've been interviewing probably five people a week over the last - since the beginning of November. We haven't hired anybody yet.
ARNOLD: So what's stopping you from pulling the trigger and hiring a lot of those people that you're interviewing?
Mr. PIERCE: It's one word: uncertainty. It's still very difficult for us to project what our sales are going to look like in 2011.
ARNOLD: That persistent uncertainty across a range of industries is keeping a lot of Americans out of work. Even people with college degrees are having trouble with 1 in 20 unable to find work. Economist David Kotok.
Mr. KOTOK: When you dig into this employment report, 1 out of 8 women who head a household with no spouse, that's the single mom with kids, 1 out of 8 is unemployed, looking for work, highly motivated to find income to feed the family and cannot find a job.
ARNOLD: Couple that with the length of this ongoing and painfully slow recovery and it's clear that the country is facing more economic hardship for working class people than it's seen in a very long time.
Richard Freeman is a labor economist at Harvard.
Professor RICHARD FREEMAN (Economics, Harvard): I mean the last time we had big unemployment, the early '80s, the Reagan period, that's when we had a big burst of homelessness. We've already seen big use of our food pantries. It's not just a normal recession.
ARNOLD: But at the same time, with every month that goes by, there are signs that the underlying economy is improving.
(Soundbite of factory)
ARNOLD: Back on the factory floor at Metal Works, CEO Fred Pierce says several different industries he makes metal parts for are placing more orders, and he is getting more confident.
Mr. PIERCE: We did buy one piece of new equipment last month. It cost about $150,000.
ARNOLD: Economist Richard Freeman thinks that the government needs to be doing all it can right now to come up with tax credits or other incentives to help push business owners like Pierce over the hump to jumpstart their pace of hiring.
Chris Arnold, NPR News, Boston.
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