Jobs Report Disappoints Economists Private sector hiring was essentially flat in May, with fewer workers being hired than expected. It's disappointing news after signs earlier in the year of a labor market recovery. The economy did add 431,000 jobs, but the overwhelming majority of those were temporary government Census positions. Only 41,000 private sector jobs were added. Frank Langfitt
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Jobs Report Disappoints Economists

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Jobs Report Disappoints Economists

Jobs Report Disappoints Economists

Jobs Report Disappoints Economists

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Private sector hiring was essentially flat in May, with fewer workers being hired than expected. It's disappointing news after signs earlier in the year of a labor market recovery. The economy did add 431,000 jobs, but the overwhelming majority of those were temporary government Census positions. Only 41,000 private sector jobs were added. Frank Langfitt

ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MICHELE NORRIS, host:

And I'm Michele Norris.

The economy grew by more than 400,000 jobs last month, according to the Labor Department. But that good news just isn't as good as it sounds. Nearly all of that growth came from temporary jobs for census workers. Private employment, a barometer of the real demand for labor, rose by just 41,000 jobs.

NPR's Frank Langfitt has the story.

FRANK LANGFITT: The American job market is growing again, just not at the speed most people would like. This morning President Obama looked on the bright side of the May employment report.

President BARACK OBAMA: We're moving in the right direction. The economic policies that we put in place are working.

LANGFITT: Speaking to workers at a truck dealership in Maryland, the president acknowledged that most of the new jobs - 411,000, to be exact - were for the census. Then he emphasized the positive.

Pres. OBAMA: Even if you put those temporary jobs aside, there's no doubt that we saw another month of private sector job growth. And that is obviously critical.

LANGFITT: Critical? Sure. But also to many economists...

Mr. MARK ZANDI (Co-Founder, Economy.com): Disappointing. I was expecting a lot more.

Professor JOHN GRAHAM (Finance, Duke University): Disappointment. I thought that we would see above 100,000 in private sector job growth.

Mr. SCOTT BROWN (Chief Economist, Raymond James): You know, it is a bit discouraging. I mean, there's no magic bullet.

LANGFITT: That was Mark Zandi, co-founder of Economy.com, John Graham, a professor of finance at Duke and Scott Brown, chief economist with Raymond James. Investors share their gloom. The Dow fell sharply, and by mid-afternoon, it was down more than 300 points.

Scott Brown says the problem right now is this: The economy just isn't adding anywhere near enough jobs to absorb the millions of people who are still out of work.

Mr. BROWN: Coming out of a severe recession, we'd really like to see much stronger gains, on the order of 250 to 300,000 jobs per month.

LANGFITT: Even at that pace, Brown says it would take at least six years before the unemployment rate could return to the good old days of five percent.

Mr. BROWN: So, there's a huge mountain to climb in terms of the labor market. It's really going to take some very strong economic growth for a long period of time before we push that unemployment rate down significantly.

LANGFITT: In fact, the unemployment rate did fall in May, from 9.9 to 9.7 percent. But some economists thought it was mostly due to those census jobs. So why is it taking so long for employers to start really hiring again? John Graham of Duke says it comes down to one of the most feared words in economics: uncertainty. Graham, along with CFO magazine, surveys chief financial officers around the country. Most tell him they're uneasy about what they see.

Prof. GRAHAM: We have a world economy that is just very uncertain right now between, you know, financial difficulties in Europe. And in the United States it's murky and difficult to tell how much of the growth is coming from long term authentic growth versus short term stimuluses and tax credits for buying houses and automobiles.

Mr. DARIN HOLDERNESS (Woodgrain Millwork): Our company has seen modest growth, but we're not sure there's a whole lot of reality to that growth.

LANGFITT: Darin Holderness is an executive with Woodgrain Millwork. The company is based in Idaho and makes doors, windows and molding for houses. Sales are up about 11 percent this year - but hiring isn't.

Mr. HOLDERNESS: We've not yet hired full-time company employees.

LANGFITT: Holderness says some of the increase in company sales was due to the government tax credit for first-time homebuyers. But that expired at the end of April. Holderness isn't sure what will drive sales next. So, instead of going on a hiring spree, he's been cautious.

Mr. HOLDERNESS: Our first choice to cover the extra volume is to just use our staff, more hours. But it came apparent with the higher levels of volume that we did need to hire some outside people.

LANGFITT: But they were temps, not permanent staff. And later this year, Holderness expects he'll have to lay off many of them as well.

Frank Langfitt, NPR News, Washington.

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