Romer: Jobless Rate To Stay High In '10
MICHELE NORRIS, host:
From NPR News, this is ALL THINGS CONSIDERED. Im Michele Norris.
ROBERT SIEGEL, host:
And I'm Robert Siegel.
Now, more on today's jobs report. The Labor Department reported this morning that the economy added 162,000 jobs in March. That includes 48,000 temporary census jobs, and it's the biggest monthly jobs gain in almost three years.
On the other hand, the unemployment rate is still 9.7 percent as it was last month and the month before. Joining us to talk about these numbers is Christina Romer, who chairs the White House Council of Economic Advisers. Welcome back to the program, Dr. Romer.
Dr. CHRISTINA ROMER (Chairman, Council of Economic Advisers): It's great to be with you.
SIEGEL: And first, why is the unemployment rate stuck at 9.7 percent?
Dr. ROMER: Well, I think, you know, the first thing to say is that it's something we need to acknowledge, because 9.7 percent is a terrible number. And there are millions of people who are unemployed, so that is something that's going to be a tremendous concern.
When you dive into the numbers a little bit, you'll find that it's more complicated because one of the things that's been happening over the last three months is the labor force has been growing tremendously. So just in March alone, it went up some 400,000. So actually, this is a very common pattern that as the economy starts to recover, some of the workers that have been discouraged come back in.
Often, that causes the unemployment rate to tick up. And the fact that it hasn't ticked up is, at least in the household survey, employment has also been growing pretty strongly.
SIEGEL: So more job seekers would depress the unemployment rate even if more jobs are being created for them.
Dr. ROMER: Exactly.
SIEGEL: One explanation I read for slow job growth this year is higher productivity. Those of us who have jobs, it said, are working so much more that there's less need for new workers. Are we working too hard for our own good?
Dr. ROMER: Well, we certainly have seen huge productivity gains. I think if you look at the numbers in the last three quarters, productivity growth has averaged something like 7.4 percent, which is probably the biggest three quarter gain in a very, very long time. We see these often in recoveries. The first thing that goes up is productivity. We don't anticipate that to continue, and I think we can't keep getting that much more productive.
SIEGEL: We're slowly reaching our limits, you think, in productivity?
Dr. ROMER: I think.
SIEGEL: Do you expect to see a continued modest monthly gains in jobs like the March numbers? Or do you think the economy is now turning the corner and in April, May or June, we start seeing robust growth in jobs?
Dr. ROMER: The best way to kind of gauge this is kind of look where we've been. In the first quarter of last year, we were losing on average 753,000 jobs per month. In the first quarter of 2010, we have added on average 54,000 jobs per month. That is an unbelievable change in trajectory. What I had anticipated is that number will start, you know, getting bigger. Just as the job losses have gotten smaller, the job gains will get bigger.
You know, I think what the president is concerned about is how do we make that as big as possible? And that's why he has been emphasizing more targeted actions. We signed the HIRE Act a couple of weeks ago, but there are lots more things pending in Congress, and they need to make it to his desk.
SIEGEL: If we are on track for a recovery, how do you think the labor market in the recovered economy will resemble the status quo ante before the recession? And in what ways will this be a different economy and different labor market?
Dr. ROMER: Unquestionably, we're going to see some changes in the composition of jobs. You know, one of the things that probably was reflecting of how we were going wrong before the crisis was the tremendous increase in employment in the financial services sector. And that has certainly shrunk over the crisis, in the recession, and I wouldn't anticipate it going back to the kind of levels that we saw before.
We do know that just because of demographic changes, health and education are going to be something that will be growing, especially health care employment. And that's a trend that we have seen, even through the recession. And I anticipate seeing that. You know, the one I'm really going to be looking at is manufacturing...
Dr. ROMER: ...because that has taken a hit in every recession and often never quite come back. And I think one of the things the president really wants is can we, with the emphasis on clean energy and those kind of things, bring that sector back.
SIEGEL: The Labor Department has a measure of underemployment, which is they had people who've stopped looking for fulltime work and taken part-time jobs or stop looking altogether, and that's up actually in March from 16.8 percent to 16.9 percent. It's more than one American in six who seems really dissatisfied in the job market.
Dr. ROMER: There's no way around - this has been a horrible recession. And it has taken, you know, as horrible as it's been on, you know, so many dimensions it's the labor market where it has been the most devastating. And so those numbers really reflect that. And I think they're part of why I know I and the president and, you know, everyone says dealing with this, getting people back to work is got to be the top priority.
SIEGEL: I think there's a realistic prospect of the unemployment rate being down in the eights come November?
Dr. ROMER: You know, our forecast is for the unemployment rate to stay pretty high through this year. I mean, just - a fact you need to know, you need employment to grow by about 100,000 just to keep up with labor force growth and just to keep the unemployment rate constant. So, you know, I'll give you a number, in the first quarter of this year, we've averaged 54,000. So, you know, we anticipate, our forecast has it, to be about 100,000 per month for most of this year. That kind of keeps the unemployment rate where it is. So thats why I keep emphasizing we need faster growth to really get that rate down.
SIEGEL: Dr. Romer, thank you very much for talking with us.
Dr. ROMER: It's great to be with you.
SIEGEL: Christina Romer, who is chair of the White House Council of Economic Advisers. Transcript provided by NPR, Copyright NPR.
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