Economy
11:36 am
Fri June 1, 2012

How Bad Jobs Report Can Trigger Vicious Cycle

Originally published on Fri June 1, 2012 6:15 pm

Transcript

MICHEL MARTIN, HOST:

I'm Michel Martin and this is TELL ME MORE, from NPR News. Coming up, we will talk about the painful new questions being raised by a long-ago crime. A man was recently arrested for murdering a little boy nearly 30 years ago but now it's been reported that the suspect may have confessed to a church group years before, but no one went to the authorities.

So now we're asking if they should have. We get perspective from two faith leaders who are also trained in law. That's in just a few minutes. But first we want to talk about the national employment picture. The Labor Department this morning released its job growth figures for the month of May. The economy added only 69,000 jobs in May.

That's down from the 77,000 jobs created in April, and the nation's unemployment rate edged back up to 8.2 percent, that after several months of slow decline. Meanwhile, millions of Americans are still relying on unemployment benefits to make ends meet, but those benefits might also end soon.

The unemployment benefits Congress extended back in February are set to expire sooner than previously estimated for some of the nation's unemployed and by the end of this year it's estimated that nearly half a million people will lose their benefits. We wanted to try to make sense of all this, so once again we've called upon NPR senior business editor Marilyn Geewax. Welcome back, Marilyn. Thanks for joining us.

MARILYN GEEWAX, BYLINE: Hi, Michel.

MARTIN: So let's start with the unemployment numbers first, the 69,000 jobs created in May. Can you give us a picture behind the numbers? Particularly wondering why the numbers fell this month.

GEEWAX: Boy, these numbers are so disappointing. It started out pretty good this year. Back in January, February, it looked like we were adding jobs at a pace of about 200,000 - 250,000 a month, and that was good. There were things that were looking up. They really were - agriculture, energy, technology.

There were sectors that were looking strong, but all of a sudden, just like we've done the last two years in a row, and now this is the third year, we start out strong and then fade in spring. And that's exactly what we've seen again. April and May turned out to be big disappointments. Numbers got revised down.

We're just not getting the momentum that we should have, and a big part of that is just this lack of confidence that comes from what's been happening in Europe. We have a lot of bad news coming out of Europe. People don't know what's going to happen with that. China has been slowing down. India is slowing down.

We had those high gas prices earlier in the year and that undermined consumer confidence. So it's like we have these just big wet blankets that just keep getting thrown on the economy. And you think there's momentum. It looks good for a while and then we're back to just slowing back down.

MARTIN: Can you give us the good, the bad, and the ugly? I mean, is anybody hiring and is anybody cutting - cutting jobs?

GEEWAX: The good sector continues to be health care. That's still the bright spot and it has been throughout, really, this recession. Now that's where jobs are mostly being created. And manufacturing held up pretty well, but construction is just terrible, another 28,000 jobs lost, and a lot of that was related to big construction projects for infrastructure.

But just generally speaking, if you're in construction, this has just been a brutal, long recession-slash-depression.

MARTIN: If you're just joining us, you're listening to TELL ME MORE from NPR News. We're talking about jobs, the latest unemployment figures, and we're also talking about how some of the nation's unemployed might lose their benefits in the near future. I'm speaking with NPR senior business editor Marilyn Geewax. So talk about that, Marilyn, if you would. Why is it that many people who are receiving benefits could actually lose them sooner than we thought? Why is that?

GEEWAX: This is pretty complicated, so let me just break it down and simplify it as much as I can. Generally speaking, unemployment insurance benefits are administered by the states. There are some federal guidelines but basically that's a state project. But during the Great Recession, when things were really bad, in 2008 and '09, Congress decided to step in and extend those unemployment benefits, to give the states more money so that people could go up to 99 weeks of unemployment benefits if things were bad enough for you.

And that helped a lot of people. But the program was - its authorization was expiring at the end of this past year and Congress needed to act to bring it back. They did, in February, finally approve that, but they created a bunch of new rules - some thresholds for states, that you had to have unemployment actually getting worse to qualify for these extended benefits.

And they also created new hurdles for individuals. You have to do more to prove that you're really looking for jobs. So now those thresholds are kicking in. Some of the benefits are starting to phase out. By September the maximum will be only 73 weeks rather than the 99. So it really depends on what state you're in.

You know, in Nebraska, unemployment is four percent or less. If you're in Nevada, it's more like 11 percent. So there's not a blanket statement that I could make for every state, but generally speaking, the overall picture is that these benefits are being reduced.

MARTIN: Well, you know, crediting your point that there is no one picture, we did want to kind of put a face, you know, to the numbers, so we reached out to the National Employment Law Project, or NELP. That's a non-profit that conducts research and advocacy on behalf of low wage and unemployed workers, and they put us in touch with Candace Faulkner, who lives in the Chicago suburbs.

We wanted to talk with somebody who has lost their unemployment benefits unexpectedly. We just want to know what that was like. So Candace worked a clerical job for almost six years and she says she got unemployment benefits for 92 weeks and then this is what happened. Here's a clip.

CANDACE FAULKNER: They told all of the applicants at the beginning of the year that they would lose their benefits, which would be the last 20 weeks of unemployment. In my case, they assured me that I would receive those last 20 weeks because I was grandfathered into that tier before the modifications took place. I received an email May 2nd that I would only receive those benefits for another 10 days.

MARTIN: You know, that had to be a shock. You know what I wanted to ask you about, Marilyn, though? There's a school of thought sort of emerging that cutting these benefits might actually be good for the economy. And you know, we've heard people on this program sort of advance the argument that actually keeping unemployment benefits going are actually keeping people from looking for work or keeping people unemployed longer than they otherwise would be.

And I just wanted to ask, does anything lend credence to that theory?

GEEWAX: Well, that is why the benefits are being cut back. That's what the conservatives in Congress had pushed for and that's why we're seeing them shrink. And the idea here is, as I said, things are uneven. If you go to Nebraska, they're begging for workers. If you want to stay in Nevada, well, it's 11 percent unemployment.

So what the thinking is, is the longer you extend unemployment benefits, the more people put off making that very difficult decision. These are not easy decisions, but maybe you need to go to Fargo, North Dakota to find work. Maybe you need to move to Nebraska or one of the other states where agriculture is booming. And that's pretty darn tough.

If your whole family lives in California, you don't really want to move, but the longer you drag out the benefits, the argument is, the more you resist making those tough changes.

MARTIN: So is there any evidence to support this? I mean is - and one other question I had is, do the available jobs match the skill sets of the people who need work? Is there really a correlation there?

GEEWAX: Well, there's so much - you know, it's economics, so there's always the one hand and the other hand. There are many conflicting points of view on this and some people feel they can construct very strong arguments that if you extend benefits, people stay put and hope for the best. And sometimes maybe things do perk up and it works out.

But there are other times when you need to say to people, it's time to re-career. Yes, I know you used to be in a construction job, but frankly, you need to get a job in a hospital as an orderly. That's a tough turnaround for a lot of people. That's not an easy change. But if you keep getting the benefits, maybe you put off making that change.

But there's another way of looking at it. There's an opposite argument, and that's that these unemployment benefits serve to stimulate the economy. That is, as soon as somebody gets the check, they pretty much cash it and buy groceries. They get shoes for the kids. I mean these are not checks that people are putting away for their retirement. They need it now to pay the light bill.

So another argument is that the more you continue to extend these benefits, the more you help prop up the economy until new job growth really can restart. So is it a - do these benefits make the economy slower because it keeps people from making important changes, or does it prop up the economy by stimulating spending?

MARTIN: Before we let you go, you mentioned there are a couple of places where unemployment is really low and that people are begging for workers. You mentioned North Dakota. You mentioned Nebraska has full of - has close to full employment. Could you just talk a little bit about that? Why? Why is that?

GEEWAX: You have an amazing mismatch of skills and workers in this country. It's just astonishing, really. There are something like 3.7 million jobs open right now. People want to fill these jobs and they can't find enough workers.

Well, you know, being an oil field worker in North Dakota is a pretty tough turn for a woman who's unemployed in Florida to think about. You know, these are not easy changes, but there really are jobs out there that are going begging. There are jobs...

MARTIN: What are some of them?

GEEWAX: Truckers. I talked many times to employers who say if they could get more truck drivers to deliver their stuff, they'd be able to expand. They can't get long distance truck drivers because it's tough for people to leave their families and take on those things.

Lots of manufacturing type jobs, machinists, welders, crane operators. Those kind of skilled jobs are going begging. Same thing in the tech world. So there really are jobs. It's just that we don't necessarily match up with what the openings are. You know, the skills and the openings are very different.

MARTIN: And finally, let's go back to those weaker than expected jobs numbers. That's where we started our conversation today. You said that there's a big psychological effect that actually could create a vicious cycle that could make this worse. We have about a minute left. What are you talking about?

GEEWAX: Confidence. People need to have confidence to go out and spend money. Say you were thinking about taking a vacation this summer and you were feeling pretty good about yourself in January, February, when you were first looking at all those cute websites where you can plan your vacation.

Now you hear this bad jobs news. Maybe you rethink it and say, gosh, you know, I don't know. Maybe this isn't the summer yet for us to take that trip, so you start to pull back. That hurts jobs in hotels and restaurants. The same thing for employers. They look over at Europe and they think, geez, am I going to lose customers this summer?

This lack of confidence becomes almost a self-fulfilling prophecy where you start to spiral down. What we were hoping for at the start of the year was to be spiraling up, that each month would start to seem a little better, confidence would rebuild. But we're back into kind of one of those downward cycles of confidence being eroded and that's just not good for the economy. It's not good for the employment outlook.

MARTIN: Well, we have confidence in your analysis, Marilyn. Does that help at all?

GEEWAX: Yeah. Keep my job.

MARTIN: Well, exactly. Marilyn Geewax is NPR's senior business editor. She joined us here in our Washington, D.C. studios once again. Marilyn, thanks so much for joining us again.

GEEWAX: It's always a pleasure to join you, Michel. Transcript provided by NPR, Copyright National Public Radio.