Fri December 7, 2012
Crunching the Job Numbers
Originally published on Fri December 7, 2012 1:52 pm
MICHEL MARTIN, HOST:
This is TELL ME MORE from NPR News. I'm Michel Martin. Later in the program we'll crack open the mail bag to hear what you have to say about stories we covered this week. That's Backtalk and it's coming up. But first, we want to talk about the latest unemployment numbers which are now out. The Department of Labor says that unemployment is down to its lowest level since December 2008.
That's after the economy added 146,000 jobs in November. We wanted to figure out what this means so once again we've called NPR senior business editor Marilyn Geewax. Marilyn, thanks so much for joining us once again.
MARILYN GEEWAX, BYLINE: Hi, Michel.
MARTIN: So that sounds good, doesn't it? I mean, the unemployment rate down to 7.7 percent. Is it?
GEEWAX: Yes. It's pretty good, especially since most economists had been thinking that this was going to be a pretty weak report. They were saying that because of Hurricane Sandy. You might remember back in early November, literally millions of people didn't have power. They couldn't get to work.
Transportation was messed up all over the East Coast. So it sort of seemed like this was going to be a bad report. But it came out and it was not that bad at all - 146,000 jobs is not as many as we need, but month after month we're seeing that the economy generates about 150,000 jobs. We wish it was twice that. Everybody does. But that's a rate that has been causing the unemployment rate to tic down.
It's now down to 7.7 percent. And really, that's the best rate we've seen in four years.
MARTIN: Are there any particular areas of strength or weakness that you want to highlight?
GEEWAX: Well, we've seen some problems in construction that was again - probably that part was tied to Sandy but, you know, as people start to rebuild in the spring, those will probably bounce back. The things that are doing somewhat well: retail, hospitality. It seems like some of those things that had gotten so depressed in the Great Recession are starting to bounce back.
So, we've seen the private sector add jobs for 33 straight months. Now, I just want to be clear, though, that this month, December, is actually the fifth anniversary of the Great Recession. We literally began this recession in December of 2007. So we went into such a deep hole - 10 percent unemployment, just job losses that were just massive, people dropping out of the workforce.
So this has been such a long, slow climb back out that we still have 12 million people looking for work and 4.8 million of them are long-term unemployed. That means they've been out of work more than six months. So I don't want to get too carried away with this good scenario, because, yes, we do like progress but if you're one of those 12 million people looking for work, this is still a very difficult time.
MARTIN: You know, that's an important point. But, Marilyn, I wanted to pick on something that you spoke about earlier. We've talked about the various factors that influence the unemployment rate and you just mentioned Hurricane Sandy. What about these discussions that we're hearing so much about, about efforts to avoid the automatic spending cuts and tax hikes that will take affect at the beginning of the year if Congress and the White House don't come to an agreement on a deficit reduction package?
You know, important to note that they did this to themselves, that they agreed to this. We're calling it the fiscal cliff. Is that - are those negotiations affecting the hiring outlook?
GEEWAX: On every level these fiscal cliff negotiations are causing problems in the job market, in the whole atmosphere in the country. Everyone is just waiting and waiting to see how this turns out. So earlier this week, President Obama went to meet with the chief executive officers who participate in this group, the business roundtable.
And he's trying to make the case to business leaders that they should go and talk to their elected representatives to make the point that while they may not like tax hikes - business people usually don't care for tax hikes - but stopping the momentum in the economy would be even a bigger problem. He is arguing for growth in 2013 and he's trying to make the case to business leaders that once you bring certainty back into the market the economy will build on this momentum we've seen in 2012.
And that 2013 actually could turn out to be the first strong year in many.
MARTIN: Well, now, you've spoken to business leaders. You mentioned that business leaders had this meeting with the president and presumably it was a two-way conversation. You've been talking to business leaders about their outlook for hiring and what are they telling you? And I'm also interested in whether what big business leaders are saying is different from what small business owners are saying. What are they telling you?
GEEWAX: You know, this is a great time of year for collecting gossip in Washington, because everybody's having holiday parties. And so I've been going around trying to talk to people, going to some luncheons. And one of the groups that I met with earlier this week was the Aerospace Industries Association. They had their big annual lunch.
And I talked to executives from companies like Boeing and Northrop Grumman and people who are government contractors. And a lot of these big corporations are really concerned that part of the fiscal cliff is this - strange word - sequestration. It's this process where beginning in January they will stop spending for - the authorization for a lot of spending for the military will stop.
And so we're looking at something like $54 billion being cut from national security spending. So if you're a company that does a lot of business with the government, you are literally sitting there at a table, at lunch, looking to your left and to your right, wondering who's still going to be working in January and February if all of those cuts kick in. They really see a lot of job losses coming if this issue doesn't get resolved. So there's lots of big businesses that are very worried.
MARTIN: What about small business owners? What are they worried about?
GEEWAX: Well, there's another issue out there. I know you've explored it considerably on your show, this issue of the extended unemployment benefits. One of the parts of this whole big fiscal cliff discussion is whether or not the federal government should continue to provide extended benefits. You know, during the worst of the recession federal government boosted those benefits out to 99 weeks.
They've cut it back a little bit. Now it's 73 weeks is the maximum for unemployment benefits. But it could drop all the way back to 26 weeks, which is typically what states offer if that federal support goes away, starting in January. So if you're a small business, you're talking about customers who have a check to spend right now. If you get those extended federal benefits you have some income.
You can go to the grocery store. You can go to the gas station. You could go to your local pizza place and get some food.
MARTIN: Or dry cleaners and get your suit pressed so you can keep looking for work.
GEEWAX: Keep looking for work.
MARTIN: So these small business owners are really worried that if unemployment benefits are curtailed that they won't have customers.
GEEWAX: It could be - that's right. Starting in January there's something like 2.1 million households that will lose a check. So, you know, for small businesses - if you're a small grocer in Alabama and your customers come in with these small amounts of money, it doesn't seem like a huge thing, but for small businesses those monthly checks are really helping people continue spending.
Now, you know, of course there's obviously other arguments. Some people say it's too expensive for the federal government to continue this. But it is one of the uncertainties that businesses are looking at.
MARTIN: We're talking with Marilyn Geewax, NPR's senior business editor. We're talking about the latest jobs numbers, the unemployment numbers. And we're also talking about the stories behind them. To your point, Marilyn, the latest Wells Fargo Gallup Small Business Index says that small business owners are as reluctant to hire - it's been at its lowest level in four years.
GEEWAX: Right. Right.
MARTIN: And it's a measure of their intention to hire. So is that primarily due to the factors that you're talking about, the uncertainty that you're talking about?
GEEWAX: It really is this uncertainty. And this morning I spoke with Senator Blumenthal. He's a Democrat from Connecticut and he was telling me that in the northeast, especially where Sandy had hit - so you've got a lot of small businesses that took a big hit in Connecticut, New Jersey, New York - these are very populated parts of the country. Millions and millions of people.
If you have a small business and in November your electricity was out for two weeks, maybe your business is pretty shaky as it is, he's saying that they've got to extend these unemployment benefits for all those people who really have not been able to look for work. Businesses have not been wanting to hire, so he's saying, you know, you've got a lot of uncertainty there that is sort of uncertainty piled on top of uncertainty. What's happening with taxes, what's happening with unemployment benefits, what's happening with even the weather. It's dicey.
MARTIN: Conversely, though, Marilyn - and forgive me for asking you to speculate a bit here - if these negotiations are fruitful, I mean right now the signals are people seem very discouraged. I mean that people are saying, well, we've had pleasant conversations but no breakthrough has been had, but you know, this is Washington and we don't know what's true and we don't know what's theater and we don't know what's kind of body language.
But let's just say a resolution is reached in time. Do you feel that this will change these indicators? Will this change the hiring picture?
GEEWAX: There's a lot of optimism sort of underneath the surface. You know, if you talk to economists, there are quite a large number who say that it's possible - not certain, but quite possible - that 2013 could be really quite a strong year. We've seen growth in hiring in the energy sector. Apple has announced they're bringing manufacturing back to this country, to at least some degree. We're seeing in-sourcing really happening. Companies are starting to grow here.
And I do talk to a lot of business leaders and, you know, I was listening to a guy from the chemical industry talking about how five years ago, in their industry, everybody was talking about building things overseas, going elsewhere. And now, because of the availability and low cost of natural gas, industries like steel and chemicals and these big heavy things - they want to do business in America again. They're bringing jobs home.
So, you know, it's possible that, if we could get past all of this political uncertainty, that we will see tremendous growth in the coming year in construction, manufacturing, agriculture, energy, the high tech industries. There are a lot of different sectors of the economy that are poised for growth if they could just get sort of unleashed. If we can get past this concern about the debt, the deficits, taxes - they need answers so that they can move forward.
MARTIN: We have less than a minute left, Marilyn. I do have to ask about the sales figures right after Thanksgiving, suggesting that consumers were a lot more optimistic than analysts had thought that they would be. Was that just a temporary burst of kind of holiday feeling or is there something there?
GEEWAX: Well, I think if we fall off the cliff in January and all of a sudden things start spiraling down, that optimism is wide but thin. You know, it's not - there are a lot of people feeling a little more positive as we head into the holidays, but they also could turn around if we go into a situation where markets, for example, start to panic. If you see the stock market drop dramatically, that doesn't exactly build your confidence.
MARTIN: Marilyn Geewax is a senior business editor here at NPR. She joins us from time to time to talk about important issues like employment and other aspects of the economy, and she was with us from our Washington, D.C. studios.
Marilyn, thank you so much.
GEEWAX: Oh, you're welcome. Always fun to join you. Transcript provided by NPR, Copyright NPR.