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Fri January 10, 2014
Labor Department's December Report Shows Jobless Rate Dipped
Originally published on Fri January 10, 2014 11:45 am
DAVID GREENE, HOST:
Supporters of a minimum wage say it can be especially important at a time of relatively high unemployment, when workers have little bargaining power. This morning we'll get a fresh snapshot of unemployment in the U.S. when the government releases new jobs numbers. NPR's Yuki Noguchi came by to talk about what to expect. Yuki, good morning.
YUKI NOGUCHI, BYLINE: Good morning, David.
GREENE: So where does the job market seem to be going right now?
NOGUCHI: Well, there does seem to be a warm front coming through, very slowly.
GREENE: Let's keep the weather metaphor going.
NOGUCHI: Keep it going. Surveys show economists expect a payroll number right at around 200,000. Now, that probably sounds familiar because it's almost exactly the same as November and only a little bit higher than the average for all of last year. But the reason there's talk that things are getting better is that the initial estimate for December was weaker.
This week a payroll processing company released its estimate of job numbers that surprised to the upside, so a lot of economists revised their numbers upward.
GREENE: So bottom line, though, I mean since you're saying they're familiar numbers, the job growth is about where it's been, right?
NOGUCHI: That's right.
GREENE: So what about the unemployment rate that we always keep our eye on?
NOGUCHI: Well, that fell more than expected in November to 7 percent, so it's not expected to decline further. But if it does, economists will be looking to see if that decline happened because of healthy job growth or because a lot of people left the workforce, which sometimes happens and isn't less of an optimistic sign. But now it's 2014, a new year, and there is some optimism that the market is improving.
The payroll report I mentioned showed growth in sectors that pay good wages and are considered high quality jobs. Also, the construction sector added more jobs than we've seen since the last housing boom, and those are the kinds of jobs that economists believe have a kind of multiplier effect.
GREENE: Yeah, this is because, I mean when we talk about construction, that can sort of multiply because it means more demand for things like furniture and appliances and all sorts of other products. It can have a good snowball effect.
NOGUCHI: Right, right, exactly. That speaks to the growing strength of the housing sector, which, as we know, dragged the economy down during the Great Recession. But now there's a lot of pent-up demand for new homes, and this year analysts expect to see a lot of backhoes and other on-the-ground signs we associate with economic growth, growth that has actually been quite a bit higher than many forecasters expected.
GREENE: Well, Yuki, let's draw some connections here. I mean we were talking a few months ago about the sequester, the budget sequester in Washington and other uncertainty maybe slowing down growth. It sounds like growth is steady, the third quarter GDP was over 4 percent. Often an economy growing means people are hiring. Does all that mean that we might see unemployment start to decline faster as we go forward in this year?
NOGUCHI: It could. Let's say the economy adds over 200,000 jobs a month in the new year, which some economists believe is realistic. Then, by the end of the year, the unemployment rate would be steadily trending lower, some say it could be around 6 percent. And if people are optimistic about the job market getting better, then consumer confidence will improve, consumers may spend more, and you'll have this kind of virtuous cycle.
But one thing that you have to remember, one caveat, is that the economy has been getting a lot of help from the Fed, extraordinary measures that make it easier to borrow, cheaper to borrow, and as things improve, the Fed is going to take some of that support away. It's promised to keep interest rates low for a long time, but we'll just have to wait and see how the economy and the job market responds to this kind of changing environment.
GREENE: Yuki, we should say a lot of debate in Washington right now, in Congress, about whether or not to extend long term unemployment benefits, which is a reminder that there are still a lot of people in this country who are still out of work and have been for a while.
NOGUCHI: Well, the fact that there are four million people who have been out of work for at least six months is definitely still a big problem for the labor market and for the economy overall. It remains hard to find a job, being out of work for such a long time; there are still, you know, three people for every one available job, so the market is not robust enough to absorb all the people who want work.
And, of course, it's unclear that Congress is going to extend those benefits again, in part because the job market is looking up.
GREENE: NPR's Yuki Noguchi talking to us about monthly jobs numbers that will be coming out later this morning. Yuki, thanks a lot.
NOGUCHI: Thank you, David. Transcript provided by NPR, Copyright NPR.