Podcast: Discussing the April Employment Report and What it Means for the Economy
I’m Michelle Bazie. In this podcast, we’ll discuss this month’s employment report, and what it means for the economy. We’re joined by the Center’s Chief Economist, Chad Stone.
1. Today, the Labor Department released data on April employment. No one expected good news, but is the report more or less gloomy than you anticipated?
A: Today’s report isn’t good, but in some respects, it’s less bad than in previous reports we’ve seen in the past months. The sobering data that we see today indicate that the unemployment rate is now at 8.9 percent. Now keep in mind that the unemployment rate at the start of this recession was 4.9 percent - that was back in December 2007. In fact, the unemployment rate today is the highest it’s been since September 1983. Also, we see a reported job loss in April of 539,000 jobs – that’s a net job loss of 5.7 million since the start of the recession.
2. How does this loss of 539,000 jobs compare to losses in the past few months? Is it encouraging?
A: Well it’s still a staggering amount of job losses, but it is less than the 680,000 jobs per month that we saw in average in the past five months, so it’s come down a little bit. Some of that’s government hiring. In the private sector we still had a little over 611,000 job losses. That’s still high, but that’s also down a little bit from what it had been.
3. So unemployment hit 8.9 percent in April. Are there any other data that can give us another way of understanding unemployment right now?
A. Well, the Bureau of Labor Statistics publishes a number of different measures of unemployment, or “slack employment.” The most comprehensive measure is one that looks at people who say they want a job, but haven’t look actively enough to qualify for the official unemployment rate and people who would like to be working full-time, but can only get part-time jobs. That unemployment rate rose to 15.8 percent in April. That’s an increase of 7.1 percentage points since the recession began and that’s the highest level of that particular measure since we began collecting data on it in 1994.
4. What’s been the role of the economic recovery legislation enacted earlier this year? Has it helped to cushion the blow of this widespread unemployment?
A: Well, the recovery act legislation is beginning to take affect. We haven’t seen its biggest impacts yet, but with respect to unemployment, there were several measures taken in that act that will cushion the blow for individual workers and also provide stimulus to the economy. The legislation temporarily provided additional weeks of unemployment insurance benefits to workers, who after exhausting their regular 26 weeks of unemployment insurance benefits, still haven’t been able to find a job in this really harsh labor market. And we also added an addition $25 a week to people’s unemployment benefit checks. And finally, the legislation enacted a measure called the Unemployment Insurance Modernization Act. That’s a very complicated term but what essentially it’s tried to do is bring unemployment insurance into the 21st century and recognize the realities of the job market and it brings more part-time workers, and women, and low-wage workers, allows more of them to be qualified for unemployment insurance. But in order for that to happen, states actually have to change their laws. So what the recovery legislation did was provide incentives for the states to do that.
So far, twelve states have already taken action to change these eligibility standards, and twenty states are expected to do so this year.
5. Should unemployment figures be considered the proverbial “canary in the coal mine”? Are they the best indicator of the direction of the economy?
A: Actually, the unemployment figures are what economists would say are a “lagging indicator.” The economy will start to turn around before the unemployment statistics start to improve. Employers are not sure in the early stages of recovery whether, in fact, their business is going to improve. So they’re reluctant to take on new workers. They work the people that they have harder, but they’re reluctant to create new jobs.
6. So how can policy makers fill the gap until employers start feeling this level of confidence to begin hiring again?
A: The measures in the economic recovery act that provide additional weeks of unemployment insurance benefits and an additional amount of benefits in worker’s checks are scheduled to expire at the end of this year. So given the fact that employers are probably going to still be a little reluctant to hire, that we will not yet be fully confident that a strong economic recovery is under way, I think policymakers should be ready to extend those provisions into 2010.
7. So what can we say about the state of the economy?
A: Well, there’s no crystal ball. No one can say with confidence when the bottom will be reached and when the economy will start growing again. The one thing we can be sure of is that it will take time for the severe job losses and the sharp increases in unemployment that have already occurred in this recession to be reversed. And that’s why it’s important for states to continue to take action, to take the steps they need, to broaden the eligibility of workers for unemployment insurance, and that federal policy makers be ready, should the need arise, to extend the unemployment insurance provisions of the recovery act into 2010.
Thank you for joining us, Chad.