Jobless Numbers Loom Even As Economy Makes Gains

STEVE INSKEEP, host:

Tomorrow the government comes out with its monthly unemployment numbers and there are fears that the jobless rate could reach 10 percent.

Of course that number's only part of the picture of unemployment in this country, so for more perspective we've brought in David Leonhardt of the New York Times. David, welcome back to the program.

Mr. DAVID LEONHARDT (New York Times): Good morning. Thank you.

INSKEEP: We're around 10 percent now, but that's not the only number - the only measure of unemployment, underemployment or just plain struggle, is it?

Mr. LEONHARDT: That's right. That includes only people who are actively looking for work, so that they've looked in the last few weeks. There are obviously a lot of people out there who are unemployed and would like to work but have not actively looked in the last few weeks. Maybe they've gotten discouraged. And this number doesn't include them.

It also doesn't include people who would like to be working full-time but can find only part-time work. And so when you wrap in that second group, the people who would like to be working full-time but are working part-time, you get a rate of underemployment of about 16 percent.

So really that means one out of every six people who would like to be working full-time right now and has been actively looking for full-time work isn't able to find it.

INSKEEP: No matter how many times I hear that calculation, it makes your jaw drop a little bit. I mean, 10 percent is still - you can wish it off and say it's only 10 percent - 16 starts to sound really, really, really serious.

Mr. LEONHARDT: It does. And in some states, including California, it's up around 20 percent. This rate of underemployment is still not quite as high as it was in the early �80s, but it's getting there very quickly and it's getting very close.

INSKEEP: You write in the New York Times that the monthly jobs report that's coming out on Friday is a more important one than usual. Why would that be?

Mr. LEONHARDT: Because for a number of months over the summer things were getting better. The number of job losses each month were shrinking. Wage growth was picking up a little bit, and then things slid backward in September - job losses grew, wage growth slipped a little bit.

And so the question is was that some change or was September just a blip? And we're going get a really good sense of that tomorrow.

INSKEEP: Now, we did just have official economic growth come out the other day for the third quarter. How does that fit in here?

Mr. LEONHARDT: Just think about a business. If you were running a business and you saw your sales picking up, you wouldn't immediately go out and hire new workers. You would try to get your existing workforce to meet that new demand. And so we should see growth before we see growth in employment.

INSKEEP: Where is the recovery going to come from?

Mr. LEONHARDT: The first answer to that is we can't be exactly sure. People don't often know where economic growth is going to come from. That being said, I'll mention a couple of possibilities. One: exports are possible, and we have seen some real improvement in the economic relationship between China and the United States in the last few months, and we can hope that will continue.

INSKEEP: Meaning that the American companies might actually be able to sell more stuff to China?

Mr. LEONHARDT: Yeah, meaning that the balance between how much they are selling to us and how much we're selling to them is less bad than it used to be. We could also hope that there are a number of ways in which we could have a more investment-based economy rather than a consumption-based economy. So whether that is alternative energy, whether it is scientific research and medical research and health care, we could hope that we would move away from this economy that is based so much on consumer spending and move more toward one that is based on investment.

INSKEEP: Is that realistic?

Mr. LEONHARDT: I think it is realistic. I'm not sure it's going to happen, but what's unusual is what a large portion of our economy has come to be based on consumer spending. It's bigger than it has been in recorded history in this country, it's bigger than it is in other countries. So that's really what's atypical.

INSKEEP: There was a time, as you know well, up until about the 1970s, when the U.S. economy was driven by exports. We had a trade surplus with the rest of the world, we were the workshop to the world. Is there any possibility of anything remotely like that economy coming back?

Mr. LEONHARDT: I don't think like that economy, and I don't think we should be too nostalgic for that economy. I think it's important to remember that countries that have a much greater share of their economy based on exports than we do are poorer than we are. Our income is 30 percent higher than Germany's -they have a lot more exports than we do, but we don't want the German economy.

And so a lot of that kind of industry that we had in this country pays less than the kinds of jobs we have right now. Now, we still want to be doing more exporting that we're doing. We want to be exporting both goods and services. That's part of the reason that the Chinese currency policy is so important.

We also want to make sure that we're educating our workforce so they can be making the kind of goods that other countries want. But I don't think we should want to go back to the �70s. I think we should want an economy where we're exporting higher value goods than Germany is today or that we were in the 1970s.

INSKEEP: David Leonhardt of the New York Times, thanks for coming by.

Mr. LEONHARDT: Thanks, Steve. Transcript provided by NPR, Copyright National Public Radio.