1 00:00:01,966 --> 00:00:05,066 JUDY WOODRUFF: The climate decision raises question about the economy, and so does today's 2 00:00:05,066 --> 00:00:07,633 jobs report. 3 00:00:07,633 --> 00:00:11,533 In it, the unemployment rate dropped to its lowest point in 16 years, causing some economists 4 00:00:12,933 --> 00:00:15,800 to raise the prospect of what they call full employment. 5 00:00:15,800 --> 00:00:19,133 But job growth seems to have slowed considerably. 6 00:00:19,133 --> 00:00:23,633 With the latest revisions, the economy is generating an average, we're told, of about 7 00:00:23,633 --> 00:00:26,200 120,000 net new jobs each month. 8 00:00:26,200 --> 00:00:31,033 To get some insight into all of this, we're joined from Chicago by Diane Swonk, an economist 9 00:00:31,033 --> 00:00:33,200 who runs her own firm. 10 00:00:33,200 --> 00:00:35,266 Diane Swonk, welcome back to the program. 11 00:00:35,266 --> 00:00:38,766 So, overall, what do you make of these jobs numbers for the month of May? 12 00:00:38,766 --> 00:00:41,333 DIANE SWONK, Founder, DS Economics: Well, certainly, they were a disappointment. 13 00:00:41,333 --> 00:00:45,733 That said, we don't need to generate as many jobs as we once did to keep the unemployment 14 00:00:45,733 --> 00:00:47,833 rate steady or even fall. 15 00:00:47,833 --> 00:00:51,700 Of course, the unemployment rate itself fell for the wrong reasons in the month of May. 16 00:00:51,700 --> 00:00:54,800 And that is that the participation rate fell yet again. 17 00:00:54,800 --> 00:00:59,366 We're seeing more people retire out of the labor force and men in particular didn't participate 18 00:00:59,366 --> 00:01:01,533 as much in the month of May. 19 00:01:01,533 --> 00:01:04,233 That is something we like to see moving in reverse at this stage of the game. 20 00:01:04,233 --> 00:01:07,900 JUDY WOODRUFF: When you say, Diane, that the country, you said we don't need to generate 21 00:01:07,900 --> 00:01:10,533 as many jobs as we once did, what do you mean? 22 00:01:10,533 --> 00:01:14,166 DIANE SWONK: Well, basically, the labor force isn't growing very rapidly anymore. 23 00:01:14,166 --> 00:01:18,466 And even though the economy is very subdued in its growth at 2 percent, you just don't 24 00:01:18,466 --> 00:01:22,900 need to create very many jobs to absorb those workers coming into the labor force and keep 25 00:01:22,900 --> 00:01:24,600 the unemployment rate going down. 26 00:01:24,600 --> 00:01:27,900 We have actually seen job growth slow and the unemployment rate fall. 27 00:01:27,900 --> 00:01:30,900 And that is because we're near what we call full employment. 28 00:01:30,900 --> 00:01:32,966 That sounds good in terms. 29 00:01:32,966 --> 00:01:36,966 What it really means in economist terms and for the Federal Reserve is nearly all of those 30 00:01:36,966 --> 00:01:41,633 people who are employable or are employed or who are looking for a job are now sort 31 00:01:41,633 --> 00:01:46,600 of either between jobs because they wanted to be between jobs or are just coming into 32 00:01:46,600 --> 00:01:49,800 the labor force, but it's not a lot of extra slack in the U.S. economy. 33 00:01:49,800 --> 00:01:54,366 That said, it doesn't mean all those people who want a job in the U.S. economy or have 34 00:01:54,366 --> 00:01:56,833 dropped out and are not looking can actually get a job. 35 00:01:56,833 --> 00:02:01,200 JUDY WOODRUFF: Diane, you were telling us earlier today that the focus on jobs obscures 36 00:02:01,200 --> 00:02:04,966 the need to look at raising skill levels. 37 00:02:04,966 --> 00:02:05,966 Talk about that. 38 00:02:05,966 --> 00:02:07,966 DIANE SWONK: Exactly. 39 00:02:07,966 --> 00:02:11,533 One of -- there are two reasons why we saw the wage gains slow in the month of May from 40 00:02:11,533 --> 00:02:12,800 a year ago. 41 00:02:12,800 --> 00:02:14,300 It is only up at a 2.5 percent rate. 42 00:02:14,300 --> 00:02:16,366 This is something we like to see going in the other direction. 43 00:02:16,366 --> 00:02:19,033 If you are near full employment, wages should be accelerating. 44 00:02:19,033 --> 00:02:24,033 One reason is because millennials are replacing older baby boomers and they're paid less. 45 00:02:25,233 --> 00:02:27,333 That is not a bad reason for wage growth slowing. 46 00:02:27,333 --> 00:02:31,200 The other reason is that we are seeing many employers out there dip further into lower-skilled 47 00:02:33,233 --> 00:02:35,433 workers, but instead of paying them more, they are actually investing in training, because 48 00:02:35,433 --> 00:02:40,400 they don't have the skills necessary to do the jobs they have or they are leaving job 49 00:02:40,400 --> 00:02:42,733 positions open. 50 00:02:42,733 --> 00:02:46,533 The shortages in construction are particularly acute and manufacturing, which actually contracted. 51 00:02:48,533 --> 00:02:51,533 We still have over 300,000 jobs that aren't filled just because people don't have the 52 00:02:51,533 --> 00:02:53,633 right skills. 53 00:02:53,633 --> 00:02:57,533 So we would do much better to enhance the skills of those out there who are on the sidelines 54 00:02:57,533 --> 00:03:02,533 and not participating right now to bring them back in, than just give them tax cuts to cut 55 00:03:03,133 --> 00:03:05,066 low wages. 56 00:03:05,066 --> 00:03:07,433 JUDY WOODRUFF: And very quickly, finally, Diane, we took note yesterday when President 57 00:03:07,433 --> 00:03:12,433 Trumped talked about the country having created, I think, he said a million jobs since the 58 00:03:13,166 --> 00:03:14,600 election last November. 59 00:03:14,600 --> 00:03:16,200 Does that reflect what's been going on? 60 00:03:16,200 --> 00:03:18,733 DIANE SWONK: It is a bit of a stretch. 61 00:03:18,733 --> 00:03:22,466 We have created 800,000 jobs since the beginning of the year. 62 00:03:22,466 --> 00:03:26,733 If you want to do it since he's been president, it's about 600,000 jobs. 63 00:03:26,733 --> 00:03:30,766 So, depending on how he wants to count, I think it is a little early for him to take 64 00:03:30,766 --> 00:03:34,566 credit one way or the other, and might be careful what he wants to take credit for in 65 00:03:34,566 --> 00:03:37,066 terms of job gains. 66 00:03:37,066 --> 00:03:40,933 I think it is going to get better going forward, but the bottom line is, that is not really 67 00:03:40,933 --> 00:03:42,900 the way to count it. 68 00:03:42,900 --> 00:03:46,133 JUDY WOODRUFF: Diane Swonk joining us from Chicago, thanks very much. 69 00:03:46,133 --> 00:03:47,300 DIANE SWONK: Thank you.