WEBVTT 00:01.966 --> 00:05.066 align:left position:10%,start line:77% size:80% JUDY WOODRUFF: The climate decision raises question about the economy, and so does today's 00:05.066 --> 00:07.633 align:left position:30%,start line:89% size:60% jobs report. 00:07.633 --> 00:11.533 align:left position:10%,start line:71% size:80% In it, the unemployment rate dropped to its lowest point in 16 years, causing some economists 00:12.933 --> 00:15.800 align:left position:10%,start line:83% size:80% to raise the prospect of what they call full employment. 00:15.800 --> 00:19.133 align:left position:10%,start line:83% size:80% But job growth seems to have slowed considerably. 00:19.133 --> 00:23.633 align:left position:10%,start line:77% size:80% With the latest revisions, the economy is generating an average, we're told, of about 00:23.633 --> 00:26.200 align:left position:10%,start line:89% size:80% 120,000 net new jobs each month. 00:26.200 --> 00:31.033 align:left position:10%,start line:77% size:80% To get some insight into all of this, we're joined from Chicago by Diane Swonk, an economist 00:31.033 --> 00:33.200 align:left position:20%,start line:89% size:70% who runs her own firm. 00:33.200 --> 00:35.266 align:left position:20%,start line:83% size:70% Diane Swonk, welcome back to the program. 00:35.266 --> 00:38.766 align:left position:10%,start line:77% size:80% So, overall, what do you make of these jobs numbers for the month of May? 00:38.766 --> 00:41.333 align:left position:10%,start line:77% size:80% DIANE SWONK, Founder, DS Economics: Well, certainly, they were a disappointment. 00:41.333 --> 00:45.733 align:left position:10%,start line:77% size:80% That said, we don't need to generate as many jobs as we once did to keep the unemployment 00:45.733 --> 00:47.833 align:left position:10%,start line:89% size:80% rate steady or even fall. 00:47.833 --> 00:51.700 align:left position:10%,start line:77% size:80% Of course, the unemployment rate itself fell for the wrong reasons in the month of May. 00:51.700 --> 00:54.800 align:left position:20%,start line:77% size:70% And that is that the participation rate fell yet again. 00:54.800 --> 00:59.366 align:left position:10%,start line:77% size:80% We're seeing more people retire out of the labor force and men in particular didn't participate 00:59.366 --> 01:01.533 align:left position:10%,start line:89% size:80% as much in the month of May. 01:01.533 --> 01:04.233 align:left position:10%,start line:77% size:80% That is something we like to see moving in reverse at this stage of the game. 01:04.233 --> 01:07.900 align:left position:10%,start line:77% size:80% JUDY WOODRUFF: When you say, Diane, that the country, you said we don't need to generate 01:07.900 --> 01:10.533 align:left position:20%,start line:83% size:70% as many jobs as we once did, what do you mean? 01:10.533 --> 01:14.166 align:left position:10%,start line:77% size:80% DIANE SWONK: Well, basically, the labor force isn't growing very rapidly anymore. 01:14.166 --> 01:18.466 align:left position:10%,start line:77% size:80% And even though the economy is very subdued in its growth at 2 percent, you just don't 01:18.466 --> 01:22.900 align:left position:10%,start line:77% size:80% need to create very many jobs to absorb those workers coming into the labor force and keep 01:22.900 --> 01:24.600 align:left position:30%,start line:83% size:60% the unemployment rate going down. 01:24.600 --> 01:27.900 align:left position:20%,start line:77% size:70% We have actually seen job growth slow and the unemployment rate fall. 01:27.900 --> 01:30.900 align:left position:10%,start line:83% size:80% And that is because we're near what we call full employment. 01:30.900 --> 01:32.966 align:left position:10%,start line:89% size:80% That sounds good in terms. 01:32.966 --> 01:36.966 align:left position:20%,start line:71% size:70% What it really means in economist terms and for the Federal Reserve is nearly all of those 01:36.966 --> 01:41.633 align:left position:10%,start line:77% size:80% people who are employable or are employed or who are looking for a job are now sort 01:41.633 --> 01:46.600 align:left position:10%,start line:77% size:80% of either between jobs because they wanted to be between jobs or are just coming into 01:46.600 --> 01:49.800 align:left position:10%,start line:77% size:80% the labor force, but it's not a lot of extra slack in the U.S. economy. 01:49.800 --> 01:54.366 align:left position:10%,start line:77% size:80% That said, it doesn't mean all those people who want a job in the U.S. economy or have 01:54.366 --> 01:56.833 align:left position:10%,start line:83% size:80% dropped out and are not looking can actually get a job. 01:56.833 --> 02:01.200 align:left position:10%,start line:77% size:80% JUDY WOODRUFF: Diane, you were telling us earlier today that the focus on jobs obscures 02:01.200 --> 02:04.966 align:left position:20%,start line:83% size:70% the need to look at raising skill levels. 02:04.966 --> 02:05.966 align:left position:30%,start line:89% size:60% Talk about that. 02:05.966 --> 02:07.966 align:left position:20%,start line:89% size:70% DIANE SWONK: Exactly. 02:07.966 --> 02:11.533 align:left position:10%,start line:77% size:80% One of -- there are two reasons why we saw the wage gains slow in the month of May from 02:11.533 --> 02:12.800 align:left position:30%,start line:89% size:60% a year ago. 02:12.800 --> 02:14.300 align:left position:20%,start line:83% size:70% It is only up at a 2.5 percent rate. 02:14.300 --> 02:16.366 align:left position:10%,start line:83% size:80% This is something we like to see going in the other direction. 02:16.366 --> 02:19.033 align:left position:10%,start line:83% size:80% If you are near full employment, wages should be accelerating. 02:19.033 --> 02:24.033 align:left position:10%,start line:71% size:80% One reason is because millennials are replacing older baby boomers and they're paid less. 02:25.233 --> 02:27.333 align:left position:20%,start line:83% size:70% That is not a bad reason for wage growth slowing. 02:27.333 --> 02:31.200 align:left position:10%,start line:77% size:80% The other reason is that we are seeing many employers out there dip further into lower-skilled 02:33.233 --> 02:35.433 align:left position:10%,start line:77% size:80% workers, but instead of paying them more, they are actually investing in training, because 02:35.433 --> 02:40.400 align:left position:10%,start line:77% size:80% they don't have the skills necessary to do the jobs they have or they are leaving job 02:40.400 --> 02:42.733 align:left position:30%,start line:89% size:60% positions open. 02:42.733 --> 02:46.533 align:left position:10%,start line:71% size:80% The shortages in construction are particularly acute and manufacturing, which actually contracted. 02:48.533 --> 02:51.533 align:left position:10%,start line:77% size:80% We still have over 300,000 jobs that aren't filled just because people don't have the 02:51.533 --> 02:53.633 align:left position:30%,start line:89% size:60% right skills. 02:53.633 --> 02:57.533 align:left position:10%,start line:77% size:80% So we would do much better to enhance the skills of those out there who are on the sidelines 02:57.533 --> 03:02.533 align:left position:10%,start line:77% size:80% and not participating right now to bring them back in, than just give them tax cuts to cut 03:03.133 --> 03:05.066 align:left position:30%,start line:89% size:60% low wages. 03:05.066 --> 03:07.433 align:left position:10%,start line:77% size:80% JUDY WOODRUFF: And very quickly, finally, Diane, we took note yesterday when President 03:07.433 --> 03:12.433 align:left position:10%,start line:77% size:80% Trumped talked about the country having created, I think, he said a million jobs since the 03:13.166 --> 03:14.600 align:left position:20%,start line:89% size:70% election last November. 03:14.600 --> 03:16.200 align:left position:20%,start line:83% size:70% Does that reflect what's been going on? 03:16.200 --> 03:18.733 align:left position:20%,start line:83% size:70% DIANE SWONK: It is a bit of a stretch. 03:18.733 --> 03:22.466 align:left position:10%,start line:83% size:80% We have created 800,000 jobs since the beginning of the year. 03:22.466 --> 03:26.733 align:left position:10%,start line:77% size:80% If you want to do it since he's been president, it's about 600,000 jobs. 03:26.733 --> 03:30.766 align:left position:10%,start line:77% size:80% So, depending on how he wants to count, I think it is a little early for him to take 03:30.766 --> 03:34.566 align:left position:10%,start line:77% size:80% credit one way or the other, and might be careful what he wants to take credit for in 03:34.566 --> 03:37.066 align:left position:20%,start line:89% size:70% terms of job gains. 03:37.066 --> 03:40.933 align:left position:10%,start line:71% size:80% I think it is going to get better going forward, but the bottom line is, that is not really 03:40.933 --> 03:42.900 align:left position:20%,start line:89% size:70% the way to count it. 03:42.900 --> 03:46.133 align:left position:10%,start line:77% size:80% JUDY WOODRUFF: Diane Swonk joining us from Chicago, thanks very much. 03:46.133 --> 03:47.300 align:left position:20%,start line:89% size:70% DIANE SWONK: Thank you.