JUDY WOODRUFF: The climate
decision raises question about
the economy, and so does today's

jobs report.

In it, the unemployment
rate dropped to its
lowest point in 16 years,
causing some economists

to raise the prospect of what
they call full employment.

But job growth seems to
have slowed considerably.

With the latest revisions,
the economy is generating an
average, we're told, of about

120,000 net new jobs each month.

To get some insight into all of
this, we're joined from Chicago
by Diane Swonk, an economist

who runs her own firm.

Diane Swonk, welcome
back to the program.

So, overall, what do you
make of these jobs numbers
for the month of May?

DIANE SWONK, Founder, DS
Economics: Well, certainly,
they were a disappointment.

That said, we don't need to
generate as many jobs as we once
did to keep the unemployment

rate steady or even fall.

Of course, the unemployment
rate itself fell for the wrong
reasons in the month of May.

And that is that
the participation
rate fell yet again.

We're seeing more people retire
out of the labor force and men
in particular didn't participate

as much in the month of May.

That is something we like
to see moving in reverse
at this stage of the game.

JUDY WOODRUFF: When you say,
Diane, that the country, you
said we don't need to generate

as many jobs as we once
did, what do you mean?

DIANE SWONK: Well, basically,
the labor force isn't
growing very rapidly anymore.

And even though the economy
is very subdued in its growth
at 2 percent, you just don't

need to create very many jobs
to absorb those workers coming
into the labor force and keep

the unemployment
rate going down.

We have actually seen
job growth slow and the
unemployment rate fall.

And that is because we're near
what we call full employment.

That sounds good in terms.

What it really means
in economist terms and
for the Federal Reserve
is nearly all of those

people who are employable
or are employed or who are
looking for a job are now sort

of either between jobs because
they wanted to be between
jobs or are just coming into

the labor force, but it's
not a lot of extra slack
in the U.S. economy.

That said, it doesn't mean all
those people who want a job
in the U.S. economy or have

dropped out and are not
looking can actually get a job.

JUDY WOODRUFF: Diane, you were
telling us earlier today that
the focus on jobs obscures

the need to look at
raising skill levels.

Talk about that.

DIANE SWONK: Exactly.

One of -- there are two reasons
why we saw the wage gains
slow in the month of May from

a year ago.

It is only up at a
2.5 percent rate.

This is something we like to see
going in the other direction.

If you are near full employment,
wages should be accelerating.

One reason is because
millennials are replacing
older baby boomers
and they're paid less.

That is not a bad reason
for wage growth slowing.

The other reason is that we are
seeing many employers out there
dip further into lower-skilled

workers, but instead of paying
them more, they are actually
investing in training, because

they don't have the skills
necessary to do the jobs they
have or they are leaving job

positions open.

The shortages in construction
are particularly acute
and manufacturing, which
actually contracted.

We still have over 300,000
jobs that aren't filled just
because people don't have the

right skills.

So we would do much better to
enhance the skills of those out
there who are on the sidelines

and not participating right
now to bring them back in, than
just give them tax cuts to cut

low wages.

JUDY WOODRUFF: And very quickly,
finally, Diane, we took note
yesterday when President

Trumped talked about the country
having created, I think, he
said a million jobs since the

election last November.

Does that reflect
what's been going on?

DIANE SWONK: It is
a bit of a stretch.

We have created 800,000 jobs
since the beginning of the year.

If you want to do it
since he's been president,
it's about 600,000 jobs.

So, depending on how he wants
to count, I think it is a
little early for him to take

credit one way or the other,
and might be careful what he
wants to take credit for in

terms of job gains.

I think it is going to
get better going forward,
but the bottom line
is, that is not really

the way to count it.

JUDY WOODRUFF: Diane
Swonk joining us from
Chicago, thanks very much.

DIANE SWONK: Thank you.