Job Picture Worse than It Seems?

Report: White House downplays significance of jobless rate


CHRIS COTTER, GUEST HOST: Well, ahead of tomorrow’s big jobs report, the White House playing down the significance of jobs on the president’s reelection bid.

White House senior adviser David Plouffe quoted as saying people won’t vote based on the unemployment rate.

We will get to his full statement in a minute, but first to Mort Zuckerman, editor in chief of U.S. News and World Report. He joins me.

Mort, now, it is true that the current 9.1 percent unemployment rate doesn’t really tell the whole story and it actually might mean bubkes to Joe taxpayer on the street. But it is part of a much bigger story and a much dire story, in your mind.


In the first place, no president has ever been reelected if the employment rate exceeded 7.2 percent, not in our history. And this is 9.1 percent. But even that number clearly doesn’t measure the real unemployment, because it only members -- measures people who have applied for a job in the last four weeks.

We have had an average unemployment now of 40 weeks, which people don’t apply every four weeks. But if you measure it according to people who have applied for a job in the last six months, then you’re involved in something different. The number there, the unemployment there is roughly 16 percent, if you also include people who are working part-time who want to work full-time.

In addition to that, you have another 3.5 million what they call discouraged workers, which puts the real unemployment rate at around 18 percent, or double what the 9.1 percent is.

Now, if you think people aren’t going to vote based on those numbers, every family is going to be considering that when they vote. Every person who knows somebody who’s unemployed is going to be considering it. It’s one of the most significant indicators of whether people feel the economy is working for them or working against them.

COTTER: I think what Plouffe was getting at was that, if that number is 18 percent of unemployed people, underemployed and those who have given up looking for work altogether...

ZUCKERMAN: Right. Right.

COTTER: ... that means there are still 82 percent of the population that is employed and maybe you don’t know somebody at your church or your neighbor or somebody that you run into at the grocery store that isn’t unemployed, and maybe you feel pretty good about things.

ZUCKERMAN: Let me put it this way. When you have that number of people unemployed, everybody knows that the job market is terrible.

And, therefore, people are staying in jobs they don’t want. Labor mobility is reduced. Labor anticipation and optimism is reduced. It affects everyone’s view of how well the economy is going. And the economy’s still the critical thing. By the way, it also affects what people are doing in terms of shopping. So it affects the whole -- consumer confidence, for example, is at a record low.

In the recessions that we’ve had since the end of World War II, based on the National Conference Board, the -- just to give you a number, the consumer confidence averaged 73 percent in the recession. This time, it’s at 57 percent. So it’s at an all-time low. It’s going to affect everything in the economy.

COTTER: All right. This is what White House senior adviser David Plouffe had to say: "The average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers," which we will get on Friday. "People won’t vote based on the unemployment rate. They’re going to vote based on" -- quote -- "‘How do I feel about my own situation? Do I believe the president makes decisions based on me and my family?’"


(LAUGHTER) COTTER: ... look, things are slowly coming out of this recession, much more slowly than we’ve seen in the past, even with all that granted.

ZUCKERMAN: We don’t know that.

In the meantime, the fact is that -- that, today, we have fewer jobs in this economy than we did when President Obama was first elected. I don’t how you measure. Home prices continue to go down. Job -- the job market is terrible. The consumer confidence is terrible.

If they think this isn’t going to affect the way people are going to vote, good luck to them. They’re much smarter politicians than that. I think this is just a statement made to try and diminish the effect of these numbers.


COTTER: All right. A big part of the job loss is in manufacturing. You could argue that those manufacturing job will never come back to this country. So, where do we go from here? How do we fix this? How do we change this?

ZUCKERMAN: Of the people -- we have over six million people who have been out of work for six months or longer. And we have four million people in addition to that who have been out of work for over a year. This is when you get into a situation we call structural unemployment.

People lose confidence in themselves. They lose the skills they need. The people who are employing them say, well, maybe they’re out of the touch with the job, so it becomes much more difficult for them to get a job.

We are going to have to have some serious way to look at this unemployment. This country is not going to accept these kinds of unemployment numbers.

COTTER: Are you talking about stimulus spending? Are you talking about infrastructure type spending?

ZUCKERMAN: Infrastructure, yes, of a particular kind. I believe the infrastructure should be tolled. That is to say, people will pay tolls, so that ultimately the users pay it. And this mean it will seen be an investment, and not as an additional...

COTTER: It’s also seen as a tax.

ZUCKERMAN: Well, it is. It’s users, OK? It’s the users who will use it who are paying a toll.

But it means that it will be not be seen as an addition to our national debt. And that’s at this stage of the game something we cannot afford, which is to add to our national debt.

COTTER: What about policy, government policy towards business right now?

ZUCKERMAN: Well, I think that’s another thing.

I think there are going to things that are going to have to be done, whether its tax incentives, for example, to hire employees, whether it’s tax incentives to small businesses. The major creator of jobs are the small businesses, OK? These are the people who need the help.

One of the ways that they could be helped is they get a special benefit for the number of people they employ when they start up a company.

COTTER: Mort, always good chatting with you. Thank you so much, sir, for the insight.

ZUCKERMAN: You’re very welcome.

COTTER: Good to see you, Mort Zuckerman. All right.

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