The U.S. economy added 245,000 jobs in the month of November, according to the Department of Labor's most recent monthly jobs report. The number falls short of what some economists predicted and indicates that the labor market is slowing down as we see a surge in coronavirus cases across the country. GBH Morning Edition host Joe Mathieu spoke with Boston College economics professor Bob Murphy about the latest jobs report and what it could signal for the economy as we head into a difficult winter. The transcript below has been edited for clarity.
Joe Mathieu: Does this tell you that, in fact, the job market is cooling off?
Bob Murphy: Oh, absolutely. In fact, if you back up the last several months, we've seen a decline in the rate of improvement in the labor market. The gains in monthly job numbers have shrunk consistently through the last four or five months now, and the unemployment rate appears to have bottomed out here, if you will, dropping only two tenths of a percentage point in the latest report. So I would certainly agree with the view that the labor market improvement has slowed. We're still seeing a little bit of improvement, but it's certainly slowed down and I think that's a consequence of the pandemic intensifying this fall.
Mathieu: People see a number like 6.7 percent, we've had higher unemployment rates, yet millions are collecting unemployment insurance as we speak, Bob. What's the real unemployment rate? I know that these surveys don't always count people when they're not actively looking for work.
Murphy: That's right. The 6.7 percent unemployment is still an extraordinarily high number from where we were prior to March; we were down in the mid 3s. But you're absolutely right. People are collecting unemployment insurance, and again, the numbers are a little bit in flux there, but certainly well north of 15 million people [are] still on unemployment insurance [and] continuing to collect. What has happened, as we're seeing in the data and reinforced today, labor force participation has actually declined by about two percentage points since February. That's a sign that people are becoming disengaged from the labor force. They're either now giving up on looking for work or they've opted to drop out of the workforce, perhaps because particularly for people getting closer to retirement, they've now sped up that decision. And we're going to lose, I think, some workers who may have stayed in the labor force longer who now think,"why don't I retire now instead of trying to slog through this?" Then on the other side is women. Women's participation rate has dropped in part, I think, because of the need to stay home and handle the kids that they may have in the household. So we've seen that happening and I think more of the burden with managing the pandemic on the home front has fallen on women. So, again, those are not good signs because when people become disengaged from the workforce, if this persists, they tend to then have a harder time getting back into employment.
Mathieu: This is typically a season for hiring. As we get closer to the holidays, retailers will frequently hire up at least temporary staff [and] shipping companies might do the same. Are we going to see those normal trends or is this just a different year, Bob, because everybody's ordering online?
Murphy: Yeah, I think we'll see less hiring up in terms of the holiday season. While the numbers we're seeing is that it's off the charts for online commerce now, so I would expect less of a cushion there, if you will, in terms of helping stabilize things. And given the circumstances, I think many folks that might take these part-time jobs to supplement whatever else they're doing, or if they're unemployed right now, may be reluctant to work in a retail environment, given the potential risks that they face in an indoor space.
Watch — The concerns around the restaurant industry:
Mathieu: Well, that brings me to my next question, Bob, and that's about stimulus. I mentioned at the start of our conversation we don't have another one. Many believe it should have been here months ago. It's looking like we could go through the holidays before this is hammered out, if we get one at all. So I guess the question is, first, does this make clear that we need an economic stimulus to get out of this trend? Does it also mean that the Federal Reserve will have to keep interest rates near zero for the foreseeable future?
Murphy: I would say yes to both. The weakening in the labor market speaks, I think, volumes to the fact that the stimulus is needed. It was needed back in May to get this thing done and it's still a pressing issue today. On the Federal Reserve's front, interest rates are going to stay low for a long time. I'm seeing that now in the minutes of the last several meetings that the Board of Governors and the Federal Open Market Committee have had. The expectation, I think, is that the Fed has done a lot to help stabilize financial markets. Some of these lending programs that were instituted to provide loans to businesses — the main street lending program, along with lending program for state and local governments — these were funded in part by monies from the Treasury Department. Those programs, unfortunately, were slated to end the end of this year. The Federal Reserve would like those to continue. The Treasury Department, Trump administration has decided that they are not going to continue to support those programs, so those will have to be pulled back and no longer be available. I think that creates a concern going forward that the Fed is left with less tools, particularly if we move into the new year without some additional stimulus package that might include, for example, aid to state and local governments.
Mathieu: We're quickly running out of ammunition on the fiscal policy side.
Murphy: I think that's right.
Mathieu: Bob, we're out of time. I just have to ask you quickly, last time you were here, you referred to the Nike "swoosh" — that we were in maybe a "swoosh" recovery as opposed to a "V". I'm hearing a lot of people talk about a "K" right now. Are you worried about a double-dip recession? Is that a possibility for next year?
Murphy: Yeah, I think that's certainly in the cards, particularly if we don't have some stimulus that helps to provide a safety net to these businesses that now may have to retrench even more, lay off more [or] go out of business. I also think on the consumer side, we were able to prop up consumer demand by what we did. And if we don't have something that helps out on that score, maybe some additional unemployment relief, then we're going to see, I think, the economy heading back down in the first quarter of next year.
