Video: Should Obama turn his focus to the job market?

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    >>> next.

    >>> more than half a million americans are now taking first-time jobless claims . that is good news. claims yesterday dropped to 521,000 and that number does jump around from week to week. the fourth drop in four weeks is a good trend and the nation still losing jobs at an alarming rate. joining me now ron ensama and elizabeth sawhill. first to you, the trend in the jobless numbers, at least as far as the overall unemployment numbers is still bad for the white house , but do you think this recovery is taking hold and do you think we're going in the right direction?

    >> i do. i think in june and july the company is starting to turn in earnest and australia and canada have begun adding jobs. britain is a separate case typically they lead us in and out of recession and britain is suffering more than the other countries and so canada's job creation was six times what was expected when reported yesterday. i think we're starting to turn the corner. the recovery is not fully baked in the cake, but we are in far better shape than we were six months ago.

    >> some republicans sent a letter to president obama asking for some better tax breaks on small businesses to boost job creation , is that a good idea?

    >> well, i'm not sure that that would be where i would start. i think we are beginning to see some green shoots now and i think we should wait and see if we can get some more but i do worry they can start to turn brown when the current stimulus package runs its course. we may need some kind of additional stimulus. i would prefer something like a payroll tax holiday than some kind of relief for small business .

    >> let me ask you both about the congressional budget office scoring of health care . ron , briefly, first to you. whether you think those are real numbers and whether they can justify their claims as they go into these budget negotiations over health reform .

    >> you know, andrea, like any other program that is medicare, medicaid and the like, i would tend to believe that the numbers are underestimated and that reducing the budget deficit would the health care plan would be wishful thinking . the cbo is nonpartisan and tend to be fairly conservative. whether or not it also helps to create jobs and tax receipts remains to be seen. but anything that will ultimately boost employment in the health care sector would be a net benefit for the jobs situation.

    >> what do you see when you look at what came out of the cbo and the projections, do you think that these are real numbers ?

    >> well, i tend to agree with ron . i think cbo is trying to do it in an honest, objective way. but that ignores the fact that when congress writes the bills, they know how to design them in a way to get the right scoring from cbo and often put in gimmicks such as the assumption that all of the relief that we have provided in recent years on doctor's fees is suddenly going to be stopped and that we're going to hold down doctor's fees and we're not going to do that. we have never been able to do that. so, these aren't necessarily realistic assumptions.

    >> wishful thinking goes into this.

    >> yes.

    >> the other problem here is that as i understand it the bill given to the cbo was not written in legislative language and suggest a variety of different, you know, tricks or quirks in the legislative language of the bill that would change the calculus on the numbers that have been produced. it is premature to say whether or not cbo has accurately scored this piece of legislation.

    >> thank you so very much.

updated 10/9/2009 3:28:42 PM ET 2009-10-09T19:28:42

The number of U.S. job seekers competing for each opening has reached the highest point since the recession began, according to government data released Friday.

The employment crisis is expected to worsen as companies stay reluctant to hire. Many economists expect a jobless recovery, putting pressure on President Barack Obama and congressional Democrats to stimulate job creation.

There are about 6.3 unemployed workers competing, on average, for each job opening, a Labor Department report shows. That's the most since the department began tracking job openings nine years ago, and up from only 1.7 workers when the recession began in December 2007.

The highest point after the 2001 recession was 2.8 workers per opening in July 2003, as the economy suffered through a jobless recovery.

Employers have cut a net total of 7.2 million jobs during the downturn. While layoffs are slowing, Friday's report shows the other critical piece of a labor market recovery — hiring — has yet to begin.

"Fewer people are facing job loss," said Heidi Shierholz, an economist at Economic Policy Institute in Washington, "but once you have lost your job, you are in serious trouble."

The department's Job Openings and Labor Turnover survey found less than 2.4 million openings in August, the latest data available. That may seem like a lot of jobs, but it's down from 3.7 million a year ago and half its peak in June 2007. It's also the lowest tally on nine years of government records.

At the same time, the number of unemployed Americans doubled from the beginning of the recession to 14.9 million in August.

Economists fear the job market will take years to recover.

Shierholz said the economy faces a "jobs gap" of almost 10 million — the 7.2 million jobs lost plus the roughly 125,000 per month that would have been needed since the recession began just to keep up with population growth.

To close that gap and get back to pre-recession levels in two years would require more than 500,000 new jobs per month, a pace of job creation that hasn't been seen since 1950-51, Shierholz said.

Most analysts expect the nation to keep losing jobs through this year and the unemployment rate to peak above 10 percent by the middle of next year, even as the economy starts to recover.

"The recovery in output continues to be unaccompanied by a recovery in jobs," said Nigel Gault, chief U.S. economist for IHS Global Insight. He expects the unemployment rate, currently at 9.8 percent, will be at 8.6 percent in 2012.

Cynthia Rosso, a Potomac Falls, Va.-based marketing and communications professional laid off in March, is painfully aware of the competition she faces.

A networking group where she once announced jobs she was trying to fill as a manager is now dominated by people looking for work.

"Very few people get up and say, 'I have a job to offer,'" she said.

Rosso went to a job fair over the summer but turned back after seeing a line snaking around the building. She later heard that 3,000 job seekers showed up to vie for the attention of a handful of employers.

The jobs crisis is likely to have political repercussions. The last time the unemployment rate topped 10 percent, in 1982, President Ronald Reagan's Republican party lost 26 seats in midterm elections.

Congressional Democrats are working on various proposals to both provide relief to the unemployed and create jobs. The House and Senate have both agreed to extend jobless benefits, though the two bills have to be reconciled.

House and Senate leaders also are considering extending an $8,000 tax credit for first-time homebuyers, and creating a new credit for companies that add jobs.

Still, Republicans in Congress say rising joblessness and the talk of additional policy moves demonstrates that the administration's $787 billion stimulus package hasn't worked. Administration officials contend that job losses would have been worse without it.

The Federal Reserve, meanwhile, is expected to keep the short-term interest rate it controls at a record low near zero until sometime next year, in an effort to bolster the economy. High unemployment makes price hikes less likely, but some analysts fear inflation could result if the Fed waits too long to raise rates.

Economists offer several reasons why companies aren't hiring. Many employers laid off huge numbers of workers earlier this year but have since found that productivity jumped, enabling them to maintain output.

"For now, many of them are trying to find out how far they can push that," Gault said.

Many employers also are unsure about whether the economy can continue to grow once the impact of government stimulus fades and aren't likely to hire until that uncertainty eases, Gault said.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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