CELESTE HEADLEE, HOST:
I'm Celeste Headlee, and this is TELL ME MORE from NPR News. Michel Martin is away. Coming up, much of the news out of Detroit has been bad lately, but one guy says it's a great place to live. We'll hear why he decided to help the Motor City comeback by purchasing a $500 wreck of a house. That's just ahead.
But first, the national unemployment numbers seem to be heading down. And yet, that number doesn't really tell the whole story. The labor force has also been shrinking. And we want to know what that means so we've invited NPR senior business editor Marilyn Geewax. And also with us is Roben Farzad. He's a contributor to Bloomberg BusinessWeek. Welcome back to both of you.
MARILYN GEEWAX, BYLINE: Hi.
ROBEN FARZAD: Hi, Celeste.
HEADLEE: Marilyn, you know, this issue has come up for years - this idea that many people are leaving the labor force, and that's part of the reason why the unemployment numbers are going down. And yet, we've never gotten a real answer on why so many people are leaving the labor force. Why can't we answer this question?
GEEWAX: Let's just start with what we do know. We do know that the labor market is still weak, but that it's been getting better. There's really no question that it's a better job market today than it was a few years ago. In October of 2009, unemployment was about 10 percent. The latest reading on it is 6.7 percent. So that's a lot better, but it's still lousy. And the question is how lousy? Is it even worse if we counted all the people who became discouraged and just dropped out of the workforce? So the Labor Department tries to understand that. Economists study it. I would say the consensus opinion is that a lot of it - probably something like half is attributable to aging baby boomers. That is people are just aging out of the workforce.
You may have lost your job in 2009, and you were still in your late 50's. And you thought you'd get back into the workforce. Now you're in your 60's, and really you're just done. You're not going to find a job so you call yourself retired. And then there's another group of people that we have seen - a big surge in people who are disabled. They've applied for Social Security disability, and that's really surged. So there remains people in that category. And we're seeing younger people - maybe an 18-year-old who, a few years ago, might have been able to find a factory job and just get started working.
That person maybe can't find a job that pays well so they just stay in school for longer. But, you know, then the remaining part of that is a question - how much of it is really attributed to these demographic factors? That's a big debate, and some people think it's just much worse than we think because there are all these people who are just discouraged. But maybe we're just not measuring things very well, and so the controversies continue.
HEADLEE: Roben, let's talk a little bit about what Marilyn just said - that we're not measuring things well. And I think part of the reason people say that is because there are lots of nontraditional jobs that don't get really included in this unemployment number or the number of people who are working, right?
FARZAD: You know, Marilyn, Celeste, is a really thorough business journalist. But she short shifted the fourth big category, which is journalists in transition. I think if you go to LinkedIn, you'll see these guys are keeping LinkedIn in business, man. No. I absolutely agree there. And this workforce is completely changed. So many people who have either - you know, in the psychological sense there is an element of learned helplessness.
You learn for so long before you are chocked up as a discouraged worker or you decide, you know, you're freelance, you're in transition. I've tried my hand at floral arrangements and this and that and that - and consulting and landscaping. And that didn't work. And so I'm on sabbatical and then I'm on disability. And then I'm retiring. But not out of choice truly. And I think what's problematic is the Bureau of Labor Statistics numbers are not granular enough to fully account for how much this workforce is changing, how many people out there have been jolted.
The headline unemployment rate really doesn't tell you about the true level of underemployment or people who are hugely overqualified who are at Starbucks who might be getting benefits, but are biding their time until something else does or does not appear.
GEEWAX: You know, I actually spoke to some department economists about this and said did you - do you think you're measuring the right things? You know, in a digital economy where, let's say you can, you know, develop software - an app just sitting in your bedroom, and this month you work and next month you don't work because there's no job. Are you working? Are you not working? And the economists said to me that there's a lot of value in asking questions exactly the same way for decade after decade. I mean, these data points go back to really just after World War II. And they basically track a very steady way of measuring the economy so that there's this value.
FARZAD: There was a lot of value to an 8-track 40 years ago, too.
GEEWAX: Right, so then you come...
FARZAD: I mean, this is the problem.
GEEWAX: Exactly. This is why...
HEADLEE: Am I going to have to separate the two of you?
GEEWAX: Well, that's why...
HEADLEE: Let's take a moment here to remind everyone what we're talking about. If you are just joining us, we're talking about labor force participation - who is actually working and who's sitting at home watching "Downton Abbey." We're talking about this with Roben Farzad of Bloomberg BusinessWeek and NPR senior business editor Marilyn Geewax.
And I made an offhand comment about sitting at home, Roben, but that leads to my question. If there are people who are dropping out of the labor force, what are they doing? Are they sitting at home or are they, as you say, cobbling together a living from a bunch of different projects?
FARZAD: Well, when I was considering dropping out, I really got into Kathie Lee and Hoda. And I would get my muse. Some days I was like...
HEADLEE: Come on. Be serious.
FARZAD: Really. It would inspire me to write a story, and then I would freelance something and then - you couldn't exactly consider me fully dropped out for that day. I was like a part-time worker. But in any event, we are seeing a lot of people decide that, OK, if you're going to hit the reset button economically, this once-in-a-lifetime cataclysm, let's go to school. So college kids know that there's no shame right now in being unemployed out of college.
That is the new normal, to use the cliched-to-death term. That, you know what? You can extend it. Take a year abroad. Go do a Teach for America fellowship, volunteer. Nobody's really going to judge you. It's not like it was when the economy was at full employment and Wall Street and consulting firms and tech startups were hiring every possible qualified 22-year-old in the country. So when you add all of these things together, you know, speaking almost existentially, how do you come to a true unemployment rate for the economy, one that represents those that are out there wholeheartedly wanting to work and wholeheartedly cannot get work?
And I think that the Bureau of Labor Statistics and other people are trying to get their minds out of how do you do that in the year 2014, which now, increasingly with Obamacare, people are going to not have to be tethered to a job because of health care. That they can be increasingly free agents. And these numbers are going to be vexingly hard to track in the standardized way that they were saying we did since World War II.
HEADLEE: So, Marilyn, the number vexingly hard to track
HEADLEE: But also, Roben's saying it's going to be less meaningful as we move forward.
HEADLEE: What do you think of that?
GEEWAX: I've talked to people who operate sort of freelance exchanges, you know, kind of the eHarmony for workers who want to do some software development and employers. And they say that they - you know, somebody might work for a month and then go hiking for a month. And they're really not unemployed, but they're not employed. They're not looking for work, but they don't feel insecure. They're just taking a month off. So how do you count that kind of new digital worker?
I think economic historians will have to look back on this period and say wow, they were miss-measuring everything. The economy was changing radically and they weren't capturing that. We have data collection that is ideally suited to 1955. And we're missing it so, you know. And there are these controversies that maybe won't be sorted out for decades to come until we look back on this period, but right now, the things we do know - the labor market is weak, and we wish we had more jobs - how weak it is exactly why it's this - the people are dropping out. There are known things. Yes baby boomers are retiring, but there are lots of unknowns. Maybe we will find out later that actually maybe the economy was a little bit better than we thought or...
HEADLEE: Now maybe that's a known unknown.
GEEWAX: Yeah or the...
HEADLEE: And the unknown unknowns...
FARZAD: Rumsfeldian sense.
HEADLEE: Right, but let me go to you Sammy Hagar. Before we go...
FARZAD: I'm a David Lee Roth guy. You know that. Don't even go there.
HEADLEE: So what exactly does this mean? I mean, when you talk about somebody working for a month and then going hiking - I wish. You know, I am one of those people that cobbles it - cobbles my living together out of many different projects. That doesn't make me unemployed, but it also doesn't mean I'm reflected in either the unemployment numbers...
HEADLEE: ...Or the employment numbers. But that also means, I would assume, Roben, that the government is not set up to not only measure me, but help me.
HEADLEE: And make me more secure.
FARZAD: It's dysfunctional and requires a whole rethink at this point. And let's not just put the Bureau of Labor Statistics and the Labor Department in the spotlight here. This goes back to everybody - the Treasury Department...
FARZAD: ...The Council of Economic Advisers - all these people who look at these stats like the headline on unemployment rate as kind of gospel. And Wall Street does, too. Every time you get a jobs report...
FARZAD: ...There is this if-then scenario. Well, the feds are going to stay on hold if we see joblessness stay high. It's all a game of - and I don't mean to be so strong in saying this - but it smacks of self-delusion. The numbers are not very telling. And any statistician out there - anybody who'd say - would call them out on what is statistically significant and insignificant in this very rapidly changing economy. I think you step back from the whole thing and you pose the question - you know, we talked about the new normal cliche.
When was it normal? If we can't trust the numbers, if we can't say that, OK, the unemployment rate is now approaching 6 percent and will be a natural rate of unemployment soon enough if we keep growing at 120,000 jobs a month, if you can't even count on that number - and then the Federal Reserve scrutinizes - I mean, after all, the Fed governors meet and they've set a hard target for unemployment rate to then pullback on quantitative easing and then increase...
FARZAD: ...Interest rates - what can you count on? So I just - I don't know what the urgency would be of some whistleblower shows up on Capitol Hill or on the steps of the Treasury Department, and says, you know, you guys need to figure out new numbers. You're juking the stats. I just don't see anybody out there with a vested interest in the federal government to say that this needs to be overhauled.
GEEWAX: You know what's really peculiar is this number is so important and people watch it so closely. And yet, last October, when we had the government shutdown, those economists for the Labor Department were out of work at the very time they were supposed to be collecting even the minimal data...
HEADLEE: That's right.
GEEWAX: ...That we do have.
GEEWAX: It's not like Congress is just rushing forward to give the Labor Department a lot more money and hiring more economists. You know, given the importance of these numbers, we might want to think about how we fund this and take a little more seriously this whole data collection issue.
FARZAD: I predict that this might be solved by the private sector. I know my employer Bloomberg certainly spends a lot of time polling economists, taking a poll of polls, taking a poll of various economists in its system...
FARZAD: ...Outside it's economists. ADP, the payroll operator, polls all sorts of hiring managers so there's got to be a better way to get at this true number.
HEADLEE: I'm sorry. I'm offended by the implication that somebody could be more effective at problem-solving than Congress, Roben. That's Roben Farzad, a contributor to Bloomberg BusinessWeek. He joined us from member station WCVE in Richmond, Virginia. And Marilyn Geewax is NPR's senior business editor. She joined us in our Washington, D.C. studios. Thanks to both of you.
GEEWAX: Great to be with you.
FARZAD: Thank you. Transcript provided by NPR, Copyright NPR.