On the Hot Seat

Recession may change the rules for the labor market

Keith Hall, commissioner, US Bureau of Labor Statistics. Keith Hall, commissioner, US Bureau of Labor Statistics. (Wendy Maeda/ Globe Staff)
By Robert Gavin
Globe Staff / August 29, 2010

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Keith Hall began his four-year term as commissioner of the US Bureau of Labor Statistics in 2008. His agency tracks a variety of data that measure the state of working America, but is best known for its monthly report on jobs and unemployment. Hall, 54, recently spoke with Robert Gavin of the Globe staff.

What’s going on in the labor market these days?

We seem to be about seven months into a labor market recovery, averaging about 90,000 new jobs a month. That’s not strong growth, but you have to consider where we were last year.

Can you put the last couple years into historical context? We’re down 8.4 million jobs, which is unprecedented in terms of raw numbers. We’re going to need a lot stronger job growth to recover those jobs quickly. That has to be the big concern.

Long-term unemployment is at record levels. . .

The reason is twofold. One, the expansion we had after the 2001 recession was not strong, so long-term unemployment didn’t go down as far as it has in the past. Then, a long, deep recession added to that.

Are fundamental changes in the labor market contributing to long-term unemployment?

We’ll have to wait and see. So much of this recession has been unprecedented — the depth, the long-term unemployment, what happened in financial markets. All that suggests that once we get out of this, things might not look the same.

The term “jobless recovery’’ was coined in the early ’90s, and it’s happened again and again. Is it becoming the norm after US recessions?

It’s always been: The deeper the recession, the faster the recovery. The last two recessions were mild, so they had mild jobless recoveries. There’s reason to think that we’ll have a bigger bounce coming out of this recession because we had such a steep decline. The question is: Where is it?

Looking ahead, where are the jobs going to be?

Service industries continue to be important locations for jobs. Obviously, demographics are pushing us to health care. And a lot of job growth coming up will be replacement jobs because we have demographics where people retire and they’re replaced.

You’re talking about baby boomers?

Yes. One of the big questions going forward is their retirement plans. They’ve been hit in a major way in the financial markets, and you have to think it will delay retirement for a lot of folks.

When you look at all the data that BLS tracks — jobs, wages, benefits, prices, productivity — what do they say about the condition of the American worker?

With respect to wages, we’ve had such inflation in energy that real wages have taken a hit. We’ve generally viewed energy inflation as transitory, but over the past few years, energy prices have been staying up. That has to be a concern, getting enough wage growth to stay ahead of energy inflation.

We’re also seeing slightly declining health care coverage through work. When people lose their jobs, they lose their health care. The shift from manufacturing to services is also a factor, since a lot of service industries have lower insurance coverage rates.

Worker productivity has risen sharply, but not wages. Is there a disconnect?

Growth in wages has probably been depressed by rising health care costs. If you look at overall compensation, it’s tracking productivity pretty well. But so much of it goes into nonwage benefits.

When you take all the data, what picture do they paint of the US economy?

The hope is what’s happened this year is the start of much stronger job growth. But we have a long way to go. It took a year and half to fully recover all the jobs we lost in the last recession. We’re starting with much more severe job losses, and if we don’t get much stronger job growth, we’re going to have a long time to wait.

Any bright spots?

It’s encouraging to see manufacturing jobs grow this year. They’ve grown every month this year, which has not happened for a long time.

Should we be optimistic or pessimistic?

We’ve had a very severe recession, and I’ve been optimistic that we’re going to have a strong recovery as a result. So far, we’ve not seen that, but I’m still hopeful.