December jobs report sends ‘a lot of signals’ about what’s needed from Biden administration: Economist

The U.S. shed 140,000 jobs in December. Labor Economist and Rutgers University Professor Bill Rodgers joins Yahoo Finance Live to discuss.

Video Transcript

AKIKO FUJITA: Let's bring in our first guest for the hour. We've got Bill Rodgers. He is a Labor Economist and a Professor at Rutgers University. Bill, it's always good to get your perspective on jobs day. When you look at the headline number here, it certainly doesn't appear to be good news, what did you take away here? What's the silver lining?

BILL RODGERS: Well, I think Emily did a great job summarizing the, you know, today's report, but I think the two things I would add to her share is one, this loss in jobs was on the horizon. For the last five to six months, we've been seeing job creation. It was positive, but it was getting smaller and smaller and smaller and smaller to finally, this past month, it flipped over into the negative.

The other thing that I also want to mention that's starting to creep up in the data, and it's because of the absence of state and local support in these relief and recovery packages is that the loss of state and local employment in education and also in non-education, that those numbers are starting to creep up, and that's because, right, state and local governments can't, they have to balance their budgets. This is not a time for raising taxes, and so the only way that they're going to be able to do that is making cuts, and these are also very essential jobs just as nurses, doctors, physician assistants, those who have been helping out during this pandemic. So I think this report sends a lot of signals about what we need in our next round of relief and recovery efforts.

ZACK GUZMAN: Yeah, and I mean, when we got this report, the markets too kind of shrugging it off. I assume because investors, again, digesting backwards facing data here. We know that stimulus odds are boosted with the incoming administration, with the benefit of now having Democratic control in the Senate. But when we talk about, you know, adding jobs back, it's always easier to lose jobs than add them. So when you think about what's going to be needed ahead to get us back to where we were pre-pandemic, obviously that's a slog when you think about unemployment still around 7% here. So what would you stress in maybe looking at that and kind of the difficulty of adding jobs back in 2021?

BILL RODGERS: Yeah, so I think I've shared before, but here in New Jersey, I serve on the governor's Restart and Reopening Commission, and the mantra that has been held there and continues to be held is that public health will create economic health. And so you know, we have to continue with the great efforts with getting the vaccine out there, but we also have to continue to provide employees and then hence customers with that appropriate PPE to be able to ensure confidence in the workplace and in the consumer place. We also have to make sure that, well, you know, that companies that need assistance with their payroll, right, that those efforts continue.

And then a group that I'm-- there's other things we can talk about too-- but the group that I'm also focused on that hasn't been getting a lot of attention is young people, and there's a great deal of research going past back on previous recoveries, recessions or economic downturns that today, we have a teenage unemployment rate that's about 16%, and it has not been falling that much, and young people who come into recessions, economic downturns, they see long term persistent erosions in their economic opportunities, and it's particularly minority and young minority. So we may have to think about some type of job program, public sector job program, particularly for young people, continue to make it easier for young high school and college graduates who can't get jobs, access to unemployment insurance. Many of them, like their windows or their lengths of tenure for working aren't big enough to make them eligible.

ZACK GUZMAN: No, for sure. I'm glad you mentioned younger people, because you know, I have a younger brother. He was on the show earlier in 2020. He actually had COVID, and he came on and talked about his experience there. Luckily he's recovered now, but he's stressing the fact that a lot of young people are right now.

You look at the unemployment rate for 16 to 24-year-olds in this country, it's about double the national average, 12.5% versus the 6.7 we're talking about for the country. As you said, they're also excluded from the idea if they're dependents from the stimulus checks we've been discussing, as well as if they just graduated, claiming unemployment benefits. So I mean, when you add all that up, plus student debt levels as well, you add it up, you can make a case that they're worse off than millennials who were coming out in the Great Recession here. So just to drive a point further, how worried are you that that kind of class of citizen coming out into the labor market is just not going to be able to catch up?

BILL RODGERS: Oh, yeah, no, that's right. At least catch up without the appropriate relief, recovery, and then reimagining the economy that these young individuals, we're going to be counting on them to be our leading indicators in productivity growth, and that's that simple relationship. Economic growth is equal to productivity growth plus population growth. And if we don't do the things right now and investing in young people going forward, they're going to have less productivity growth, less productivity over their lifetimes, which will have a drag on economic growth. So you know, the future is now.

AKIKO FUJITA: Bill, you've also been focused a lot on the unequal recovery or uneven recovery that we've been seeing, especially among Blacks and Hispanics, and I wonder if we can point to this chart based on data we got today from that jobs report. When you look at unemployment rate, still very high among Blacks at 9.9%, Hispanics at 9.3%. As we look to this new democratically controlled Congress and additional stimulus, what kind of targeted relief do you think lawmakers should be considering to narrow that divide?

BILL RODGERS: Well, you know, one of the challenges here is that the challenges that many African-Americans and other people of color face, it's not just race specific or just ethnicity specific, and so, you know, I would continue to urge that the Biden group and then the new Congress, that they continue to focus on the bread and butter things that they've done, like the unemployment insurance, expanding that, making sure that people who have not been eligible in the past are now eligible, because that takes up a large proportion of minorities. I think as I've mentioned earlier, can't reiterate the importance, but state and local government. State and local governments for many Blacks and other minorities, and women especially, this was their toehold into the middle class.

And so if we do not invest in state and local governments going forward to help us get out of this pandemic, that's going to also create a drag on economic growth. And then finally, the continuation of the Federal Reserve, keeping money cheap, keeping interest rates low, and not starting to raise interest rates prematurely, because there's been ample evidence, and I've contributed to that too, that as the Federal Reserve starts to slow down the economy by raising interest rates because of fear or concern for inflation, that has a disparate impact on minorities. So there's sort of what we call micro Main Street approaches, but also there's the macro side of things too that we have to take into account.

AKIKO FUJITA: Yeah, and on that aid for state and local governments, certainly the expectations on that front elevated as a result of Democrats winning those two seats in Georgia. Bill Rodgers, it's good to talk to you today. Have a great weekend.

BILL RODGERS: Thank you, happy new year to everybody.