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Economists consider what might repair job market (+video)

By Christopher S. Rugaber

Associated Press

Published: Friday, June 1 2012 10:07 a.m. MDT

White House economist Alan Krueger said that while the latest jobs report illustrated the need for faster growth, the administration welcomes any increase in jobs.

"We are on a better path then we had been before the president came into office," he said.

Obama's Republican challenger, Mitt Romney countered: "Today's weak jobs report is devastating news for American workers and American families. ...It is now clear to everyone that President Obama's policies have failed to achieve their goals and that the Obama economy is crushing America's middle class."

— Darlene Superville, Associated Press Writer

GOVERNMENT ISN'T HELPING

Government jobs cuts are worsening the jobs picture. The federal government shed 5,000 jobs in May. State governments cut 5,000 and local governments 3,000.

Overall, governments have cut jobs in 10 of the past 12 months.

Tax collections by state and local governments have been rising since mid-2009. Yet the belt-tightening continues. From January through March, government cuts reduced U.S. economic growth by 0.78 percent point to an annual pace of just 1.9 percent.

"Typically, the government offers a base level of support" when the economy is weak, says Scott Brown, chief economist at Raymond James & Associates.

"In this case, the government is actually contributing to the weakness of the recovery. ... You're talking about teachers getting laid off. Government worker have families. They have mortgages. They spent their paychecks."

— Paul Wiseman, AP Economics Writer

BIG CUTS IN CONSTRUCTION

Some major industries absorbed steep job losses in May.

Construction firms cut 28,000 jobs. That was the sharpest such drop in two years.

Governments shed 13,000. Amusement parks, museums and casinos cut nearly 17,000 positions. Professional and business service firms, which include high-paying positions in accounting, engineering and legal services, dropped 1,000.

On a hopeful note, a few key industries created jobs. Manufacturers added 12,000. Transportation and warehousing companies created nearly 36,000. And 46,000 jobs were added in education and health care. Hotels and restaurants added roughly 9,000 jobs.

— Christopher S. Rugaber, AP Economics Writer

CONSIDER THE 'EMPLOYMENT RATE'

To assess the job market, most people look at the unemployment rate. But it can be misleading. The rate can fall, for example, even if hiring is weak.

This can happen when many people stop looking for work and are no longer counted as unemployed. The rate can also rise even when jobs are created, if more people start looking. The number of unemployed often rises. That's what happened in May.

Then there's the "employment rate." It measures the percentage of adults who do have jobs. And it's painting a more sobering picture.

Consider: The unemployment rate has dropped almost a full percentage point from August, from 9.1 percent to 8.2 percent. That might suggest the job market is steadily strengthening. Yet the employment rate has improved only slightly in that time, from 58.3 percent to 58.6 percent. That's lower than when the recession ended, when it was 59.4 percent.

So why the difference? The economy has added jobs since August — but only about enough to keep up with population growth and prevent the unemployment rate from heading up.

— Christopher S. Rugaber, AP Economics Writer

EUROPE STILL WORSE

As bad as the May employment numbers were, Americans can take solace from one thing: It's a lot worse in Europe.

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