ROBERT SIEGEL, HOST:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
And we begin this hour with the health of the U.S. economy. In a moment, we'll mark the fifth anniversary of the collapse of Lehman Brothers with the man at the center of the financial crisis, then-Secretary of the Treasury Henry Paulson. But first, news from the Labor Department today. The U.S. economy gained 169,000 jobs last month, and the unemployment rate ticked down to 7.3 percent as fewer people looked for work.
The jobs report has taken on special significance because it's the last one before the Federal Reserve meets to decide whether to scale back its efforts to boost the economy. NPR's Chris Arnold reports.
CHRIS ARNOLD, BYLINE: We saw a job gains last month in home building, manufacturing and retail, but the report had a downward revision for the two months before, which wasn't such a good sign. Overall, most economists agree that it's good to be gaining jobs, but the pace remains frustratingly slow.
DAVID KOTOK: This is unhealthy. It suggests ongoing weakness in the recovery in the labor markets of the United States.
ARNOLD: David Kotok is chief economist and investment officer at Cumberland Advisors. He did not like to see that downward revision. Also, the labor participation rate fell again. That means that more people have stopped even looking for work, and a lot of people. This reading hasn't been so low for about 40 years.
KOTOK: It's back to where it was in the late 1970s, which means there's millions of people who have either opted out, given up, can't find a job or the demographics are changing, some combination of all of the above. The bottom line of the participation rate is that the recovery is not robust, and the trend suggests that it's not likely to become robust.
ARNOLD: You notice Kotok said the demographics might be changing. This gets at a fundamental question about what's happening within the economy right now. Randy Kroszner is a professor at the University of Chicago.
DR. RANDALL KROSZNER: There's a big debate in economics right now of whether this very low participation rate - what is that due to?
ARNOLD: Maybe a lot of people are just frustrated. There aren't enough jobs, and wages are stuck and stagnant. But that's temporary, and most of them will come back to work. Or the structural scenario is that aging baby boomers just give up and decide to retire for good. And if a lot of that's going on, that could change the balance of workers versus retirees.
KROSZNER: Fewer people who are working, fewer people who are paying taxes, who are paying Medicare, Medicaid ,who are paying Social Security.
ARNOLD: And more retirees drawing down benefits. Basically, everybody knows we have problems with Social Security, but those problems could get much worse if millions of Americans don't go back to work.
KROSZNER: It's just not going to be sustainable without major change.
ARNOLD: For its part, the White House is seeing the glass half full in this report. Jason Furman is President Obama's new chief economic adviser. He calls the job growth steady and solid.
JASON FURMAN: 2.2 million jobs added over the last 12 months, but there's more we need to do. We need to make investments in our growth, in our job creation. We need to make sure we're not getting in the way of that by Congress failing to pay our bills and pass a budget.
ARNOLD: In other words, please no more debt ceiling standoffs. Furman also says that government cutbacks have hurt job growth. The Federal Reserve is watching all this very closely, of course, and one thing that it's been doing is injecting $85 billion a month into the financial system. Economist David Kotok says that the Fed doesn't want to turn off that money spigot too soon, but waiting too long might spur inflation or cause other problems. If you were wearing the chairman's hat, what would you do?
KOTOK: If I were the Fed chairman - and I am certainly not - but I would be tapering now at a very gradual rate. Instead of 85 billion, something somewhat smaller.
ARNOLD: Kotok says that might make markets less nervous than they've been lately if it showed that the world wasn't ending just because the Fed began to pull back. Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.