MARY LOUISE KELLY, HOST:
The U.S. job market is suffering a summer slowdown. A report from the Labor Department this morning shows employers cut more than 20,000 jobs in July. That's sobering news at a time when polls show many Americans are already feeling gloomy about the economy. NPR's Scott Horsley joins us. Hey, Scott.
SCOTT HORSLEY, BYLINE: Hi, Mary Louise.
KELLY: Isn't this - what - the second month in a row that the jobs report has been weaker than expected?
HORSLEY: Yeah, it is. So a market that was already sluggish has now shifted into reverse. Retailers and insurance companies cut jobs last month. Even healthcare, which had been a reliable source of job growth, saw weaker hiring in July than earlier in the year. Some of the losses at public schools might have been exaggerated by seasonal adjustments, but make no mistake. This was a week report. Economist Kory Kantenga of LinkedIn says, even bars and restaurants, which hope to get a kick from the big soccer tournament this summer, instead wound up losing 26,000 jobs last month.
KORY KANTENGA: There was some speculation, oh, it's the World Cup driving up leisure and hospitality. Actually, no, we didn't really see much of a boost there. We are still facing a labor market where hiring is over 20% slower than what we saw prior to the pandemic.
HORSLEY: And the weakness was not limited to July. More complete numbers from May and June also erased more than 100,000 jobs we thought were added during those two months.
KELLY: But help me square these two things, because the unemployment rate is also really low. How can those two things both be true?
HORSLEY: Yeah, the unemployment rate is low, just 4.1% last month, and it actually inched down, but that's not as good as it sounds. The rate is not falling because people are finding jobs. It's falling because more than a quarter million people gave up and dropped out of the workforce last month. Now, some of that is to be expected as baby boomers age and retire, but the number of working-age people in the labor market has also shrunk by about 600,000 since the beginning of the year. Kantenga says, for some people, work is just not paying enough these days to justify the cost of filling your gas tank or hiring a babysitter.
KANTENGA: Partly, it might have to do with the fact that real wages today are going down. It's not as good of a deal to work. When inflation outpaces your wage gains, you don't necessarily gain by working.
HORSLEY: Average wages in July were up just 3.2% from a year ago. That's probably not enough to keep pace with the rising cost of living. We'll find out for sure next week when we get the July inflation data.
KELLY: Stay with inflation, which the Federal Reserve, of course, keeps promising to bring under control. How does this jobs report today affect the Fed's calculation there?
HORSLEY: Well, the Fed's balancing act is getting tougher. Ordinarily, the central bank would raise interest rates to fight inflation and cut rates to boost the job market. A week ago, investors were betting the Fed would raise rates at its next meeting in September. Today's downbeat jobs report makes that a much closer call.
KELLY: Scott, one more piece of Fed news to talk through today, and that is we're told President Trump is trying again to remove Fed Governor Lisa Cook.
HORSLEY: Yeah, it was just over a month ago the Supreme Court smacked down the president in his effort to fire Cook over unproven allegations of mortgage fraud. But Trump is not giving up. The White House is now demanding that Cook respond to mortgage allegations. Cook's lawyer insists the charges are baseless and is promising to fight Trump's effort in court. Massachusetts Senator Elizabeth Warren, the top Democrat on the committee that oversees the Fed, said in a statement today, Donald Trump is tanking the economy and desperate to shift the blame. And Warren is also promising to fight this renewed effort by the White House to fire Cook.
KELLY: Thank you, Scott.
HORSLEY: You're welcome.
KELLY: NPR's Scott Horsley. Transcript provided by NPR, Copyright NPR.
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