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May jobs report 'way better than expected,' says White House adviser

The White House is cheering the stronger than expected May jobs report. Yahoo Finance's Jennifer Schonberger spoke with Heather Boushey, a member of the White House Council of Economic Advisers about the numbers.

Video Transcript

- May jobs numbers came in hotter than expected with the US adding 339,000 jobs last month. Let's get to Yahoo Finance's Jennifer Schonberger who's standing by for an important conversation on this. Jennifer.

JENNIFER SCHONBERGER: Thanks, Rochelle, for White House reaction to this blow out number. I am joined now by Heather Boushey, one of President Biden's advisors on the Council of Economic Advisors. Heather, thank you so much for joining me here on the North Lawn.

HEATHER BOUSHEY: Thank you. It's a pleasure to be here in person.

JENNIFER SCHONBERGER: So 10 consecutive rate hikes and still, this job market not cooling, surprising to the upside. Your reaction.

HEATHER BOUSHEY: Well, this is certainly a good jobs report, and it's way better than expected. And what it means is that millions of American families are able to access good jobs right now get those jobs. We're seeing people continue to enter the labor force and stay in there. We actually now have labor force participation rates that are higher than at any point since January of 2007 for primate workers, workers between 25 to 54. So this certainly is a good labor market, it's one that's drawing people in, keeping them in the labor force, and providing that access to the economic security that Americans need.

JENNIFER SCHONBERGER: Some have pointed to the strength in the job market saying that there could be structural issues at play, perhaps some effects that are left over from the pandemic. A lower immigration, a long haul COVID, certainly people who have died off from COVID. What do you think can be done about low immigration to increase the size of the labor pool here? We keep hearing about a shortage of workers.

HEATHER BOUSHEY: Well, here's the thing, a shortage of workers is a mismatch between the demand for workers and the supply available. And one way to fix that is to make sure that employers are offering good jobs. And that's one of the things we've seen over the course of this recovery is that the extent to which employers are offering those good jobs, we're seeing nominal wage gains. That's drawing people in, it's bringing them into the labor force, bringing them into that employment. So that gives me a lot of hope that there's still room to grow there.

Now, again, prime age labor force participation. Those workers in there, their peak earning years is 25 to 54. That's back to where it was in January of 2007, but it's not at its all-time peak. We certainly have some room to go for people who are here in the US economy that could be entering the labor force.

JENNIFER SCHONBERGER: Fed officials are closely watching this report. We heard from a couple officials this week who suggested that perhaps they should hit the pause button when it comes to raising rates at the next meeting in June to sort of take a step back, assess, and then perhaps resume raising again this summer. Do you think that's a prudent approach at this juncture?

HEATHER BOUSHEY: Well, I can't comment on Fed policy, but what I can tell you is that they're looking at-- we are looking right now at a strong labor market, one where we're not seeing rises in unemployment claims, one where people are not quitting their jobs or getting laid off, one where we're seeing this strong employment alongside wage gains. That while they are good in nominal terms and are for the most part keeping pace with inflation, they aren't sort of at the blockbuster pace that they were before.

That pace has been slowing. So that gives us some indication that there's a bit of cooling in the economy and hopefully, we are finding that place where we can continue to see that job creation month after month, continue to see those nominal wage gains month after month without needing to see the overheating that people are concerned about.

JENNIFER SCHONBERGER: Want to ask you about AI. And I know it's early innings right now but as you look out, what impact do you think this is going to have on the labor market? There have been some analogies to automation, perhaps. AI's automation on steroids. What sorts of impacts do you think we'll see in terms of evolution?

HEATHER BOUSHEY: Well, here's the thing, the economy is always undergoing technological changes. We've seen this time and again. And certainly that can affect what kinds of work needs to get done, how that work is done, and what you need from people versus machines. That's really the crux of this issue. This is about where and how technology can replace human labor and what makes sense for employers.

What we've seen in prior technological changes is a lot of times, technology is labor augmenting. So it's not so much unnecessarily destroying all the jobs but it's changing people's jobs. The computers changed the way we work. We didn't use typewriters, there was a change in the need for stenographers because you could type directly into your computer. But that didn't mean that we saw the disappearance of jobs.

So I think as we're looking at from the labor market perspective, what we really want to understand is which jobs are going to see some of that augmentation and which ones might be totally shifted out of the economy, and how do we think about that transition for those workers in the communities that they live in?

JENNIFER SCHONBERGER: Switching gears a bit, we're going to hear from the president tonight. He's going to address the nation on the debt ceiling. What can we expect to hear from the president? And secondly, what can be done to in essence sort of suspend the debt ceiling here? It seems every couple of years, the US credit rating becomes in jeopardy because of this brinksmanship. We're one of the only countries in the world who has a debt ceiling, so what can be done about that?

HEATHER BOUSHEY: Well this is such a-- from an economics perspective, it's a challenging issue because in some times, the debt ceiling, you just get this clean increase, you don't talk about it. It's just the normal order of business. And sometimes, you go really close to the brink. I think what's really important this week is to acknowledge this historic bipartisan compromise, this deal that was come to between the president and leaders in Congress and the Republicans to move past this to say we can come together, we can make a deal to raise the debt ceiling. And then address some of the budget challenges where, of course, different parties are going to disagree. And that's what happens in a democracy.

So I think the important thing today is that we have a deal and that the president did not have to compromise on his core economic principles. He did not have to do anything that would jeopardize the security or social security or Medicare and was able to protect students and veterans and other workers across the economy.

JENNIFER SCHONBERGER: And what can we expect to hear from the president tonight as he addresses the nation?

HEATHER BOUSHEY: I think the president is-- I'm sure the president will be relieved as we all are, that we're able to move past this moment, able to avoid the potential catastrophic consequences for the US economy of blowing past the debt ceiling but also proud of the fact that parties were able to come together and get this done in a way that will help and support the US economy.

JENNIFER SCHONBERGER: Heather, thank you so much for your insights. So appreciate it. Hope to see you again soon.


JENNIFER SCHONBERGER: That's Heather Boushey, President Biden's member of the Council of Economic Advisors. Also back to you guys in the studio.

- All right, thanks so much, Jennifer. Appreciating the conversation there.