January Employment Figures Exceed All Expectations
DONNA KELLEY, CNN ANCHOR: And welcome back to CNN SATURDAY. This week the U.S. jobless rate fell to a 30-year low, just 4 percent for the month of January. The figures show our red hot economy added 387,000 new jobs outside of the farm sector. How long can that continue? For some insight, we turn to John Challenger, whose firm in Chicago has been tracking trends in the workplace for about 10 years now. Mr. Challenger, good to have you join us, thanks.</s>JOHN CHALLENGER, CHALLENGER, GRAY AND CHRISTMAS: Hi, Donna.</s>KELLEY: What's with January? Why is January showing up so well?</s>CHALLENGER: Well, January is traditionally a very heavy month for job creation, and yet we've been seeing this now for several months. December saw 316,000 jobs created. It's a red-hot economy. KELLEY; Yes, the weather had something to do with it, too, didn't it?</s>CHALLENGER: There are 110,000 construction jobs that were created. That's very heavy, and that was, in part, due to weather and in fact part also to strong spending on construction.</s>KELLEY: Hit a cold snap, though. You think February can sustain that or go down a little?</s>CHALLENGER: Well, 250,000-plus jobs were created in the service sector, nearly that much. High-tech continues to be a job engine. That sector is growing by leaps and bounds, and it -- there's no stopping it KELLEY; So is high-tech the biggest adding of the jobs at this point?</s>CHALLENGER: Well, high-tech and service businesses in general. That's where the real job creation is occurring. And it's also occurring in the smaller companies. It's the companies from under 100 people down that create all the jobs year in and year out. KELLEY; You know, if that's really good for high-tech to be creating those jobs, isn't that causing trouble for some other sectors, for some of the people that are leaving to go to high-tech?</s>CHALLENGER: No question. That high-tech sector is a magnet for people. More and more, the talented -- most talented people in Fortune 500 companies, from law firms, from consulting firms, are moving over to high-tech, chasing some of those stock options and the excitement of being in on the new digital economy. KELLEY; You know, John, if this is a 4 percent, is there some thought, some school of thought, that when you reach a certain number that you have employed all the people who are employable?</s>CHALLENGER: Well, we thought three years ago when we reached 6 percent unemployment that we were at full employment. In other words, anybody else who got hired was going to cause wages to rise and the economy would eventually slow down. We have now dropped 2 percentage points. That's an extraordinary amount of drop. It defied economist expectations. So the question is just how long can we continue to see this kind of job creation and this plummeting of the unemployment rate. KELLEY; And what do you see? How long do you think it could continue?</s>CHALLENGER: Well, it depends on productivity. If we continue to create with our technology and with changes in the workplace, more and more opportunity for people to produce work, for companies to get more work out of their people, we can continue to see this unemployment rate drop. The real question is, is it going to cross our borders and spill over into the rest of the world and help bring up the economies all over the globe.</s>KELLEY: Yes, Federal Reserve, of course, boosted rates a quarter of a point on Wednesday. How does that affect unemployment and do you see another boost coming in March?</s>CHALLENGER: Well I think the Fed was surprised by these numbers, and probably rue the fact that -- and wondered certainly, did they raise interest rates enough? The more they raise interest rates, the more the economy slows down. Right now, kind of paradoxically, the Fed would like to see the economy slow down a bit. It is super charged and there is some danger that it could get out of whack and stop this marvelous expansion that we're now in the 107th month of.</s>KELLEY: John Challenger, who is the CEO of Challenger, Gray and Christmas. Nice to have you join us, thanks much.</s>CHALLENGER: Thank you.