Federal Reserve Chairman Ben S. Bernanke

His speech Friday morning has gotten big headlines for what it says about the economy and prospects for new policy action, but Federal Reserve Chairman Ben S. Bernanke also waded into a debate that has occupied the economics blogosphere of late.

Might part of the current sky-high unemployment rate reflect structural changes in the economy, as opposed to a mere shortfall in aggregate demand? Bernanke’s colleague Narayana Kocherlakota of the Minneapolis Fed has raised this possibility, and some economists point to it as a reason that neither the Fed nor fiscal authorities should take significant new action to try to boost growth.

The road to success is filled with a lot more potholes than any college freshman might have imagined four years ago. Welcome, graduate, to the world of very hard knocks.

An average of 9.1 percent of college graduates were unemployed in 2009, up from 5.5 percent in 2005 and 4.4 percent in 2000, according to the Department of Labor’s Bureau of Labor Statistics. For those with some college experience but without a degree, that figure averaged 14.1 percent last year, compared to 21.5 percent of high school graduates with no time on

a higher education campus. (For comparison, the current national unemployment rate is 9.5 percent.)

And the bleak economic outlook for the young people isn’t limited to the United States, or solely the educated in the U.S., as the International Labor Organization announced last week that of some 620 million economically-active youth aged 15 to 24 years, 81 million were unemployed at the end of 2009 — the highest number ever and nearly 8 million more than the figure in 2007. The overall youth unemployment rate increased from 11.9 percent in 2007 to 13 percent in 2009.

The less-than-bright economic outlook is forcing some recent college graduates to live with their parents or for current students to consider changing their majors to fields with higher demand.

Tatiana Shears, a 21-year-old student at Long Island University, said she may switch from business to nursing after she had no luck finding a job
for the past 18 months.

“It’s extremely hard, no one is hiring,” Shears said.

Mike Derienzo, 22, who graduated from Philadelphia’s Temple University last year, said he has resorted to his parent’s basement to keep himself off the street since graduating.

“It’s literally the only thing that’s keeping me afloat,” Derienzo said.

Both Shears and Derienzo said they voted for President Obama two years ago, due in part to promises of job creation and bipartisanship. But now, they said, they feel let down.

“I expected way more change, but now, doing the research, I realize that Obama is an illusion of change,” Shears said. “But I’m not so much disappointed in Obama, I’m also disappointed with the Republicans and the American citizens. Far too many Americans keep failing for this left-right paradigm, when the power structure at the top of both parties is corrupt. They’re both sold to the bankers and the corporate interests.”

Derienzo said he voted for Obama in the hopes that he’d be a visionary along the lines of Franklin D. Roosevelt and John F. Kennedy.

“He sold me on the idea of bipartisanship,” Derienzo said. “That he would take the best of the left and the best of the right and he would be right in the middle … but it’s just not happening.”

Neal McCluskey, an education analyst at Cato Institute, a libertarian think tank based in Washington, said the message he sees in the rate of unemployed college graduates is that post-secondary classes don’t necessarily equate to increased marketability or a bigger paycheck.

“The majority of people who are going to college today are really just getting a piece of paper,” he said. “The bottom line is we always insist that everybody has to go to college without in any way discriminating or determining whether actually going to college is giving you the skills that makes you more employable. All that matters, especially to the politicians, is that everybody is getting a piece of paper – a college degree.”

McCluskey said roughly 80 percent of all U.S. institutions of higher learning have non-competitive admissions processes, perhaps making some graduates less-than-attractive candidates even with a secondary degree.

“There are lots of people going to college who are ultimately studying things and skills that employers aren’t looking for,” he said. “But public policy urges everyone to get a college degree on the super-simplified notion that getting that college degree makes you more sought after”.

The state Department of Employment, Training and Rehabilitation reported Friday that the jump from 13.7 percent to set a new record for Nevada.

The jobless rate temporally eased a bit in Las Vegas, the report said, dropping to 14.1 percent in May from 14.2 percent in April. The rate dropped in other parts of Nevada as well and was lowest in the Elko area, where mining is strong and the May jobless rate was 8.3 percent.

The county figures are not comparable with the state rate because the state unemployment rate is seasonally adjusted based on typical ups and downs in the labor market, said Bill Anderson, chief economist with Nevada’s employment agency.

Anderson said at this time of year, college graduates should be entering the labor force and construction activity should be rising.

“What’s happening this time around is we’re seeing the economy continue to struggle — it’s not picking up as much as it should,” Anderson said. “We’re just not seeing those kinds of positive trends unfold as they have in the past.”

About 10,000 people left Nevada’s labor force from April to May, he said, with workers either leaving the state or giving up on their job hunt here.

Nevada had nearly 1.18 million people employed in May, with a total labor force of 1.37 million and 189,000 people actively seeking jobs without success. In April, 192,000 people were unemployed.

Elected officials, political candidates and their operatives — both Republican and Democrat — seized on the news as they face a November midterm election. The economy is a top issue in the Silver State, where foreclosure and bankruptcy rates also lead the U.S.

Friday’s report said Nevada’s economy has dropped dramatically since December 2007, with the state unemployment rate increasing 8.8 percentage points in that time.

The figures put Nevada 4.3 percentage points above the national unemployment rate of 9.7 percent, and 0.4 point above Michigan’s 13.6 percent rate. Nevada was one of six states that saw unemployment increase in May, while the rate fell in 37 states and the District of Columbia, and had no change in seven states.

The 304,600 workers employed in leisure and hospitality, the state’s largest industry, was slightly improved from the 303,300 people working in the sector in April, but far less than the 311,800 jobs there in May 2009. Casino-hotel jobs were essentially unchanged month-to-month with less than 184,000 workers.

The state reported 500 more construction jobs in May compared with April, but the 48,400 people employed in the industry were far less than the 64,900 in the sector a year ago.

The jobless rate was 9.5 percent last month, down from 9.7 percent in May, a surprising decrease that came as hundreds of thousands of workers dropped out of the labor force. Private employers added 83,000 jobs in June, more than double the rate in May but still below the six-figure job creation numbers that would suggest a strong recovery in employment.

Overall, employers shed 125,000 jobs in June; however, that figure was distorted by the Census Bureau cutting 225,000 temporary jobs. The total of 100,000 jobs added, excluding the census, is lower than the 130,000 or so jobs needed every month just to keep up with growth in the labor force, which could put upward pressure on the jobless rate in the months ahead.

Friday’s jobs report was eagerly anticipated by economists and Wall Street analysts, who are searching for signs of whether a recent spate of weak economic data – including last month’s jobs report – means that the economic recovery is sputtering out. The answer from the June report: The expansion that began last year has indeed lost momentum, but the numbers are not so bad as to suggest the nation is heading into a double-dip recession.

The private-sector job growth number, for example, is a deceleration from strong job creation levels in March and April, but it is better than any month out of the past 31, other than those two.

“Make no mistake – we are headed in the right direction,” President Obama said. “But . . . we’re not headed there fast enough for a lot of Americans. We’re not headed there fast enough for me, either.”

Obama, who spoke to reporters from Andrews Air Force Base before flying to West Virginia to participate in a memorial service for Sen. Robert C. Byrd, vowed to do “everything in my power” to push the nation’s economic recovery forward. As part of that effort, he announced nearly $800 million in stimulus grants to several dozen projects that will expand broadband Internet access in communities across the country.

“The recession dug us a hole of about 8 million jobs deep,” Obama said. “And we continue to fight headwinds from volatile global markets. So we still have a great deal of work to do to repair the economy and get the American people back to work.”

Many of the details of the Labor Department report suggest a job market that is muddling through, rather than beginning a strong expansion. May job growth was revised downward, for example. The average workweek shrunk to 34.1 hours, from 34.2, and average hourly earnings at private employers fell by 2 cents to $22.53.

“No double-dip, but no rapid recovery either,” said John Silvia, chief economist at Wells Fargo, in an e-mail.

Even the decline in the overall unemployment rate, at first glance the best news in the report, is less positive than it appears. The number of people who described themselves as employed actually fell by 301,000. But many more people – 652,000 – counted themselves as no longer being in the labor force at all, possibly out of frustration, pushing the unemployment rate down.

Job creation was strongest in the professional and business services sector, which added 46,000 positions, though nearly half of those were in temporary services field. Other sectors to add large number of jobs were leisure and hospitality, which added 37,000, and education and health care, which added 22,000.

Sectors that slashed jobs included construction, which cut 22,000 positions; financial activities, which shed 15,000 jobs; and state and local government, which cut 8,000 positions.

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One of President Obama’s top economic advisers suggested that the economy still has a ways to go to turn around a bleak unemployment situation. At the same time, Lawrence Summers suggested that the White House’s efforts were being stymied by Republican opposition on Capitol Hill.

The economy gained 162,000 jobs in March, the Labor Department announced Friday. But even with that growth – which constituted the best monthly jobs report in three years – the national unemployment rate held steady at 9.7 percent.

“We’ve got a long way to go,” Lawrence Summers, Director of the White House National Economic Council, said on CNN’s State of the Union. “We’ve inherited a terrible situation, the most pressing economic problems since the Great Depression in our country. It is the president’s preoccupation to put people back to work.”

HTML clipboard While acknowledging that the economic outlook is not where the White House would like it to be, Summers pointed out that the economy is doing better now than it was this time last year in terms of job growth, exports, and availability of credit.

HTML clipboard “The trend has turned,” Summers told CNN Senior Political Correspondent Candy Crowley, “but to get back to the surface, we’ve got a long way to go and that’s what we’re fighting to do every day.”

In order to try to bring the unemployment rate down, Summers said the administration is taking five steps: (1) continuing to implement the approximately $800 billion stimulus package passed soon after President Obama took office, (2) implementing new measures including tax credits intended to encourage businesses to hire the unemployed, (3) additional support to protect workers in state and local government like teachers and firemen, (4) providing incentives for small businesses to expand, and (5) providing incentives to create “the new energy economy” that includes a focus on energy efficiency and renewable sources of energy.

Asked why the administration did not seem to be pointing to any new proposals intended to battle unemployment, Summers suggested that some of the White House’s economic agenda was being held hostage by Republicans in Congress.

“It is unacceptable,” he said of the 9.7 percent national unemployment rate. “And we’ve put forth a whole set of proposals on which – the opposition in Congress has not allowed them to pass.” Summers pointed out that many of the economic proposals favored by the White House have already been passed by the House but not yet by the Senate.

“We are not complacent. We are not standing still. We are fighting to implement the programs that have already been legislated, to actually legislate the other programs that have been put forward, and to put forward new proposals,” he said.

Asked specifically whether the White House thought congressional Republicans were responsible for holding up job growth, Summers replied that there are important steps that would help with unemployment that are waiting on action by Congress.

“I can tell you that the majority of Congress is ready to go on those pieces of legislation,” he said.

The nation added jobs at the fastest pace in three years last month as factories, stores, hospitals and the census all brought workers on board — the surest sign yet that the worst employment market in a generation has finally snapped back.

The unemployment rate stayed at 9.7 percent for the third month in a row, the Labor Department said Friday. Economists actually consider that a hopeful sign because it means more people are encouraged and starting to look for work.

“This recovery is for real,” said Chris Rupkey, economist at the Bank of Tokyo-Mitsubishi.

Overall, the economy added 162,000 jobs for the month. About a third of the gains came from the census, with much more to come: About 700,000 head-counters will be hired to tally the nation’s population this spring.

Economists took heart that even aside from the population count, the private sector added 123,000 jobs for the month, the most since May 2007.

Hiring is not expected to be robust enough anytime soon to significantly bring down the unemployment rate. Economists think unemployment will probably still be above 9 percent by the November midterm elections, making Democratic and Republican incumbents in Congress vulnerable, particularly in hard-hit states such as Michigan, Nevada and Rhode Island.

President Barack Obama seized on the positive numbers in the jobs report and took partial credit for them. But with 15 million people still out of work, he also acknowledged that the economy will be recuperating for a long time to come.

“We are beginning to turn the corner,” he told workers at a battery plant in Charlotte, N.C., that received government stimulus money. But he added: “We shouldn’t underestimate the difficulties we face.”

House Republican leader John Boehner of Ohio said a jobless rate near 10 percent is “no cause for celebration.” The unemployment rate peaked at 10.1 percent in October, a 26-year high.

No one disputes that the job market is still bleak. Counting people who have given up looking for work and part-timers who would prefer to be working full-time, the so-called underemployment rate rose to 16.9 percent in March.

But Friday’s report from the Labor Department at least provides firm evidence that the job market is on the right track, even if it will be a long journey for the millions of Americans who want work but cannot yet find any.

“The economy is moving in the right direction, albeit at a torturously slow pace,” said Paul Ashworth of Capital Economics.

Economists do not expect the jobless rate to drop to something more normal — like 5.5 percent to 6 percent — until the middle of this decade.

In the meantime, economists are concerned that hiring now appears to be concentrated among large companies — a sign that small businesses, which typically lead job creation in the early stages of a recovery, are having difficulty getting financing from banks.

The worst recession since the 1930s has wiped out 8.2 million jobs, making the competition for any openings fierce. On average, there are five or six unemployed people competing for each opening, according to government data.

Elaine Murszewski of Aurora, Colo., who was laid off by a software company a year ago, has found only found openings for lower-paying jobs. Taking one would end her unemployment benefits, roughly $11 an hour, and force her to continue digging into savings to get by.

“I can’t believe this,” she said.

Paula Hartland, on the other hand, snagged a job last month in communications at Children’s Healthcare of Atlanta after being laid off in January, and urged job-seekers to not give up hope.

“You kind of have to ignore all the negative news,” she said. “You have to put all your time and energy into networking into those companies where you want to work”.

The Labor Department said it wouldn’t quantify how the snowstorms that hammered the East Coast last month affected job losses. Some data in the report signaled the storms didn’t reduce payrolls as much as had been feared.

Economists had estimated that the storms could inflate job losses by 100,000 or more. That would mean the economy

generated a net gain in jobs last month, excluding the impact of the snow, for only the second time since the recession began in December 2007.

The department revised its estimate of job losses for January from 20,000 to 26,000.

Hiring for the 2010 Census accounted for 15,000 jobs, the department said. The government expects to hire 1 million temporary census workers this year.

Many economists predicted the snowstorms would artificially inflate job losses. The storms occurred in the week that the government surveys businesses about their payrolls. Employees who couldn’t make it to work and weren’t paid aren’t included on those payrolls.

But many industries that economists thought might be hardest hit — construction, retail, and hotels and restaurants — didn’t seem to be heavily affected. The construction industry lost 64,000 jobs, compared with an average of about 40,000 in the previous three months. Retail employment was flat and the leisure and hospitality industry posted a net gain of 7,000 jobs, the first increase since September.

The unemployment rate, which hasn’t risen since October, could be bottoming out. Still, 14.9 million Americans are unemployed, nearly double the total when the recession began, and the economy has shed 8.4 million jobs during that time.

Including people who have given up on their job searches or are working part-time but would prefer full-time work, the so-called “underemployment” rate rose to 16.8 percent from 16.5 percent last month. That reflects a jump in the number of involuntary part-time workers. The figure is below October’s all-time high of 17.4 percent.

On Thursday, the House passed legislation giving companies that hire the jobless a temporary payroll tax break. Economists doubt, though, that it’ll create many jobs. President Barack Obama and the Democratic Party are under pressure to address the jobs crisis in a congressional election year.

One encouraging sign in the report: The number of long-term unemployed — those out of work for six months or more — fell for the first time since November 2008, to 6.1 million from 6.3 million. Still, about 40 percent of the unemployed have been out of work six months or longer.

The average work week dropped to 33.8 hours from 33.9 the previous month. That’s a negative sign: Employers are expected to increase the hours for their current employees before hiring new workers. Still, that drop could be due to the weather. The department said more than 5 million people worked fewer hours last month because of the snow.

Job losses have moderated sharply in the past year. The economy shed an average of about 700,000 jobs in the first three months of 2009.

New hiring is desperately needed after the worst recession since the 1930s. The economy grew at a 5.9 percent rate in the October-December quarter last year, the fastest pace in six years. But most economists expect the pace of growth to slow to about 3 percent in the current quarter, which won’t be fast enough to quickly bring down the jobless rate.

The Labor Department said employers cut 36,000 jobs, below analysts’ expectations of 50,000. Analysts expected the jobless rate to rise to 9.8 percent.

Still, Friday’s unemployment report showed just how deep the job crisis remains: 8.4 million jobs vanished in the Great Recession. Economists say the nation would be lucky to get back 1.5 million jobs this year. And they say it will take at least three to four years for the job market to return to anything like normal.

The unemployment rate fell to its lowest level since August because a Labor Department survey of households found a sharp rise in the number of Americans with jobs. The survey found that 541,000 more Americans had jobs last month.

But those gains resulted from seasonal adjustments to the data. Without those adjustments, the data show fewer people had jobs last month.

Such adjustments are made each month and are especially large in January because of heavy seasonal changes in hiring, according to Tom Nardone, an assistant commissioner at the department’s Bureau of Labor Statistics.

A separate survey of businesses found that employers shed 20,000 jobs last month. That was worse than the 5,000 gain analysts expected.

January’s report offers hope that employers may start adding jobs soon. Excluding the beleaguered construction industry, the private sector as a whole added 63,000 positions.

President Barack Obama said the unexpected drop in the unemployment rate was “cause for hope but not celebration.” Public concern about persistent unemployment has forced President Barack Obama and members of Congress to shift their attention to jobs and the economy and away from health care reform. Speaking at a small business in a Washington suburb, Obama said the figures show modest progress but cautioned that the data will continue to fluctuate for months.

Seasonal adjustments tend to have a big effect on the January employment data. Retailers typically lay off temporary employees who were hired over the holidays. Construction companies temporarily cut jobs as work stops due to cold weather. The data are adjusted to account for such factors so the figures will illustrate underlying trends.

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AP Business Writer Christopher Leonard in St. Louis contributed to this report