TOO MANY JOBS? SEPTEMBER 6, 1996 TRANSCRIPT

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Unemployment figures are in and at their lowest level in years. But what does this mean for the economy and the average American. To get the answer, Paul Solman talks with the Commissioner of Labor Statistics, Katherine Abraham and then turns to a labor economist and a senior economist with a Wall Street investment firm to glimpse the meaning behind the numbers .

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Sept. 6, 1996 Paul Solman talks with the two economists about jobs in todays economy. August 20, 1996 In its last meeting, the Federal Reserve left short term interest rates. July 5, 1996 Paul Solman leads a discussion on the unemployment rate which has dropped to 5.3 percent. July 3, 1996 Paul Solman examines the role of the Federal Reserve in the nation's economy. May 3, 1996 The NewsHour looks at the correlation between a strong economy and a weak stock market. Browse The NewsHour's coverage of the Economy

PAUL SOLMAN: The unemployment rate dropped to 5.1 percent in the month of August, the lowest level in over seven years, as you've heard, but what does this number mean? Well, to help answer that question, we have three perspectives. And first we're joined by the commissioner of the Bureau of Labor Statistics, Katharine Abraham. Commissioner Abraham, thanks for joining us. Okay. Unemployment rate down to 5.1 percent. What does that number mean?

KATHARINE ABRAHAM, Bureau of Labor Statistics: Well, that's a fairly low unemployment rate by recent standards. The last time we saw an unemployment rate that low was back in 1989.

PAUL SOLMAN: Uh-huh. So that's way low. This is a really low number.

COMMISSIONER KATHARINE ABRAHAM: This is a low number by recent standards, for sure. The rate dropped. Last month it was 5.4 percent, down to 5.1 percent. I would say that I think that that drop may have been exaggerated a big.

PAUL SOLMAN: Exaggerated by what?

COMMISSIONER KATHARINE ABRAHAM: Uh, by some quirks related to the timing of our survey that may have affected the numbers we were seeing for young people, but, nonetheless, if you look at what was going on with, for example, adult men, men age 25 and up, their unemployment rate fell over the month from 4 percent to 3.8 percent. So these numbers are showing real strength in the labor market.

PAUL SOLMAN: Quirks, can you briefly explain what you're talking about.

COMMISSIONER KATHARINE ABRAHAM: It's really an issue related to, umm, when we do our survey and when it is that young folks leave the labor force to go back to school. Our survey was a little later than it ordinarily is, and more of those young people would have left the labor force to go back to school, and that probably artificially depressed the unemployment rate just a bit.

PAUL SOLMAN: But that doesn't explain the whole drop to 5.1 percent.

COMMISSIONER KATHARINE ABRAHAM: That certainly doesn't explain the whole drop.

PAUL SOLMAN: You know, there's a second number that also comes out today. You do a different survey, and you add--this is jobs added, and there was something like 1/4 million jobs were added.

COMMISSIONER KATHARINE ABRAHAM: Was exactly 250,000 net new jobs added to employers' payrolls over the month.

PAUL SOLMAN: So where--that's a lot of jobs.

COMMISSIONER KATHARINE ABRAHAM: That's about in line with what we've been seeing for the past year. The average monthly gain in payroll employment over the year to date was--has been 237,000.

PAUL SOLMAN: Well, how does that compare historically to say three, four years ago, or something like that? Do you know?

COMMISSIONER KATHARINE ABRAHAM: It's less than we saw last year. It's somewhat hard to make long-term comparisons because what's happening to the rate of growth in the working-age population is going to affect employment growth, but it's good, solid employment growth. We need about 130,000 jobs a month to keep the share of the working-age population that's employed constant.

PAUL SOLMAN: So, in other words, people coming into the labor market in order to keep them employed, we need at least 130,000, but we're doing double that at the moment?

COMMISSIONER KATHARINE ABRAHAM: Yeah. About double that.

PAUL SOLMAN: And that's why the number, employment number is going down?

COMMISSIONER KATHARINE ABRAHAM: And that's presumably why over the past couple of years the unemployment rate has been at a fairly low level.

PAUL SOLMAN: Okay. So what are the good jobs? I mean, if my kid is asking me what profession to go into, what are the jobs that are being added at the moment?

COMMISSIONER KATHARINE ABRAHAM: Well, uh, just stick to that 250,000 number for a minute.

PAUL SOLMAN: Okay.

COMMISSIONER KATHARINE ABRAHAM: That may look a little stronger than it really is. There were some things going on in local government that I would somewhat discount.

PAUL SOLMAN: Local government meaning that that's where a number of the jobs were added, or--

COMMISSIONER KATHARINE ABRAHAM: About 77,000 of the jobs added last month were in local government, especially education, public schools. But part of that had to do with teachers coming back with schools starting before Labor Day when they used to start after Labor Day.

PAUL SOLMAN: I see. You didn't have that figured into what your calculations--

COMMISSIONER KATHARINE ABRAHAM: Yeah. And given that's a new development, we couldn't wholly adjust for it.

PAUL SOLMAN: Okay. So there aren't millions of new teachers, thousands of new teacher jobs, but where are new jobs being created?

COMMISSIONER KATHARINE ABRAHAM: Well, if you look at the private sector employment growth of, it was 173,000 over the month--

PAUL SOLMAN: Uh-huh.

COMMISSIONER KATHARINE ABRAHAM: --we saw growth in services. We always see growth in services.

PAUL SOLMAN: But services specifically like what?

COMMISSIONER KATHARINE ABRAHAM: Specifically, uh, business services were very strong over the month--

PAUL SOLMAN: Services to businesses?

COMMISSIONER KATHARINE ABRAHAM: Services to businesses, things like temporary help firms.

PAUL SOLMAN: Uh-huh.

COMMISSIONER KATHARINE ABRAHAM: Firms that provide computer services to other businesses, engineering and management consulting services, that sort of thing, were quite strong over the month, as they have been for some time.

PAUL SOLMAN: Well, one of the things that people always talk about is, hey, services, those are bad jobs, you know, hamburger flippers or temp jobs, as you were saying. Is there a profile to what's happening to wages here? Or are some of these jobs good jobs, and other jobs bad jobs, or--

COMMISSIONER KATHARINE ABRAHAM: One way to take a cut at that is to ask whether the industries who were adding jobs are industries that pay above average or below average wages.

PAUL SOLMAN: Mm-hmm.

COMMISSIONER KATHARINE ABRAHAM: Over the past month, two thirds of the jobs that were added were in industries paying above average wages. But that's a little atypical. Over the past few years, it's been about 40 percent.

PAUL SOLMAN: But then that would suggest that today's numbers were really encouraging if they were real?

COMMISSIONER KATHARINE ABRAHAM: Right. We saw jobs added in relatively high paying industries.

PAUL SOLMAN: A question I've always wanted to ask you actually is, how seriously should we take these data? I mean, you know, they get adjusted, the GNP, GDP numbers get adjusted, these numbers get adjusted, last month's numbers got adjusted, I mean, and there's lots of criticism of government statistics. Are these sort of shaky numbers, or how firmly do you feel about it?

COMMISSIONER KATHARINE ABRAHAM: Well, I think with any of these numbers you probably don't want to focus too much on just what happened this month, but looking at the trend captured in these data over a little bit longer period of time, they've been pretty good. They're subject to revision, but the revisions have not generally changed the basic sense that one would draw from them about what's going on in the economy.

PAUL SOLMAN: All right. So really good news. Can the news get any better? I mean, if you have an office pool at the Bureau of Labor Statistics, how many people would be betting on a number even lower, an unemployment number lower than the one we saw today for next month?

COMMISSIONER KATHARINE ABRAHAM: Well, we try not to do that. We sort of try to stay focused on what the data we have to look at can tell us, and stay away from speculating about the future, since, among other things, we almost certainly will be wrong a good deal of the time.

PAUL SOLMAN: But you were surprised that the number was as low as it was this month?

COMMISSIONER KATHARINE ABRAHAM: I was a little surprised at the 5.1 percent.

PAUL SOLMAN: Okay. Thank you very much, Commissioner Abraham.

COMMISSIONER KATHARINE ABRAHAM: Thank you.

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