MARCH 8, 1996
The 0.3% drop in the national unemployment rate is our topic of discussion. Margaret Warner talks with Tom Plewes, associate commissioner of the Bureau of Labor Statistics, about the where's, how's and why's of this boost in job creation.
MARGARET WARNER: Seven hundred and five thousand, that's how many new jobs the government said were created last month. That brought the unemployment level down .3 of a percent, the largest drop in a decade, but what kinds of jobs will be created, and where is the growth in the economy? To help explain that, we turn to Tom Plewes, the associate commissioner of the Bureau of Labor Statistics. Welcome, Mr. Plewes. Thanks for coming in.
TOM PLEWES, Bureau of Labor Statistics: Good evening, Margaret. Thank you.
MARGARET WARNER: Put this in some perspective for us. How does this 705,000 compare to how many jobs there are in the economy as a whole or how rapidly jobs have been created in the past?
TOM PLEWES: This particular month the 705,000 jobs is really a headline. We haven't had this much job growth since back in 1980--'93, excuse me--and that's really an important kind of a factor here, and that's why the attention to the 705. But this is a very important month for other factors too. We gained jobs for two main reasons. No. 1 is we lost a lot of jobs in January.
MARGARET WARNER: Some 200,000.
TOM PLEWES: Some 200,000 jobs were lost, maybe even more, because of the blizzard. We just don't know the total effect. Those jobs came back in February. In addition to those jobs coming back, the 700,000 jobs indicates that there was some real economic growth on top of that. This is the first time we've seen a picture of some real economic growth for some time.
MARGARET WARNER: All right. But what kind of jobs are these?
TOM PLEWES: Well, there's a mixed bag. Certainly, the jobs that were lost in January were marginal jobs, marginal jobs in eating and drinking places, restaurants, and the like, in some of the service industries, in some of the amusement recreation industries, hotels and the like. Those jobs were lost. They came back. But some other jobs came back I think that were better jobs. We gained a lot of jobs in construction, for example. Those are, generally speaking, good jobs. We gained jobs in the business service sectors, those businesses that serve other businesses, so those are pretty good jobs also.
MARGARET WARNER: Meaning what?
TOM PLEWES: Well, we're talking about computer services, mailing services, and the like. We're talking about temporary help industry. Sometimes people think that temporary help jobs aren't very good, but there's a mixed back there too. Some of the jobs we believe that came back there were pretty good jobs.
MARGARET WARNER: And what do you mean by temporary help industry?
TOM PLEWES: Well, temporary help industry is the industry that provides workers to other businesses. In the past, you've seen them as just kind of the companies that provide someone on a temporary basis. The way they're doing business now is that, is that companies hire someone from one of these companies before they add to their own payrolls. They aren't quite sure if they're going to expand. That's a good sign.
MARGARET WARNER: Well, these jobs that have been created, how many are really temporary, full-time jobs, the kind of jobs on which if you've got one of these jobs, you would then make other decisions, such as having a baby, buying a house?
TOM PLEWES: Well, we don't know that on a monthly basis. We kind of take a look at that periodically. Within this temporary help industry, by the way, we gained 79,000 jobs in that one industry. That was pretty much. There was another 70,000 or so jobs gained in the health industry, and those are pretty good jobs too. There are some jobs there that are very good and some jobs very bad. If you look at it and look at the average, this month, for example, let's say that the average income, say $20,000 a year, about 2/3 of the jobs were gained in the wage ranges that were less than $20,000, and about a 1/3 jobs gained in wage ranges probably added up to more than $20,000 a year. That's kind of what we got this month.
MARGARET WARNER: Let's look at how much they pay in another way. Would you say that the hourly wage, the average hourly wage of all these new jobs, is that greater or less than say the average has been up till now?
TOM PLEWES: Well, the average is his--for the private sector right now is somewhere around $12 an hour. On average, the jobs that were added this month were in industries that were somewhat lower. We don't know the specific mix of the jobs. There might have been some good occupations in the low-paying industries, but on average, that's what we come up with.
MARGARET WARNER: Well, for instance, last month, there were a record number of layoffs announced, I think close to 100,000 big companies. How do these new jobs compare to those say in terms of not only salary but benefits?
TOM PLEWES: Well, we haven't seen those jobs layoffs yet. Those announcements usually take place about six months after. Quite frankly, I'm not quite sure that we have, we're losing some really good jobs and gaining all the bad ones. Some of the jobs we're gaining are pretty good. They're in legal services and the like, companies that help other companies with that.
MARGARET WARNER: Last month, after this 200,000 jobs were lost, there were all kinds of news stories predicting a recession, the coming recession. Does this increase put to rest all those doubts?
TOM PLEWES: Well, those news stories didn't come from us. We saw the weather effect, and we said wait a minute, we aren't quite sure what's going on out there in the economy. It looks like, in retrospect, what went on was that we had a lot of good economic activity that was kind of hidden by the snow drifts, and when the snow drifts went away, we saw some real strength there. What this means for the future I'm not quite sure, but this is a fairly robust kind of a job growth we're talking about.
MARGARET WARNER: And are you able to take one month's job growth like this and make any kind of reasonable predictions about say what the growth of the economy will be?
TOM PLEWES: No. I think not. We have to wait till March. But I think if you average the two months, a bad January and a good February, you get about two hundred and fifty job growth, you compare that with what we were getting late last year, which was in the range of a hundred and thirty to a hundred and fifty, and you say that that's a pretty good start for the year.
MARGARET WARNER: In the past, economists have always had some kind of a theoretical point below which if unemployment actually fell below that point, it was assumed that then inflation would begin. Where is that point? Have we reached that point?
TOM PLEWES: I don't know. There are a number of economists who say that 5.5 is a magic point. Others tell you that 6 percent is that magic point. We have not done those studies. I can tell you, however, that the unemployment rate has been in a very narrow range now for well over a year, between 5.8 and 5.4, and 5.5 is a fairly low, narrow part of that range. Where it goes in the future I'm not quite sure. What you have to look for, to see if there's a problem, is whether or not there is pressure on wages. That indicates that we have labor shortages. And right now there is absolutely no pressure on wages.
MARGARET WARNER: Still no upward pressure?
TOM PLEWES: There is no pressure on wages and, thus, no pressure on inflation that comes from pressure on wages.
MARGARET WARNER: Well, Mr. Plewes, thank you very much. Thanks for being with us.