BLS DAILY REPORT, MONDAY, MAY 8, 2000
__The U.S. unemployment rate fell to 3.9 percent in April, the lowest
recorded since January 1970, BLS reports. Nonfarm payroll growth was also
robust in April, rising by 340,000, although temporary hiring by the Census
Bureau added about 73,000 workers to the tally. Even when those short-term
jobs are excluded from the calculations, payrolls grew by a strong 267,000
in April, after an astoundingly large, upwardly revised, gain of 458,000
jobs in March. Special factors boosted the March increase. ...Although
labor markets are tight, the Secretary of Labor said, there are more than
"13 million workers available in the labor pool." Those workers include not
only the 5.5 million people counted unofficially as unemployed, but also
those working part-time for economic reasons (who would rather be working
full time) and another 4 million people who are not in the labor force but
who want to work. She said the 4 million people not counted in the labor
force are often hampered in their job searches by lack of transportation and
child care options, rather than by lack of education or skills. ... (Daniel
J. Roy in Daily Labor Report, page D-1; text of Commissioner Abraham's
statement, page E-1).
__The roaring U.S. economy drove the nation's jobless rate down to 3.9
percent last month, the lowest level since January 1970, and pushed the
unemployment rate among Hispanics and blacks to record lows. Employers
added 340,000 workers to their payrolls, the length of the average workweek
rose, and manufacturing workers spent more overtime hours on the job. ...
The increase in the number of hours worked last month was so great that some
forecasters are now predicting that the economy will grow at an
exceptionally high 6 percent rate or more in the current quarter. ... (John
M. Berry in Washington Post, May 6, page A1).
__The nation's unemployment rate fell below 4 percent in April for the first
time in 30 years, as employers hired, among others, tens of thousands census
takers, restaurant employees, and temporary workers in the boom that showed
no signs of letting up. ... (Louis Uchitelle in New York Times, May 6, page
A1).
__With the unemployment rate now below 4 percent for the first time since
January 1970, economists warn that the turbo-charged U.S. economy has
finally reached a pace bound to revive long-absent inflation pressures. The
milestone makes the nervous Federal Reserve more likely to intensify its
campaign of interest-rate increases to slow growth. But the news in
Friday's labor market report -- and supported by other recent data -- is
that, at least so far, labor-cost increases aren't causing widespread
problems. ... ( Wall Street Journal, page A2).
The Wall Street Journal's feature "Tracking the Economy"(page A10) projects
that the Producer Price Index for April, to be released Friday, will decline
0.3 percent, according to the Thomson Global Forecast. The previous actual
change was an increase of 1.0 percent.
The Federal Government is facing a people crisis. Within 5 years, about 30
percent of the government's 1.6 million full-time employees will be eligible
to retire. An additional 20 percent could seek early retirement. While not
all will bolt at once, the government seems assured of a huge talent drain
at the start of a new century. And the losses will be heaviest at the top.
A whopping 65 percent of the Senior Executive Service, the government's
elite cadre of managers and technicians, will be eligible to retire by 2004.
... (Washington Post, May 7, page A1).
Congress recently repealed one of the nation's most unpopular laws -- the
Social Security earnings limit. It limited the amount of money that
retirees aged 65 to 69 could earn without losing some of their Social
Security payments (Washington Post, May 7, page H1). Today, with "help
wanted" signs everywhere, the government wants to encourage retirees to go
back to work to help fill vacant jobs. Administration officials also like
the idea that when retirees work, even though they are receiving Social
Security benefits, they continue to contribute to Social Security and
Medicare through payroll taxes. And, of course, they also pay income taxes.
Several national trends are creating a greater demand for older workers,
explains the Social Security Commissioner. People are living longer and
healthier lives; work will become increasingly knowledge-based, which favors
older worker; tight labor markets are likely to continue, creating a demand
for older workers; the line between work and retirement is blurring.
Now that President Clinton has signed into law the repeal of the Social
Security earnings test for workers aged 65 to 69, many people in that
category will start putting in longer hours. That's the prediction of Ledra
R. Friedberg, an economist at the University of California, San Diego, whose
research helped influence Congress and the White House to back the repeal,
which is retroactive to January 1. Under the earnings test, this year a
Social Security beneficiary 65 to 69 would have lost $1 in benefits for
every $3 earned above $17,000. Friedberg figures that a fairly small group
of people making right around $17,000, whom she terms low earners, have held
down their working hours to avoid a reduction in benefits. She predicts
that they will increase their hours worked by 50 percent. She estimates
that middle earners, who have had part of their benefits taken away by the
test, will increase their hours about 18 percent. ... (Business Week, May
8, page 34).
At long last companies find they can charge more for lots of things from
beef to PCs, says Business Week (May 8, page 50). In the graph that
illustrates the article, headlined "Who Has Pricing Muscle?", the National
Association for Business Economics indicates that airlines will, as oil
price "surcharges" become permanent; drug makers, where price is no object
for potent new drugs; home builders, as houses and raw land alike soar;
travel, surging demand boosts room rates; meat, limited supply pushes up
beef and pork prices; medical care, weaker managed care helps doctors and
hospitals; oil producers, higher crude prices are easily passed along;
papermakers, strong order books boost the tab for pulp; steel, surging car
sales hike high-quality sheet steel costs; and technology, parts shortages
and high demand push up PC prices.
"Don't look now, but the U.S. global economic and technological leadership
of the past decade appears to be evaporating fast," says an editorial in
Business Week (May 8, page 176). European productivity is beginning to
rise, government budgets are poised to move into surplus-funds territory,
corporations are restructuring, economic growth rates are nosing up to 4
percent, and the wireless revolution appears to be advancing apace. ...
Consider productivity: U.S. manufacturing productivity boomed along in the
fourth quarter of 1999 at a 6.8 percent year-to-year rate. In Germany,
however, manufacturing productivity also rose 5.6 percent, and in Britain 5
percent. Manufacturing productivity has been growing for some time, as
Europe moves into its own version of the New Economy. Europe's wireless lead
over the U.S. is already substantial. It is clear that the mobile net is
the next big thing, and that much of the innovation is coming from European
companies. After a decade of economic sleepwalking, Japan is showing serious
signs of renewal. The rate of growth in manufacturing productivity is even
higher than America's: 6.9 percent for the final quarter of 1999. This is
wonderful news for the global economy. But these regions' resurgence could
prove problematic for some U.S. companies.
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