> BLS DAILY REPORT, THURSDAY, FEBRUARY 1, 2001
>
> RELEASED TODAY: In December 2000, there were 2,677 mass layoff actions by
> employers as measured by new filings for unemployment insurance benefits
> during the month. Each action involved at least 50 persons from a single
> establishment; the number of workers involved totaled 326,743. The number
> of layoff events and initial claims for unemployment insurance were the
> highest for the month of December since the series began in 1995; part of
> the increase was due to a calendar effect, since December 2000 contained 5
> weeks that ended in the month compared with 4 weeks in each of the prior
> four Decembers. The total of layoff events for all of 2000, at 15,738, and
> the total number of initial claimants, at 1,835,592, were higher than in
> 1999 (14,909 and 1,572,399, respectively).
>
> The Federal Reserve Board cuts short-term interest rate targets another 50
> basis points, and economists say another half point reduction is likely by
> mid-March if not before (Daily Labor Report, page A-8; The Washington
> Post, page 1; The New York Times, page 1; The Wall Street Journal, page
> 1).
>
> Real gross domestic product growth decelerated to 1.4 percent for the
> fourth quarter of 2000, reaching its slowest rate of growth since the
> second quarter of 1995, the Commerce Department reports. Analysts had
> been expecting the GDP to grow about 2 percent, but sharper than expected
> cutbacks in capital spending weakened the overall growth. For all of
> 2000, real GDP grew by 5.0 percent. As economists try to gauge the
> severity of the economic slowdown, many of them are counting on
> productivity gains, which have been robust since 1995, to continue playing
> a critical role in holding down inflation. If much of the recent
> productivity gain is liked to business spending on information technology,
> as a recent Federal Reserve study suggests, the outlook for technology
> investment is key to prospects for productivity this year. The most recent
> productivity figures compiled by the Bureau of Labor Statistics show that
> labor productivity -- output per hour worked -- rose 3.3 percent in the
> third quarter 2000 after jumping 6.1 percent in the second quarter.
> Despite the fact that hourly compensation accelerated to a 6.3 percent
> rise in the third quarter, the productivity gain kept unit labor costs to
> a 2.9 percent advance. Fourth quarter productivity data are scheduled for
> release February 7 (Daily Labor Report, pages D-1; D-10; The New York
> Times, page 1).
>
> The United States economy grew at its slowest rate in more than 5 years
> during the final quarter of 2000, as businesses abruptly cut their
> spending on new equipment, the government said yesterday. The Commerce
> Department's quarterly report depicted the $10.1 trillion United States
> economy verging on a slowdown or a recession. Growth remained faster than
> it had been in the first half of 1995, when the country avoided a
> recession and the economy than entered one of the best 5-year periods in
> history. But over the final 3 months of 2000, personal consumption was
> the only part of the private sector that expanded, and in the early weeks
> of this year consumer confidence has plummeted, according to two major
> surveys (The New York Times, page C1).
>
> Sales of new homes actually rose 13.4 percent in December, more than
> reversing a drop during the previous month, the Commerce Department
> reports (The New York Times, page C6; The Wall Street Journal, page A8).
>
> The Purchasing Management Association of Chicago says that manufacturing
> activity in the Chicago area had fallen this month to its lowest level in
> 18 years (The New York Times, page C6).
>
> The American economy has hit a snag, no doubt about it, but that has not
> deterred the nation's most influential economic forecaster, the
> Congressional Budget Office, from issuing a much more promising projection
> of the economy over the next decade than it had offered in the past. "The
> dip in the economy is expected to be short-lived," Barry R. Anderson,
> deputy director of the budget office, told Congress today. At the same
> time, Anderson said, the office's professional forecasters believe the
> economy will grow faster over the next 10 years than they had previously
> thought because they now expect greater growth in worker productivity and
> business investment. The forecast was that the economy would grow 2.4
> percent in this calendar year and that lower interest rates would cause it
> to rebound to 3.4 percent next year. Then the growth rate is expected to
> level off at an average of 3.1 percent through 2011. That average is
> three-tenths of a percentage point higher than the long-range average
> expected just last July. The budget office has been making 10-year
> forecasts only since 1992, so their accuracy cannot be assessed.
> Productivity is a measurement of the efficiency of workers. From 1974
> until the mid-1990's, productivity grew an average of 1.5 percent a year.
> But since then, productivity growth has averaged nearly 3 percent and it
> was 5 percent from the summer of 1999 to the summer of 2000. Robert J.
> Gordon, an economist at Northwestern University and an expert on
> productivity, says that he thinks the budget office has overestimated the
> likely influence of computers on productivity and that the growth in
> productivity would therefore be lower than the projections. But even
> then, he says, he does not believe the forecast of an average of 3.1
> percent growth in the economy over the next decade is out of line (The New
> York Times, page A15; lead editorial, page A22).
>
> On any given day, more Americans owe their jobs to temporary-help outfits
> than are working in auto and aircraft plants. About 10 percent of the job
> growth in the 1990s was in temp agencies, twice as much as in the 1980s.
> Manpower, Inc. boasts of being America's largest employer. Temp agencies
> grew rapidly after state courts in the late 1970s and 1980s limited
> employers' ability to fire permanent workers. Temps were easier to fire
> than permanent workers, so employers hired more of them. By 1996,
> according to one national survey, half of all employers and three-quarters
> of all manufacturers were using temp firms. Today, more than 3.3 million
> workers are on temp-firm placements, mostly in clerical or
> light-manufacturing jobs. The temp boom is a huge change in the way the
> economy works. It's one reason the U.S. has pushed down the unemployment
> rate without pushing up inflation. Economists Lawrence Katz and Alan
> Krueger estimate that the jobless rate consistent with stable inflation
> might be four-tenths of a percentage point higher if not for the expansion
> of the temp agencies. How do the temp agencies accomplish this? They
> make it easier for employers with openings and unemployed workers to find
> each other. They allow employers to avoid raising wages. Agencies help
> some workers get jobs they wouldn't get otherwise, often screening and
> auditioning workers to save employers' effort. In some states, more than
> 20 percent of those leaving welfare for work spend time in temporary help
> placement. Some wouldn't get jobs unless a temporary help agency vouched
> for them. Temp agencies also offer a quick, free way to brush up on
> computer skills. In a survey of 439 temp offices, it was found that 30
> percent of clerical hires get training, usually 7 hours of computer
> lessons. Training allows the temp agency to charge employers higher fees
> and to attract both workers and employers. But hospitals use temp-agency
> nurses because they can't fill vacancies at the wages they are paying. A
> big North Carolina hospital hires as many permanent nurses as it can get
> at $25.76 an hour in wages and benefits. Then it fills vacancies by
> paying $40 for temps, of which the nurses get between $28 and $32 an hour
> with few fringe benefits. The winners: folks who pay hospital bills.
> The losers: the $26 an hour nurses who might otherwise make more money if
> the nursing shortage forced hospitals to bid up wages across the board.
> In factories, a Midwestern auto-parts plant pays $15.67 an hour for
> permanent workers and $10.88 for temps, of which $7.50 goes to the
> workers. The company can't hire seasoned workers at the higher wage. It
> takes a chance on unproven workers because they're cheap and failures can
> be fired easily. After successful tryouts, some temps get permanent jobs
> they would never have landed otherwise. The jobs are temporary, but the
> changes temp agencies are making to labor markets are likely to last
> (David Wissel in"Capital", page 1, The Wall Street Journal ).
>
> Gasoline pump prices are primed for a repeat of last summer's scary ride,
> says The Wall Street Journal (page A2). One reason is the recent decision
> by the Organization of Petroleum Exporting Countries to trim crude-oil
> production by 1.5 million barrels a day. But an even bigger culprit is
> the price of natural gas, which is crucial in the production of MTBE, a
> high-cost gasoline component that reduces tailpipe emissions.
>
> DUE OUT TOMORROW: The Employment Situation, January 2001
>
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