BLS DAILY REPORT, MONDAY, AUGUST 31, 1998:
Personal income rose 0.5 percent in July, while spending
declined 0.2 percent, the Bureau of Economic Analysis says. Although
personal income rose in June and July, the increases "were affected by a
strike in the motor vehicle industry that reduced wages and salaries in
that industry by approximately $3.5 billion in June and by approximately
$7.5 billion in July," BEA said. (Daily Labor Report, page D-1).
__Consumer spending dipped 0.2 percent in July, the
first monthly decline in 2 years, the Commerce Department says.
Spending on big-ticket durable goods in particular - pricey items such
as cars, computers and refrigerators - fell 5.2 percent. Part of the
decline reflected a drop in auto sales, since the now-settled strikes
against General Motors Corp. left dealers without as many vehicles to
sell, the government said. Still, there is "no question consumer
spending is slowing," says an analyst with a New York City brokerage
firm. However, experts expect spending to be up by about a 2.5 percent
annual rate in the third quarter. Personal income surged 0.5 percent in
July, despite the GM strike that idled 200,000 workers. Income grew 0.3
percent in June. Wages and salaries, which account for more than half
of Americans' income, rose 0.6 percent in July. But factory wages and
farmers' income fell, yet another signal that economic turmoil abroad is
affecting American commerce (The Wall Street Journal, page A-2).
The Wall Street Journal's feature "Tracking the Economy"
(page A2) cites the Technical Data Consensus Forecast that nonfarm
productivity for the second quarter, revised, to be released Thursday,
will be unchanged. The August unemployment rate, to be released Friday,
is forecast to remain at the July level of 4.5 percent.
The last time the U.S. enjoyed an unemployment rate
approaching 4 percent was in the early 1960, begins "The Outlook" column
of The Wall Street Journal (page 1). Back then, U.S. farmers could
count on access to cheap labor under a "guest worker" program. Called
the bracero program, it allowed foreign workers, mainly from Mexico, to
enter the country legally, work the harvests and then go home.
Nowadays, U.S. farmers want to bring back the braceros, or "strong
arms". As harvest season draws near, they complain of too few hands to
pick the crops, and they are pushing Washington to take action. Data
from BLS illustrate the growing gap between farm wages and those offered
in other low-skill jobs. In 1995, the median weekly salary in a car
wash was $273, about 5 percent better than average weekly farm wages.
In 1997, that median wage rose to $303, a 10 percent premium over farm
work. During the same period, the pay differentials for janitors, hand
packers, and construction workers all widened over farm workers
earnings. Kitchen work, which used to pay wages 15 percent below
pickers, has drawn even. The number of new farm jobs has remained flat
since 1995, while the U.S. has added almost 200,000 janitors, 40,000
construction laborers, 33,000 landscapers and 15,000 dishwashers.
What sector of the American economy has faced rapidly rising costs for
several decades, with third parties, including government, paying most
of the bills? Health care? Sure, but also higher education. And the
economics of rising costs are likely to force radical change at many of
our colleges and universities, says Richard Vedder, professor of
economics at Ohio University and author, with Lowell Gallaway, of "Out
of Work: Unemployment and Government in Twentieth Century America" (The
Wall Street Journal, page A18). Vedder points out: "When I entered
Northwestern University in 1958, the tuition was $795, about 2 months
pretax income for the typical family. This fall, the tuition for new
students is $22,392, or almost 6 months pretax income for the typical
family. The burden of attending Northwestern has tripled." Tuition
increases at public universities, while smaller in absolute dollars,
mirror those of private schools. In the past decade and a half, tuition
costs have increased 195.3 percent, while the overall consumer price
index has risen just 63.3 percent. Universities are labor-intensive
places, and they have become more so. The number of faculty members has
risen slightly faster than enrollments, and there has been an explosion
in nonteaching staff. In the fall of 1976, universities nationwide had
31.5 administrators for every 1,000 students. By 1993 that number had
grown to 51.4. By the mid-1990s, only about 35 percent of universities
employees actually taught students.
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