BLS DAILY REPORT, WEDNESDAY, JULY 7, 1999
People are getting jobs everywhere, even in the inner cities where
entrenched joblessness is finally giving ground, writes Louis Uchitelle in
the New York Times ("Money and Business Section," July 4, page 5). In
Boston, for example, inner-city people ride streetcars to the last stop,
then take taxis the final few miles to jobs at suburban companies. To get
the workers, the employers pay the taxi fares. Such tactics, which allow
companies to tap the nation's remaining pools of idle workers, help postpone
the day when corporate America might really have to bid up wages. ... There
are those who argue that a significant acceleration of wages is just around
the corner. But strangely, although unemployment has fallen below 4.5
percent since last November, wages and salaries have risen more slowly in
recent months. ... The same deceleration also applies to the corporate cost
of health insurance and other benefits. And economists are scrambling to
explain the anomaly. ... As one substitute for raises, companies offer
stock options, which do not show up in the Labor Department employment cost
data. And one-time signing bonuses lure workers without obliging an
employer to raise the pay of comparable workers already on the payroll.
Labor productivity is clearly part of the explanation. It has risen smartly
in the last 2 or 3 years. Service companies, particularly telephone call
centers, distribution centers, and clerical operations, have relocated to
areas where unemployment was relatively high and there are pools of
not-very-expensive workers. ... In a new study, two labor economists, Alan
B. Krueger of Princeton and Lawrence F. Katz of Harvard, find that the
unemployment rate may be kept artificially low by the very sharp rise in the
male prison population. Prisoners are not counted as either employed or
unemployed. If they were on the street, many would show as unemployed.
Then there is the aging of the work force; older workers are less likely to
be unemployed. And don't forget the growing temporary-help industry, which
keeps people off unemployment rolls between permanent jobs. ... On a
different plane, some experts argue that workers have become used to a low
inflation rate and therefore settle for smaller raises. Or perhaps job
insecurity inhibits them. ... The list of explanations surely will grow if
the nation's tight labor market keeps failing to push up wages
significantly. ...
Producer prices for June are projected to be up 0.1 percent when they are
released by BLS July 14, according to "Economic Indicators" (USA Today, page
4B). Producer prices for June, less food and energy, are expected to be up
by 0.1 percent as well. ... June consumer prices, to be released July 15,
are estimated to be up 0.2 percent.
The National Association of Purchasing Management says the nonmanufacturing
sector continued to expand in June and at a faster pace than in May. NAPM's
nonmanufacturing business activity index rose from 60.0 percent in May to
61.0 percent in June, continuing a long-term growth trend. ... Industries
reporting the highest rates of growth of business activity for the month
were finance and banking, public administration, "other services,"
transportation, communications, and business services. The chair of the
committee that oversees the nonmanufacturing business survey said
availability of qualified labor remains a concern for many industries.
Overall, various NAPM members reported shortages of computer programmers,
contract administrators, labor in general, qualified labor, senior buyers,
and temporary help. But a few industries, particularly in the mining group,
reported hiring freezes. ... Prices paid by firms for materials and
services increased. ... Employment rose to its highest level since the
survey began two summers ago. ... (Daily Labor Report, page
A-5)_____Business at banks, farms, retailers, and other non-factory
companies expanded in June. Manufacturing accounts for about 20 percent of
the nation's economic output, and services, farming, and mining make up the
rest. The rise was led by retailers like Wal-Mart and Best Buy and
Microsoft (New York Times, page C2).
Though it may be bad manners to bask in the misfortune of others, it is now
apparent that the economic crisis that began in Asia 2 years ago turned out
to be a great tonic to the U.S. economy. But now, with Asian economics on
the mend, their gain could mean some pain here. The U.S. economy now faces
the prospect of a modest slowdown as interest rates and prices for many
goods inch up, forcing companies and consumers to curb their free-spending
ways. ... (Washington Post, page E1).
application/ms-tnef
