[PEN-L:262] BLS Daily Report

[Richardson_D]

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BLS DAILY REPORT, WEDNESDAY, MAY 27, 1998

Payrolls are sneaking up because more new jobs are higher wage, says
Business Week (June 1, page 34).  The widely quoted ECI has been
flashing reassuring news to inflation fighters recently:  By its
measure, average total employee compensation rose just 0.8 percent from
the first quarter of 1997 to the first quarter of 1998.  But the ECI has
a weakness:  For purposes of comparing different time periods, it makes
the simplifying assumption that there is no change in the mix of jobs.
Lately, though, the number of high-paying jobs has grown faster than the
number of low-paying ones.  So employers' average payroll costs are
rising more than the ECI shows.  The changing mix of jobs is captured by
a "Job Quality Index" that has been pioneered by Harvard University
labor economist James L. Medoff.  His index, published by the Center for
National Policy almost simultaneously with the ECI, fell steadily from
1985 to 1994 as the economy shifted to ever more low-paying service
jobs.  It has been rising, however, since then -- as the proportion of
high-paying positions rises....  The growth in the Job Quality Index has
come almost entirely in its wage component....  Medoff says this is
partly a result of America's trend away from traditional union jobs,
which offer generous fringe benefits.  The Job Quality Index has its own
peculiarities.  While adjusting for the changing job mix, it assumes for
calculation purposes that the pay for various jobs is fixed....  The
ideal measure would be one that captures both the change in pay for
given jobs and the change in mix of jobs.  In fact, such a thing exists:
It's the measure of "employer costs for employee compensation," and it's
an actual dollar-per-hour figure, rather than an index.  But it's issued
only once a year....     

Consumer confidence dropped a bit in May, but Americans continue to feel
upbeat about the economy, the Conference Board says....  (Daily Labor
Report, page A-3; Washington Post, page C10; Wall Street Journal, page
A2).

Existing-home sales fell in April from March's highs but continued at a
brisk pace.  Separately, the value of new construction contracts
remained nearly unchanged in April....  (Wall Street Journal, page A4)


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