TEXT FOR DELIVERY: 9:30 A.M., E.S.T. FRIDAY, JANUARY 7, 1994 ___________________________________________________________ Advance copies of this statement are made available to the press under lock-up conditions with the explicit understanding that the data are embargoed until 8:30 a.m. Eastern time. ____________________________________________ Statement of Katharine G. Abraham Commissioner Bureau of Labor Statistics before the Joint Economic Committee UNITED STATES CONGRESS January 7, 1994 Mr. Chairman and Members of the Committee: Once again, I would like to thank you for the opportunity to offer a few comments about the employment and unemployment data released this morning. The nation's labor market showed clear signs of continuing improvement in December. Employment as measured by both our employer survey and our household survey grew over the month. At 6.4 percent, the December unemployment rate was little changed from November, though it now lies almost a full percentage point below its level of a year ago. -2- The 183,000 over-the-month gain in payroll employment was concentrated in the service-providing sector of the economy. Each major industry group in this sector had job growth. The biggest gain numerically was in the services industry, a diverse grouping that added 68,000 jobs. This included an increase of 36,000 in its personnel supply component. Retail trade added somewhat more workers than normal for the month; a seasonally adjusted increase of 32,000 followed a small decline in November. As has been true throughout the year, the employment gains in retail establishments were concentrated in eating and drinking places. Elsewhere in the services sector, finance continued to show broadbased job growth and transportation continued an uptrend that now totals 33,000 jobs over the past 4 months. Following gains in October and November, both manufacturing and construction employment held steady in December. The extraordinarily high factory workweek and overtime levels achieved in November were sustained in December. As already noted, the unemployment rate was 6.4 percent in December, little changed from the revised November level of 6.5 percent. (As is our normal practice, seasonally adjusted estimates from the household survey have been revised at the end of the year to reflect updated seasonal -3- factors. Data for the last 5 years are affected by these revisions.) The jobless rate for adult men, 5.8 percent in December, has shown slow but steady improvement over the past few months. The rate for adult women, however, has held at about the current 5.7 percent since midyear. The number of discouraged workers was 1.1 million in the fourth quarter, essentially the level that has prevailed for more than 2 years. The number of involuntary part-time workers--those who would prefer to work full time--was 6.2 million, slightly below the levels that prevailed for most of the year. Long-term unemployment (the number of persons unemployed more than 6 months) was little changed at 1.7 million. The start of the new year provides an opportune time to look back at labor market developments during 1993 as a whole. While the detailed picture changed somewhat from month to month, some clear patterns are apparent in the data for the year. Unemployment improved slowly but steadily throughout the year, with the rate falling by nearly a full percentage point, from 7.3 percent in December 1992 to 6.4 percent this past month. This steady improvement continued a downward trend that had begun in mid-1992, when the jobless rate peaked at 7.7 percent. The employment growth registered by both the payroll and the household surveys was considerably stronger than it had been in 1992. The rise in payroll employment of nearly -4- 2 million jobs was double that of the previous year. Total 1993 employment growth as measured by the household survey was about 2-1/2 million, and the pace of growth was particularly brisk in the fourth quarter. This is cheering news in light of the major restructuring occurring in the economy. Though faster than in 1992, the rate of job growth still is not as high as in some previous years. Further, many of these jobs are temporary placements through personnel supply firms. In addition, the numbers of discouraged workers and persons working part time who would prefer full-time work changed relatively little over the year, and long-term unemployment has declined at a slower pace than in other expansionary periods. Overall, however, the labor market is clearly stronger than it was a year ago. On another important matter, I would like to remind the Committee that our long-term effort to improve the quality of our household survey data comes to fruition next month with the release of the January data. Week after next, Census Bureau interviewers will take their laptop computers into the field and begin to collect data from our full 60,000 household sample using a substantially revised questionnaire. In previous testimony, I have indicated that the revised survey is likely to produce higher estimates of both employment and unemployment than were obtained from the current survey. -5- In addition, the incorporation of estimates based on the 1990 census, including adjustments for the population undercount, will have the effect of increasing population, labor force, and employment levels. It also is expected to raise the jobless rate by a tenth of a percentage point. As part of our continuing efforts to help users interpret the data from the new survey, we have developed plans to do three things in preparation for the release of January data on February 4: -- develop an estimate, based upon the historical relationship between changes in the unemployment rate and changes in other economic indicators, of what the January 1994 rate would have been had the old survey been continued; -- using information from the 12,000 household survey conducted during 1992 and 1993 to test the new methods, develop estimates of what the unemployment rate would have been had the new survey been in place during that period; and, finally, -- assess, as best we can, the special factors related to the survey being fielded for the first time that may impinge upon the January 1994 estimates. Additional work, leading to the production of a variety of historical series suitable for use by analysts and researchers, will be completed over the next 12 to 18 months. Lastly, I am pleased to report that we have finalized the plans for a 12,000 household survey, to begin this month, that continues the old CPS methods. Because of -6- potential problems related to the initiation of this activity, the first planned release of data from this survey will take place in early summer. At the time that the official unemployment numbers for June are released, and each month thereafter for some period of time, we plan to report a 3-month average unemployment rate based on the survey using the old methods that can be compared to the most recent 3-month average rate from the new official survey. My colleagues and I now would be glad to answer any questions the Committee may have.