TEXT FOR DELIVERY: 9:30 A.M., E.D.T. FRIDAY, AUGUST 5, 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 August 5, 1994 Mr. Chairman and Members of the Committee: Once again, I would like to thank you for the opportunity to offer a few comments on the Nation's employment situation. Payroll employment continued to grow at a healthy pace in July, and the unemployment rate held about steady for the second straight month. The number of payroll jobs rose by 259,000 last month, following an even larger gain in June. As I reported to you at the Committee's previous hearing, some of the strong June increase resulted from the relatively late timing of the survey, which picked up extra hiring in some highly seasonal industries that more typically would not have been counted -2- until July. Thus, the size of the June increase probably is somewhat overstated and that of July somewhat understated. Over the 2 months, job growth averaged about 310,000. So far this year, payroll job increases have totaled nearly 2.0 million. As in June, the bulk of the job growth in July occurred in the services (138,000) and retail trade (75,000) industries. Within services, the number of jobs in business services, especially personnel supply, rose sharply. There also was continued job growth in health and social services, consistent with the recent trend in each industry. In retail trade, as in services, the large July gain followed an even larger June increase. Jobs in eating and drinking places continued to expand, and there were also substantial gains in furniture and food stores. Employment in retail trade has been strong over the past year and a half. The number of construction jobs rose by 25,000 in July, continuing the pace of moderate gains evident in recent months. Employment in the Nation's factories edged up only slightly in July, following fairly strong growth in June. July's gains were dampened by an increase of 12,000 in the number of workers on strike (primarily in the construction machinery industry). In addition, auto plant closings for vacations and model changeovers during the July survey period held down hiring by these plants and led to temporary layoffs at auto parts suppliers. There were job gains in -3- the furniture, printing and publishing, rubber and plastics, and food processing industries. Factory hours were off by another tenth of an hour and are now down by three-tenths of an hour over the past 3 months; at 41.9 hours, however, the factory workweek continues to be high by historical standards. Data from the household survey show a quite different picture of recent employment trends. Following a large decline in June, total employment was unchanged on a seasonally adjusted basis in July. Since January, the household survey has shown an employment increase of about half a million, only a quarter of that shown by the payroll survey. As I mentioned in my testimony last month, short- term movements in employment as measured by the two surveys often differ. In the longer run, however, they usually track more closely. After trending downward through May, the overall unemployment rate--at 6.1 percent in July--has been at about the same level for the past 3 months. The rate for adult men rose by three-tenths of a percentage point in July to 5.6 percent. Rates for adult women and teenagers, at 5.3 and 17.7 percent, respectively, were little changed. The total number of unemployed persons, at 8.0 million, was about 700,000 below the January level. I would like to spend a few minutes talking about two groups of people who are not counted in the official -4- unemployment total but who have shown some interest in acquiring a job. Discouraged workers--the more familiar group--are persons who want jobs but have given up searching because they do not think they could find work, giving reasons for not currently searching such as believing that no suitable work is available or that they lack the necessary training, skills, or experience to land a job. There were about 550,000 discouraged workers in July (on a not seasonally adjusted basis). The number has hovered between 400,000 and 600,000 since the new, more restrictive, definition of discouragement was introduced as part of the overall redesign of the household survey in January. Two new requirements were added to classify a person as discouraged: they must have engaged in some job search within the previous year, and they must indicate directly that they are currently available to take a job. The effect of the new definition has been to lower the estimate of the number of discouraged workers by more than one-half as compared with the former measure. In addition to those people who are formally classified as discouraged, there is a larger number of people not currently in the labor force who have shown some interest in a job and say they are available for work, but are not currently engaged in active job search for reasons such as family responsibilities. In July, there were some 1.3 million persons in this latter category. As we acquire more -5- data from the redesigned household survey, we will be studying the behavior of these and other groups who are out of the labor force but have expressed some interest in work. In summary, the July data show continued strength in the Nation's labor market. Payroll employment expanded and the unemployment rate held about steady at 6.1 percent. My colleagues and I now will be happy to answer any questions you may have.