[PEN-L:4760] FW: BLS Daily Report

[Richardson_D <RichardD@xxxxxxxxxxxxxxx>]

BLS DAILY LABOR REPORT, THURSDAY, JUNE 20, 1996

_____Most regions of the country kept up a moderate pace of economic
expansion during May and early June, with acceleration in manufacturing and
steady gains in real estate, according to the Fed's "beige book"  (Daily
Labor Report, pages 2,D-1).  Some Fed districts report price pressures,
particularly for construction materials and supplies, but there were fewer
reports of rising prices at the retail level, the Fed says.  Wage pressures
were minimal. Manufacturing activity picked up in most Fed districts in late

spring, the report shows.  The acceleration was spread across a wide range
of industries, with some variation among the districts.  In the Boston
district, both consumer and capital-goods industries posted improvements.
 Drawing on reports from its 12 district banks, the Fed finds that "most
districts continued to report tight labor markets for both entry-level and
skilled workers, although indications of rising wages remained scattered"
....
_____The Washington Post (John M. Berry, page A1) headlines the Fed report
by saying that "Labor shortages may be slowing economy" ....Companies all
over the country are going to extra lengths to attract workers, the Fed
reports, in the latest sign that the pool of unemployed workers has shrunk
to the point that it is limiting economic growth.  Unemployment nationally
has hovered around 5.5 percent for the past 18 months, and in more than half

the states this spring it is below 5 percent ....According to the
Minneapolis Federal Reserve Bank, a growing number of firms wanting to hire
skilled workers have stopped advertising because they got no responses.
 "Perhaps we should call them discouraged employers,'" one Minnesota state
official quipped ....Many Fed officials have expressed surprise that, with
the unemployment rate so low, there have not been more problems on the
inflation front, with wages rising to attract workers.  But the Fed's latest

survey turned up only scattered instances in which tight labor markets were
causing wages overall to increase rapidly ....Some analysts say the best
explanation is twofold:  Heightened concern among workers about job security

in a world of corporate downsizing has made them squeamish about asking for
raises.  That's coupled with strong resistance by employers to raise overall

wages because they know that, in a low-inflation economy, it is difficult to

raise prices to cover higher costs.  So even though some companies are
having to increase their offers of starting wages to get workers, in the
aggregate, pay hikes are still modest by historic standards.  And companies
aren't going begging for workers everywhere in the country ....To many
economists, this is a picture of a nation essentially at full employment.
 That means that going forward, the economy can grow only as fast as its
capacity to produce goods and services grows.  How fast that growth can
occur is the subject of much debate these days ....If the economy is at full

employment, additional labor is largely a matter of how fast the population
is growing, including immigrants.  When the post-World War II baby boomers
were entering the work force in the 1960s and 1970s, labor supply was
increasing roughly 2 percent a year.  Now it is increasing only about 1
percent a year.  All other things equal, that difference means the economy's

capacity to grow is a full percentage point lower than it used to be.  And
gains in productivity slowed sharply after 1973 for reasons economists still

can't explain fully ....
_____The New York Times (page D1) says that, despite fresh strength in the
economy, wages and prices remain largely in check ....
_____The Wall Street Journal (page A2) reports that the Federal Reserve's
regular economic surveys are sounding like a broken record, but the music is

sweet:  modest growth, low inflation, modest growth, low inflation ....

_____The Bureau of the Census released a report that consolidates recent
data documenting the rise of income inequality among U.S. households since
the late 1960s (Daily Labor Report, page A-2).  After declining between 1947

and 1968, income inequality among families in the United States began to
increase.  By 1982, inequality had returned to its 1947 level, Census says,
adding that it has increased further since then ....There are no new data or

conclusions drawn in the report, Census analysts said in releasing "A Brief
Look At Postwar U.S. Income Inequality."  Census's purpose was to pull
together recently released figures in one brief report ....
_____The New York Times carries the story on page A1,  saying that, using
new methods of collecting data that it says provide a more accurate picture
of incomes, the Census Bureau said that the gap between the most affluent
Americans and everyone else was wider than it has been since the end of
World War II.  Looking at five different indicators to measure household
income distribution, the Census Bureau has determined that, from 1968, when
the gap began to widen, to 1994, despite some yearly fluctuations, each
indicator has shown a pronounced increase in the gap between the incomes of
the well-to-do and those of the poor and the working class ....Census Bureau

officials say the acceleration in income inequality is partly explained by
the bureau's beginning to use computers for the first time in January 1994
to assist interviewers conducting surveys on household income, employment,
and other data.  Also, in March 1994, the Census Bureau lifted its upper
limit on reported income from $300,000 a year, allowing households for the
first time to report up to $1 million in earnings.  Both changes tended to
boost household incomes reported in the higher income brackets, producing a
more accurate picture of income distribution.  But the change also made it
look as though income disparity was widening more rapidly.  Even discounting

the effect of the methodology change, the report confirmed a well-known
trend .... Among the phenomena that have contributed to the disparity over
the long haul are:  the shift in the economy away from manufacturing jobs
that paid higher wages for relatively low-skilled workers; the increased
reliance in industry on the use of the computer and computer-assisted
technology which places a premium on higher skills and education; the
decline in the number of workers who are unionized, and the increasing use
 of part-time workers.  Also there have been demographic changes that have
greatly contributed to the growing disparity in household incomes ....
_____USA Today (page 1A) says that the rich earn more than all of the middle

class ....It cites as a possible cause:  Technological changes that put a
premium on workers who are skilled at learning and collaborating.

In Europe, a wave of layoffs stuns white-collar workers, says The New York
Times (page A1).  It is straining families, communities, and politics on a
continent on which 11 percent of available workers are already unemployed,
double the rate in the United States.  Many of the discarded workers are
people in their 50s who take large early-retirement packages and suffer
little if any financial hardship ....But these generous packages are
burdening European companies and also governments, which provide
supplemental benefits for people who lose their jobs ....

This week's "Trendlines" in the Washington Post (page D10) is "Behind Rising

Corporate Profits:  Economy's Growth Gets Right Down to the Bottom Line" by
John M. Berry.  Berry writes, "Corporate profits from current production
climbed to ... 8.66 percent of gross domestic product in the first quarter.
 That's the highest share since 1969, except for one quarter in 1977 and
another in 1978.  The continuing economic expansion and major efforts to cut

costs, including keeping wage gains low, are two reasons profits are up;
lower net interest expenses are another ....In some cases, of course, the
effort to improve profits has included painful layoffs of thousands of
employees, many of whom have been unable to find other jobs that pay as well

as those they lost.  However, even though millions of workers have lost
their jobs, there are nearly 11 million more payroll jobs now than there
were at the end of the slump ....Joseph E. Stiglitz, chairman of the CEA,
said in an interview that the high level of profits also is a form of
short-run protection against an increase in inflation.  Stiglitz said that
should firms' costs begin to rise more rapidly than they have been -- say as

the result of bigger wage increases -- prices would not necessarily do the
same.  With profit margins as high as they are, companies could absorb the
additional costs by allowing margins to slip somewhat, he said ....One
question frequently bruited about is whether the rise in profits has come at

the expense of employees' incomes.  For the economy as a whole, the answer
appears to be, a little bit ...."

A coalition of science, education, and health organizations argue against a
bill requiring written parental consent before children can participate in
federally funded surveys, insisting it would jeopardize major national
research on drug use, violence, health, and sexual activity among young
people.  The Family Privacy Protection Act ... would make it so expensive
for researchers to gather written permission from a representative sample of

minors that some ongoing studies would have to shut down, coalition leaders
said ....Under current law, federally funded research projects must be
approved by Institutional Review Boards, made up of members of the public,
which consider privacy and other issues posed by the research.  Parents are
notified in writing when their children will be included in a survey and, if

they object, can withhold permission by notifying the school or researchers.

 Under the bill, written permission slips would have to be signed and
returned by parents before their children could participate ....(Washington
Post, page A25).

DUE OUT TOMORROW:  U.S. Import and Export Price Indexes -- May 1996