TEXT

 
 
 
                                    FOR DELIVERY: 9:30 A.M., E.S.T.
                                    FRIDAY, FEBRUARY 4, 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
 
                              February 4, 1994
 
 
 
 
        Mr. Chairman and Members of the Committee:
 
             It is again a pleasure for my colleagues and I to be
 
        here to offer a few comments on the Nation's employment
 
        situation.
 
             Nonfarm payroll employment showed some improvement in
 
        January, as 62,000 jobs were added.  It is quite likely,
 
        however, that employment gains were held down by unusually
 
        frigid weather over large portions of the country during the
 
        survey reference period.  The unemployment rate was 6.7
 
        percent in January, the first month that the estimates were
 
        based on a totally redesigned household survey questionnaire
 
        and collection methodology.  The January employment estimate
 
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        from the household survey was 1.3 million higher than the
 
        figure reported for December.  This difference largely
 
        reflects the introduction of new population estimates,
 
        although the survey redesign also may have affected the
 
        employment estimate.
 
             This leads me into what is perhaps the topic of
 
        greatest interest today.  This morning, for the first time,
 
        we released data from our revised household survey.  Over
 
        the past few years, BLS and our partners at the Bureau of
 
        the Census have put forth an extraordinary effort to bring
 
        about the most comprehensive set of improvements in the
 
        Current Population Survey since its inception more than 50
 
        years ago.  We are very pleased to report to you that the
 
        first full-scale "live" data collection using the revised
 
        survey questionnaire and collection methodology went very
 
        smoothly.  This is a particularly impressive achievement,
 
        since the data collection coincided with the earthquake in
 
        California and record cold weather across much of the
 
        eastern half of the country.
 
             I will return to the new Current Population Survey in a
 
        moment, but, as I have often said these last few months,
 
        changes to this survey require that we rely on our payroll
 
        survey even more than usual for our view of current labor
 
        market developments.
 
             As I mentioned, weather appeared to play a major role
 
        in the relatively small rise in payroll employment between
 
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        December and January.  Though the reference week for the
 
        survey was the week before the California earthquake and
 
        the East Coast snow and ice storms, the extreme cold over
 
        much of the Nation during the reference week held down
 
        employment.  Indeed, the weakness in the payroll survey was
 
        quite concentrated in weather-sensitive industries in
 
        January, while other industries continued the pattern of
 
        moderate growth that has prevailed for some time.
 
             Construction employment is most obviously affected by
 
        unusual weather.  Our seasonal adjustment factors, of
 
        course, expect only an "average" month.  Thus, particularly
 
        bad weather will result in seasonally adjusted construction
 
        employment estimates that may mask underlying strength.  In
 
        January, construction employment was flat, despite general
 
        indications of improving health in the industry.  Our survey
 
        responses suggest larger-than-normal construction cutbacks
 
        in the poor-weather areas, while employment continued to
 
        grow elsewhere in the country.
 
             Similarly, employment in entertainment and recreation
 
        services, which also can rise or fall on the basis of
 
        unusual weather, fell by 17,000 in January.  In addition, we
 
        saw employment weakness within retail trade, particularly in
 
        eating and drinking places and general merchandise and
 
        apparel stores.
 
             I should point out that, despite the small employment
 
        gain overall, we did continue to see strength in many of the
 
 
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        industries that have done well recently.  A number of the
 
        durable goods manufacturing industries, particularly the
 
        construction-related and auto-related industries, had job
 
        gains in January, and factory hours remained high.  Job
 
        growth also continued in finance, transportation, wholesale
 
        trade, automobile dealers, and health services.
 
             Returning to the household survey, as we have discussed
 
        on previous occasions, there are three factors at work to
 
        make the reported January estimates, particularly the
 
        unemployment rate, different from what would have been
 
        obtained had the December survey and estimation procedures
 
        been followed.  First, the survey redesign can be expected
 
        to have raised the measured unemployment rate.  Over the
 
        whole of 1993, our test of the new survey produced
 
        unemployment rate estimates nearly half a percentage point
 
        higher than the official estimates for that period, though
 
        that does not imply that the new and old survey estimates
 
        necessarily would differ by exactly half a percentage point
 
        in any particular month.  Second, the introduction of new
 
        population controls raises the jobless rate by a tenth of a
 
        percentage point.  Finally, the survey data for January --
 
        and perhaps also for February and March -- may differ from
 
        what we would have obtained had the new survey been in place
 
        for a longer period of time.
 
             As noted earlier, we have estimated an unemployment
 
        rate of 6.7 percent for January.  The unemployment rate
 
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        reported for December was 6.4 percent.  I would stress again
 
        that those two numbers should not be directly compared.
 
             We have made efforts in several areas to bridge the gap
 
        between the old and new survey data.  The first attachment
 
        to my statement shows our model-based estimates of what
 
        unemployment would have been from September 1992 through
 
        December 1993 had we used the new survey methodology and
 
        updated population controls.  In effect, our model smooths
 
        out some of the variance found in the parallel survey
 
        conducted during that period and produces estimates that
 
        more closely follow the month-to-month pattern of the
 
        official survey results.  Our model-based unemployment rate
 
        estimate for December 1993 was 7.0 percent on a seasonally
 
        adjusted basis.
 
             While the series shown in this attachment provides a
 
        helpful frame of reference, I would nonetheless advise
 
        against taking the three-tenths of a percentage point
 
        difference between the December model-based figure and the
 
        January survey estimate as a measure of the "real" change in
 
        the unemployment rate.  Aside from the uncertainty
 
        associated with any model-based estimate, there may be
 
        factors related to the new survey's phase-in -- and thus
 
        totally unrelated to economic factors -- that might have
 
        affected the January data and may cause the rate to "drift"
 
        in upcoming months.  In addition, although at least
 
        initially we will be using seasonal adjustment factors based
 
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        on prior years' experience, those factors may not precisely
 
        capture the pattern of seasonality in the new series.
 
             Another tool that we are providing to analysts is our
 
        model of what the January 1994 unemployment rate would have
 
        been under the old methods, based on the historical
 
        relationship between the unemployment rate and other
 
        economic indicators.  That rate, as shown in the second
 
        attachment to my statement, is 6.3 percent.  We will
 
        continue to produce a similarly modeled measure for the next
 
        few months.
 
             As you know, we also are continuing collection of data
 
        using the old survey methods with a sample comparable in
 
        size to the one we used to test the new questionnaire
 
        (12,000 households).  Around the middle of the year, we will
 
        begin to incorporate the results from this survey into our
 
        model-based estimates of what the unemployment rate would
 
        have been had the old survey been continued.
 
             A last technical item I should note before discussing
 
        some of the details of the household survey data is that we
 
        have introduced 1990 census-based population controls
 
        adjusted for the undercount.  We normally introduce new
 
        population controls following each decennial census.  The
 
        introduction of undercount-adjusted controls raises the
 
        population level by 1.3 million and the level of employment
 
        by about 950,000.  And since the new population estimates
 
        have a higher proportion of persons with above-average
 
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        unemployment rates (particularly Hispanics) than the old
 
        1980 census-based population estimates, the jobless rate is
 
        a tenth of a percentage point higher than it otherwise would
 
        have been.
 
             Keeping all of this in mind, we are reporting that the
 
        jobless rate for adult women was 6.0 percent in January;
 
        the rate for men was 5.9 percent; and that for teenagers,
 
        18.4 percent.  The rate for whites was 5.8 percent; that for
 
        blacks, 13.1 percent; and that for Hispanics, 10.6 percent.
 
        Each of these rates implies a December-January change in
 
        unemployment well within the range that we had anticipated
 
        based on the results from the parallel survey.
 
             Other estimates of particular note are the counts of
 
        discouraged workers and persons working part time for
 
        economic reasons.  The discouraged worker total for January
 
        (not seasonally adjusted) was 600,000; we had been reporting
 
        about 1.1 million for the prior 2 years.  The lower figure
 
        reflects a new definitional requirement that, in order to be
 
        classified as a discouraged worker, one must have looked for
 
        work during the prior year.  This change, which implements a
 
        recommendation of the National Commission on Employment and
 
        Unemployment Statistics, brings the measure more in line
 
        with what people have generally perceived it to be -- a
 
        count of persons who had given up looking for work due to
 
        discouragement over job prospects.  Similarly, the number of
 
        persons employed part time for economic reasons was about a
 
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        million lower in January than in December, because
 
        respondents so classified now must explicitly indicate that
 
        they both wanted and were available to take a full-time job.
 
             In summary, today we begin a new era with the release
 
        of the first data from the redesigned household survey.  Any
 
        statistical organization must continue to improve its data
 
        to keep up with the times.  Nevertheless, we well recognize
 
        and appreciate the added uncertainty that this transition
 
        imposes on labor market analysts and hope that our continued
 
        efforts to bridge the old and revised surveys will ease the
 
        changeover.
 
             With respect to the state of the labor market, the
 
        healthy payroll employment growth that we have seen in
 
        recent months appears to have been restrained by unusually
 
        poor weather in January, but many of the industries that are
 
        less affected by weather conditions continued to expand.
 
        The unemployment rate based on the redesigned household
 
        survey was 6.7 percent.  Despite some uncertainty
 
        surrounding this rate, the data released today are
 
        consistent with there having been continued underlying
 
        improvements in the labor market.
 
             My colleagues and I now would be glad to answer any
 
        questions the Committee may have.