THE WHITE HOUSE
Office of the Press Secretary
PRESS BRIEFING BY SECRETARY OF LABOR ALEXIS HERMAN AND CHAIRMAN OF THE COUNCIL OF ECONOMIC ADVISORS MARTIN BAILY The Briefing Room
2:17 P.M. EST
MR. TOIV: Good afternoon, everybody. Here to brief you today and give you even further detail on the great economic news we have today are Secretary of Labor Alexis Herman, and the Chairman of the Council of Economic Advisors, Martin Baily, who will also talk about the report that the Council and the Department issued today.
SECRETARY HERMAN: Thank you, Barry. Today is an historic day for the American economy and for the American worker. When President Clinton took office in 1993, America was barely creating jobs, wages were stagnant and the unemployment rate was 7.5 percent.
Today, with the unemployment report that has been issued by the Labor Department, and the creation of 234,000 jobs in the November report, we have now broken the 20 million mark for this administration.
But the story is not simply in terms of the number, the quantity of jobs. I think the real story is in the quality of what has happened in this economy. Quality in the context of the kinds of jobs that have been created. We know, for instance, that more than 81 percent of these jobs are in fact jobs that are paying at or above the median wage in this country.
We also know that more than 51 percent of these jobs were created in the service sector. But it's important to point out that these jobs in the service sector, two-thirds of them are actually comprised of managers and professional jobs -- jobs like systems analyst, computer scientist, engineers, doctors, lawyers. These are the kinds of jobs that have been created in the service sector.
I think it's also important to point out that with this number it's fair to say that when we look at the quality of these jobs that America is growing together again. This is an economic prosperity that has been broadly shared by all groups participating in our economy today. You can look at the lowest unemployment rates on record for African Americans, for Hispanic, for women since almost 50 years, 46 years to be exact.
And I think it's also important to point out that when we look in particular at what is happening with real wage growth in this country, that the bottom 10 percent of the economic ladder are growing at approximately today the same rate of the top 10 percent. So, clearly, we are also reversing finally the trends of income inequality in this country.
I believe that if we continue to pursue the President's policies of controlling for fiscal discipline, opening markets and making sure that we are going to make the right kinds of investments in the skilling and training of American workers, that we can continue to see an economy that performs at a very solid, stable and steady pace.
It is particularly important in this economic time that we are seeing that we especially, I think, concentrate on the pools of potential where we still have higher rates of unemployment than average in the economy today. That is a particular focus of our President's New Markets Initiative; and it is a particular focus for us at the Labor Department to focus on our young people who are coming into the labor market, particularly out-of-school youth, where we have more than 11 million of those workers, and other communities where we have high rates of unemployment today.
We have a real opportunity to also take these pools of potential and turn them into oceans of opportunity so that we can truly say that this is an economy where we have broadly shared prosperity and we are, in fact, leaving no one behind.
To speak more directly to the report that was issued today by the Council of Economic Advisors and the Department of Labor is now the distinguished Chair of the Council.
CHAIRMAN BAILY: Thank you, Alexis. Thank you very much and I want to quickly just thank the staff of the Council and the Department of Labor who worked very hard to put this report out. Obviously, we didn't know until today that we were getting the jobs, breaking the 20 million jobs mark.
Let me mention a couple of things that are in this report. It is available and I would encourage you to take a look at it. It is really an amazing set of statistics in there, and let me draw your attention to some Secretary Herman mentioned and the President has talked about them. But we know that we've broken the 20 million jobs mark, but what has this done? This has brought unemployment down, it has raised the employment-to-population ratio to 64.3 in November, which is just about at its peak level. It's been about at that level throughout the year.
We've seen unemployment rates come down among all groups. This year, we've had some of the lowest unemployment rates on record since we started doing this, separating the unemployment rate by groups in 1979. We've seen some of the lowest rates on record for African Americans and Hispanics.
The rate for women is the lowest since 1953. The unemployment rate has dropped down -- one of the signs, I think, that this is a broad-based expansion that's helping all people in the economy. The unemployment rate has declined for all educational groups -- not just the people with college education, but also those with a high school and below. We've actually seen the largest percentage drops in the groups with the fewest years of schooling.
I think that's sort of what you would expect as we operate a very high-pressure economy. Some of those workers who had previously not been brought into the mainstream labor market are able to get good jobs.
As Alexis Herman said, these are high-quality jobs, and she mentioned the overall figure of 81 percent in occupation and industry categories above the median. But we can also look a little bit behind that. A lot of those jobs are in sort of professional and managerial categories, and many of those do require a college education.
But if you remove that group, you just focus on the workers in other occupational categories, we find that 71 percent of the job growth was in the higher-paying half of this new distribution; 60 percent was actually in the highest-paying third. And, two, when we think about -- now, that's a calculation that excludes the professional and managerial jobs, but one thing that's also worth noting is that not all managers have to have a college education. A lot of people who have a high school education are able to move into those managerial jobs, and we've created an enormous number of those.
Part of the way to illustrate that, we sort of re-ran our numbers, looking only at those workers with a high school education. And among those with a high school diploma but no college, almost all of the growth was in the highest paying third of this distribution. In other words, among high school jobs, the new jobs were good high school jobs. The number is actually 98 percent, which makes it seem like almost all of the -- it is the case that virtually all of the growth was in that group. That's because we got some declines in other categories. But I think that is a very striking and encouraging number. Virtually all of the net job growth among high school graduates was among good jobs for those -- for that group of people.
We've also mentioned the wage growth and I want to draw your attention to a couple of charts in the report, Chart 6 and Chart 7, because they, I think, very clearly make the case that this expansion has been different from previously expansions. They show us that whereas wages were substantially declining in, really even the last part of the 1980s expansion, so the economy was still expanding but real wages on average were declining and that decline unfortunately continued in 1993. But by 1994, we started to see pick-ups in real wages.
In the last three or four years, we have seen growth in real wages, as we said, across the board and that is very new. We had, as economists, been spending a lot of time trying to understand why there seemed to be increasing inequality in our economy, why it was that the people at the low end were doing so badly relative to the people at the high end. And I think if that had continued and continued, it creates a kind of social divisiveness, it's really not the way we would like the expansion to go.
That trend towards higher inequality has stopped in the last four years of this expansion. That is a huge shift that we've seen taking place. As you might expect -- and actually we talked about not long ago -- these gains in wages and in incomes and in jobs have resulted in a decline in poverty. The poverty rates in 1998, the last figure for which we have -- the last year for which we have figures, fell to 12.7 percent. That's the lowest rate we've had since 1979.
Let me mention manufacturing employment, because that's been a concern and that's been part of the discussion that's gone on in Seattle. During really the first -- through 1998, the first five years or so of this expansion, we saw manufacturing jobs grow right along with the rest of the economy -- a very large gain in manufacturing jobs.
Unfortunately, coming out of the Asian financial crisis, a number of those jobs were lost. But, still, if you look between this month, the November figures, and January 1993, we still have seen a net gain of 250,000 jobs in manufacturing. We would expect, going forward, the rest of the world is recovering. We're past the Asian crisis. We are hoping and expecting to see some improvement in the manufacturing position.
Finally, let me note that a lot of people when they see so many jobs say, oh, they must be just part-time jobs or maybe that there are multiple job holdings -- yes, the joke, yes, I've got three of those jobs. We looked hard at that and that is simply not the case. There has been no increase in part-time employment; as the President said, there has been a slight decrease. And there has been no increase in multiple job holding, either. So we have not seen in this expansion that more and more people have had to take multiple jobs. That's not the case.
We have a problem of worker displacement. We know that even in a growing, expanding economy, some workers do lose their jobs as some companies grow and others decline, some industries grow and others decline. We have seen in this expansion -- seen some evidence that reemployment rates have been higher, that the wages workers have received when they lose their jobs and get new jobs has been better; and, in fact, we find that anxiety about job loss has been declining sharply in the last couple of years.
Let me stop there, and we'll take questions.
Q Mr. Baily, with all these jobs being created over the last -- well, since President Clinton came into the office, are you concerned at all about an overly tight labor market, and do you see any signs the labor market is overly tight?
CHAIRMAN BAILY: No, we don't. We think there was a lot of conventional wisdom about how well we could -- whether we could operate this economy with low unemployment rates, and I think we're now seeing evidence that we can operate at much lower unemployment rates than we had thought.
If you look at this last report, we find that average hourly earnings have gone up 3.6 percent over the past year, which is enough to allow workers to get real wage gains and improve their situation, but is not an acceleration of wages. We're not seeing the beginnings of a wage-price spiral.
SECRETARY HERMAN: I'd like to add to that by also saying that typically, when we look at the numbers of who is available for work, we concentrate on the 6 million who are unemployed. But the fact of the matter is, there are also two other numbers that are very important in that equation.
One is the 4 million workers who say that were it not for issues like child care and transportation, that they would also be available for the labor market. And so that is why we have to continue to pursue policies and strategies to lower barriers to labor market participation. And we also need to acknowledge the fact that we have had, on average, steady growth of about 2 million workers on average who are available to us as a part of the overall work force numbers.
Q On income disparity, do you understand why the disparity in incomes has stopped expanding? And do you have any idea what policies the government could pursue to start shrinking them?
CHAIRMAN BAILY: We certainly think that the high-pressure economy is a big part of this story, so the policies that have been followed -- it may seem distant to say fiscal discipline helps the income distribution, but we think it does, because what it's done is allowed interest rates to come down, allowed investment to increase, allowed rapid productivity growth to occur, which has allowed us to operate this high-pressure economy -- and in a high-pressure economy, the people at the bottom do well.
The other things that have certainly helped, increases in the minimum wage have helped people at the bottom. We see a significant effect of the people in the less skilled wage categories as a result of the minimum wage. We think that the earned income tax credit has encouraged more people to work, brought people into the work force, so that -- also of course the job training and education programs -- and why don't I hand over to Secretary Herman to say more about that, because I think that has been an important part of our policy initiative, to allow us to do this.
SECRETARY HERMAN: I would just underscore in addition to strategies like the minimum wage and the earned income tax credit, I think our efforts in terms of what we've done for welfare reform has also made a difference in terms of seeing those at the bottom of the economic ladder come in to the labor market and, in particular, when you look at the employment to population numbers for such groups as African-American women at the bottom of the economic ladder, you can really see it in terms of their stronger labor force attachment.
Q Secretary Herman, was it a negotiating mistake for President Clinton to state that he favors eventually imposing sanctions on countries that permit abusive conditions for workers?
SECRETARY HERMAN: Well, I don't believe that the President actually said that eventually that is what he favors. I think what the President was trying to communicate is that, in the context of the long-term principle, the long-term vision, as we bring worker rights, as we bring issues of the environment into play around what we do to level up global standards and not level them down, that obviously this is something that is a part of the longer term principle and vision.
The real issue that the President was stressing, quite frankly, is what we need to do now to focus on a process in Seattle, as a part of the WTO ministerial, to say let's have the appropriate research, let's have the debate, let's have the discussion to begin to examine the best ways to take all of these issues into consideration; and let's not rule anything in and let's not rule anything out as a part of that process.
Q In the phone calls he's been making, can you tell us the types of people he's been speaking to? Has he been able to clean up some of the mess caused by the remarks and do you think now this possibly can get on the agenda?
SECRETARY HERMAN: Well, I think that, as a part of the President's visit to Seattle, I think all of the work that has been done on this issue, I think that there is increasingly, quite frankly, an understanding that we have to do more to level up global standards more generally. The President was speaking to Prime Minister Obuchi as a part of the phone calls that he was engaged in today and I know that the White House Press Office is planning to have more to say about that later.
Q Mr. Chairman, can you just give us your views on the outlook for the economy at this point?
CHAIRMAN BAILY: Well, I mentioned a minute ago -- I mean, you asked me the question, do I see the difficulty with the current situation and we do not see that coming from the labor market there is any inflationary pressure. So I would say we are looking for a strong fourth quarter. There may be some effect of reduction in inventories in the first quarter of next year, but we would anticipate continued strong, stable growth next year.
We are in the process of preparing a budget and there will be a new forecast made with that budget that will be issued in February.
Q Mr. Chairman, recently, Texas Governor Bush announced a tax cut. Do you have any comment on the tax cut front?
CHAIRMAN BAILY: Well, a tax cut -- and I will let the Secretary respond to that also -- but this was twice as big as the one that the President vetoed. He vetoed it because it was irresponsible, the Republican tax cut, and this one is twice as big. So draw your own conclusion about our sense of this new proposal.
We think that preserving the fiscal discipline has been a key to the strong economic performance we have had in this expansion and we want that, and the President wants that to continue.
SECRETARY HERMAN: I think Chairman Baily has answered it quite accurately. I would just say that continuing the fiscal discipline as we look at any tax cuts proposal, the issue is how are we going to pay for them. And I think that, certainly, the analysis in terms of what Governor Bush proposed indicates that his projections for the surplus are actually much greater than what current reality would suggest at this point.
CHAIRMAN BAILY: I think his proposal would involve very substantial cuts in real spending and that's a concern.
END 2:35 P.M. EST