Nation's low unemployment rate in April signals "worker heaven" Dow

Journal Record, The (Oklahoma City), May 5, 1997

WASHINGTON (AP) -- The nation's unemployment rate tumbled below 5 percent last month for the first time in nearly a quarter-century, with job levels boosted by a robust, low-inflation economy.

"It's worker heaven," declared economist Allen Sinai of Primark Decision Economics. "This myth that the American worker is an unhappy camper went away eight to 10 months ago. There are plenty of jobs available."

Meanwhile, news that the Clinton administration and congressional negotiators agreed to cut taxes and balance the budget by 2002 helped the Dow Jones average advance 95 points to close at 7,071. That capped the best one-week point gain -- 332 points -- in the history of the average and brought it within 14 points of its March 11 record high. The week's percentage gain, nearly 5 percent, was the best in more than five years. The booming economy helped seal the budget deal by providing a windfall of billions in unexpected tax revenue. But Sinai and other analysts cautioned that the fine print in the unemployment report offered evidence economic growth already is slowing to a less spectacular, though more sustainable, pace. Joblessness, as measured by a survey of households, fell to a seasonally adjusted 4.9 percent in April from 5.2 percent a month earlier, the Labor Department said Friday. It was the lowest unemployment rate since December 1973 when Richard Nixon was president and years before most workers now in their 30s obtained their first full-time jobs. "Our economy is now the strongest it has been in a generation," President Clinton told reporters. But some of the drop in the rate may have been a statistical anomaly from an unusually sharp contraction in the size of the labor force -- people working or looking for work. And a separate survey of businesses showed modest payroll gains of 142,000 in April and 139,000 in March after large increases of 314,000 in February and 259,000 in January. Analysts said that suggested some ebbing in the momentum of economic growth from a decade-high rate of 5.6 percent in the first three months of 1997. "These numbers are clearly indicative of a slower economy in the second quarter, strange as that may seem when you look at the unemployment rate," said economist Martin Regalia of the U.S. Chamber of Commerce. The crosscurrents were such that financial markets reacted mildly to the report. Stocks increased moderately at first, shooting up after word spread of the budget deal. Bond prices also rose, with the rate on the benchmark 30-year Treasury bond slipping to 6.88 percent from 6.92 percent the day before. In recent weeks, stock and bond prices have yo-yoed, with strong economic reports suggesting the Federal Reserve will need to quell inflationary pressures with a protracted series of interest-rate increases and weaker data offering support for steady rates. Fed policy-makers raised short-term interest rates by a quarter percentage point on March 25. Most analysts believe they soon will tighten monetary policy at least once more, if not at their upcoming May 20 meeting then at the next in July. April's decline in joblessness was broad-based. For adult men the rate was 4.2 percent, compared to 4.8 percent a year ago; for adult women, 4.4 percent compared to 4.7 percent; for whites, 4.2 percent compared to 4.8 percent; for blacks, 9.8 percent compared to 10.5 percent; for Hispanics, 8.1 percent compared with 9.5 percent; and for teen-agers of both sexes and all races, 15.4 percent compared with 16.8 percent. But, in an exception, the rate for black male teen-agers was 37.3 percent compared to 34.9 percent a year earlier. That underscores that the "worker heaven" hasn't been universal and pay increases have been meager for some. Employees such as highly trained computer programmers are seeing big raises while others with less education barely are managing to keep abreast of inflation. "Workers don't seem to be going downhill, but they're not getting their share of the growth either. The typical worker's pay is lagging behind the improvement in productivity," said economist Larry Mishel of the Economic Policy Institute, a union-funded think tank. "Instead we're seeing dramatic improvement in (corporate) profitability that helps boost the stock market." Average hourly earnings for nonsupervisory workers fell a penny to $12.14, according to Friday's report. But that was up 3.6 percent from a year earlier. In other details, the Labor Department said the average workweek slipped to 34.6 hours in April from 34.9 the month before. But at factories the average workweek edged up to 42.2 hours, matching the post-World War II high of January 1995. Overtime at factories inched up to five hours, highest since the government began tracking that figure in 1956. Two temporary factors dampened payroll growth -- late spring snow and flooding in many parts of the country and auto strikes that temporarily depressed manufacturing by 14,000 jobs.