

			   THE WHITE HOUSE

		    Office of the Press Secretary
______________________________________________________________
For Immediate Release                              April 1, 1994     


			    PRESS BRIEFING
				  BY
		 SECRETARY OF LABOR ROBERT REICH AND 
	  CHAIRMAN, COUNCIL OF ECONOMIC ADVISORS LAURA TYSON

		  
			  The Briefing Room  

	     
	     
11:10 A.M. EST
	     
	     
	     SECRETARY REICH:  Good morning.  This is good news for 
American workers today.  The March employment increase of 456,000 
jobs reflects steady, sustainable employment growth over the last six 
months, with an average of 200,000 jobs a month.  In fact, March puts 
us back on track to where we would have been had we not lost so much 
ground in the bad weather during January.
	     
	     You'll remember that in the last four months of 1993 job 
growth averaged 200,000 -- approximately 200,000 a month.  January's 
bluster, that bad weather, stopped that progress temporarily.  We 
actually lost 31,000 jobs that month.  And we got back on track in 
February in terms of 200,000, but we still were behind about 231,000.  
Now we are firmly back on track with regard to our goal of 
approximately 200,000 a month.
	     
	     Unemployment is better, but it still remains a problem, 
especially persistent long-term unemployment.  Currently, one in five 
Americans who are unemployed have been out of work for more than six 
months.  Now, we're marking a major improvement from the 7.7 percent 
of January of '93.  That's under the new measurements.  The present 
unemployment rate of 6.5 percent represents 8.5 million Americans who 
are unemployed, and it calls for continued vigilant efforts on the 
part of this administration to ensure steady job growth and to help 
all Americans get new jobs.
	     
	     That's why the President, a couple of weeks ago, 
introduced the Reemployment Act of 1994, to make sure that Americans, 
in fact, get the skills they need and the jobs they need and can move 
easily into new jobs.  
	     
	     Yesterday, the Census Bureau reported that 18 percent of 
full-time workers of the United States are not earning enough to keep 
a family of four out of poverty.  In 1979, it was 12 percent.  I 
don't mean to cast an aura of gloom and doom over this.  We're very 
happy about the job numbers  and everybody should be quite positive, 
but we still have a problem with the job quality.  And that's also 
why the President, yesterday, signed the Goals 2000 Education Act, to 
ensure that all American schools come up to high standards, and why 
we will continue to push forward very, very hard on the issue of 
skills, education, training to ensure that all Americans are prepared 
for the economy of the future.
	     
	     Laura.
	     
	     DR. TYSON:  Thank you.  I'll just elaborate a little 
bit.  First of all, there are two reports today.  There's the 
employment report; there's also the personal income report.  Both 
reports contain more good news on the underlying fundamentals of the 
current economic expansion.  Taken together, the reports indicate 
that the economy continues to sustain good job growth, but does so 
without inflationary pressures from the labor market.
	     
	     Secretary Reich has already talked about the employment 
numbers, so just let me talk a little bit about the inflation 
indicators that are in these two reports, the employment report and 
the personal income report.  According to the employment report, 
average hourly earnings increased only 0.1 percent in March, and only 
2.4 percent from March of 1993.  Industry by industry, the pace of 
earnings growth continues to be very moderate.
	     
	     In the personal income report, total wages and salaries 
also increased slightly by only 0.2 percent in March.  What these 
numbers show, taken with the employment numbers, is that the economy 
is creating jobs, is creating jobs at a good pace, but without the 
inflationary pressure from the labor market that could ultimately 
compromise future economic growth.
	     
	     The other thing I want to say, particularly apparent in 
the personal income report, but also in the employment report, is 
that a number of special factors -- the earthquake and weather --make 
it difficult to interpret recent data to some extent.  However, when 
you look at a whole series of reports, taking into account these 
special factors, we don't see anything in the current reports that 
would cause us to revise our forecast of economic growth for 1994.  
Overall, the economy appears to be at a path of moderate sustainable 
growth in 1994, following a very strong growth pattern at the end of 
1993.
	     
	     Thank you.
	     
	     SECRETARY REICH:  And now if there are any questions.
	     
	     Q    Do you have any views on the stock market these 
days?  Either one.  What's happened?
	     
	     SECRETARY REICH:  The stock market is closed today.  
(Laughter.)
	     
	     Q    Well, is that good news or --
	     
	     Q       financial markets are overreacting and putting 
too much gloom on this economic data?
	     
	     DR. TYSON:  Well, I think what I -- I am on record as 
saying that the fundamentals looked good up until these reports today 
and they continue to look good.  That is, if you look at fundamentals 
on the real side of the economy, here would be the number of jobs 
that are being created, what's happened to the unemployment rate over 
the past several months; if you look at in fundamentals on the 
inflation side of the economy -- look at either side, the reports 
continue to paint the same picture.  The picture is a moderate 
sustainable recovery with very little in the way of inflationary 
pressure.
	     
	     Now, if I look at all of those reports and look at the 
financial markets, I am led to conclude that they are overreacting to 
something; certainly not to -- because they're inconsistent with the 
news of not just these reports, but a whole series of reports.
	     
	     Q    You note that there's some parallel to the pace of 
jobs growth and economic performance in the fourth quarter.  If we 
had 7 percent growth in the fourth quarter, and this is a very strong 
figure for March -- I mean, the rest of the March study that we'll be 
getting in coming weeks could be strong, so are we looking at a much 
stronger first quarter performance than we thought, or will this 
portend stronger growth than we anticipated for the second quarter 
such that maybe the markets are not getting out so far ahead?
	     
	     DR. TYSON:  Well, what I say to that is that there are 
no simple -- you would not want to draw a simple relationship between 
employment growth and output growth quarter by quarter.  These 
numbers -- sometimes employment growth moves with a lag to output 
growth, which occurred in the previous quarter.  Sometimes -- these 
numbers, simply on a quarter by quarter basis, are not in such close 
sync that you could conclude from the employment report of today that 
the first quarter of this year is going to be at an output rate 
comparable to the last quarter of last year.
	     
	     Most pieces of economic evidence and most economic 
analysts who do quarterly predictions for the economy -- we don't, 
but who do quarterly predictions, are -- the base of the evidence we 
have here suggesting that the first quarter, while it will be a good 
growth quarter, will certainly come in at significantly less than the 
growth rate observed in the fourth quarter of last year.  That's to 
be anticipated.  No one really anticipated that the economy would be 
growing quarter by quarter at 7 percent.  And that's why we're 
comfortable with the range of 3 percent through the year.
	     
	     SECRETARY REICH:  If I could just add to that.  Again, 
the last four months of 1993 we saw about 200,000 new jobs -- net new 
jobs -- a month.  That's just about what we were aiming for all 
along.  That puts us on a path a little bit better than two million 
jobs a year.  That's what the administration has sought from the 
beginning.  That is good, steady, noninflationary growth with regard 
to the labor force.
	     
	     Q    But didn't you expect this 456,000 that we saw 
today -- in other words, we're not going to see a continuation of 
that, that's sort of a one-shot deal, and we're going to go back to 
this 200,000 average?
	     
	     SECRETARY REICH:  Predictions are always hazardous, but 
remember that in January we, because -- largely because of the 
weather, lost 31,000 jobs.  In February, we were back on the 200,000 
track, but we still were behind 231,000 jobs.  So today's figure can 
be interpreted as being back on track for the 200,000 and then making 
up for what we lost in January.
	     
	     DR. TYSON:  Could I say, just to -- that most of the 
models for the year run by us and other economic forecasters are 
consistent with growth.  If you're in the range of growth of 3 
percent, then job creation around two million, perhaps more since 
maybe there's more upside risk -- that is, it's more likely, if you 
sort of access the risk, it's more likely that this year may end up 
stronger than predicted than less strong than predicted -- you'd say 
we believe we're on course for about a 3-percent year with about two 
million jobs with the upside risk on both numbers.  And that's not 
out of line, again, with sort of the basic forecasts that are being 
developed around the country by private forecasters -- about the 
fundamentals of the economy.
	     
	     SECRETARY REICH:  I'm sorry -- you had a question about 
where the jobs -- construction employment, which is particularly 
sensitive to weather conditions, advanced by 74,000 in March.  That's 
seasonably adjusted.  Manufacturing employment is an interesting 
story.  Manufacturing employment edged up slightly in March, as jobs 
were increased in the durable goods sector for the sixth consecutive 
months.  And again, that's fairly interest-rate sensitive.
	     
	     There were employment increases in fabricated metals, in 
industrial machinery, in electronics.  Actually, manufacturing is up 
88,000 since September.  And for all of those who said that 
manufacturing jobs are gone forever, well, that is simply not the 
case.  Since September, 88,000 increase in manufacturing jobs.
	     
	     Remember, manufacturing jobs dropped 1.8 million over 
the previous five years.  So this is quite an important reversal.  
It's been positive for six straight months.
	     
	     The factory work week is another interesting aspect.  
The factory work week rose by a full hour in March to 42.2 hours.  
And again, that's reversing February and January's weather-related 
decline.
	     
	     Q    Given the fact that inflation seems to be subdued 
and you're still looking for moderate growth, is there any 
justification whatsoever for either the markets or the Fed to raise 
interest rates further?
	     
	     DR. TYSON:  I don't think markets -- the issue of 
justification -- markets respond to what they respond to.  And as 
I've said, I believe that where the markets are right now, where the 
fundamental indicators of the economy are right now seem to be a 
little bit at odds, meaning that the markets may be overreacting.  If 
that is the case, then once the fundamentals take more hold of market 
participants, one might expect an adjustment in the markets.
	     
	     As far as Federal Reserve decision-making, the 
administration view on that is that it is -- the Federal Reserve is 
an independent agency.  It does what it does -- it reads the economy 
and makes a decision on what to do about the economy.
	     
	     Q    Can you go on the record and say what they are 
responding to, if they're not responding to the fundamental -- you 
always just leave that as a big gap.
	     
	     DR. TYSON:  Well, I don't think that -- I don't leave it 
as a --
	     
	     Q       series of things, you say.  But what are --
	     
	     DR. TYSON:  I don't leave it as a big gap I somehow 
think I know the answer and I'm not giving it.  I think that 
basically there is out there a number of hypotheses about what the 
market might be responding to, including concerns about inflation -- 
but as more of these numbers come in, I would assume those concerns 
would be somewhat alleviated -- concerns that the economy is growing 
at faster than a sustainable rate.  Once again, I think the evidence 
suggests that this quarter will show a slowdown to a sustainable rate 
of expansion.  But to the extent that that's a concern, that may be 
what the market is responding to.
	     
	     There has also been considerable discussion in this 
week's press about various reasons in the financial markets 
themselves about why they may be responding this way, having to do 
with the operation of hedge funds and derivatives and margin calls 
and the first quarter behavior of financial actors often is more risk 
adverse than it is over the rest of the year.  Those are various 
suggestions made by participants themselves and observers of the 
financial markets themselves.
	     
	     So all I'm really trying to point out is that if you 
tried to explain what's going on in the financial markets right now 
on the basis of the evidence of what the economy is doing, you 
couldn't easily make an explanation.  And that does suggest that 
there are other factors than the fundamentals at work.
	     
	     Q    If I could follow on Steve's question a little bit 
on the interest rates.  The fact that we've got the long bond rate -- 
it ticked up to 7.11 this week -- and we had Panetta saying for all 
last week that a 7-percent bond rate would be potentially dangerous 
for the economic outlook and that it would drive up the cost of 
interest on the debt, drive up the deficit forecast.  So if the bond 
market is insistent at staying at 7 percent or above, do you need 
some action from the Fed again to try to push that long end down, or 
what do you do to try to get the long bond rate down other than 
jawbone?
	     
	     DR. TYSON:  I think that -- there are sort of three 
things that come to mind in your question.  Number one, I think you 
first have to make the assumption that the markets will stay where 
they are.  That is, if you accept the notion that the fundamentals 
can't give you an adequate explanation of where the market is right 
now, then you might predict that the market won't stay where it is; 
that fundamentals sooner or later take over as a dominant cause of 
where markets go.  It may take some time for the fundamentals to take 
over, but if you believe that, then you would predict that it's not 
likely the markets will stay where they are.  That's the first thing.
	     
	     The second thing is it is certainly the case that if you 
have -- that higher long-term rates by themselves would tend to have 
a slowing effect on the economy.  It would be an effect that would 
feed in gradually, would probably not begin to be felt until the end 
of this year and going into next year.  On the other hand, if the 
economy is growing somewhat faster than predicted -- so suppose I go 
back to my upside risk point, that the economy might, in fact, be 
growing at more than 3 percent -- then there's some momentum in the 
economy which is sort of, in itself, going to offset the slowing 
effect from long-term interest rates.  
	     
	     And so all of this suggests that I think we should wait 
and see for a little while, but, of course, recognizing that if you 
have a sustained period of higher long-term interest rates, that 
does, by itself, tend to slow the economy down.
	     
	     Q    Could I ask you about Japan?  Since exports to 
Japan would mean new jobs and the Japanese government and auto 
companies have announced that they will be bringing in more spare 
parts from the U.S., do you feel that Japan is really making an 
effort to open up its market to U.S. exports?
	     
	     SECRETARY REICH:  Well, Japan is making a beginning, and 
I would say that it's not yet a satisfactory effort.  But it is 
certainly the start of what will continue to be efforts, hopefully, 
on Japan's part, and certainly on our part working with Japan, to 
ensure that Japan opens its markets.
	     
	     Q    You talked about the jobs -- some of the jobs being 
in manufacturing and durable goods.  Is your enthusiasm for the 
numbers at all tempered by the fact that a lot of them are part-time 
and in service sectors?
	     
	     SECRETARY REICH:  We don't see a major change in part-
time work.  Service sector work, some of those jobs are very good.  
Business services are very good.  We're seeing an increase over the 
last six months in what might be called technician jobs.  These are 
jobs in hospitals, in manufacturing, even on the factory floor, 
requiring more skill than the jobs we used to have, but not 
necessarily college degree.  In fact, not only do today it point out, 
but over the last month I have seen across the nation and met with a 
number of employers who say they can't get the skilled people they 
need.  Not necessarily college educated, but they can't get the 
skilled technical workers they need.  And as we come out of this 
recession, we're seeing a greater and greater demand for those kinds 
of technical workers, I would venture to say more than we have 
before, simply because of the nature of the economy is changing.  
Even sales representatives now need to have some technical skill and 
knowledge in many cases.
	     
	     Q    But overall, you're happy with the quality of these 
new jobs --
	     
	     SECRETARY REICH:  Well, as I said before, the Commerce 
Department yesterday, the Census Bureau reported that 18 percent of 
full-time workers -- full-time workers -- are not earning enough to 
keep a family of four out of poverty.  We are seeing a widening gap 
between people at the top and people at the bottom.  And that 
widening gap and those earnings are correlated more and more to 
levels of education and skill and training.
	     
	     Q    Well, are they being paid what they're worth?  I 
mean, why is that, this gap?
	     
	     SECRETARY REICH:  The gap is largely because -- and 
there are a lot of theories about why the gap, but I think the gap is 
largely because people who have skills are being rewarded in this 
economy.  They can use technology.  They can use computers.  They are 
able to add value because technology is their friend. 
	     
	     On the other hand, if you don't have skills in this 
economy, technology is increasingly replacing you or making you less 
and less valuable.  We used to have a lot of bank tellers, and now we 
have a lot of teller machines.  And the same thing can be seen across 
the economy.
	     
	     Q    Wages and salaries are up slightly.  Do you expect 
continued wage and salary growth, and at what point will the 
administration recommend an increase in the minimum wage?
	     
	     SECRETARY REICH:  Actually, average hourly wages are not 
up.  I think they're up about a cent an hour.  I mean, that's not 
very much growth.  So we're not seeing any wage push; we're not 
seeing any push with regard to employment.  And at the present time 
we're going to revisit the issue of the minimum wage, but I can't 
tell you precisely when.
	     
	     THE PRESS:  Thank you.

				 END11:26 A.M. EST

