THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, July 9, 1994 TAG: 9407090170
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY ROBERT NAYLOR JR., ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium: 88 lines
Unemployment held steady at 6 percent in June and 379,000 people found jobs, the government said Friday. But many new workers got temporary, part-time or low-paying positions rather than careers.
``The overwhelming proportion of the jobs that are being added to the economy are low-wage jobs in the service sector,'' said Mark Roberts, an economist with the AFL-CIO.
The Clinton administration hailed the report, which showed a much greater increase in the nation's nonfarm payrolls than the quarter-million or so most economists had anticipated.
``The great American job machine is back and humming,'' Labor Secretary Robert Reich said.
Economist Norman Robertson of Carnegie Mellon University in Pittsburgh said there was ``little or no evidence of any sort of palpable slowdown in the economy.''
The June unemployment rate mirrored that for May, which was the lowest since November 1990.
The average work week was down from 42.1 hours to 42 hours. Overtime was unchanged at 4.6 hours.
Factories hired 34,000 workers while construction payrolls were up a modest 16,000.
Most of the overall gains came in lower-paying service sector jobs and in temporary and part-time positions. The Labor Department said 186,000 new hires were in services and 46,000 of those were temporary. Retailers added 102,000 jobs while restaurants hired 69,000 new workers.
More than 4.7 million Americans who wanted full-time work found only part-time positions.
``There continues to be a lot of slack in the jobs market,'' Reich said. But he insisted the employment picture is strong.
Some private economists say that creation of part-time jobs is a logical step for employers wanting to make sure the economic recovery is firmly in place.
Part-time jobs ``are still jobs and they will still generate income,'' said Martin Regalia, chief economist for the U.S. Chamber of Commerce.
He said some employers are hesitant to add full-time workers because they were ``still concerned over the health care issue and how that's going to add costs.''
Other analysts said the large number of low-paying, temporary and part-time jobs is a sign that the economy may not be as strong as it appears.
``Job creation is good news, but the quality is declining,'' the AFL-CIO's Roberts said.
Wall Street initially reacted negatively to the report. An early slump in the bond market unsettled stock investors, but stocks later recovered.
Investors worry that an economy growing too rapidly drives up prices and pushes down the value of their holdings. One bit of calming news was a decrease in average hourly earnings from $11.09 in May to $11.08 in June. The decline, though slight, was an indication that wage inflation remains in check.
``We're not seeing any inflationary push,'' Reich said in an interview.
Worries about inflation prompted the Federal Reserve to raise interest rates four times this year a total of 1.25 percentage points.
Some economists say the Fed may again push up interest rates at the August meeting of the Federal Open Market Committee, and they offer mixed opinions of the necessity and the potential long-term effect on the economy.
``There's a long way to go before higher interest rates will choke off the economy,'' said economist Eugene J. Sherman of the New York brokerage firm M.A. Schapiro & Co. ``We would want to see some suppressing because right now we're growing at an unsustainable rate.''
But economist Lawrence Chimerine of the Washington-based Economic Strategy Institute said ``inflation pressures remain dormant'' and the Fed ``should wait at least several months before considering any additional tightening of monetary policy.''
``I don't think we should do anything to undermine the recovery when we have still Americans who need jobs, we have still Americans who are working part-time who wish to work full time,'' he said. ``We have parts of America that have not felt the recovery, and we have no evidence of inflation. The real key is, is the economy generating real, genuine, substantiated fears of inflation, and the answer to that is no.'' ILLUSTRATION: STAFF CHART
U.S. UNEMPLOYMENT
SOURCE: U.S. Department of Labor; Associated Press.
[For a copy of the chart, see microfilm for this date.]
KEYWORDS: ECONOMY JOBLESS UNEMPLOYMENT by CNB