95th Congress 1 JOINT COMMITTEE PRINT
2d Session f
PUBLIC HEARINGS BEFORE THE
NATIONAL COMMISSION ON EMPLOYMENT I AND UNEMPLOYMENT STATISTICS
Hearings held in Atlanta, Ga., July 11, 1978; Washington, D.C.,
July 26, 1978; and additional statements submitted for the hearings record I
PREPARED FOR THE USE \O
JOINT ECONOMIC COM T
CONGRESS OF THE UNITED ST-ATr SDECEMBER 20, 1978
Printed for the use of the Joint Economic Committee
U.S. GOVERNMENT PRINTING OFFICE
41-535 0 WASHINGTON : 1879
For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402
JOINT ECONOMIC COMMITTEE
(Created pursuant to sec. 5(a) of Public Law 304, 79th Cong.) RICHARD BOLLING, Missouri, Chairman LLOYD BENTSEN, Texas, Vice Chairman HOUSE OF REPRESENTATIVES SENATE
HENRY S. REUSS, Wisconsin JOHN SPARKMAN, Alabama
WILLIAM S. MOORHEAD, Pennsylvania WILLIAM PROXMIRE, Wisconsin LEE H. HAMILTON, Indiana ABRAHAM RIBICOFF, Connecticut
GILLIS W. LONG, Louisiana EDWARD M. KENNEDY, Massachusetts
PARREN J. MITCHIELL, Maryland GEORGE McGOVERN, South Dakota
CLARENCE J. BROWN, Ohio JACOB K. JAVITS, New York
GARRY BROWN, Michigan WILLIAM V. ROTH, JR., Delaware
MARGARET M. HECKLER, Massachusetts JAMES A. McCLURE, Idaho JOHN H. ROUSSELOT, California ORRIN G. HATCH, Utah
JOHN R. STARK, Executive Director
LETTERS OF TRANSMITTAL
DECEMBER 13, 1978.
To the Members of the Joi;nt Economic Committee:
Transmitted herewith are the transcripts of the final set of public hearings conducted by the National Commission on Employment and Unemployment Statistics.
The Joint Economic Commuittee has always maintained a deep interest in the evolution of the statistics on employment and unemployment to meet changing legislative needs. For that reason we have been pleased to participate as advisers to the National Commnission on Employment and Unemployment Statistics, whose mandate covers this problem.
Because the public hearings held by the Commission provide informative and valuable material f rom. several different sources, the committee has agreed to publish the transcripts in order to provide widespread dissemination. I believe that members of the Joint Economic Conmmittee and other Members of Congress will find them most useful.
The views expressed in the transcripts are those of the witnesses and do not necessarily represent the views of the members of the Joint Economic Committee or the committee staff.
CJhairm-an, Joint Economic Committee.
Hon. RICHARD BOLLING,DEMBR6198 Chairman, Joint Economic Committee, U.S. Congress, Washington, D.C.
DEAR~ MR. CHAIRMAN: Trnmte herewith are the transcripts of the final set of public hearings conducted by the National Commission on Employment and Unemployment Statistics.
The Joint Economic Committee has maintained a continued interest in the formulation of statistics on employment and unemployment. As you are well aware, these data are under increasing scrutiny because past legislation has placed insupportable demands on these statistics. In the initial process of examining various alternatives to existing methods of data collection and presentation, the Commission on Employment and Unemployment Statistics held public hearings. Witnesses included persons f romn congressional, academic, government, and public sectors. Their combined testimony gives the Joint Economic Committee a valuable and broadly based compendium of information.
The committee's undertaking to publish these hearings will enable a wide-ranging audience. to review the material. The expected feed(III)
back from interested parties should provide another source of important insight in our studies. Public dissemination also will focus attention on the complexities and ramifications implicit in any changes recommended by the Commission.
The transcripts were prepared for publication under the direction of Sar Levitan, the Chairman, Marc Rosenblum and Lois Black of the Commission's staff.
The views expressed in the hearings are those of the respective witnesses and do not necessarily represent the views of the Joint Economic Committee or any of its individual members.
JOHN R. STARK,
Executive Director, Joint Econoric Committee.
NATIONAL COITMMISSION ON EMPLOYMENT ANT)
Washington, D.C., November 29, 1978.
Mr. JoH-,- R. STARK,
Executive Director, Joint Economic Committee, U. Congress, Washington, D.C.
DFAR Mi. STX, K : This is the final volume of transcripts of the public hearings conducted by the National Commission on Employment and Tnemployment Statistics. It contains the record of the hearings held on July 11, 1978, in Atlanta and July 26, 1978, in Washington, D.C.. written submissions by persons who could not appear in person to testify. and a representative sample of the correspondence dealing with substantive issues which has been received by the Commission.
In transmitting this final volume. I once again would like to thank the Joint Economic Committee for making possible the widespread distribution of this testimony. The Commission is hopeful that the public response will insure a more thorough and constructive examination of the current system of labor force statistics.
SAR A. LEVlTAN,
Letters of Transmittal.................. ..........000*. iii
Opening Statements of the Chairman Sar A. Levitan ... 1
CHRONOLOGICAL LIST OF WITNESSES TUESDAY, JULY 11, 1978
Cruse, Donald, regional commission, United States
Department of Labor, Bureau of Labor
Jackson, Hon. Maynard, Mayor, Atlanta, Georgia;
accompanied by Aaron Tureau and Devon
Bent, assistants............................... 3
Scott, Hon. David A., member, Georgia House of
Simmons, James C., associate professor of economics,
Flordia State University....................... 42
Johnson, Preston, special assistant to the chairman,
Employment Security Commission of North
Chimerine, Lawrence, manager U.S. economic forecasting,
International Business Machine Corporation..... 66 Dressman, Hon. James A., County Judge/Executive,
Kenton County, Kentucky......................... 85
Hehl, Hon. Lambert, County Judge/Executive, Campbell
County, Kentucky............................... 89
Drewes, Donald, Conserva, Inc. ..................... 100
Wetzel, James, division of research and statistics,
Federal Reserve Board of Governors............ 114
Bell, Ulysses, director of employment and
training policy, National Rural Center; accompanied by Julian Ellison, economic
development programs, National Rural
Norvel, Paulette, national director, Minority
Women's Employment Program..................... 154
WEDNESDAY, JULY 263, 1978
Taylor, S. Martin, director, Employment
Security Commission, State of Michigan;
accompanied by Von Logan chief, labor
market analysis section, Employment
Security Commission, State of Michigan .......... 162
Farber, Stephen B., director, National
Governors' Association; accompanied
by Jack Brezius, director, Center for
Policy Research, National Governors'
Association ................................... 00 198
Teper, Lazare, research director, International
Ladies' Garment Workers Union ................... 213
Mohay, Kurt, research analyst, National Association of Manufacturers; accompanied by
George Hagedorn,, chief economist,
National Association of Manufacturers ........... 229
Rucker, George, research director, Rural
America, Inc ................................... 249
Watts, Harold, Center for Social Sciences,
Columbia University ............................. 286
Roberts, Markley, economist, Department of
Research, AFL-CIO ............................... 299
Appendix A. Additional Submission by
James C. Simmons, associate professor
of economics, Florida State University .......... 320
Appendix B. Additional Submission by
Kurt Mohay, research analyst,
National Association of Manufacturers ........... 324
.Appendix C. Additional Submission by
Markley Roberts, economist,
department of research, AFL-CIO ................. 328
Appendix D. Submission by Mack A. Moore,
professor of economics, Georgia
Institute of Technology .................... 330
Appendix E. Representative correspondence
received by the National Commission on
Employment and Unemployment Statistics ..... 339
Baker, Miner, vice president and economist,
Seattle First National Bank ................ 340
Biderman, Albert D., research associate and
assistant director, Bureau of Social
Science Research, Inc ..................... 342
Brandt, Harry, vice president and director of
research, Federal Reserve Bank of Atlanta 345
Chaplain, Margaret, librarian, University of
Illinois at Urbana-Champaign ............... 347
Eastburn, David P., president, Federal Reserve
Bank of Philadelphia ....................... 349
Eckstein, Otto, professor of economics, Harvard
University ................................. 351
Fongemie, Ray A., director of manpower research
division, State of Main, Department of
Manpower Affairs ........................... 353
Freedman, Marcia, senior research associate,
Columbia University ............. 355
Ikeda, George, executive secretary, State
Commission on Manpower and Full Employment, Hawaii ............................... 357
Keran, Michael W., director of research,
Federal Reserve Bank of San Francisco ...... 363
Lewis, William B., administrator, U.S. Employment Service ** ... .. . .. ... .. .. .. ... 365
Lott, Juanita Tamayo, chairperson, Asian and
Pacific American Federal Employee
Modigliani, Franco, professor, Massachusetts
Institute of Technology .................... 373
Morris, Frank E., president, Federal Reserve
Bank of Boston .. .. .. .. .. .... .. .. .. .. .. .. 374
O'Hara, John S., research and statistics director,
State of Florida Department of Commerce .... 377
Orbeck, Edmund N., commissioner, State of
Alaska Department of Labor ................. 392
Papier, William, director, division of research
and statistics, Ohio Bureau of Employment
Pinola, R., director, research and planning,
Minnesota Department of Employment
Rankin, George, C., first vice president,
Federal Research Bank of Richmond .......... 405
Rivlin, Alice M., director, Congressional
Budget Office .. .. .. .. ... .. .. .. .. .. .. .. .. 409
Rungeling, Brian, director, Center for Manpower
Studies, and associate professor of
economics, University of MIssissippi ....... 411
Rus, Vladimir,, director, Department of Human
Resources and Economic Development,
City of Cleveland .. .. .. .... .. .. .. .. .. .. 422
Schiff, Frank W., vice president and chief
economist, Committee for Economic Development .......................................0 427
Sheridan, James A., manager, Human Resources
Department, and John 0. Monagham, American
Telephone and Telegraph Company ............ 430
Willes, Mark H., president, Federal Reserve
Bank of Minneapolis ....................... 456
Winpisinger, William W., international president
International Association of Machinists
and Aerospace Workers ........... ....... 458
NATIONAL COMMISSION ON EMPLOYMENT
AND UNEMPLOYMENT STATISTICS
(Created pursuant to Sec. 13 of Public Law 444,
Sar A. Levitan, Chairman
Bernard E. Anderson
Glen G. Cain Jack Carlson
Michael H. Moskow
Samuel L. Popkin
Joan L. Wills
Eli Ginzberg Juanita Kreps Ray Marshall
James T. McIntyre, Jr.
Richard Bolling Jacob K. Javits
James M. Jeffords
Carl D. Perkins
Harrison Williams, Jr.
Arvil V. Adams, executive director
Robert Guttman, general counsel
Wesley H. Lacey, administrative officer
Curtis Gilroy, staff economist Joseph Hight, staff economist Janice Madden, staff economist Marc Rosenblum, staff economist Diane Werneke, staff economist
Lois Black, research analyst Gary Solon, research analyst
TRANSCRIPT OF PUBLIC HEARINGS
TUESDAY, JULY 11, 1978
NATIONAL COMMISSION ON EMPLOYMENT
AND UNEMPLOYMENT STATISTICS
The Commission met, pursuant to notice, at 9:30 a.m., in room 276, 1375 Peachtree Street, N.E., Atlanta, Georgia, Sar A. Levitan, Chairman, presiding.
Present: Bernard E. Anderson, Jack Carlson, Samuel L. Popkin and Joan L. Wills.
Also present: Marc Rosenblum, staff economist; and Wesley Lacey, administrative officer.
OPENING STATEMENT OF CHAIRMAN LEVITAN
CHAIRMAN LEVITAN: This is the sixth hearing of the National Commission on Employment and Unemployment Statistics. It's a delight to be in Atlanta to hear testimony of the Mayor and many other important citizens from this area of the country. We will
open these proceedings as we usually do with a welcome statement from the regional representative of the BLS. Mr. Don Cruse, you will proceed in your own way, please.
STATEMENT OF DONALD CRUSE, REGIONAL COMMISSIONER,
BUREAU OF LABOR STATISTICS,
U.S. DEPARTMENT OF LABOR
MR. CRUSE: Thank you, Mr. Chairman. On behalf of theregionalofficeandtheBureauofLaborStatistics as well as the other departments of Labor agencies in
this region, I'm pleased to welcome you, the other members of the National Commission on Employment and Unemployment Statistics and your staff to this region and to Atlanta.
The Commission has a very important objective in the area of employment and unemployment, having been mandated to study and recommend improvements in the method of measuring this critical economic activity. We are all very much interested in your work since a better set of statistics for this purpose at the national as well as the state and local area levels is one of the things we've all been working toward.
Here in this regional office and among the eight states comprising the Southeastern Region, one of our primary concerns in the last few years has been the day-to-day activities surrounding the local area unemployment statistical program and the distribution of funds that are based on day-to-day arrivals in this program. Recently, however, the Current Population Survey data used for national estimates of
employment and unemployment have been mandated for direct use on a monthly basis in one of these states, Florida. And this, too, has caused concern to most of
us, especially the people at the Florida Employment Security Agency.
I feel confident this public hearing will assist the Commission in determining the thinking of
people in this part of the country about the current employment and unemployment measurements and how
they might be improved. A single set of labor force data that would serve as a basis for fair and equitable allocation of funds to state and local areas as well
as a reliable source for economic analysis at these levels is one of the things we would like to see resulting from your study.
So. with that, Mr. Chairman I'll close, wishing you and the other members of the Commission every success in your efforts to derive a more precise gauge--a more precise measure for gauging the employment and unemployment in this country. Thank you.
CHAIRMAN LEVITAN: Thank you, Mr. Cruse, on behalf of the Commission. We would like to thank you for extending your southern hospitality which you did so nicely and for arranging for our first witness, the Mayor of this city, the Honorable
Mr. Jackson, I understanding you have a statement. We'll include it in the record and you can proceed in any way you would like.
STATEMENT OF HONORABLE MAYNARD JACKSON, MAYOR,
MR. JACKSON: Thank you, Mr. Chairman. My
name is Maynard Jackson. I serve as Mayor of the city of Atlanta. On my right is Mr. Aaron Turpeau, who is the Director of the city of Atlanta's Conference of Employment and Training, otherwise called CETA. On my left is Dr. Devon Bent, Special Assistant to my office. Dr. Bent has been specializing in, among other things, the BLS methods of reporting
CHAIRMAN LEVITAN: We found that out.
MR. JACKSON: I am pleased to submit for the
record, as you've indicated, a copy of my testimony this morning entitled A Measure of Employment Need, a statement by Maynard Jackson, Mayor to the City of Atlanta to the National Commission on Employment and
Unemployment Statistics attached to which, Chairman and members of the Commission, is a position paper on the unemployment statistics and lays out the discussions, I think, in some comprehensive detail, we hope adequately to your needs and our concerns*
I welcome Chairperson Sar Levitan and the distinguished members of the National Commission on Employment and Unemployment Statistics. We are
gratified that you have chosen Atlanta for the site of a regional hearing and we are pleased that you actively have solicited the testimony of local officials. We are interested vitally in an unemployment statistic which is used for the allocation of $17 billion per year in federal funds and we have been disappointed that the Federal Bureau of Labor Statistics never has sought our opinion.
I will not attempt to offer the Commission any technical advice; however, I will offer some broad policy directions for your consideration.
First, Mr. Chairman and members of the Commission the allocation of federal employment and training funds to localities, we believe, should be made on the basis of need--the need for jobs and the need for job training. In recent years, we all have
become familiar with the concept of structural unemployment. Yet it amazes me that some of us have accepted apparently the co-existence of very low unemployment rates for some favored groups in our society with critical levels of unemployment for others as, simply, a hard fact of modern American Life. We don't think that's good enough. In Atlanta's metropolitan area, a 1976 survey conducted by the Institute for Urban Research and Service of Georgia State University revealed an unemployment rate in
metropolitan Atlanta of 3.6% for whites in suburban Fulton Country. In stark contrast, however, the study showed an unemployment rate for minorities within the City of Atlanta of 12.8%. As you will
know, the younger the black the higher the rate of unemployment.
These intolerable disparities in employment opportunities require that we target assistance to the areas of greatest need. Now, we think that's a fairly simple policy that frankly commands our respect. If we continue to pump a disproportionate share of
Federal employment dollars into affluent suburban areas where the unemployment rates are the lowest, not only will we continue to neglect those with the greatest need for assistance, but the misdirection of funds will serve to accelerate the inflationary spiral*
Second, if we are to allocate Federal employment funds on the basis of need, then the present definition of unemployment is inadequate and a new measure of employment need is required. The current
unemployment statistics excludes too many residents of the central city who are in critical and chronic need of assistance.
Among these are:
The full-time worker who does not earn
enough to support his or her family but is
considered "employed" under the current
The involuntary part-time worker with a family
to support who also is considered "employed."
The "discouraged worker" who has given
up looking for work and yet who is considered neither employed nor unemployed and frankly
not ever counted.
All of these are in critical need of assistance. But the current definition of unemployment excludes those groups, thus deceptively reducing the level of
unemployment. The lower the level of unemployment statistics, the less money we get to fight the
problem. The less money we get to fight the problem, the more critical the need is. The need already is beyond just being critical.
I suggest, respectfully, that we stop arguing about whether these people are employed or unemployed.
What is clear is that all are in need of jobs, all are in need of training, and all should be included in the new measure of employment need.
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I am concerned for all persons who are without work. However, we suggest that there are some people who, although genuinely unemployed, are in
less need of government assistance because of aboveminimum income or short-term unemployment. Both Congress and the Executive Branch have recognized
this fact and have established priorities for lowincome persons and for the long-term, otherwise called hard core, unemployed. A meaningful allocation statistic the measure of employment need, we suggest, must heed these priorities.
Third, we suggest that we must have a method of estimating employment need which is not biased against central cities. I will not detail the
technical reasons why we feel the proposed methodology of estimating local unemployment which relies upon unemployment insurance claims is biased against
central cities, unless in response to your questions. Because we submit, for the record, a staff paper, prepared primarily by Dr. Devon Bent with the assistance of Mr. John Gilmore of Atlanta's CETA office, who also is here, by the way, and with the help of Mr. Joe Woodall, which addresses that question and I offer you the following additional evidence. The previously cited study by Georgia State University found an unemployment rate of 10.2% for the City of Atlanta, April through September 1976. Now that period of time
this 10.2% rate was slightly higher than our official rate after year-end revision for the same period and
should be contrasted with the 8.5% rate that would have resulted from the new proposed claims shares method proposed and partially implemented now by the U.S. Bureau of Labor Statistics. You also sould know that the reduced reported unemployment level and rate resulting from the BLS claims shares method unfairly would have cost the City of Atlanta last year $14
million in Comprehensive Employment and Training Act 'Finds in 1977 alone, and that absolutely is unacceptable.
Moreover, we argue that it is patently impossible to estimate "discouraged workers," those who have been looking so long they simply have thrown their hands up and they've given up. It's impossible to estimate discouraged workers by using unemployment insurance claims. By definition, the discouraged worker no longer goes to file unemployment claims at the employment office. We cannot expect people in employment need to come to us to voluntarily be counted when they have given up hope. We are going to have to find a way to go to them, and this implies the use of survey methodology, corrected for census undercount.
We recognize, of course, that survey data are expensive. However, we are quite willing to give up monthly data. The current monthly data for the City of Atlanta are of limited utility. The definition is not meaningful for our purposes and no one
pretends that the estimate is accurate. We are
willing to exchange a monthly unemployment statistic that is inaccurate and unreliable for a quarterly statistic that would portray more accurately thenature and extent of employment need in the City of Atlanta. We also should consider the use of public service workers to conduct the survey.
Fourth, we must have increased consultation between the U.S. Bureau of Labor Statistics (BLS) and elected officials on the local level. We recognize that the BLS has a legal and ethical responsibility to develop the best possible methodology. However, we believe that mayors and other elected officials have a
positive contribution to make to the development of that methodology* The officials of the BLS should give us ample prior notice of contemplated changes. They should listen to our objections prior to reaching
a final decision, and should develop the research that either (1) would allay our fears of anti-urban
bias or (2) would suggest an alternative, unbiased methodology*
In closing, Chairman and members of the Commission, I stress the urgency of the task before you. We have discovered, painfully, that chronic long-term unemployment can co-exist with chronic long-term inflation. Local communities have accepted the challenge to join in partnership with the Federal Government to plan and administer employment programs. If these programs are to work, we must have an accurate measure of employment need to allocate the Federal funds and to plan our
local programs, and we must have it soon. I am
confident, Mr. Chairman that this Commission will act expeditiously to develop its recommendations.
I am not confident, however, that this Commission's recommendations will be implemented expeditiously by the Bureau of Labor Statistics. We hope that will be the case. Mr. Julius Shiskin, the Commissioner of Labor Statistics, was quoted in the Wall Street
Journal earlier this year saying that a "major overhaul" of the unemployment statistics is about four years away. This intolerable delay will hamper severely our efforts to direct employment aid to those most in need. They cannot wait four years. They cannot even wait four months. Even when times
are Itgood" for the hardcore unemployed in America's cities, and in Atlanta as well, they often cannot wait until the next pay day.
I am disturbed that legislation requires that your Commission cease to exist six months after submission of its final report; we will need an
expert organization to oversee the implementation of the Commission's recommendations. I respectfully
urge the Commission to consider the problem of implementation and to develop some organizational means to monitor the progress of your recommendations.
You have been entrusted now with a vital task. Please do not let bureaucratic inertia defeat your and our mutual purposes. Thank you very much.
THE UNEMPLOYMENT STATISTICS
The unemployment statistic is important to Atlanta and other cities because it is a key element in the formulas used to allocate funds under both public service and public works programs. In federal fiscal year 1977 alone, the distribution of more than $16 billion was tied to the unemployment statistic. We must object to any aspect of the definition of unemployment or the methodology of estimating unemployment which might result in Atlanta receiving less than its fair share of funds. Our objections can be
summarized as follows:
I. The unemployment statistic,, as currently defined,
excludes many unemployed and underemployed residents of central cities; it includes many affluent suburbanites; and consequently it is not suited for the allocation of federal employment
and training funds.
11. Methodological changes either implemented or
planned by the Bureau of Labor Statistics, U.S.
Department of Labor, will introduce additional
bias against the central city.
A. These methodological changes will result in
the loss of millions of dollars of federal
funds for Atlanta and several 'thousand jobs
and training slots.
B. The methodological changes were introduced
without consulting affected cities and without adequate study.
These objections are discussed in greater detail below.
I. The unemployment statistic, as currently defined,
excludes many unemployed and underemployed residents of central cities; includes many affluent suburbanites; and consequently is not suited for the allocation for federal
employment and training funds*
According to the current definition of unemployment, one must be
(a) without any full-time or part-time work;
(b) actively seeking employment-,
(c) available for work.
Under this definition, the "discouraged" job seeker who has given up job seeking is treated as neither employed nor unemployed, but is out of the labor force. The involuntary part-time worker with a family to support is considered "employed"
even if the "employment" is for one hour per week. Thus, the involuntary part-time worker has the paradoxical effect of reducing the unemployment rate. The full-time worker who does not earn enough
for family support also is considered "employed" with a similar paradoxical effect. On the other hand, affluent suburbanites who are genuinely "between jobs" are counted as unemployed.
Consequently, suburban jurisdictions may have many unemployed as currently defined, and may receive CETA funding, and yet have great difficulty finding sufficient CETA eligibles. Central cities, with many CETA eligibles who do not show up in unemployment statistics, are underfunded.
Congress has recognized the deficiencies of the current unemployment statistic and has provided for a National Commission on Employment and Unemployment
Statistics to provide a public forum for a comprehensive review of the unemployment statistic., However, progress has been slow. Although the legislation establishing the Commission was enacted in 1976, the members were confirmed only recently. Mr. Julius Shiskin, Commissioner of the Bureau of Labor Statistics, was quoted in the Wall Street Journal on March 7,
1978, that a "major overhaul is about four years away.'I This four-year timetable is not acceptable. Atlanta Mayor Maynard Jackson, in a prepared statement for the Joint Economic Committee of Congress, has called "upon the President, the Secretary of Labor and the National Commission on Employment and Unemployment Statistics to implement an accelerated timetable."
Ii. Methodological changes either implemented
or planned by the Bureau of Labor Statistics, U.S. Department of Labor, will introduce bias
against Atlanta and other central cities.
The methodological issues are complex: The
Bureau of Labor Statistics has introduced several methodological changes simultaneously and does not use identical methodologies in all cities. This
discussion will focus on the methodological question of particular concern to the City of Atlanta: the
method used to break Atlanta's unemployment out of estimated metropolitan area unemployment. The
method which was used in 1977 to break out or "disaggregate" the City's unemployment from the metropolitan area unemployment is called the census shares, method. Under this method, it is assumed that Atlanta's current share of metropolitan area unemployment is the same as its share of unemployment as revealed by the
1970 census. The method which the Bureau of Labor Statistics (BLS) plans to implement within a year or two is called the claim shares method. Under this method, greater reliance is placed on unemployment insurance claims to estimate Atlanta's share of metropolitan area unemployment. For 1978, a hybrid or
interim method is in place which combines elements of both census shares and claim methodology.
The justification of the claims shares method is that "we are able to incorporate information more current than the seven-year-old 1970 census relationships previously used." However, the claims shares method employs data on population, age composition and unemployment insurance claims, while the old method used data on employment and unemployment.
The new method will be accurate only to the extent that we can estimate unemployment and employment from population, age composition and claims data. We contend that the method is not accurate and that
its use by the BLS has introduced additional bias against the central city.
First, the claims shares method disaggregates employment on the basis of population: if a central city has 40% of the population of the SMSA, then it is credited with 40% of the employment. The methodology assumes that the ratio of employment to population (i.e., employment ratio) is the same for the central city and its suburbs. In fact, we know from BLS data that the employment ratio is lower in the central city and that the gap is increasing rapidly. It has grown steadily from three percentage points in 1973 to five percentage points in 1977. (Calculated from Employment and Earnings, January 1975, 1977, 1978.) The new method thus systematically overstates central city employment and thus systematically understates the central city rate of unemployment.
Second, the new methodology uses claims data to disaggregated "experienced" unemployed: if a
central city has 40% of the SMSA claims, then it is credited with 40% of SMSA experienced unemployed.
The assumption is that the ratio of claims to experienced unemployed is the same for the central city
and its suburbs. I have not yet been able to find data to test this assumption. However, a May 1976 survey Uy the BLS found that 37% of unemployed
whites were receiving unemployment insurance benefits as opposed to only 27% of unemployed blacks. (Monthly Labor Review, November 1977.) This comparison
strongly suggests, but certainly does not prove,
that the ratio of claims to experienced unemployed is considerably lower in the central city than its suburbs. Consequently, there would be a serious underestimation of the number of experienced unemployed in the central city.
Finally, the methodology uses age composition data from the 1970 Census to disaggregated new and reentrant unemployed: (1) if a city has 40% of the 14-19 year-old population of the SMSA, then it is credited with 40% of the 14-19 year-old new and reentrant unemployed of the SMSA; (2) if a city has 40% of the 20-year and older population of the SMSA,
then it is credited with 40% of the 20-year old and older new and reentrant unemployed of the SMSA. The assumption for both age groups is that the ratio of new and reentrant unemployed to population is the same for the central city and its suburbs. Again, I do not have data to test fully this assumption.
However, using BLS data, it is possible to compare the central city and suburban ratios of unemployment to population. For 16-19 year-olds, the 1977 central
city unemployment ratio is 11.6% as computed with 9.5% in the suburbs. For 20 years and older, the
central city unemployment ratio is 4.6% as compared with 3.4% in the suburbs. Again, the evidence
strongly suggests, but does not prove, that the new method may underestimate seriously new and reentrant unemployed in the central city.
In summation, there is strong statistical
evidence that demonstrates that the claims shares method will overstate seriously the level of employment for central cities and strongly suggests that the method will understate seriously the level of unemployment for the central city. Mayor Maynard
Jackson voiced these objections in a letter of February 15, 1978, to Secretary of Labor Ray Marshall, and we have not received an adequate response. (See below, II. B.)
11. A. These methodological changes will result in
the loss of millions of dollars of federal funds for Atlanta and several thousand jobs
and training slots.
If the claim shares method had been in effect in 1976, it would have reduced Atlanta's reported annual average unemployment level from 29,000 to 19,000 and the rate from 10.3% to 8.7%. (Data provided by the Georgia Department of Labor.) These reductions would have resulted in a loss of (1) $14,000,000 in Comprehensive Employment and Training Act (CETA) funds in federal fiscal year 1977; (2) $5,000,000 in local public works
funds for the period September 1976, through July 1977, and (3) $600,000 in countercyclical grants for the period July 1, 1976, through June 30, 1977. It is not possible to calculate the exact number of jobs and training slots affected, but literally several thousand jobs and training slots would have been lost.
The interim or hybrid method which is currently in place has less impact. However, it has reduced
our January and February 1978, reported unemployment level by approximately 15%. This would reduce
significantly Atlanta's CETA funding under the Administration's proposed CETA renewal. II. B. The methodological changes were introduced
without consulting affected cities and
without adequate study.
Atlanta has learned that the Bureau of Labor Statistics has been considering the application of the claim shares method to Atlanta and other cities for several years. On July 23, 1975, Mr. Martin Ziegler, Chief of Local Area Unemployment Statistics, wrote Mr. Brunswick A. Bagdon, Assistant Regional Director for Region IV: "Our current thinking is to
make the method mandatory in those states which tabulate claims data by place of residence." The
letter specifically discusses application of claims method to the Atlanta metropolitan area as "atypical." Nevertheless, the first communication we received
f rom the BLS on this question was a letter of March 23, 1978, after the implementation of the hybrid
method and after we had objected to the Secretary of Labor.
Mayor Jackson raised the question of consultation with cities in his letter to Secretary Marshall on February 15, 1978. The only instance of communication that the Bureau of Labor Statistics was able to provide was a meeting of October 20, 1977, with representatives of the U.S. Conference of Mayors and
the National League of Cities. This meeting came
(1) after Atlanta had voiced objections to the Department of Labor; (2) after the new methodology
was in effect for the cities of eight states; and
(3) less than three months prior to the extension of the methodology to Atlanta and other cities.
This meeting cannot reasonably be considered an example of consultation. It might be considered a form of minimal notification. It is fair to state as did the Wall Street Journal on December 19, 1977,
that "few city officials seem aware of the policy or its potential impact-it
Moreover, there is little evidence that the BLS has undertaken any serious study of the new methodology and its biases. We have called and written the BLS repeatedly asking for copies of studies of the new methodology. All that we have received are two tables which summarize an "internal" study of the impact of the methodology in eight states and three tables which summarize a study of the impact, of the new methodology in twenty-nine SMSA's. The eight-state study is dated December 1977 based on September 1977 data. The twenty-nine SMSA study is dated April 1978, based on 1977 annual average data. The timing of these studies would indicate that their purpose was retrospective justification. The studies do not address the question of biases inherent in the use of claims data, nor do they consider alternative methodologies to reduce the bias.
We can close by quoting a resolution adopted by the Research Directors of the State Employment Security Agencies on October 27, 1977: f1modif ications to the Local Area Unemployment Statistics program have been proposed without adequate opportunity for the review and analysis of the methodology and potential results; and . the implementation of the proposed modifications may result in serious errors in the estimation of local labor force
statistics with the subsequent misallocation of grant fund resources * *11
CHAIRMAN LEVITAN: Thank you very much,
Mr. Jackson. Thank you for your confidence, but I assure you a year and half to play with this is enough.
We have a state and local representative on the Commission. She is Mse Joan Wills of the national Governors' Association. Ms. Wills do
you have any questions for Mayor Jackson?
MS. WILLS: Mayor, you talked about an oversight committee--an oversight body--do you have any idea about how you'd like to see that constructed and what you think its powers should be? My personal bias is I'm very much in favor of that idea. I think we have to make sure that kind of oversight structure maintains a level of integrity and does not respond to political pressures of the day. Or at least when I've asked people, that's the response I get back. Have you done any thinking about how you would like to see that constructed? And would you like to see, also, some kind of mechanism at the
state and/or local level so there could be a feeder mechanism?
MR. JACKSON: I would recommend that the
oversight body, first of all, have continuity with this Commission. Which might mean the presence of an oversight body to monitor the implementation at that period of time, having maybe one or two people from this Commission to maintain the continuity.
Number two, I would think that the major
public interest of the U.S. Governors Conference, the U.S. Conference of Mayors, the National League of cities, would be more than happy to volunteer services by way of representatives to assist that oversight body. I would think the U.S. Congress ought to exercise its powers of and response to
How the two would have liaison, I'm not quite sure.p I think there would be no wish or attempt to
replace the Congressional oversight obligation, but to augment it.- My f eeling is that a broad base of elected officials with private sector people and
also with continuity with this Commission would be a very useful idea.
MS. WILLS: One more question. You talked about some kind of need index. Have you or any of your staff done any thinking about the kind of components that you think should be in that need index for the allocation of funds?
MR. JACKSON: Let me start off with Aaron Turpeau.
MR. TURPEAU: In the need index we talked about those levels that are mentioned in his speech-those levels, as far as the different kinds of peoples--list them all out in matrices of themselves. We list three general categories that should be included that are not included.
DR. BENT: We didn't really want to give the
Commission any technical advice on these matters., Our feeling was that certain categories that we identified broadly should be included. Now, one thing I will mention here is the definition of
discouraged workers. We would like to see a broader definition than the current conceptualization. Anyone who says, "Gee, I can't find a job and my qualifications aren't good enough. People are
prejudiced against me." But then at the end, fli'm also keeping house"~ is put down as a housewife. We would like to see a much broader definition than that for discouraged workers.
Exactly what would be the cut of f in terms of income or limited employment, things like that, we didn't develop positions.
MS. WILLS: How often would you need that kind of information? Once a year, once every five years? Obviously, if you don't need the unemployment rate monthly, you don't need that statistic.
MR. TURPEAU: Quarterly. We like to have some index on a quarterly basis because when you are
fighting a war against a particular problem you can 01 t wait for a year. You need an update on a quarterly basis for allocation of funds.
MR. JACKSON: It's important, I think,, to add, also, the potential loss to Atlanta, not only $14 million, but also, the actual job slots and jobs and so forth we'd get depending on the level of
unemployment here. We think it's a very simple and fundamental thing. We think, sometimes, we can get so sophisticated that we forget about the fundamentals
of living It is a simple, defensible, compelling argument that those who are the most in need are the ones who should get the most attention. Those who are the least in need should get their share of attention which means, therefore, less attention than those who are most in need.
CHAIRMAN LEVITAN: Mr. Popkin.
MR. POPKIN: Yes. First, Mr. Jackson, we've
now held hearings in New York, Chicago, San FranciscoI would like to congratulate and compliment you and your staff on the clearest, most distinct and lucid presentation of the central cities issue we have yet seene It really does serve as a model.
MR. JACKSON: I'm sorry, sir. I didn't hear you. Would you repeat that please?
MR. POPKIN: Shall I put it on stone for you? No, very seriously, this is one of the two or three clearest testimonies we've received. I'd like to ask a few very short questions for your staff. One is, with respect to discouraged workers, the
preliminary indications are that contrary to what everybody believes, how you define them or include them isn't going to matter very much. That's my personal hunch, but we haven't gotten all the data yet. But I'd like to ask you. We're going to need some kind of cutoff on how long it is since people have worked and I'd be curious if your staff has thought of any ideas on what a realistic cutoff point would be. If someone hasn't worked for ten years, would you count them as discouraged? Would you settle for six months? What do you think is a reasonable cutoff for discouraged workers? Do either of you-MR. TURPEAU: As far as counting the person
in the field, right?
MR. POPKIN: As unemployed, even though they are not looking.
MR. TURPEAU: Unemployed. We found--let me just tell you--we found that people who had been out
of work even two years because of the economic situation are not going down to the unemployment claims office. Therefore, they are not counted. At the same time, I think you could get a feeling by the Day Labor Center here. People go out just for day jobs. They're discouraged workers also. We have some people who have been out there for three or four years
MR. POPKIN: You see, they're looking for
work. They would not be counted as unemployed. The
discouraged worker is somebody who is not looking. If they're looking for day labor, they'll get picked up by current definitions.
MR. TURPEAJ: That's where we have a definitional
problem. The discouraged worker is sometimes considered one that doesn't go to the ES office to look for work or who is not--nobody knows they're looking. Somebody-he may be looking, but nobody counts him as one who's looking. So a definitional problem is the question here.
MR. POPKIN: Our CPS--I think that if you're looking for work, you get covered.
DR. BENT: I think the point Aaron is making is that estimating our unemployment rate based on the claims method, they wouldn't be picked up.
MR. POPKIN: I think everything you said about the claims method--nothing could be more clear. The other little thing I wanted to ask the two of you is,
I think, probably the most important point you've pointed out about using unemployment to allocate money. That is, even when you get around the problem of the fudge factors of breaking down national unemployment and allocating it to cities and counties,
the definitional problem is at the center of the political issue. Somebody who is working eight hours a week and wants 40 hours a week of work, doesn't get
counted as somebody who is in need when Atlanta gets money. What is the legitimate cutoff point that would, in terms of hours worked, say a person is or is not full time. Right now, if you're working one hour, you're counted as not needy in employment terms. What would you consider a good cutoff? Would you say 20, 15, 28? 1 mean, this is something we
really have to address--a specific number of hours working.
MR. JACKSON: I'm not at all sure, Commissioner Popkin, that a blanket answer could cover all situations. I would assume, for example, that public policy would want to encourage a breadwinner for a family. And if he or she, for example, is responsible for supporting a family but is working only 10 hours a week, then the consideration as to what would be the answer to your question would differ, for
example, from a single person who might be able to support himself or herself on 10 or 12 to 15 hours a week. I'm not able to answer the question, frankly, but I have the confidence we have the capacity within America's super structure to find the answer.
CHAIRMAN LEVITAN: I think you have the correct-DR. BENT: I would say the same thing the Mayor did, just somewhat differently. We should look
at family income rather than actual number of hours worked.
MR. POPKIN: So, you really want to move the hardship not to undo unemployment statistics.
DR. BENT: Well, it has to be related to employment. The need for employment to overcome that hardship problem. It's not just a blanket hardship problem. We would not do away with the employment considerations totally, but would consider the need for employment to overcome hardship.
MR. TURPEAU: I agree with that but also, we found a lot of cases out there where they worked 20 hours--20 and 25 hours--they still couldn't qualify. So, you have a lot of people who just may have been able to find a day or a day and a half work and are not counted. So, I think, you are talking about 20 or 25 as maybe a reasonable area.
41-535 0 79 3
MR. JACKSON: The BLS says for an urban family of four to live modestly but adequately requires-What is it now?--ten thousand some odd. Then maybe there should be some correlation between determining
whether one is unemployed by whether one is able to live at least modestly or adequately or maybe below that standard.
MR. POPKIN: One short question for the Mayor; not a technical question. You got the Mayors involved in fighting about the new claims share method. How much prior warning were you, the Mayors as a body, given about this? Just for the record, how did this hit you? A bombshell, a grenade?
MR. JACKSON: Well, it hit me like a bombshell because when I sat down to compute what we would have lost had the claims shares been in effect in 1977 and
with this interim hybrid method still giving us, not as bad as that would be, but certainly even somewhat less than we would have gotten, I think, this year. Is that right? We're in a one one year hybrid method which even now is cutting us down somewhat. It is cutting us down somewhat. It scared the living daylights out of me. I could not believe that it was only in Atlanta so, we waved the flag at U.S.C.M. and it was absolutely overwhelming. It was deafening. I would have to tell you that to my knowledge not
even U.S.C.M. was on the issue before we got on ito Is that right Devon?
DR. BENT: Yeso As far as we could tell. The Bureau of Labor Statistics did say they had a
meeting with a representative of the Conference of Mayors present, I believe it was October 20th, of 1977.
MS. WILLS: That is correct. I was there.
DR. BENT: The message didn't seem to get through to the Mayors. Now, the Wall Street Journal pretty accurately stated in December, after the Mayor made his statement, that the issue caught city officials by surprise.
MR. POPKIN: So, no elected official, to your knowledge, was in on the decisionmaking process involved in shifting the monies around?
DR. BENT: Local officials. No local officials.
MR. JACKSON: No locally elected officials.
There may have been, but we just didn't know about them.
MR. POPKIN: Thank you.
CHAIRMAN LEVITAN: Mr. Anderson.
MR. ANDERSON: Mr. Jackson, I'm highly honored to have you come before the Commission and we want to commend you for the leadership that you've taken on the question of employment and the figures you have stated so eloquently here this morning. We're always pleased to come to the great City of Atlanta.
MR. JACKSON: I would not suggest that that's especially true when one comes from the City of Philadelphia. I'm going to be like Cicero and not suggest that.
MR. ANDERSON: I did want to raise really two questions that come out of both your statement and the complimenting paper by your staff. Let me say that the paper will be examined very carefully by members of the Commission as we deliberate. One of
the questions that has arisen in our deliberations, is the question of counting youth. I wanted to get your comment on the following notion. There are those who suggest that if a young person, 16 through 19 years of age, is a full time student should not really be included or counted as a part of the labor force because the individual is involved, essentially, in an activity that is separated from the labor force. That is, the individual is a student rather than really an active, stable member of the work force.
Now, obviously, if we redefine the labor force to exclude full time students, it would have some effect on the measure of unemployment. It might possibly significantly affect the count of youth unemployment. I was wondering if you would care to comment on that with respect to, in your views, the appropriateness of counting full time students as unemployed, if indeed they are only searching for part time work as much as two or three hours per week?
MR. JACKSON: The very last few words made it even more difficult, Dr. Anderson. You say just two or three hours a week. That's really kind of hard to react to. So, let me not try to react to that, but just let me, if you don't mind, give you my
opinion of what I think the realities are for the majority of young people, especially Afro-Americans and other minorities, who live in central cities in this country. First of all, a person who is 16 to 19 is a person who, incidentally, or maybe primarily, is
engaged in studying to prepare for something. But who meanwhile must survive. And whose daily reminder of his or her economic status--a person who is reminded daily that he or she may not be counted by many many people--compels survival.
Now, if the major obligation of a person who happens to be between the ages of 16 and 19 is to survive and that includes studying and also
working to pay the bills, I think that person should be counted like anybody else. And the fact that
they are studying should be neither a rational for not counting them as unemployed nor be used as a disincentive to find work*
MR. ANDERSON: Thank you very much. The other issue is your recommendation to establish an advisory
group to the Bureau of Labor Statistics on a continuing basis. Would you agree that one of the important responsibilities of that group might be a sounding
board for the BLS prior to implementing any of the kinds of changes that were implemented last year, so that you would avoid the uncertainty that you were faced with in the different methodology? Would you have that group, perhaps, have the authority to veto
in some way the implementation of the methods and the changes in methods prior to getting the local officials?
MR. JACKSON: As the chief executive officer of the City, I specifically would not assign the advisory group a veto power* I respect how the system is suppose to work and when, from time to
time aberrations occur, I don't think we ought to over react. I think we should correct those. I
would suggest, also, that,, I'm not sure I'm really talking about an advisory group to BLS as much as I am suggesting there be a monitoring mechanism, an oversight organization. Kind of a continuum of this Commission which would have one or two people to
represent a continuity on this oversight body. I would hope that there would be an agreement that BLS's procedures in the future would be one, two, three, four, five. Among those procedures would be
checking before they get too far down the road with the various constituent groups, especially locally elected officials, mayors, members of the city council, the Governors Conference, etc., counties and so forth.
But if we can get an agreement, reach an
understanding and have that respect, then I would be content with pursuing that processO Now, if reaching an agreement is not enough and there was not respect for the process, then I would think more stringent methods would have to be taken.
MR. ANDERSON: Thank you.
CHAIRMAN LEVITAN: Mr. Carlson.
MR. CARLSON: Mr. Mayor, I would like to join with my colleagues in thanking you for a very fine statement. We will look it over very carefully.
MR. JACKSON: Thank you very much.
MR. CARLSON: I have two questions I would like to ask you. You mentioned you could live with more accurate unemployment data, under the circumstances of your city, on a quarterly basis. Can you give us an appreciation of the difference between a monthly basis and a quarterly basis, and say a semi-annual basis? Obviously the costs are much higher, the more frequently the surveys are taken, and if you do not go with a higher cost, then your accuracy goes down. I do appreciate the fact that you are willing to suggest a monthly basis is not necessary, though it's much more costly than a quarterly basis. But could you share with us, what you would lose if we went to a semi-annual basis for accurate local data on unemployment?
MR. JACKSON: I personally would tell you that we would prefer a quarterly method or the monthly methods We don't think the monthly method means anything anyhow. That's the essence of my statement in that regard. I'm not really sure that there really is a lot of difference between quarterly and semi-annually except in so far as our staying on track and meeting our goals and our targets. In
other words, we are able to see a f lag waved at us more of ten and earlier, so we can fine tune what we are doing betters
MR. TURPEAU: I suggest that we go for a quarterly basis in the allocation of funds. When
you are talking about fighting the--and to understand the way the Federal Government implementation system goes* They get money in plenty of time during the year and it's very bad to say that we can't do that because we've got to wait another three months before that--we don't have any good data yet. And because of their implementation process and because of he federal bureaucracy, you need a quarterly statistic because what is more discouraging than to come up with some legislation or try to make some of these decisions you can't do it for another six months because they don't have that. So, you need some kind of quarterly allocation statistic to use in that Because things are changing and when you are--because I see an attack--a war on itself and a program so the allocation can be quarterly.
MR. JACKSON: This is John Gilman of our CETA office who's done a lot of work in support of this project.
MR. CARLSON: My last question is to ask, what is your impression and how much confidence do you have going into the 1980 census that we may not undercount this time around as much as some people
have estimated we undercounted in the 1970 census?
MR. JACKSON: I believe the speed of the boss is the speed of the crew. To the extent that there is an overwhelmingly serious commitment on the part of the political leadership to guarantee as much
accuracy as possible, we will see a more accurate accounting. I don't believe, however, that there is going to be any dramatic reduction of the undercount in 1980. Of course, we're going to a five year, every five year count, as I understand it.
We've got to have some way that people do not walk into an apartment building and estimate that there are 4 units in there and the American average
is three people per unit. When they walk into an apartment that looks like four units, it could be literally 10 with an average of five people per unit. Folks have got to walk down these back alleys and knock on the doors and go up into those rat infested holes and get an accurate account of where America lives and how America lives like. If they're afraid to go there, think how those people that have to live there feel.
CHAIRMAN LEVITAN: Mayor Jackson, I would
like to make it unanimous and thank you very much for your excellent testimony. If you'll bear with me
for just two more questions. Number one, and it's first a statement. You were critical of BLS for taking four years to change whatever counting of unemployment numbers they are doing now. This is a fact; it'll take them that long. I don't think that that can be speeded up. First of all, they'll have to wait for the change on whatever data that they get from the 1980 census, and there are many other secondary points that don't need to be mentioned her. But at the same time, we have before us the testimony of the National League of Cities, Alan Beals, and, of
course, the Chairman of the National League of Cities, Mayor Moody. We had the United States
Conference of Mayors. They were all as critical as you, and more so, of the BLS. But none of them suggested anything about the advisory committee.
I'm sure you most likely know that the BLS
has two advisory committees consisting of business people and union research directors. I was wondering
whether, rather than wait for the Commission report and the BLS acting on the Commission report, whether anybody from the League of Cities or the U.S. Conference of Mayors ever approached the BLS to get an advisory committee of elected officials. Do you know whether anyone has done this?
MR. JACKSON: I don't know, Mr. Chairman.
CHAIRMAN LEVITAN: You may want to give some
thought to that in order to get some quicker action on the participation of mayors and other elected officials from the BLS.
MR. JACKSON: I'll be with the NLC Board this weekend. I serve on that Board, and I'll raise that
question at that time.
CHAIRMAN LEVITAN: Thank you. My second question
deals with again--you see as the Chairman, I always get the last questions and all the good ones are asked already. I would like to pick up the point that we were discussing before. Either your staff people or yourself may want to comment. You suggested before, Mayor Jackson, that the family income, the BLS low-income family of over $10,000, would be an appropriate measure for hardship. This is about, of course, the average wage of full time American workers. I was wondering, whether for purposes of hardship, your staff or yourself had talked about the possibility of considering the poverty level; in other words, for a family of four, $6,200. That means about $3.20 or $3.30 an hour. Would that be an appropriate start to measure hardship?
MR. JACKSON: Dr. Levitan, let me make sure that we are on the same wave length, respectfully sir. Number one, I've not advocated an advisory committee to BLS. I talked maybe about an oversight committee, something like the Commission here. But
your suggestion, which I'm going to take to NLC this weekend, is an excellent suggestion. Number two, I'm not suggesting that the BLS urban standard for modest but adequate should be the hardship standard. I suggest to them that maybe there should be some correlation between one BLS standard for one idea and a determination of who is unemployed. But I also said in the course of my comments or a standard lower than that.
I clearly now suggest to you that what I would receive to be a hardship standard would be less than the BLS urban standard of modest but adequate for a family of four.
CHAIRMAN LEVITAN: Thank you very much, Mr. Jackson I would like to tell you that the Mayors were really well represented in this Commission with you and Mr. Moody. We appreciate very much your testimony.
MR. JACKSON: Thank you very much. Enjoy your stay in Atlanta and we appreciate your being here.
(Whereupon a brief recess was taken.)
MR. LEVITAN: Our next advisor is the Honorable David Scott of the Georgia State House of Representatives. Mr. Scott, you're a first for this Commission because we have not yet had a state representative, an elected representative, advise the Commission. We don't call you a witness. We call you an advisor. Mr. Scott, would you proceed please.
STATEMENT OF HONORABLE DAVID A. SCOTT,,
MEMBER, GEORGIA HOUSE OF REPRESENTATIVES
MR. SCOTT: Certainly. Thank you. Mr. Chairman
and to Mr. Carlson, Mr. Popkin, Ms. Wills and certainly to Dr. Bernard Anderson. For those who might not know, Dr. Anderson was one of my professors, thesis advisors, friends, when I was student at the Wharton School of Finance where I received my MBA, so anything that I might say right, you can give him the credit. And anything I might say wrong, you can give him the credit, too.
It is indeed an honor for me to have this
opportunity to come before this distinguished Commission on the National Commission of Employment and Unemployment Statisticso
Thank you for this opportunity to share my
thoughts with you on this crucial issue of unemployment in the United States.
First, let me state that I feel the current method of determining the national unemployment rate is inadequate. The current unemployment rate does not take into consideration persons in our society who have given up looking for work; nor does it figure in those young persons who have become classified as permanent unemployables.
The unemployment estimates considerably understate the severe unemployment among blacks and the intercity poor.
It is normally taken for granted that the unemployment rate of blacks is twice the national
overall unemployment rate. I submit that when the "discouraged worker," the "permanent unemployable" and the "black youth (age 17-25), with a 35% to 45% unemployment rate". are taken into consideration; then, the black unemployment rate can conservately be
placed at 3 times much as the national unemployment rate*
When the unemployment levels are actually higher than the official levels we receive out of Washington, it serves to diminish the severity of the
problem; and this diminishes the degree of local, state, and national urgency needed to begin to solve
this ever-increasing problem of joblessness in America.
The unemployment statistics determine both Federal and State funding levels in the LaborManpower Training area for government funding; but
the figures also serve as a barometer by which the private-sector business community measures their degree of concern and involvement.
Personally and as an elected official, I have, with significant, positive results, stressed the need for the private sector economy to assume the
major responsibility for solving the unemployment problem. However, when the Labor Department says
the unemployment level is 12% for blacks, when it is, in actuality, 18-20%, then, the private sector's involvement is slower to materialize, and much more difficult for me to inspire.
We suffer from "structural unemployment." To respond to this, we must have structured specified, targeted employment in the private sector. The
inadequate unemployment statistics and formulas make it difficult to ever get a handle on the badly needed "full employment economy"; which can only be achieved by targeted employment in the private economy, through economic expansion.
Black Americans, particularly young blacks, are hurt most by this inadequacy. And, when you add in the fact that, because of rapidly advancing technology and automation, many thousands of jobs presently in the labor market for the unskilled and semi-skilled will no longer be there 5 to 10 years from now. But with a continuing escalating population level, incomes must still be provided.
Also, black Americans are hurt more by inaccurate labor statistics when we realize that the major source of income for 98.8% of all black Americans is employment. Because unlike white Americans, black people own little or no factors of production other than their own labor power. And 20% of the definable black
labor force is out of legitimate work (according to April statistics from the Urban League). If this
figure was for the Nation as a whole, the national economy would be labeled a depression.
Also, there is another factor that is often
overlooked; that of what I call the "male-absenteewelfare-recipient-on-the-run." The welfare law
states, rather cruelly, that for many families to receive aid-to-dependent children the father must not be in the home and/or gainfully employed. Many of these men have become permanent "hidden" numbers in the unemployment statistics that are never recorded*
And, of course, all of these considerations mentioned thus far are further complicated by the fact that the U.S. Census has never accurately
counted black people in the first place.
In conclusion, let me commend the Commission for seeking input from elected officials and the
public. This will certainly be of help in correcting a terrible inadequacy in stating our true unemployment levels.
A more accurate statement of the unemployment
statistics, taking into consideration the points I have presented here, certainly will not alone do the job of improving the employment. It will provide the base for improving the employment situation, particularly of Black Americans. Upon which, the public and private sectors can construct structured targeted employment opportunities.
And finally, I cannot leave you without emphasizing the tragic situation facing our black and
white youth, especially our black youth. This is
where I have concentrated much of my creative efforts and with the help of Atlanta's business and industrial
community, we have established a unique high school work intern program going on in my district, in which over 200 youngsters have received full-time and part-time work.
Commission members, we have a serious problem of getting our youth into meaningful work experiences early in life. There is an enormous reservoir
of talent among our black youth; that we are losing. The unrealized capacities of our youth are indictments of our society's proclivity for wasting human resources.
And in a booming economy, when we are producing and consuming more than ever before, here we have 35 to
40% of our black youth afflicted with unemployment as though our Nation was in an economic crisis. Our black youth are the explosive outsiders of the American economy; a ticking time bomb about to explode.
In life and history there is such a thing as being "too late". We still have a chance to choose today,: Employment or confrontation. And it may
well be our last chance to choose.
CHAIRMAN LEVITAN: Thank you, Mr. Scott. Mr. Anderson, I think we ought to start with you.
I wish I had students that gave me credit for such statements*
MR. ANDERSON: Our working students are very generous. Let me say that I am very pleased to have Representative Scott come before this Commission. He certainly distinguished himself as a leader in
this area and has put his education, I think,, to extraordinarily good use.
I notice that you're a member of the State Planning and Community Development Committee,
Mr. Scott With reference to the expanding opportunities in the private sector and the emphasis you place
on that for setting up some of the problems of the structural unemployment, would you comment on what you have found as the utility of occupational projections information that is available from the Bureau of Labor Statistics and other places that would permit you to know what might be happening or what
might happen in the future in the private sector of the economy? How adequate have you found those statistics for planning purposes?
MR. SCOTT: Well, as I said earlier in my statement, they have not been as helpful as they could be. If, on one hand you have black leadership throughout the United States echoing each other
by stating that the unemployment level of black people hovers at 20 percent, and then you have coming out of Washington, the Bureau of Labor Statistics saying it is 11 to 12 percent, then you have some
credibility problems there for those of us who are dealing with private industry to spur them on.
So, we have to many times sit down and explain just what I've explained in my testimony what we
mean, why it is 20, and why the Bureau of Labor Statistics has a problem in this area. I don't, f or example, have any immediate solutions except that we know they're not counting right. We're not counting accurately. Perhaps, we need to expand our definitions but I believe that if we had a more accurate accounting from BLS, and if the President of the United States would get behind a more accurate accounting of BLS, as I'm sure he will and he is, as
unemployment and unemployment is one of his highest priorities, then I think that we would have the tone set and the direction set. After all that is basically the function of government leadership; to set the tone, to point the direction. But we're not doing that because--to the degree that we need to be because of what I think is suppressed statistics. And it does not heighten the degree of seriousness and urgency that we face.
And I'm not saying that we need to cry a great deal of alarm over the need to promote statistics, but certainly when you look at the facts of life in the inner city where you find between the ages of 17 and 25, a particular target of age and racial grouping without employment opportunities, hovering at 35 or 45 percent--and I think BLS was right there--then we
do have serious problems. As far as our activities in the state,, we sort of depend heavily on our own State Labor Department that I think is doing one of the most incredible jobs of any State Labor Department.
I know, for example, that legislation that I have passed as a member of the Committee on Urban Affairs, that we have been able to utilize more of the information coming out of our Georgia Bureau of Labor and their statistics that would give us a more patterned target in Georgia in our full employment legislation that I think you might recall when that legislation was passed. It set up a study to determine how Georgia could move ahead on its own. And this is the
kind of thing I encourage instead of waiting for Washington to do everything. There are some things that we could do at the state level. That's one example.
However, I think we have a real crackerjack
labor department here with some fairly good accurate figures, but still they, too, depend upon Washington so, it all goes back to Washington and I think that we found it difficult and I personally--and I can't speak for anyone else--but, I personally have found them not to be really helpful at all. Because when you're dealing in district as I have, to go to an employer and say we've got 12 percent unemployment
here, and you know for a fact that there's more around out there. But I want to say one thing, it's not all external either. It's not all just finding the jobs. There's an awful lot of work that we have to do internally with many people who have given up and have just just lost motivation.
There are people who have just given up completely in our society. They have resigned themselves to become permanent unemployables. Many don't want to work. They've fallen into a kind of don't
MR. ANDERSON: Along that point, I would like to ask you a very quick question. Is it your view that some of the government programs that you are so
critical of might in part be responsible for the attitudes of not wanting to work? And to what extent have you seen in your district a tendency for those who might receive welfare or other kinds of government transfers to be unwilling to work? Is it your vie w that this is a major contributfTi-j-factor in the unemployment problem?
MR. SCOTT: I think it's a major contributing factor not because of fhe major government programs,, but because it gives many people a crutch to fall back on. Many times, just to give you an example,
I've talked to the young kids that come in and say-one kid would say to another, "Man, I got a good
j ob So the other kids asked the kid, "What do you do?" The other one says, "I don't do nothing. That's why it's a good job." The other kid says, "Well, I've got a tough job. I've got to get up in the morning." Discipline, you know. So, that there is a tendency to--if you've got a choice between a job making $6 an hour, as has been the case personally. I have had jobs in the trucking industry starting at $6 an hour. That's better than $200 a week straight time. And a youngster 18 years old to choose between
that job and a job making $2.60 an hour working for CETA where he could sit at a desk and all he had to do was look that way and look this way. As people would come in he would just point them in that
direction or he would point them in this direction.
Now, my concern is not the program. My concern is the individual. And in many of these cases they're black young people. There is nothing there to stimulate this man's mind, his creativity, or anything. He becomes so much wasted energy, so much fat. There's no question about it. That's why the private sector must be prodded. It is in this sector where the competition lies. Where the
competitive edge must grow* And if we're going to use productive people in our society, we're going to have to get them into productive disciplined environments early.
And, while I'm not kicking the government programs because there is a use, we're going to have to point out to people that these are there out of a basic necessity and nothing else. We have to make
sure there is nothing else. That's why we need to involve to the private sector even closer.
CHAIRMAN LEVITAN: Your representative on the Commission is Ms. Joan Wills. If you have any
complaints just give them to her.
41-535 0 79 4
MR. SCOTT: Okay. Thank you.
MS. WILLS: Thank you. Listening to you talk,
I'm compelled to ask a question I'm not sure is totally related to the responsibility of this Commission. But I'm curious to know what you think about the idea and the utilization of the expansion
of jobs tax credits, as opposed to direct programs such as CETA. It's been running through my mind for the last five minutes, so, I'm sort of compelled to ask it.
MR. SCOTT: Well, I believe, there is a role for CETA. I'm not--I think that CETA has become or is alluded to in my circles or lower income areas as the pot at the end of the rainbow. I think that's a mistake. I'm not saying we should scrap it or any programs of that type, we need them as much as we cane However, this society and this sytem is based upon a competitive money making society. I would say a greater emphasis, if we can target it--a lot of
times you give these major corporations tax credits and they love the tax credits and they do window dressing. So, one evil and another evil.
So, theoretically, and philosophically, I go along with whatever we can do to bolster, convince,
cajole, whatever, the private sector in accepting more of the responsibility and the job tax credit program is an excellent one. I don't say that in the place of CETA because there are some people that have to be--industry is going to have to accept so much
responsibility for training. Some people are so f ar down that the industry has a waste program. But I don't think the private sector is doing even 20
percent of what it's capable of doing and should do to help us solve this unemployment problem.
CHAIRMAN LEVITAN: On my extreme left, far left, is a representative of the U.S. Chamber of Commerce, Mr. Carlson. Since Mr. Scott has some nice things
to say about depending upon the business community, do you have any questions?
MR. CARLSON: Yes. I'd be very much interested
in your experience in the high school program, placing the 200 youngsters. Did you find any difficulties, as Dr. Anderson was talking about, such as minimum wage? Was that a problem? Social Security? Taxes? Or placing these young people or any other policy oriented problems?
MR. SCOTT: No, I didn't. I learned a long time ago that 90 percent of anything is selling it. You can have the greatest product in the world and do
everything you want to do, but if you don't have the tact of selling that--an idea--then it's not going to be successful. Our basic forte, the salesmanship to the industry, is to convince them of getting involved
in the school system right now in the inner city can effect their bottom line. Their margins of profits. Because that's what they're interested in. That's
what they'll go back and tell their stockholders. Not just a sense of corporate responsibility, but it makes good business sense if you have everybody--everybody's not going to grow up to be a lawyer or doctor. A guy can drive a truck to Albany, Georgia overnight and he's making $25,000 a year.
The lowest paid job in the trucking industry is $6 an hour and that's in a non-union shop In a union shop it's $9.41 an hour. That's almost $400 a week. I don't make that. Most Americans donot make that. Now, why can't we get into our high schools with these kinds of programs early and develop work internships. The concept came from, as a matter of fact, I was in the Wharton School for the Labor Department. And I knew that because
of that exposure and that experience that it opened my eyes to a world of which I was only dimly aware. And I say now, why can't that same concept be applied to 9th and 10th grade because that's where we lose people. They're formulated right there*
Now, this is the pitch that I gave the businesses. And I said it makes good business sense. Hopefully you can get recognized for it, but that's not the
major point. The major point is you can get good employees. The business is constructed for that. Now, we have a major weakness in this country. That
is proper utilization of what I call the legitimate feeder program. That is the public schools. We are wasting tremendous amount of money because of a massive failure of the public schools. Why in the world do we have our tax dollars going to support the
public schools in the first place. It's not to
prepare young people to gainfully get out in the world and produce. What happens is after we have other stopgap measures Empire Training programs, so many training programs that take up slack. My
contention is this, that if we can get all over this country major industrial firms particularly skilled, semi-skilled that are paying these kinds of monies.
In my district we have the Lakewood General
Motors Assembly Plant that makes all the Chevrolets and Pontiacs for this area. At the bottom of this district we have the Ford Motor Plant. We've got 37 trucking firms in the district. We've got Atlanta Stadium. We've got Hartsfield International Airport. We've got all of that. But also in that same part of town, we've got the lowest economic quality of life. Now, that is not unique to Atlanta. It is unique to almost every major city in this country. And if what I've done in getting this program at Carver can work in Atlanta, it can work everywhere.
And I'm not saying it's the all answer, but clearly we've got 206 kids now at one school who never worked before and it's because of the industries.
CHAIRMAN LEVITAN: Mr. Scott, if you would bear with us for just a few more minutes, or just two short questions. I would like to continue with your old professor's, or young professor's, line of questioning.
You are a member of the State Planning Community Affairs Commission?
MR. SCOTT: Yes.
CHAIRMAN LEVITAN: You have heard Mayor Jackson testify that he would be satisfied with quarterly
data on employment and unemployment labor force statistics, rather than monthly data. How do you feel about it as a policy? Do you need the monthly
data, in other words, that is being published now?
MR. SCOTT: I'm not sure in what view the Mayor was responding, but without being as involved on a day-to-day basis with the major problems, my contention is, the more frequently we can get the information I would say the better and more accurate that information would be. That's a basis of four times a year as opposed to 12 times a year.
The State of Georgia has not to my satisfaction as a State Official moved as aggressively as we ought to in the whole unemployment area. We tend to say that unemployment is a Congressional program or
it's a problem of the Federal Government, but it is not. I think that just to answer you question, I would be for, just based upon the higher frequency, I would think that we could use it better if were on a monthly basis*
CHAIRMAN LEVITAN: Well, thank you very much, Representative Scott. We appreciate your coming and testifying and it's nice to hear from a state legislator.
MR. SCOTT: Thank you very much.
CHAIRMAN LEVITAN: Now, I don't know whether we 0 re going up or down from a state elected official, to a local elected official, to a college professor. Given my occupation, I would think we're going up. Our next advisor is Professor James Simmons of Florida State University. Professor Simmons, you have the floor.
STATEMENT OF JAMES Ce SIMMONS, PROFESSOR
OF ECONOMICS, FLORIDA STATE UNIVERSITY
Is rural labor force data needed?
The bulk of the labor force is in urban areas. Therefore, adequate sampling of urban areas will
yield national and regional labor force estimates. Intensive rural sampling would not significantly improve the national and regional estimates. I do
not intend to expand on this thought except to venture an opinion that national and regional estimates are interesting and useful but it is the detail that provides the basis for analysis and rural America is still a significant detail. In another
generation this detail that we call rural America will be radically changed. I think this transition should be well-documented and I consider labor force and economic welfare data important for this purpose.
There is a tendency to think of rural areas as being homogeneous in respect to most characteristics other than the physical geography. This tendency is apparent when people consider the rural South populated by stereotype "Red Necks" and "Crackers" occupied as farmers when actually the majority are nonfarming Blacks, Indians, Mexican Americans and
11wetbacks" and the ever increasing number of "dormitory" residents who work in the urban areas and sleep
in an adjacent rural area.
Early in 1976 1 directed a rural labor force study in north Florida. The purpose was to conduct
a pilot study to determine the feasibility of rural labor force studies in Florida and to develop the concepts, questionnaire, basic statistical design, computer program, and other necessary procedures for such studies.
I considered it desirable when conducting the study and for future studies that the concepts be based on the BLS labor force status concepts in use at the time if, in the future, rural labor force
data are collected through the Current Population Survey I assume that the data would also conform to BLS concepts.
No problems were encountered in using the questionnaire employed in the CPS although the format
was modified for greater convenience in interviewing and in transcribing the coding to computer.
There was a specific request that the study provide data necessary for producing an employment and earnings inadequacy index based on the work of Sar Levitan and Robert Taggart III as reported in their Employment and Earnings Inadequacy: A New Social Indicator, 1974.
In selecting interviewers for a rural labor force survey, in addition to ability to read and write and follow instructions, they should be local residents for at least two reasons: One, to provide temporary employment for local residents and two, the interviewee response is much better when the interviewer is from the area. A brief chat on
familiar local matters sets a favorable atmosphere for the interview* Also, the people are available for this work temporarily as a break in their daily routine, particularly housewives.
In the South there is still sufficient social separation of the Blacks and whites to sometimes create problems in employment. There was no discrimination in hiring interviewers but there was a necessary
condition that the person be willing to enter the house and interview a resident if of different race. Some potential interviewers, blacks and whites, were unwilling and could not be employed. It. was also essential that the interviewer have a vehicle at his or her disposal due to the distance that must be covered.
Sampling design for rural areas where people are likely to live in houses strung along winding roads rather than in blocks of houses bounded by streets can be a problem. For the Florida study
cluster sampling was employed taking a random sample
of land sections each being a cluster. In each
selected section 100 percent of the houses were covered.
Rural labor force statistics
In estimating the labor force status there has been a question of where to count the person as being employed or unemployed. Should it be where the person works or where residing if the two are not in the same statistical location? When considering rural area statistics the matter is more complicated. Most rural areas east of the Mississippi River are
within commuting distances of urban areas where a large percentage of the rural residents will be employed.
The number of people residing in rural areas who are economically tied to an urban area is increasing. Because of their training, education, skills, work experience, and interests they are urbanites and if unemployed will seek employment in the urban area. To count them as unemployed in the rural area will confound the issue and programs to deal with the
problem as rural unemployment will be ineffective. For similar reasons attempts to resolve employment
problems of those who would be rurally employed cannot succeed by simply increasing urban employment. The two are separate problems and neither can be
helped by simply aiding agriculture which does not employ these people.
In rural areas "discouraged workers" are not a marginally important group. In the two Florida
counties surveyed the number of discouraged workers exceeded the number unemployed (using the BLS concept of unemployed). The discouraged workers were composed of distinctly different groups of people. They are the residual population, largely
black, left from the mechanization and consolidation of agricultural units who are likely, in terms of
education skills and age, to be labor force marginal.
A second group is composed of secondary family members of employed family heads. These may be
wives or other dependents both of which may need and want work to supplement the family income.
A third group are the seasonally unemployed, most from resource based activities.
A fourth group are the retired or semi-retired who would like to work and who may be in need of occasional employment to supplement their income.
These people are not currently looking for
work because they are sufficiently knowledgeable of the area to know that there is no work available. These people do not leave the area to seek employment because of family ties, age, ignorance, possibility of seasonal work, accustomed life style, etc. These people are as unemployed as the officially unemployed and some are in greater financial need than some of the officially unemployed.
Such workers, or would be workers, should, be included among the unemployed. When including
them it would be desirable to exclude those unable to work for whatever reason and those unavailable for work for whatever reason. It is insufficient that a person would only like to work. This alone should
not place him or her in the labor force.
Employment and earnings inadequacy
I strongly urge publication of a measure of employment and earnings inadequacy of supplement measures of labor force status. This would not be a general measure of economic welfare but one that can be directly associated with employment or the lack of employment. I am in general agreement with the measure "Index of Employment and Earnings Inadequacy" of Levitan and Taggart but suggest certain conceptual
changes in their proposal*
Instead of the past year's earnings, an annual rate of current earning of the survey week, which
would be compatible with labor force status data, should be used. In regard to farm income, this would require getting any current income plus an estimate of annual farm income because income from farming may be primarily during one period of the year*
If the income during the survey week at the annual rate for 50 weeks of employment is sufficient to put one above the poverty threshold it would be considered as adequate for individuals or if a family's combined earnings are above the poverty threshold for the family size it would be considered adequate.
Levitan and Taggart subtract all persons in families with above average incomes for the relevant area from those included in the index. I am unable to reconcile this with the purpose of the index. Firstly, as they indicate, family size is not accounted
for in this average. Secondly, I am unable to
understand the reasoning behind the use of such an upper income threshold as an adequacy criterion.
Such an average is difficult to interpret because it will be based on different income distributions in different places. It is also conceivable that in some areas the average income could be below the poverty threshold.
It would seem that the poverty threshold is sufficient. An individual or family with above threshold income would be considered to have "adequate" income, those below, inadequate incomes. All persons
in families with combined income below the poverty level who are in the labor force would be counted,
all those in families with incomes above the threshold would be excluded.
As the data would be available I suggest the publication of a separate count and/or index of all persons in the labor force who have earnings below the poverty threshold whether individuals,
family heads or secondary family members and whether in families below or above the poverty threshold.
CHAIRMAN LEVITAN: Thank you very much sir.
MS. WILLS: I have two questions on the index. One, did you do any thinking, I'm not certain whether Sar did, about an age cutoff?
MR. SIMMONS: Yes. I agreed with most of his suggestions. They do have a cutoff at the bottom and the top*
MS. WILLS: I had just forgotten. Why are
you recommending, though I can understand the ease and collection of the statistics--why are you recommending
both individual and family income be considered adequate? I think a family with four or five children as opposed to an individual with-MRS. SIMMONS: In my last sentence there was something additional. I said I would like to see the data published on the number of individuals and/or families regardless of the -family status. This is just a count of the people with an inadequate income from employment or lack of employment and that would not be part of the unemployment index. But the data
goes into the calculation of the index and will be available.
MS. WILLS: I see. I didn't read that correctly. Thank you. I'm sorry.
MR. ANDERSON: Thank you very much, Mr. Chairman. I have two quick questions. One refers to the nature of your study. Was this a study of the labor force in rural Florida alone or did your survey cover more than the state of Florida?
MR. SIMMONS: It covered two counties in Florida.
MR. ANDERSON: Two counties in Florida*
MR. SIMMONS: The purpose was not to estimate the level of unemployment in rural areas of Florida, but to develop the methodology and so forth for doing that.
MR. ANDERSON: I see.
MR. SIMMONS: The idea was to know whether it was feasible to do this type of thing in rural areas* Now, the two counties happened to be--one of them bordered on Georgia and both of them also
border on the coast--are in north central Florida. There are one or two counties between Georgia and the coast in this area.
MR. ANDERSON: I'd like to call your attention to a statement on page four where you allude to the
definition of the discouraged workers. If in fact the mere lack of a job is insufficient in your view for having an individual classified as unemployed, what labor market test would you impose? What
standard of job search would you impose in defining a person as unemployed, specifically with reference to the discouraged workers? How recently should an individual have searched for a job be counted as unemployed?
MR. SIMMONS: Under current definitions, they would not be counted at all, if they had not been looking within the last four weeks. I would not have that criteria, searching, because by definition what we call discouraged workers are not looking for work. So, it would be necessary to include them, if they said they would like to work, that they are willing to work, that they are able to work, as part of the unemployed.
MR. ANDERSON: That's where it confuses me. Because you say it is insufficient that a person would only like to work. This alone should not place him or
her in the labor force.
MR. SIMMONS: All I'm referring to here is--this comes after another statement--that they have to be
able and willing. If they are not able--today they can be unable and unwilling and still be classified as unemployed or discouraged workers. And I don't think
such people, if they are not capable of entering the labor market and taking employment, then they shouldn't be considered--they should be considered something else. I'm not talking about welfare and so forth but
as part of the labor force they should be capable, able, and available for work.
MR. ANDERSON: I don't wish to prolong this, but I think it's a fairly important point because, as you know, the survey methodology has to be as objective as possible and I'm wondering just how
we could develop a methodology that is objective, and yet determine whether a person is able to work. What criteria would you impose in determining whether an individual is really able to work?
MR. SIMMONS: Well, it creates some difficulty
but today all of the data is dependent upon the persons replying being reliable. If he says he is unable--if he does not say he is unable when he is, then there is no way to check it that I know of, but there is no way to tell that that person has been looking for employment unless he actually registered some place, but is accepted--but if he says he has, it is accepted. We don't eliminate the problem by dealing specifically with these discouraged workers on
MR. ANDERSON: Your statement is very helpful. I wonder if I could request that you enlighten us further. If you could, please, add a supplement to your statement responding specifically to the criteria that you think should be added, or used in fact, to make the judgement whether a person is indeed able to work. I think the Commission would find that very helpful in dealing with the question of how to define the discouraged worker. Thank you very much.
CHAIRMAN LEVITAN: One professor giving suggestions to another professor.
Professor Simmons, I would like to divvy up with you on the criticisms. I've taken one year's income and another's unemployment as for working out the new index. The Commission is taking care of that.
MR. SIMMONS: You've dealt with this some in your proposals, also.
CHAIRMAN LEVITAN: But I would like to ask you a question on that.
The kind of income is not important to the BLS and thus it is not measured. To what extent do you think current farm income is from family farms, and to what extent is it commercial farm income.
MR. SIMMONS: I don't know any very precise way of measuring the farm income. This is the
only problem I have with this concept of annual rates of earning, taking the week's income, current week's income. Farmers do have some current income
very often, they sell a few things according to the nature of their farming. On the other hand, most of their income is likely to come in at certain harvest
seasons when they sell their products.
The only way is to ask them what they expect
their income to be or do what you did, take their last year's actual income. For a farmer it doesn't create the same problems as it does for a wage employee.
CHAIRMAN LEVITAN: I'm afraid I didn't make that question very clear. What I'm asking, Professor Simmons, is if you want to count total income, do you know to what extent is the income is from commercial farming and, therefore, presumably countable?
MR. SIMMONS: I have no way of estimating.
Only primarily for those who are actually farmers, living on the farm, is this a major factor. All these other people do not have incomes in-kind. Most of the people in this part of the country in rural areas are not necessarily farmers. This is one thing I am pointing out. They are rural dwellers, but
they are not farmers.
CHAIRMAN LEVITAN: That part does not present any problems to us, but you see, as I look at my BLS
statistics, they are mostly city slickers and they don't understand how farmers or part-time farmers make a living.
Is there any way you could suggest by which we could measure total farm income including, as I said before, if some of their income is in-kind and therefore not measured because of the census not measuring in-kind income--at least not feasibly right now.
MR. SIMMONS: I have some ideas, but I don't think they are adequate for this. The Department of Agriculture does deal with this type of thing and I think that they are the ones that you should address this type of question too
CHAIRMAN LEVITAN: In other words, you're
sending me back to the city slickers.
MR. SIMMONS: Yes, sir. I think they are
people who are acquainted directly with the problem.
CHAIRMAN LEVITAN: Opportunity knocks twice. Ms. Wills, do you have another question for Professor Simmons?
MS. WILLS: (Shaking head negatively.)
CHAIRMAN LEVITAN: Well, thank you very much, Professor Simmons, for your very helpful testimony or advice. We call it advice, not testimony. Thank you.
Our next advisor comes from a different sector of society, namely from the Employment Security Commission of North Carolina. Mr. Preston Johnson. You have the floor, sir. Welcome. I've read your statement* You've one of the very few that have
sent it in advance and I can say before you start that it was a very interesting statement. You
were very informative.
STATEMENT OF PRESTON JOHNSON, SPECIAL ASSISTANT
TO THE CHAIRMAN, EMPLOYMENT SECURITY
COMMISSION OF NORTH CAROLINA
Thank you. Mr. Chairman and members of the Commission, my name is Preston Johnson. I am
Special Assistant to the Chairman of the North Carolina Employment Security Commission and a member of the Interstate Conference of Employment Security Agencies' Labor Market Information Committee.
I want to thank you for this opportunity to present to the Commission the views of the North Carolina Employment Security Commission and some of the concerns of the Labor Market Information Committee of ICESA. It is my understanding that other members of this Committee have, or will, testify before you presenting additional areas of concern.
I'm not going to take the time to retrace stepby-step the historical developments and events leading up to where we are today in estimating employment and unemployment. The historical perspective is an extremely vital element in your deliberations. Unless we learn something from history except history, then we have to learn from experience and progress is
hampered greatly. However, I'm sure each of you are well-versed in the history of the present state of the art as well as having had it presented to you in previous testimonies.
Measuring employment and unemployment can be done generally in three ways: (1) a complete count such as the figures we see in many financial reports. For example, we can determine rather simply exactly how many dollars were paid in UI benefits last week or last year, exactly how many dollars were collected in Ul taxes during any time period, etc. The experiences of the decennial censuses have shown, however, that try as we might we cannot count exactly how many people there are in the United Statese
(2) A second method of measurement is through the use of an independent variable(s) which can readily be measured and then mathematically manipulated to estimate a dependent variable. This
type of regression analysis has been explored by BLS for estimating unemployment with mixed or less than satisfactory results. However, I feel that a more rigorous pursuit of this avenue could be
fruitful--perhaps with a larger number of variables.
41-535 0 79 5
The "Handbook" method of estimating unemployment is a form of this type measurement when insured unemployment determines, through various formulae, much of the total unemployment estimate.
(3) Finally, measurement can be attempted through the use of sampling. This is a very scientific and reliable technique where the preciseness of the estimate is controlled by the size of the sample.
Sampling in many cases is the only way to measure certain features such as the life of a light bulb where the test destroys the product. In other cases it is highly desirable in that an acceptable measure
can be made for much less cost such as the CPS program for national employment and unemployment statistics.
Only the complete count method will give an
exact as possible measurement of employment and unemployment. Obviously, however, even if it were
possible to perform such massive job, the cost of such a program would be prohibitively expensive. This leaves us with two techniques that can be
used--independent variables (some form of regression analysis) and/or sampling. Neither of these two will give a point value measurement, however. The value
obtained represents the center of a range in which the true value is reasonably expected to lie. The width of the range and the probability that the true value lies within it is dependent upon the correlation between variables for the sample size and the desired degree of assurance. All too often users of employment and unemployment statistics overlook, or choose to ignore, this fact and accept the rate of unemployment as being an exact measurement. I would hope that this Commission would address itself to this point
and stress the need for the proper understanding and use of these statistics.
The current BLS philosophy is to use the "Handbook" method for state estimates and adjust the estimates to the difference between the six-month CPS moving average and the monthly estimates for employment and unemployment.
The result of this is a dampening and shifting of the
normal seasonal aspects of a state s economy thus distorting trends. In addition there is an annual benchmarking to bring the estimates into agreement
with the annual CPS average. I would question the need for this for approximately half of the states whose annual average estimates fall within the confidence interval of the CPS annual average. Does benchmarking in this case make the data more accurate? I would think not. This first adjustment has caused a great deal of concern by many users of our data. We
must remember that employment and unemployment data are not used solely to allocate funds--far from it. Financial institutions, utility companies, educational institutions, private industry, local governments and planners, state governments, governors, the SESA's
themselves and others use and demand these valuable economic data for a multitude of purposes. A serious lack of confidence in these data has developed among
our users, and we now face two major challenges instead of one--a system or methodology which produces good and timely estimates of employment and unemployment and convincing our users of its validity. The SESA's are considered by most state and local users to be the originators and disseminators of state and local employment and unemployment estimates. They are the "front-line" troops so to speak. The states are in the position to have to defined these estimates far more often than either BLS or ETA. Without state participation, input, and sharing in the development of revisions and/or changes in any of the methodologies, they are hard put to defend, understand, or even have confidence in the estimates
themselves. I would strongly urge this Commission to place the strongest possible emphasis on the federalstate partnership role in this area of the Employment Security program as it is supposed to be in all areas. This would mean a continuance of such a role by some of our federal partners, a resumption by some others, and a beginning of a federal-state partnership for a
number of others.
There is no question that we should always
strive for perfection, but we should also recognize the impossibility in this instance and realize that we
will never be able to produce local area employment and unemployment statistics for some 6,000 areas across the United States with the same degree of precision that can be obtained for nationwide statistics through household sampling techniques. it appears then that we must accept the fact that local area estimates and possibly state estimates will have
to be prepared using a dependent variable(s) (a form of regression analysis) such as a revised and improved "Handbook" method.
A BLS spokesman has said that the "Handbook" method of estimating unemployment correctly depicts
the trend in unemployment but fails to produce the accurate level. I tend to agree with this assessment. Both level and trend are necessary. The current BLS six-month moving average extrapolator technique
mentioned earlier contains a bias that overstates sub-state unemployment rates when they are higher than the state rate in states with low unemployment rates and understates sub-state rates below the state rate in states with high unemployment rates. This is true for two reasons. BLS maintains that the "Handbook" method, while capturing the trend, tends to understate low levels of unemployment and overstate high levels. Graphically speaking, this is saying that the slope of the line over a range of rates is too great and the intercept too small. Secondly, the current BLS
extrapolator technique only changes the intercept of the above-mentioned line while leaving the slope unchanged. This means that there is still a lack of comparability among interstate sub-state areas in unemployment rates and a resulting improper allocation of funds when used as an allocator. However, I would submit to you that if the "Handbook" method, with its present methodology, can correctly portray the trends in unemployment, the methodology can be refined and improved to the point where it would more accurately reflect the level of unemployment.
Also., BLS has indicated that there appear to be several compensating errors in the methodology and the weakest link is the estimating of unemployed new and reentrants into the labor force I agree with this also. For several years while Director of the North Carolina Job Market Research Center, I conducted research into estimating employment and unemployment and the "Handbook" methodology under assignments from what is now ETA. We were very aware of some inconsistencies in various segments of the methodology. Of
main concern at the national level at that time was the additivity of the state estimates to the national total as derived via CPS. A conscious decision was made to modify the new and reentrant methodology to unnaturally force closer additivity. This, of course, resulted in this component being the weakest and least accurate in the entire methodology
The current efforts by BLS and the states to develop a uniformly-defined U1 data base is a great step in the right direction. We advocated such a direction when I was involved in this type research. Once this has been accomplished along with techniques to accommodate state UI law differences, I am firmly convinced that the "Handbook" methodology can be
refined to the point where results will correctly reflect both levels and trends in unemployment for both state and sub-state areas* It may well be that one refinement could be the use of CPS
data as input for the unemployed new and reentrant component to produce very good state estimates of
unemployed that will be beneficial and acceptable to all parties who use them including their use as an allocator of funds.
I would hope, however, that this Commission will consider alternative allocators. For example, since unemployment insurance laws now cover approximately 90 percent of all workers, the insured rate
of unemployment may be an acceptable allocator for small areas. As for redefining the labor force to include military personnel, I would question this for two reasons. One reason forwarded for including
them, because it is now a volunteer service, could well be voided should there be a conflict which would reinstitute to draft. Also, even though the service is voluntary entrance, there is not the freedom to leave as in the private sector. In other words, military service personnel are generally not available as potential employees to meet the immediate needs of the civilian employing sector. I also question the appropriateness of the development and use of other indices to replace or supplement the unemployment rate. Such indices are likely to be more sophisticated and dynamic than the unemployment rate. I fear the acceptability by users would be difficult to attain. Also, it appears that the production of such sophisticated indices would tax our abilities beyond their capabilities. This appears especially true since we are having great difficulty in developing methods of measuring accurately the present concepts of simply employment and unemployment.
In summary, I would propose to you that estimating employment and unemployment be accomplished using a revised and improved version of the "Handbook" method for all areas and states possibly incorporating some aspect of the CPS for unemployed new and reentrant at the state level. With such an improvement the benchmarking process could then be on an annual basis
to the CPS f igure only for those states where the "Handbook" results were outside the CPS confidence intervals. The definitions of employed and unemployed
should not be changed drastically. Finally, if it does not appear possible to produce accurate enough estimates of the level and rate of unemployment to satisfy allocation needs, then some other allocator
This concludes my remarks, Mr. Chairman. I will be happy to answer any questions you or the members of the Commission may have*
CHAIRMAN LEVITAN: Thank you Mr. Johnson.
In each one of our hearings we had at least one representative of ICESA, and each time we've learned something new. I appreciate your statement and weoll start with Ms. Wills for questioning.
MS. WILLS: I'll try not to take too long.
I have a lot of questions. You mentioned one variable, the entrant and the reentrant, but you also noted other possible variables. Do you have anything
specifically in mind? I can't remember which page it was on--on changing the handbook method. And then you
did mention later on in the testimony about the entrants and reentrants, page two. Do you have anything beyond entrants and reentrants?
MR. JOHNSON: No. Largely the unemployment
estimate with the handbook method is a function of the insured unemployed in almost every case except the new and reentrants and in that case it is partially.
MS. WILLS: On page four you speak of a federalstate partnership continuing what we now have, and the resumption of some others, and the beginning of the federal-state partnership for a number of others. Could you be a little more specific on the resumption of some others and the beginning of the federal-state partnership? When you are answering, could you also think about the possibility of some kind of oversight structure as Mayor Jackson mentioned? So answer on two levels, if you would please?
MR. JOHNSON: All right. The beginning of the federal-state partnership in a number of other areas. I would address that primarily to certain segments of the BLS.
MS. WILLS: Such as?
MR. JOHNSON: Such as the BLS at the national
level responsible for the developing of estimates which are done as I alluded to earlier, in that the states have no input in most cases. No reaction.
Opportunity of reacting. And in some cases inadequately explained at the time it is being considered for implementation.
MS. WILLS: What do you think of the ideas for some variations? Mayor Jackson talked about the continuation of some kind of oversight body to-MR. JOHNSON: I think it would probably be a good idea f or no other reason than to insure that the federal-state partnership was in fact occurring. That the states were not just following the decisions after they were made. It would affect the states to a great deal. However, I do feel that over time an oversight body may work itself out of a job by educating those involved.
MS. WILLS: Another question; it goes to what I think is going to be one of our toughest considerations. You suggest that there might be other ways to allocate money, one of them being the utilization of of the insured unemployment rate. From what I have read, not only are the entrants and reentrants a part of the problem if we use only the insured unemployment rate, and indeed that may well be a
trend particularly in the rural areas, at least in some of my reading, but it's not clear that the rural residents participate as much in the unemployment insurance, even though it may be available to them. This is also the case inside the inner city. Now how would we--it's a two pronged question--would you allocate the insured employment rate from the Federal Government? Let's use CETA for example, although there are others--using the insured unemployment rate
directly--or would you do that in some other kind of way? And how would you then accommodate the problem in the inner city, and the entrants and reentrants?
MR. JOHNSON: First, let me say,, that I made that suggestion merely as that--a suggestion. Because I firmly believe that there can be a technique set up to accurately measure employment and unemployment for counties and possibly inner cities. It is more difficult. But at least for the country and intrastate areas, some form of the handbook method.
So actually in my own mind, use of an insured rate or any other type of allocator is moot. Because I think it can be done through existing techniques through improvements. If unemployment insurance, for instance, is used as an allocator and alluding to one
aspect, how would it be done through the local, or whatever level? It gets a little out of the realm of this discussion, but I firmly believe that the allocation should be made at the state level and from
there down to the local level.
MS. WILLS: I will be quite short. Mayor
Jackson, again, made a recommendation that--or an observation--that he could live with quarterly statistics as opposed to monthly statistics. I would like your reaction to that on two different levels. And it's fair to say that this Commission recognizes the allocation of funds is not the only reason for the existence of the unemployment rate. But do you think that there would be any value in having only a quarterly statistic where at the state level you then develop the sub-state and county data to claim the detail necessary for the allocation of funds?
MR. JOHNSON: It's possible that quarterly data could be used, if it's used only for the allocation of funds. I think it would work. But so far as having only quarterly data, I can cite you an experience in North Carolina when there was a statement made by the BLS that states would be prohibited from
making monthly estimates when they went to this quarterly data--statements that were later retracted I understand. My governor said we are going- to have monthly dataf
My position is that if our governor is going to have the monthly data--the private sector is going to
have monthly data, then I want our agency to develop it; not let everybody get into the business of developing employment and unemployment data.
MS. WILLS: But you do see that I'm trying to make a distinction between the state monthly unemployment-MR. JOHNSON: I think it would be good--you
would have that one problem where people would be comparing quarterly and three month average data. If you average it, you may get a lot more money and, in their mind, it would be better than using quartering data.
CHAIRMAN LEVITAN: Thank you. Mr. Johnson. A few questions. Number one. On top of page four-to continue with Ms. Wills questions--you make the point that the labor force data are not used only for allocating purposes, but for many others. Now, I assume your Governor wants monthly data. If he wants monthly data, he'll get monthly data. I'm not going to argue about that. But what you hear from your various constituents, the financial institutions, utility companies, the vocational institutions, private industry, government planners and so forth-can you take them one by one--to the best of your knowledge, do they need monthly data?
MR. JOHNSON: To the best of my knowledge and I have not been involved in their specific use internally or externally, but I do know that a number of financial institutions use this data on a monthly basis in their economic analyses. Utility companies use this because many of the utility companies, even though there is an energy crisis, do have the industry hunters. They are recruiting industries to get new industries to locate in their service area and they want this type date for any
areas in which they might have a client interested.
CHAIRMAN LEVITAN: Do you think they also use it on a monthly basis?
MR. JOHNSON: Yes, sir. In fact, they want the most recent data and series of such data-CHAIRMAN LEVITAN: Do you think if they had to pay for it they would still want it on a monthly basis?
MR. JOHNSON: Yes, sir. There are educational institutions across the country and economic analysts who have a great use for this data. Some of them, after being educated into its limitations are horrified, but they still use it. Local governments go
without saying; they want monthly data. And there
are planners and there are state governments, even we ourselves, state agencies, we use this data in planning work loads and analyzing trends that we may have for various things, staffing, office locations, etc.
CHAIRMAN LEVITAN: All right, Mr. Johnson.
In common with many other state representatives, or ICESA representatives, for some reason or other you're not happy about the state-federal partnership. Would you agree with the definition that someone gave me the other day about a cooperation between federal
and state--does that mean that you and I cooperate?
MR. JOHNSON: Yes.
CHAIRMAN LEVITAN: On page seven, Mr. Johnson, you suggest that the insured unemployment rate can be used now--top of page seven--possibly for the allocation of funds for small areas. Do you think that in
light of the fact that many of the rural folks are not collecting unemployment--that's the word that we got from this Commission hearing--that that would be a good source for determining rural area unemployment?
MR. JOHNSON: Well, I'm not sure whether it would or not. I have heard the same argument
posed for urban areas-Without a study of those particular areas I would hate to offer any--I would just state that
you won't find the problem as severe in either area as is being maintained.
CHAIRMAN LEVITAN: And another question on
page seven. You suggest that we should not count military personnel. Your major argument against this, as I understand it, is that in case of war we may not be able to count military personnel. Aren't you excessively worried? In case of war we might get deeper problems than just counting the military.
MR. JOHNSON: No, I'm using that argument
because it was posed as one reason for including military service, and because it is involuntary then they aren't available for changing jobs.
MR. POPKIN: Would you want to extend that to
anybody that is not available for changing jobs?
MR. JOHNSON: No. I think the others under contract are in the private sector producing some-CHAIRMAN LEVITAN: What if I would ask you, isn't it correct Mr. Johnson, that if they are not
in the military--maybe more like ICESA employees or college prof essors--would you suggest that we don't count college professors for unemployment purposes?
MR. JOHNSON: No. I think they are providing a service for the private sector.
CHAIRMAN LEVITAN: I'm not saying they are not providing a service for the private sector, but the turnover is high and therefore it is less among college professors than among military. If the basis is one of turnover, then why should we count college professors?
'MR. JOHNSON: The basis is lack of freedom.
MR. POPKIN: Would you count policemen, but not military. How would you distinguish between the service that policemen provide and the service that military provide?
MR. JOHNSON: Policemen are free to leave the police service and go somewhere else.
MR. POPKIN: Well isn't the military man after his two years or four years?
MR. JOHNSON: No. They sign up for more than two years*
CHAIRMAN LEVITAN: I have one final question, Mr. Johnson. You suggest that the present employment and unemployment concepts are simple concepts* I
have struggled with them for the last few years and I know the question they are asking me* I'm trying to understand all the responsibility that this Commission has, and I don't think it's such a simple concept as you suggest. Why is that simple, or more simple than income concepts? I thought we could all count to six thousand, twelve thousand--I think that we would be able to know what the concepts aree
MR. JOHNSON: That's correct. But it doesn't stop when you get to some index of that matter* It starts getting into many more complications; the size, urban, rural, southern, northern, snowmelt,
sunbelt. It doesn't stop. It keeps evolving into other issues. Employment and unemployment are not simple concepts. It's been around for a long time and people are beginning to understand what you mean by it even though they don't understand the gray areas,*
CHAIRMAN LEVITAN: Are you saying that because something has been around for a long time is a good
reason to continue it?
MR. JOHNSON: No. I'm saying it's fairly well understood.
CHAIRMAN LEVITAN: I've asked a lot of questions. Are these any more questions? We're running over time.
Thank you very much, Mr. Johnson. We appreciate it very much.
Our next advisor is welcome for several reasons. First, because he is a well known business economist. Secondly, because he is going to be, next year, the head of the Business Research Advisory Committee's Subcommittee on Unemployment, and thirdly, because he is also a very important member of the National Association of Business Economists. Dr. Chimerine.
STATEMENT OF LAWRENCE CHIMERINE, MANAGER,
U.S. ECONOMIC FORECASTING, INTERNATIONAL
BUSINESS MACHINES CORPORATION
DR. CHIMERINE: Thank you, Mr. Chairman and members of the Commission.
I welcome the opportunity to present my views on the unemployment and employment statistics. Unlike Representative Scott, I was not fortunate to have anyone on the Commission to instruct me, and I'm afraid I'm going to take complete responsibility for my own statement.
MR. ANDERSON: We won't hold that against you.
DR. CHIMERINE: My name is Lawrence Chimerine, Manager of U.S. Economic Research and Forecasting, IBM Corporation, Armonk, New York. I am a member of the National Association of Business Economists, and the American Economic Association. I currently serve on the Department of Commerce Economic Policy Board, and the Business Research Advisory Council of BLS and two of its committees; I just assumed the chairmanship of one of these, the Manpower and Employment Committee. However, the views I will express today are solely my own and do not necessarily reflect those of any of the organizations mentioned.
My use of the statistics on employment and unemployment is primarily for national economic analysis and forecasting, including the construction of macro-econometric models of the U*Se economy* Thus, I will confine my remarks today to the national data, to their usefulness in analyzing economic conditions, and their value as an input to the policymaking process. I recognize the need for increasing the reliability of the state and area statistics, both to ensure a more equitable distribution of federal funds for various programs and to aid
in regional economic analysis, and I would strongly support any program that would result in substantial improvements in such data. However, I will leave to others the specific suggestions that may bring forth such improvements.
Let me begin by first praising BLS for the quality, quantity, and timeliness of employment and unemployment data, and the consistent professionalism of its personnel. The current array
of data published by BLS is not only invaluable for economic analysis and policymaking, but, despite the current disagreements among economists, is
more than adequate in measuring national economic
performance and various aspects of labor market conditions, including employment and unemployment differences among race, sex, and age groups. However, I believe that the data under discussion should be improved insofar as they measure economic hardship and--particularly important in our current inflationary environment--the degree of labor market tightness. While currently available data are helpful, I will propose some additions to the CPS which should provide more useful data for these purposes, as well as some other suggestions relating to the presentation of employment and unemployment statistics to the press and the public. These are among the issues which I believe the Commission should stress in its investigation, rather than focusing on small changes in series definitions, or alternative seasonal adjustment procedures, or other similar problems.
On the issue of economic hardship, I recognize that there are data other than the official global unemployment rate which may better reflect this social condition--for example, the unemployment rate among married men or other similar adult categories. However, these data do not measure hardship directly, and the exclusion of particular age or sex groups may give the impression that there is no hardship associated with unemployment in excluded groups. Additionally, a family with one breadwinner who has been unemployed for less than 15 weeks may be experiencing serious difficulties, and this person would not be included among the long-term unemployed, another measure often used as a proxy for hardship. The
unemployment rate among job losers, while it should be examined by any responsible analyst or policymaker, is also not sufficient as a measure of economic
privation--particularly in those cases where a new entrant or reentrant to the labor force is a new head of household.
In my view, information regarding income in those families currently experiencing unemployment would provide the best measure of hardship. I
advocate an additional question be added to the CPS ascertaining the total current income from all
sources of a household or family which has at least one unemployed member, and this income as a percept of what income was prior to the unemployment. This would include income from unemployment benefits and other government programs. The total size of family or household should also be obtained*
I recognize the difficulty in acquiring accurate responses, particularly regarding income. The
respondent may not know how much other family members may be earning, nor the amount received from various government support programs. It would probably be necessary to present the respondent with a series of income ranges rather than ask for a point estimate. However, only when we have a continuous and consistent time series on average income, or on income distribution, in families with someone unemployed, categorized by family size, both with and without discouraged workers, can we be more definite about hardship. Comparisons of average family income among those unemployed with average income of all families would also help in evaluating the data.
There has been work already done by BLS which bears on this issue. In a special survey in May of 1976, the unemployed were asked to estimate their family income in the previous month, and to list the sources of that income. The nonresponse
rate was apparently quite high, casting additional doubt on the reliability of the data* However, in my
view, these data would be of such great value that BLS should conduct a feasibility study on whether reliable enough data can be developed on a regular basis to result in an ongoing series-0 It would not only add considerably to the measurement of hardship, but would also help in determining the effectiveness of various remedial program.
41-535 0 79 6
BLS has been publishing since 1977 a quarterly series on the percentage of the unemployed with at least one other family member employed. This statistic
obviously bears on economic hardship and will prove more useful when adequate history is developed; it should therefore be continued.
In order to better measure labor market tightness, some improvement in the unemployment statistics can also be made. Several factors relate to the degree of tightness in labor markets and how it changes over time, over and above the bare measurement of the rate of unemployment. These factors include the experience of those unemployed, their skills, and how willing they are to work. While it is difficult to measure some of these, various proxies can be sought. For example, the level of income individuals earned prior to becoming unemployed probably relates to the skills possessed by those individuals. Changes in mean or median prior income of the jobless over time, in real terms, would make a good proxy for changes in the average skill level of the unemployed. This can be calculated for men, by race, or for other categories. A significant decline in the average real income on the last job of those unemployed would probably indicate that the average skill level of those without jobs is falling. To be sure, this could be in part due to a change in mix to more new entrants into the labor force. The cross-classification would, of course, help determine whether it is a mix change, or more likely a change in average skills of experienced workers. It would be very helpful if the prior income for those unemployed was measured consistently with incomes of those with jobs so that a ratio of the two can be calculated and reported on a regular basis.
Secondly, an average educational attainment level among those unemployed can be computed and
reported as a proxy for skill-this can be tabulated from questions already part of the CPS. Such data-for the month of March--are published once a year. Quarterly or at least semi-annual data would provide more timely insights into the potential skill levels of those unemployed.
Thirdly, finer data should be obtained on work experience of the unemployed. The category
Inexperienced wage and salary workers" for which BLS has until recently published an unemployment rate essentially just removed new entrants and the selfemployed from the official rate. A better measure would relate to the number of years an individual was employed in his last occupation prior to becoming unemployed--the more prior experience these individuals have, the more skill we can assume that they possess. I propose that a specific question concerning the amount of prior work experience in the unemployed person's most recent occupation should be co considered as an addition to the CPS, and that a distribution by years of experience be produced on a regular basis. It might be useful to obtain this information for employed persons as well.
I am aware that another factor relating to tightness of labor markets relates to the degree of underemployment or underutilization of those
still employed, and not just to the characteristics of the unemployed. I know the Commission is investigating this issue and I support that investigation.
One last comment on labor market tightness.
One major argument often made is that the overall unemployment rate is misleading, not only because it may comprise primarily unskilled or inexperienced
workers, but because it may hide severe shortages in one or more critical occupations or geographic areas* BLS currently publishes annual unemployment rates for over 200 occupational categories and quarterly numbers for about 30 more broadly defined categories. I recognize the sample size problems;
any attempt to produce reliable monthly or quarterly data for detailed occupational categories, and do so on a regional basis, would require an enormous increase in sample size and cost. However, if
the sample is ultimately increased to improve the quality of the state and area numbers, I would suggest that whatever regional and occupational
data that can be reliably estimated be made available. At a minimum, improving the reliability of the broad occupational split on a national basis, and publishing these numbers monthly or quarterly, should be an objective of BLS. An annual occupational split by region would also be useful. Any cross-classification of occupational data by years of experience would greatly increase the value of these data, as well as
any matching to job vacancy data which is currently being studied by BLS.
In terms of utilizing the current statistics as a measure of national economic performance, my
major concerns relate to (1) the difference between the household and payroll estimates of employee,
and (2) the way in which employment and unemployment statistics are made available to the public. On the first point, I believe a more complete reconciliation is necessary each month between the two measures of employment. There have been several months recently, including June of this year, for which the two measures grew at significantly different rates. These differences must be due either to changes in the number of multiple job holders, farm workers, self-employed or other groups included in one series but not the other, or to sampling errors or statistical discrepancies. But to evaluate the performance of the
economy it would be very helpful to have the reconciliation on a regular basis. In addition, I advocate
that the payroll survey data be tabulated so as to provide a split between part- and full-time workers, or a distinction of employees by ranges of hours worked. Such a split would be useful in evaluating the strength of employment, and perhaps s"hed some light on changes in productivity, which is calculated from the payroll data. In addition, it would be a useful cross-check on the number of part-time workers reported in the household data*
Along these lines, I also suggest a change in the labor turnover series. Labor turnover rates are currently calculated for all employees on establishment payrolls in manufacturing, including part-time workers and temporary employees. The data would be far more useful if they were also calculated separately for permanent full-time workers only. This would involve broadening the questionnaire somewhat, but it would enable business firms to make more meaningful comparisons between their turnover rates and overall trends.
In terms of the reporting of employment and unemployment statistics, I believe the focus on one number, the official unemployment rate, should be changed. Two other rates among the Ul to U7 array
that is now tabulated regularly in "The Employment Situation" should also be discussed on a regular basis in the press release. One of these should be
either Ul, U2, or U3, all of which are more narrow definitions of unemployment than the official measure, and are probably better measures of labor market tightness. The other would be either U6 or U7, the two broadest measures. In addition, both total employment and the employment-population ratio should be reported and analyzed in the release each month since they are valuable indicators of economic performance.
I strongly urge, however, that there be no deemphasis of the unemployment data in the regular BLS reports and press releases as others have suggested. Some claim that the current unemployment rate is
misleadingly high because it is heavily weighted by jobless women and teenagers, and that this does not represent a major problem. However, the adult male Jobless rate is still high relative to previous periods. Furthermore, unemployment among women is of
great concern because many of them are heads of households. Additionally, teenage unemployment is
also a vital problem because the jobs secured in the early years provide the experience, skills, and work
habits that will make many young people useful members of society in later years and prevent or reduce serious social problems. The solution to this type of unemployment may be different than the possible actions which might be considered to rectify
other kinds of unemployment but the problem is just as important.
Finally, I believe a page of charts providing long-term historical perspective for several key unemployment rates should be included in "The Employment Situation" some of these are already included in "Employment and Earnings". Appropriate candidates for these charts would be the long-term unemployment rate, the rate among job losers, unemployment among adults, the official measure, and U7, the broadest measure* In addition, the employment-population ratio should be included. This would enable anyone reviewing the report to compare the current rate for those categories to historical levels in order to better evaluate current conditions.
CHAIRMAN LEVITAN: Thank you for a very nice statement. We'll start with Mr. Carlson.
MR. CARLSON: I do have one question. I would
like to get some appreciation of the order of magnitude of costs, if you've given any consideration to some of the more important recommendations, or if you could give some more thought to the totality of the recommendations you have provided? Do you have any idea of the order of magnitude?
DR. CHIMERINE: Yes, Mr. Carlson, I have given some thought to the cost, and I can tell you that it would be quite considerable. I could not give you a specific estimate, but in my judgment, particularly again, in the current environment and the likely future environment, I personally view that cost as a wise expenditure to provide the kind of information that we need*
MR. CARLSON: Would you think in terms of the money spent and the survey and the analysis that there would be a doubling of the cost?
DR. CHIMERINE: I doubt it, but it would
involve probably a 50 percent increase.
M4R. CARLSON: Thank you.
CHAIRMAN LEVITAN: Mr. Popkin.
MR. POPKIN: First of all let me say this.
It probably might be a lot more than doubling, but giving how shockingly small it is in terms of the money that depends on it, I don't think there's a real issue to defend.
DR. CHIMERINE: I would agree completely with that.
MR. POPKIN: I want to go into two things that your testimony raised. And I agree with Jack, that it was very stimulating. You talk about adding lots of logical, intelligent, and very important data
into the CPS to go with "how long did you have your last job?" "How much did you make in your last job?" "How much education do you have?" And then you talk about adding income, which we all know is right now extremely difficult to obtain. I've done survey work--people in the labor field know that it is very very touchy. I'd like to ask you to think about something your testimony initially raised for me. Do
we even need the income data given all of the other variables you suggested to allocate money for a program such as CETA? Think for a minute, if you would. Just suppose you had age data, education data, the past job, how long you had held the job, and how much you made? Could these numbers be much more
reliable than income--be perhaps a good enough proxy so if you use those numbers to spread the CETA money we'd be doing something maybe better than we could
with the income data, given the problems of getting honest data on transfer payments and family income?
DR. CHIMERINE: My concern about income data Mr. Popkin, is primarily from the point of view of the policymaker. I'm looking at it not in terms of allocating funds but of determining appropriate economic policy. I think the two most critical questions regarding unemployment in that respect are
(1) how much suffering are those people who are unemployed encountering and (2) if we stimulate the economy, are we going to generate nothing but some
more inflation because labor markets are really tighter than we believe. So, from that point of view, I think the income data is necessary.
MR. POPKIN:o Okay. So, I will ask the question about CETA--leave it to someone else.
DR. CHIMERINE: Good.
M4R. POPKIN: Another point of view does come up then. I thought about it several times during these hearings and I think it's very relevant to the problem of tightness and also to the problem of equity and intelligent allocation. That is, right now if you're the head of a family and the sole income earner and you're working 13 hours a week, you're counted as employed. If you're living in a retirement community with no work and looking for seven hours of work, you're counted as unemployed.
Should we consider--I hate to suggest that--another measure--but a measure that is weighted so that a person who works 20 hours a week and who wants 40 is half unemployed and counted a full member of the labor force? A person who is looking for 8 hours a week of work counts as 20 percent of a work unit? So we .have a real measure of the size of the labor force and you count people as equivalent half times, quarter times*
DR. CHIMERINE: Yes. In my judgement you should and as a matter of fact to some extent that is already incorporated in one of the definitions of unemployment. If someone wants to work full-time and has only a part-time job he is counted as half unemployed and half employed.
MR. POPKIN: Thank you.
CHAIRMAN LEVITAN: Mr. Anderson.
MR. ANDERSON: Dr. Chimerine, I want to also add my congratulations on a very fine statement. There are two areas I'd like to get some additional comment on, if I may. One is your statement at the bottom of page five regarding the measure of labor market tightness. This is a subject that has for some time been close to my heart. With that in mind, I would simply suggest to you that I don't think you're likely to accomplish the objective you have in mind by looking simply at wage changes. As you might know, most of the changes in wages that take place, certainly over a limited period of time, are the result of increases in pay without regard to skill
changes, rather than occupational or skill changes. So, I don't think you're likely to accomplish your objective of a better measure using this. But I was wondering why you would not suggest an improvement in the measurement of unemployment by occupation, and also, an improvement in the availability of the Job
vacancies statistics which you allude to, I believe, on page eight. Would that not be a better measure of labor market tightness--to look at the rate of unemployment in specific occupations and the availability of job vacancies in relation to the unemployed?
DR. CHIMERINE: Yes. Mr. Anderson, let me comment on all parts of your question. But first of all I'm not sure I completely agree with you on your statement
that measuring prior income of those unemployed would not be a proxy for their skill levels. I agree with you that an average would change over a period of time because of inflation. All salaries are rising. There are two adjustments we can make to make those data more meaningful.
One, we can measure the performance in real terms, Secondly, we can measure prior income relative to all average incomes throughout the United States. So, if there is any change in that ratio, that might be indicative of a change in the average skills of those unemployed relative to the average skill of the population in general*
MR. ANDERSON: I don't want to gauge this problem--this probably isn't appropriate--but also it really gets you at the question of labor market tightness? The tightness--I gather what you mean by the tightness is a tightness in specific sectors of the labor market. Are you using the term tightness in a macro or micro sense?
DR. CHIMERINE: Both. It does not get us directly to a measure of labor market tightness. It bears on the degree of tightness; in particular what are the potential skill levels of those unemployed.
There is a big dif f erence in labor market tightness if you have six percent unemployment if all six percent are new entrants into the labor force or inexperienced workers than if all six percent are highly skilled and experienced workers. I think the data would bear on that.
MR. ANDERSON: Why would that not suggest to you a critical need for good job vacancy statistics.
As you know, if you want to stimulate the economy, you're likely to get inflation. If, in fact, we cannot target our spending on the pockets of unemployment, getting people into the jobs that are vacant, why would you not suggest that we improve significantly the availability of the information on job vacancies?
DR. CHIMERINE: For two reasons. One reason, Mr. Anderson is that BLS has explored this issue numerous times in the past and has determined that it
was extremely difficult to get reliable job vacancy data. And number two is the issue of the cost. Current estimates of the cost of the program are enormous. Now, I'm not suggesting that they don't do it. I didn'Irt take a position one way or the other in
my prepared testimony because I'd like to see the results of the BLS feasiblity study first.
MR. POPKIN: Are you speaking of the estimates for the vacancy program?
DR. CHIMERINE: The job vacancy program. I would support it if the data derived are useful and reliable, and if the cost is within reason. As a
matter of fact, I support the feasibility study that the BLS is currently undertaking to determine whether or not reliable estimates can be made.
MR. ANDERSON: I was very pleased to hear
you mention in your statement on page 10 that your emphasis on--no, deemphasis of--the unemployment data
that has been suggested by some.. Because of this, I'm extremely pleased that you are about to become the Chairman of the Business Research Advisory Group. I think it would be a tremendous credit to the BLS to have someone with those views in that position.. I
want to congratulate you.
DR. CHIMERINE: Thank you, Mr. Anderson. I would like to make one further remark on the question you asked. I did discuss the occupational data in my statement and I did support a significant broadening of that data as an additional measure of labor market tightness. I would strongly support any
effort in that direction*
MR. ANDERSON: That's occupational employment?
DR. CHIMERINE: Occupational unemployment.
CHAIRMAN LEVITAN: Ms. Wills.
MS. WILLS: Let me, too, add congratulations. Two very quick questions. For the questions and
information you'd like to see expanded on the CPS, would want that done every month, or do you think some of it could be done once a quarter? I don't recall that you mentioned that.
DR. CHIMERINE: I didn't. I waffled on that to be honest. And I guess in most cases, probably quarterly would be sufficient. Certainly not less frequently than once a quarter.
MS. WILLS: One final question. As you're
aware we had the Gordon Committee, now we have the Levitan Commission--I read in the paper the other day it was called the Levitan Commission so, I'm calling it that now. What do you think of Mayor Jackson's recommendation for some kind of oversight structure? You're very familiar with subcommittees and advisory subcommittees, which I'm still not sure are by law and/or just by choice on the part of BLS, do you think that we do need some kind of oversight body that constantly works in concert with BLS in a more formalized fashion than the current advisory committee?
DR. CHIMERINE: Quite frankly, I don't--I
doubt that such a committee would serve such a purpose. I think the B3LS has managed to get inputs from all people who have them--I wonder whether or
not they would get any additional input information over what they are now getting. So, quite frankly, I don't think it would serve any major purpose.
CHAIRMAN LEVITAN: How about if BLS f eels that it needs an informal business advisory committee? Why should we treat Mayors and Governors as less than research peopleDR. CHIMERINE: We shouldn't, but the question
was whether or not I thought it would be useful, or whether it would result in any useful statisticsCHAIRMAN LEVITAN: Are you suggesting that advisory committees are not useful?
DR. CHIMERINE: I serve on those committees, Mr. Chairman, and I certainly wouldn't make that statement. But I think they are of limited value.
CHAIRMAN LEVITAN: In other words, you think that people representing political groups would be less useful than-DR. CHIMERINE: No. I don't think BLS would get any significiant additional information.
CHAIRMAN LEVITAN: I would say, in reference to your question about greater emphasis on the
part of BLS, maybe they will listen to you about measuring hardship deprivation in the labor market. There are conceptual problems that occurred to me following your statement. You emphasize, or you
comment on, the accounting of employed persons as far as deprivation is concerned. I don't have to tell you, sir, that, of course, many are also discouraged workers. You think that they might even be more important for those purposes. Would
you include them?
DR. CHIMERINE: Absolutely and I thought
I did mention in my statement that they should be included in that measure.
CHAIRMAN LEVITAN: If it was there, then the question was unnecessary and if it wasn't there then-MR. POPKIN: If it's there, what do you think is an appropriate cutoff on discouraged worker?
DR. CHIMERINE: I really don't have any objections to the current measure, that is the official measure, of four weeks. I think that's a reasonable period. I don't think there's much to be gained by changing it to five weeks or three weeks or six and half or something like that.
CHAIRMAN LEVITAN: My second question, sir.
In the exchange between you and Mr. Carlson, you talked about cost. But you talked only of cost to the taxpayer or to government agencies. Would you also consider the cost of additional questions to the respondents, who are volunteers? Would you expect to give them all sorts of questions, which I think as Mr. Popkin suggested, may raise their hackles?
DR. CHIMERINE: The answer to your question, Mr. Chairman, is that I never considered it. if
it's something that would improve the response rate for these questions, I would be all for it. I can't imagine that it would involve substantial costs.
CHAIRMAN LEVITAN: No, obviously. I am all in favor of the questions you are asking, but Census and BLS tell us that every time they ask additional
questions--I'm just asking whether you would want to consider that.
DR. CHIMERINE: I think it should certainly be considered, Mr. Chairman.
CHAIRMAN LEVITAN: Finally, I have one which I don't know how to handle, so I'll turn to page ten. You suggest on page ten, that in terms of reporting employment and nonemployment statistics you want a few things. How many numbers do you think Mr. Walter Cronkite is going to report on Friday at 7 o'clock?
DR. CHIMERINE: I think three is a good number.
CHAIRMAN LEVITAN: You think you could talk him into it.
DR. CHIMERINE: Yes, I think three is enough. Absolutely.
CHAIRMAN LEVITAN: All right. If you think that they would then I think it's an excellent idea. But some people tell me that the way they run the news, CBS never gives you more time.
DR. CHIMERINE: Well, they could flash it on a board.
CHAIRMAN LEVITAN: I see. In other words,
both visual and-DR. CHIMERINE: Audio reporting. Mr. Chairman, I'm thinking of the money supply where they are now regularly reporting on both Ml and M2. I haven't found that that change has burdened either the newspapers or TV coverage.
CHAIRMAN LEVITAN: I'm delighted to hear
that. Before we take the break for jogging or calories, whichever your disposition happens to be--as you may have heard Mayor Morial of New
Orleans will not be able to make it today, but he will present a written statement to the Commission. We appreciate very much to hear from him.
We had another witness or another advisor today, Barbara Monohan, of the Heartland of Florida CETA. Because of a serious illness in the family, she cannot appear. Of course, we wish Mr. Monohan a speedy recovery.
The final announcement is a rather sad one, but I think the record should take note of this,
over this weekend the newspapers reported the death of Dr. Isadore Lubin, the Commissioner of the Bureau of Labor Statistics in the '30's. He was the numbers man in the White House during World War II and had a distinguished career since then.
We will miss him not only because of his very productive contributions to the labor force statistics of the United States, but also when the Commission was appointed Dr. Lubin came immediately and offered his help, volunteered his help, and promised to review the draft of the Commission's report. We'll miss him very much, and the expert advice and help that he would have given us, if he had not been taken away. And the Commission will express its condolences to the family of Dr. Lubin.
On this sad note we'll take a break f or one hour--sixty minutes--30 minutes of jogging and 30 minutes for eating. Which means, Mr. Dressman and Mr. Hehl--will 1:40 p.m. be suitable for you gentlemen?
Thank you very much. We'll take a break for one hour.
(Whereupon, the lunch recess was taken.)
CHAIRMAN LEVITAN: Since we have one less
speaker, then we ask anyone that would like to give any advice, you will be welcome at the end
of the seance, at about 4:10 or 4:20. So please
prepare your statements.
We will continue with our next witnesses-experts--who are going to advise the Commission.
They are the Honorable James A. Dressman of Kenton County, Kentucky, and the Honorable Lambert Hehl, Campbell County, Kentucky. Gentlemen, proceed in whichever way you please.
STATEMENT OF HONORABLE JAMES A. DRESSNAN,,
CAMPBELL COUNTY, KENTUCKY
MR. DRESSMAN: Thank you, Mr. Levitan, for calling us experts, because in our home counties no one thinks we know anything. We previously filed with the Commission the impact statement of Kenton County. I don't know whether you have that or not.
CHAIRMAN LEVITAN: We do have the Kenton
MR. DRESSMAN: We brought extra ones with us.
CHAIRMAN LEVITAN: I thank you sir.
MR. DRESSMAN: First of all I don't know
whether you know where Kenton or Campbell Counties are located, but they are directly across the river from Cincinnati, Ohio separated by the Ohio River which is owned by Kentucky and in turn the Licking River separates Kenton and Campbell Counties and we fight over who owns that river.
According to all the figures that we can see, we are the two counties that have suffered the most severely because of this new change of mathematics that was projected by the Department of Labor, Bureau of Labor Statistics, according to the figures that we have. I think you will find that in our impact report there, I don't want to go over all of that, because I presume that you will take time to look at it and read it.
CHAIRMAN LEVITAN: We shall.
MR. DRESSNAN: According to the figures that we have on our unemployment rates, it dropped from 7.2 to 3.8, a 3.4 percent drop--this is a drop of about a half in the rate.
CHAIRMAN LEVITAN: That's one way to solve unemployment.
MR. DRESSNAN: I think it solves the unemployment problem--but it is so unreasonable that we can'J.t understand either one of these figures. They are so wrong (the one that they had before and the one that they have now) that somebody ought to look into it. And it also shows that how undependable using unemployment rates is in figuring out the system. Using these unemployment rates not only affected us with CETA, it affects us with all the other federal funds such as countercyclical and economic development funds.
If the figures can come out so differently, then they are so unreliable, that they oughtn't be the sole determining factor in any of the federal grant programs.
The other thing we can't understand. We've
checked the unemployment claims from our county which seems to be the primary thing that they are using now in their calculation. Although our
unemployment rate dropped about a half, the claims for unemployment insurance only dropped 19 percent during that time. That is just totally inconsistent with what they've come up with. Also we'ye checked the amount of food stamps, the welfare claims and what not and they've gone up rather than coming down in Kenton County.
The drop in the unemployment rate seems to be so different with what was found. If unemployment figures are so unreliable, some consideration should be given to other things such as the average income in Kenton County. Our county is below the
national average in income in the United States. Also, there ought to be some thought about the industrial development and the new jobs created or whether your employment figures are static or whether you're getting increased employment.
Another thing that I've checked out, when people go on unemployment in Kenton County, how long are they there before they can find a job. We've got a great number of people who have gone on fifteen weeks without being able to find a job in the employment market. I think that another determining factor that should also be considered is how many people never file. For instance, we
have one particular case right now where a fellow hasn't worked for four years because he has been subject to epileptic fits and we're now working with him to find him a job and get him a job. Now he
isn't even listed in the statistics.
The other thing that gets our nanny up a little bit is that President Carter revved us up, geared us up to fill up a great number of jobs and we I ve done it. Our county filled its quota within the time that was allowed to us when it was a geared up situation. Now we've got all these people working for us and they are going to take the money away just like that and we're going to have to fire 350 people.
I guess the government ought to do it for us because that isn't going to be very much fun to take 350 people off of our payroll. When you lay these people off they're going to have to make
unemployment claims so that they go up again, which will make us qualified again. Welfare and food stamps for those people are also going to go up*
We think that there ought to be some way to ease us down from the great build up that they've made us do just recently and which we've just com.pleted. They shouldn't let those people hang out on a limb and make us the big bad wolf if we fired 350 people all on one day.
The other thing that's indirectly affected here. In the use of CETA--if you** 11 look at our record in there, the greater part of the people that Kenton County has helped have always been the kind that were hard to hire. They've been the underpaid, the minorities and what not and we've followed what the government wanted strictly. We've not used the slots for government officials or any other kind and we've also got over 80 social agencies that have employees for CETA. Now, if we take them away from those people, it's going to effect their services that go to the poor, to the aged, to the handicapped. It will ruin our bus company going--we are using it to keep day care centers. We're using it for home care for the aged, running transportation systems f or the aged Redwood School which is a Cerebral Palsy School is getting people. I think you can see the impact on the social situation in our community, if we withdraw all of these people that we've been assigning to social agencies to assist in the needed areas of our county.
To summarize we just can't understand how figures can be so wrong. It has hurt us badly. How can there be such a drop in the unemployment rate in one section of the United States? BLS could now be right, I'm not saying they are not--I'm not an expert. I've tried to read how they do these things. I've never really paid much attention to these figures until recently--until it affected us. I tried to read how to arrive at the rate. I'm a lawyer and I've read it and I still can't understand that handbook you use and all that business. I'm not a mathematician. All I know is, it doesn't make sense that somebody could be so wrong for so many years. And now all of a sudden they say they're right. You see, it just doesn't make sense that ways.