April 7, 2006
This morning the Bureau of Labor Statistics released the jobs report for March, and once again we are seeing strong, consistent job growth. 211,000 net new jobs were created in March and the unemployment rate dipped further to 4.7%. About 590,000 net new jobs have been created in the first quarter of 2006-for the strongest first quarter showing in five years. As the President said this morning, these numbers signal an economic resurgence, which is the result of the energy and effort of America's workers, small business owners and entrepreneurs. And it's also the result of the President's pro-growth policies, which have left $880 billion more in the pockets of America's workers and their families, which has fueled this expansion. So with that in mind, I'd be happy to take your questions.
Toshi, from New York
Many economists say that unemployment rates below 5,NAIRU are dangerous.
Could you tell us your view on this point?
Thank you for your question, Toshi. For those not familiar, Toshi is referring to concerns about tight labor markets pushing up wage costs and prices. Right now, core inflation is not rising, despite low unemployment and rising wages. So the labor market likely has room for more expansion without inflationary pressures arising. But the Federal Reserve is carefully managing monetary policy to keep inflation expectations in check. Traditional views about the so-called "natural and irreducible rate of unemployment" may be changing, as new developments in the labor market make it possible to achieve lower unemployment without generating inflationary pressures.
Marja, from Finland writes:
Hello Mrs. Chao Iam interested to hear how the U.S. economy seems to
develope in coming years? Does it look brighter in the future? This
question is just out of common interest, because I live in Europe and
economy has quite strong effect to ours too. Also, how would you compare
the economical development between U.S.A and Europe in future? What is
the employment rate in U.S.? I would imagine that it would alter quite
much between states and also that it would be rather "easy" to get a job
with a proper diplomaprofession, but what about the ones who dont have
academic education? Thank you very much for answering Yours, Marja
I am very optimistic about the future of the U.S. economy, because America is a very special place in which each person is free to pursue his or her dreams. The combined force of so many people pursing their personal best has created one of the most powerful engines for growth and opportunity in the world. More Americans are employed today than ever before143.6 million. Real GDP growth averaged 3.5% in 2005, better than any other G-7 industrialized nation. And the U.S. economy created more job in the past 2 ½ years that the EU and Japan combined. Compared to Europe, the U.S. has higher real per capita income, lower unemployment and higher productivity.
The strength of the American economy is also the result, in part, of the flexibility of the U.S. labor market, which allows workers to pursue better opportunities. In fact, the average American worker will have had 10 jobs by the time he or she is 38 years old.
Fred, from Irvine, CA
Hi, Secretary Chao: Thank you for your government service. What do you
think the long-term effects will be of the cost-shifting of pension
obligations? I think of the way that companies are ditching their
pension plans. That is, our country right now is telling companies that
it is ok to go into bankruptcy, transfer their pension obligations to
you, the PBGC, and then allow the shareholders to reap the benefits of
that action (by having an increase in their stock price). It has
happened with many companies, and I don't see government doing anything
except getting out of the way (and of course, assuming the obligations
at the PBGC). What will the long term impacts be on the thousands of
people whose pensions are nearly all lost, the government's PBGC, and
how does that bode for a plan to set up individual social security
accounts? Thanks Fred
34 million Americans have defined benefit pension plans and the retirement security promises made to these workers must be kept. Thats why last year, the President introduced a pension reform plan to strengthen these plans, to make sure that they are properly funded, and to give workers accurate information about the health of their defined benefit plans. Pension reform legislation is currently pending in the Congress and the President has made it clear that he will not sign a bill that is weaker than current law.
KH, from Traverse City, MIchigan
Secretary Chao: Our good economy and increase in jobs is something you
never hear on the news. Can you briefly explain how our economy is doing
and how our job numbers have increased?Thank you for your time
Thank you for you excellent question! Our economy is doing very well indeedwe've had 31 consecutive months of job growth for a total of about 5.2 million net new jobs created since August 2003.
Just last month, in March, job growth once again exceeded expectations with 211,000 net new jobs created. And the good news is that this job growth is broad, across many industries. GDP growth averaged about 3.5% in 2005, which is strong for a mature, industrialized economy. Also, the unemployment rate of 4.7% is lower than the average of the 1960s through the 1990s, more Americans own their own homes than at any time in history, and consumer confidence is at its highest point in nearly 4 years. So theres a lot of good news!
Brian, from New Jersey
In the aftermath of Katrina an estimted 2 million people were left
displace and unemployed. Why was there almost no substantial change in
the unemployment numbers following Katrina? I only hear that 1.2 million
jobs were created in 2005, but is this a Net increase after the 2
million jobs lost in the south? Were the numbers adjusted or did we
really create 3.2 million jobs last year?
Actually, there was a change in the employment numbers because of the impact of the hurricanes. Job growth was below average in September and October 2005 due to employment losses in the Gulf region, which offset some of the job growth in the rest of the nation. Fortunately, some of the people who were unable to work in the immediate aftermath of the storms were not permanently dislocated. Others have been able to return to their old jobs or find new ones. There is still much more work to be done, and we can expect to see a tremendous period of rebuilding and renewal as the recovery continues. But yes, overall, our nations economy really did create 2 million net new jobs in 2005.
Courtney, from DesMoines,IA writes:
How many people are working at a job now than at a job in 1993?
According to the Bureau of Labor Statistics' payroll survey, about 24 million more people are on payrolls today than in 1993. In fact, more Americans (143.6 million) are working today than ever before. This robust jobs growth is a testament to the strength, flexibility and dynamism of our nation's workforce and economy, and to the President's pro-growth policies.
Derek, from State College, PA
Hi Secretary Chao: I am currently a 2nd year Finance undergraduate
student. I am really curious about how the job market is going to look
like in the year of 2008 (when I will graduate) for business
undergraduate students (FinanceEconomics student)? Can you please give
some prediction and explain? Also, I wonder, what is the current median
and average salary for FinanceEconomics Bachelors nationwide? Lastly,
if possible, can you make some rough predictions what the umemployment
rate will be in 2008? Thank you very much.
You will be glad to know that a recent independent survey reported that graduates this year will find the strongest job market since 2001. Demand is especially high for business, computer, engineering, education and health care graduates. Every two years, the Bureau of Labor Statistics publishes a projection of job growth by occupations for the next decade. BLS has just released its latest projections for 2004-2014, and you can find this as www.bls.gov.
Cliff, from Brimfield, Ohio
Secretary Chao: With many of the BIG companies laying off, is the
smaller companies taking up some of the slack in employment? Thank You
Actually, small and medium sized businesses are the engines of job growth in our economy today. Between 1992-2005, firms with fewer than 500 employees accounted for 65% of average employment growth in our country. And firms with fewer than 100 employees accounted for 46% of average employment growth. Thats why the President has made small business growth one on his highest priorities, i.e., putting in place policies that encourage a climate of growth, innovation and entrepreneurship. He also supports policies that would expand access to quality, affordable health care for small businesses, such as Association Health Plans. These plans allow small and medium sized employers to band together, pool their risk, and purchase health insurance for their employees at more affordable rates.
Thank you for these interesting questions. It has been a pleasure to help explain the meaning of the monthly employment report and to highlight the strength and dynamism of our nation's workforce and economy. Our nations' strong economic performance is all the more remarkable considering the tremendous challenges that our nation has faced over the past 5 years. Let me close by pointing out that the majority of the new jobs being created are in occupations that pay above average wages. By definition, they require more skills and higher education. So the challenge before us is to ensure that our nation's workers have the skills they need to access these emerging opportunities and remain competitive in the 21st century economy.