[Joint House and Senate Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



                                                         S. Hrg. 108-76

                  THE EMPLOYMENT SITUATION: MARCH 2004

=======================================================================

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 2, 2004

                               __________

          Printed for the use of the Joint Economic Committee



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                        JOINT ECONOMIC COMMITTEE

    [Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]

SENATE                               HOUSE OF REPRESENTATIVES
Robert F. Bennett, Utah, Chairman    Jim Saxton, New Jersey, Vice 
Sam Brownback, Kansas                    Chairman
Jeff Sessions, Alabama               Paul Ryan, Wisconsin
John Sununu, New Hampshire           Jennifer Dunn, Washington
Lamar Alexander, Tennessee           Phil English, Pennsylvania
Susan Collins, Maine                 Adam H. Putnam,  Florida
Jack Reed, Rhode Island              Ron Paul, Texas
Edward M. Kennedy, Massachusetts     Pete Stark, California
Paul S. Sarbanes, Maryland           Carolyn B. Maloney, New York
Jeff Bingaman, New Mexico            Melvin L. Watt, North Carolina
                                     Baron P. Hill, Indiana

        Donald B. Marron, Executive Director and Chief Economist
                Wendell Primus, Minority Staff Director


                            C O N T E N T S

                              ----------                              

                      Opening Statement of Members

Representative Jim Saxton, Vice Chairman.........................     1
Representative Pete Stark, Ranking Minority Member...............     3
Senator Jeff Sessions............................................    10
Representative Carolyn B. Maloney................................    12
Representative Melvin L. Watt....................................    16
Representative Baron P. Hill.....................................    14

                               Witnesses

Statement of Hon. Kathleen P. Utgoff, Commissioner, Bureau of 
  Labor Statistics, U.S. Department of Labor.....................     5

                       Submissions for the Record

Prepared statement of Representative Jim Saxton, Vice Chairman...    23
Prepared statement of Representative Pete Stark, Ranking Minority 
  Member.........................................................    23
Prepared statement of Hon. Kathleen P. Utgoff, Commissioner, 
  Bureau of Labor Statistics, U.S. Department of Labor, together 
  with Press Release No. 04-596..................................    24

 
                  THE EMPLOYMENT SITUATION: MARCH 2004

                              ----------                              


                         FRIDAY, APRIL 2, 2004

             Congress of the United States,
                          Joint Economic Committee,
                                                     Washington, DC
    The Committee met, pursuant to call, at 9:35 a.m., in room 
1334, Longworth House Office Building, The Honorable Jim 
Saxton, Vice Chairman of the Committee, presiding.
    Representatives present: Representatives Saxton, Stark, 
Maloney, Watt, and Hill.
    Senator present: Senator Sessions.
    Staff Present: Chris Frenze, Bob Keleher, Colleen Healy, 
Brian Higginbotham, Mike Ashton, Donald B. Marron, Rebecca 
Wilder, Wendell Primus, Chad Stone, Matthew Salomon, Nan 
Gibson.

 OPENING STATEMENT OF REPRESENTATIVE JIM SAXTON, VICE CHAIRMAN

    Representative Saxton. Good morning. I am pleased to 
welcome Commissioner Utgoff once again before the Joint 
Economic Committee.
    The figures released this morning are good news for 
American workers. According to the payroll survey, employment 
increased by 308,000 jobs in March. Moreover, payroll 
employment growth was revised upward to 159,000 in January and 
46,000 in February
    The data reported today show that 759,000 jobs have been 
added to the payrolls since August 2003. The BLS describes the 
unemployment rate as about unchanged.
    The diffusion index, an important indicator of the breadth 
of employment changes, jumped from 51.4 percent to 61.0 percent 
in March. This is the highest level of the diffusion index 
since July 2000. This indicates that the job gains in March 
were not confined to one sector of the economy, but rather were 
much more broadly diffused. In addition, the consecutive 
declines in manufacturing employment that began in August 2000 
have come to an end.
    According to a wide range of other economic data, the U.S. 
economy is growing at a healthy pace. A review of the recent 
history demonstrates that the American economy has displayed 
amazing resilience despite the 2000 economic slowdown that soon 
became a recession, terrorist attacks, wars, corporate 
scandals, and other shocks.
    However, according to critics of the administration, there 
is a notion that the U.S. economy was in splendid shape until 
President Bush took office and put his policies in place. 
According to this view, virtually immediately upon President 
Bush's inauguration, the economy went from an ideal picture of 
health to the ``worst economy since the Great Depression.'' 
However, the evidence demonstrates that this view of the 
economic record is fundamentally wrong.
    A review of the facts shows that long before the current 
economic administration took office, the U.S. economy was 
dangerously exposed to a frenzy that had overtaken the stock 
market and had perverse effects throughout the economy.
    As the chart to my right shows, the stock market and high-
tech bubbles can be seen in the spiking of the NASDAQ in the 
late 1990s. If we look at the bottom of the chart, we see that 
in 1999 we had this tremendous spike, in this case in the 
NASDAQ.
    When the stock market bubble burst in the first quarter of 
2000, three quarters before the President was sworn in, it 
exposed widespread over-investment and bad investment, and 
triggered a painful structural adjustment that has taken years 
to complete. The bursting of the stock market bubble in the 
first quarter of 2000 was reflected in a 45 percent drop in the 
NASDAQ for the period through January 2001.
    The bursting of the stock market bubble was the largest in 
several generations and set in motion forces that shook the 
U.S. economy for several years. The stock market bubble helped 
boost investment by lowering the cost of capital, but when it 
burst, bad investments were exposed and there was a falloff in 
overall investment that led the economy into a slowdown and 
recession. This weakness in investment lasted over 2 years.
    We have another chart here that shows that fixed private 
nonresidential investment began to fall in the third quarter of 
2000, and obviously, according to the trends that existed at 
the time, led the economy during the last half of 2000 into 
negative nonresidential investment.
    With the sharp economic slowdown that started in 2000 and 
GDP actually declining in the third quarter of 2000, the 
economy continued to fall.
    The next chart shows a similar pattern based on GDP.
    The GDP chart, shows the same trend beginning in the second 
quarter of 2000 and then, of course, continuing into the first 
two quarters of 2001.
    Since much investment is comprised of machinery and 
equipment produced in the manufacturing sector, the falloff in 
investment pushed this sector into recession by the second half 
of 2000. The respected ISM survey of manufacturing activity 
shows the plunge in manufacturing activity under way in 2000 as 
well. The chart shows that in 2000 the ISM began to drop 
significantly; and by the middle of 2000, the ISM survey of 
manufacturing activity had plunged to an all-time low, or at 
least into a low in terms of modern history.
    The ISM survey of manufacturing employment shows 
accelerating declines in the second half of 2000. All of the 
net job declines in recent years are accounted for by the 
manufacturing sector, but the downward trend in manufacturing 
employment began long before President Bush took office or his 
policies were in place. For example, relative to the cyclical 
peak in March 1998, manufacturing payroll jobs had declined by 
over half a million by January 2001. There has also been a long 
downward trend in manufacturing employment. As noted, the 
falloff in investment that began in the second quarter of 2000 
had a negative impact on manufacturing, because much of this 
sector is engaged in the production of capital goods like 
machinery and equipment.
    Manufacturing employment began to fall every month, 
beginning in August 2000. The economic slowdown became a 
recession in 2001. As Joseph Stiglitz, President Clinton's 
chairman of the Council of Economic Advisers, said, ``the 
economy was slipping into recession even before President Bush 
took office, and the corporate scandals that are rocking 
America began much earlier.'' The recession ended in November 
2001.
    The bottom line is that the largest stock market bubble in 
several generations burst in the first quarter of 2000, and 
this had widespread and long-lasting spillover effects that 
remain today.
    The U.S. economy has also been negatively affected by 
terrorist attacks, wars, corporate scandals, and a weak 
international economy. However, the U.S. economy has proven 
very resilient, and economic growth started to accelerate in 
2003 as the stimulative effects of tax relief and monetary 
policy became evident. The economic expansion has accelerated 
over the last year, particularly in the last two quarters. GDP 
growth, the total output for goods and services, jumped over 6 
percent in the second half of 2003.
    According to the Blue Chip Consensus of Economic 
Forecasters, GDP growth is expected to grow by about 4 percent 
for the foreseeable future.
    Continued strong economic growth will ultimately translate 
into continued growth in employment, as it always has in the 
past. The bottom line is, if the economy is strong, although 
high productivity delayed sustained economic growth, the labor 
market has tended upward in recent months. Again, we are 
delighted with today's number of 308,000 new jobs created in 
the month of March.
    [The prepared statement of Vice Chairman Saxton appears in 
the Submission for the Record on page 23.]
    Commissioner, we look forward to your testimony, but before 
we go to you, we certainly want to give Mr. Stark an 
opportunity to say whatever is on his mind.

    OPENING STATEMENT OF REPRESENTATIVE PETE STARK, RANKING 
                        MINORITY MEMBER

    Representative Stark. Thank you. A couple of things. First 
of all, I want to welcome Commissioner Utgoff to the House side 
of the Hill, and thank you for being here on this rainy day 
with some sun-shiny news. I also want to notice, if I can, the 
presence of Tom Nardone from BLS, who got a nice, well-deserved 
accolade today in today's Washington Post for his long and 
dedicated service as a civil servant and helping us in this 
area.
    I welcome Tom. Congratulations.
    I also wanted to say, Mr. Chairman, that I haven't heard 
such eloquent economic dissertation since I heard my professor, 
George Papandreou, tell me at the University of California that 
the only good economists in the world were Greek, and he may or 
may not have been right, but congratulations.
    I have to say 308,000 jobs ain't bad, and if we could keep 
it up for, I think, what is it, a year and a half, then we will 
be out of the woods.
    Representative Saxton. I would just say to the gentleman 
all I was trying to say was my glass is half full.
    Representative Stark. Okay.
    But I am serious, 308,000 jobs is what we have been hoping 
for. We will ask the Commissioner later whether she thinks this 
will continue or whether it is a bubble; but as I say, there is 
nothing that I would rather see than to see us be out of the 
hole in a year and a half.
    I would like to, however, ask you and your colleagues, Mr. 
Chairman, that as long as rosy scenario is singing in our 
economic opera here, how about a little compassion?
    I remember compassionate conservatism somewhere back, some 
time ago, and we have 8 million Americans officially unemployed 
and another 5 million who still want work out there. If we 
include those 5 million, I guess we could be up around 10 
percent unemployment.
    Treasury Secretary Snow has said that the President would 
sign an extension of benefits--of unemployment benefits if a 
bill reached his desk, but our Congressional Republican 
leadership seems to have blocked our extending unemployment 
benefits. So, I would just say to add to this good news and to 
bring it home to those people whose unemployment benefits are 
expiring and who are looking forward to perhaps their 
children's summer vacation without any funds, perhaps no funds 
to buy them decent food even, maybe even pay the rent, that for 
these families we could add to this good news that you are 
bringing to us today and extend those unemployment benefits.
    It is our position in the House and in the Senate that is 
blocking it, and so I am sure that you, as I do, have many 
patriotic Americans who have worked long and hard at their 
chosen occupation, obeyed the law, paid their taxes, served in 
the military, if called on; and they are out of work not 
because they are unemployable, because they had to have a job 
for at least 6 months in order to qualify. It is those folks--
they don't need training, but we have to find jobs for them. In 
the interim, in a matter of compassion and good will, we should 
pressure--and I hope you will join with me to see if we can put 
pressure on our colleagues to report out an extension of the 
unemployment benefits.
    With that, I look forward to hearing the Commissioner's 
report.
    Representative Saxton. Thank you, but I would just like to 
respond to your request.
    I certainly am willing to consider another extension of 
unemployment benefits, and I suspect that that may be a subject 
of upcoming interest as we move into this year, but I would 
point out, again, that 308,000 of the people who were 
previously unemployed are re-employed today, and 759,000 have 
been added to the payroll since August 2003. So we are making 
good progress here on the domestic side.
    On the international side, the unemployment rates around 
the world are quite astonishing actually. In the euro zone, 
meaning the countries that now are trading with the euro, the 
unemployment rate before today--and it probably hasn't changed 
much--was 8.8 percent, and in Canada the unemployment rate is 
7.4 percent, and here today in the United States the 
unemployment rate is 5.7 percent.
    So we are not doing too bad on the international scene, and 
it looks like things are getting better with 759,000 jobs 
having been added here in recent months.
    So thank you for your suggestion on unemployment insurance 
benefits, and I certainly would look forward to working with 
you.
    Representative Stark. Thank you for your offer to help. 
Let's do it. Let's show them who runs this House.
    Representative Saxton. Thank you.
    If Congressman Stark and I could just have our way, we 
could solve all the problems, couldn't we?
    Commissioner, thank you for being here with us this 
morning. We look forward to your testimony.
    [The prepared statement of Representative Stark appears in 
the Submission for the Record on page 23.]

STATEMENT OF KATHLEEN P. UTGOFF, COMMISSIONER, BUREAU OF LABOR 
              STATISTICS, U.S. DEPARTMENT OF LABOR

    Commissioner Utgoff. Thank you. Mr. Chairman and Members of 
the Committee, I appreciate this opportunity to comment on the 
labor market data released this morning.
    Non-farm payroll employment----
    Representative Saxton. Commissioner, could you pull that 
microphone a bit closer.
    Commissioner Utgoff. Sorry. It wasn't on.
    Non-farm payroll employment rose by 308,000 in March. This 
follows a revised gain of 159,000 in January and 46,000 in 
February. Since August 2003, payroll employment has risen by 
759,000. The unemployment rate was 5.7 percent in March; little 
changed over the month.
    Job growth was fairly widespread in March, as you noted, 
with gains in both the goods-producing and service-producing 
sectors of the economy. Among the goods-producing industries, 
construction employment increased by 71,000 over the month. 
This unusually large gain followed a decline of 21,000 in 
February. Employment in construction has been trending upward 
over the past year; 201,000 jobs have been added over the 
period.
    Manufacturing employment was unchanged in March at 14.3 
million. Factory employment has been declining for some time, 
although the rate of job loss began to moderate last summer. 
This abatement in job losses has been concentrated among 
durable goods manufacturers. The manufacturing work week was 
down in March to 40.9 hours. Since July 2003, however, the 
factory work week is up by eight-tenths of an hour.
    Several of the major service-producing industries added 
jobs in March. Retail trade employment increased by 47,000. 
Part of this gain reflects the return to payrolls of some 
workers who had been on strike in food stores. Elsewhere in 
retail trade, employment rose over the month among motor 
vehicle and parts dealers and continued to trend up in building 
materials and garden stores.
    In health care and social assistance, employment increased 
by 36,000, almost entirely in health care industries. There 
were noteworthy gains in hospitals, offices of physicians, and 
nursing and residential care facilities.
    Employment in professional and business services expanded 
over the month. Job gains occurred in a number of component 
industries, including computer systems design, and management 
consulting. Elsewhere in this sector, employment in the 
temporary help industry was basically unchanged after an 
increase in February. From a longer-term perspective, the 
number of temporary help jobs has increased by 212,000 since 
April 2003.
    The food services industry added 27,000 jobs over the 
month. Over the past year, employment in food services has 
expanded by 186,000. The number of jobs in transportation and 
warehousing edged up in March. In financial activities, 
employment increased by 11,000 in credit intermediation, 
reflecting the recent rise in mortgage refinancing activity.
    The job total in the information industry was essentially 
unchanged in March. Employment in the industry appears to have 
leveled off following roughly 2\1/2\ years of decline.
    Moving on to the data for our household survey, the 
unemployment rate was little changed at 5.7 percent in March. 
The jobless rate has held fairly steady for several months and 
remains below its recent peak of 6.3 percent in June 2003.
    The labor force participation rate was unchanged in March 
at 65.9 percent. Total employment measured in another survey, 
the household survey, was essentially flat over the month, and 
the employment-population ratio was little changed at 62.1 
percent. The number of discouraged workers, that is, persons 
outside the labor force who have stopped looking for work 
because they believe their job efforts would be fruitless, was 
514,000, not much different from a year earlier.
    In summary, non-farm payroll employment increased by 
308,000 in March, and it is up by 759,000 since August. The 
unemployment rate was little changed over the month at 5.7 
percent.
    Thank you. My colleagues and I would be glad to answer any 
questions.
    [The prepared statement of Commissioner Utgoff appears in 
the Submission for the Record on page 24.]
    Representative Saxton. Commissioner, thank you very much, 
and we appreciate, again, your being here this morning.
    Let me just ask a few questions, and then we will go to Mr. 
Stark for his questions.
    Commissioner, given the health of the economy reflected in 
the economic statistics, it is not surprising that employment 
has begun to pick up. Strong productivity growth had delayed 
the resumption of healthy employment growth, in my opinion, but 
now it appears that the lag in employment growth is over.
    In your testimony, you describe the March payroll gains as 
fairly widespread. Isn't this supported by the surge in the 
March diffusion index?
    Commissioner Utgoff. Yes.
    Representative Saxton. Can you explain the significance of 
the diffusion index and the growth that we see in it?
    Commissioner Utgoff. That is an indication of how many 
industries are expanding and how many are contracting, and when 
the number is above 50 percent, that means more industries are 
expanding than contracting.
    Representative Saxton. We saw the diffusion index rise from 
last month's level of 51 percent to 51.4 percent, I believe?
    Commissioner Utgoff. We can check that.
    That is correct.
    Representative Saxton. From 51.4 to today's level of 62--
61?
    Commissioner Utgoff. Sixty one.
    Representative Saxton. Sixty one, thank you.
    Is the 308,000 gain in payroll employment overstated in any 
kind of seasonal adjustment other than--or other statistical 
issue?
    Commissioner Utgoff. No. We believe that there are no 
special factors that account for this increase in employment.
    There was a weather pattern change in construction. In 
February, the weather was exceptionally cold, and it was better 
in March, so there may have been some increase in construction, 
but that is a real increase; it is not an artifact of any 
computation. There were about 15,000 workers added because of 
the ending of the strike activity in the grocery store 
industry.
    Representative Saxton. Thank you.
    Where are the greatest areas of strength in the latest 
March payroll data?
    Commissioner Utgoff. The construction industry added 71,000 
jobs.
    Representative Saxton. How significant is the upward 
revision in payroll employment from January?
    Commissioner Utgoff. I believe it was 47,000, revised 
upward.
    Representative Saxton. What accounts for those jobs that we 
somehow didn't account for at the end of the January survey?
    Commissioner Utgoff. Each month we report, so we have a 
very current report. We report only a few weeks after the end 
of the survey week, so that we don't have all reports in. About 
two-thirds of the employment is accounted for in the first 
report, and then by the time we get to the third report, it is 
over 90 percent, so that the estimates are revised. They can be 
revised upward or downward, and they are usually quite small in 
the context of 131 million people on the payroll.
    Representative Saxton. In March, the monthly consecutive 
declines in manufacturing ended. Didn't these consecutive 
declines in manufacturing employment begin in August 2000?
    Commissioner Utgoff. Yes.
    Representative Saxton. Aren't the payroll numbers reported 
today consistent with other data showing expansion of economic 
activity?
    Commissioner Utgoff. Yes.
    Representative Saxton. So we have seen growth in GDP. We 
have seen declines in first-time unemployment claims.
    Are there other economic sets of data that show economic 
growth this month, other than employment? If so, what are they?
    Commissioner Utgoff. Well, we have had recent productivity 
growth, which is, in the long term, good for the economy and a 
positive indicator of employment over the long run.
    Representative Saxton. Thank you.
    Has the level of the unemployment rate changed in a 
statistically significant way in March?
    Commissioner Utgoff. No.
    Representative Saxton. Let me turn at this point to my 
friend, Mr. Stark, the gentleman who has a beautiful home on 
the water on the Chesapeake.
    Representative Stark. A long drive in, Mr. Chairman, but 
for you, I would make it any time.
    As I understand it, we have got a good number of people 
still unemployed, and there is a figure known as the 
unemployment--or the employment-population ratio.
    Commissioner Utgoff. Yes.
    Representative Stark. Which I am sure you know much more 
about than I do. But is it not now lower than it was 3 years 
ago?
    The figures that I am looking at show that it is a couple 
of points lower, and to me that means that the portion of the 
population of Americans that have a job is lower over the past 
couple of years. Is that a fair----
    Commissioner Utgoff. Yes. Since the peak, the employment--
population ratio has declined.
    Representative Stark. The proportion of the total 
population that is in the labor force working or actively 
looking is a little bit smaller as well.
    Commissioner Utgoff. That is true.
    Representative Stark. Okay.
    Then we have got a lot of people, 8.4 million, unemployed--
another 4.7 million who want a job, but you don't officially 
count them, and another 4.7 million working part-time for 
economic reasons, and whatever that adds up to, 9.4 million. We 
have got a lot of people whose employment situation is not 
good.
    Is that a fair assessment? Are those numbers about right?
    Commissioner Utgoff. Those numbers are about right.
    Representative Stark. Further, coming back to this crusade 
that Chairman Saxton and I are about to undertake, we have 
long-term unemployed as a share--and I gather that is 27 weeks 
or longer that they are out of work, so that the long-term 
unemployed as a share of all the unemployed has moved, 
according to my figures, gone from about 14 to almost 24 
percent from November 2001 to March of this year. Is that 
correct?
    Commissioner Utgoff. That is correct.
    Representative Stark. Now, it is those folks that I want to 
come back to a little bit and just remind whoever takes this 
all very seriously that they are the people that, for whatever 
reason--either geographic location, their particular trade has 
moved offshore, their jobs have been outsourced, whatever--that 
we would be helping. About 2 million, 1.998 million is the 
number I have, of what I am going to call the hard-core, long-
term unemployed that would be helped if we extended the 
benefits.
    Is that a fair assumption?
    Commissioner Utgoff. Yes.
    Representative Stark. Well, as I say, I wish I could 
congratulate you for the good performance, but I have a hunch 
you are just the bearer of good news and for so long you have 
been the bearer of bad news, I am happy to have--one more 
question, Mr. Chairman, and then I will stop. I don't want to 
ask the Commissioner for an opinion, because that is not right.
    But I am going to ask her if there are any indices that 
people in your profession have reviewed and whether that has to 
do--I suspect major wars would be one, but other than that, 
that you can track with any reliability; and I am thinking 
over, say, 30 years, employment, either total employment or 
growth. Does it follow the stock market? I guess it does, since 
the stock market----
    Commissioner Utgoff. It lags--employment lags the stock 
market.
    Representative Stark. It really does?
    Commissioner Utgoff. Yes.
    Representative Stark. There is some correlation?
    Commissioner Utgoff. I believe that is true, yes.
    Representative Stark. Anything that you could dig out that 
doesn't have too many multi-syllable words in it that you could 
reference, I would appreciate.
    The other question of the market, obviously I am curious 
about increase or decrease of taxes, income taxes, so corporate 
tax or individual tax. Are there any parallels there that you 
can track over a long period of time?
    Commissioner Utgoff. No, I cannot do that.
    Representative Stark. I don't mean you. But I mean in your 
craft, as it were, a profession, have there been some scholarly 
or professional pursuits that show any correlation there?
    Commissioner Utgoff. None that I am aware of, but I am 
not----
    Representative Stark. Are there any other variables that 
stand out to you that you could say, ``Gee, the growth in this 
or decline in that has always paralleled a growth or decline in 
employment in our country?''
    Commissioner Utgoff. Well, I mean, I am sure you know that 
the September 11th attacks clearly had an impact on employment.
    Representative Stark. Fortunately, those don't come along 
very often. I presume World War I and World War II would show 
some economic and employment changes because of going into a 
wartime economy, but absent that.
    Commissioner Utgoff. Well, you asked me before about taxes, 
but if lower taxes increased spending and spending is part of 
GDP, then one would expect employment to follow tax----
    Representative Stark. I am just asking historically, is 
there some correlation between employment and home building. 
Obviously, in the construction business and in the years where 
we had increased home building, as we have had phenomenal 
growth in home construction, I would suspect that in that 
industry you would see something.
    But I am just curious to get a variety--I really am not 
picking on taxes or wars or anything else--to just see if there 
is some kind of a series of databases or statistical data that 
in your work you often look at to draw some parallel, because 
there is some relationship that you see historically.
    Commissioner Utgoff. Well, there are a number of economic 
models not used by BLS, but used by Wall Street and other 
predictors that have things in them like initial claims, GDP 
growth, Institute of Supply Management figures, and they are 
used. But we have not done an independent study of what 
predicts employment.
    Representative Stark. A list of those, again, if you can 
find them in popular form and not in technical form, would be 
of interest to me, if I could trouble you to send me some of 
that.
    Commissioner Utgoff. I would be happy to provide it.
    Representative Stark. Thank you. Thank you, Mr. Chairman.
    Representative Saxton. Thank you, Mr. Stark.
    Senator Sessions, welcome back to the House side. I am glad 
you are here.
    Senator Sessions. Thank you. It is good to be with you and 
it is good to have some good news. It certainly is a move that 
we appreciate and celebrate.
    With regard to Mr. Stark's questions, Commissioner, I have 
been thinking about our revenues of the government also, and 
where we are in all of this. Now, this is a payroll survey. So 
this means these are people paying FICA and withholding taxes?
    Commissioner Utgoff. Yes.
    Senator Sessions. These are officially on a payroll 
somewhere?
    Commissioner Utgoff. Yes.
    Senator Sessions. Now, the household survey, which never 
has looked as bad as the payroll survey, people may not be on a 
payroll, may not have withholding or don't have withholding, I 
suppose; is that correct? Sometimes they don't pay taxes, maybe 
even when they should.
    Commissioner Utgoff. It is very hard to measure illegal 
activity.
    Senator Sessions. But on the household survey, it picks up 
jobs that are not on a withholding basis. Is that right, not on 
official payroll?
    Commissioner Utgoff. Right. It does pick up jobs that are 
not on the official payroll.
    Senator Sessions. Now, I think what we all thought and 
hope, Mr. Chairman, is if we could take strong action in 
Congress to enhance growth in the economy, which are the tax 
cuts--what President Bush promoted and I supported--and we have 
had growth. We have had 8 percent growth third quarter last 
year, the highest in 20 years, and another good fourth quarter.
    It looks like we will have another good quarter this year. 
I believe Mr. Greenspan said it could be as high as 5 percent 
for the year.
    Now, normally jobs follow that growth. Is that right, 
Commissioner? But they lag behind the growth?
    Commissioner Utgoff. They lag behind the growth, but they 
do follow it.
    Senator Sessions. It seemed that jobs were lagging longer 
behind the growth this year more than we may have seen in the 
past. Is that true?
    Commissioner Utgoff. That is correct.
    Senator Sessions. But would you conclude that it is 
following now?
    Commissioner Utgoff. Yes.
    Senator Sessions. So the jobs we are seeing now are a 
product of the strong growth we have had for several quarters?
    Commissioner Utgoff. We don't have any econometric models 
that predict how they all relate, but I think it is fair to say 
growth is correlated with jobs.
    Senator Sessions. Another thing that has complicated this 
is productivity. Productivity, the economists say, is good, but 
it may not be good if your job was the one that got lost in the 
production achievements through technology and things like 
that.
    So we have had increased productivity. Is that a factor in 
the lagging of the job growth until maybe this quarter, this 
month?
    Commissioner Utgoff. In the early stages, productivity can 
reduce jobs.
    Senator Sessions. So it seems to me that what we are seeing 
is that we got the growth we wanted at the same time we were 
achieving tremendous productivity increases, which makes us 
very competitive in the world marketplace, but didn't get the 
surge in jobs that we hoped to get; and now we are beginning to 
feel those jobs. I think that is just good news, and I hope it 
can continue.
    With regard to the payroll survey, what about illegal 
immigrants in the country? Are some of those picked up on the 
payroll survey and some not, or do we have a number?
    Commissioner Utgoff. We don't have a number, but some 
employers are given fake documents, and they are included on a 
payroll. Employers are very concerned about--some are--about 
having illegal workers. In other cases where it may be day 
labor or something like that, they may not have full papers, 
and they may not be recorded on a payroll. We don't have any 
breakdown of that.
    As I said, it is very hard to measure illegal activity.
    Senator Sessions. So you really can't--you are not aware of 
any studies that have been done that could identify how many 
jobs are being held by persons here illegally and who are not 
being subjected to payroll taxes?
    Commissioner Utgoff. There was one study done at 
Northeastern which tried to get into that, but what they did 
was make a guess about what the number was; and I wouldn't 
exactly call that a study.
    Senator Sessions. Do you recall that number?
    Commissioner Utgoff. We would be happy to provide that.
    [The information referred to appears in the Submission for 
the Record on page 56.]
    Senator Sessions. Thank you. My time, I believe, has 
expired, Mr. Chairman. Thank you.
    Representative Saxton. Senator Sessions, great point on 
productivity. I think you hit the nail right on the head.
    You know, back in the 1960s and 1970s, when we had 
recessions, following the recessions, while there was a lag in 
the growth of employment, the lags were relatively short.
    When we got into the growth periods of the 1980s and 1990s, 
following the recessions of the early 1980s and the short 
recession we had in the early 1990s, the productivity that you 
speak of was an ongoing--the growth in productivity was an 
ongoing process.
    It is exactly what you said: During those two--following 
those two recessions, the lag between the end of the recession 
and where we saw good growth in jobs, the lag was longer. We 
believe it was exactly what you said because of the bringing on 
of technology that improved productivity and jobs changed, and 
so it took longer for the growth in jobs to catch up with the 
growth in the economy.
    Senator Sessions. Mr. Chairman, I think this chart shows--
although this productivity makes our economy volatile in some 
ways and people change jobs more often--it shows why, I think, 
we are more productive and we have lower unemployment. We have 
a stronger economy than the other economies in the world, and I 
think we should celebrate that also. Even though we are not 
satisfied where we are today, we would like to do better with 
employment, but the numbers stack up well against the other 
economies in the world, and I think are less free market 
oriented.
    Representative Saxton. Thank you. Good point.
    Mrs. Maloney.
    Representative Maloney. Thank you very much, Mr. Chairman, 
but just on that point, I think it is really--Senator Sessions, 
our economy and our labor market are very different from Europe 
and from Canada; and a fair comparison would be with current 
history in our own country with the labor market. When 
President Bush took office, unemployment was at 4.2 percent.
    But that being said, this is the first substantial job gain 
during the Bush administration. It is very good news for the 
American workers and for our economy, but still there is a 1.8 
million unemployment hole or job-loss hole since the President 
took office; and since job growth has turned around in 
September, we have only averaged, roughly, 108,000 jobs that 
have been created per month, even with today's very positive 
announcement.
    As the President's Chief Economist, Dr. Gregory Mankiw, who 
testified before the Joint Economic Committee--he testified we 
need 125,000 jobs per month just to keep up with the growing 
workforce with the young men and other men and women entering 
the workforce.
    But I would like to ask about--the unemployment number is 
roughly 5.7 percent, and I would like to ask--that is roughly 
8.4 million people, would you say, Commissioner?
    Commissioner Utgoff. Yes.
    Representative Maloney. How many people currently want a 
job, are looking for a job, but are not counted among the 
unemployed because they have thrown in the towel and given up 
because they are getting tired of having people say, ``no, we 
don't have a job for you?'' How many is that, would you say?
    Commissioner Utgoff. Four million eight-hundred thousand 
persons were outside the labor force but said they want a job.
    Representative Maloney. Four million eight-hundred 
thousand. How many people are underemployed or people that are 
working part-time for economic reasons? They used to be an 
analyst on Wall Street and now they are a bartender 4 nights a 
week just to put bread on the table? How many of these people 
are working part-time now?
    Commissioner Utgoff. Four million seven-hundred thousand.
    Representative Maloney. So I would venture to say that 
these two groups of people are in unemployment or certainly 
underemployment.
    What would your measure of unemployment be if you included 
people that are not in the labor force who want to work and 
people who are working or are underemployed in part-time jobs 
for economic reasons?
    Commissioner Utgoff. 9.9 percent.
    Representative Maloney. So it would be 9.9 percent?
    Commissioner Utgoff. Yes.
    Representative Maloney. Really it is 9.9 percent are 
unemployed or underemployed?
    Commissioner Utgoff. That is one measure of unemployment.
    Representative Maloney. I would like to go to New York. I 
represent New York, 300 of my constituents died on 9/11, and I 
would like to know New York's numbers.
    I don't want to take up your time here. Maybe afterwards 
you can give it, because that is not the interest of everybody.
    But the President recently said that 1 million jobs were 
lost as a result of the terrorist attacks in September 2001. 
Yet, I literally got the New York Federal Reserve to do a 
report on the number of jobs lost due to the 9/11 terrible 
attack on our country, and that study found between 70,000 and 
80,000 jobs lost.
    So my question to you is, what is the accurate number? Is 
it the President's number that it was 1 million, the New York 
Federal Reserve, which was 70,000 to 80,000? Do you have any 
indication of how many jobs were lost because of that terrorist 
attack?
    Commissioner Utgoff. We do not know, and I think it will be 
very hard to ascertain how many jobs were lost from the 
September 11th attacks. The 70,000-80,000 figure by the Federal 
Reserve was only in New York City. In----
    Representative Maloney. I am talking about New York City. 
They are saying 70,000-80,000 jobs in New York City. The 
President said a million in New York City as a direct result of 
2001. So I am wondering what is the accurate number. Have you 
looked at that for New York City?
    Commissioner Utgoff. I have not looked at it for New York 
City, but I believe the President's number was nationwide.
    Representative Maloney. His number was nationwide, and you 
have not looked at that. Could you look at it? I would be 
interested in knowing what the economic impact of the 9/11 
attack was for New York City.
    Commissioner Utgoff. Well, we have done a study where we 
asked people who were on what are called ``mass layoffs.'' 
These are layoffs where there are 50 or more people in a 5-week 
period, so it is a very limited subset of people who were 
displaced. Over the period, about 145,000 workers were 
displaced, using that definition, where the employer identified 
in a secondary question the fact that a non-natural disaster 
was a cause of that layoff.
    But there were enormous impacts of September 11th 
throughout the country in, particularly, the leisure and travel 
industries, and it is hard to know whether these employers knew 
that their layoffs were related to 9/11, and it is also true 
that many of the layoffs were in small businesses particularly 
restaurants, that would not qualify as mass layoffs.
    Representative Maloney. My time is up, but just a 
clarification.
    Was the President correct when he said 1 million nationwide 
were lost because of 9/11, would you say?
    Commissioner Utgoff. Undoubtedly, some of that loss in 
employment was due to an overall weak labor market at the time.
    Representative Maloney. My time is up.
    Representative Saxton. Thank you. Just to give everybody a 
heads up, we are supposed to have three votes beginning at 
about 10:30, which shouldn't affect us because it should be 
time for everybody to get their questions in.
    Baron, you are up.
    Representative Hill. Thank you, Mr. Chairman.
    Commissioner, thank you for being here this morning. Let me 
follow up with what Congresswoman Maloney just asked you. The 
President--let me begin by saying, I think it is fairly obvious 
that the Republicans want to paint a rosy picture and the 
Democrats want to paint a not-so-rosy picture; and this is all 
politics, so I would like to cut through all this, if I can, 
and ask you, as a follow-up to Congresswoman Maloney's 
question, how many jobs were lost directly as a result of 9/11?
    Commissioner Utgoff. We cannot answer that question.
    Representative Hill. Okay. Thank you. Can anybody answer 
that question? Are there economists that can answer that 
question?
    Commissioner Utgoff. I am not aware of that.
    Representative Hill. All right. So when the President says 
that 1 million jobs were lost, he is basing that on what then?
    Commissioner Utgoff. Decrease in total payroll employment 
for September, October, November and December--well, not 
September, but October, November and December.
    Representative Hill. But no one can say for certain that 
the 1 million jobs were lost as a direct result of 9/11?
    Commissioner Utgoff. No.
    Representative Hill. Now, I am looking at several numbers 
that are conflicting here at my desk. You say that there were 
308,000 jobs that were created--new jobs that were created in 
March. Correct?
    Commissioner Utgoff. Yes.
    Representative Hill. But yet the unemployment rate stayed 
at 5.7 percent.
    Commissioner Utgoff. Yes.
    Representative Hill. Can you tell me, if you have got 
308,000 new jobs that were created, why is the unemployment 
rate remaining the same?
    Commissioner Utgoff. We have two surveys, one that measures 
the unemployment rate and gives us what I would call ratios; 
and then the second is a payroll survey that goes to employers, 
and they count the number of people that are on the payroll.
    So the surveys are quite different. Over the long term they 
move together, but in any particular month, they don't; and in 
this month, the total employed in the household survey went 
down by a very small amount.
    Representative Hill. Why is that?
    Commissioner Utgoff. Because of the differences in the 
surveys and how they are measured.
    Representative Hill. Well, let me cut to the chase here.
    You say there are 308,000 new jobs that were--or the 
employment rose by 308,000 people, but the unemployment rate 
remains at 5.7 percent. I don't understand the answer to my 
question here. Why would it remain the same if there are 
308,000 new jobs that have been created?
    Commissioner Utgoff. Because the jobs number comes from a 
different survey. Employers count how many people are on their 
payroll. In the household survey, you ask someone in the 
household to report their employment status for themselves and 
for other people in the household. So on a month-to-month 
basis, the surveys can differ.
    The household survey is more volatile and tends to go up 
and down more in any particular month. If you want to look at 
the number of jobs created in a particular month, it is 
probably better to look at the payroll survey, since it is less 
volatile.
    Representative Hill. How many people do you call in the 
household survey?
    Commissioner Utgoff. We collect data on 60,000 households.
    Representative Hill. Let me ask you this then. Of that 
308,000 increase in employment, how many government jobs are 
there?
    Commissioner Utgoff. Thirty-one thousand of the increase 
was government jobs.
    Representative Hill. Now, you mention in your remarks that 
159,000 jobs were created in January, 46,000 in February, and 
these are revised gains.
    Commissioner Utgoff. Yes.
    Representative Hill. For example, the data that I have 
here, 21,000 jobs were created last month. Now you are saying 
46?
    Commissioner Utgoff. That is right.
    Representative Hill. The 21,000 that were created, as I 
understand it, from last month, 20,000 of them were government 
jobs.
    Commissioner Utgoff. That is right.
    Representative Hill. How many of these 46,000 jobs are 
government jobs?
    Commissioner Utgoff. Fifteen. So the number of government 
jobs was revised downward.
    Representative Hill. Okay.
    Commissioner Utgoff. Originally we had estimated that there 
was a 21,000 job gain, and all 21,000 of that was from 
government employment.
    Now, with our revised estimates, it is 15 out of 46.
    Representative Hill. Well, I have got thousands more 
questions to ask, but the red light is on. Let me just cut to 
the chase, if I can, here.
    In your opinion, have we had a dramatic increase in new 
jobs created for the month of March?
    Commissioner Utgoff. Yes.
    Representative Hill. What can we attribute that to?
    Commissioner Utgoff. The gains were very widespread. It 
wasn't any particular small set of industries, so it can be 
attributed to a better job market, employers hiring more 
people.
    Representative Hill. But the manufacturing base is not 
really increasing very much, is it?
    Commissioner Utgoff. For 40-something months it has been 
declining every month, and now it is stable, so that is an 
improvement.
    Representative Hill. Thank you, Mr. Chairman.
    Representative Saxton. Thank you, Mr. Hill.
    Mr. Watt.
    Representative Watt. Thank you, Mr. Chairman.
    Thank you, Commissioner for being here. I apologize for 
being late, but when your heating and air-conditioning service 
people are coming, life grinds to a screeching halt, and you 
can only wait. One industry that must be doing well, I can 
presume.
    Let me just clarify a couple of things for my own 
edification. We created 308,000 jobs in March, or at least that 
was the increase in payrolls--number of people on payrolls. Is 
it correct that 72,000 of those jobs resulted from the 
resolution of a labor dispute at grocery stores in southern 
California?
    Commissioner Utgoff. No. We estimate that approximately 
15,000 jobs were created by the ending of the strike.
    Representative Watt. So the USA Today report that says that 
72,000 workers returned to work is incorrect?
    Commissioner Utgoff. No. That is correct. What happened was 
there were replacement workers who were hired during the 
strike, so the net increase in employment is----
    Representative Watt. Oh, I see. Okay, I got you.
    So you had some people being displaced and some people were 
returning to work. The net effect of that was a 15,000 job 
increase?
    Commissioner Utgoff. Approximately.
    Representative Watt. Okay. Now, if I understand correctly, 
the unemployment rate, 5.7 percent, results in 8.4 million 
people being unemployed nationwide.
    Commissioner Utgoff. That is right.
    Representative Watt. I believe you said in response to 
questions from Mrs. Maloney that there are an additional 4.8 
million potential employees who have simply given up and gone 
off the rolls, and so they are not included in the 8.4 million 
figure. Is that correct?
    Commissioner Utgoff. Yes.
    Representative Watt. Then, in addition to that, there are 
4.7 million people who are underemployed, I think you testified 
in response to Mrs. Maloney's question. Is that correct?
    Commissioner Utgoff. Yes.
    Representative Watt. So when you add all of that together, 
the rate is 9.9 percent either unemployed or underemployed?
    Commissioner Utgoff. Yes. That is the most inclusive 
measure. It includes the most people in it that we produce.
    Representative Watt. All right. That is the overall rate 
for people of all ages, colors, races, what have you.
    What is the number of that 8.4 million that are minorities? 
Or do you keep it that way? Do you keep it--African American, I 
think you keep a statistic on; Latino, you keep a statistic on. 
If you combine those two--well, let's look at the African 
American unemployment. What number of people in the 8.4 million 
would be African Americans?
    Commissioner Utgoff. 1.7 million.
    Representative Watt. What percentage rate would that be?
    Commissioner Utgoff. 10.2.
    Representative Watt. And the Hispanic number and percentage 
rate is what?
    Commissioner Utgoff. 1.4 million.
    Representative Watt. And the percentage is?
    Commissioner Utgoff. 7.4.
    Representative Watt. Of the 4.8 million people who have 
given up, what would be the African American number as a 
percentage?
    Commissioner Utgoff. We don't have that.
    Representative Watt. You don't have the Hispanic percentage 
that falls in that category?
    Commissioner Utgoff. No.
    Representative Watt. You don't keep that statistic, or you 
just don't have it with you.
    Commissioner Utgoff. We don't have it with us. We would be 
happy to provide that to you.
    [The information referred to appears in the Submission for 
the Record on page 57.]
    Representative Watt. If you could send that to my office, 
that would be helpful. I would like the same number and 
percentage in the underemployed category if you have the 
ability to do that.
    Commissioner Utgoff. Yes, sir.
    Mrs. Maloney. Would the gentleman yield for one second? 
Could you ask that she include women in this report? I would be 
very interested in seeing the statistics on women.
    Representative Watt. I wasn't discriminating. If you have a 
separate--I guess I was discriminating on some criteria.
    But it appears that this job loss, this giving up, and I 
suspect you will find that the people who have given up are 
even more disproportionately African American than the 
unemployment rate, or would they be?
    Commissioner Utgoff. I can't answer that question. We will 
have to provide the data.
    [The information referred to appears in the Submission for 
the Record on page 58.]
    Representative Watt. Well, the numbers don't lie. So we 
will get the actual numbers.
    It seems to me that while all unemployment is bad, people 
of color, minorities, are bearing an even more disproportionate 
share of the brunt of this. We need to do something about it. I 
guess that is the bottom line.
    I think my time is up, Mr. Chairman. I will yield back.
    Representative Saxton. Thank you, Mr. Watt.
    Commissioner, thank you for being with us this morning.
    Let me add my congratulations to Tom Nardone who has been a 
great help to our Committee from time to time. We certainly 
wish Tom well.
    Commissioner, thank you for being with us this morning.
    Representative Maloney. Can we ask another round?
    This is good news. We should have another round of 
questions until the bell sounds.
    Representative Saxton. If the gentle lady would like to ask 
additional questions, certainly.
    Representative Maloney. I would like to underscore my 
request with the gentleman from North Carolina to get us the 
numbers on women, particularly the women who maintain families 
who are particularly vulnerable, in a job slump, and we are in 
the most persistent job slump since the 1930s.
    I would like to go back to the household numbers. Mr. 
Greenspan, incidentally, testified before the Financial 
Services Committee that he felt that the payroll numbers were 
more accurate and dependable than household. Would you agree 
with that statement or not?
    Commissioner Utgoff. We have testified previously that 
because of the larger sample of the payroll survey and the fact 
that it is benchmarked to a total sample, that the sample of 
400,000, establishments is benchmarked to the total count of 
establishments once a year, that provides a better current 
picture of what is going on in the labor market.
    Representative Maloney. Thank you.
    But I would like to go back to the payroll numbers, which I 
understand are tied to the unemployment percentage, correct.
    Commissioner Utgoff. No.
    Representative Maloney. It is the household numbers, 
rather, which are tied to that?
    Commissioner Utgoff. Yes.
    Representative Maloney. What is the proportion of the 
population that has a job, the so called employment population 
ratio?
    Commissioner Utgoff. 62.1.
    Representative Maloney. How has that changed over the past 
year?
    Commissioner Utgoff. It has declined.
    Representative Maloney. It has declined to what? From what? 
It has declined.
    What was the employment population ratio in January 2001, 
which was when President Bush took office?
    Commissioner Utgoff. It was 2.3 percentage points higher.
    Representative Maloney. So 64. So does that mean that the 
proportion of the population with a job is 2.3 percent lower 
than it was when President Bush took office?
    Commissioner Utgoff. That is correct.
    Representative Maloney. That is correct. I also would like 
to get a clarification on the proportion of the population that 
is in the labor force working or actively looking for work that 
remains low. What was the labor force participation rate in 
March?
    Commissioner Utgoff. In March, 65.9.
    Representative Maloney. Okay. How has it changed in the 
past year?
    Commissioner Utgoff. Over the last 3 years, I can tell you 
it has declined by 1.2 percentage points.
    Representative Maloney. So it has declined. So what was it 
in January 2002?
    Commissioner Utgoff. 1.2 points higher than that.
    Representative Maloney. So it was 67 percent. Right?
    Commissioner Utgoff. Right.
    Representative Maloney. So does that mean that the labor 
force has shrunk by 1.3 percentage points as a share of the 
population since President Bush took office?
    Commissioner Utgoff. Yes.
    Representative Maloney. Okay. Thank you.
    When Mr. Sessions and I talk, we always get into household 
and payroll and what is more accurate. I just think that it is 
good to have both, but to be clear that one is a very small 
sample.
    I have to thank you, Mr. Saxton, I believe my time is up. I 
have enjoyed your company this morning.
    Representative Saxton. Thank you.
    I would just like to comment here. The payroll survey and 
the household survey have been issues of discussion throughout 
the last number of months, I guess a year or so. For some 
reason that maybe the Commissioner can explain, the divergence 
between the payroll survey and the household survey seems to be 
increasing. In other words, where they--over time as the 
commissioner said--track together. Over the last--well, since 
the beginning of about 2002, the gap or the difference between 
the two surveys has been--has been widening.
    Commissioner, is there some explanation for that? This has 
nothing to do with Republican or Democrat or how the economy is 
going. I am just curious about why this may be occurring.
    Commissioner Utgoff. Some small part of it is self-
employment. As you know, the payroll survey does not include 
self-employment.
    The rest of it, we have not been able to explain.
    Representative Saxton. If you were to try to rely on one 
survey or the other, which one would you say would be more 
accurate?
    Commissioner Utgoff. For current near-term trends, the 
payroll survey is more accurate. It is based on a larger 
sample. As I said, it is benchmarked to the full population 
once a year.
    The household survey is much smaller. It is only 
benchmarked every 10 years to the Census.
    Representative Saxton. Tell us, if you can, the nature of 
this survey on the household survey? Can you describe in some 
detail how it is done, what kinds of questions are asked, what 
kind of responses you get, what kind of problems you run into 
with it?
    Commissioner Utgoff. The household survey is either a visit 
to the home or a telephone survey where a cohort of people are 
asked: Were you employed last month? Is anybody in your 
household employed? If they say they are not employed, then 
they ask reasons, such as, do you want a job? Why, if you want 
a job, haven't you taken one?
    Representative Saxton. Who conducts the household survey?
    Commissioner Utgoff. The Census Bureau.
    Representative Saxton. Okay. When you ask--I am just 
curious about this. I have never asked these questions before, 
but I have always been curious. When the Census Bureau asks 
these questions and they say to someone, ``Are you employed?'' 
is there a difference in the way someone may answer the 
question based on the definition of employment? I don't ask 
this to be funny.
    Commissioner Utgoff. No.
    Representative Saxton. We sometimes talk about being 
employed in the home as opposed to being employed out in the 
workplace. Does this create any kind of a problem?
    Commissioner Utgoff. Well, the questions are: Last week, 
did you do any work for pay, which means, the week of the 12th, 
did you earn any money in any kind of a job?
    Representative Saxton. I see. So it could be a part-time 
job, a full-time job, just if you got paid?
    Commissioner Utgoff. Yes. Even an hour or so of employment.
    Representative Saxton. If you mowed somebody's lawn and you 
got paid for it, then that would be considered employed?
    Commissioner Utgoff. That is right.
    Representative Saxton. So the household survey probably 
would not be as accurate? I guess that is what you said before.
    Commissioner Utgoff. Well, it is a question of how many 
people worked for pay at any time during the week, and includes 
agricultural workers, self-employed. If you wanted to know that 
question, the household survey would be better.
    But if you want to know how many people have a formal job, 
of people on a payroll, an actual count rather than someone's 
memory of it, you would want to go to the payroll survey.
    Representative Maloney. Will the gentleman yield for a 
question?
    Representative Saxton. I think Mr. Watt wanted to be 
recognized.
    Representative Maloney. Just on a clarification on this.
    Also, the sample as I understand it, is much larger for the 
payroll. It is only 60,000 people called by the Census for the 
household as opposed to 700,000 on the payroll?
    Commissioner Utgoff. Four-hundred thousand.
    Representative Maloney. Four-hundred thousand on the 
payroll. Is that a sample, the 400,000 that you rely on?
    Commissioner Utgoff. Yes. It is called the probability 
sample, where by firm size and industry, you are represented 
as--you would be represented in the whole population. If your 
firm accounts for 5 percent of the employment in that size 
industry, than 5 percent of those firms would be sampled.
    Representative Maloney. Well, I thank the gentleman for his 
line of questioning to clarify this.
    In New York, we used to have two sets of books, and the 
city went bankrupt. It was actually--this was in the 1970s. It 
was actually my bill that did a very simple thing, required one 
set of books.
    The controller and the mayor now compile the numbers so 
that people aren't confused, and we have one set of books.
    What is the benefit of having two surveys out there? A lot 
of times it is confusing to the public when we get into public 
debates, they are saying, ``Well, I am talking about the 
household'', and somebody says, ``Well I am talking about 
payroll''.
    It is not a clear message. I just throw that out. I think 
it is--could you explain to us why we have both surveys, and do 
you think that is helpful in going forward with our analysis of 
what is happening to the economy in a non-partisan way?
    Commissioner Utgoff. Yes. As you say, the payroll data is 
more comprehensive. We get very good geographic data. We get 
industry data. It is much larger. So we can go into more detail 
about specifics of employment.
    The household survey is smaller, but we cannot count 
unemployment using the payroll survey, because we don't know 
what the labor force is. We don't know how many people are 
unemployed.
    So each of these asks different questions, and they both 
shine a good deal of light on the labor market. We need them 
both.
    Representative Maloney. Okay. Thank you.
    Representative Saxton. Thank you.
    Mr. Watt.
    Representative Watt. Can you just give me a two-sentence 
description of how you determine whether someone is 
underemployed? Perhaps you can give me more detail when you 
submit the other information I have asked for. But I am just 
trying to figure out how that determination is made.
    Commissioner Utgoff. It is through a series of questions. 
Did you work part-time? Then, why did you work part-time? The 
various reasons that can be given. I will send you that section 
of the questionnaire so that you can see exactly how these 
questions are asked.
    [The information referred to appears in the Submissions for 
the Record on page 61.]
    Representative Watt. Okay. Thank you very much.
    Thank you, Mr. Chairman.
    Representative Saxton. Thank you.
    Any further questions, Mr. Hill?
    Representative Hill. Just briefly. The memo I am looking at 
here from the Democratic side shows that market forecasters 
expect the March data to show that payroll employment rose by 
123,000 jobs.
    You are saying that it actually rose by 308,000 jobs. Is 
that correct?
    Commissioner Utgoff. That is correct.
    Representative Hill. Okay. Thank you.
    Representative Saxton. Thank you. It has been a great 
hearing.
    Thank you for the good news, Commissioner. We look forward 
to seeing you under the tutelage, I suppose, of Senator Bennett 
next month. Presumably, he will be back in the chair.
    Thank you.
    [Whereupon, at 10:50 a.m., the hearing was adjourned.]


                       Submissions for the Record

=======================================================================

     Prepared Statement of Representative Jim Saxton, Vice Chairman
    Washington, DC.--I am pleased to welcome Commissioner Utgoff once 
again before the Joine Economic Committee.
    The figures released this morning are good news for American 
workers. According to the payroll survey, employment increased by 
308,000 in March. Moreover, payroll employment growth was revised 
upward to 159,000 in January and 46,000 in February. The data reported 
today show that 759,000 jobs have been added to payrolls since August 
2003. The BLS describes the unemployment rate as about unchanged.
    The diffusion index--an important indicator of the breadth of 
employment changes--jumped from 51.4 percent to 61.0 percent in March. 
This is the highest level of the diffusion index since July 2000. This 
indicates that the job gains in March were not confined to one sector 
of the economy. In addition, the consecutive declines in manufacturing 
employment that began in August 2000 have come to an end.
    According to a wide range of other economic data, the U.S. economy 
is growing at a healthy pace. A review of the recent history 
demonstrates that the American economy has displayed amazing resilience 
despite the 2000 economic slowdown that soon became a recession, 
terrorist attacks, wars, corporate scandals, and other shocks.
    However, according to critics of the Administration, there is a 
notion that the U.S. economy was in splendid shape until President Bush 
took office and his policies were in place. According to this view, 
virtually immediately upon President Bush's inauguration, the economy 
went from an ideal picture of health to ``the worst economy since the 
Great Depression.'' However, the evidence demonstrates that this view 
of the economic record is fundamentally wrong.
    All of the net job declines in recent years are accounted for by 
the manufacturing sector, but the downward trend in manufacturing 
employment began long before President Bush took office or his 
policieis were in place. For example, relative to its cyclical peak of 
March 1998, manufacturing payroll jobs had declined by over half a 
million by January 2001. The fall-off in investment that began in the 
second half of 2000 had a negative impact on manufacturing because much 
of this sector is engaged in the production of capital goods, i.e., 
machinery and equipment. Manufacturing rmployment began to fall every 
month beginning in August 2000, until March 2004.
    However, the U.S. economy has proven very resilient, and economic 
growth started to accelerate in 2003 as the stimulative effects of the 
tax relief bill and monetary policy became evident. GDP growth--the 
total output of all goods and services--jumped over 6 percent in the 
second half of 2003. According to the Blue Chip consensus of economic 
forecasters, GDP growth is expected to be about 4 percent for the 
foreseeable future.
    Continued strong economic growth will ultimately translate into 
continued growth in employment, as it always has in the past. The 
bottom line is that the economy is strong. Although high productivity 
had delayed sustained employment growth, the labor market has trended 
upward in recent months.
    Commissioner, we look forward to your testimony.

                               __________
           Prpeared Statement of Representative Pete Stark, 
                        Ranking Minority Member

    Thank you, Vice Chairman Bennett. I want to welcome Commissioner 
Utgoff and thank her for testifying here today.
    The Bureau of Labor Statistics' (BLS) March employment situation 
shows that the unemployment rate edged up slightly to 5.7 percent. More 
than 8 million Americans remain unemployed--with 2 million out of work 
for 6 months or more. While 308,000 payrolls jobs were created, this 
was the first significant job gain of the entire Bush presidency. We 
are still in a deep hole and we can't really talk about a jobs recovery 
until we see robust job creation for several months.
    March marks the third anniversary of the Bush jobs slump--the most 
persistent jobs recession since the 1930's. Overall, the economy has 
lost 1.8 million payroll jobs since President Bush took office in 
January 2001. When you take out growth in government jobs, and focus on 
just the private sector, the loss is even more staggering: we are 2.6 
million jobs in the hole since President Bush took office. The 
manufacturing sector alone has lost 2.8 million jobs.
    We've been gaining jobs slowly since August, but at the pace we've 
seen so far, it would take nearly 1\1/2\ years to erase the current 
jobs deficit. Job creation would have to average over 184,000 jobs per 
month from April 2004 to January 2005 just to erase the current 1.8 
million Bush jobs deficit completely.
    Besides the more than 8 million Americans officially unemployed, 
another 5 million people want to work, but are out of the labor force 
and not counted among the unemployed. The unemployment rate would be 
nearly 10 percent if you included them and those who are forced to work 
part-time because of the weak economy.
    Even though jobs grew in March, we still have a huge jobs deficit 
and long-term unemployment rose again last month. House Republicans 
have thwarted efforts by Democrats to help nearly three million 
unemployed workers and their families avoid financial ruin by extending 
temporary Federal jobless benefits for the next 6 months and 
retroactively for the last 3 months. Treasury Secretary Snow has said 
that President Bush would sign an extension of benefits if a bill 
reached his desk. But the Republican leadership has made this the `do-
nothing for unemployed workers' Congress. The long-term jobless deserve 
additional unemployment benefits now--the President and the Republican-
controlled Congress should just do it.
    I look forward to Commissioner Utgoff's testimony today.

                               __________

        Prepared Statement of Kathleen P. Utgoff, Commissioner, 
                       Bureau of Labor Statistics

    Mr. Chairman and Members of the Committee: I appreciate this 
opportunity to comment on the labor market data we released this 
morning.
    Nonfarm payroll employment rose by 308,000 in March. This follows 
revised gains of 159,000 in January and 46,000 in February. Since 
August 2003, payroll employment has risen by 759,000. The unemploymeny 
rate was 5.7 percent in March, little changed over the month.
    Job growth was fairly widespread in March, with gains in both the 
goods-producing and service-producing sectors of the economy. Among the 
goods-producing industries, construction employment increased by 71,000 
over the month. This unusually large gain followed a decline of 21,000 
in February. Employment in construction has been trending upward over 
the past year; 201,000 jobs have been added over the period.
    Manufacturing employment was unchanged in March at 14.3 million. 
Factory employment had been declining for some time, although the rate 
of job loss began to moderate late last summer. This abatement in job 
losses has been concentrated among durable goods manufacturers. The 
manufacturing workweek was down in March to 40.9 hours. Since July 
2003, however, the factory workweek is up by eight-tenths of an hour.
    Several of the major service-providing industries added jobs in 
March. Retail trade employment increased by 47,000. Part of this gain 
reflects the return to payrolls of some workers who had been on strike 
in food stores. Elsewhere in retail trade, employment rose over the 
month among motor vehicle and parts dealers and continued to trend 
upward in building material and garden supply stores.
    In health care and social assistance, employmeny increased by 
36,000 in March, almost entirely in health care industries. There were 
noteworthy job gains in hospitals, offices of physicians, and nursing 
and residential care facilitiies.
    Employment in professional and business services expanded over the 
month. Job gains occurred in a number of component industries, 
including architectural and engineering services, computer systems 
design, and management consulting. Elsewhere in this sector, employment 
in the temporary help industry was basically unchanged over the month, 
after an increased in February. From a longer-term perspective, the 
number of temporary help jobs has increased by 212,000 since April 
2003.
    The food services industry added 27,000 jobs over the month. Over 
the past year, employment in food services has expanded by 186,000. The 
number of jobs in transportation and warehousing edged up in March. In 
financial activities, employment increased by 11,000 in credit 
intermediation, reflecting the recent rise in mortgage refinancing 
activity. The job total in the information industry was essentially 
unchanged in March; employment in the industry appears to have leveled 
off recently following roughly 2\1/2\ years of decline.
    Moving on to the data from our household survey, the unemployment 
rate was little changed at 5.7 percent in March. The jobless rate has 
held fairly steady for several months and remains below its recent peak 
of 6.3 percent in June 2003.
    The labor force participation rate was unchanged in March at 6.5 
percent. Total employment (as measured in the household survey) was 
essentially flat over the month, and the employment-population ratio 
was little changed at 62.1 percent. The number of discouraged workers--
persons outside the labor force who have stopped looking for work 
because they believe their job search efforts would be fruitless--was 
124,000 in March, not much different from a year earlier.
    In summary, nonfarm payroll employment increased by 308,000 in 
March and is up by 759,000 since last August. The unemployment rate was 
little changed over the month, at 5.7 percent.
    My colleagues and I now would be glad to answer your questions.

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