[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
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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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