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


                                                        S. Hrg. 108-689



                  THE EMPLOYMENT SITUATION: APRIL 2004

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

                                HEARING

                               BEFORE THE

                        JOINT ECONOMIC COMMITTEE

                     CONGRESS OF THE UNITED STATES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 7, 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
      Christopher J. Frenze, Chief Economist to the Vice Chairman


                            C O N T E N T S

                              ----------                              


                      Opening Statement of Members


Representative Jim Saxton, Vice Chairman.........................     1
Senator Jack Reed, U.S. Senator from Rhode Island................     2

                                Witness

Statement of Hon. Kathleen P. Utgoff, Commissioner, Bureau of 
  Labor 
  Statistics, accompanied by Dr. John Greenlees, Associate 
  Commissioner, Office of Prices and Living Conditions, and John 
  Galvin, Associate Commissioner, Employment and Unemployment 
  Statistics.....................................................     3

                       Submissions for the Record

Prepared statement of Representative Jim Saxton, Vice Chairman...    11
Prepared Statement of Senator Jack Reed, U.S. Senator from Rhode 
  Island.........................................................    11
Prepared Statement of Commissioner Kathleen P. Utgoff, together 
  with Press Release No. 04-818, entitled, ``The Employment 
  Situation: April 2004,'' 
  Bureau of Labor Statistics, Department of Labor................    12

 
                       THE EMPLOYMENT SITUATION: 
                               APRIL 2004

                              ----------                              


                          FRIDAY, MAY 7, 2004

                     Congress of the United States,
                                  Joint Economic Committee,
                                                     Washington, DC
    The committee met, pursuant to call, at 9:27 a.m., in room 
1334, Longworth House Office Building, the Honorable Jim 
Saxton, Vice Chairman of the Committee, presiding.
    Senator present:  Senator Reed.
    Representative present: Representative Saxton.
    Staff Present: Chris Frenze, Robert Keleher, Brian 
Higginbotham, Colleen J. Healy, Mike Ashton, Chad Stone, Matt 
Salomon, and Nan Gibson.

        OPENING STATEMENT OF REPRESENTATIVE JIM SAXTON, 
                         VICE CHAIRMAN

    Representative Saxton. Good morning. I am pleased to 
welcome Commissioner Utgoff once again to testify on the 
monthly employment statistics.
    According to the payroll survey, economic employment 
increased by 288,000 jobs in April following a revised gain of 
337,000 new jobs in March. The April payroll employment gains 
were broad-based, as reflected in the diffusion index, 
remaining well over 50 percent in April. The 1-month diffusion 
index has been well above 50 for the last 4 months. The 
manufacturing employment increased for the third consecutive 
month. Overall, 1.1 million payroll jobs have been created 
since last August.
    Separately, the household survey showed a similar monthly 
increase in employment, and the unemployment rate went from 5.7 
percent in March to 5.6 in April. The unemployment population 
ratio edged up to 62.2 percent in April.
    The employment data reported today follow the release of 
many other economic figures that reflect a healthy pace of 
economic expansion. Investment has been strong in recent 
quarters, providing a faster and more balanced pattern of 
economic growth. Overall, the economy has grown at a rate of 
about 5 percent during the last year.
    The rebound in business investment is reflected in the 
manufacturing sector where capital goods are produced. The 
Institute for Supply Management (ISM) index of manufacturing 
activity has trended upward for many months and remains at 
historically high levels. Meanwhile, consumption remains 
strong, as reflected by retail sales and other measures. 
Housing and construction activity is robust. Independent 
economists note the important contributions of tax relief and 
low interest rates in improving economic conditions.
    The consensus of Blue Chip economic forecasters projects 
that economic growth will be nearly 5 percent in 2004. This 
sustained period of economic growth will continue to improve 
the opportunities of both workers and businesses. The outlook 
for the U.S. economy remains very positive for the foreseeable 
future.
    [The prepared statement of Representative Saxton appears in 
the Submissions for the Record on page 11.]
    Representative Saxton. Senator Reed, do you have an opening 
statement?

            OPENING STATEMENT OF SENATOR JACK REED, 
                 U.S. SENATOR FROM RHODE ISLAND

    Senator Reed. Thank you very much, Chairman Saxton. I want 
to welcome Commissioner Utgoff and thank her for testifying 
here today.
    It is encouraging to note that 288,000 payroll jobs were 
created. But we still have a significant jobs deficit, and 
long-term unemployment remains high.
    Although the recession officially ended nearly two-and-a-
half years ago, we still have a payroll unemployment gap of 1.5 
million jobs since President Bush took office. We have not seen 
such persistent job loss since the 1930s. It appears that job 
creation has turned the corner, and that is very good news. But 
it will take many months of solid payroll growth to erase the 
huge gap that has developed since early 2001.
    Meanwhile, we are waiting for another gap to close; that is 
the wage gap. Most measures of workers' earnings have barely 
kept up with inflation over the past 3 years despite remarkable 
productivity growth. The gap between the growth in productivity 
and growth in real hourly wages is unusually wide.
    For example, the productivity data reported yesterday show 
that since the start of the recession in early 2001, output per 
hour in non-farm businesses has grown at a staggering 4.5 
percent average annual rate. However, those same data show 
that, once you take out inflation, workers' hourly compensation 
has grown at just a 1.1 percent annual rate over that same 
period.
    Moreover, some of that growth in compensation reflects the 
rising costs of benefits, like employer contributions to health 
insurance. For some time now, wages and salaries, which is what 
shows up in the workers' paychecks, have been growing more 
slowly than benefits. Thus far, at least, strong productivity 
growth has done more for the bottom line of companies than it 
has done for the take-home pay of workers.
    Another nagging concern in the labor market is that long-
term unemployment remains stubbornly high. April was the 19th 
consecutive month in which at least 20 percent of the 
unemployed had been without work for more than 6 months. That 
is the longest such streak in the more than six decades that 
the Labor Department has kept these records.
    Congress can do something now to help the long-term 
unemployed by extending federal unemployment benefits. With 
bipartisan majorities in both Houses of Congress and the 
support of Federal Reserve Chairman Alan Greenspan, it is 
stunning that the President and Congress have been yet to 
decide this important issue for American workers.
    The economy is growing, but middle-class families still 
face an uncertain jobs picture, stagnant wages, higher prices 
at the pump, and rising consumer interest rates. It may be some 
time before workers and their families experience the benefits 
of this emerging recovery firsthand.
    I look forward to the Commissioner's testimony.
    [The prepared statement of Senator Reed appears in the 
Submissions for the Record on page 11.]
    Representative Saxton. Commissioner, thank you for being 
with us this morning. I could not help but think how good it 
must feel after all this time. It was the second half of the 
last year of the Clinton Administration when the economy turned 
and headed toward a recession. So last month and today were the 
first really good months, real good-news months that we have 
had since the second half of 2000. So thank you for being here 
with us. We are anxious to hear your good news.

     OPENING STATEMENT OF HON. KATHLEEN P. UTGOFF, Ph.D., 
 COMMISSIONER, BUREAU OF LABOR STATISTICS, ACCOMPANIED BY DR. 
 JOHN GREENLEES, ASSOCIATE COMMISSIONER, OFFICE OF PRICES AND 
  LIVING CONDITIONS, AND JOHN GALVIN, ASSOCIATE COMMISSIONER, 
             EMPLOYMENT AND UNEMPLOYMENT STATISTICS

    Commissioner Utgoff. Thank you very much, Mr. Chairman. I 
appreciate this opportunity to comment on the labor market data 
that we released this morning.
    As you already said, non-farm payroll employment rose by 
288,000 in April, on the heels of an even larger job gain in 
March. Since August 2003, payroll employment has risen by 1.1 
million. In April, job growth was widespread for the second 
consecutive month. Employment increased substantially in 
several service-providing industries, construction employment 
continued to expand, and there was a noteworthy job gain in 
durable goods manufacturing. The unemployment rate, at 5.6 
percent in April, was little changed over the month.
    Among the goods-producing industries, construction 
employment continued to trend upward in April. Since March 
2003, the industry has added 213,000 jobs, bringing 
construction employment slightly above its most recent peak in 
March 2001.
    Following a protracted period of job decline, factory 
employment edged up over the past 3 months. I would note that 
the data for February and March were revised slightly upward 
into positive territory. The recent improvement in 
manufacturing employment has occurred largely in the durable 
goods components. In April, durable goods employment rose by 
20,000, with notable job gains in both fabricated metals and 
machinery.
    A number of service-providing industries added jobs over 
the month. Employment in professional and business services 
increased by 123,000 and has risen by about a half million 
since March 2003. Roughly half of the over-the-month gain in 
this diverse sector occurred in employment services, where the 
temporary help industry added 35,000 jobs. Employment in 
temporary help has grown by 261,000 over the past year. In 
April, employment increased by 7,000 in architectural and 
engineering services and by 8,000 in management consulting. In 
addition, employment in businesses that supply services to 
buildings and dwellings rose by 30,000, with most of the gain 
occurring in landscaping services.
    Within education and health services, employment increased 
by 30,000 in health care and social assistance. Job gains 
occurred in hospitals and in outpatient care centers. In 
leisure and hospitality, the food services industry continued 
to add jobs in April. So far this year, employment increases in 
food services have averaged 28,000 a month, twice the average 
monthly increase for 2003.
    Elsewhere in the service-providing industries, employment 
in retail trade edged up over the month, following a sizable 
increase in March. In April, building material and garden 
supply stores added 10,000 jobs, and employment in motor 
vehicle and parts dealerships rose by 6,000. Wholesale trade 
employment was little changed in April, but the industry has 
added 49,000 jobs since October. Within the financial sector, 
employment in credit intermediation and in real estate 
continued to edge up, reflecting strength in the housing 
market.
    In April, average hourly earnings for production or 
nonsupervisory workers rose by 5 cents to $15.59. Over the 
year, average hourly earnings grew by 2.2 percent.
    Looking at some of our measures obtained from the survey of 
households, the April unemployment rate was 5.6 percent. The 
jobless rate has shown essentially no movement since last 
December.
    In April, the labor force participation rate was 65.9 
percent for the third consecutive month. Nearly 8.2 million 
persons were unemployed in April. The number of persons who had 
been jobless for 27 weeks or longer declined by 188,000, to 1.8 
million.
    In summary, non-farm payroll employment increased by 
288,000 and is up by 1.1 million since last August. The 
unemployment rate was little changed over the month, at 5.6 
percent.
    Thank you. My colleagues and I now would be glad to answer 
your questions.
    [The prepared statement of Commissoner Utgoff, together 
with Press Release 04-818, appears in the Submissions for the 
Record on page 12.]
    Representative Saxton. Thank you very much, Commissioner.
    Given the health of the economy reflected in other economic 
statistics, it is not surprising that employment has finally 
begun to pick up. Strong productivity growth had delayed the 
resumption of healthy employment growth, but it is now evident 
that the lag in employment growth is over.
    In your testimony, you describe the April payroll gain as 
widespread. Is this statement supported by the level of the 
April diffusion index? And in your opinion, what does the 
diffusion index say to us?
    Commissioner Utgoff. My statement was supported by the 
diffusion index. And what that says is how widespread the 
increase is over the different industries that we tracked. So a 
number above 50 indicates more widespread diffusion.
    Representative Saxton. So this is not limited to a sector 
two. It is generally widespread across all sectors.
    Commissioner Utgoff. Yes.
    Representative Saxton. What does the level of the diffusion 
index in manufacturing suggest about the improving situation in 
that sector?
    Commissioner Utgoff. Well, as you know, manufacturing had 
declined, before the last 3 months, for more than 3 years. And 
now we see small increases in the prior 2 months and an 
increase of 21,000 this month, which is significant. And one of 
the significant sectors among that was machinery, which is 
considered a good portent for the future.
    Representative Saxton. And the diffusion index in 
manufacturing, if I am not mistaken, has been over 50 for the 
last several months. Is that correct?
    Commissioner Utgoff. Yes. It has been 3 months above 50.
    Representative Saxton. Thank you. What are the greatest 
areas of strength in the April payroll data?
    Commissioner Utgoff. The business services area increased 
significantly, and construction has reached a new high level. 
And there were significant increases in health care. As I said, 
it was fairly widespread.
    Representative Saxton. And how significant is the upward 
revision in payroll employment for March?
    Commissioner Utgoff. It was not significant, but it was 
positive. In the stream of things, when you get a revision of 
30,000 or so, that is very small compared to the overall base 
of 131 million. But it was positive, adding to the increases 
since August.
    Representative Saxton. Certainly significant is that the 
average increase in employment over the past 2 months has been 
over 300,000 jobs. That is significant.
    Commissioner Utgoff. Yes. Yes.
    Representative Saxton. In February, the monthly consecutive 
declines in manufacturing ended. Didn't the consecutive 
declines in manufacturing employment begin in August of 2000?
    Commissioner Utgoff. Yes.
    Representative Saxton. Aren't the payroll numbers reported 
today consistent with other data showing expansion of the 
economy? And how significant do you believe these numbers are?
    Commissioner Utgoff. These numbers are, as you say, in a 
somewhat lagged fashion consistent with other positive signs in 
the economy. The initial claims for unemployment insurance 
dropped to very low rates yesterday for the latest weekly 
period for which they are calculated.
    Representative Saxton. Let me move to another element here. 
What does the April index in the index of aggregate weekly 
hours suggest about the current state of the economy?
    Commissioner Utgoff. The index of hours went up.
    Representative Saxton. Right.
    Commissioner Utgoff. I thought you were talking about the 
average number of hours. The index, which is the hours 
multiplied by the employment, went up.
    Representative Saxton. And that is also a significant 
positive indicator?
    Commissioner Utgoff. Yes.
    Representative Saxton. Aren't the construction employment 
figures consistent with other data showing strong construction 
activity?
    Commissioner Utgoff. Yes.
    Representative Saxton. Let me just move to another issue. 
The unemployment rate decreased this month from 5.7 to 6 
percent. We would probably say that one-tenth of 1 percent is 
not statistically significant. Is that right?
    Commissioner Utgoff. That is correct.
    Representative Saxton. However, if we look back to last 
June and note that the unemployment rate was 6.3 percent, to 
see it drop today to 5.6 percent, that would be statistically 
significant, would it not?
    Commissioner Utgoff. Yes.
    Representative Saxton. That would be, obviously, a positive 
sign.
    To review the data reported today: Payrolls are up. 
Household employment is up. Diffusion indices remain well above 
50. Positive employment revisions occurred for March. 
Manufacturing employment is up for 3 months in a row. 
Unemployment has been trending downward. These are all very 
positive signs.
    Isn't the employment gain reported today consistent with 
other recent positive economic data?
    Commissioner Utgoff. Yes.
    Representative Saxton. Thank you, Commissioner.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman.
    Thank you, Commissioner, for your testimony. How does the 
current unemployment rate compare with the unemployment rate in 
March 2001 when the recession began?
    Commissioner Utgoff. I will have to look up that number. 
Just a moment.
    Senator Reed. And March 2001 was the official beginning of 
the recession?
    Commissioner Utgoff. Yes, that is right--4.3 percent. It 
was 4.3 percent in March of 2001.
    Senator Reed. So it is 1.3 percent higher.
    Commissioner Utgoff. Yes, that is right.
    Senator Reed. The recent trend in labor force participation 
rate, has the labor force been growing rapidly or just keeping 
up with population growth?
    Commissioner Utgoff. Are you asking about the participation 
rate?
    Senator Reed. The labor rate, the labor force participation 
rate.
    Commissioner Utgoff. Yes. The participation rate since 
March 2001 has declined.
    Senator Reed. So fewer people are actually working, based 
on population.
    Commissioner Utgoff. That is right.
    Senator Reed. How does the current labor force 
participation rate compare with the rate in March of 2001 when 
the recession began?
    Commissioner Utgoff. The decline in the participation rate 
has been 1 full percentage point.
    Senator Reed. So we have, essentially, fewer people 
working.
    Commissioner Utgoff. Yes.
    Senator Reed. Do you think that is voluntary?
    Commissioner Utgoff. It is very hard to say whether that is 
voluntary or not. A great deal of that decline has been among 
young people, teenagers and those in their early 20s. And there 
is some indication that that may be related to increased school 
participation, but we really do not know.
    There have been significant declines in participation in 
all groups except for age 55 and older men. They seem to be 
coming back into the labor market.
    Senator Reed. This suggests, I believe, that there is 
considerable slack in the labor market. Is that fair, that 
there is a considerable untapped potential of people who could 
work?
    Commissioner Utgoff. It is very hard to predict whether 
there will be an increase in the participation rate. The 
conventional wisdom is that when the participation rate goes 
up, the unemployment rate will go up also. But if you look at 
historical trends where you compare the participation rate and 
the unemployment rate, they do not follow that pattern.
    So in the future, it will depend upon how fast the labor 
demand grows relative to the labor supply. And in many 
recoveries, the labor demand has grown faster than the labor 
supply, so that the unemployment rate has not gone up when the 
participation rate goes up.
    Senator Reed. Is this one of those situations where we have 
an unusually large number of people who have left the labor 
force?
    Commissioner Utgoff. Participation rates have declined 
considerably since March 2001.
    Senator Reed. So at least this might represent a situation 
where as the economy picks up and people enter the labor force, 
the unemployment rate could go up.
    Commissioner Utgoff. That is a possibility.
    Senator Reed. Let me ask you a few questions about 
inflation rates. What were the reasons for the spike in the CPI 
last month?
    Commissioner Utgoff. Energy is a principal factor behind 
increases in the CPI.
    Senator Reed. And my impression is that wages have not been 
contributing significantly to increased inflationary pressures. 
Is that accurate?
    Commissioner Utgoff. When we compute the CPI, we do not 
take wages into account. It is consumer goods. So wages would 
not be contributing to that measure of inflation.
    Senator Reed. But in terms of--since it is a component of 
production of consumer goods, at least there is a notion that, 
as wages go up, that would be reflected in the prices of 
consumer goods.
    Commissioner Utgoff. That can be true, yes.
    Senator Reed. But you have not noticed any increase in 
terms of wage pressures in your statistics?
    Commissioner Utgoff. No.
    Senator Reed. There is tremendous productivity growth, 
which my estimate--which I think it is accurate--is 4.5 percent 
at an annual rate.
    Commissioner Utgoff. That is right.
    Senator Reed. Those productivity gains do not appear to be 
reflected yet in wages. Is that correct?
    Commissioner Utgoff. That is correct.
    Senator Reed. The other aspect of this, benefits, seem to 
be rising faster than wages and salaries. And is that accurate 
also?
    Commissioner Utgoff. Yes.
    Senator Reed. Also it seems to me, and particularly 
troubling to families, I think, across the country, it is not 
only the cost of benefits, particularly health care, for the 
employer, but more and more employees are paying larger 
portions of their health care benefits. Is that accurate?
    Commissioner Utgoff. Yes.
    Senator Reed. So that they are getting very insignificant 
increases in wages, and yet they, too, are paying more and more 
for their health care benefits. Is that an accurate sort of 
description?
    Commissioner Utgoff. Yes.
    Senator Reed. Which puts a tremendous squeeze on family 
incomes.
    Let me ask another question, about investment. We have 
seen, over the last several months, a significant increase in 
profits. And there are some good signs, as the Chairman noted, 
of increased investment. But is investment at the level you 
would expect it to be given the profitability we have seen over 
the last several quarters for companies?
    Commissioner Utgoff. I am sorry, the BLS does not track 
investment, so I am not the person to be speaking to that.
    Senator Reed. The Chairman mentioned the ISM data. Is that 
a statistic that you----
    Commissioner Utgoff. No, it is not.
    Senator Reed. So you have no insights into the ISM data or 
the investment?
    Commissioner Utgoff. We do watch the ISM data as one other 
indication, particularly of the labor market. A subpart of 
these indexes are future employment projections. And I keep 
track of that. We all do.
    Senator Reed. Let me ask, Commissioner, in that context, to 
continue robust growth in employment would presume that 
corporate profits will begin to be directed more and more to 
investment in new plant and equipment expansion; is that fair?
    Commissioner Utgoff. I cannot speak to that.
    Senator Reed. I do not want to take you on terrain that is 
unfamiliar. You are already ahead of me in the march.
    Let me thank the Chairman for his gracious hospitality this 
morning. And thank you, Commissioner.
    Representative Saxton. Commissioner, thank you.
    We are just going to thank you for being here this morning 
and bringing us this strong news.
    I would like to close on this note. I note that the top 
unemployment rate during the decade of the 1970s was 8.5 
percent. The top unemployment rate during the 1980s was 9.7 
percent. The top unemployment rate during the 1990s was 7.5 
percent. And we have peaked and are now declining from the peak 
rate in the decade of 2000s at 6.3 percent.
    So we have topped out at 8.5, 9.7, 7.5 and now just 6.3, 
and now we have fallen back to 5.6 percent unemployment. So we 
think that is because you are the Commissioner and want to 
thank you for the great job you are doing. Thank you very much.
    Commissioner Utgoff. Let me correct the record. When 
Senator Reed asked what the decline in the participation rate 
was, I said 1 percentage point. It is 1.2 percentage points.
    Representative Saxton. Commissioner, thank you. It has been 
a pleasure.
    When we have this strong news, it seems like our hearings 
do not last as long, but not because we do not appreciate you 
being here and the fine job you are doing.
    [Whereupon, at 9:53 a.m., the hearing was adjourned.]

                       Submissions for the Record

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

           Prepared Statement of Representative Jim Saxton, 
                             Vice Chairman

    I am pleased to welcome Commissioner Utgoff once again to testify 
on the monthly employment statistics.
    According to the payroll survey, employment increased by 288,000 in 
April, following a revised gain of 337,000 in March. The April payroll 
employment gains were broad-based, as reflected in the diffusion index 
remaining well over 50 in April. The one-month diffusion index has been 
above 50 for the last four months. Manufacturing employment increased 
for the third consecutive month. Overall, 1.1 million payroll jobs have 
been created since last August.
    Separately, the household survey showed a similar monthly increase 
in employment, and the unemployment rate went from 5.7 percent in March 
to 5.6 percent in April. The employment-population ratio edged up to 
62.2 percent in April.
    The employment data reported today follow the release of many other 
economic figures that reflect a healthy pace of economic expansion. 
Investment has been strong in recent quarters, providing a faster and 
more balanced pattern of economic growth. Overall, the economy has 
grown at a rate of about 5 percent in the last year.
    The rebound in business investment is reflected in the 
manufacturing sector, where capital goods are produced. The ISM index 
of manufacturing activity has trended upward for many months, and 
remains at historically high levels. Meanwhile, consumption remains 
strong, as reflected in retail sales and other measures. Housing and 
construction activity is robust. Independent economists note the 
important contributions of tax relief and low interest rates in 
improving economic conditions.
    The consensus of Blue Chip economic forecasters projects that 
economic growth will be nearly 5 percent in 2004. This sustained period 
of economic growth will continue to improve the opportunities of both 
workers and businesses. The outlook for the U.S. economy remains very 
positive for the foreseeable future.

                               __________
               Prepared Statement of Senator Jack Reed, 
                     U.S. Senator from Rhode Island

    Thank you, Chairman Bennett. I want to welcome Commissioner Utgoff 
and thank her for testifying here today.
    The Bureau of Labor Statistics' (BLS) April employment situation 
shows that the unemployment rate was little changed at 5.6 percent. 
More than 8 million Americans remain unemployed--with nearly 2 million 
out of work for 6 months or more. While 288,000 payroll jobs were 
created, we still have a jobs deficit and long-term unemployment 
remains high.
    Although the recession officially ended nearly 2\1/2\ years ago, we 
still have a payroll employment gap of 1.5 million jobs since President 
Bush took office. We haven't seen such persistent job loss since the 
1930s. It appears that job creation has turned a corner, but it will 
take many months of solid payroll growth to erase the huge gap that has 
developed since early 2001.
    Meanwhile we are also waiting for another gap to close--the wage 
gap. Most measures of workers' earnings have barely kept up with 
inflation over the past three years, despite remarkable productivity 
growth. The gap between the growth of productivity and growth in real 
hourly wages is unusually wide.
    For example, the productivity data reported yesterday show that 
since the start of the recession in early 2001, output per hour in 
nonfarm businesses has grown at a staggering 4.5 percent average annual 
rate. However, those same data show that once you take out inflation, 
workers' hourly compensation has grown at just a 1.1 percent annual 
rate over that same period.
    Moreover, some of that growth in compensation reflects the rising 
costs of benefits like employer contributions to health insurance. For 
some time now, wages and salaries--which is what shows up in workers' 
paychecks--have been growing more slowly than benefits. Thus far, at 
least, strong productivity growth has done more for the bottom line of 
companies than it has done for the take-home pay of workers.
    Another nagging concern in the labor market is that long-term 
unemployment remains stubbornly high. April was the 19th consecutive 
month in which at least 20 percent of the unemployed had been without 
work for more than 6 months. That is the longest such streak in the 
more than six decades that the Labor Department has kept these records.
    Congress can do something now to help the long-term unemployed by 
extending federal unemployment benefits. With bipartisan majorities in 
both houses of Congress and the support of Federal Reserve Chairman 
Alan Greenspan, it's stunning that the President and the Republican-
controlled Congress have been dragging their feet on this.
    The economy is growing, but middle-class families still face an 
uncertain jobs picture, stagnant wages, higher prices at the pump, and 
rising consumer interest rates. It may be some time before workers and 
their families experience the benefits of this recovery firsthand.
    I look forward to the Commissioner's testimony.

                               __________
        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 that we released this 
morning.
    Nonfarm payroll employment rose by 288,000 in April, on the heels 
of an even larger job gain in March (337,000). Since August 2003, 
payroll employment has risen by 1.1 million. In April, job growth was 
widespread for the second consecutive month. Employment increased 
substantially in several service-providing industries, construction 
employment continued to expand, and there was a noteworthy job gain in 
durable goods manufacturing. The unemployment rate, at 5.6 percent in 
April, was little changed over the month.
    Among the goods-producing industries, construction employment 
continued to trend upward in April (18,000). Since March 2003, the 
industry has added 213,000 jobs, bringing construction employment 
slightly above its most recent peak in March 2001.
    Following a protracted period of job decline, factory employment 
edged up over the past 3 months. I would note that data for both 
February and March were revised slightly upward into positive 
territory. The recent improvement in manufacturing employment has 
occurred largely in the durable goods component. In April, durable 
goods employment rose by 20,000, with notable job gains in both 
fabricated metals (10,000) and machinery (4,000).
    A number of service-providing industries added jobs over the month. 
Employment in professional and business services increased by 123,000 
and has risen by about a half million since March 2003. Roughly half of 
the over-the-month gain in this diverse sector occurred in employment 
services, where the temporary help industry added 35,000 jobs. 
Employment in temporary help has grown by 261,000 over the past year. 
In April, employment increased by 7,000 in architectural and 
engineering services and by 8,000 in management consulting. In 
addition, employment in businesses that supply services to buildings 
and dwellings rose sharply (30,000), with most of the gain occurring in 
landscaping services.
    Within education and health services, employment increased by 
30,000 in health care and social assistance. Job gains occurred in 
hospitals and in outpatient care centers. In leisure and hospitality, 
the food services industry continued to add jobs in April (34,000). So 
far this year, employment increases in food services have averaged 
28,000 a month, twice the average monthly increase for 2003.
    Elsewhere in the service-providing industries, employment in retail 
trade edged up over the month, following a sizable increase in March. 
In April, building material and garden supply stores added 10,000 jobs, 
and employment in motor vehicle and parts dealerships rose by 6,000. 
Wholesale trade employment was little changed in April, but the 
industry has added 49,000 jobs since October. Within the financial 
sector, employment in credit intermediation and in real estate 
continued to edge up, reflecting strength in the housing market.
    In April, average hourly earnings for production or nonsupervisory 
workers rose by 5 cents to $15.59. Over the year, average hourly 
earnings grew by 2.2 percent.
    Looking at some of our measures obtained from the survey of 
households, the April unemployment rate was 5.6 percent. The jobless 
rate has shown essentially no movement since last December.
    In April, the labor force participation rate was 65.9 percent for 
the third consecutive month. Nearly 8.2 million persons were unemployed 
in April. The number of persons who had been jobless for 27 weeks or 
longer declined by 188,000, to 1.8 million.
    In summary, nonfarm payroll employment increased by 288,000 in 
April and is up by 1.1 million since last August. The unemployment rate 
was little changed over the month, at 5.6 percent.
    My colleagues and I now would be glad to address your questions.

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