[Joint House and Senate Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 108-781
THE EMPLOYMENT SITUATION: SEPTEMBER 2004
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
OCTOBER 8, 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 Ron Paul, Texas
Jack Reed, Rhode Island Pete Stark, California
Edward M. Kennedy, Massachusetts Carolyn B. Maloney, New York
Paul S. Sarbanes, Maryland Melvin L. Watt, North Carolina
Jeff Bingaman, New Mexico Baron P. Hill, Indiana
Paul A. Yost, Executive Director
Wendell Primus, Minority Staff Director
C O N T E N T S
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Opening Statement of Members
Senator Robert F. Bennett, Chairman, U.S. Senator from Utah...... 1
Representative Jim Saxton, Vice Chairman, U.S. Representative
from New Jersey................................................ 2
Representative Pete Stark, Ranking Minority Member, U.S.
Representative from New Jersey................................. 3
Representative Carolyn Maloney, U.S. Representative from New York 4
Witnesses
Statement of Kathleen P. Utgoff, Commissioner, Bureau of Labor
Statistics, U.S. Department of Labor........................... 7
Submissions for the Record
Prepared statement of Senator Robert F. Bennett, Chairman........ 21
Prepared statement of Representative Jim Saxton, Vice Chairman... 21
Prepared statement of Representative Pete Stark, Ranking Minority
Member......................................................... 22
Prepared statement of Kathleen P. Utgoff, Commissioner, Bureau of
Labor Statistics, U.S. Department of Labor..................... 23
Chart entitled ``Bush Economic Record: Only Administration in 70
Years With Decline in Private Sector Jobs''.................... 49
Chart entitled ``Decline in Nonfarm Payrolls in the Current and
Previous Cycles''.............................................. 50
THE EMPLOYMENT SITUATION: SEPTEMBER 2004
----------
FRIDAY, OCTOBER 8, 2004
Congress of the United States,
Joint Economic Committee,
Washington, DC
The Committee met at 9:30 a.m., in room 628 of the Dirksen
Senate Office Building, the Honorable Robert F. Bennett,
chairman of the Joint Economic Committee, presiding.
Senators present: Senators Bennett and Sarbanes.
Representatives present: Saxton, Stark, and Maloney.
Staff Present: Reed Garfield, Ike Brannon, Mike Ashton,
Colleen J. Healy, Chris Frenze, Robert Keleher, Brian
Higginbotham, Wendell Primus, Chad Stone, and Matt Salomon.
OPENING STATEMENT OF SENATOR ROBERT F. BENNETT, CHAIRMAN, U.S.
SENATOR FROM UTAH
Chairman Bennett. The hearing will come to order.
Commissioner Utgoff, we welcome you again, and appreciate your
persistence in coming back again and again to these hearings.
Today's unemployment situation report from the Bureau of
Labor Statistics confirms the continued improvement of the
country's job market. Today's announcement of 96,000 new jobs
in September means 13 straight months of job growth.
Hurricanes during the month of September appeared, however,
to have held that growth down below what some of us had hoped
for.
Since last August, we've created nearly 1.8 million new
jobs, and, according to the household survey, employment has
increased by more than two million since last August.
The unemployment rate has remained steady at 5.4, which is
well below its peak of 6.3 last year, and below the average
unemployment rates of all the 1970's, the 1980's, and the
1990's.
I'm interested to notice that the BLS announced today that
total payroll employment through March 2004, was underestimated
by approximately 236,000 jobs, based on its estimate of the
next benchmark revision to the payroll survey.
This means that the actual number of jobs created, when you
add the underestimation in the period described, is 2 million
and not 1.8.
In addition to its monthly revisions to payroll employment,
BLS conducts a standard annual revision that brings its
estimates of payroll employment in line with State unemployment
insurance tax reports, and using these data, past estimates of
payroll employment are revised by BLS to more accurately
reflect the employment situation in the United States, and I'm
sure we'll discuss those revisions during the hearing.
Aside from today's reports, other indicators also confirm
continued economic expansion. Americans are going back to work,
interest rates and inflation are low, business investment and
consumer spending is strong, business activity is increasing,
and the home ownership rate is at a record high.
Unemployment rates in the past year have fallen in 45
states. I know that's not consolation to those who live in the
five where it has not, but overall, that indicates that the
recovery is continuing to grow.
So, I look forward to discussing today's news with you, and
we welcome you. Now we'll hear from the Vice Chairman, Mr.
Saxton, and then the Ranking Member, Mr. Stark.
[The prepared statement of Senator Bennett appears in the
Submissions for the Record on page 21.]
Vice Chairman Saxton. Mr. Chairman, thank you. Before I
read my opening statement, let me just thank you for the great
leadership you've shown here for the last couple of years. We
know that the Chairmanship goes back and forth between the
House and the Senate, so let me just thank you for the very
professional job that you've done over the past couple of
years.
This is likely the last employment hearing that we'll have
in this session, and so I just wanted to take a minute to note
the fine job that you and your staff have done in leading us
here for the last couple of years. Thank you very much.
Chairman Bennett. Thank you for the kind words.
OPENING STATEMENT OF REPRESENTATIVE JIM SAXTON, VICE CHAIRMAN,
U.S. REPRESENTATIVE FROM NEW JERSEY
Vice Chairman Saxton. Commission Utgoff, it's a pleasure to
join in welcoming you before the Committee once again. The
September employment data have been affected by four hurricanes
that pounded the United States in August and September.
Even so, according to the payroll survey, employment
increased by 96,000 jobs in September, continuing its upward
trend. Over the past 13 months, payroll employment has
increased by about 1.8 million jobs.
In addition, today the BLS announced that the benchmark
revision will add about 236,000 jobs to payroll employment for
March 2004. According to the household survey, the unemployment
rate has been trending downward, and now stands at 5.4 percent,
and, Mr. Chairman, I'm proud to say that the State of New
Jersey has an unemployment rate of just 4.8 percent, and we're
enjoying that back home.
Other economic data continue to show healthy economic
growth over the last four quarters. GDP growth has been 4.8
percent, on average, and a key element in the acceleration of
economic growth over the last year has been the rebound in
investment.
Fixed business investment has risen at a rate of 11.6
percent over the last four quarters, and this has been
broadened and accelerated the economic expansion.
The pivotal reason for this acceleration in investment and
economic growth is the tax relief for investment enacted in
2003. Tax relief and the low interest rates resulting from
Federal Reserve policy have made major contributions to the
positive economic situation we see today.
Furthermore, both the Blue-Chip Consensus and the Federal
Reserve forecast that healthy economic growth will continue.
Thank you, Mr. Chairman.
[The prepared statement of Representative Saxton appears in
the Submissions for the Record on page 21.]
Chairman Bennett. Thank, you, sir. Again, I appreciate the
kind words. I have enjoyed being the Chairman, and I look
forward to your Chairmanship in the next Congress. I know
Congressman Stark looks forward to his, but we will see what
happens. One way or the other, I hope to be the Vice Chairman
next year.
Congressman Stark.
OPENING STATEMENT OF REPRESENTATIVE PETE STARK, RANKING
MINORITY MEMBER, U.S. REPRESENTATIVE FROM CALIFORNIA
Representative Stark. Mr. Chairman, let me join in, first,
if I may, by thanking Commissioner Utgoff, who has to troop up
here and bear with us frequently during her career. She does it
with grace and charm, and she is able to keep her wits about
her and be nonpartisan and very professional. We appreciate you
and your staff and the good work you do for us.
And as a member of the Minority, my good friend, Jim
Saxton, with whom I am going to battle fiercely for the next 4
weeks to see which one of us might chair this Committee next
term, it's been a pleasure working with Jim, and, as always,
when he chaired our Committee.
I guess I'd have to say for you and me, Senator, that I'd
advise the audience that if we get much closer together, they
ought to reserve one of the puppies.
[Laughter.]
Representative Stark. The similarities between me and the
Senator are amazing. We both learned to steal money from the
public, he, by taking old Playboy calendars, taking the
pictures off, putting them under his bed and selling the
remainder at an outrageous price; I did it by lending people
back their own money at far more than I paid them to keep it in
my institution. That's what we learned about economics.
But we have been blessed on both sides by staff. Your
staff, Mr. Chairman, has been accommodating, patient, and most
willing to work closely with us, and we appreciate it, and,
needless to say, the staff on our side, both new to this
session and some of the old pros that, as it were, I think has
helped us. I know Congresswoman Maloney joins me in saying that
we have enjoyed having the support from our staff.
Having said that, we have spent 2 years, either trying to
make a silk purse out of sows' ears, or sows ears out of silk
purses, depending on which way the political motives have
driven us to take the very professional information that we
receive from the Commissioner and spin it to our own ends.
I've often accused the Senator of basically solving the
economic problems the same way that the President wants to
solve the health problems, and that's just merely making normal
105 degrees, and then a whole lot more people would be well in
this country, and so we can't change it.
But I think that we would all agree that we'd like to see
more jobs. I'm disappointed that we haven't. There are some
more, and a little bit of help is always appreciated, but we've
had a long slump, and we're going to have a lot of
disagreement, and you're going to hear a lot about it in the
coming debates and coming conversations in the next 4 weeks as
to how best to improve it.
I can only ask the Chair, as I'm sure he will, to join with
me in hoping that we are witnesses to much better news in the
next Congress. Thank you very much. I'd like, of course, to put
this beautifully prepared statement that the staff has written
for me, without objection, into the record.
Chairman Bennett. Without objection, it shall be put into
the record.
[The prepared statement of Representative Stark appears in
the Submissions for the Record on page 22.]
Representative Stark. Thank you, Mr. Chairman.
Chairman Bennett. You remind me of the first time Madeline
Albright appeared before the Senate Appropriations Committee.
She said, Mr. Chairman, I have a prepared statement and
according to the people who wrote it, it's brilliant.
OPENING STATEMENT OF REPRESENTATIVE CAROLYN B. MALONEY, U.S.
REPRESENTATIVE FROM NEW YORK
Representative Maloney. Mr. Chairman, I actually have my
own statement, and I'd like to make it. I worked very hard on
it.
But first I'd like to thank you very much for your
leadership. I look forward to the Chairmanship of Mr. Stark
next year, but it is always a pleasure to work with our
colleagues, and I join you in congratulating members of the
staff on both sides of the aisle. This is an important
Committee. It's one that, really, there should be more focus
on, because the strength of our country, part of it, is our
economy.
I would just like to say that these numbers show that
September job growth was considerably weaker than it was in
August, and only about two-thirds of what Wall Street and other
economists projected for this month.
And once again, I do believe that some in our
Administration are not acknowledging the true picture of the
economy. Please do not blame it on the weather. The Bureau of
Labor Statistics said clearly that the hurricanes did not
change the employment situation materially.
This is really the result of bad public policy. The record
on jobs of this Administration remains the worst of any
President since Hoover. Despite a year of job gains, there is
still a substantial jobs deficit on President Bush's watch.
Through August, total non-farm payrolls were down almost a
million jobs; private payrolls were down 1.7 million jobs, and
manufacturing payrolls were down 2.7 million jobs. That's an
astonishing loss.
Nothing we have learned in today's report changes this
picture. In fact, it shows that job growth is considerably
slower than what the Administration had led us to expect.
Job growth of less than two million in the past 13 months
may seem like a lot compared with the earlier dismal record in
the Bush Administration, but it is quite weak for an economic
recovery and barely enough to keep up with growth in the
working-age population.
The unemployment rate of 5.4 percent is unchanged from last
month, and down from its peak level last summer, but it is
still too high, and it is 1.2 percentage points higher than it
was when President Bush took office.
Furthermore, other measures continue to show a weaker labor
market than might be indicated by the unemployment rate.
Through August, labor force participation was down 1.2
percentage points from what it was in January 2001.
If those people who have left the labor force were counted
as looking for work, the unemployment rate would be
substantially higher. When the number of people who want a job,
but are not actively searching for work, and the number of
people who are forced to work part-time because of the weak
economy, are taken into account, the unemployment rate is
really 9.5 percent.
I would say that most of these people are women who are
juggling taking care of families and working part-time, needing
that part-time work to help their families.
Wages have grown only about enough to keep up with
inflation over the past year. Since August 2003, real,
inflation-adjusted average hourly earnings are down .2
percentage points; real average weekly earnings are up .4
percent. I would say that these numbers show that America is
moving in two directions--richer and poorer.
Since early 2001, corporate profits have increased 48
percent, while workers' wages have only increased 10 percent.
The poverty figures are tremendously troubling to me and
equally alarming, where 4.3 million more people are living in
poverty today than were living in poverty when President Bush
took office. This is as though an entire segment of our
population has become a Third World country, and growing.
The average increase in the poverty rate during the George
W. Bush Administration is second only to that during his
father's Administration. It contrasts sharply to the declines
in the poverty rate during the Clinton and Kennedy-Johnson
Administrations when there was an active War on Poverty.
These figures are tremendously troubling. I would say they
are a disgrace, and the Administration is struggling to paint a
rosy picture, at any cost, but they are closing their eyes to
the harsh reality of the unemployment, the job deficit, and the
growing number of Americans living in poverty. Thank you.
Chairman Bennett. Thank you very much. Commissioner Utgoff,
welcome to a rehearsal of tonight's debate.
[Laughter.]
Chairman Bennett. We'll be happy to hear from you now.
STATEMENT OF KATHLEEN P. UTGOFF, COMMISSIONER; ACCOMPANIED BY
JACK GALVIN, ASSOCIATE COMMISSIONER FOR EMPLOYMENT AND
UNEMPLOYMENT STATISTICS, AND JOHN GREENLEES, ASSOCIATE
COMMISSIONER, OFFICE OF PRICES AND LIVING CONDITIONS, BUREAU OF
LABOR STATISTICS, DEPARTMENT OF LABOR, WASHINGTON, DC
Commissioner Utgoff. Thank you very much, Mr. Chairman and
Members of the Committee.
First, I'd like to say I have with me, Jack Galvin, the
Associate Commissioner for Employment and Unemployment
Statistics and John Greenlees, the Associate Commissioner for
Prices and Living Conditions, who will help me with the numbers
that you need.
Turning to the employment situation, non-farm payroll
employment continued to trend up in September, increasing by
96,000. The unemployment rate was unchanged at 5.4 percent.
Since August 2003, payroll employment has increased by 1.8
million. About 900,000, or half that gain, occurred in March,
April, and May of this year. Employment gains in the last 4
months have totaled 405,000.
I know that many people have speculated about the effect of
the recent hurricanes on the September payroll employment data.
Four hurricanes struck the United States during August and
September--Charlie, in mid-August; Frances, early in September;
Ivan, in mid-September; and Jeanne, late in the month.
This month, BLS and our State partners made extra efforts
to obtain data from our survey respondents in the hurricane-
affected states. As a result, our total response rate, even in
the affected states, was as good as or better than it normally
is for first publication.
Still, our ability to gauge the impact on September's
growth is limited, for reasons that I will discuss in a minute.
First, let me note how our payroll survey treats employment and
businesses that are affected by weather.
For weather conditions to reduce the estimate of payroll
employment, employees have to be off work for an entire pay
period and not paid for the time that was missed. BLS' review
of the sample data for September in the hurricane affected
areas, indicates that there was a negative impact on employment
in those states. We will know more about the local effects when
the official State estimates are available in 2 weeks.
There were negative employment effects on those firms that
were unable to operate, or were operating at a reduced capacity
during the survey period. However, other firms expanded their
employment in response to the storms.
There were cleanup and rebuilding efforts following
Hurricanes Charlie and Frances. In addition, some firms
adjacent to the hard-hit areas, likely added workers to help
accommodate evacuees from Hurricane Ivan.
Overall, we do not believe that the net result of these
factors materially changes the national employment situation
for September, but we cannot precisely quantify the weather
effects.
In September, job gains occurred in a few service-providing
industries. Employment in professional and technical services
rose by 24,000.
Since August 2003, this industry has added 205,000 jobs.
Temporary help employment was up by 33,000 in September.
Employment in real estate and rental and leasing services grew
by 15,000, following an increase of 11,000 in August.
Utilities added 2,000 jobs over the month. Within
healthcare services, employment in doctors' offices rose by
8,000 in September. Other healthcare industries, however,
showed little or no employment growth over the month.
Telecommunications employment fell by 9,000 in September.
Since March 2001, the telecommunications industry has shed
302,000 jobs.
In the goods-producing sector, manufacturing employment
edged down in September, reflecting small, but widespread
declines among component industries. Employment was little
changed over the month in both construction and mining.
Average hourly earnings rose by 3 cents over the month, and
have increased by 2.4 percent over the year. Average hours for
private production or non-supervisory workers, were unchanged
in September.
Manufacturing hours declined by one-tenth of an hour.
Factory overtime was unchanged.
Turning now to measures from our survey of households, the
unemployment rate held at 5.4 percent in September. This is
down from its most recent high of 6.3 percent in June 2003.
Most of this decline occurred in the second half of last
year. The labor force participation rate was 65.9 percent in
September. It has been at or near this level since late last
year. Most other household survey measures showed little or no
change over the month.
Before closing, I would like to mention the upcoming
benchmark revision to the payroll survey. Each fall, we
announce the preliminary estimate of the next benchmark
revision to payroll employment.
The benchmark revision is a standard annual procedure that
adjusts the payroll survey's sample-based employment estimates,
to incorporate universe employment counts that are derived
largely from unemployment insurance tax records.
Preliminary tabulations of the first quarter of 2004
employment from State unemployment insurance tax reports
indicate that the estimate of total non-farm payroll employment
will require an upward revision of approximately 236,000 or
two-tenths of 1 percent for the March 2004 reference month.
This is slightly below the historical average for benchmark
revisions over the past decade, which have been plus or minus
three-tenths of 1 percent.
In summary, payroll employment continued a trend up in
September, and the unemployment rate was unchanged at 5.4
percent. My colleagues and I would be glad to answer any of
your questions.
[The prepared statement of Commissioner Utgoff appears in
the Submissions for the Record on page 23.]
Chairman Bennett. Thank you very much. My memory from the
time I was in private business was fascinated by Congressman's
Stark's description of what it was we did. I think we should
try that. It sounded like a wonderful idea.
[Laughter.]
Chairman Bennett. The word, ``material,'' as used by
accountants, can mean different things to different people. I
remember in a small firm that I ran, ``material'' would be
something, anything over $10,000, and then when I was running a
firm that ended up on the New York Stock Exchange, why,
``material'' would be anything over a million dollars.
You say that the hurricane had an effect; you can't
quantify it exactly, but you have decided that it was not
material. Would 20,000 jobs be considered immaterial in the
overall scheme of things?
Commissioner Utgoff. In the overall scheme of things, that
would not be considered a statistically different number.
Chairman Bennett. But that's my point. We're dealing with
so many people here that 20,000, 30,000 and so on, would be
appropriately immaterial in terms of the overall direction.
Commissioner Utgoff. Right, not material, not only in terms
of total employment, but not material in terms of recent growth
trends.
Chairman Bennett. Yes.
Commissioner Utgoff. Recent growth trends are roughly in
line with this month's trend.
Chairman Bennett. Yes, and that's--what you have said is
absolutely appropriate. Unfortunately, again, this is taking
place in the context of a political election, and that number
of jobs, politically, is hugely material, because we are under
the 100,000 figure, and we're going to hear a lot about that in
the debate tonight.
If only we had been over 100,000, or 120,000, which would
have been what Wall Street was expecting, and so on, the debate
would be very different tonight.
The point I want to make is that the hurricane had an
effect; it had an effect that probably--that undoubtedly is not
material in the overall direction of employment and the
analysis you're doing, but in the political atmosphere, it can
be talked about a great deal.
Now, the participation rate, you talk about the
participation rate. Isn't this affected in September by 16- to
19-year olds who go back to school?
Commissioner Utgoff. The participation rate is seasonally
adjusted, so the going back to school should not affect the
participation rate that we report in our monthly estimates.
Chairman Bennett. And you say this participation rate is--I
say that because the comment has been made, how much it is
down. It is, this participation rate, is in line with previous
Septembers?
Commissioner Utgoff. Yes.
Chairman Bennett. OK. Let's go back to previous Septembers,
talking about that as our benchmark. If we go back to 1976, the
highest level of job growth as 120,000 in 1999, Hurricane
Floyd, and the September average is 41,000. Doesn't this
suggest that hurricanes had a bigger effect than maybe you're
talking about?
Commissioner Utgoff. I'm sorry, Mr. Chairman, but I'm not
familiar with the statistics that you are citing, so I cannot
comment on them.
We have looked at the household survey, asked questions
about whether you were out of work because of weather or your
hours were reduced because of weather. That did show an effect,
but it does not account for the jobs that were created by the
hurricane, also, so that when we talk about the number being
not material, we take both of those into account.
Chairman Bennett. Right. Now, again, I understand that, but
just for the record, my staff informs me that 205,000 people in
the household survey reported they missed work in September
because of bad weather. Does that number----
Commissioner Utgoff. That's correct, yes.
Chairman Bennett. So that is a correct number. So, to take
numbers out of the air, but to illustrate the point, if 100,000
people found work because of the hurricanes, that gap would not
be material, but, again, in the political atmosphere, that
would be a very significant number. Is that within the realm of
possibility? Do you have a number of how many you think found
work?
If you have 205,000 that reported they missed work because
of bad weather, do you have a number of those who----
Commissioner Utgoff. The difference would be 100,000.
Chairman Bennett. Oh, I understand that, but you don't have
a number?
Commissioner Utgoff. No, we do not have a number.
Chairman Bennett. OK. Well, since we don't have numbers,
that's a politician's paradise. We can now postulate any number
we want, and not be able to be contradicted.
I hope I have made my point, which is that the hurricane
information, while in the language that you have to use, was
not material; in fact, in the political situation, the
hurricane had an effect.
Commissioner Utgoff. I understand that.
Chairman Bennett. All right, thank you.
Mr. Saxton.
Vice Chairman Saxton. Thank you, Mr. Chairman.
Commissioner, you reported today that in addition to the jobs
that were created this month, you announced that the benchmark
revision will add about 236,000 jobs to payroll employment for
the month of March 2004.
Would you explain how this benchmark revision will affect
the measure of payroll employment through March 2004?
Commissioner Utgoff. When we report to you on a monthly
basis, the employment estimates are based on a large sample of
payroll records that are collected. Once a year, with a lag, we
conduct a virtual census of all employment records from the
unemployment insurance tax records and from other sources.
In January, with the February announcement of the January
numbers, we will change the reported level of employment to
reflect that benchmark level, if that's clear.
Vice Chairman Saxton. That means that the number of jobs
created will reportedly be increased?
Commissioner Utgoff. That's right.
Vice Chairman Saxton. Will the benchmark revision be wedged
back to the previous 12 months, adding to employment levels for
those months, as well?
Commissioner Utgoff. Yes.
Vice Chairman Saxton. How does the upward benchmark
revision compare in size to previous revisions over the last,
let's say, decade or so?
Commissioner Utgoff. It's been a little smaller. The
average revision is .3 percent and this is slightly smaller
than that.
Vice Chairman Saxton. And how is the revision linked to
unemployment insurance records?
Commissioner Utgoff. As I was saying earlier, we know what
to benchmark the monthly sample to through records filed by
employers with the unemployment insurance system, so that they
can assess taxes and pay benefits to people.
So, there are ways this is used to get an estimate, a total
estimate of payroll employment.
Vice Chairman Saxton. So, we have been using the number of
jobs created since the job creation began to look positive, of
about 1.8 million jobs.
Commissioner Utgoff. Yes.
Vice Chairman Saxton. Including today's numbers. How does
this revision affect that total job growth number?
Commissioner Utgoff. Well, the number will be wedged back
over a year's period, and what you're talking about is a period
from August until now. The number of jobs that was created over
that period, will be increased, but not by the full 236,000, by
a fairly high fraction of that.
Vice Chairman Saxton. Like what kind of a fraction? Is that
a fair question?
Commissioner Utgoff. I would say by at least three-
quarters.
Vice Chairman Saxton. So----
Mr. Galvin. Seven-twelfths.
Chairman Bennett. Seven-twelfths, I am told.
Vice Chairman Saxton. Seven-twelfths, OK, so a little bit
better than half, so we can use the--of the 236,000 jobs, we
can use 120 or 130?
Commissioner Utgoff. Right, yes.
Vice Chairman Saxton. So, we're getting close to 1.9 or 2
million jobs that have been created over the----
Commissioner Utgoff. Yes, that's fair to say.
Vice Chairman Saxton. OK, thank you. Let me follow up on
the Chairman's question, if I may, on the storms. We don't need
to concentrate on this too much, but there is one aspect of it
that I would like to ask about.
We know that there were jobs lost because of the storms,
and we know there were some jobs created. Presumably, now that
the storms seem to be over the people who lost jobs will be
regaining those jobs, for the most part, and that the cleanup
will continue creating other jobs.
Do you expect that as the recovery efforts from the
hurricanes continue, that there will continue to be jobs
created, and what effect are they likely to have on employment
data?
Commissioner Utgoff. The BLS reports current data. We do
not make projections for the future.
Vice Chairman Saxton. You didn't bring your crystal ball?
Commissioner Utgoff. No, no. We don't even have one.
[Laughter.]
Vice Chairman Saxton. But wouldn't it be fair to assume
that the cleanup effort will, in the months ahead, continue to
cause people to be employed, and that that would add jobs to
the payroll number?
Commissioner Utgoff. I expect that the cleanup efforts will
continue.
[Laughter.]
Vice Chairman Saxton. Thank you very much.
[Laughter.]
Vice Chairman Saxton. Mr. Chairman, thank you.
Chairman Bennett. Thank you.
Mr. Stark.
Representative Stark. The sale of brooms will.
Commissioner, you say we've got about 1.8 million, and my
good friend, Mr. Saxton, would like to say 1.9 million----
Vice Chairman Saxton. Maybe even two million.
Representative Stark. Maybe even two million, but that
would run us about 135,000 to 140,000 jobs a month for the past
13 months. I've got my shoes and socks on, so I can't do that
math, but I think I'm in the ball park there.
So if we have created 135,000 to 140,000 jobs, what do we
need just to keep pace with the growth in the working-age
population for that same 13-month period?
Commissioner Utgoff. Recently, people have quoted a number
of 150,000, but there has been some recent comment that the
growth in the labor force is expected to slow, so that the
number to keep pace with the growth in the population will be
less than the figure that's typically used.
Representative Stark. Less than the 135,000 or 140,000? I
mean, what's the order of magnitude that that would change?
What's meaningful?
Commissioner Utgoff. What's meaningful?
Representative Stark. And material.
Commissioner Utgoff. What's material? I cannot recall the
exact number that's used in the study.
Representative Stark. The point I'm trying to make for the
debate is that with this job growth we're in the neighborhood
of basically just keeping pace with the growth of the working-
age population, give or take a couple of thousand jobs a month.
Then we come to the question of we are still, I believe,
about 900,000 jobs below the January 2001 level in non-farm
employment, and private non-farm payroll, excluding government
jobs, is still about 1.7 million jobs below the January 2001
level, and that is still the most persistent job slump since
the 1930's.
Does that comport with your number?
Commissioner Utgoff. Yes, the numbers you have cited are
correct.
Representative Stark. The third item is that while we talk
about 5.4 percent--which is high enough by itself--that if you
include the jobless workers who currently want a job but have
given up searching for work and if you include the part-time
workers who would prefer full-time work but can't find it, that
raises the underutilization rate by about 4 percent, so we're
closer then to a 9.5 percent underutilization rate,
unemployment and people not working up to their full desires or
potential. Is that a fair statement?
Commissioner Utgoff. Yes, we calculate and publish several
different unemployment rates and the one that you talked about
is called U-6.
Representative Stark. It's called what?
Commissioner Utgoff. It's called U-6.
Representative Stark. Oh boy, OK.
Commissioner Utgoff. That's the----
Representative Stark. I think I could----
Commissioner Utgoff. There's several ways, as you know, to
measure unemployment and we publish them all each month. What
you said was correct.
Senator Sarbanes. What rate do you show for U-6?
Commissioner Utgoff. It is currently 9.4 percent.
Senator Sarbanes. 9.4 percent.
Commissioner Utgoff. Yes.
Representative Stark. Well, Mr. Chairman, I think you're
right, I think the debate will center around whether we're
doing well enough. We obviously will blame this all, all the
bad news on the Bush Administration. They blamed the hurricane
on us; I don't know why I can't. There will be a discussion
which, I think, is more important is what we do in the future.
That's not Mrs. Utgoff's or I suppose it's not the topic of
this hearing, but I think that there will be some agreement
that there aren't enough jobs currently. I think what we're
going to hear is a question of for whom we cut taxes. If we cut
taxes for the very rich, your side will say that will create
jobs, and if we cut taxes for those companies, the incentives
to take jobs overseas, my side will probably say that will help
us. We'll both have to wait until Saturday morning to see what
the public thinks is the correct answer.
Thank you very much.
Chairman Bennett. Thank you.
Ms. Maloney.
Representative Maloney. We have the great Senator from
Maryland, and I would defer to him. Just very briefly, because
I want to certainly hear what Senator Sarbanes has to say. But
there is a chart that the staff prepared and it shows that the
Bush economic record, that this is the only Administration in
70 years with a decline in private sector jobs. Everybody else
is creating jobs, then you see Hoover and the Bush
Administration below the line. Is this accurate?
[Chart entitled ``Bush Economic Record: Only Administration
in 70 Years with Decline in Private Sector Jobs'' appears in
the Submissions for the Record on page 49.]
Commissioner Utgoff. We do not have the data with us to
check all of these numbers, but I believe they are roughly
accurate.
Representative Maloney. They're roughly accurate. Well, how
long, or how many jobs would we have to create to get the Bush
Administration up to the line so that it is not a negative loss
but that you're just holding, even with when we came into
office, how many jobs would we have to create if it's a-0.4?
Commissioner Utgoff. 821,000.
Representative Maloney. So it would have to create 821,000
jobs between now and January just to get up there?
Commissioner Utgoff. That's correct.
Representative Maloney. Do you think we could do that, is
that possible?
Commissioner Utgoff. We deny the crystal ball.
Representative Maloney. OK. But this chart is accurate, he
and Hoover are competing.
I want to talk a little bit about women. We talked about
the poverty numbers earlier that the gap between the rich and
the poor is growing dramatically. That shows in your numbers;
it shows in the poverty numbers. It is also shown in the
poverty report that for the first time in many years women's
wages have dropped and that the gap between men and women's
wages is growing larger, as is the gap between the rich and the
poor. Both these trends are not healthy, in my opinion, for the
future of all the people in our country.
So I would like to ask about women who maintain families. I
would say that in this economy, probably any economy, are
especially vulnerable to jobs and that they sometimes slump
during this time. So what was the unemployment rate for women
who maintained families at the start of the recession of March
2001?
Commissioner Utgoff. 6.5 percent.
Representative Maloney. What was it when the recession
formally ended in November 2001?
Commissioner Utgoff. 7.7 percent.
Representative Maloney. What is it now?
Commissioner Utgoff. 8.2 percent.
Representative Maloney. Well, that is very, very troubling.
I thank you for your report.
Chairman Bennett. Senator Sarbanes.
Senator Sarbanes. Thank you very much, Mr. Chairman.
Mr. Chairman, I'm reminded of a radio news announcer many
years ago, Gabriel Heeter, and he used to start off his
programs every evening, he'd say, ``Oh, there's bad news
tonight.'' and that's how I feel this morning. I think this is
bad news.
Chairman Bennett. Not always. I remember Gabriel Heeter
``There's good news today.''
Senator Sarbanes. No, no, it was bad news, I remember it.
Chairman Bennett. He did it both ways.
Senator Sarbanes. Commissioner, we're pleased to welcome
you and your colleagues. I want to say first that I understand
and appreciate the professional job which you and your
colleagues at the Bureau of Labor Statistics do and I respect
your unwillingness to be drawn into registering political value
judgments, which you do in a very gentle way. As they say
``just the facts, Ma'am,'' and you've tried to do that in the
very established tradition of the Commissioners of the Bureau
of Labor Statistics. I think your legendary predecessor, Janet
Norwood, was as good as they come at that, but you're obviously
developing that talent very well. I like your ``no crystal
ball'' response to one of the questions. So I'm going to try to
ask you the facts. I may do some interpretation of the facts,
but I won't ask you about, I hope, about the interpretation and
if you feel I'm doing so, you just put me off and I'll go back
to trying to just get the figures out of you.
Now, as I understand it, the job growth for the past month
was 96,000, is that correct?
Commissioner Utgoff. That's our estimate.
Senator Sarbanes. Now Mr. Chairman, I note that the market
expectations for non-farm payroll growth had been at about
150,000; that was what the general expectation was. So the job
growth that's being reported this morning is substantially less
than that. Now I just want to review for a moment these various
indices you keep of the unemployment rate. The unemployment
rate is at 5.4 percent, is that correct?
Commissioner Utgoff. Yes.
Senator Sarbanes. Now that rate, as I understand it, does
not include those who have dropped out of the workforce because
they're discouraged about the prospects of finding a job. Of
course, that figure fluctuates, but is that correct?
Commissioner Utgoff. If you haven't looked for work in the
last 4 weeks, you're not counted as unemployed.
Senator Sarbanes. How many such people are there?
Commissioner Utgoff. Discouraged workers--and this is in
September 2004--were 412,000.
Senator Sarbanes. Then you also have people who are working
part-time but want to work full-time so in a sense they are
partially unemployed. Is that correct?
Commissioner Utgoff. Yes.
Senator Sarbanes. Now if you factor both of those groups
into the unemployment rate, in other words, you try to take a
more comprehensive view of the extent of unemployment, what
would the unemployment rate be?
Commissioner Utgoff. That would be 9.4 percent.
Senator Sarbanes. 9.4 percent.
Commissioner Utgoff. Yes.
Senator Sarbanes. Is that the most comprehensive measure of
unemployment of the various measures you do?
Commissioner Utgoff. Let me go back to another analogy that
was used. There are different measures of unemployment. As we
would measure something in Celsius or Fahrenheit, they would
have different numbers attached to them but they would all move
up and down when it got either colder or hotter. So that is why
we produce the different measures. We don't say one is better
than the other, but they do move together.
Senator Sarbanes. Yes. Now what I'm trying to determine is
if there is another measure, a broader measure that includes
some other group in calculating an unemployment rate figure
beyond this measure--or is this the most comprehensive of all
the measures?
Commissioner Utgoff. The measure that you talked about is
the most--includes the----
Senator Sarbanes. Inclusive.
Commissioner Utgoff. Yes, it's the most inclusive that we
publish.
Senator Sarbanes. OK. All right.
Now I want to ask about the long-term unemployed for just a
minute. I've had a strong interest in this issue because I
perceive it as being related to whether unemployment insurance
benefits should be extended. We've had debates about that on
the floor of the Senate; I think also they've had them over on
the floor of the House, and regrettably unemployment insurance
benefits have not been extended. I'm very much concerned about
that because I think there are people who are no longer drawing
unemployment insurance benefits but they're working in a labor
market where there aren't jobs available and they can't go back
to work. They can't find a job, and my question is how do they
support their family.
How many people are there who have been unemployed for more
than 26 weeks, which I think, is the length of the standard
unemployment insurance benefits program? Although we extended
it, that's expired and I'm using those who've been unemployed
for more than 26 weeks and continue to look for work, as the
measure for those who are long-term unemployed.
Commissioner Utgoff. 1.7 million.
Senator Sarbanes. 1.7 million. Was there an increase over
the previous month? How much of an increase from the previous
month?
Commissioner Utgoff. There was an increase over the
previous month of 83,000.
Senator Sarbanes. 83,000 additional people fell into the
category of long-term unemployed last month.
Commissioner Utgoff. Yes, that's right.
Senator Sarbanes. Now what percent of the total unemployed
looking for work are long-term unemployed workers? I mean, this
is often a relevant figure because you have all these
unemployed people and then you look to see, well, how long have
they been unemployed and how many of them are long-term
unemployed; in other words, those who have really been looking
for work for a very sustained period and haven't been able to
find it. What percent of the total unemployed who are looking
for work are long-term unemployed workers?
Commissioner Utgoff. In September, that percentage was 21.8
percent.
Senator Sarbanes. 21.8 percent.
Commissioner Utgoff. That's correct.
Senator Sarbanes. What was it the previous month?
Commissioner Utgoff. 20.7 percent.
Senator Sarbanes. So it went from 20.7 percent the previous
month to 21.8 percent now?
Commissioner Utgoff. That's correct.
Senator Sarbanes. I have tended to use the 20 percent
figure as sort of a benchmark figure on long-term unemployed.
How long have the long-term unemployed been above 20 percent?
Commissioner Utgoff. Since October 2002.
Senator Sarbanes. For 24 months we've been above 20
percent?
Commissioner Utgoff. Yes.
Senator Sarbanes. Twenty-four months. Do we know when the
BLS started tracking this information?
Mr. Galvin. I have data back to 1969.
Senator Sarbanes. 1969.
Mr. Galvin. We've got it back to 1948, but not with us
here.
Senator Sarbanes. Let me ask you this question. Maybe you
can answer it, even though you don't have the earlier data with
you. It's my understanding that there has never heretofore been
a stretch of 24 continuous months in which the long-term
unemployed figure was above 20 percent. Is that correct?
Mr. Galvin. In the data I have here, since 1969, no,
there's never been such a stretch.
Senator Sarbanes. Do you know of your own knowledge with
respect to 1948 to 1969?
Mr. Galvin. No, but we could check that and get back with
you.
Senator Sarbanes. Would you get that back to us? It's my
understanding that even during that period there's never been
such a stretch. So this measure has the long-term unemployed at
really record levels.
I spent some time on this point, Mr. Chairman, just to
underscore again the urgency in my view of the necessity to
extend unemployment insurance benefits. I very much regret that
that has been resisted and we've not been able to do it because
you've got a very substantial number of people out there
looking for work and they can't find work. In fact, how many
jobs do you have to add each month just to stay abreast of
population growth in the economy?
Commissioner Utgoff. We were talking about that earlier.
It's on the order of 130,000 to 150,000.
Senator Sarbanes. 130,000 to 150,000.
Commissioner Utgoff. Yes.
Senator Sarbanes. 130,000 to 150,000 new jobs we needed
just to stay abreast of population growth, not to even crack
into the existing on the unemployed. So you have this situation
where the job growth last month fell short of staying abreast
of population growth, let alone relieving the problems that the
long-term unemployed--which are at record levels--are
confronting.
Now I've gone on at some length. I presume we will have
another round, if I----
Chairman Bennett. I was not planning another round. Mr.
Stark left on the assumption we were not, but if you want to go
on further, Mr. Saxton has no objection and neither do I. I
will have a few comments when you're through.
Senator Sarbanes. Well then we will have a comment period
at the end of all of this questioning as well. Well, if I could
take just a couple more minutes.
We are down 821,000 jobs in this Administration from the
number of jobs that there were in January 2001, is that
correct?
Commissioner Utgoff. That's correct.
Senator Sarbanes. Now I won't ask you, but I'm fairly
certain that the last Administration which was down jobs from
when it came in at the end of its 4-year term was with
President Hoover. Every President since Hoover has added jobs
in the course of the Administration although at varying levels,
some quite a number of jobs, some not quite so many.
Now I understand that we're now 42 months since the
recession began in March 2001. From what you've just said, I
gather the economy has fewer jobs today than it had 42 months
ago.
Commissioner Utgoff. That's correct.
Senator Sarbanes. Now do you know whether, since World War
II, the economy has ever failed to regain all of the jobs that
it had before a recession within over a 42-month period since
the beginning of a recession?
Commissioner Utgoff. I believe the answer to that is no.
Senator Sarbanes. Mr. Chairman, I have a chart here that I
just want to spend a moment on.
[Chart entitled ``Decline in Nonfarm Payrolls in the
Current and Previous Cycles'' appears in the Submissiom for the
Record on page 50.]
Senator Sarbanes. What this chart shows is that the dark
line is the average of post-war recoveries in terms of
regaining jobs from the beginning of the recession and, as you
can see, after around 20 months it has gone back up over the
zero mark and then you have positive additions of jobs.
In this recession, which is contrary to all of the previous
patterns, that hasn't happened. In this recession, we had the
down-swing in the jobs which sort of paralleled what had been
done in previous recessions, but then the upswing didn't occur.
And so this economy has trailed along in this sort of light-
colored line over here and it is still below the zero mark--in
other words, there's been no net gain in jobs over those 42
months--the gain in jobs has not been enough to get back across
the zero mark so that you can say that you're now back up and
above where we started. In fact, if we had paralleled previous
recoveries, we'd be up about 6 million more jobs today, as I
understand it, if we'd had the typical sort of recovery coming
out of this situation. Of course, that hasn't occurred.
So I know, you know, there will be a lot of efforts to
place a spin on these figures but I think it's very clear that
the job growth this month is extremely disappointing. The
revisions for the 1-year period are substantially below the
report of the Council of Economic Advisers that estimated what
the revisions would be. The Council of Economic Advisers
doesn't have quite the same, I guess, scruples to be objective
that the BLS has----
Chairman Bennett. Reluctance to project is, I think, a
better term.
Senator Sarbanes. Yeah. So they're quite happy to sort of
try to paint a rosy scenario. Of course, their rosy scenario
was that the revisions would bring somewhere between 290,000
and 385,000 jobs, which, of course, hasn't happened.
Thank you very much.
Chairman Bennett. Thank you, Senator.
Let me just make a closing comment. Commissioner Utgoff you
undoubtedly are not a party to this discussion, but let me make
a closing comment about the information that Senator Sarbanes
has put before us and that you have laid out before us.
I don't think there is any question but what this recession
and this recovery are fundamentally different than any we have
had, really, in our history. I won't say any since the end of
the Second World War because I think it goes back even farther
than that. There are all kinds of things that didn't happen in
this recession that happened in previous ones, all kinds of
surprises.
I won't take the time to list them all, but some of the
most obvious ones that showed that this recession and recovery
were fundamentally different than others was the fact that
consumer spending never, ever went below the line in this
recession. That is very unusual. Recessions almost always see
consumer spending turn negative. In this recession, they never
did.
The standard pattern of a recession is that housing goes
deeply down and then you look to the housing sector to bring
you out of the recession. In this recession, housing remained
strong all the way through. When I had a conversation with Alan
Greenspan and said, ``Why is this recovery so sluggish in
historic terms,'' he said, ``It's because the recession was so
shallow in historic terms and you didn't get the base for
bouncing back that other recessions have had.'' Now that's good
news in that you didn't want the recession to be so deep that
you would get a strong bounce back, but it is fundamentally
different.
My analysis has been that this recession is probably the
first recession of the information age. Previous recessions
have been driven primarily by inventory buildup that then has
to be sold off until you get rid of your entire backlog in
inventory and then you bring everybody back to work at the
factory because all of the excess goods have been moved.
Now that we're in a world of just-in-time inventory
control, we're probably never going to have what Senator
Sarbanes and I learned about in school as a traditional
inventory recession. We're not going to have that ever again,
because inventory recessions were caused in large measure by
lack of real-time data that caused businessmen and women to
overbuild their inventories, not realizing that that's what
they were doing, because no businessman would deliberately
overbuild an inventory. And then, upon discovery of that fact,
have to make adjustments, which means cut back purchasing, cut
back production, and so on, until the inventory got sold off.
With the information age, that phenomenon doesn't occur any
more. We live in a world of real-time inventory on many
manufacturing lines; the storage bin in which spare parts are
stored for manufacturing is the railroad car in which they
arrive. The car shows up, they open the side of the car and
take the parts off and put them directly onto the item that's
being manufactured so that there is no inventory buildup. It
makes manufacturing enormously more productive, requires fewer
workers, but sees to it that we will not have an inventory
recession.
I think when the economists get through studying this
recession--and we're constantly getting revisions in it: the
first time, we were told the recession began in the third
quarter of 2000, then we had an up--in the fourth quarter of
2000, GDP went down again, first quarter of 2001, second
quarter of 2001 and so on, now the revisions have come back and
say we grew second quarter of 2001. So that by the technical
definition of a recession, we didn't have one because we never
had two successive quarters of negative GDP. We had three, but
they were not successive, the first one occurring, as I say,
third quarter of 2000, second one the first quarter of 2001,
third one third quarter of 2001 when 9/11 hit us.
This is not a classic pattern of recession and, as the
Senator's chart very clearly demonstrates, this is not a
classic pattern of recovery. Now I think we're going to have to
learn a lot more about this as more data gets brought in and
revised and examined and realize that industrial age solutions
probably aren't going to work very well in information age
challenges.
We've been through this before as a Nation when we made the
transition from the agricultural age to the industrial age. The
difference between making the transition from the industrial
age to the information age is that it's coming at us about 10
times as fast, and therefore we need to be a little humble
regardless of how we're trying to spin the numbers politically
in our ability to get a handle on what's really going on.
Senator Sarbanes. Well, Mr. Chairman, let me just make this
observation. I mean all of that may be and, you know, it
obviously calls for analysis, but none of that addresses the
problem that someone working and supporting a family who lost
his job through no fault of his own, became unemployed, then
relied on our unemployment insurance system to help sustain him
or her and their family through this trying time until there
was an improvement in the job market. That improvement would
enable them to find work and go back into the job market to
confront and deal with the problems that they're facing. I find
it absolutely unfathomable why this Administration has not
supported an extension in the time period for receiving
unemployment insurance benefits for those people that are long-
term unemployed.
Now, you know, the reasons for it may be the changing
nature of the economy and so forth, I mean, we can have long
debates about that. But the reality, the human reality of the
situation that we're dealing with in the meantime is about
people who were working people as you can't draw unemployment
insurance unless you buildup a work record, that's a
prerequirement. So it's not welfare. It's designed to cushion
families at times of an economic downturn.
You know, we have a limited period for unemployment
insurance benefits that because we assume that the economy will
pick back up and people will be able to get back into the job
market. We have in the past extended that period when that
wasn't happening as quickly as it ought to. We have extended it
in this period but not to the extent we have done in previous
recessions and the extension has now run out. As we learned
this morning, the long-term unemployed as a percent of the
total unemployed jumped 1.1 percent, jumping from 20.7 percent
to 21.8 percent last month. That's a jump of better than 5
percent. We've tried repeatedly here in the Congress to try to
extend unemployment insurance benefits to help these people
through this difficult time and that effort has been beaten
back. That's just the human reality that is not being dealt
with in the current situation. We have a system in place which
could alleviate that problem which has, in the past, been used
to alleviate the problem, but it's not happening this time
around.
Chairman Bennett. We will not resolve that in this
Committee this morning. But thank you, Commissioner Utgoff, and
thank the members of the Committee. The hearing is adjourned.
[Whereupon, at 10:40 a.m., the Committee meeting was
adjourned.]
Submissions for the Record
=======================================================================
Prepared Statement of Senator Robert F. Bennett, Chairman,
U.S. Senator from Utah
Today's employment situation report from the Bureau of Labor
Statistics (BLS) confirms the continued improvement of the country's
job market. Today's announcement of 96,000 new jobs in September means
13 straight months of job growth. Hurricanes during the month of
September appear to have held down employment growth. Since last
August, we've created nearly 1.8 million new jobs. According to the
household survey, employment has increased by more than 2 million since
last August.
The unemployment rate remained at 5.4 percent, well below its peak
of 6.3 percent last year, and below the average unemployment rates of
the 1970's, 1980's, and 1990's.
BLS also announced today that total payroll employment through
March 2004 was underestimated by approximately 236,000 jobs, based on
its estimate of the next ``benchmark'' revision to the payroll survey.
In addition to its monthly revisions to payroll employment, BLS
conducts a standard annual revision that brings its estimates of
payroll employment in line with State unemployment insurance tax
reports. Using these data, past estimates of payroll employment are
revised by BLS to more accurately reflect the employment situation in
the U.S. We'll discuss these revisions in more detail during today's
hearing.
Aside from today's report, other indicators also confirm continued
economic expansion. Americans are going back to work, interest rates
and inflation are low, business investment and consumer spending are
strong, business activity is increasing, and the homeownership rate in
the U.S. is at a record high. Over the past year, unemployment rates
have fallen in 45 states.
I look forward to discussing today's news with you, Commissioner
Utgoff. Welcome.
__________
Prepared Statement of Representative Jim Saxton, Vice Chairman,
U.S. Representative from New Jersey
Commissioner Utgoff, it is a pleasure to join in welcoming you
before the Committee once again.
The September employment data have been affected by the four
hurricanes that pounded the U.S. in August and September. Even so,
according to the payroll survey, employment increased by 96,000 jobs in
September, continuing its upward trend.
Over the last 13 months, payroll employment has increased by about
1.8 million jobs. In addition, today the BLS announced that the
benchmark revision will add about 236,000 jobs to payroll employment
for March 2004. According to the household survey, the unemployment
rate has been trending downward and now stands at 5.4 percent.
Other economic data continue to show healthy economic growth. Over
the last four quarters, GDP growth has been 4.8 percent. A key element
in the acceleration of economic growth over the last year has been the
rebound in investment. Fixed business investment has risen at a rate of
11.6 percent over the last four quarters, and this has both broadened
and accelerated the economic expansion.
The pivotal reason for this acceleration in investment and economic
growth is the tax relief for investment enacted in 2003. Tax relief,
and the low interest rates resulting from Federal Reserve policy, have
made major contributions to the positive economic situation we have
today. Furthermore, both the Blue Chip consensus and the Federal
Reserve forecast that healthy economic growth will continue.
Prepared Statement of Representative Pete Stark, U.S. Representative
from California
Thank you Chairman Bennett, and I welcome Commissioner Utgoff to
today's hearing.
There is a great deal of interest in today's employment report,
since it's the last report on the President's jobs record before the
election. The interpretation of today's numbers is somewhat complicated
by the fact that the Bureau of Labor Statistics (BLS) has also provided
a preliminary estimate of their annual ``benchmark'' revision of
payroll jobs, which in January will probably add fewer than 240,000
jobs to the current total.
Although the recession officially ended nearly 3 years ago, we
still have anemic job growth and a deficit of 821,000 jobs since
President Bush took office. Even with the benchmark revisions taken
into account, President Bush still has the worst jobs record of any
President since Herbert Hoover in the Great Depression.
The BLS reports today that only 96,000 payrolls jobs were created
in September, and the unemployment rate was unchanged at 5.4 percent.
But the strength of the job market is still very much in question,
because job growth has been weak over the past year and labor force
participation remains depressed. More than 8 million Americans remain
unemployed and long-term unemployment remains near historically high
levels.
Announced layoffs rose 45 percent last month and we're headed into
the time of year when firms traditionally do their heaviest downsizing,
according to the outplacement firm of Challenger, Gray, and' Christmas.
This is not good news for workers wondering if theirs is the next job
to be outsourced and sent overseas.
The prolonged labor market slump has also taken its toll on
workers' earnings. Since last August when job losses bottomed out,
average hourly earnings have declined by 0.2 percent. Corporate
profits, by contrast, have grown by more than 50 percent under
President Bush.
The largest tax cut in our nation's history hasn't prevented the
longest jobs slump in history. We got little bang for the big bucks we
spent on tax giveaways to the wealthy and now American families are
saddled with a historically high Federal debt burden.
The economy is growing, but middle-class families still face an
uncertain jobs picture, stagnant wages, higher gas prices, and rising
consumer interest rates. I simply don't think American families can
afford four more years of President Bush's economic policies.
Thank you Commissioner Utgoff for coming today and I look forward
to your testimony.
______
Weak Payroll Gains in September; Jobs Deficit Persists
Washington, D.C.--The unemployment rate remained unchanged at 5.4
percent and only 96,000 total payroll jobs were created in September.
Private nonfarm payrolls grew by 59,000 jobs. The Bureau of Labor
Statistics (BLS) also provided a preliminary estimate of their annual
``benchmark'' revision of payroll jobs, which in January will probably
add fewer than 240,000 jobs to the current total.
``Although the recession officially ended nearly 3 years ago, job
growth remains anemic and we still have a jobs deficit,'' said Rep.
Pete Stark (D-CA), Senior Democrat on the Joint Economic Committee
(JEC). ``Even taking into account the technical adjustments, President
Bush still has the worst jobs record of any president since Herbert
Hoover in the Great Depression. American families simply can't afford
four more years of President Bush's economic policies.''
Job growth has been weak over the last year, barely keeping pace
with the growing labor force. Today's employment report shows that
despite 13 months of job growth, there are still 821,000 fewer nonfarm
payroll jobs than there were when President Bush took office. There are
1.6 million fewer private payroll jobs, including 2.7 million fewer
manufacturing jobs.
The Bureau of Labor Statistics today announced preliminary
estimates of their annual ``rebenchmarking'' of nonfarm payroll
statistics. Data back to April 2003 will be affected by the upward
revision of nonfarm employment by 236,000 jobs, but the actual
revisions will not show up in the current total until January 2005.
Overall, there are still 8 million unemployed Americans, and about
4.9 million additional workers who want a job but are not counted among
the unemployed. An additional 4.5 million people work part-time because
of the weak economy. The unemployment rate would be 9.4 percent if the
figure included those who want to work but are not counted among the
unemployed and those who are forced to work part-time because of the
weak economy. More than one in every five unemployed people--1.7
million Americans--has been jobless for more than 26 weeks, the maximum
number of weeks for receiving regular unemployment insurance benefits.
The prolonged labor market slump has also taken its toll on
workers' earnings. Since last August when job losses bottomed out,
average hourly earnings have declined by 0.2 percent, once inflation is
taken into account. Corporate profits, by contrast have grown by more
than 50 percent under President Bush.
The Joint Economic Committee, established under the Employment Act
of 1946, was created by Congress to review economic conditions and to
analyze the effectiveness of economic policy.
__________
Prepared Statement of Kathleen P. Utgoff, Commissioner, Bureau of
Labor Statistics
Mr. Chairman and Members of the Committee:
Thank you for the opportunity to discuss the September employment
and unemployment statistics that we released this morning.
Nonfarm payroll employment continued to trend up in September,
increasing by 96,000. The unemployment rate was unchanged at 5.4
percent. Since August 2003, payroll employment has increased by 1.8
million. About 900,000, or half of that gain, occurred in March, April,
and May of this year. Employment gains in the last 4 months have
totaled 405,000.
I know that many people have speculated about the effect of the
recent hurricanes on the September payroll employment data. Four
hurricanes struck the U.S. during August and September: Charley in mid-
August, Frances early in September, Ivan in mid-September, and Jeanne
late in the month. This month, BLS and our State partners made extra
efforts to obtain data from our survey respondents in the hurricane-
affected states. As a result, our total response rate, even in the
affected states, was as good as or better than it normally is for first
publication. Still, our ability to gauge the impact on September's job
growth is limited for reasons that I will discuss in a moment.
First, let me note how our payroll survey treats employment in
businesses that are affected by weather events. For weather conditions
to reduce the estimate of payroll employment, employees have to be off
work for an entire pay period and not be paid for the time missed.
BLS' review of the sample data for September in the hurricane-
affected areas indicates that there was a negative impact on employment
in those areas. We will know more about the local effects when the
official State estimates are available in 2 weeks.
There were negative employment effects on those firms that were
unable to operate or were operating at a reduced capacity during the
survey period. However, other firms expanded their employment in
response to the storms. There were clean-up and rebuilding efforts
following Hurricanes Charley and Frances. In addition, some firms
adjacent to the hard-hit areas likely added workers to help accommodate
evacuees from Hurricane Ivan.
Overall, we do not believe that the net result of these factors
materially changes the national employment situation for September, but
we cannot precisely quantify the weather effects.
In September, job gains occurred in a few service-providing
industries. Employment in professional and technical services rose by
24,000. Since August 2003, this industry has added 205,000 jobs.
Temporary help employment was up by 33,000 in September. Employment in
real estate and rental and leasing services grew by 15,000, following
an increase of 11,000 in August. Utilities added 2,000 jobs over the
month.
Within health care services, employment in doctors' offices rose by
8,000 in September. Other health care industries, however, showed
little or no employment growth over the month.
Telecommunications employment fell by 9,000 in September. Since
March 2001, the telecommunications industry has shed 302,000 jobs.
In the goods-producing sector, manufacturing employment edged down
in September, reflecting small but widespread declines among component
industries. Employment was little changed over the month in both
construction and mining.
Average hourly earnings rose by 3 cents over the month and have
increased by 2.4 percent over the year. Average hours for private
production or nonsupervisory workers were unchanged in September.
Manufacturing hours declined by one-tenth of an hour. Factory overtime
was unchanged.
Turning now to measures from our survey of households, the
unemployment rate held at 5.4 percent in September. This is down from
its most recent high of 6.3 percent in June 2003; most of this decline
occurred in the second half of last year. The labor force participation
rate was 65.9 percent in September; it has been at or near this level
since late last year. Most other household survey measures showed
little or no change over the month.
Before closing, I would like to mention the upcoming benchmark
revision to the payroll survey. Each fall, we announce the preliminary
estimate of the next benchmark revision to payroll employment. The
benchmark revision is a standard annual procedure that adjusts the
payroll survey's sample-based employment estimates to incorporate
universe employment counts derived largely from unemployment insurance
tax reports.
Preliminary tabulations of first quarter 2004 employment from State
unemployment insurance tax reports indicate that the estimate of total
nonfarm payroll employment will require an upward revision of
approximately 236,000, or two-tenths of 1 percent, for the March 2004
reference month. This is slightly below the historical average for
benchmark revisions over the past decade, which has been plus or minus
three-tenths of 1 percent.
In summary, payroll employment continued to trend up in September,
and the unemployment rate was unchanged at 5.4 percent.
My colleagues and I now would be glad to address your questions.
______
Hon. Paul Sarbanes,
U.S. Senate,
Washington, D.C.
Dear Senator Sarbanes: At the October 8 hearing of the Joint
Economic Committee, you asked questions regarding the proportion of
unemployed persons who had been jobless for 27 weeks and over.
I stated at the hearing that long-term joblessness has exceeded 20
percent for 24 consecutive months. I did not have the entire time
series at the hearing to confirm whether this was the longest such span
on record. In reviewing the data, the recent period is the longest
stretch during which the incidence of long-term unemployment has
remained so high for so long. I have enclosed the entire historical
series for your information.
During a conversation after the hearing, you also expressed
interest in the data from our American Time Use Survey. I have included
a copy of the recent press release which contains the first results
from this survey.
I hope this information is helpful to you. Please do not hesitate
to contact me if you have further questions. Also, Thomas Nardone,
Assistant Commissioner for Current Employment Analysis, can be reached
at 202-691-6379 and would be happy to answer any questions you or your
staff may have.
Sincerely yours,
Kathleen P. Utgoff,
Commissioner.
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