[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

                              ----------                              

                      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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