[Joint House and Senate Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




                                                         S. Hrg. 109-58
 
                  THE EMPLOYMENT SITUATION: APRIL 2005

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

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 6, 2005

                               __________

          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]

HOUSE OF REPRESENTATIVES             SENATE
Jim Saxton, New Jersey, Chairman     Robert F. Bennett, Utah, Vice 
Paul Ryan, Wisconsin                     Chairman
Phil English, Pennsylvania           Sam Brownback, Kansas
Ron Paul, Texas                      John E. Sununu, New Hampshire
Kevin Brady, Texas                   Jim DeMint, South Carolina
Thaddeus G. McCotter, Michigan       Jeff Sessions, Alabama
Carolyn B. Maloney, New York         John Corynyn, Texas
Maurice D. Hinchey, New York         Jack Reed, Rhode Island
Loretta Sanchez, California          Edward M. Kennedy, Massachusetts
Elijah E. Cummings, Maryland         Paul S. Sarbanes, Maryland
                                     Jeff Bingaman, New Mexico

               Christopher J. Frenze, Executive Director
                  Chad Stone, Minority Staff Director




                            C O N T E N T S

                              ----------                              

                      Opening Statement of Members

Representative Jim Saxton, Chairman, a Representative from the 
  State of New Jersey............................................     1
Representative Carolyn B. Maloney, a Representative from the 
  State of New York..............................................     2

                               Witnesses

Statement of Kathleen P. Utgoff, Commissioner, Bureau of Labor 
  Statistics, United States Department of Labor..................     3

                       Submissions for the Record

Prepared statement of Representative Jim Saxton, Chairman........    13
Prepared statement of Representative Carolyn B. Maloney..........    13
Prepared statement of Kathleen P. Utgoff, Commissioner, Bureau of 
  Labor Statistics, United States Department of Labor, together 
  with Press Release No. 05-788..................................    14


                  THE EMPLOYMENT SITUATION: APRIL 2005

                              ----------                              


                          FRIDAY, MAY 6, 2005

                    United States Congress,
                          Joint Economic Committee,
                                                     Washington, DC
    The Committee met, pursuant to call, at 9:30 a.m., in room 
1334, Longworth House Office Building, the Honorable Jim 
Saxton, Chairman of the Committee, presiding.
    Representatives Present: Representatives Saxton and 
Maloney.
    Staff Present: Chris Frenze, Robert Keleher, Brian 
Higginbotham, Colleen Healy, John Kachtik, Chad Stone, Matt 
Salomon, Daphne Clones Federing, Pamela Wilson and Nan Gibson.

 OPENING STATEMENT OF REPRESENTATIVE JIM SAXTON, CHAIRMAN, U.S 
                 REPRESENTATIVE FROM NEW JERSEY

    Representative Saxton. Good morning.
    It is a pleasure to welcome Commissioner Utgoff and her 
colleagues before the Committee this morning to discuss the 
latest employment data.
    The April employment data are good news for the American 
workers. According to the payroll survey, employment increased 
by 274,000 jobs in April. Over the last 23 months, 3.5 million 
jobs have been created.
    According to the household survey, employment also 
advanced, while the unemployment rate was 5.2 percent. Over the 
last year, most of the net increase in employment has been in 
the occupations that pay in the middle range and higher.
    The employment data are consistent with other data showing 
that the economy continues to grow. In 2004, real GDP increased 
about 4 percent, followed by a more sustainable 3.1 percent 
pace in the first quarter of 2005. Consumption and investment 
both continue to rise. The strength of investment over the last 
2 years has been an important factor explaining the vitality of 
the economy.
    The economy seems to have weathered the recent rise in oil 
prices quite well, although oil prices have probably had some 
negative impact on growth. Another factor that bears watching 
is the potential impact of the recent expiration of tax 
provisions permitting expensing, which may affect the robust 
performance of business investment. Traces of inflation have 
surfaced in recent months, but inflation appears to be 
contained over the long term, as the Fed has recently noted.
    Looking ahead, the consensus of economic forecasters is 
that the U.S. economy will continue to grow at a rate in excess 
of 3 percent through the end of 2006. This is consistent with 
the long-term growth path of the U.S. economy over the last 
several decades.
    At this time, I will turn to Mrs. Maloney for any statement 
she may have.
    [The prepared statement of Representative Saxton appears in 
the Submissions for the Record on page 13.]

 OPENING STATEMENT OF REPRESENTATIVE CAROLYN B. MALONEY, U.S. 
                  REPRESENTATIVE FROM NEW YORK

    Representative Maloney. Thank you, Commissioner; and thank 
you very much, Chairman Saxton.
    The Joint Economic Committee has a long tradition of 
holding these hearings with the Commissioner to discuss the 
latest data on the employment situation, and I am glad that we 
are here today continuing that important tradition.
    Now this morning's news that the economy created 274,000 
jobs in April is absolutely great news for America and for 
America's workers. However, we haven't seen very many good 
months of good job growth in the last 4 years as the economy 
has gone through the most protracted job slump since the 1930s.
    We continue to see evidence of this job slump. There are 
still fewer private sector payroll jobs in April than there 
were when President Bush took office in January 2001, and there 
are 2.8 million fewer manufacturing jobs. Even though we have 
had nearly 2 years of job growth, the pace of that job 
creation, about 150,000 jobs per month, is not what one would 
expect to see in a strong jobs recovery. It seems as though we 
are barely treading water. As the Commissioner has testified, 
we need to create 120 to 150,000 jobs just to keep pace with 
the people coming into the labor force.
    Today's report also shows that the unemployment rate 
remained unchanged at 5.2 percent. While it is true that the 
unemployment rate has come down from its peak, it is still more 
than a percentage point higher than the 4 percentage rate that 
we were able to achieve by the end of the 1990s. Today's 
unemployment rate masks the fact that 5.1 million people who 
want to work remain out of the labor force, and another 4.3 
million are working part time for economic reasons. The 
unemployment rate would be 9 percent if those people were 
included. Finally, I am concerned about workers' wages and 
earnings, especially over the past year or so. It seems that no 
matter what measure of workers take-home pay you look at 
lately, you see that it is not keeping up with inflation. For 
example, in the 12 months ending in March, both average hourly 
earnings and average weekly earnings of private-sector workers 
are down about one-half percentage after accounting for 
inflation. Measures of total compensation, which include 
benefits as well as wages and salaries, are keeping up with 
inflation, but just barely.
    The problem is that rising costs of health insurance 
premiums are adding to employer's costs, and they are squeezing 
worker's take-home pay at the same time. Not only are earnings 
generally not keeping up with inflation, but the distribution 
of earnings is becoming more unequal. For example, from the end 
of 2000 to the end of 2004, the real earnings of full-time 
workers in the middle of the earnings distribution grew by just 
.2 percent per year after inflation. However, those near the 
top of the distribution rose by almost 1 percent per year after 
inflation, while those near the bottom fell by .3 per year on 
average. More recently, those disparities have become larger, 
and only earnings at the very top have exceeded inflation. This 
growing gap between the haves and the have-nots is something 
that is very--I am deeply concerned about, as I believe every 
American is.
    Mr. Chairman, I am especially pleased to have Commissioner 
Utgoff here today. I look forward to hearing her comments and 
testimony, and I appreciate you having this hearing. Thank you.
    [The prepared statement of Representative Maloney appears 
in the Submissions for the Record on page 13.]
    Representative Saxton. Commissioner, thank you for being 
here today. We appreciate it, and we are ready for your 
testimony.

STATEMENT OF KATHLEEN P. UTGOFF, COMMISSIONER, BUREAU OF LABOR 
STATISTICS; ACCOMPANIED BY JACK GALVIN, ASSOCIATE COMMISSIONER 
FOR EMPLOYMENT AND UNEMPLOYMENT STATISTICS; AND JOHN GREENLEES, 
               ASSOCIATE COMMISSIONER FOR PRICES

    Ms. Utgoff. Thank you.
    Mr. Chairman and Congresswoman Maloney, I appreciate this 
opportunity to comment on the labor market data we released 
this morning.
    Sitting with me at the table is Jack Galvin, our Associate 
Commissioner for Employment and Unemployment, and John 
Greenlees, our Associate Commissioner for Prices.
    In April, nonfarm payroll employment rose by 274,000, and 
the unemployment rate held at 5.2 percent. The increase in 
payroll jobs followed revised gains of 300,000 in February and 
146,000 in March. Over the month, employment growth was 
widespread. Notable gains continued in construction, mining, 
food services and health care.
    Among the goods-producing industries, construction 
employment rose by 47,000, continuing the strong growth trend 
of the last 2 years. Most of April's increase occurred in 
specialty trade contracting, with gains in both its residential 
and nonresidential components. Mining added 8,000 jobs in 
April. Over the past 6 months, mining employment has risen by 
31,000, largely reflecting increased hiring for support 
activities for oil and gas operations.
    Manufacturing employment was essentially unchanged both in 
April and over the year. The manufacturing work week was up by 
one-tenth of an hour over the month, and factory overtime held 
at 4.5 hours.
    In the service-providing sector, food services added 35,000 
jobs over the month. Following a lull in hiring last summer, 
industry employment has risen by 183,000 since September. 
Health care employment increased by 25,000 in April. The job 
gain was concentrated in hospitals and doctors' offices.
    Employment in the information industry increased by 12,000 
over the month, with gains in motion pictures and 
telecommunications. Job growth continued in a number of other 
service-providing industries, including financial activities, 
professional and technical services, and transportation. 
Average hourly earnings of private production or non-
supervisory workers rose by 5 cents in April to $16, following 
a 4-cent increase in March. Over the year, average hourly 
earnings grew 2.7 percent.
    Looking at measures from our household survey, total 
employment rose in April by 598,000, to 141.1 million. The 
labor force participation rate and the employment-to-population 
ratio each edged up by 0.2 percentage points, to 66.0 and 62.6 
percent, respectively. The number of discouraged workers 
declined by 99,000 over the year, to 393,000 in April.
    Both the number of unemployed persons and the unemployment 
rate were unchanged in April. About one in five unemployed 
persons had been jobless for 27 weeks or longer. The long-term 
unemployed have accounted for over 20 percent of total 
unemployment for 31 consecutive months.
    As a part of our mission of reporting on America's workers 
each month and in recognition of Mother's Day this Sunday I 
would like to mention a few facts about working mothers. In 
today's labor market, 7 out of 10 mothers are working moms, 
compared with 5 out of 10 in 1975. Working moms account for 
almost one-fifth of all employed individuals, and nearly three-
fourths of employed mothers usually work full time.
    Mothers who usually work full time also spend more than 2 
hours each week day performing active child care, cleaning 
house and preparing meals. In addition, nearly 4 out of 10 
mothers who work full-time perform volunteer work at some point 
during the year.
    I would also like to note that an updated version of a 
report by BLS on women in the labor force, which includes data 
on working mothers, will be posted on our Web site next week. 
This report is a compilation of information on women workers by 
various characteristics, including age, education, occupation 
and earnings.
    To summarize, April's labor market data, nonfarm payroll 
employment increased by 274,000. The unemployment rate was 
unchanged over the month, at 5.2 percent.
    My colleagues and I now will be glad to address your 
questions.
    [The prepared statement of Commissioner Utgoff together 
with Press Release No. 05-788 appears in the Submissions for 
the Record on page 14.]
    Representative Saxton. Commissioner, thank you very much. 
We particularly appreciate your remark today about working 
moms. It is a subject that we continue to see changes, an 
important change in our society. I can remember several decades 
ago there were very few working moms, and today there are many, 
and so your remarks were most appropriate. Thank you for that.
    Ms. Utgoff. Thank you.
    Representative Saxton. Commissioner, how would you 
characterize the April data? Didn't both unemployment surveys 
show strong gains in employment?
    Ms. Utgoff. Yes, the labor market showed a good deal of 
strength this month.
    Representative Saxton. And how large were the upward 
revisions in payroll employment for the months of February and 
March?
    Ms. Utgoff. 57,000 for February.
    Representative Saxton. Bringing it to a total of what kind 
of growth?
    Ms. Utgoff. 146,000.
    Representative Saxton. 146,000 in February?
    Ms. Utgoff. Yes. Oh, I am sorry, that was March. February 
is 300,000.
    Representative Saxton. 300,000 in February. So we had a 
slight downturn on revised numbers in March, but certainly we 
are seeing a trend of good growth here over the past 3 months, 
certainly.
    Ms. Utgoff. Both of them were revised upward, so we had 
stronger news for the previous 2 months.
    Representative Saxton. Okay, thank you. So over the past 3 
months, including this month, we have seen, overall, good 
growth.
    Ms. Utgoff. Yes.
    Representative Saxton. Is it typical for this stage of a 
cycle, or is it unusual?
    Ms. Utgoff. I think when we talk about a cycle we have to 
realize that what we have seen since March, 2001, is very 
atypical. It doesn't look like other recessions. But this kind 
of growth is normal for when the labor market starts to 
recover.
    Representative Saxton. Okay. Thank you.
    What factors contributed to the revisions of February and 
March?
    Ms. Utgoff. The revisions for February were in leisure and 
hospitality, largely eating and drinking. The revisions for 
March were spread widely throughout all of the industries.
    Representative Saxton. Thank you.
    Are there any signs in the April data that workers are 
choosing to enter the workforce? Are we seeing any movement of 
encouraged workers who may perceive that the labor market 
conditions continue to improve?
    Ms. Utgoff. The household survey shows a very strong 
increase in participants in the labor force, and it also shows 
a strong growth in employment.
    Representative Saxton. So individuals who are unemployed 
are becoming more encouraged to seek jobs, is that a fair 
statement?
    Ms. Utgoff. Yes. Over the last year, the number of 
discouraged workers has declined.
    Representative Saxton. In your statement, you note that the 
monthly gain in payroll employment was widespread. Isn't this 
reflected in the defusion index which rose to 61.3?
    Ms. Utgoff. Yes.
    Representative Saxton. What does that mean? 61.3 percent is 
a number which means what?
    Ms. Utgoff. It reflects roughly the percentage of 
industries that have increased employment that month. It is 
actually the percent with an increase, half the percent of the 
industries that had no change to reflect, so that 50 is the 
mark for neither contraction or expansion.
    Representative Saxton. So of all the firms in the index, 
61.3 percent have growth in employment?
    Ms. Utgoff. Yes.
    Representative Saxton. In your statement you also note an 
increase in employment related to oil and gas operations. How 
do you interpret this increase?
    Ms. Utgoff. I think this is related to the increase in fuel 
prices, which has led for more exploration and people providing 
the services for more exploration and drilling.
    Representative Saxton. Now I have noted that, with regard 
to coal operations--speaking of energy--there have been some 
reports that coal mining operations have had trouble finding 
workers. Is this reflected in your data?
    Ms. Utgoff. There has been an increase of employment in 
mining over the last 12 months, about 6,300. Now they may have 
wanted to hire 20,000, so that there is a shortage, but we do 
see an increase in employment over the year.
    Representative Saxton. Also in your statement you mention 
that over the last 2 years construction employment has been 
strong. This strength seems to be quite consistent month after 
month over the recovery, hasn't it?
    Ms. Utgoff. Yes.
    Representative Saxton. Is that a reflection of something 
that has been happening generally in the housing market?
    Ms. Utgoff. Yes. The low interest rates have sparked a 
fairly strong housing boom. We see that in construction, we see 
that in the financial services that deal with mortgages, we see 
that throughout the employment situation--that if it is related 
to the housing market--it is showing strength.
    Representative Saxton. And slightly out of your domain, I 
guess, but let me ask this question anyway. We have noted that 
the Fed has had a continuing slow increase of short-term 
interest rates, but, at the same time, long-term interest rates 
have continued to at least be stable and in some cases fall. 
Has this contributed to the housing market, and do you have any 
thoughts about what is causing the long-term rate to remain 
stable while short-term rates are increasing?
    Ms. Utgoff. Chairman Greenspan is far better than I on 
that--and that is totally out of my bailiwick.
    Representative Saxton. Okay, thank you.
    Let me just turn to the rate of unemployment for just a 
moment. We have a chart that our great helper is going to help 
us put up there.
    The point that I want to make here is that Mrs. Maloney 
pointed out that the rate of unemployment remained at 5.2 
percent this month. I just wanted to point out that, in spite 
of the fact that the rate of unemployment remained at 5.2 
percent, we have already talked here in the last few minutes 
about the rate of unemployment; and one of the things that, of 
course, keep it from falling is that more and more people are 
attempting to enter the workforce, and that is good.
    Now over the last three and a half decades, this chart 
shows the--through the red line--the trends in the rate of 
unemployment. And, of course, during the 1970s, we saw 
unemployment peak out at around 9 percent; during the 1980s, we 
saw unemployment peak out at just under 11 percent; during the 
1990s, we saw unemployment peak out at just under 8 percent; 
and in this recession that we are now recovering from, we saw 
the rate of employment peak out at 6.2 percent. So the peak of 
9 percent in the 1970s, the peak of almost 11 percent in the 
1980s, the peak of almost 8 percent in the 1990s far surpassed 
the peak of unemployment that we saw of 6.2 percent in this 
cycle. And, further, the average rate of unemployment in the 
1970s was 6.2 percent, in the 1980s was 7.3 percent, and in the 
1990s was 5.8 percent.
    So while we would like to see full employment, whatever 
that is, we certainly are in a period when we should be fairly 
pleased, I would think, with the way the job recovery and the 
rate of unemployment have shown great long-term progress here. 
And I just wondered if there is anything about this chart that 
you would like to remark about or comment on inasmuch as this 
is--at least over the last three and a half decades we are in a 
fairly historic position in terms of long-term low-unemployment 
rates.
    Ms. Utgoff. Yes. We just checked the numbers, and what you 
have there is correct.
    Representative Saxton. Okay. Thank you.
    Mrs. Maloney.
    Representative Maloney. It is always good to hear you are 
correct. First of all, I would like to thank you very much for 
including Mother's Day employment numbers. They show a 
tremendous shift, really, in the framework of our country. 
Seven out of ten mothers are now in the labor force.
    I think this is such an important issue. One of the areas I 
work in is supporting policies in the private and public sector 
to support working mothers; and I would like to request a 
hearing just on working mothers or, at the very least, the 
opportunity, Commissioner, to speak with you in depth on the 
numbers that you see in this really dramatic change in the way 
our country is constructed.
    But I do want to go back to the Chairman's chart, and I am 
glad that it is correct. Because one of the things that it 
shows is that the unemployment numbers are still higher than 
when President Bush took office. Although there is a larger 
participation, it is still not as large as I would like to see; 
and I would like to ask specifically, Commissioner, the 
unemployment rate remains at least a percentage point higher 
than it was before the start of the recession, is that correct? 
And what was the unemployment rate in April?
    Ms. Utgoff. The unemployment rate in April was 5.2 percent. 
In March 2001, last business cycle peak, the jobless rate was 
4.3.
    Representative Maloney. 4.3, okay. So the labor force 
participation rate I think is tremendously important.
    Wouldn't you expect in an economic recovery that people who 
had dropped out of the labor force would begin to come back and 
that the labor force participation rate would increase? What 
has been the recent level of the labor force participation 
rate, and how does that compare with what it was in 2000 and 
early 2001? And if I could add, when was the last time the 
labor force participation rate was this low?
    Ms. Utgoff. In April, the labor force participation rate 
was 66.0 percent. The rate peaked at 67.3 in the first few 
months of 2000, and it was at 67.2 percent in March 2001, at 
the business cycle peak.
    You asked me when the last time we had these kinds of 
rates. The labor force participation rate has been at or near 
66 percent since mid-2003. Prior to the 2001 recession, the 
rate was last in that general range in 1993.
    Representative Maloney. So we would have to go back at 
least 10 years----
    Ms. Utgoff. That is correct.
    Representative Maloney [continuing]. For it to be in this 
range.
    The employment-to-population ratio is very important, and I 
would like to understand this more. What fraction of the 
population was employed in April? And how does the employment-
to-population ratio in recent months compare to what it was in 
2000 or early 2001? And when was the last time the employment-
to-population rate was as low as it has been recently?
    Ms. Utgoff. The employment-to-population ratio now is 
62.1--I am sorry, 62.6; and the annual average in 2000 was 
64.4. In January 2001, the employment-to-population ratio was 
64.4.
    You asked about when the last time it was as low as it is 
now. The employment-to-population ratio has been about 62.5 
percent since the middle of last year. The last time it had 
been at the level prior to this recession was in mid-1994.
    Representative Maloney. The official unemployment rate does 
not, as I understand it, include people who want to work but do 
not satisfy all of the requirements to be officially classified 
as unemployed. When people who want a job that are not in the 
labor force and people who want to work full time but can only 
get a part time job are included, that measure of labor market 
slack is much higher than the official unemployment rate. So 
how many people are officially counted as unemployed now?
    Ms. Utgoff. 7.7 million.
    Representative Maloney. 7.7 million. How many people who 
are not in the labor force say they want a job now?
    Ms. Utgoff. 1.5 million people say that they are not in the 
labor force, but they say they want a job, have searched for 
work in the prior 12 months, and are available to work now.
    Representative Maloney. How many people are working part 
time for economic reasons and presumably would want to work 
full time if they could get a full-time job?
    Ms. Utgoff. In April, 2005, that was 4.3 million.
    Representative Maloney. What would the unemployment rate be 
if you included people who want a job now but are not in the 
labor force and people who are working part time not for 
economic reasons but because they cannot get a full time job?
    Ms. Utgoff. That is one of the unemployment rates we 
published. It is called the U-6, and that number would be 9 
percent.
    Representative Maloney. Nine percent.
    May I continue asking questions, Mr. Chairman?
    Representative Saxton. Sure.
    Representative Maloney. Thank you.
    Something that really concerns me deeply and that I, quite 
frankly, do not understand, is why are we not seeing stronger 
wage growth? We see some good employment numbers across the 
board, which is great news, but the wage growth does not appear 
to be growing.
    A few weeks ago--in fact, the last time we had a hearing--
the L.A. Times ran a story entitled, ``Wages Lagging Behind 
Prices.'' Inflation has outpaced the rise of salaries for the 
first time in 14 years, and workers are paying a bigger share 
of the cost of their health care.
    Then the next day the New York Times ran a story headlined, 
``Falling Fortunes of the Wage Earners.'' What has been 
happening to growth and wages and earnings recently compared 
with what has been happening to inflation? In other words, have 
workers' paychecks been keeping up with inflation?
    Ms. Utgoff. There are several measures of earnings. Let me 
talk about the ones that are in the report that I testified on 
today, and that is real earnings of production or 
nonsupervisory workers. That, in real terms, declined a half a 
percent from March 2004 to March 2005.
    Representative Maloney. But haven't we seen pretty strong 
productivity growth over the past 4 years, and wouldn't we 
expect to see that translated into solid growth and real jobs? 
Productivity is growing up faster than real wages.
    Ms. Utgoff. That is the theory, that productivity leads to 
higher wages. We just have not seen it in the last part of this 
cycle.
    Representative Maloney. Most of this strong growth and 
labor productivity has, therefore, translated into profits, not 
wages, hasn't it?
    Ms. Utgoff. The Bureau of Labor Statistics has very limited 
information on profits. Our productivity analysis reports on 
profits in the nonfinancial corporations. In 2004, productivity 
in nonfinancial corporations increased by 3.9 percent, hourly 
compensation by 4.4 percent, and unit profits by 20 percent.
    Representative Maloney. Employers' costs--and I am hearing 
a lot of this from my constituents that are very concerned that 
their costs are not only wages and salaries but also benefits, 
and the cost of benefits are going up really dramatically. When 
employers costs go up because they have to pay more for health 
insurance, how does that affect our measure of employee 
compensation? Aren't workers subject to a squeeze on their 
take-home pay as employers have to pay more for their health 
insurance? And if employers are shifting more of the burden of 
rising health care costs onto their workers, does that not 
reduce the purchasing power of that take-home pay still more?
    Ms. Utgoff. You asked how is the compensation measured. We 
have an employment cost index which measures wages and salaries 
and benefits and then the total compensation package. Wages and 
salaries have not risen as quickly as the benefits increases, 
so I think it is fair to say that there has been pressure on 
wages and salaries because of increases in workers' benefit 
costs, particularly pension and health benefits.
    Representative Maloney. I believe that the BLS publishes 
data on the usual weekly earnings of full-time workers, 
including some information about the wage distribution, is that 
correct?
    Ms. Utgoff. Yes.
    Representative Maloney. Well, our staff has done some 
calculations that shows some disturbing trends in that wage 
distribution. First, they show that from the fourth quarter of 
2000 to the fourth quarter of 2004, median earnings had 
increased by just .2 percent per year after inflation. Does 
that seem about right to you?
    Ms. Utgoff. We have done the same calculation, and it is 
about right. We calculated a gain of about .15 percent.
    Representative Maloney. Okay, thank you.
    However, earnings near the very top of the earnings 
distribution, the 90th percentage, have risen by roughly .9 
percent per year, while earnings near the bottom, the tenth 
percentile, have fallen by 3 percent per year. Does that seem 
about right to you as well?
    Ms. Utgoff. Well, let me read the numbers for you.
    During that 4-year period, you are talking about nominal 
earnings. If the ninth decile grew from 1,299 to 1,477, that 
was up 13.7 percent, while those at the first decile increased 
from $284-308, that is up 8.5 percent. Now, inflation over this 
period rose by 9.6 percent. So, in real terms, those at the 
ninth decile have seen earnings growth around 1 percent per 
year, while those in the first decile have seen their earnings 
decline .3.
    Representative Maloney. Thank you.
    So in other words, things seem to have gotten worse in the 
past year, comparing the first quarter of this year with the 
comparable period a year ago. Only the very top of the 
distribution seems to have experienced real wage gains, while 
earnings at the bottom, the tenth percentile, were down 1.3. Do 
those numbers sound roughly right to you, or----
    Ms. Utgoff. Yes. From the first quarter of 2004 to the 
first quarter of 2005, weekly earnings at the ninth decile are 
up in nominal terms, and earnings in the first decile are up 
about 1.6 percent.
    Given that the CPI is up about 3 percent over this period, 
earnings among workers at the ninth decile have seen a small 
increase in real terms over this period, while those in the 
first decile have experienced a decline of about 1.4 percent.
    Representative Maloney. Thank you.
    Well, this job growth is really encouraging. 274,000 jobs 
in this month is just great news for America. But I would like 
to know, how long does it usually take from when the economy 
first begins to lose jobs in a recession until the job's 
deficit created by that recession is completely erased?
    Ms. Utgoff. It varies. It took 28 months to recover from 
the----
    Representative Maloney. It is roughly 2 years, would you 
say?
    Ms. Utgoff. Yes.
    Representative Maloney. And hasn't it taken us nearly 4 
years in this business cycle just to get back to where we were 
when this recession started?
    Ms. Utgoff. Yes.
    Representative Maloney. And when you take out growth in 
government jobs, don't we still have fewer jobs on private 
payrolls than there were when President Bush took office in 
January 2001, or at the start of the recession in March 2001?
    Ms. Utgoff. That is correct.
    Representative Maloney. More than 4 years after the start 
of a recession, isn't our usual experience that there are two 
or three million more payroll jobs than there were when the 
recession started, instead of a deficit?
    Ms. Utgoff. Can we get back to you the average? The 
question is, 4 years after a----
    Representative Maloney. Start of a recession.
    Ms. Utgoff [continuing]. The start of a recession what is 
the average job growth?
    Representative Maloney. Yes, payroll jobs.
    Ms. Utgoff. Okay. We don't have those numbers here with us 
today.
    Representative Maloney. If you could get back.
    [The information referred to may be found on page 41.]
    Representative Maloney. And aren't there significantly 
fewer manufacturing jobs than there were in 2001?
    Ms. Utgoff. Yes.
    Representative Maloney. Roughly 2.6 million less.
    Ms. Utgoff. That is right.
    Representative Maloney. And those persistent job deficits 
are different from anything we have seen in a business cycle 
for a very long time, aren't they?
    Ms. Utgoff. Yes.
    Representative Maloney. Thank you.
    One of the reports that I--it was not in your statement but 
was really in the news broadcast this morning--is that 
Americans are working longer hours, that the number of hours 
Americans are working is longer. And I am just interested, 
given the fact that you show how long the women are working and 
then working at home, too, is it true that the numbers that 
Americans are working for their wages are growing longer? I 
heard that on a news report this morning.
    Ms. Utgoff. The average hours worked are a function of not 
just how many people are working but where they are working. 
Manufacturing tends to have higher hours than the service 
industry. So that over the last several years, as you have seen 
a shift out of manufacturing, average hours have fairly gone 
down.
    Representative Maloney. They have gone down.
    Thank you very much. I have no further questions. 274,000 
jobs sounds good to me, Mr. Chairman. I hope it continues.
    Representative Saxton. Well, I just have one question, and 
I guess this is a rhetorical one. Inasmuch as Mrs. Maloney went 
to great pains to point out what she perceives as the various 
weaknesses in this cycle related to Mr. Bush, I wonder if she 
would give Mr. Bush credit over the past 3 months for having 
created an average of 240,000 jobs a month.
    Representative Maloney. What I am very concerned about, Mr. 
Chairman, are the structural challenges that we face. This is 
probably not a question for the BLS, but I am concerned that we 
have raised the debt ceiling three times in this 
administration, that we have three records----
    Representative Saxton. You are not answering my question. 
It is my time. I am going to reclaim my time. My question said, 
do you give the President credit for having created 240,000 
jobs a month for the last 3 months? That is a very good rate of 
job creation.
    In addition to that--let me amend my question. Do you 
criticize in any way the previous administration for the loss 
of manufacturing jobs which took place in 1998, 1999, and 2000? 
Wouldn't it be fair to blame that administration for that job 
loss in manufacturing?
    Representative Maloney. Mr. Chairman, I am not blaming 
anyone. My questions were very factual and aimed at getting 
information. The fact that our country is losing manufacturing 
jobs is a challenge to both sides of the aisle to try to 
reverse that disturbing trend, no matter what administration it 
is in. We have seen today 4 records--record job growth, record 
deficits, record trade deficit, and record debt--and I am 
concerned about these structural challenges that this country 
faces with the growing and looming debt.
    Mr. Chairman, you and I both owe the Federal government 
$27,000 of what our personal debt price is. I happen to be 
concerned about that. And until we address the structural 
challenges, I don't feel that continued prosperity for our 
country long term is extremely positive.
    We are a great country. I hope the stock market goes up. 
This is great employment. I hope some of those people that got 
those jobs live in my district, in the great State of New York. 
I am very happy about this job growth, and let's work together 
to come up with some policies to reverse the disturbing loss of 
manufacturing jobs and to try to structurally address the 
challenges that we confront.
    I am concerned that there are some people that want to add 
another couple of trillion dollars of debt in a structure to go 
to private insurance. Now if you want to go to private 
insurance, don't add debt to the American people----
    Representative Saxton. I am going to reclaim my time. I am 
sorry. The gentlelady is out of order.
    Representative Maloney. I was answering your question.
    Representative Saxton. I think you were filibustering.
    I think the 240,000 average job growth during the last 3 
months speaks for itself.
    With regard to manufacturing jobs, I am pleased that the 
gentlelady has pointed out that--and has agreed that it is part 
and parcel of both administrations. It is a set of issues that 
we do need to address on a bipartisan basis. And certainly--I 
will conclude with this--the gentlelady's questions were aimed 
at pointing out the weaknesses which she inferred took place 
because of this administration.
    Thank you very much. The hearing is adjourned.
    [Whereupon, at 10:13 a.m., the hearing was adjourned.]
                       Submissions for the Record

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

       Prepared Statement of Representative Jim Saxton, Chairman
    It is a pleasure to welcome Commissioner Utgoff and her colleagues 
before the Committee this morning to discuss the latest employment 
data.
    The April employment data are good news for American workers. 
According to the payroll survey, employment increased by 274,000 jobs 
in April. Over the last 23 months, 3.5 million jobs have been created.
    According to the household survey, employment also advanced, while 
the unemployment rate was 5.2 percent. Over the last year, most of the 
net increase in employment has been in occupations that pay in the 
middle range and higher.
    The employment data are consistent with other data showing that the 
economy continues to grow. In 2004, real GDP increased about 4 percent, 
followed by a more sustainable 3.1 percent pace in the first quarter of 
2005. Consumption and investment both continue to rise. The strength of 
investment over the last 2 years has been an important factor 
explaining the vitality of the economy.
    The economy seems to have weathered the recent rise in oil prices 
quite well, although oil prices have probably had some negative impact 
on growth. Another factor that bears watching is the potential impact 
of the recent expiration of tax provisions permitting expensing, which 
may affect the robust performance of business investment. Traces of 
inflation have surfaced in recent months, but inflation appears to be 
contained over the long term, as the Fed has recently noted.
    Looking ahead, the consensus of economic forecasters is that the 
U.S. economy will continue to grow at a rate in excess of 3 percent 
through the end of 2006. This is consistent with the long-term growth 
path of the U.S. economy over the last several decades.
                               __________
        Prepared Statement of Representative Carolyn B. Maloney
    Thank you, Chairman Saxton. The Joint Economic Committee has a long 
tradition of holding these hearings with the Commissioner of the Bureau 
of Labor Statistics to discuss the latest data on the employment 
situation, and I am glad we are able to continue that tradition today.
    This morning's news that the economy created 274,000 jobs in April 
is certainly good news for American workers. However, we haven't seen 
very many months of good job growth in the last 4 years as the economy 
has gone through the most protracted jobs slump since the 1930's.
    We continue to see evidence of that jobs slump. There were still 
fewer private sector payroll jobs in April than there were when 
President Bush took office in January 2001, and there are 2.8 million 
fewer manufacturing jobs. Even though we have had nearly 2 years of job 
growth, the pace of that job creation--about 150,000 jobs per month--is 
not what one would expect to see in a strong jobs recovery. It seems as 
though we are barely treading water in terms of keeping up with 
population growth and encouraging people to come back into the labor 
force after a long jobs drought.
    Today's report also shows that the unemployment rate remained 
unchanged at 5.2 percent. While it is true that the unemployment rate 
has come down from its peak, it still is more than a percentage point 
higher than the 4 percent rate we were able to achieve by the end of 
the 1990's. Moreover, today's unemployment rate masks the fact that 5.1 
million people who want to work remain out of the labor force and 
another 4.3 million are working part-time for economic reasons. The 
unemployment rate would be 9.0 percent if those people were included.
    Finally, I am concerned about workers' wages and earnings, 
especially over the past year or so. It seems that no matter what 
measure of workers' take-home pay you look at lately you see that it is 
not keeping up with inflation. For example, in the 12 months ending in 
March, both average hourly earnings and average weekly earnings of 
private sector workers are down about \1/2\ percent after accounting 
for inflation. Measures of total compensation, which include benefits 
as well as wages and salaries, are keeping up with inflation--but just 
barely. The problem is that rising costs of health insurance premiums 
are adding to employers' costs but they are squeezing workers' take-
home pay at the same time.
    Not only are earnings generally not keeping up with inflation, but 
the distribution of earnings is becoming more unequal. For example, 
from the end of 2000 to the end of 2004, the real earnings of full-time 
workers in the middle of the earnings distribution grew by just 0.2 
percent per year after inflation. However, those near the top of the 
distribution rose by almost 1 percent per year after inflation, while 
those near the bottom fell by 0.3 percent per year, on average. More 
recently, those disparities have become larger and only earnings at the 
very top have exceeded inflation.
    Mr. Chairman, I am very pleased to have Commissioner Utgoff here 
today and I look forward to hearing her testimony and pursuing with her 
some of the concerns I have raised about the employment situation.
                               __________
        Prepared Statement of Kathleen P. Utgoff, Commissioner, 
                       Bureau of Labor Statistics
    Mr. Chairman and Members of the Committee: I appreciate this 
opportunity to comment on the labor market data we released this 
morning.
    Nonfarm payroll employment rose by 274,000 in April, and the 
unemployment rate held at 5.2 percent. The increase in payroll jobs 
followed revised gains of 300,000 in February and 146,000 in March. 
Over the month, employment growth was widespread. Notable gains 
continued in construction, mining, food services, and health care.
    Among the goods-producing industries, construction employment rose 
by 47,000, continuing the strong growth trend of the last 2 years. Most 
of April's increase occurred in specialty trade contracting (40,000), 
with gains in both its residential and nonresidential components. 
Mining added 8,000 jobs in April. Over the past 6 months, mining 
employment has risen by 31,000, largely reflecting increased hiring for 
support activities for oil and gas operations.
    Manufacturing employment was essentially unchanged both in April 
and over the year. The manufacturing workweek was up by one-tenth of an 
hour over the month, and factory overtime held at 4.5 hours.
    In the service-providing sector, food services added 35,000 jobs 
over the month. Following a lull in hiring last summer, industry 
employment has risen by 183,000 since September. Health care employment 
increased by 25,000 in April. The job gain was concentrated in 
hospitals and in doctors' offices.
    Employment in the information industry increased by 12,000 over the 
month, with gains in motion pictures and telecommunications. Job growth 
continued in a number of other service-providing industries, including 
financial activities, professional and technical services, and 
transportation.
    Average hourly earnings of private production or nonsupervisory 
workers rose by 5 cents in April to $16.00, following a 4-cent increase 
in March. Over the year, average hourly earnings grew by 2.7 percent.
    Looking at the measures from our household survey, total employment 
rose in April by 598,000 to 141.1 million. The labor force 
participation rate and the employment population ratio each edged up by 
0.2 percentage point to 66.0 and 62.6 percent, respectively. The number 
of discouraged workers (persons outside the labor force who had stopped 
looking for work because they believed their job search efforts would 
be fruitless) declined by 99,000 over the year to 393,000 in April (not 
seasonally adjusted).
    Both the number of unemployed persons and the unemployment rate 
were unchanged in April. About 1 in 5 unemployed persons had been 
jobless for 27 weeks or longer. The long-term unemployed have accounted 
for over 20 percent of total unemployment for 31 consecutive months.
    As part of our mission of reporting on America's workers each 
month, and in recognition of Mother's Day this Sunday, I would like to 
mention a few facts about working mothers. in today's labor market, 7 
out of 10 mothers are in the labor force, compared with 5 out of 10 in 
1975. Working moms account for almost one-fifth of all employed 
individuals, and nearly three-fourths of employed mothers usually work 
full time. Mothers who usually work full time also spend more than 2 
hours each weekday performing active childcare, cleaning house, and 
preparing meals. In addition, nearly 4 out of 10 mothers who work full 
time perform volunteer work at some point during the year.
    I also would note that an updated version of a report by BLS on 
women in the labor force, which includes data on working mothers, will 
be posted on our Web site next week This report is a compilation of 
information on women workers by various characteristics, including age, 
education, occupation, and earnings.
    To summarize April's labor market data, nonfarm payroll employment 
increased by 274,000. The unemployment rate was unchanged over the 
month, at 5.2 percent.
    My colleagues and I now would be glad to address your questions.
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                      Change in Nonfarm Payroll Employment 49 Months After Recession Onset
                                                 [In thousands]
----------------------------------------------------------------------------------------------------------------
                  Recession Onset                      49 Months After Recession Onset     Change in    Percent
----------------------------------------------------------------------------------------- Employment   Change in
               Month\1\                 Employment            Month           Employment     Level    Employment
----------------------------------------------------------------------------------------------------------------
Nov-48................................      45,194  Dec-52..................      50,164       4,970       11.0
Jul-53................................      50,536  Aug-57..................      53,128       2,592        5.1
Apr-60................................      54,812  May-64..................      58,089       3,277        6.0
Nov-73................................      77,909  Dec-77..................      84,408       6,499        8.3
Jul-81................................      91,594  Aug-85..................      96,819       6,225        6.8
Jul-90................................     109,773  Aug-94..................     114,801       5,028        4.6
Average...............................                ......................                   4,765        7.0
Mar-01................................     132,511  Apr-05..................     133,293         782        0.6
----------------------------------------------------------------------------------------------------------------
\1\ As designated by the National Bureau of Economic Research (NBER).
Source: Bureau of Labor Statistics, Current Employment Statistics (CES) Survey.

  

                                  
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