[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
__________
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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
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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.