[Joint House and Senate Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 109-635
THE EMPLOYMENT SITUATION: JANUARY 2006
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
FEBRUARY 3, 2006
__________
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 Cornyn, 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
Hon. Jim Saxton, Chairman, a U.S. Representative from the State
of New Jersey.................................................. 1
Witnesses
Statement of Kathleen P. Utgoff, Commissioner, Bureau of Labor
Statistics; accompanied by John S. Greenlees, Associate
Commissioner, Offices of Prices and Living Conditions; and John
M. Galvin, Associate Commissioner, Employment and Unemployment
Statistics..................................................... 2
Submissions for the Record
Prepared statement of Representative Jim Saxton, Chairman........ 9
Prepared statement of Senator Jack Reed, Ranking Minority........ 10
Prepared statement of Kathleen P. Utgoff, Commissioner, Bureau of
Labor Statistics, together with press release USDL 06-160,
entitled, ``The Employment Situation: January 2006''........... 11
Response from Commissioner Utgoff to Chairman Saxton............. 43
The New York Times article, entitled, ``The Nation of the
Future''....................................................... 46
THE EMPLOYMENT SITUATION: JANUARY 2006
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FRIDAY, FEBRUARY 3, 2006
Congress of the United States,
Joint Economic Committee,
Washington, DC
The Committee met, pursuant to notice, at 9:30 a.m., in
room 2212, Rayburn House Office Building, Hon. Jim Saxton,
Chairman of the Committee, presiding.
Present: Representative Saxton; Senator Sessions.
Staff Present: Chris Frenze, Colleen Healy, Brian Higgin-
botham, John Kachtik, Jeff Schlagenhauf, Nan Gibson, Matthew
Salomon, Chad Stone and Rachel Thomson.
OPENING STATEMENT OF HON. JIM SAXTON, CHAIRMAN,
A 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 January employment data are good news for American
workers. According to the payroll survey, employment has
increased by 193,000 jobs in January. Since May 2003, more than
4.7 million jobs have been created. According to the household
survey, employment also advanced, while the unemployment rate
fell to 4.7 percent. Over the last year, most of the net
increase in employment has been in occupations that pay in the
middle range or higher.
The employment data are consistent with other data showing
that the economy continues to grow. In 2005, the real GDP
increased 3.5 percent. Although economic growth slowed to only
1.1 percent in the fourth quarter of 2005, this advance figure
is incomplete and may be revived upward. Most forecasters
project a rebound in economic growth in the first quarter of
2006.
As an important Federal Reserve policy statement recently
noted, the expansion in economic activity appears solid.
According to the Federal Reserve, the Congressional Budget
Office and private economists, economic growth this year will
be comparable to the healthy pace set in 2005.
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. Inflation appears to be contained
over the long run, as the Fed recently stated. In conclusion,
U.S. economic growth has been healthy in recent years and
significantly higher than most other advanced economies.
The U.S. unemployment rate also remains below comparable
rates in many other economies. Most recent forecasters expect
good economic and employment growth to continue.
Commissioner Utgoff, we are pleased that you are here this
morning, and we look forward to hearing your statement.
[The prepared statement of Representative Jim Saxton
appears in the Submissions for the Record on page 9.]
STATEMENT OF HON. KATHLEEN P. UTGOFF, COMMISSIONER, BUREAU OF
LABOR STATISTICS; ACCOMPANIED BY JOHN S. GREENLEES AND JOHN M.
GALVIN
Commissioner Utgoff. Thank you, Mr. Chairman. I appreciate
this opportunity to comment on the labor market data we
released this morning.
Nonfarm payroll employment increased by 193,000 in January,
and the unemployment rate fell to 4.7 percent. Payroll
employment was up by 140,000 in December and by 354,000 in
November. Over the year, payroll employment increased by 2.1
million. In January, employment growth occurred in
construction, mining, and in several service-producing
industries.
Employment in construction rose by 46,000 over the month
and by 345,000 over the year. Above-average temperatures in
most of the country may have contributed to fewer seasonal
layoffs than usual in January.
Manufacturing employment was little changed in January. A
few manufacturing industries have some small job gains in
recent months, including wood products, fabricated metals, and
electrical equipment.
Mining added 6,000 jobs in January. Since its most recent
low in April 2003, mining employment has increased by 91,000.
In the service-providing sector, employment growth
continued in health care over the month. Jobs were added in
doctors' offices, hospitals and nursing and residential care
facilities.
In January, employment in food services and drinking places
grew by 31,000. Over the year, this industry has added 214,000
jobs.
Employment in professional and business services was up by
24,000 in January, following 2 months of unusually large gains
that totaled 138,000. In January, accounting services lost
jobs, while employment trended up in computer systems design
and in management and consulting services.
In January, financial activities added 21,000 jobs.
Wholesale trade employment was up by 15,000, while retail
employment was little changed.
Average hourly earnings for production or nonsupervisory
workers on private payrolls rose by 7 cents in January to
$16.41. Over the year average hourly earnings grew by 3.3
percent.
The establishment survey data released today reflect the
incorporation of annual benchmark revisions and updated
seasonal adjustment factors. Each year we anchor our sample-
based survey estimate to full universe counts of employment
derived principally from administrative records of the
unemployment insurance tax system.
The benchmark revision increased the level of nonfarm
payroll employment in March 2005 by 158,000, or about \1/10\th
of 1 percent. Over the past decade, benchmark revisions have
averaged plus or minus \2/10\th of 1 percent. The seasonally
adjusted establishment survey data from January 2001 forward
have been revised to incorporate updated seasonal adjustment
factors.
Turning now to measures from our household survey, the
unemployment rate declined to 4.7 percent in January, and the
number of unemployed persons fell to 7 million. The number of
long-term unemployed persons, those unemployed for 27 weeks or
more, declined to 1.2 million in January. They constituted 16.3
percent of all unemployed persons down from 21 percent a year
earlier. The number of discouraged workers fell over the year
to 396,000. Discouraged workers are those persons outside the
labor force who had stopped looking for work because they
believed their job search efforts would be unsuccessful.
With today's release, we again report on the labor force
status of survey respondents who evacuated from their homes due
to Hurricane Katrina. The data are derived from a special set
of questions that have been included in the household survey
since October to identify and gather information from evacuees.
The estimates do not account for all persons who evacuated from
their homes due to Hurricane Katrina. We do not gather
information on those evacuees who remain outside the scope of
the survey, such as those currently living in hotels or
shelters.
The January data indicate that there were about 1.2 million
persons age 16 and over who have evacuated from their August
residence due to Hurricane Katrina. By January, about one-half
of the evacuees had returned to the homes they vacated in
August. Among Katrina evacuees in January, 56.8 percent were in
the labor force, and their unemployment rate was 14.7 percent.
Unemployment rates were much lower for those evacuees who had
returned home than for those evacuees who had not. The January
unemployment rate for those who had returned was 2.9 percent.
It was 26.3 percent for those who had not yet returned to their
residences.
To summarize, the labor market data for January payroll
employment rose by 193,000, and the unemployment rate declined
to 4.7 percent.
My colleagues and I would be happy to answer any of your
questions.
[The prepared statement of Commissioner Utgoff appears in
the Submissions for the Record on page 11.]
Representative Saxton. Commissioner, thank you again for
being with us again this month.
As I noted in my opening statement, the economy's growth in
the fourth quarter of last year fell to 1.1 percent, and, in
spite of that, we continued to see significant job growth
through most of that quarter.
Can you review with us the number of jobs created during
the fourth quarter of last year?
Commissioner Utgoff. Five hundred thirty-one thousand.
Representative Saxton. Five hundred thirty-one thousand
jobs were created during the fourth quarter, and yet GDP sunk
to--I think it was 1.1 percent.
Do you expect that there will be some revisions in the GDP
number for the fourth quarter of last year?
Commissioner Utgoff. Yes.
Representative Saxton. Can you shed any light on that at
this point, or is it too early for us to?
Commissioner Utgoff. It is too early.
Representative Saxton. What are the factors that would
account for the revision of GDP growth in the fourth quarter of
last year?
Commissioner Utgoff. New information on wages and salaries,
new information on exports and imports, new information on all
the components of GDP.
Representative Saxton. Can you give us any idea what those
adjustments might look like as they begin to come in?
Commissioner Utgoff. I can't predict whether those
adjustments will be upward or downward.
Representative Saxton. Right. But we expect, as a normal
course of events that there will be some adjustments in the GDP
figure from the fourth quarter.
Commissioner Utgoff. Yes. This is called a preliminary GDP
number, and for good reason.
Representative Saxton. And do you have any idea as to when
we may see those adjustments take place?
Commissioner Utgoff. Approximately 3 weeks.
Representative Saxton. Is the increase in January payroll
employment a solid number, or is it significantly inflated by
special factors?
Commissioner Utgoff. It is a solid number, and with the
upward revisions that we had for the previous 2 months from
late reporters, it is a very solid report.
Representative Saxton. And once again, what was the number
of jobs created in January?
Commissioner Utgoff. One hundred ninety-three thousand.
Representative Saxton. One hundred ninety-three thousand.
And is that a significant number?
How much did the revisions in November and December of 2005
payroll employment figures add to total employment for those
months?
Commissioner Utgoff. Eighty-one thousand.
Representative Saxton. Eighty-one thousand.
And so once again when we talk about preliminary numbers
and adjusted numbers, we may see this number revise upward?
Commissioner Utgoff. Yes.
Representative Saxton. In January the diffusion index rose
to 60.6 percent. What does this figure say about the breadth of
job gains in January?
Commissioner Utgoff. It says that they were widespread.
Representative Saxton. So we are not seeing job growth
confined to a specific sector, but it is widespread throughout
the economy?
Commissioner Utgoff. That is correct.
Representative Saxton. Is the decline in unemployment to
4.7 percent statistically significant?
Commissioner Utgoff. Yes.
Representative Saxton. And when we talk about the 4.7
percent unemployment rate, can you give us an idea as to how
that compares with the unemployment rate over the last, let's
say, 3 years?
Commissioner Utgoff. It is the lowest rate since January--
July 2001.
Representative Saxton. July of 2001.
Commissioner Utgoff. Yes.
Representative Saxton. So that obviously is also good news.
What is the unemployment rate for men 20 and over?
Commissioner Utgoff. 4.0.
Representative Saxton. So we continue to have good news
there.
What is the unemployment rate for women aged 20 and over?
Commissioner Utgoff. 4.3 percent.
Representative Saxton. 4.3 percent.
We used to say that when we got to these low levels--we
used to talk about that being full employment. Are we reaching
what you would consider full employment?
Commissioner Utgoff. These are the lowest unemployment
rates for men and women since summer 2001.
Representative Saxton. Historically low unemployment rates.
Very good.
At this point how would you interpret the apparent effects
of the hurricanes on payroll employment over the last 5 months?
Commissioner Utgoff. There were 2 months, September and
October, where the unemployment rate was clearly held down by
the effects of Hurricane Katrina. In the subsequent months, the
economy appears to have recovered, and job growth has been--job
growth has been substantial.
Representative Saxton. Could you spend a few moments
explaining the benchmark revisions to the payroll employment
survey?
Commissioner Utgoff. Yes. Let me see if I can do this
simply is we have--when I testify before you each month, we
have an estimate of payroll employment that comes from a sample
of 400,000 establishments. That is large, but that is not all
the establishments.
Once a year we take a census of all establishments largely
taken from unemployment insurance records, and we tie the
census to the sample so that in this year and March they are
the same, and then adjust the other numbers to meet that census
number.
Representative Saxton. Thank you.
Mr. Sessions.
Senator Sessions. Thank you, Mr. Chairman, and,
Commissioner, I am pleased to welcome you here and to see
continued good news.
I guess, Mr. Chairman, good news doesn't attract as many
Members as bad news.
Representative Saxton. Airplanes attract Members on
Fridays.
Senator Sessions. Maybe you are right, airplanes attract
Members.
Commissioner, we are having a little excitement in Alabama.
Everybody is trying to claim credit for the unemployment rate.
Our unemployment rate, Mr. Chairman, is 3.5 percent, the lowest
ever recorded in the State. Job training program is first rate
and been ranked, I think, No. 1 one in the country, but now is
the challenge to get people trained for the good jobs that are
out there.
Have you had occasion, Commissioner, to be able to consider
whether if we could get people trained quicker, turn them
around more readily with skills that are needed in the
workplace, we could not only find more jobs, but we could move
people up into higher-paying jobs and better benefits?
Commissioner Utgoff. Yes.
Senator Sessions. What could you tell us about your
observation there? I think the reason I raise that is I don't
think it is a coincidence that Alabama's low unemployment rate
coincides with the fact that the job training program for the
State was rated
No. 1 in the country. Do you have any thoughts about that?
Commissioner Utgoff. Yes. Job training programs are
incredibly important in getting people into their first jobs,
which is important, and then moving them up into higher-paying
jobs. And the one-stop centers have been doing an excellent job
in taking in people and moving them through the entire process
of getting them into good jobs.
Senator Sessions. There has been a good bit of interest on
behalf of Governors in consolidating Federal workforce
programs. And we are trying to do that, although our Senate
bill is not as good as I would like; frankly, I think it is far
short of what the Governor has requested, but I remain hopeful.
Do you have any information and received any feedback from
the fact that a lot of these stovepipe programs are
contradictory and duplicative and would be much more efficient
if they were merged together?
Commissioner Utgoff. Yes. There are duplicative programs
for the same groups of people, and moving them together will
allow better service for these people. I have to say that I,
from the BLS, am well aware of the work that the Employment and
Training Administration is doing to improve the training, and
particularly tie training to the local workforce needs. But I
think the Assistant Secretary for Employment Training would be
a better witness for all of the things that are going on in
that area.
Senator Sessions. Well, I think we can do better. Our
commissioner, Dr. Roy Johnson, the chancellor of the system,
made this statement to me as we were going to a meeting, and he
said, an individual 28 years old with 2 kids can't go--he is
chairman of the community college system in the State, where
you have 2-year programs for the most part traditionally, when
you think in terms of the 2-year program--they don't have 2
years. What we need to do, he says, and he is doing, is create
specific programs that prepare people in 6 months or less for a
high-paying job, and he believes it can be done and is doing
that.
Would you agree that that has an important role in our
system--as well as our classical interest in degrees in 4 years
and 2-year degrees--but this kind of more specific focus on
training persons for a job that exists in that community, can
we do better than that?
Commissioner Utgoff. Yes. We can do better than that.
Senator Sessions. And would you share with us some thoughts
on that subject?
Commissioner Utgoff. Well, I would note that in the
military people are taken in for specific jobs and trained in
far less than 2 years for specific jobs and come out with
skills that are often good for the private sector, and that we
can't afford to have someone in for 4 years of service spending
2 years in a job training program. So that 6 months is
certainly a much better target period than for 2 years,
especially for someone who is 28 years old and has 2 children.
Senator Sessions. I think that was a very insightful
comment. I hadn't thought about the military. They absolutely
don't have--they can't spend 2 years preparing somebody, and
they train them for highly technical jobs in very short order,
and then when they get out, businesses line up to hire them.
They are very pleased to have them because of the way they have
been trained.
Mr. Chairman, I was just looking at the February 2 New York
Times article by David Brooks that made this point. And I think
in our country, we get a little too down on ourselves, and when
things are good, people start thinking, well, next week it is
going to be bad; you know, it can't stay good. But look at
this. David Brooks points out, has the American economy shrunk
as a part of the world economy? In 1971, the United States
economy accounted for 30.52 percent of the world's GDP. 30.52.
Now, we have seen China surge; Japan really over the last
30 years has been a tremendous force; India, the Asian tigers;
production in Europe and all; and today, he notes, our
percentage of GDP is 30.74, a larger percentage of the world's
GDP in the United States today than it was 30 years ago. And if
you listen to a lot of our commentators out there, you would
think the United States is in a period of decline.
That is a phenomenal achievement in light of the
productivity growth in other areas of the world. It is not as
if they shrank. They have been surging, and we still are doing
that, and our job numbers are going down. And we only have a
couple of things to fear, I think, and that is making sure our
children are properly trained and educated and really motivated
to take advantage of this economy, and to be positive and to
see that if they work hard, they can actually sustain a good
lifestyle for themselves and their children in the future.
Thank you for your leadership, Mr. Chairman, and I was
pleased to be here today. And, Commissioner, you should take a
bow on the job growth, too. Everybody else is. I am trying to.
If it were going up, they would blame me, so I might as well
claim some credit.
[The New York Times article entitled, ``The Nation of the
Future,'' appears in the Submissions for the Record on page
46.]
Representative Saxton. Thank you very much, Senator. I have
said in jest a couple of times that people were running for
airplanes. Actually, the Democrat Minority party has their
retreat today, and so that is the reason that they are not
here. And so I just wanted to make that part of the record.
Let me just ask one final short question. Manufacturing
employment has been a concern to the Members of the Committee,
and I am sure to you, also, Commissioner, over the last several
years. But manufacturing employment showed some small increases
in January, and I am curious to know in what sectors of
manufacturing did job gains actually take place. Can you talk
about that a little bit?
Commissioner Utgoff. Wood products, electrical equipment,
and there was one other, fabricated metals.
Representative Saxton. And what percentage of the
manufacturing sector would that involve? Can you give us an
estimate?
Commissioner Utgoff. I can't give you that estimate now,
but I will--we will provide that to you in a letter.
[The response from Commissioner Utgoff to Chairman Saxton
appears in the Submissions for the Record on page 43.]
Representative Saxton. We would certainly appreciate that.
But in general, the manufacturing sector showed some job
gains in January; is that right?
Commissioner Utgoff. Yes. Yes.
Representative Saxton. And was it statistically
significant?
Commissioner Utgoff. No.
Representative Saxton. But it was an indicator that there
is life in terms of growth in the manufacturing sector?
Commissioner Utgoff. Yes.
Representative Saxton. Thank you. I have no other questions
at this point, and we want to thank you for being with us here
today. It is always a pleasure to see you, and it is even more
of a pleasure when you have good news like the news you brought
us today. Thank you very much.
Commissioner Utgoff. I hope it will continue.
Representative Saxton. We do, too. Thank you.
[Whereupon, at 9:56 a.m., the Committee was adjourned.]
Submissions for the Record
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