[Joint House and Senate Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 109-687
THE EMPLOYMENT SITUATION: FEBRUARY 2006
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
MARCH 10, 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 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 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 New Jersey. 1
Witnesses
Statement of Hon. Kathleen P. Utgoff, Commissioner, Bureau of
Labor Statistics, accompanied by John Galvin, Associate
Commissioner for Employment and Unemployment Statistics; and
John Greenlees, Associate Commissioner for Prices and Living
Conditions..................................................... 2
Submissions for the Record
Prepared statement of Representative Jim Saxton, Chairman........ 8
Prepared statement of Senator Jack Reed, Ranking Minority Member. 9
Prepared statement of Hon. Kathleen P. Utgoff, Commissioner,
together with Press Release No. 06-396, entitled, ``The
Employment Situation: February 2006,'' Bureau of Labor
Statistics, Department of Labor................................ 10
THE EMPLOYMENT SITUATION:
FEBRUARY 2006
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FRIDAY, MARCH 10, 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.
Staff present: Chris Frenze, Robert Keleher, Brian
Higginbotham, Colleen Healy, Katie Jones, Chad Stone, Matt
Salomon and Nan Gibson.
OPENING STATEMENT OF HON. JIM SAXTON, CHAIRMAN, A U.S.
REPRESENTATIVE FROM NEW JERSY
Chairman Saxton. Good morning. Commissioner Utgoff, it is a
pleasure to welcome you once again to testify before the Joint
Economic Committee.
The economic figures released today reflect more good news
for American workers. According to the payroll survey, 243,000
jobs were created during the month of February. The level of
the diffusion index shows that job gains were widespread last
month. According to the household survey, the unemployment rate
at 4.8 percent was statistically unchanged.
The U.S. economy has created 5 million jobs since August of
2003. The strength of the economy since 2003 has led to
sustained job growth and downward pressure on unemployment. The
resilience and flexibility of the economy have overcome a
number of serious shocks, most recently the hurricanes of last
year.
The pick-up in economic growth since 2003 is explained by a
rebound in investment activity. The bursting of the stock
market and technology bubbles in the first quarter of 2000 had
exposed a lot of bad investments. These investments took years
to liquefy and had a negative effect on investment. Falling
investment was a drag on economic growth and undermined the
early expansion period.
In 2003, the new policy mix caused a sharp rebound in
investment activity. The combination of low interest rates set
by the Fed, together with increased tax for investment, led to
a sustained upward trend in investment that boosted economic
and employment growth. The result is that the economic
expansion is healthy, and the outlook is good.
In a recent policy report to Congress, the Fed noted that,
quote, ``The U.S. economy delivered a solid performance in
2005.'' Furthermore, the Fed observed that the U.S. economy
should continue to perform well in 2006 and 2007. The Fed,
along with a number of private and Government agencies, expects
economic growth in 2006 to be about 3\1/2\ percent. The
economic growth will continue to expand employment and further
reduce unemployment.
[The prepared statement of Representative Saxton appears in
the Submissions for the Record on page 8.]
Chairman Saxton. At this time I would like to ask unanimous
consent that Senator Reed's statement be included in the
record. He had fully intended to be here today, but another
hearing on the Senate side, which was originally scheduled for
10, was moved forward to 9:30, so he will be unable to be here.
[The prepared statement of Senator Reed appears in the
Submissions for the Record on page 9.]
Chairman Saxton. Commissioner Utgoff, we are ready for your
testimony.
STATEMENT OF HON. KATHLEEN P. UTGOFF, COMMISSIONER, BUREAU OF
LABOR STATISTICS, ACCOMPANIED BY JOHN GALVIN, ASSOCIATE
COMMISSIONER FOR EMPLOYMENT AND UNEMPLOYMENT STATISTICS; AND
JOHN GREENLEES, ASSOCIATE COMMISSIONER FOR PRICES AND LIVING
CONDITIONS
Commissioner Utgoff. Mr. Chairman, I appreciate this
opportunity to comment on the employment and unemployment data
we released this morning.
Nonfarm payroll employment rose by 243,000 in February, and
the unemployment rate was little changed at 4.8 percent.
February's employment increase reflected gains in construction,
mining, and several service-producing industries.
Within the goods-producing sector, construction employment
increased by 41,000 in February following another sizable gain
in January. Over the past 12 months, job growth in construction
has totaled 346,000. In February, employment continued to rise
in mining, mainly in support activities, especially for those
for oil and gas operations.
Manufacturing employment overall was virtually unchanged in
February. There were, however, offsetting movements in several
industries. The largest job losses were in motor vehicles and
parts and primary metals. Job gains occurred in machinery,
petroleum products, and computers and electronic products. The
manufacturing workweek and factory overtime each rose by 1/10
of an hour.
Over the month, financial activities added 22,000 jobs,
reflecting increases in depository institutions and in
insurance carriers. Health care employment expanded by 18,000,
with continued growth in hospitals, doctors' offices and home
health care. Professional and business services, private
education, food services and drinking places, and government
also had job gains in February.
Average hourly earnings for private production or
nonsupervisory workers rose by 5 cents in February, following
increases of 7 cents in both December and January. Over the
year, hourly earnings increased by 3.5 percent. The average
workweek was down by 1/10 of an hour in February to 33.7 hours.
Turning to data from the household survey, both the number
of unemployed persons and the unemployment rate were little
changed over the month. The number of persons employed for 27
weeks or more returned to its December level of 1.4 million
after declining in January. These long-term unemployed
constituted 19.0 percent of all unemployed persons, down
slightly from a year earlier.
Total employment in the labor force continued to trend up
in February. However, the employment-to-population ratio has
held steady in recent months, and the labor force participation
rate has shown little movement for about 2\1/2\ years.
This month 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 gather information about evacuees. The estimates do
not account for all persons who evacuated from their homes due
to Hurricane Katrina. Information is not gathered on those
evacuees who remain outside the scope of the survey, such as
those currently living in hotels or shelters.
The February data indicate that there were about 1 million
persons age 16 and over who evacuated from their August
residences due to Hurricane Katrina. In February, about one-
half of the evacuees were back in the homes they vacated in
August. Among Katrina evacuees identified in February, 58.1
percent were in the labor force, and their unemployment rate
was 12.6 percent. Unemployment rates were much lower for those
evacuees who returned home than for those evacuees who had not.
To summarize February's labor market data, nonfarm payroll
employment rose by 243,000, and the unemployment rate was
little changed at 4.8 percent. Payroll employment has increased
by 2.1 million over the year, and the unemployment rate is down
by half a percentage point.
My colleagues and I would now be glad to respond to your
questions.
[The prepared statement of Commissioner Utgoff, together
with Press Release No. 06-396, appears in the Submissions for
the Record on page 10.]
Chairman Saxton. Commissioner, thank you very much.
Commissioner, let me ask this question. You mentioned that
there was a slight change in the unemployment rate. It actually
increased from 4.7 to 4.8 percent.
Commissioner Utgoff. Yes.
Chairman Saxton. Is that a statistically significant
change?
Commissioner Utgoff. No, it was not.
Chairman Saxton. Are there any special factors distorting
or overstating the payroll job gains reported this month?
Commissioner Utgoff. No. We haven't identified any special
factors.
Chairman Saxton. You mentioned Katrina a minute ago. Has
the aftermath of Katrina continued to have some effect on the
economy generally, or is that more of a regional phenomenon?
Commissioner Utgoff. I wouldn't know about the economy in
general, but the unemployment rate in Louisiana is quite low,
and about half of the people who evacuated from their homes in
Katrina have returned, and they have an unemployment rate of
4.8 percent.
Chairman Saxton. You mentioned that the evacuees who have
not returned home have a higher unemployment rate; is that
right?
Commissioner Utgoff. Yes; 22.6 percent.
Chairman Saxton. And they are in Houston and in other
places?
Commissioner Utgoff. Yes.
Chairman Saxton. And continue to live in temporary housing?
Commissioner Utgoff. Yes.
Chairman Saxton. Does the current level of the diffusion
index indicate that payroll job gains in February were fairly
widespread?
Commissioner Utgoff. Yes, it does.
Chairman Saxton. Were there any sectors of the economy
where job creation was significantly higher than others?
Commissioner Utgoff. In construction and in several service
industries.
Chairman Saxton. You mention construction. Is that business
construction or residential construction? Do you have those
indicators?
Commissioner Utgoff. Most of the increase was in specialty
trade.
Mr. Galvin. I think our analysis indicates most of the
increase was in residential construction.
Chairman Saxton. I am curious. There has been some evidence
of cooling in the real estate sector. Do your statistics shed
any light on what is happening with real estate generally, real
estate construction?
Commissioner Utgoff. As Mr. Galvin said, previous to this,
most of the increase had been in residential construction, and
last month it was in--much more in heavy construction. I should
also note that for many months the increase in--there was a
marked increase in mortgage bankers and brokers, and for the
last 2 months we have seen a flattening of that.
Chairman Saxton. So your figures on residential
construction would tend to bolster the notion that the real
estate market has cooled some?
Commissioner Utgoff. The very limited evidence that we have
would.
Chairman Saxton. January was the warmest January in
recorded history, and some attributed the job growth in January
to climatological factors, warm weather. Was there anything
about February's weather that you can attribute to the very
healthy job growth that we saw?
Commissioner Utgoff. There was a snowstorm in the
Northeast, but it occurred on a Saturday and Sunday, and it was
the kind of snow that was easily removable, so we didn't see
anything in the data that would indicate that there were
special weather factors in February.
Chairman Saxton. What do payroll job gains suggest about
the strength of commission growth in the first quarter of 2006,
which many forecasts expect to be strong? Are the payroll job
gains consistent with solid economic growth?
Commissioner Utgoff. The payroll job gains are very
consistent with solid economic growth. I can't predict what
will happen for the rest of the quarter. There is 1 month left
in the quarter.
Chairman Saxton. The last quarter of last year was weaker
than we expected. Has there been any change in the rate of
growth as measured by your statistics in the last quarter of
last year?
Commissioner Utgoff. Compared to the first quarter of this
year?
Chairman Saxton. No. The last quarter of last year was 1.6
percent GDP growth, and we expected that figure to be adjusted.
Was there an adjustment?
Commissioner Utgoff. Yes, there was an adjustment. From the
preliminary announcement of GDP to the revised announcement,
there was an increase in measured GDP.
Chairman Saxton. Mr. Frenze tells me that it was adjusted
from 1.1 percent to 1.6 percent. Is that correct?
Commissioner Utgoff. That is correct.
Chairman Saxton. Thank you.
Do you have any indicators as to what we can expect? Can we
expect a rebound during the first quarter of this year?
Commissioner Utgoff. I can't predict that.
Chairman Saxton. OK. Thank you.
What can you tell us about the revisions in the recent
payroll data?
Commissioner Utgoff. They were very small.
Chairman Saxton. And is the gain in February payroll
employment statistically significant?
Commissioner Utgoff. Yes, it is.
Chairman Saxton. How do we account for the slight tick up
in the unemployment rate while we see such healthy job growth?
Commissioner Utgoff. Household survey and the payroll
survey, as you know, come from different sources, and the
unemployment rate has to do with participation and a number of
other factors so that there can be an increase in the
unemployment rate. There really wasn't an increase. It was the
same. So that what happened was the employment-to-population
ratio stayed the same, and the unemployment rate stayed the
same.
I have to say the answer is every month household and
payroll series can show differences, and in this month they do
that.
Chairman Saxton. Of course, I ask you questions, and you
say that you can't speculate, but let me just ask one anyway.
With the trend in job creation being, now, 5 million jobs since
August of 2003, and seeing good job growth this month, I might
be able to anticipate some downward trends in the unemployment
rate in the months ahead, couldn't I?
Commissioner Utgoff. Right. Right. Certainly that is your
right.
Chairman Saxton. Seasonal adjustment factors affected the
February numbers? And if so, which sectors are affected most
significantly by these seasonals?
Commissioner Utgoff. It is going to take me a minute.
Mr. Galvin. It is not really a very seasonal month. Normal
seasonal movements are about 600,000 at the total nonfarm
level. And the sector with the biggest normal seasonal movement
looks to be education and health services. But we did not see
anything unusual from a seasonal perspective this month.
Chairman Saxton. And are there any other particular
statistical anomalies affecting this month's payroll or
household numbers?
Commissioner Utgoff. We don't see any.
Chairman Saxton. OK. I thank you for being here this
morning. We always enjoy it when you come with good news and
good numbers. And we will look forward to seeing you in the
months ahead. Thank you very much.
[Whereupon, at 9:49 a.m., the Joint Committee was
adjourned.]
Submissions for the Record
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Prepared Statement of Hon. Kathleen P. Utgoff, Commissioner,
Department of Labor, Bureau of Labor Statistics
Mr. Chairman and Members of the Committee:
I appreciate this opportunity to comment on the employment and
unemployment data that we released this morning.
Nonfarm payroll employment rose by 243,000 in February, and the
unemployment rate was little changed at 4.8 percent. February's
employment increase reflected gains in construction, mining, and
several service-providing industries.
Within the goods-producing sector, construction employment
increased by 41,000 in February, following another sizeable gain in
January. Over the past 12 months, job growth in construction has
totaled 346,000. In February, employment continued to rise in mining,
mainly in support activities, especially those for oil and gas
operations.
Manufacturing employment overall was virtually unchanged in
February. There were, however, offsetting movements in several
industries. The largest job losses were in motor vehicles and parts and
primary metals. Job gains occurred in machinery, petroleum products,
and computer and electronic products. The manufacturing workweek (at
41.0 hours) and factory overtime (at 4.6 hours) each rose by 0.1 hour.
Over the month, financial activities added 22,000 jobs, reflecting
increases in depository institutions and in insurance carriers. Health
care employment expanded by 18,000, with continued growth in hospitals,
doctors offices, and home health care. Professional and business
services, private education, food services and drinking places, and
government also had job gains in February.
Average hourly earnings for private production or nonsupervisory
workers rose by 5 cents in February, following increases of 7 cents in
both December and January. Over the year, hourly earnings increased by
3.5 percent. The average workweek was down by 0.1 hour in February to
33.7 hours.
Turning to data from the household survey, both the number of
unemployed persons (7.2 million) and the unemployment rate (4.8
percent) were little changed over the month. The number of persons
unemployed for 27 weeks or more returned to its December level of 1.4
million, after declining in January. These long-term unemployed
constituted 19.0 percent of all unemployed persons, down slightly from
a year earlier.
Total employment and the labor force continued to trend up in
February. However, the employment-population ratio has held steady in
recent months, and the labor force participation rate has shown little
movement for about 2\1/2\ years.
This month, 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 gather information
about evacuees. The estimates do not account for all persons who
evacuated from their homes due to Hurricane Katrina. Information is not
gathered on those evacuees who remain outside the scope of the survey,
such as those currently living in hotels or shelters.
The February data indicate that there were about 1 million persons
age 16 and over who evacuated from their August residences due to
Hurricane Katrina. In February, about one-half of the evacuees were
back in the homes they vacated in August. Among Katrina evacuees
identified in February, 58.1 percent were in the labor force, and their
unemployment rate was 12.6 percent. Unemployment rates were much lower
for those evacuees who had returned home (4.8 percent) than for those
evacuees who had not (22.6 percent).
To summarize February's labor market data, nonfarm payroll
employment rose by 243,000, and the unemployment rate was little
changed at 4.8 percent. Payroll employment has increased by 2.1 million
over the year, and the unemployment rate is down by about half a
percentage point.
My colleagues and I now would be glad to respond to your questions.
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