[Joint House and Senate Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-862
 
                  THE EMPLOYMENT SITUATION: APRIL 2008

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

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 2, 2008

                               __________

          Printed for the use of the Joint Economic Committee




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                        JOINT ECONOMIC COMMITTEE

    [Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]

SENATE                               HOUSE OF REPRESENTATIVES
Charles E. Schumer, New York,        Carolyn B. Maloney, New York, Vice 
    Chairman                             Chair
Edward M. Kennedy, Massachusetts     Maurice D. Hinchey, New York
Jeff Bingaman, New Mexico            Baron P. Hill, Indiana
Amy Klobuchar, Minnesota             Loretta Sanchez,  California
Robert P. Casey, Jr., Pennsylvania   Elijah Cummings, Maryland
Jim Webb, Virginia                   Lloyd Doggett, Texas
Sam Brownback, Kansas                Jim Saxton, New Jersey, Ranking 
John Sununu, New Hampshire               Minority
Jim DeMint, South Carolina           Kevin Brady, Texas
Robert F. Bennett, Utah              Phil English, Pennsylvania
                                     Ron Paul, Texas

                  Michael Laskawy, Executive Director
             Christopher J. Frenze, Minority Staff Director
                            C O N T E N T S

                              ----------                              

                     Opening Statements of Members

Hon. Amy Klobuchar, a Senator from Minnesota.....................     1
Hon. Robert P. Casey, a Senator from Pennsylvania................     4

                               Witnesses

Statement of Keith Hall, Commissioner, Bureau of Labor 
  Statistics, Accompanined by John Galvin, Associate Commissioner 
  for Emmployment and Unemployment Statistics, and Michael W. 
  Horrigan, Associate Commissioner for Prices and Living 
  Conditions.....................................................     5

                       Submissions for the Record

Chart entitled ``There Are More Long Term Unemployed and More 
  Workers Exhausting Unemployment Benefits Than at the Beginning 
  of Previous Two Recessions''...................................    28
Prepared statement of the Honorable Charles E. Schumer, Chairman.    29
Prepared statement of Dr. Keith Hall, Commissioner, Bureau of 
  Labor Statistics, together with Press Release No. 08-0588......    30
Witten analysis from Dr. Keith Hall to Hon. Robert P. Casey......    59
Written analysis from Dr. Keith Hall to Hon. Amy Klobuchar.......    66
Chart entitled ``Income and Expense Changes 2000-2007''..........    69
Chart entitled ``Income and Expense Changes, Working Parents, One 
  Small Child 2000-2007''........................................    70
Chart entitled ``Income and Expense Changes, Families with One 
  Child in College 2000-2007''...................................    71
Chart entitled ``Total Consumer Debt, 2000-2007''................    73


                 THE EMPLOYMENT SITUATION: APRIL 2008

                              ----------                              


                          FRIDAY, MAY 2, 2008

             Congress of the United States,
                          Joint Economic Committee,
                                                    Washington, DC.
    The committee met at 9:30 a.m. in Room SD-562 of the 
Dirksen Senate Office Building, the Honorable Amy Klobuchar, 
presiding.
    Senators present: Klobuchar and Casey.
    Staff present: Christina Baumgardner, Heather Boushey, 
Stephanie Dreyer, Gretta Goodwin, Colleen Healy, Annabelle 
Tamerjan, Chris Frenze, Bob Keleher, Tyler Kurtz, Jeff 
Schlagenhauf, and Jeff Wrase.

 OPENING STATEMENT OF HON. AMY KLOBUCHAR, A U.S. SENATOR FROM 
                           MINNESOTA

    Senator Klobuchar [presiding]. We are calling the hearing 
to order of the Joint Economic Committee on this month's 
Unemployment statistics.
    I want to thank our witnesses for being here, Commissioner 
Hall, and Dr. Horrigan, and Mr. Galvin. Thank you very much for 
being here.
    I think we all know what has been going on in this country. 
We have lost 260,000 jobs in just the first four months of this 
year. Twenty thousand jobs were lost this past month.
    We also have the phenomenon that more and more workers are 
going part-time, and reducing their hours, and the other 
phenomenon we are going to discuss here today and why we are in 
such trouble right now, or workers are in such trouble, is 
because at the same time you see reduced hours, stagnant wages 
or in fact declining wages, you see expenses going up.
    And I am looking forward to discussing in detail what all 
of these numbers mean. I do think that we would not be fair if 
we did not say that we are in tough times. I say that after 
visiting with people all over my State and seeing what is going 
on with them. And some of them may have jobs, but they have 
seen such stagnant wages, and with the rise of costs in 
gasoline and the rise in cost of health care and other things, 
it is getting tougher and tougher for them to get by. And they 
look for a second job, and they cannot find them because of 
course we are having less jobs in this country.
    What has been going on is that the wealthiest 1 percent of 
the United States families is garnering the largest share of 
income since 1929, while most of America is just struggling to 
hang on.
    Middle-class income has fallen over $2000 since this 
Administration has taken office, a phenomenon that we have not 
seen in 50 years.
    Meanwhile, the cost of virtually everything has 
skyrocketed, from heating bills, to groceries, to gas, to 
health care, and college tuition. For many families even some 
basic necessities seem out of reach.
    Just yesterday we had a hearing in this very room of the 
Joint Economic Committee about the price of food. We had food 
banks testify about how they are stretched thin. We had a baker 
testify about how difficult it is for bakers to pay for wheat.
    And in fact there has been some interesting work done on 
this that I will be asking our witnesses about later by a woman 
at Harvard, a professor there, who has shown this lost income 
of wages. And she actually tracked it from 2000 to 2007.
    She showed the total lost income and increased expenses for 
your average American family comes to $5739. And I will be 
passing out copies of this in about ten minutes or so. She 
showed that the lost income is $1175 for the average American 
family between 2000 and 2007. And then she was able to show how 
the expenses have increased.
    Higher mortgage payments, again this does not include 2008, 
higher mortgage payments, $1729 a year.
    Higher gas bills, $2081 a year.
    Higher food costs, $237 a year--again not including even 
what's been going on in 2008.
    Higher phone bills, land line, $112.
    Higher appliance costs, $42.
    Higher health insurance costs, $363.
    And when you have families with children, there has been 
even a greater change with increased daycare, increased after-
school, and increased state college costs.
    So you see this net basically of $5739 per year that the 
average American family has lost. I bring this up in the 
context of the unemployment rate, and the reduction in hours, 
and real wages for Americans because that is what so many 
middle-class families are experiencing. That is why they have 
been putting more of their debt on credit cards, because they 
literally are not keeping up.
    Americans are facing the largest loss of wealth since the 
Great Depression. And here you have a chart showing that, that 
the Stock Market lost $2.7 trillion in value since May of 2007. 
The crisis has wiped out $2.7 trillion in home values. And the 
dollar has lost a third of its value. And the Federal Debt has 
nearly doubled in the last eight years. And for too many 
families across the country the dream of owning a home is 
turning into a nightmare. Every day 8000 more families lose 
their homes to foreclosure. Between January and March of this 
year, 1 out of every 194 households received notice of default, 
auction sale, or bank repossession.
    What started as a foreclosure crisis has now had more than 
ripple effects. It is turning into a tsunami across the entire 
country.
    For many people in my State who are paying their mortgage, 
like I have, they say: Well, why does this matter to me? I pay 
my mortgage. But what they have finally begun to realize is 
that it is affecting home values across this country.
    In my State we have seen a 10 percent decrease in home 
values. When Chairman Bernanke testified before our Joint 
Economic Committee a few weeks ago he agreed that what started 
as a foreclosure crisis is now in fact the root of the economic 
crisis.
    As of this month there are 7.6 million Americans 
unemployed. But with the continuous loss of jobs, they are now 
vying for 3.9 million available jobs. The number of unemployed 
workers is almost double the amount of jobs that they can find.
    More and more jobs are disappearing each month. In January 
through March, as I mentioned, we lost a total of 240,000 jobs. 
And for some industries the losses are particularly felt, and 
that is something I think we should discuss in this hearing. 
There is a difference between industries. In construction this 
month we saw a loss of 61,000 jobs. In manufacturing we saw a 
loss of 46,000 jobs. In retail we saw a loss of 27,000 jobs.
    What today's numbers also show is that, while some 
companies have not been cutting jobs, they have been cutting 
back on hours. Across the board manufacturing hours were down, 
as was factory overtime. And remember, when we are talking 
about families that have seen this $4500 a year increase in 
expenses, when they lose some of their overtime this is what 
puts them over the edge in terms of their family expenses.
    While this might sound insignificant for many of us that 
they lost a little overtime, or they got their hours cut back, 
for them these lost hours can literally make the difference of 
paying their mortgage or not paying their mortgage.
    Unemployment rates in the month of April remained high. 
What we have also seen is that those that have not been able to 
find a job are exhausting their unemployment benefits. In 
Minnesota 52,000 people are expected to lose their unemployment 
benefits without having found work. That is 5000 more than last 
year. And as you see here on this chart, which is the 
Unemployment Exhaustion chart, nationally long-term 
unemployment and exhaustion rates have continued to rise.
    [Chart entitled ``There Are More Long Term Unemployed and 
More Workers Exhausting Unemployment Benefits Than at the 
Beginning of Previous Two Recessions'' appear in the 
Submissions for the Record on page 28.]
    While they were unemployed, these people paid into the 
Unemployment Compensation Fund, a fund that currently has a 
surplus of $35 billion. They paid into this insurance, and now 
they are running out of resources. In every other economic 
downturn when we have seen this kind of exhaustion of 
unemployment benefits, the Administration has extended 
unemployment.
    Time and time again people in this situation have 
appropriately been given relief through an extension of 
unemployment benefits by 13 to 26 weeks. But we have not seen 
this kind of relief yet from this Administration.
    These unemployment numbers are hitting our veterans as 
well. Members who have bravely served overseas now are standing 
in unemployment lines back home. I figure when these men and 
women signed up for war, there was not a waiting line, and we 
would hope that when they come home after serving our country 
there should not be a waiting line to get a job.
    This shows how recent veterans are having a hard time 
finding work. Their percentage in the total workforce, all 
veterans serving after September 2001, and the percentage of 
young male veterans serving after September 2001 with the 
unemployment rate. So 11.2 percent of young male veterans 
serving after September 2001 are now unemployed, which is a 
higher rate than of course the national average.
    It is unbelievable that we cannot do more to help the men 
and women that protect this country to find a way to provide 
for themselves or their families upon returning.
    As layoff rates are expected to increase to 68 percent for 
U.S. companies, and prices for everything from college tuition, 
to health care, to food, continue to rise, it looks like we 
will likely have to brace ourselves for continued increases in 
unemployment.
    I look forward to hearing from Commissioner Hall and what 
the numbers for April can tell us about the economic outlook, 
and working with my colleagues in the Senate to bring much 
needed relief to American families feeling the pressure of this 
economic downturn.
    With that, I am pleased that Senator Casey has joined us, 
from Pennsylvania, and I will give him an opportunity for an 
opening statement.
    [The prepared statement of the Honorable Charles E. Schumer 
appears in the Submissions for the Record on page 28.]

OPENING STATEMENT OF HON. ROBERT P. CASEY, A U.S. SENATOR FROM 
                          PENNSYLVANIA

    Senator Casey. Madam Chair, thank you very much for calling 
this hearing, and also for the testimony that you just 
provided. You covered virtually every aspect of this challenge 
to our economy and the challenge for our families.
    I just wanted to highlight a couple of basic numbers that 
we know about today, and I know we will explore these further, 
but one of the numbers that jumped off the page to me when I 
looked at the preliminary analysis of today's numbers was the 
number of manufacturing jobs.
    Manufacturing employment fell by 46,000 over the month. 
That is troubling even in light of the overall number, which 
the decrease is less than it was last month, but that 
manufacturing number is very high, just as it was a month ago 
and virtually every month in the recent past.
    Senator Klobuchar made the point about long-term 
unemployed. This is a huge problem for the country, the 
challenge posed by those numbers that we saw for our veterans, 
especially young male veterans.
    Also I think when you combine all of this economic data 
with the other data that we see, not only on jobs but on the 
housing crisis, health care costs, college tuition, food, and 
of course gasoline prices. I was noting in a summary of 
Pennsylvania data that households with children in Pennsylvania 
are paying $2920 more per year for gasoline than when President 
Bush took office.
    So when you combine all of that, the misery, the hardship, 
the trauma that has been heaped upon families in this country 
is almost bringing them to the breaking point. They cannot 
often make ends meet just to get through the week, just to get 
through the month, just to provide basic necessities for their 
children, and that all starts with jobs, or lack thereof.
    I am interested in hearing the testimony today of 
Commissioner Hall, and all of our witnesses, but this is a 
challenge for the country. I think the Administration has to 
take much more dynamic and focused actions to deal with this 
issue.
    If anything, there has been almost a state of denial that 
things are not that bad. No one believes that. No one that I 
know believes that this country is headed in the right 
direction. And these numbers today, and the other data that we 
just highlighted, points to that very basic concern that a lot 
of families feel.
    So we are grateful for the testimony that will be provided 
today, and I want to thank Senator Klobuchar for her leadership 
on the central challenge faced by American families. And that 
is, the economic challenge, and in particular the challenge of 
job loss, and the challenge of economic trauma in the life of a 
family.
    Thank you, very much.
    Senator Klobuchar. Thank you very much, Senator Casey.
    Commissioner Hall.

  STATEMENT OF DR. KEITH HALL, COMMISSIONER, BUREAU OF LABOR 
  STATISTICS, U.S. DEPARTMENT OF LABOR, ACCOMPANIED BY: JOHN 
GALVIN, ASSOCIATE COMMISSIONER FOR EMPLOYMENT AND UNEMPLOYMENT 
STATISTICS, U.S. DEPARTMENT OF LABOR, AND MICHAEL W. HORRIGAN, 
 ASSOCIATE COMMISSIONER FOR PRICES AND LIVING CONDITIONS, U.S. 
                      DEPARTMENT OF LABOR

    Commissioner Hall. Madam Chair, Members of the Committee:
    Thank you for the opportunity to discuss the April 
employment and unemployment statistics we released this 
morning.
    Nonfarm payroll employment changed little in April 
following job losses in the first quarter that averaged 80,000 
per month.
    In April, employment continued to decline in construction, 
manufacturing, and retail trade, while jobs were added in 
health care and in professional and technical services. The 
unemployment rate at 5.0 percent was also little changed.
    Within the goods-producing sector, employment in 
construction declined by 61,000. Since its peak in September 
2006, construction employment has fallen by 457,000.
    Over the last six months, job losses in construction 
averaged 50,000 per month compared with an average of 12,000 
per month from September 2006 to October 2007.
    Manufacturing employment continued to decline in April. Job 
losses totalled 46,000 and were concentrated in durable goods 
manufacturing.
    Manufacturing hours fell from 41.2 to 40.9 hours per week 
over the month, with reductions widespread across both durable 
and nondurable industries. Factory overtime was down by one-
tenth of an hour.
    In the service-providing sector, retail trade employment 
continued to trend down. Since a peak in March 2007, the 
industry has shed 137,000 jobs. In April, job declines occurred 
in building and garden supply stores and in department stores.
    Elsewhere in the service-providing sector, health care 
employment expanded by 37,000 with continued growth in 
hospitals, home health care, and doctors' offices.
    Professional and technical services added 27,000 jobs in 
April, following 3 months in which employment was about 
unchanged.
    Employment in the food services continued to trend up over 
the month, although the pace of job growth has slowed in recent 
months.
    Average hourly earnings for production and nonsupervisory 
workers in the private sector were up by 1 cent, or 0.1 percent 
in April, and by 3.4 percent over the past 12 months.
    From March 2007 to March 2008, the Consumer Price Index for 
Urban Wage Earners and Clerical Workers rose by 4.3 percent.
    Turning to data from the household survey, both the number 
of employed persons and the unemployment rate were little 
changed in April.
    Over the past 12 months the jobless rate has risen by 0.5 
percentage point, and the number of unemployed individuals has 
risen by 797,000.
    Although the number of unemployed persons who had been 
searching for work for 27 weeks or more increased by 160,000, 
their share of total unemployment changed little.
    Over the month, the number of persons who were unemployed 
due to job loss was little changed, at 4 million, but was up by 
698,000 from a year earlier.
    These job losers accounted for 53 percent of all unemployed 
persons in April, up from 49 percent 12 months earlier.
    Other groups of unemployed persons include those entering 
the labor market for the first time, those who are entering 
after an absence, and those who were voluntarily leaving jobs.
    The number of persons in the labor force was about 
unchanged over the month, and the labor force participation 
rate held at 66.0 percent.
    In April, 62.7 percent of the population was employed, 
essentially unchanged from the prior month, but down from a 
recent peak of 63.4 percent at the end of 2006.
    The number of persons working part-time who preferred full-
time employment rose by 306,000 in April to 5.2 million. Over 
the past 12 months, involuntary part-time employment has 
increased by 849,000.
    To summarize April's labor market developments, payroll 
employment was little changed at 137.8 million, as was the 
unemployment rate, at 5.0 percent.
    [The prepared statement of Keith Hall appears in the 
Submissions for the Record on page 29.]
    My colleagues and I would now be glad to answer questions.
    Senator Klobuchar. Thank you very much, Commissioner Hall.
    According to today's report the economy lost 20,000 jobs in 
April, and we know as I mentioned that the economy lost an 
average of 80,000 jobs per month in the first three months of 
2008. When was the last time that we saw four months of 
consecutive job losses?
    Commissioner Hall. The last time we had four consecutive 
months of job loss was in 2003 when the U.S. labor market was 
still recovering from the effects of the 2001 recession.
    Senator Klobuchar. And then how many more months did we go 
with job losses in 2003?
    Commissioner Hall. Job growth ticked up in September of 
2003 but we had fairly consistent job loss from about March of 
2001 to August of 2003, so it was quite a long time. Nonfarm 
payroll unemployment reached its most recent trough, or 
lowpoint, in August 2003.
    Senator Klobuchar. Do you think the circumstances are 
different this year?
    Commissioner Hall. Well certainly we have now had four 
months of job loss. We have not seen nearly quite the numbers 
of loss that we had obviously during the recession, but again 
we do have four months in a row of job loss.
    Senator Klobuchar. Discuss the fact that in some industries 
such as construction and manufacturing have seen job losses for 
the first time for some time, and during the first four months 
of this year construction lost 190,000 jobs. In fact, in my 
State we have seen the largest over-the-year increase in mass 
layoffs from construction.
    However, employment losses are now spread across a wide 
array of industries. Can you tell us where job losses began and 
what industries are now seeing unemployment?
    Commissioner Hall. Sure. Well the job loss really began in 
residential construction, which has been experiencing job 
losses since early 2006. More broadly, industries related to 
the housing market have been shedding jobs for about two years 
now, declining nearly 850,000 over that period.
    This actually wipes away about 90 percent of the jobs 
gained in those industries between April 2004 and April 2006.
    Otherwise, I would say there is sort of broad weakening in 
job growth fairly much across the board with the big exception 
being health care and educational services.
    Even those industries that have not been experiencing job 
loss lately have had a slowing in job growth.
    Senator Klobuchar. How many jobs have been lost in the 
temporary help industry? And I ask this because I have heard 
that this is a precursor to a sign that things are in trouble.
    Commissioner Hall. The temporary help industry peaked in 
December 2006 most recently, and has shed 155,000 jobs since 
then.
    Senator Klobuchar. And do you consider the temporary help 
industry a leading indicator of employers' willingness to hire?
    Commissioner Hall. The temporary help industry is 
considered by many to be a leading indicator. The logic is that 
firms may let go of temporary workers first when the economy 
begins to weaken.
    I don't know how well it functions right now as a leading 
indicator, but I will say that prior to the 2001 recession 
temporary help began to decline in May of 2000, about 10 months 
prior to the recession.
    Senator Klobuchar. And when was the last time this 
temporary--that the temporary help industry saw this level of 
job loss?
    Commissioner Hall. 2001.
    Senator Klobuchar. Nationwide, manufacturing saw job losses 
from 2001 to 2004, and after a slight respite manufacturing has 
been shedding jobs since mid-2006. Is that correct?
    Commissioner Hall. The most recent employment peak for 
manufacturing was August 2004.
    Senator Klobuchar. I just had a number of builders visiting 
me, so I know first-hand what they have been experiencing.
    Which subsector of manufacturing have been the hardest hit 
by recent job losses?
    Commissioner Hall. Looking at it over the past six months, 
the biggest job losses were in motor vehicle and parts, which 
lost 66,000 jobs; fabricated metal products; furniture; wood 
products, all lost around 20,000 jobs. Then non-metallic 
mineral products, plastic and rubber products, apparel, and 
textile industries all lost jobs.
    Senator Klobuchar. It is my understanding that some parts 
of the country are experiencing higher joblessness in other--
could you tell me what regions are seeing the highest job loss?
    Commissioner Hall. Sure. Actually we've had, we've had 
states in every region of the country experience job loss. The 
largest job loss over the past 12 months have been in Michigan 
and Florida, by far; and then California, Rhode Island, Ohio, 
Arizona, and Wisconsin also lost jobs.
    Senator Klobuchar. Could you go through that again?
    Commissioner Hall. Sure. Michigan and Florida, California, 
Rhode Island, Ohio, Arizona, and Wisconsin. Those are in order 
of job loss.
    Senator Klobuchar. Okay. So it is not necessarily regional 
as much as--what do you think defines the job losses in the 
state? It seems some of them are manufacturing states, I would 
say.
    Commissioner Hall. Yes, that's certainly true for some of 
them. Michigan I think in particular has probably been hit with 
quite a lot of manufacturing job loss.
    Senator Klobuchar. What parts of the country are being 
impacted by falloffs in the housing and credit-related 
industries? I think we talked about what states you think are 
hit by manufacturing decline.
    Commissioner Hall. Sure. 33 states have seen construction 
declines over the past year, and again it is not concentrated 
in regions. It is pretty spread out.
    By far California and Florida have seen the biggest 
declines, but there were also significant declines in Arizona, 
Michigan, and Nevada.
    With respect to financial activities, again California and 
Florida were the two biggest losers, but New Jersey and Arizona 
also lost jobs.
    Senator Klobuchar. It almost would be simpler if you said 
this was regional. The concern for me when I hear this is it 
seems like this is truly a national economic downturn, and it 
is not just one region or area of the country. Is that right?
    Commissioner Hall. Yes, it seems consistent with that. 
Certainly it is fairly broad with respect to industries and 
regions.
    Senator Klobuchar. Are there other industries that are 
driving the decline of employment in some areas besides the 
ones we have talked about, the construction and the financial 
and the manufacturing?
    Commissioner Hall. Yes, that's a--it's a question that it's 
impossible to give sort of a simple answer to that question 
because every area has its own unique industry mix.
    I would say the labor market performance really depends a 
lot on the industries. For example, the Texas job market might 
have been helped recently by rising oil prices, but other areas 
would be hurt, for example. So there is really not a simple 
answer to that.
    Senator Klobuchar. Okay. In our State the employment to 
population ratio, which is the fraction of working-age 
population with a job, keeps falling. And the information you 
reported on today shows that the percentage of the U.S. 
population with jobs is also quite low. Is that correct?
    Commissioner Hall. Yes.
    Senator Klobuchar. And when was the last time the national 
employment to population rate was as low as it has been 
recently?
    Commissioner Hall. Um, that's a good question.
    Senator Klobuchar. You have done so well, so far. 
[Laughter.]
    Commissioner Hall. I am going to have to dig a little for 
that one. [Pause.]
    When has it been? Well I will tell you what I know and they 
can see if they can dig up a specific answer.
    Senator Klobuchar. Okay, that's fine.
    Commissioner Hall. The employment to population ratio is at 
62.7 percent this month, and that has edged down a little bit 
from 63 percent a year ago.
    Senator Klobuchar. Okay. When you put this all together--
and then I am going to turn it over to Senator Casey, and then 
come back with some additional question--would you agree that 
the employment situation is looking rather grim?
    Commissioner Hall. I try to stay away from sort of looking 
forward because we do--
    Senator Klobuchar. Okay, then that it looked grim the past 
four months, if you want to look at it that way.
    Commissioner Hall. We have certainly seen a significant 
slowing in the labor market, and it is broad.
    Senator Klobuchar. Okay. Thank you very much.
    Senator Casey?
    Senator Casey. Thank you very much, Senator Klobuchar.
    Commissioner Hall, I wanted to ask you about productivity, 
which I guess we will technically describe as output per hour 
in the nonfarm business sector. I want to use the right 
terminology. I am going to shorthand that and use the word 
``productivity,'' but isn't it true that that productivity 
number, the output per hour, has grown at a 1.9 percent average 
annual rate--and this I guess would precede this month--but the 
real hourly compensation, which we would define as pay plus 
benefits, of those workers producing that increase in output, 
hasn't that actually decreased by a half a percentage point in 
the fourth quarter of 2007?
    Commissioner Hall. Those figures are correct.
    Senator Casey. I mean it stands to reason I think even if 
you are not an economist or a Bureau of Labor Statistics 
expert, that if you have greater productivity you would think, 
I would think, I think anyone would logically think that wages 
would grow at the same time. Is that not necessarily consonant 
with the data?
    Commissioner Hall. There is a business-cycle aspect to 
that. Over a long time period, say from 1973 say to 2000, they 
have grown very closely.
    The business cycle part of it is that in the early stages 
of an economic expansion, productivity does outpace real 
compensation growth. But real compensation growth typically 
catches up.
    Senator Casey. Well that's what--in looking at this chart 
on my left, employee compensation has lagged far behind 
productivity. You see the gap there between productivity being 
the line on top, the blue line, and compensation the red line 
below it, that gap. And this is of course starting in 1998 
where there was a confluence or a connection or a meeting of 
the two from 1998, 1999, 2001, and then you get into 2002 until 
2007 and that is where we have the gap or the disconnect.
    Do you know of anything in recent American economic history 
where there has been that much of a gap, any period of time?
    Commissioner Hall. The answer is, no.
    That sort of gap has happened in the past in the early 
stages, but typically it is either closed or it is closing by 
now during the expansion. It just has not closed like it 
normally does.
    Senator Casey. What do you think is the cause of that? I 
mean, there may be multiple causes, but what is different about 
our economic situation today as opposed to comparable periods 
when we have had a recession or a downturn, however you want to 
describe it?
    Commissioner Hall. It is hard to say. It is hard to say 
just because productivity/real compensation in the past have 
always grown back together. That gap has always narrowed.
    Senator Casey. Let me ask you this. If you can describe it 
today, that would be great, but if you could add to the record 
of this hearing, the Committee record, a written analysis of 
why you think that has happened, and why it is unusual, because 
that is part of the frustration here.
    You are not called upon to make policy pronouncements, but 
here is the problem. Here is the trauma for the American 
family.
    They are working as hard as they have ever worked, or 
frankly as hard as any group of Americans have worked, and they 
are not seeing a commensurate increase in their wages. In other 
words, the costs of everything in their lives is going up at 
the same time that they are producing more than they have been.
    So I think that is a troubling sign for the economy, and 
especially for those families. I don't know if you want to add 
something to that. I did not mean to interrupt you.
    Commissioner Hall. No, no, I don't disagree. We will 
provide you with a written analysis.
    [The witten analysis from Dr. Keith Hall to the Honorable 
Robert P. Casey appears in the Submissions for the Record on 
page 58.]
    Commissioner Hall. The obvious things that come to mind is 
we have had pretty significant energy inflation, and wages have 
not kept up with that. And that is the most obvious thing.
    And of course now over the past year plus we have had a 
weakening in the labor market, so that has almost certainly 
contributed to this.
    Senator Casey. I also wanted to ask you about this question 
of the long-term unemployed. I don't know if you can pull that 
chart up. This I know was referred to earlier, but we have 
long-term unemployment, more and more workers exhausting their 
unemployment benefits, and more so than at the beginning of the 
two previous recessions.
    We go from the third quarter of 1990, long-term unemployed 
on the left, the kind of purple bar there, unemployment benefit 
exhaustions 580,000.
    Quarter one of 2001, a comparison there.
    And then quarter four of 2007. And you have more of a gap 
between the long-term unemployed number, almost 1.4 million, 
and the unemployment benefit exhaustion 665,000 individuals.
    What is your assessment of that in terms of comparing 1990, 
2001, and 2007, in those quarters?
    Commissioner Hall. Sure. The share of unemployed that are 
long-term unemployed has a real strong cyclical component. 
Obviously during recessions you have people become unemployed 
with a lag, and then they start to become long-term unemployed.
    Typically during an economic expansion, at some point the 
share of long-term unemployed starts to decline, and it pretty 
much steadily trends down throughout the business cycle.
    What has happened right now is for about the past couple of 
years that decline in long-term unemployed has stalled. It has 
been flat now for a couple of years, and that is unusual. That 
is why it is at a higher level now than it typically is at this 
point in a business cycle.
    Senator Casey. And what does that mean?
    Commissioner Hall. I think it is simply an indication of 
the weakening in the labor market that we have had. We just 
never got quite as strong a job growth as we have in past 
economic expansions, and now we are having a weakening in the 
labor market over the past year plus.
    Senator Casey. Do you think that it is sufficient to leave 
the duration of unemployment benefits at their current level? 
Do you think we need to make some kind of an adjustment?
    Commissioner Hall. I am going to beg off answering policy 
questions.
    Senator Casey. I tried again. [Laughter.]
    Well I will tell you what I think.
    Senator Klobuchar. Please do, Senator Casey.
    Senator Casey. We tried very hard--we were debating, 
Senator Klobuchar and I, and many others were urging that in 
the stimulus package that was put together that we include 
unemployment compensation benefits as part of that.
    That was shot down. And I think that was a terrible mistake 
for both short-term economic stimulus but also long-term. And I 
think some of the data that we just reviewed supports that.
    Let me move to one more section and then I will--I'm glad 
that Senator Klobuchar has not put a time restriction on us. 
That never happens. I do not want to abuse it, though, because 
she is the Chairwoman of this hearing and I do not want to 
abuse that privilege.
    Commissioner Hall, the number of persons working part-time 
obviously for economic reasons are not doing it for exercise. 
The number of people who would like to work full-time but 
cannot find full-time employment rose by 306,000 to 5.2 
million? Is that correct?
    Commissioner Hall. I will look it up to make sure. That 
sounds right.
    Senator Casey. Do you want to verify that to make sure we 
have our numbers right?
    Commissioner Hall. Yes. Yes, that is correct.
    Senator Klobuchar. And that would be just in the past month 
that it went up 306,000?
    Commissioner Hall. Yes, that's correct.
    Senator Klobuchar. So now we are at a point where we have 
5.2 million people in the country that are working part-time? 
Is that correct?
    Commissioner Hall. Yes.
    Senator Klobuchar. Tell me about that. Is that--well, (a) 
tell me about what you can inform us about with regard to the 
types of jobs that they are taking. Do you have any data on 
that?
    Commissioner Hall. No, actually--no, actually we don't. We 
collect data on people who are working part-time for economic 
reasons, but we do not actually--
    Senator Casey. You mean you do not track that, necessarily?
    Commissioner Hall. No.
    Senator Casey. Okay. I am wondering if that is 
ascertainable, if you are able to do some kind of analysis to 
tell us about that. Because I think it is significant.
    Commissioner Hall. We would be happy to see if we can 
follow up.
    Senator Casey. I think it is significant, the types of jobs 
they are taking, but also tell us what you can about what that 
means, that trend line where more and more people are working 
part-time. Is that unusual in terms of historic patterns? Is it 
a danger sign for the economy?
    Commissioner Hall. I would say it is consistent with the 
other labor market data. It is an indication of a weakening 
labor market.
    Senator Casey. And finally--and this will be all, and I 
want to turn it over to Senator Klobuchar--construction 
employment was down 61,000 since its peak in September 2006, 
construction employment has fallen by 457,000 people? Is that 
correct?
    Commissioner Hall. Yes.
    Senator Casey. So since September of 2006, not 2007, 2006, 
we have lost almost a half a million construction jobs? Is that 
right?
    Commissioner Hall. Yes.
    Senator Casey. Thank you, very much.
    Senator Klobuchar. Thank you very much, Senator Casey.
    Commissioner Hall, I just want to follow up a little bit of 
Senator Casey's questions about the part-time workers, because 
it has been my impression, and I guess it is hard for you to 
get to the bottom of these statistics, but that some people 
would like to work full-time but they are working part-time, it 
is not by choice. Do you have any statistics on that?
    Commissioner Hall. Well, yes, actually I think the number 
that I quoted before is people who are working part-time for 
economic reasons, as opposed to other reasons--
    Senator Klobuchar. Okay, so that 306,000 you gave to 
Senator Casey, those are not people that, you know, they have a 
child so they want to work from noon to four or something like 
that? This is people that are pushed by economic reasons to 
work part-time?
    Commissioner Hall. Correct.
    Senator Klobuchar. And do you know how high the 
unemployment rate would be if it included those who work part-
time for economic reasons, as well as those who did not have 
any job at all?
    Commissioner Hall. Well the broadest measure--we have 
several measures of unemployment--the broadest measure we've 
got includes not only the unemployed but those working part-
time for economic reasons, and those who are marginally 
attached.
    Senator Klobuchar. Okay.
    Commissioner Hall. That's our broadest measure. And that 
number is at 9.2 percent right now.
    Senator Klobuchar. Because to me, when I am giving you 
those statistics early on--and we will talk about them a little 
more about how people are just hanging on, and their expenses 
are going up--when they are pushed to go half-time, and they 
have got some credit card debt, or mortgage debt, it seems to 
me that for them, maybe it is losing half a job, but it is 
losing enough that they might not be able to make it.
    And that 9.2 percent figure feels a little bit more like 
what you hear when you are out there than the other 
unemployment rate. And do you know how that has changed over 
time?
    Commissioner Hall. That has had similar changes as the 
regular unemployment rate. It has actually increased from 8.2 
to 9.2 over the past year.
    Senator Klobuchar. So it has gone up say roughly with my 
math, almost 10 percent, or something like that?
    Commissioner Hall. Yes. It's up about 1 percentage point. 
The regular unemployment rate is up about a half a percentage 
point over that time.
    Senator Klobuchar. Compared to what it was? If it was 8.2 
percent, and then it's gone up to 9.2 percent, it hasn't gone 
up 10 percent, but it's percentagewise, it's gone up rather 
dramatically.
    And would you agree with me that if the expenses are going 
up and they have just a little bit of a change can make a 
difference to them, that when you are in that situation with 
rising expenses that those kinds of loss of full-time to part-
time jobs is more meaningful in the economy to individual 
families?
    Commissioner Hall. Absolutely.
    Senator Klobuchar. Okay. The thing I also wanted to focus 
on here is how well the labor market is doing is not just about 
employment, but it is also about wages.
    How have wages done for the past say year, April to April 
or something like that?
    Commissioner Hall. Over the past--well data is not 
available for inflation in April at the moment, but over the 12 
months ending in March, hourly earnings grew by 3.7 percent, 
and that did not keep up with inflation. Inflation grew about 
4.3 percent at that time.
    Senator Klobuchar. So that's my argument with the expenses.
    Commissioner Hall. Yes.
    Senator Klobuchar. So the inflation--whatever they made got 
eaten up by their health care or other things like that.
    Commissioner Hall. Yes.
    Senator Klobuchar. And how about those numbers say going 
back to 2000, the wages, the average wages?
    Commissioner Hall. We will have to look that up.
    Senator Klobuchar. I stumped you again, Commissioner.
    Commissioner Hall. You did. [Laughter.] [Pause.]
    Senator Klobuchar. And then I probably will then ask about 
controlling it for inflation, too. And if it is easier, just 
take your time. Senator Casey and I are happy we're not using a 
clock.
    Commissioner Hall. This might be a question where we would 
need a calculator, so I am not sure we are going to be--
    Senator Klobuchar. Senator Casey is threatening to put on 
the Jeopardy! music, but I have told him we will not do that. 
[Laughter.] [Pause.]
    Commissioner Hall. This might be something where we would 
be better off--
    Senator Klobuchar. Okay, that's just fine--
    Commissioner Hall [continuing]. Following up later, if 
that's okay.
    Senator Klobuchar [continuing]. And what I'm just trying to 
do is find a longer term trend just in general with the wages, 
and then wages adjusted for inflation. Because I have these 
numbers from a well-known professor, and I just wanted to see 
where you were coming from.
    I think she probably used your statistics.
    Commissioner Hall. Odds are, yes.
    [The witten analysis from Dr. Keith Hall to the Honorable 
Amy Klobuchar appears in the Submissions for the Record on page 
65.]
    Senator Klobuchar. How much have real wages then fallen? So 
the actual, when you adjust it for inflation, has gone down, 
what, 1 percent or something?
    Commissioner Hall. Over the past 12 months it has been 
about 6/10ths of a percent.
    Senator Klobuchar. It's been about what?
    Commissioner Hall. Six-tenths of a percent.
    Senator Klobuchar. Six-tenths of one percent.
    And employers' labor costs include not only wages and 
salaries, but also benefits. When labor costs rise due to 
increases in health insurance, how does that affect your 
measure of employee compensation?
    Commissioner Hall. Well we do have measures of employee 
compensation that include health care costs. So for employer-
provided health care, it does raise compensation.
    Senator Klobuchar. Okay. And as employers shift more 
burden, there is a lot of discussion right now about, you know, 
health care reform, and my prediction, I would try to make 
predictions, would be that we would be taking this on not this 
year but next year, and there are discussions about placing 
more burden by some people onto employees.
    As employers shift more burden, and they have been doing 
that, of rising health care costs to their workers, doesn't 
that reduce the purchasing power of their take-home pay even 
more?
    Commissioner Hall. Yes. And when health care costs rise, in 
fact I think you see two things. To the degree that the burden 
is shifted onto workers, their purchasing power is reduced. 
Also what can happen though is employer-provided health 
insurance can crowd out wage increases and you actually get 
slower wage growth as a result of higher health care costs.
    Senator Klobuchar. Oh, because the money they are paying 
out to their workers, more is going out to pay for health care 
instead of for the wages?
    Commissioner Hall. Yes.
    Senator Klobuchar. So either way you do it, they are kind 
of messed up--
    Commissioner Hall. Yes.
    Senator Klobuchar. [continuing] Because the worker is 
either taking more of the health care costs, and then maybe the 
employer gives a little higher wage, or the employer pays for 
more of the health care cost.
    But you are saying the statistics show when that happens 
then that is not reflected in his higher wages?
    Commissioner Hall. Yes.
    Senator Klobuchar. Okay. Yesterday this Committee, as I 
mentioned, held a hearing on the rising costs of food. 
Government forecasters predict that for 2008 we will see a 4 to 
5 percent increase in the Consumer Product Index for food 
consumed at home.
    So that is just another example. Does this concern you 
about the health of our economy in general?
    Commissioner Hall. Yes. Certainly higher food prices would 
put extra strain on consumers, and obviously consumers are a 
major part of the economy, and that would add to their 
difficulties.
    Senator Klobuchar. And then I just wanted to go through 
these numbers. These are these numbers that I got from the 
professor.
    If you want to look first on the first page--and I thought 
this was just a nice way of laying this out--and it shows that 
for the average American--this is from 2000 to 2007, and what I 
find somewhat scary about this for the average American family 
is that this does not even include the food increases that we 
are talking about in 2008, or the enormous gas increases we 
have just seen in this past year.
    But when you look at this, the lost income at $1175. And 
then you look at these increases:
    Higher mortgage payments, $1729, each year. This is extra 
money that our people are paying.
    Higher gas bills, $2081 per year. This is from 2000 to 
2007. Again, not including the increases that we've seen.
    Higher food costs, $237. Again not including that 4 to 5 
percent increase that is being projected.
    Higher phone bills--these are land line bills--$112 more. I 
personally know this from seeing my bill.
    Higher appliance costs, $42.
    Higher health insurance costs, which you and I have been 
talking about some, increased $363 per year.
    And so when you add up the increases, and then you add in 
the wage losses, you are at $5739 that the average American 
family is paying out that they didn't before.
    So I bring this up. And then when you have families with 
children, increased day care expenses have gone up. And this is 
what they have gone up, not what they are, $1321 per year. 
Increased after-school costs--that's the area I am in now, I am 
in the little dip of child growth--$511. And then increased 
state college costs--this is state college--$1021 per year.
    So depending on where a family is with their kids, this is 
additional money that they are paying out per year. So when you 
add all this up, it can be even more than $5739. And you can 
see the bar graphs show the same thing, the declining income 
and then you add in this increased expenses. You look at it for 
working parents with one small child. You look at it with 
families with one child in college. And it says here that these 
are based on U.S. Census Bureau Population Reports. Changes and 
expenses are calculated from the Bureau of Labor Statistics. 
And also they use the Consumer Price Index.
    Then the last chart I included just because I thought it 
was interesting, was the total consumer debt increase from 2000 
to 2007.
    [Chart entitled ``Income and Expense Changes 2000-2007'' 
appear in the Submissions for the Record on page 68.]
    [Chart entitled ``Income and Expense Changes, Working 
Parents, One Small Child 2000-2007'' appear in the Submissions 
for the Record on page 69.]
    [Chart entitled ``Income and Expense Changes, Families with 
One Child in College 2000-2007'' appear in the Submissions for 
the Record on page 70.]
    [Chart entitled ``Total Consumer Debt, 2000-2007'' appear 
in the Submissions for the Record on page 72.]
    Now do you project that any of this will change in the next 
year? Are they still going to be facing these higher expenses, 
Commissioner Hall?
    Commissioner Hall. I wouldn't project.
    Senator Klobuchar. That's right. I forgot. Does this 
trouble you, what's happened in the past?
    Commissioner Hall. I haven't seen this study, but sure it 
would trouble me.
    Senator Klobuchar. I noticed the higher mortgage payments 
again as we're seeing more and more problems with that. The 
higher gas bills again go up. And I just think that is at the 
root of what we are looking at with these unemployment numbers. 
And the reason that Senator Casey and I--I will speak for 
myself--but we are concerned about those part-time employment 
rates is that these are people that are just on the cusp, and 
they are trying to keep those full-time jobs with their rising 
expenses.
    And we are also concerned as policymakers because they are 
putting--a lot of families are putting this on their credit 
cards, these increases, $5000 a year. And it is very similar to 
what we are seeing for the average American putting it on their 
credit cards.
    So what we are trying to find here is some glimmer of hope 
with the job market. I personally think, from a policy 
standpoint, that we need to look at more direction for this 
economy with green jobs and other things.
    I also think that when you look at that initial--do you 
want to put that wealth chart up again that we had from the 
beginning, where we had showed that for the top one percent 
they are doing the best they ever have since 1929.
    They have the largest share of income they have ever had 
since 1929. And I am hoping this will lead us to make some 
changes with tax policy with regard to the top one percent.
    But does this trouble you, what we are seeing with the loss 
of income, and then the out-sized portion going to the top one 
percent?
    Commissioner Hall. Sure.
    Senator Klobuchar. Okay. I have another area of questions 
about consumer spending, but I think I will let Senator Casey 
go and then I will come back.
    Senator Casey. Thank you. I wanted to ask you, 
Commissioner, about the overall number, when we looked at a 
number that a lot of people are becoming familiar with now, is 
the number for the total for January, February, and March job 
loss of 232,000.
    Is that correct?
    Commissioner Hall. Yes. Actually it's 240,000.
    Senator Casey. That is the point of my question. 232,000 
has now become 240,000? Is that correct?
    Commissioner Hall. Yes.
    Senator Casey. It was adjusted upward.
    Commissioner Hall. Yes.
    Senator Casey. And that adjustment was just made for 
today's report? Is that correct? In other words, if I had asked 
you the question last week you would have said 232,000? It is 
just recently adjusted?
    Commissioner Hall. Correct. We revised back two months.
    Senator Casey. Right, right. And I guess even in the 
context of that time window there were adjustments. There was a 
January number reported, and then later there was an 
adjustment, or was it January and February, or just one of 
those months?
    Commissioner Hall. We revise the data. We give an initial 
estimate, and then we give two additional estimates, actually, 
as more data comes in on employment.
    Senator Casey. And how do you do that? What is the timing 
of that? Do you usually do that two weeks after the initial 
report? Or a month after?
    Commissioner Hall. Yes. We have our initial estimate, and 
then one month later we revise, about one month later, then 
another month later we revise as we get more data in.
    Senator Casey. So for purposes of today, the 20,000 job 
loss number may change when you have further reporting a month 
from now, or two months from now? Is that correct?
    Commissioner Hall. Yes. There will be two more revisions 
over the next two months.
    Senator Casey. Okay. And for the reports for the month of 
January, the month of February, and the month of March, when 
you've revised them, all of them have been revisions upward? Is 
that correct?
    Commissioner Hall. Gosh, I'm--okay, we've got the 
revisions. One second.
    Senator Casey. The point I'm making is the twenty may grow?
    Commissioner Hall. That's possible, yes.
    Senator Casey. I guess another area I wanted to ask you 
about was that this week the Bureau of Economic Analysis 
reported that the Gross Domestic Product, GDP, rose by .2 
percent over the first quarter of 2008? Is that correct? Do you 
know that to be true?
    Commissioner Hall. I think it was .06 percent. Am I 
remembering correctly?
    Senator Casey. Point six for the first quarter of 2008?
    Commissioner Hall. The first quarter, yes.
    Senator Casey. Now I guess the growth there for the first 
quarter, much of that, if not all of that, is attributable to 
an increase in inventories? Is that your understanding?
    Commissioner Hall. It is. Actually, more than 100 percent 
of the growth was in inventories, about .8 percentage point of 
the .6 was in inventories.
    Senator Casey. Okay. So now you have this month's 
Unemployment Report showing accelerating job losses in goods-
producing industries. Can you explain how these two pieces of 
data are linked, where you have some GDP growth, rather limited 
I would argue, but some GDP growth premised on, based solely on 
inventories, and yet you still see accelerating job losses in 
goods-producing industries?
    How do you assess that?
    Commissioner Hall. I would say that they are consistent. I 
would say that the GDP growth in the first quarter was not 
strong enough to sustain job growth, is the way I would word 
it. So I would say they are consistent. The weakening in the 
labor market, and the weakening in the GDP----
    Senator Casey. You wouldn't expect anything else, you're 
saying?
    Commissioner Hall. Correct.
    Senator Casey. Okay. That may be all I have for now. 
Senator Klobuchar.
    Senator Klobuchar. Thank you very much, Senator Casey.
    I wanted to just go back to the Unemployment Rate a little 
bit before talking about the consumer statistics. So basically 
the Unemployment Rate is at 5 percent, is that correct?
    Commissioner Hall. That's correct.
    Senator Klobuchar. And how many people entered unemployment 
last month?
    Commissioner Hall. Well the unemployment rate ticked down a 
little bit. It was little changed over the month. But I would 
say the month-to-month numbers, they vary a bit. I prefer to 
look at maybe quarterly averages.
    Senator Klobuchar. That would make sense.
    Commissioner Hall. So for example if you start with the 
second quarter of last year, you start with an average of 4.5 
percent. Then the next quarter, 4.7, 4.8, and then 4.9. So we 
have seen this steady rise in the Unemployment Rate up through 
the first quarter of this year. So I think that gives you the 
best picture of unemployment.
    Senator Klobuchar. And as you and I discussed, a similar 
rate for that, was it 9.2 percent when you add in the economy, 
the part-time workers that didn't want to go there but are 
there? And what is the other group you called, marginally----
    Commissioner Hall. Marginally attached.
    Senator Klobuchar. What does that mean?
    Commissioner Hall. Those are folks who want to work, and 
say they want to work, and they have looked for a job some time 
in the past but they are not looking now.
    Senator Klobuchar. Okay. And this idea that jobs are 
difficult to find is something that I have heard a lot from 
people across the country. Just yesterday the Department of 
Labor reported that last week applications for Unemployment 
Benefits rose to 380,000, up from 345,000 the previous week.
    So we seem to be getting close to the 400,000 mark, which 
is significant because I am told that many economists consider 
that to be an indication that the labor market is actually in 
recession.
    Do you agree with that?
    Commissioner Hall. To be honest, I'm not sure I do because 
I think the relationship between the unemployment, UI initial 
claims and the job growth is not quite what it used to be.
    Senator Klobuchar. Why is that?
    Commissioner Hall. The relationship seems to have changed 
over the last year or two, and to be honest with you I really 
don't know. But what you are saying is it was the old rule of 
thumb about the UI claims being consistent with a certain level 
of job loss or job growth.
    Senator Klobuchar. So then what do you consider to be the 
best indicators for whether or not we are in a recession?
    Commissioner Hall. Payroll job growth and the Unemployment 
Rate.
    Senator Klobuchar. Okay. And do you think we're there?
    Commissioner Hall. I, I wouldn't want to offer an opinion. 
And really it is because of the role of the Bureau of Labor 
Statistics.
    Senator Klobuchar. I understand.
    Commissioner Hall. Because it is important for us--we 
produce the data, and we want to be clear that people have 
trust that we are not offering our opinions; we are offering 
the facts, and we do what we can to let the data speak for 
itself.
    Senator Klobuchar. And as we talked about earlier, people 
enter unemployment for a number of reasons. What is the most 
common reason to be unemployed in April?
    Commissioner Hall. The most common reason is job loss.
    Senator Klobuchar. Okay.
    Commissioner Hall. In April, about 52 percent of the 
unemployed were unemployed because of job loss.
    Senator Klobuchar. And what is the next reason?
    Commissioner Hall. Second would be re-entrants and new 
entrants. And about 36 percent of the unemployed are either re-
entering the labor market, or are new entrants.
    Senator Klobuchar. So is that possible that some of our 
returning Veterans that we talked about that come back are new 
entrants because they had lost their jobs when they served 
overseas?
    I am just trying to--it would make sense to me--I am trying 
to figure out why we are seeing those high numbers with our 
returning Veterans, those that have served since 2001. And if 
it is harder, if you do not have a job, or you had to give up a 
job either because you decide to stay home with the kids, or 
you went to fight in Iraq, or whatever, it seems like it would 
be--this is my own common sense--harder to get back in the 
market.
    And so that is what I am trying to get at with that 
question.
    Commissioner Hall. Yes, I think that is right. I think the 
returning Veterans would count as re-entrants, or new entrants 
in the job market.
    Senator Klobuchar. Okay. Just one more question about the 
long-term unemployed people. Isn't it the case that the share 
of the unemployed who are long-term unemployed is higher today 
than it was in the early 1990s and the early 2000s? Is that 
true?
    Commissioner Hall. That's true.
    Senator Klobuchar. And back then Congress extended the 
Unemployment Insurance Benefits, didn't they?
    Commissioner Hall. I believe so.
    Senator Klobuchar. Do you think this is a good measure 
about whether or not we should extend benefits, Unemployment 
Insurance Benefits to the long-term unemployed?
    Commissioner Hall. I will beg off on that as a policy 
question.
    Senator Klobuchar. Okay, but just to keep you with the 
facts, back in the early 1990s and early 2000s, and this was--
when we discussed, this must be like the 2003 issue we were 
discussing early on--when we saw long-term unemployment, that 
was when Congress extended the Unemployment Insurance Benefits, 
and now it is worse now?
    Commissioner Hall. I believe so.
    Senator Klobuchar. Okay. All right, the consumer spending 
issue. The Commerce Department reported that consumer spending, 
which represents about two-thirds of economic activity, 
increased by only .1 percent in March after remaining stagnant 
in February.
    In your view what does this trend portend for the labor 
market in the months to come?
    Commissioner Hall. Well----
    Senator Klobuchar. This is based historically on what 
you've seen.
    Commissioner Hall. Okay, yes. Without forecasting I will 
say the weakening in the consumer spending has been consistent 
with the weakening in the labor market.
    And I think this is something that works in both 
directions. Weaker consumer spending weakens the labor market, 
and a weaker labor market means lower income growth, which can 
lower consumer spending. So you sort of have things working 
both ways.
    Senator Klobuchar. So getting at my issue that I have been 
focusing on today with how you have more expenses--these 
expenses are going up no matter what happened with wages; we 
know these expenses are going up--so when expenses are going 
up, and wages are pretty much stagnant and have gone down maybe 
over time, then you see less consumer spending? Is that right? 
Is that a trend that happens?
    Commissioner Hall. Yes.
    Senator Klobuchar. And so what you have just said is when 
you see less consumer spending that can also lead to a weaker 
job market? Is that right?
    Commissioner Hall. It can, yes.
    Senator Klobuchar. So it is almost the chicken and the egg, 
it just keeps--so how does that work? That less consumer 
spending leads to a lesser job market?
    Commissioner Hall. Well, that is if consumers are spending 
less then you have businesses cutting back on production. And 
that leads to the weaker job growth. And then it can eventually 
lead to job loss.
    Senator Klobuchar. Okay. So when Minnesotans are not going 
to buy a new fishing rod because gas is too expensive, and they 
are not going to go up to their cabin as much, then the people 
that were making the fishing rods see less jobs?
    Commissioner Hall. Yes.
    Senator Klobuchar. So this expense issue that I brought up 
is not just some wild-eyed thing, it is actually related to the 
loss in jobs?
    Commissioner Hall. Yes.
    Senator Klobuchar. Typically in a recession how long does 
it take for employment to recover to its pre-recession peak?
    Commissioner Hall. Since 1980 the average time for 
employment to recover to its pre-recession level is about 20 
months. I will point out that the most recent recession took 39 
months for employment to recover.
    Senator Klobuchar. 39 months. And that was back in early 
2000?
    Commissioner Hall. Yes.
    Senator Klobuchar. Okay. How long do wages and compensation 
take to recover?
    Commissioner Hall. It depends on if you are talking about 
the levels or the growth. Wages and compensation do not 
typically decline for very long, the levels don't, during a 
recession. But the growth--in fact, the last two recessions the 
growth in wages has never recovered. You had what seems to be 
so far has been a permanent decline in the growth of wages.
    Senator Klobuchar. So that has been continuing since the 
1990s, basically?
    Commissioner Hall. Real wages hit a low point in the mid-
1990s but then rose steadily until the 2001 recession. Since 
then, real wages have been essentially flat.
    Senator Klobuchar. And recessions before that, it did 
recover?
    Commissioner Hall. Um, that's a good question. I don't know 
beyond the last couple of recessions.
    Senator Klobuchar. When you had those recessions before in 
the 1990s and the early 2000s, did you see this kind of 
escalating expenses like we are seeing with food and gas 
prices?
    Commissioner Hall. I don't know. My memory is not that good 
to--
    Senator Klobuchar. We can check that out. I am just 
thinking, the reason I am going there is that you have this--
some of how you got out of these recessions in the past was 
that people were able to increase their spending.
    Commissioner Hall. Right.
    Senator Klobuchar. And part of how they did that is that 
they had the money to do it. And now when these expenses are 
escalating, they are going to have less money to do it, and so 
we may have--it may take longer, and have more of a gloomy 
picture in terms of getting out of it.
    Commissioner Hall. Right, right. Yes, I don't--I'm just 
going to do this from memory a little. I don't recall that both 
declining economic growth and high inflation, I don't think we 
have had both of those two things together since the early 
1980s.
    Senator Klobuchar. So based on your analysis of today's 
report, and mostly--which I've appreciated--the trends going 
over the last years, does it appear that we are going to 
continue to be in a difficult period for the labor market in 
the months to come?
    Commissioner Hall. Well I am going to beg off on that.
    Senator Klobuchar. It's based on the historical data.
    Commissioner Hall. Well the reason is that we produce--we 
are going to be producing the data over the next few months.
    Senator Klobuchar. Yes.
    Commissioner Hall. And if we are going to be producing it, 
I do not want to forecast what I think it is going to show. I 
want to let the data come out and speak for itself.
    Senator Klobuchar. Okay, very good.
    Senator Casey?
    Senator Casey. Thank you. In light of your statement 
earlier about looking at quarterly averages as opposed to 
month-to-month, I was struck by something I had not noticed in 
terms of a big differential.
    Quarterly averages in terms of race. White unemployment, 
4.3--we're talking about fourth quarter 2007, fourth quarter 
2007, and first quarter 2008. So the two recent quarters 
compared to each other.
    White unemployment, 4.3 to 4.4. Right? So that only went up 
very slightly. And correct me if I'm wrong, I'm just reading 
from your tables here.
    African American unemployment, last quarter 2007 to this 
quarter 2008, 8.6 to 8.8. So that is up .2 percent. Correct?
    Commissioner Hall. I don't--we have quarterly averages 
here, but that sounds reasonable.
    Senator Casey. I think this is your table, if I'm not 
mistaken. And if I'm wrong about that, correct me.
    And in the one that had the most significant increase, 
Hispanic, or Latino, depending on what term you use, 
unemployment, 5.9 percent unemployment fourth quarter 2007, 6.5 
percent unemployment first quarter 2008.
    So in other words, Hispanic unemployment went from 5.9 to 
6.5 one quarter to the other? Is that correct?
    Commissioner Hall. Again that sounds reasonable. Oh, okay, 
yes, that is correct. I found it. Thank you.
    Senator Casey. So that is a staggering increase, .6 percent 
in just one quarter to the other. And of course the numbers are 
high. The African American unemployment rate is double what the 
White number is, and Hispanic is almost double, but the 
Hispanic increase is precipitous. So I just wanted to put that 
in the record. It's very troubling.
    Thank you.
    Senator Klobuchar. Commissioner, is there anything you 
wanted to say here at the end to clarify anything, or summarize 
anything?
    Commissioner Hall. No, thank you.
    Senator Klobuchar. Okay, well I really appreciate you 
giving us these statistics. I just thought I would summarize 
what I learned from this hearing today, as Senator Casey and I 
have just been here a year-and-a-half and have appreciated 
being at this hearing and getting this information. Correct me 
if any of the things I say are wrong, because I wrote this down 
from what we got at the hearing.
    So this month we have seen 20,000 or more people that 
basically are unemployed. They have lost their jobs in this 
country.
    So that means we have had 260,000 people who have basically 
lost their jobs or are unemployed in the first four months of 
this year.
    Is that correct?
    Commissioner Hall. Yes, the payroll employment survey shows 
a decline of 260,000 in the first four months of 2008 although 
we don't know if all those people became unemployed.
    Senator Klobuchar. We are seeing an increased trend in the 
Unemployment Rate from the same time last year, and you kindly 
gave me those numbers of 4.8, 4.9, up to the point of 5.2 
percent?
    Is that right? Or 5 percent where we are now?
    Commissioner Hall. Yes.
    Senator Klobuchar. 5 percent.
    And then the statistic that I think people need to continue 
to concentrate on is the people that do have jobs, but their 
hours have been reduced and in hard economic times it is more 
difficult for them to find work.
    And I think the people, not that they chose to go part-
time, but they have been pushed part-time economically, was 
306,000 more people in April coming to 5.2 million people in, 
what was it, the last year?
    Commissioner Hall. I think that was this month.
    Senator Klobuchar. In the quarter?
    Commissioner Hall. Yes.
    Senator Klobuchar. In the quarter. So it is 306,000 people 
going from full-time work, or maybe--does it have to be full-
time work, but just had their hours reduced? 306,000 people?
    Commissioner Hall. The number of part-time for economic 
reasons increased by that much this month.
    Senator Klobuchar. Okay, so 300,000 people this month, a 
total of 5.2 million people nationally.
    Commissioner Hall. Yes.
    Senator Klobuchar. Then at the same time you also have I 
thought another statistic that was interesting was that we have 
had people, the major reason that people are unemployed is 
because they have lost their jobs?
    Commissioner Hall. Yes.
    Senator Klobuchar. But the second reason is people who are 
returning to the work force are having trouble finding a job.
    They can't get a job. And while you did not give me the 
statistic, we had the statistic on the--did that come from your 
work, the returning Veterans? Do we want to put that one up 
again? Which includes the people who are returning Veterans.
    So young male Veterans serving after September 2001, 11.2 
percent of them are unemployed. So that has helped me to 
understand this when we look at those statistics.
    And then the last thing that you and I have talked about, 
and you verified pretty much with your own statistics, is just 
that we are seeing these increasing expenses for the average 
American family.
    The statistics that I used that came from the Consumer 
Price Index--Consumer Product Index, and from Labor Bureau 
statistics is a trend from 2000 to 2007--and again you have not 
verified this number; this is statistics I got from a study, 
and I will give you the study--where the average American 
family has lost $1175 a year. And then their expenses have 
increased over $4000 a year.
    Would you say that doesn't surprise you at all?
    Commissioner Hall. No, I would say it doesn't.
    Senator Klobuchar. Okay, so maybe we're off a few hundred 
here or there, but it is $5739 for total lost income and 
increased expenses. And when you add in people who have kids, 
that is even more.
    One of the things I learned from our hearing today was that 
that is bad on its own, but also because of the decreased 
spending it leads to more job loss, basically. So you have this 
chicken and an egg situation.
    And while you cannot forecast for the future for me as a 
new Senator here, I am proud that we have been trying to push 
for these things that help people: extending the Unemployment 
Benefits, which we discussed had happened in the last few 
recessions, which we have been blocked by a filibuster from 
doing.
    Also, the long-term economic plans of trying to reduce 
expenses, which I think is trickier but something that 
Washington has not been doing.
    And that is looking at a real oil policy with more reliance 
on alternative energy, and doing more to promote research into 
hybrid, and electric cars, and alternative fuels beyond corn-
based ethanol, the cellulosic ethanol. And you look at some of 
these other countries like Brazil that have been able to do 
this with sugar cane because of a government policy that pushed 
it, and now they don't have to pay for all this expensive oil.
    They are not dependent on these foreign countries.
    So I want to thank you for this information, because it has 
really helped me as I go forward, to go back with an even 
stronger commitment to look at this long-term economic policy, 
as well as the statistics that show how hard it is getting for 
the middle class to get by.
    What really concerns me is when you look at those numbers 
for the top one percent, and you think of these tax cuts that 
have helped that wealthiest group, and where it has gotten us.
    It has gotten us to the point where we are much worse off 
as a country. Now it is starting to hurt the entire economy.
    So I think these are things that we will take from this 
hearing as we go forward to make policy.
    I know that you are a numbers person, as you are, Dr. 
Horrigan, and you are, Mr. Galvin, but I thank you for getting 
us these numbers on a timely basis so we can move forward.
    Thank you, very much.
    Commissioner Hall. Thank you.
    Senator Klobuchar. The hearing is adjourned.
    (Whereupon, at 10:48 a.m., Friday, May 2, 2008, the hearing 
was adjourned.)
                       SUBMISSIONS FOR THE RECORD
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[GRAPHIC] [TIFF OMITTED] 44540.044

                    Prepared Statement of Keith Hall
    Madam Chair and Members of the Committee:
    Thank you for the opportunity to discuss the April employment and 
unemployment statistics we released this morning.
    Nonfarm payroll employment changed little in April (-20,000), 
following job losses in the first quarter that averaged 80,000 per 
month. In April, employment continued to decline in construction, 
manufacturing, and retail trade, while jobs were added in health care 
and in professional and technical services. The unemployment rate, at 
5.0 percent, was little changed.
    Within the goods-producing sector, employment in construction 
declined by 61,000. Since its peak in September 2006, construction 
employment has fallen by 457,000. Over the last 6 months, job losses 
averaged 50,000 per month, compared with an average loss of 12,000 per 
month from September 2006 to October 2007.
    Manufacturing employment continued to decline in April. Job losses 
totaled 46,000 and were concentrated in durable goods manufacturing. 
Manufacturing hours fell from 41.2 to 40.9 hours over the month, with 
reductions widespread across both durable and nondurable industries. 
Factory overtime was down by one-tenth of an hour.
    In the service-providing sector, retail trade employment continued 
to trend down. Since a peak in March 2007, the industry has shed 
137,000 jobs. In April, job declines occurred in building and garden 
supply stores and in department stores.
    Elsewhere in the service-providing sector, health care employment 
expanded by 37,000, with continued growth in hospitals, home health 
care, and doctors' offices. Professional and technical services added 
27,000 jobs in April, following 3 months in which employment was about 
unchanged. Employment in food services continued to trend up over the 
month, although the pace of job growth has slowed in recent months.
    Average hourly earnings for production and nonsupervisory workers 
in the private sector were up by 1 cent, or 0.1 percent, in April and 
by 3.4 percent over the past 12 months. From March 2007 to March 2008, 
the Consumer Price Index for Urban Wage Earners and Clerical Workers 
(CPI-W) rose by 4.3 percent.
    Turning to data from the household survey, both the number of 
unemployed persons (7.6 million) and the unemployment rate (5.0 
percent) were little changed in April. Over the past 12 months, the 
jobless rate has risen by 0.5 percentage point and the number of 
unemployed individuals has risen by 797,000. Although the number of 
unemployed persons who had been searching for work for 27 weeks or more 
increased by 160,000, their share of total unemployment changed little. 
Over the month, the number of persons who were unemployed due to job 
loss was little changed, at 4.0 million, but was up by 698,000 from a 
year earlier. These job losers accounted for 53 percent of all 
unemployed persons in April, up from 49 percent 12 months earlier. 
(Other groups of unemployed persons include those entering the labor 
market for the first time, those re-entering after an absence, and 
those who voluntarily leave jobs.)
    The number of persons in the labor force was about unchanged over 
the month, and the labor force participation rate held at 66.0 percent. 
In April, 62.7 percent of the population was employed, essentially 
unchanged from the prior month but down from a recent peak of 63.4 
percent at the end of 2006. The number of persons working part time who 
prefer full-time employment rose by 306,000 in April to 5.2 million. 
Over the past 12 months, involuntary part-time employment has increased 
by 849,000.
    To summarize April's labor market developments, payroll employment 
was little changed at 137.8 million, as was the unemployment rate, at 
5.0 percent.
    My colleagues and I now would be glad to answer your questions.
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