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



                                                        S. Hrg. 110-711
 
                   THE EMPLOYMENT SITUATION: MAY 2008

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



                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                              JUNE 6, 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

                              ----------                              

                                Members

Hon. Charles E. Schumer, Chairman, a U.S. Senator from New York..     1
Hon. Maurice D. Hinchey, presiding, a U.S. Representative from 
  New York.......................................................     2

                               Witnesses

Statement of Philip L. Rones, Deputy Commissioner, Bureau of 
  Labor Statistics, U.S. Department of Labor, Washington, DC.....     3
Statement of Dr. Heidi Hartmann, president, Institute for Women's 
  Policy Research, Washington, DC................................    17
Statement of Dr. Eileen Appelbaum, director, Center for Women and 
  Work, Rutgers University, New Brunswick, NJ....................    21
Statement of Diana Furchtgott-Roth, director, Center for 
  Employment Policy and senior fellow, Hudson Institute, 
  Washington, DC.................................................    24

                       Submissions for the Record

Prepared statement of Senator Charles E. Schumer, Chairman.......    38
Prepared statement of Representative Maurice D. Hinchey..........    40
Prepared statement of Carolyn B. Maloney, Vice Chair.............    42
Prepared statement of Philip L. Rones, Deputy Commissioner, 
  Bureau of Labor Statistics, U.S. Department of Labor, 
  Washington, DC.................................................    44
Prepared statement of Dr. Heidi Hartmann, president, Institute 
  for Women's Policy Research, Washington, DC....................    48
Prepared statement of Dr. Eileen Appelbaum, director, Center for 
  Women and Work, Rutgers University, New Brunswick, NJ..........    62
Prepared statement of Diana Furchtgott-Roth, director, Center for 
  Employment Policy and senior fellow, Hudson Institute, 
  Washington, DC.................................................    69
Historical employment data on the goods-producing and service-
  producing industries submitted by Philip L. Rones, Bureau of 
  Labor Statistics, in response to questions from Representative 
  Hinchey........................................................    87
Chart entitled, ``Annual Change in Real Earnings: May 2007 - May 
  2008''.........................................................    89


                   THE EMPLOYMENT SITUATION: MAY 2008

                              ----------                              


                          FRIDAY, JUNE 6, 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 Charles E. 
Schumer (Chairman of thd Committee) and Maurice D. Hinchey 
presiding.
    Senators present: Schumer.
    Representatives present: Hinchey.
    Staff present: Christina Baumgardner, Heather Boushey, 
Tanya Doriss, Chris Frenze, Tamara Fucile, Gretta Goodwin, 
Rachel Greszler, Colleen Healy, Bob Keleher, Jeff Schlagenhauf, 
Christina Valentine, and Colm Willis.
      
    Representative Hinchey [presiding]. We are ready to start 
the hearing. I want to thank you all very much for being here, 
and I would now like to call upon Senator Schumer, the Chairman 
of the Joint Economic Committee, to address us.

OPENING STATEMENT OF HON. CHARLES E. SCHUMER, CHAIRMEAN, A U.S. 
                     SENATOR FROM NEW YORK

    Chairman Schumer. Well thank you, and I want to thank you 
for chairing this, Congressman Hinchey.
    These numbers are very, very troubling. The spike in the 
unemployment rate to 5.5 percent, up half a percentage point in 
just 1 month, is like a tsunami hitting our economy and our 
jobs.
    This is the biggest single month's surge in unemployment 
since 1986, and along with the last 5 months of job losses, it 
should put the economy front and center on the White House 
agenda. And numbers like this will ensure that the economy will 
be the number one issue in the Presidential campaign.
    In 2008 our economy shed 324,000 jobs, including 49,000 
that we just lost last month. Just about every sector of our 
economy shed jobs in May. Sadly, more than three-quarters of a 
million newly unemployed workers are now looking for jobs.
    If you count those who are working part-time, but want to 
work full-time, or have fallen off of the unemployment rolls 
entirely, the total under-employment rate is an awful 9.7 
percent.
    Some groups were particularly hard hit in May: Black 
unemployment was up from 8.6 to 9.7; and students from 15.4 to 
18.7. The new numbers make very troubling the President's 
refusal to sign an Unemployment Insurance extension.
    Between January and June in 2008, nearly 1.5 million 
workers will exhaust their Unemployment Insurance benefits. In 
the first quarter of 2008, 732,000 people exhausted their 
benefits--36.4 percent of all UI recipients.
    We hope these numbers will cause the President to re-think 
his opposition to an extension of unemployment benefits. The 
bottom line is not pretty for American workers, their family, 
or our economy.
    Today's Jobs Report is just another wake-up call for this 
Administration to quit its threats to veto additional 
Unemployment Insurance for hard-hit workers and to actively 
work with Congress to address the more systematic problems 
dragging down our economy.
    Thank you to the witnesses, and thank you to Chairman 
Hinchey.
    [The prepared statement of Senator Schumer appears in the 
Submissions for the Record on page 38.]

     OPENING STATEMENT OF HON. MAURICE D. HINCHEY, A U.S. 
                  REPRESENTATIVE FROM NEW YORK

    Representative Hinchey. Mr. Chairman, thank you very much. 
I appreciate you joining us.
    I want to express my appreciation to Chairman Schumer, 
Chairman of the Joint Economic Committee, and Carolyn Maloney, 
the Vice Chair, for arranging this particular hearing because I 
think it is a great opportunity for us to have information that 
you can provide to us, Mr. Rones, as well as the two people 
that you have with you here, Mr. Galvin and Mr. Layng. We very 
much appreciate it.
    As Senator Schumer was just saying, the economic 
circumstances that we are confronting here as a Nation are 
continuing to get worse and worse. Many of the situations that 
we are confronting are reminiscent of those that we confronted 
as a Nation back in the 1970s when we had both a declining 
economy which was exemplified by increasing unemployment, and 
the downgrading of economic circumstances for working people; 
but also an increase in inflation.
    That is very much similar to the circumstances that we are 
confronting today. This new information that we have just 
learned this morning shows the increase in unemployment has 
jacked up to 5.5 percent. As Senator Schumer was saying, if you 
include the people whose Unemployment Insurance has run out, 
who have been unemployed for more than 26 weeks, people who are 
struggling along to find a job, they're only working 1, or 2, 
or 3 days a week; if you put those people into the numbers of 
Unemployment, it gets up close to 10 percent.
    With the rising cost of gasoline, home heating oil, fuel 
generally, and the rising cost of food, we are seeing a complex 
set of economic circumstances that are confronting median 
income people.
    As we know, most of the Gross Domestic Product of our 
economy is driven by the spending of median-income people. As 
their circumstances decline, then the circumstances of the 
economy generally will continue to decline.
    So we are deeply troubled about the set of circumstances 
that we have to confront here, and we are very much obliged to 
you, Mr. Rones, and the others who are with you today for the 
testimony that you are about to give to us.
    And so, Mr. Rones, I turn it over to you and thank you very 
much.
    [The prepared statement of Representative Hinchey appears 
in the Submissions for the Record on page 40.]

 STATEMENT OF PHILIP L. RONES, DEPUTY COMMISSIONER, BUREAU OF 
   LABOR STATISTICS, U.S. DEPARTMENT OF LABOR, WASHINGTON, DC

    Commissioner Rones. Thank you for the opportunity to 
address the Committee and to discuss fully the employment and 
unemployment data we released this morning.
    The labor market continued to weaken in May. The----
    Representative Hinchey. You need to turn the microphone on.
    Commissioner Rones. OK. I'm sorry. The labor market 
continued to weaken in May, as you mentioned. The unemployment 
rate increased by \1/2\ a percentage point to 5.5 percent, and 
jobless rates rose for most of the major demographic groups.
    Over the month, non-farm payroll employment continued to 
trend down by 49,000. Thus far in 2008, job losses have totaled 
324,000. In May, employment declined in construction, 
manufacturing, retail trade, and temporary help services, and 
health care continued to add jobs.
    Within the goods-producing sector, employment in 
construction declined by 34,000. Job losses in this industry 
continued to be widespread, and since its peak in September of 
2006, construction employment has fallen by 475,000. Two-thirds 
of that decrease, however, has occurred in just the past 7 
months.
    Manufacturing employment also continued to decline in May 
by 26,000. Thus far this year, monthly job losses have averaged 
41,000, about twice the average monthly decline of 2007 and 3 
times the decline in 2006. Over the month, jobs declines 
continued in two construction-related manufacturing industries: 
wood products and nonmetallic mineral products.
    Within the servicing providing sector of the economy, 
retail trade employment continued to decline, by 27,000 jobs. 
Since peaking in March 2007, the industry has lost 184,000 
jobs. Over the month, job declines continued in department 
stores.
    Temporary help services shed 30,000 jobs in May. Job losses 
have totaled 110,000 over the past 4 months and 193,000 since 
the industry's most recent employment peak in December of 2006.
    Health care employment expanded by 34,000 in May, with 
continued growth throughout that industry. Employment in food 
services continued to edge up over the month. Since last fall, 
job growth has slowed markedly in that industry.
    Average hourly earnings for production and nonsupervisory 
workers in the private sector rose by 5 cents, or 0.3 percent 
in May and by 3.5 percent over the past 12 months. From April 
2007 to April 2008, by comparison, the CPI for Urban Wage 
Earners and Clerical Workers (CPI-W) rose by 4.2 percent.
    Turning now to the data from our survey of households, the 
jobless rate, as we mentioned, rose sharply in May to 5.5 
percent. Unemployment rates increased for adult men, adult 
women, teens, whites, and blacks. The number of unemployed 
persons grew by 861,000 to 8.5 million, with the increase 
disproportionately large among 16- to 24-year olds.
    The over-the-month jump in unemployment reflected 
additional workers who had lost their jobs, as well as an 
upsurge in new and returning job seekers.
    In May, the number of newly unemployed persons--those who 
have been jobless less than 5 weeks--increased substantially by 
760,000. The number of long-term unemployed continued to rise.
    The number of persons who had been unemployed for 27 weeks 
or more totaled 1.6 million in May, up from 1.1 million a year 
ago.
    Over the month, the number of persons in the labor force 
increased by 577,000, primarily among youth. The labor force 
participation rate edged up to 66.2 percent.
    In May, 62.6 percent of the population was employed, down 
\4/10\ of a percentage point from a year earlier. Since May of 
last year, the employment-population ratio for adult men has 
declined by a full percentage point, while the rate for adult 
women has been about unchanged.
    The number of persons working part time who would prefer 
full-time employment was essentially unchanged in May at 5.2 
million, but has increased by 764,000 over the past 12 months.
    I would note that large over-the-month changes in the 
seasonally adjusted estimates from the household survey can 
occur between April and July. There is a substantial flow of 
workers, particularly young workers, into the labor force 
during these months. The interaction of several factors, 
including the underlying state of the economy, the timing of 
our survey reference week, and school schedules can impact the 
month-to-month in our Labor Force measures.
    While we always caution against reading too much into a 
single month's data, that is particularly the case at this time 
of the year.
    So to summarize May's labor market developments, the 
jobless rate rose to 5.5 percent, which is the highest since 
October of 2004. And nonfarm payroll employment continued to 
trend downward.
    My colleagues and I would of course now be happy to answer 
your questions.
    [The prepared statement of Commissioner Rones appears in 
the Submissions for the Record on page 44.]
    Representative Hinchey. Well thank you very much.
    The long-term unemployment rate seems to have gone up 
significantly. In other words, the number of people who find 
themselves unemployed for long times even beyond the 26 weeks 
that Unemployment Insurance provides benefits for.
    How significant is that, Mr. Rones?
    Commissioner Rones. Well obviously it is significant. We 
actually see increases both in the newly unemployed and the 
long-term unemployed. We have--excuse me, I have the numbers 
here--18.3 percent of the unemployed had been jobless for more 
than half the year as of May of 2008. That number had been as 
high as 23.4 percent as we were recovering from the last 
recession, and that goes back to March of 2004.
    Representative Hinchey. It was that high back in 2004?
    Commissioner Rones. Yes. But again, that is after the 
recession had played out. And generally long-term unemployment 
takes a while to peak. Obviously those newly unemployed from 
this month won't reach that point for another 5 or 6 months.
    So, you know, obviously we have seen an increase in long-
term duration unemployment, but we have seen an increase in 
unemployment across the board.
    Representative Hinchey. And part-time unemployment, you 
said went up by 7 million? Part-time?
    Commissioner Rones. The number of people part-time who 
would prefer full-time work?
    Representative Hinchey. Yes.
    Commissioner Rones. That number was up--excuse me just a 
second while I get that.
    Representative Hinchey. If I remember correctly, I think it 
was that the number of people that were employed part-time, has 
gone up by 7 million?
    Commissioner Rones. No, I don't think that's right, but 
just give me 1 second, please.
    Yeah, it's 764,000 over the last 12 months. It's now 5.2 
million.
    Representative Hinchey. There's another interesting set of 
circumstances with regard to the way in which people are 
employed.
    I understand that the service sector now is something like 
80 percent of employment; is that correct?
    Commissioner Rones. It's actually 84 percent of jobs in our 
payroll survey, are in the payroll--in the service sector, and 
that includes Government.
    Representative Hinchey. That includes Government?
    Commissioner Rones. Right.
    Representative Hinchey. What is the recent history of that? 
Say, over the course of the last two decades, with regard to 
the changes in manufacturing, as opposed to service employment?
    Commissioner Rones. Obviously, over the decades, we've 
shifted from a goods-producing to service-producing economy, 
and that's been a steady increase, and the 84 percent is an 
all-time high.
    In recent months, while the economy has started losing some 
jobs, generally, we're at a point now where service-producing 
sector is fairly flat, that it's neither gaining nor losing, 
but the goods-producing sector--and we're talking about, 
particularly, manufacturing and construction, as you know--
continue to decline.
    Representative Hinchey. It would be interesting to take a 
look at the history of that, say, over the course of the last 
two or three decades. I know you may not have that handy right 
now, but if you wouldn't mind, if you could come up with those 
numbers and give them to us at some point?
    Commissioner Rones. We'll be glad to do that.
    [The historical data referred to appears in the Submissions 
for the Record on page 87.]
    Representative Hinchey. We appreciate that. As you 
mentioned, a large part of the service, or a significant--at 
least, part of the service sector is Government employment and 
a significant part of Government employment, is employment by 
the States.
    But I understand that, given the set of circumstances that 
a number of States have to deal with, that the likelihood is 
service employment for the States will decline.
    Is that true or not? Do you know, offhand?
    Commissioner Rones. Well, I have books of information about 
what is and what has been. Obviously, we can't look into the 
future.
    I read the same reports that you read about tax takes for 
the State. Generally speaking, we haven't seen declines in 
Government employment yet.
    As for the future, I just don't know.
    Representative Hinchey. What we have seen is actual 
increases in Government employment.
    Commissioner Rones. That's correct.
    Representative Hinchey. In fact, the main increases in 
employment have been Government employment.
    Commissioner Rones. Right, Government and, particularly, 
healthcare, as well, but, yes, you're right.
    Representative Hinchey. But private-sector employment has 
either been stagnant or declining recently.
    Commissioner Rones. That's exactly right.
    Representative Hinchey. So now we're confronting a 
situation where the economic circumstances facing both the 
Federal Government and State governments is going to make it, I 
think, increasingly difficult for them to continue to engage in 
employment.
    For example, the National Debt here now is something in the 
neighborhood of $9.4 trillion. That National Debt has gone up 
very substantially over the course of the last several years.
    And many of the States, especially the ones that are 
significant in terms of employment, like California, New York, 
and others, are looking at situations where the employment rate 
is not likely to increase; it's likely to decline.
    It seems to me that that is going to make perhaps a 
significant contribution to the unemployment rate.
    Commissioner Rones. When we look at our state data, it's 
interesting that some of the larger declines in employment, so 
far, have been in the States where there have been well-
publicized run-ups over the last decade in housing prices, and 
we've seen those really fall off.
    Places like California, Florida, Arizona, Nevada, are 
States that have been often cited in the press as States with 
particular problems in the areas you've mentioned, and, in 
fact, we're seeing those effects in our employment data.
    Obviously, the employment declines reduce income, reduce 
taxes, so, yes, I agree with that assessment.
    Representative Hinchey. Well, I think that's troubling, 
because part of the debate that we've been having in the 
context of the hearings by the Joint Economic Committee over 
the course of the last year or so, actually, is the question 
about recession.
    Is this economy approaching recession? Are we actually 
involved in a recession? That's a question where there are 
still differences of opinion.
    But I don't think there's any question that the economy is 
receding. It is receding and has been receding for some time.
    And based upon the information that we have, including the 
information that you've provided us this morning, the 
likelihood is that receding of this economy is likely to 
continue, and it's likely to continue, perhaps even at an 
accelerating rate.
    And I wonder if you might have any insight with regard to 
that at the moment?
    Commissioner Rones. Well, again, I have no insight as to 
what might happen next month or 6 months from now. When 
employment is declining, generally that's associated with a 
recession, but one thing I would say about that is, if you look 
at the pace of job loss over the last 5 months, which is since 
employment peaked in December, we've lost about \2/10\ of 1 
percent of employment over those months.
    If you take the first 5 months of the last two recessions, 
the job losses have been about double that, so, obviously, I 
won't try to add to that debate as to whether there's a 
recession or whether there isn't.
    What we can do is provide the data that says this is what's 
going on in our part of the economy, which is the job market. 
And it's clear that almost everything we measure has shown some 
deterioration, not the level of deterioration that's typically 
associated with a recession.
    And as I think you know, generally, recessions are viewed 
or even named after the fact, after you get a lot of data, and 
in hindsight, you can say that looks like a recession. The 
National Bureau of Economic Research, is actually responsible 
for the recession dating.
    Representative Hinchey. I wonder if Mr. Galvin or Mr. Layng 
had any comments on that? No? Nothing additional? No?
    Someone else does, however. We see that the funding level 
available in the President's budget proposal will require BLS, 
for example, to eliminate the American Time Use Survey.
    Commissioner Rones. That's correct.
    Representative Hinchey. Now, this survey explores how 
Americans spend their time, how much time they spend with their 
families, at their jobs, doing housework.
    It also shows that over the past two decades, families have 
had less time together, less time for each other, but have put 
in more time at work.
    And we know that to be the case. Can you tell us more about 
the importance of the American Time Use Survey, what that 
indicates?
    Commissioner Rones. When we began the Time Use Survey, 
there were some people who thought, well, why is the Bureau of 
Labor Statistics involved in what is more a social than an 
economic measure? Actually, for us and for many economists who 
encourage us to do this, it actually rounded out our view of 
the economy.
    What the Time Use Survey allows you to do is to take the 
thing that we always measure--work--and put it in the context 
of your entire life.
    And so you can look at, within the family structure, the 
tradeoffs that people make between labor supply, that is, 
providing themselves--offering themselves to the job market and 
taking care of other family responsibilities. It's the only way 
to measure those things.
    The reason the Administration has proposed to cut this, is 
not specifically any comment on the value of the Time Use 
Survey, but in this budget environment, for us to maintain our 
core programs, including the Current Population Survey and 
Current Employment Statistics Survey, which we're reporting on 
today, we had to offer up some cuts.
    I would add to that,that while the loss of the Time Use 
Survey would be important to a group of data users, right now, 
with our budget situation, we will cut next year $50 million 
worth of programs, including 25 percent of the sample from our 
Household Survey that gives you the unemployment statistics, 
that gives you the duration of the employment data that you use 
to deliberate on extension of benefits, as you mentioned 
earlier.
    We will not be able to do the improvements to the CPI that 
we would normally do every decade, that we have not been able 
to get funding for, and even beyond those two cuts, there will 
be $30 million additional worth of cuts that we will have to 
take.
    The money to support the BLS, outside of the Time Use 
Survey and some other minor cuts, that money is in the 
President's budget, as it was in 2008, but we have not been 
able to get funding through Congressional appropriations.
    I'd argue, and I'll make this argument and will either ring 
true or it won't, but much of what you do here in Congress and 
what the Administration does, absolutely requires statistics. 
As I said, with the unemployment extensions, the discussion is 
based on the data that comes from the statistical system.
    You are escalating half a trillion dollars a years of 
Social Security payments, based on the CPI, which has a housing 
component, which is almost a third of the CPI. It has a housing 
sample that was selected based on the 1990 Decennial Census, 
and we have no way of updating it.
    I could give you a long list, but that will give you an 
idea of where we are within our budget situation.
    Representative Hinchey. Well, I very much appreciate that. 
I mean, the job of this Joint Economic Committee, you know, one 
of those unusual Committees made up of both Houses, is to 
understand the set of circumstances, the economic set of 
circumstances that we are confronting as a Nation, and to make 
recommendations to both Houses as to how we might deal with 
those set of circumstances.
    And without the facts, without the statistics that you're 
talking about, obviously will make those recommendations, or 
even a basic understanding, increasingly more difficult.
    So, BLS is considering eliminating that survey.
    Commissioner Rones. The Time Use Survey.
    Representative Hinchey. Pardon me?
    Commissioner Rones. The Time Use Survey?
    Representative Hinchey. Yes.
    Commissioner Rones. Yes, that is in the President's budget, 
that that will be cut in order to preserve, particularly, the 
Household Survey.
    But, again, if the President's budget itself isn't funded, 
we have, instead of $4 million worth of cuts for the Time Use, 
we have $50 million worth of cuts.
    Representative Hinchey. So who has been responsible for 
these cuts? This is something that the Administration has 
recommended, that the funding be continued, but the Congress 
has cut them back?
    Commissioner Rones. I'm afraid that is the case.
    Representative Hinchey. That is the case?
    Commissioner Rones. We had what--in 2008, the President's 
budget essentially funded all of BLS's core activities. In the 
end, the House mark that we had last year was actually also 
fully funded, if the Senate mark didn't, but it was $14 million 
short.
    In the end, with the Omnibus Appropriation, we were cut $30 
million a day, and so our 2008 budget is actually absolutely 
below the 2007 budget, and yet we still have to pay all the 
normal cost increases.
    So we're at a $30 million deficit now. What the President's 
budget in 2009 does, is restores those cuts and gives us 
funding for the mandatory increases in 2009, as well.
    Representative Hinchey. So your budget basically has been 
declining over the course of the last several years?
    Commissioner Rones. This year, it absolutely declined. In 
the years prior to that, it's gone up some with inflation, but 
not enough to keep up with costs, so we've had to do actually a 
series of cuts.
    In 2006 for instance, we had to make cuts, smaller cuts, 
but cuts in eight of our different programs. So we've had a 
situation even before that where we get--and this is very 
typical across the Government--that the increase in wages for 
our employees is not fully funded, so you have to absorb the 
difference, so you're absorbing a percent a year, year after 
year after year.
    But the big cut, really--it all hit the fan, if we can 
speak that way, in 2008.
    Representative Hinchey. Right.
    Commissioner Rones. And you know how difficult those 
deliberations were over that final 2008 budget. To fund some 
other priorities that the Congress had, they looked in places 
where they thought they could cut, and BLS somehow was on that 
list.
    One other thing that I'd say is we distribute hundreds of 
billions of dollars to the States and localities based on our 
statistics, our local area unemployment statistics. The Child 
Health Insurance Program distributes--it's a $40 billion 
program over 10 years, I think.
    Those funds are all distributed, based on our data, whose 
quality will erode year after year. In some cases, some of the 
data will disappear. When I think of the size of the 
commitments made on the basis of our data, the hundreds of 
billions of dollars, it's hard for me to think of making really 
bad judgments, because you have bad data.
    Representative Hinchey. Well, I appreciate that. And I'm 
awfully glad that this subject has come up, so that we 
understand it more clearly than we have in the past.
    How much has your budget gone down over the course of the 
last couple of years? You're saying that it hasn't gone down 
very much? It's only in the last year that it's declined.
    Commissioner Rones. Right. You would normally get--in our 
case, we might normally get, let's say, a $15- or $20-million 
increase, just to cover the increased cost of your rent and 
your salaries and such.
    So for instance, in 2006, we took a 1-percent rescission at 
the end of the budget process, so to us, 1 percent at the time, 
was $5 million and we cut $5 million worth of activities.
    In 2007, we cut about $7 million, and we did that largely--
we stopped training; we stopped travel; we limited hiring. By 
2008, with that $30-million cut, we still are doing virtually 
no training; no travel we're not replacing equipment, and we've 
had a virtually complete hiring freeze, except for our data 
collection, and temporarily cut some data products.
    If you don't get the data in, you don't get anything, 
right? So, again, the shortfall in 2008 was $30 million and the 
shortfall that the President's budget is looking to address in 
2009, is almost $50 million.
    Representative Hinchey.  [presiding]. OK, well, this is 
obviously something that we're going to have to address here in 
the context of this budget situation that we're dealing with 
now.
    We need to have accurate information here, and your 
presentation of it is crucial. So, we very much appreciate what 
you're doing and we've got to make sure that that continues to 
be accurate.
    Commissioner Rones. Thank you.
    Representative Hinchey. Last month, we were talking about 
the unemployment rate, which has gone from 5 to 5.5 percent 
unemployment.
    How many people were unemployed? What's the actual number 
there? Do you have that handy?
    Commissioner Rones. The total number of unemployed, 
seasonally adjusted, was just about 8.5 million, and it was 7.6 
million in April.
    Representative Hinchey.  OK, so there's a trend here or 
maybe there's a trend here of increasing unemployment, with the 
numbers going up.
    One of the things that people were talking about in terms 
of a positive aspect of the economy, was productivity. 
Productivity was talked about over the course of the past few 
days, saying that, well, while some people are saying the 
economy is suffering, the fact is that productivity went up.
    But if productivity is going up while employment is going 
down, how is that happening? Do you have any insight into that, 
how the productivity rate is going up while the number of 
people who are employed is going down, and while such a large 
percentage of the people who are employed are involved in the 
service sector, including employment in Government?
    Commissioner Rones. The calculation of productivity is 
affected by two things: First, it's output, and the other is 
the amount of labor that goes into that output. That 
essentially is what our measure of productivity is.
    So, if the labor going into it goes down, if the output is 
not going down as fast, productivity will actually go up, and 
so that looks like a positive thing, I guess, by itself, but we 
don't look at the statistics--any one statistic by itself.
    In the context of a short-term indicator of the broader 
economy, you see that probably the most important thing that 
we're looking at, is not whether productivity is up a little, 
or down a little in a particular quarter, but the labor market 
data that we're presenting today and that we present each 
month, are probably much more important than those productivity 
statistics.
    Representative [presiding]. Right, and the level of 
productivity may, at least in part, depend upon how many people 
are employed.
    Commissioner Rones. Well, it does, arithmetically, it does.
    What happens--let's say--and this is just hypothetically--
that the people who are losing jobs are in jobs that are more 
labor-intensive, let's say, in the service sector, retail 
trade, some of these areas that are, you know, pretty labor-
intensive.
    Productivity actually tends to go up in that situation, so 
it's one thing to look at whether productivity is up or down; 
it's another to try to interpret, well, why is it going up or 
down? Is it because--is the problem on the output side or is it 
on the labor side?
    And so it's--you know, there are no simple explanations for 
productivity increases and decreases.
    Representative Hinchey. OK, well, thanks very much.
    One of the issues about unemployment that I find among the 
most troubling is the long-term unemployment rate, the fact 
that we've had such a significant number of people who are 
long-term unemployed.
    When we look at the situation in specific States, for 
example, with the State that I represent, New York, the number 
of long-term unemployed is about 36 percent of the unemployed, 
and that number has been increasing, so the percentage of long-
term unemployed has continued to go up.
    Commissioner Rones. Right. Let's see, now, there are 
differences from State to State on each of these measures. I 
think you're right; these figures are fairly high for New York.
    The problems that we're seeing in the job market, are not 
showing up in any particular region of the country. Any measure 
you ask me for, and you say, well, where are you seeing this 
problem, you see States on the worst-hit list, all across the 
country.
    So each economic cycle tends to have its unique geographic 
pattern. This is one where housing, in particular, is really 
important. Many of those areas that have been hard-hit by 
housing, are being hard-hit by job loss, employment decline, 
unemployment, and eventually long-term unemployment.
    Representative Hinchey. One of the issues that we're 
attempting to deal with here is the issue of long-term 
unemployment and the way in which stimulating the economy 
should be addressed. One of the things that a number of us have 
been suggesting is that a way in which we can provide economic 
stimulation, is to deal with long-term unemployment and the 
effect that that's having on the economy.
    More and more people are experiencing long-term 
unemployment beyond the 26 weeks.
    Commissioner Rones. Right.
    Representative Hinchey. And if you're--I think, and I'd be 
interested in the actual numbers here, but it seems to me that 
the percentage of long-term unemployment now is higher than it 
was in the context of the most recent two recessions--one in 
2001 and the other in the early 1990s.
    Do you have the figures on that handy?
    Commissioner Rones. Yes, we do. What's actually going on is 
the starting point is higher.
    Representative Hinchey. The starting point is higher?
    Commissioner Rones. Yes, and so long-term unemployment as a 
share of the unemployed never came down to where it had come 
down in the past expansions.
    So the peak--and I had given you the figures earlier, 
where, you know, the peak had been, let's say, 23.4 percent in 
March 2004, we're not at that point or close to that point yet, 
but the starting point is higher than the starting point had 
been in past recessions.
    Representative Hinchey. What was that? Twenty-four percent?
    Commissioner Rones. The 24 percent was the peak for the 
long-term unemployed as a share of the total unemployed.
    Representative Hinchey. OK. So, do you have any information 
with regard to long-term unemployment now, as opposed to long-
term unemployment, say, in 1991?
    Commissioner Rones. Yes, if you'd just give me 1 minute.
    [Pause.]
    Commissioner Rones. The problem of having so much 
information, is finding precisely what you need.
    [Pause.]
    Commissioner Rones. There we go. All right, so the current 
share of the total unemployed who have been jobless for 17 
weeks and over is 18.3 percent. If you go back to the early 
1990s--now again, this is a series that tends to peak well 
after the beginning of a recession, but the peak actually was--
let's see now, in 1994, it peaked at a little over 21 percent, 
so we're not there yet, but again, we're starting at a point 
that's not that far from that level.
    Prior to the recession in 1990, we were starting at a point 
that was around 9 percent, and again, here we're starting at a 
level more around 16 percent and it's gone up to 18 percent.
    Representative Hinchey. OK. All right, well, all of that is 
very interesting and very critical to our understanding and how 
we're going to try to deal with this situation.
    Another issue is the level of wage growth. Looking at the 
numbers, it seems that we're experiencing a period of time when 
wages are actually pretty flat in the context of the increased 
cost of living.
    Here we go, the annual change in real earnings, OK, thank 
you. So one of the major issues that we're interested in is the 
whole question about Gross Domestic Product and how significant 
Gross Domestic Product is for the economy and how median income 
spending makes up a little more than two-thirds of the Gross 
Domestic Product.
    So if you have median income that is not increasing and you 
have the cost of living that is going up substantially, then 
you're likely to see a continuing downturn in the Gross 
Domestic Product and a genuine downturn in the economy.
    So again, there is more of a likelihood of a recession and, 
frankly, if this set of circumstances continues, the likelihood 
of a deeper recession. This is one of the things that troubles 
me.
    So, the way in which wages have been affected over the 
course of the last year and over the course of the last several 
months is that wages are not going up, that wages are pretty 
flat, and in some cases, they're actually going down.
    Commissioner Rones. In the calculation that you have up 
here, there are really two things going on: One is the issue of 
wages and the other is prices.
    Just to clarify, wage growth has continued on a fairly 
steady path. We're getting, let's say 3.5 percent wage growth a 
year which is very similar to what we've had in recent years.
    There have been little ups and downs, but wage growth has 
been fairly steady. The thing that has increased has been the 
CPI, and as you know, that's largely the result of very large 
increases in energy and large increases in food costs, as well.
    Representative Hinchey. Yeah. So when you're looking at the 
rate of inflation, you see one level of increase. When you look 
at something that we might call the increased cost of living, 
you see something else, something that is very substantially 
higher.
    When you look at the rate of inflation, that rate of 
inflation doesn't include the cost of energy or the cost of 
food.
    Commissioner Rones. I see that a lot in press analyses. Our 
price index information includes all of the goods and services 
that people spend on, so our core CPI, if we say that the CPI 
is up 5 percent over the year--I'm just throwing out a 
hypothetical number--that is going to include energy; it will 
include food; it will include all the other commodities or 
goods that people purchase, all the services they purchase.
    There is a thing called--a calculation call the Core Rate, 
and that's just something that our data users have asked us to 
produce, and that is, what would the rate of inflation be if 
you stripped out the more volatile series, which tend to be 
food and energy?
    But our CPI, and, I would assume the CPI that you've used 
to do these calculations of real earnings, that includes food 
and energy.
    Representative Hinchey. OK, so what's the rate of increase 
then, including food and energy?
    Commissioner Rones. I'm going to let Mr. Layng, who runs 
our CPI, I'm going to let him answer that.
    Representative Hinchey. Thank you.
    Mr. Layng. It was 4.2 percent in April.
    Representative Hinchey. Gone up 4.2 percent in April, 
increased by 4.2 percent?
    Mr. Layng. Correct. The issue of the Core versus the All 
Items is the CPI press release every month; the lead number is 
always everything, and then we break that down into food and 
energy and all items, less food and energy, and we don't use 
the term, ``core.''
    Some people pick that number up and use it as the number 
and gives a misperception to the public as to what's really 
going on to everything.
    Representative Hinchey. OK, well, isn't that the right way 
to do it?
    Mr. Layng. The right way to do it is to report everything, 
but when the reporters--sometimes they'll focus on what the 
reporters call ``core,'' because people like the Federal 
Reserve tend to focus on that, when they're analyzing monetary 
policy.
    But in terms of the numbers that BLS produces, it is 
everything.
    Representative Hinchey. OK. So, with regard to wages, wages 
have not fallen over the course of the past year?
    Commissioner Rones. Nominal wages certainly have not, but 
as the chart shows, real wages have, because----
    [The chart, ``Annual Change in Real Earnings: May 2007 - 
May 2008,'' appears in the Submissions for the record on page 
89.]
    Representative Hinchey. Real wages have?
    Commissioner Rones. Right, because the CPI has been growing 
at a faster rate than wages.
    Representative Hinchey. Well, the information that we have, 
shows that incomes for people in the top level of incomes, 
those incomes have gone up very significantly.
    But if you're looking at people in the middle income, their 
incomes have not gone up.
    If you look at people in the lower income level, their 
incomes have gone down.
    Commissioner Rones. We have seen for quite some time, 
issues with the dispersion of income. I think it's largely been 
the case that the income growth has been highest among those 
people who are most educated, who have the highest earnings, 
and that's been the case, not just in the past 5 months or 
year, but for really a couple of decades.
    I mean, people--career counselors use that as an argument 
to get people to focus on their education and to go to college, 
obviously.
    But yes, I mean, it is the case that wage growth, generally 
speaking, has been higher at the top end.
    Representative Hinchey. At the top end? And in the middle-
income range?
    Commissioner Rones. Well, I don't have the whole time 
series here, so I don't want to speculate on that. I can 
certainly provide that for the record.
    Representative Hinchey. OK.
    Commissioner Rones. I know we have those data.
    The information referred to appears in the Submissions for 
the Record on page 87.]
    Commissioner Rones. One thing I just want to point out, is, 
when you talk about incomes going down, incomes are affected by 
a couple of things: One is the wage rates, as we've talked 
about, but the other is just whether you're employed or not.
    And so incomes could go down, not only because there's an 
issue with wage rates, but as we've seen in the last 5 months, 
there's an issue with declining employment, as well, and 
nothing affects family income as much as unemployment does.
    Representative Hinchey [presiding]. Right. Well, I know, 
but these are the things that we're trying to understand, 
comprehensively trying to put it altogether and understand it. 
I know that what you're saying is exactly true.
    But what we're trying to understand, is what is the impact 
here on the economic circumstances that most people are 
confronting. What are we seeing?
    We're seeing the cost of living going up very, very 
substantially, but we're not seeing incomes going up 
proportionately to deal with the rising cost of living.
    So the effect of that, if that continues, and every 
indication is that it will continue, then the likelihood is 
that blue- and white-collar working people are going to find 
themselves increasingly in a more difficult set of economic 
circumstances as time goes on.
    And that's one of the reasons why we're seeing significant 
increases in debt, for example. There's been a dramatic 
increase in debt for working people, and a lot of that debt is 
credit card debt.
    So, you know, all of that indicates clearly that the 
economic situation we're facing is getting darker and darker, 
more and more difficult for more and more people, for the vast 
majority of people.
    And so this is something that we're going to have to deal 
with here, because, if we don't, then we're going to face a 
bigger and bigger problem. I think that the first element of 
dealing with it is recognizing what we have to deal with.
    And there are people who are arguing that, no, no, 
everything is fine; the economy is good; there's no recession 
and nothing is receding; everything is fine; don't worry about 
it.
    But it seems to me, when you look at all the numbers here, 
it's quite the opposite. There's a growing negativity in the 
economic circumstances of the vast majority of people, 
particularly, you know, blue- and white-collar working people, 
across the board. They're getting hit harder and harder.
    So I'm wondering if that seems to be accurate to you.
    Commissioner Rones. I think the description that you've 
made, describes what's happened up till now, that is, you have 
some reduction in income for many families because of the job 
loss we've seen over the last few months, and of course, while 
we hadn't been in negative numbers before that, the pace of job 
growth had really slowed down in 2007, as well.
    And as you point out, there is an issue with the buying 
power of the income, of the earnings that are out there, 
because inflation has been heading upwards somewhat recently.
    Representative Hinchey [presiding]. Well, let me ask you 
one more question, and you may not want to comment on this, but 
one of the issues that we're facing here is what we've just 
been talking about. Back in the 1970s, when we had a somewhat 
similar set of circumstances, a lot of people experienced 
declining economic circumstances and increases in the cost of 
living because of driving up costs of energy, et cetera.
    There was at that time, a major push to increase wages, 
benefits, things of that nature to try to keep pace with the 
growing cost of living. But there are some who are making 
arguments now that that was a mistake back then, and we don't 
want to set up that kind of situation here today.
    Now, if we adopt that argument that it was a mistake back 
then and we don't want to set up that situation here today, 
then I'm wondering, what do we do? What else do we do? How do 
we help people deal with the rising cost of living? How do we 
help people deal with their rising debt?
    How do we help them deal with the need to purchase 
essential elements of their set of circumstances so that they 
can continue to function with regard to the economy and 
providing benefits for their families? I mean, that's not ultra 
benefits, but just basic benefits like food and fiber, for 
example; getting back and forth to work; getting back and forth 
to school, you know, doing those kinds of things.
    So I'm wondering if you have any particular insight on that 
experience back in the 1970s, how we may be confronting another 
set of ``stagflation'' circumstances here today, a downward 
economy, and upward cost of living. And if we're not going to 
deal with it in the way that we dealt with it back in the 
1970s, what do you think we ought to be doing to confront this 
situation so that people do not continue to suffer?
    The vast majority of Americans are suffering under this 
present set of economic circumstances.
    Commissioner Rones. I'll bargain with you for half an 
answer, if I may.
    Representative Hinchey. OK.
    Commissioner Rones. The half that I'll give you--and I 
think you knew this coming in--the half I'll give you is 
looking back at the economy in the 1980s. We had a peak of 
unemployment of about 10 percent; we had inflation that was 
considerably higher; we had very high interest rates over a 
period of time.
    Many of the issues that go along with a troubled economy 
also exist now--trouble in the construction sector, rising 
unemployment, job loss.
    The magnitude of all of those things is much less now than 
it was in the 1970 recession, so that's the comparison I'd 
make.
    What would we do about it? I'm going to invoke the kind of 
separation of powers for a statistical agency. We can't take a 
position on policy issues.
    Once we do, then we're seen as being political, and once 
we're seen as being political, people will dismiss our data as 
being political, and I think none of us wants that.
    Representative Hinchey. OK, well I accept the half answer 
and I appreciate the set of circumstances that you're dealing 
with. I would also observe though, that at a certain point back 
in the 1970s, the unemployment rate was 5.5 percent; the cost 
of energy was going up at roughly about the same rate that it's 
going up now, and the other set of circumstances that we're 
dealing with, are similar to that which we're dealing with now.
    The likelihood is that the set of circumstances we're 
dealing with are going to continue to worsen as they did back 
during that period of time. So it just seems to me that we 
ought to be trying to do something now to head off the danger, 
rather than waiting till it gets so bad that we have to do the 
kinds of things that were done back in the 1970s, which became 
so controversial.
    Anyway, that probably doesn't provide the opportunity for 
half an answer.
    Commissioner Rones. That's all on the policy side, but I 
appreciate the sentiment.
    Representative Hinchey. OK, well, I appreciate you and your 
two colleagues, and I very much appreciate--Vice Chair Maloney 
is going to submit a statement for the record here for this 
hearing. She's going to submit a statement for the record, 
based upon the fact, at least in part, that she initiated this 
hearing, so I can fully understand, her involvement in this and 
her interest in this issue.
    [The prepared statement of Representative Maloney appears 
in the Submissions for the Record on page 42.]
    Representative Hinchey. So we thank you very much for 
providing all the information that you have. We're going to 
look at this information very, very closely, and see if there's 
some ideas that we might be able to use to try to head off a 
more difficult set of issues that we might have to deal with in 
the future.
    Commissioner Rones. Thank you very much.
    Representative Hinchey. Thank you very much, gentlemen. Mr. 
Rones, thank you very much.
    A new set of witnesses is coming in. Let me just introduce 
them and describe what they are about.
    Heidi Hartmann is the president and founder of the 
Institute for Women's Policy Research. Dr. Hartmann focus on 
economic issues affecting women, including poverty, employment 
discrimination, caregiving, and retirement.
    Dr. Hartmann is co-author of ``Still a Man's Labor Market: 
A Long-Term Earnings Gap.'' She has published numerous articles 
in journals and books, and she lectures widely on women, 
economics, and public policy.
    Eileen Appelbaum joined Rutgers University in March of 
2002, as a professor in the School of Management and Labor 
Relations and director of the Center for Women and Work. She 
holds a concurrent appointment as professor in the Business 
School of the University of Manchester in the United Kingdom. 
Formerly, she was research director at the Economic Policy 
Institute in Washington, DC, and professor of economics at 
Temple University, and held a visiting position at the 
University of Auckland, in New Zealand.
    And Diane--how do you pronounce it?
    Ms. Furchgott-Roth. ``Firch-got'' (ph.) Roth.
    Representative Hinchey. OK, thank you very much. Diane 
Furchgott-Roth is a senior fellow at Hudson Institute and 
directs the Center for Employment Policy.
    From February 2003 to April 2005, Ms. Furchtgott-Roth was 
Chief Economist of the U.S. Department of Labor.
    Previously, she served as Chief of Staff of the President's 
Council of Economic Advisors. Ms. Furchgott-Roth was also a 
resident fellow at the American Enterprise Institute, and prior 
to that, she served as Deputy Executive Director of the 
Domestic Policy Council and Associate Director of the Office of 
Policy Planning in the White House under George H. W. Bush.
    Well, thank you all very much. We very much appreciate your 
being here. So, if you don't mind, we'll start in that way, and 
ask Dr. Heidi Hartmann if she would please begin.

   STATEMENT OF DR. HEIDI HARTMANN, PRESIDENT, INSTITUTE FOR 
            WOMEN'S POLICY RESEARCH, WASHINGTON, DC

    Dr. Hartmann. Thank you. Good morning, Mr. Chairman. I 
thank you for the opportunity to testify today and alert you 
and your colleagues in the Congress to some of the emerging 
issues for women, as the current period of slow or possibly 
negative economic growth proceeds.
    First, I want to stress that the context of women's 
employment has changed over time. If women ever worked for 
``pin money,'' they certainly don't anymore. Women's earnings 
are a large and critical share of the economic support of 
families, and we have estimated that women's earnings 
constitute 45 percent of all earnings that support families.
    Women's earnings are especially important to the children 
who live in families that do not have fathers living with them. 
Even though the typical woman who works full-time, year'round, 
earns only about three-quarters of what a typical man earns; 
more than 7 million families with children relied solely or 
mainly on the mother's earnings in 2006.
    Second, it's important to understand that men's employment 
has generally been more sensitive to both the ups and the downs 
of the business cycle than has women's.
    If we look at employment-to-population ratios for the last 
10 years--do we have a chart of that? \1\ We can see that 
employment-to-population ratios typically rise in good times, 
as more people work, and they fall as the economy weakens and 
workers both lose jobs and stop looking for work.
---------------------------------------------------------------------------
    \1\ See ``Figure 1. Employment to Population Ratios Have Not Yet 
Recovered from the 2001 Recession,'' in the Submissions for the Record, 
page 50.
---------------------------------------------------------------------------
    For men--I guess we don't have that chart\1\ right now--the 
ratio was highest in 2000 and 2001, and then it fell more in 
the downswing and rose more in the upswing than did the ratio 
for women.
    And this greater responsiveness of men than women over the 
business cycle really has to do with where men are located in 
the economy. They tend to work in the more cyclical sectors 
like manufacturing and construction, and women tend to work in 
the more stable sectors like education and healthcare.
    One thing I want to point out though, is that even though 
women's employment tends to be less cyclical than men's, the 
2001 recession really marked a watershed for women. For the 
first time in 40 years, after decades of continuous employment 
growth, women experienced a sustained period of job loss.
    And I believe you can see that in this chart, that after 
the 2001 recession, you see the lowest line there shows that 
women's employment growth was negative after that recession, 
and that's the only time that has happened in post-World War II 
American history.
    And, in fact, women's total employment didn't recover from 
its pre-recession peak until August of 2004. If we have another 
recession like that, with a slow recovery of employment after a 
recession, after the downturn, then it will be very difficult 
for women to further catch up with men. They will suffer in 
both their employment growth and in their earnings, so 
recession is particularly difficult for women, because they 
still need to catch up to men.
    And another thing I'd like to point out, is that really, we 
haven't recovered from that 2001 recession at all. The 
employment-to-population ratio is still below where it was 
before the last recession.
    Wage growth has been very weak, so whereas sometimes when 
you enter a recession, you enter it after a strong boom; 
families have a little surplus built up; they've had strong 
earnings growth; they've had strong employment; that's not 
happening this time.
    If we enter a recession now and it becomes deep, it will be 
very, very bad for families because they have no backlog that 
they've built up through a boom. That boom was 10 years ago, so 
that is a big problem for families today.
    The financial anxiety that appears to affect women more 
strongly than men right now--we looked recently at a survey 
from February 2007, and women were 50 percent more likely than 
men to worry about their economic security, and they are more 
likely than men to have to put off getting health care, to wait 
to buy things their children need, and they are also more 
likely than men to go hungry.
    With these general trends as background, I want to take a 
look at a couple of vulnerable areas before I close.
    One especially vulnerable group is single mothers. Single 
mothers have a higher unemployment rate, either than all men or 
all women. They may face more constraints when they look for 
jobs. They may also face more employment discrimination.
    The unemployment rate for female heads of household was 6.8 
percent in April of 2008, and that was 10 percent higher than 
in the previous April. Rates were also very high for adult 
African American women, as well as for African American men, 
and all of those groups have higher rates than either white men 
or white women.
    And in May, the data just released this morning show a very 
high rate of increase for African American women, in 
particular.
    I also want to point out that the employment rates overall 
for mothers in the last 5 years have been very troubling. We 
have lost 302,000 jobs for mothers, and 302,000 fewer mothers 
are working today than were working in 2001.
    There are a lot of different theories for why this might 
be. It might be preference; it might be job loss in the 
industries where women work; it might be the lack of family 
friendly policy, but in any case, a recession or weak job 
growth will only exacerbate the problems that mothers face.
    One other area of weakness I'd like to look at is the real 
estate rental and leasing services industry. We do have a 
chart\2\ for that, as well, and it shows very high volatility 
in employment in the past couple of years, for both men and 
women. You can see that the blue line--men--is more cyclical, 
went up more in the 2006-2007 period or early 2007, but more 
recently women's employment has fallen much more rapidly.
---------------------------------------------------------------------------
    \2\ See ``Figure 3. Women's Employment Has Suffered More Than Men's 
in the Real Estate Crisis'' in the Submissions for the Record on page 
53.
---------------------------------------------------------------------------
    Women have lost almost 100,000 jobs in that industry, and 
men about 40,000. Now, in the real estate crisis, as a whole, 
men have lost more jobs, because of the construction industry, 
but just looking at the real estate services, women have lost 
more jobs than men, so that's an industry in which women appear 
to be more vulnerable than men.
    I do want to comment on pay equity, something that 
Representative Carolyn Maloney asked me to comment on. Pay 
equity is something that typically improves in a recession: 
Women do better than men in recession, because their wages 
don't fall as fast, because women's employment is a little bit 
better and more stable. But women's earnings also don't grow as 
much in the boom, so men gain on women in a boom, and, in a 
relative sense, women gain on men in the recession.
    But the overall fact is that since the 1980s, we've made 
very little progress in narrowing the wage gap, and that is 
something that I think that Congress should really turn its 
attention to.
    So, in looking at the types of policies that Congress might 
want to consider, I would say expanded educational 
opportunities for women, especially in non-traditional jobs 
where the wages are higher. I think that would be an excellent 
national investment.
    One of the things we've noticed is that women in the United 
States, especially those with college degrees, do not work as 
much as women in the European countries, so we're losing out 
competitively. We're not making the most intensive use of our 
women as we could.
    We notice that mothers' ability to compete in the labor 
force is limited, and we feel that there's a great need for 
more family friendly policies. Many of those are being 
considered by Congress right now.
    We would urge stronger enforcement of Equal Employment 
Opportunity laws in order to combat discrimination against 
women, especially women of color and especially mothers. We 
also urge greater regulation of the credit industry, because we 
do have a chart\3\ on the fact that women, especially women of 
color, are much more likely to hold subprime mortgages than 
white men or white women.
---------------------------------------------------------------------------
    \3\  ``Figure 6. African American Women Who Likely Qualify for 
Better Credit Terms Suffer Disportionately from Subprime Rates'' in the 
Submissions for the Record on page 56.
---------------------------------------------------------------------------
    You can see that it's nearly triple for African American 
women, the rate of subprime mortgageholding, compared to white 
women. This was already so in 2006, so this group is especially 
vulnerable in this real estate crisis, and I think credit 
regulations are very necessary.
    Finally, I think you yourself remarked about the need for 
economic stimulus, and Mr. Hinchey, you're particularly 
concerned about the long-term unemployed. I would suggest then, 
that building public infrastructure would be a very good 
investment for Congress in areas like transportation, 
communications, healthcare, and education.
    And while some would argue that a recession is not a good 
time to take on ambitious new projects, of course, 
countercyclical spending is a function of national Government. 
It's been recognized by the Employment Act of 1946 which 
established the Joint Economic Committee. Not only does the 
macroeconomy benefit, but so will individuals and families.
    So these are some of the policies that I would urge the 
Congress to consider and to exercise more oversight over.
    In addition, I would like to mention the importance of the 
American Time Use Survey and other data. We presented data 
today that come from the Women Workers Series. This is a series 
that the BLS proposed to eliminate several years ago, and did 
eliminate for 1 year, but because of the actions of Congress, 
we were able to get that dataset back. BLS restored the missing 
year of data and we were able to present that data to you 
today.
    So we urge the Congress to make information a top priority. 
Thank you very much for this opportunity, and I would like to 
request that my written testimony be submitted for the record. 
Thank you.
    [The prepared statement of Dr. Heidi Hartmann appears in 
the Submissions for the Record on page 48.]
    Representative Hinchey. Indeed, it will be and we very much 
appreciate that testimony and the way in which you summarized 
it just now. Thank you very much.
    Dr. Appelbaum.

 STATEMENT OF DR. EILEEN APPELBAUM; DIRECTOR, CENTER FOR WOMEN 
    AND WORK, RUTGERS UNIVERSITY; NEW BRUNSWICK, NEW JERSEY

    Dr. Appelbaum. Good morning, Mr. Hinchey, and thank you 
very much for this opportunity to talk to you about how the 
economic downturn is affecting women workers.
    And as you pointed out yourself, we have a lot of business 
people, commentators and Government officials who are dithering 
over whether or not we're actually in a recession. But 
America's working women know that the economy is in big trouble 
as they face those record high oil prices, food prices, energy 
prices, as you pointed out.
    Income growth has been constrained now by 6 months of 
private-sector job loss, and housing prices are still falling. 
We know that we have millions of families that face the 
prospect of losing their homes, their jobs, their retirement 
savings, their health benefits, and their middle class way of 
life.
    My remarks will focus on the effects of the economic 
slowdown on state budgets, how that affects cuts in spending, 
and how those affect women, both in terms of the services they 
rely on and the jobs that they hold.
    I want to begin by pointing out that Congress can really 
help. The economic stimulus package that was passed--those 
checks are going out right now, and they are what stands 
between us and an official recession at this very moment. In 
the absence of those checks going out, personal income and 
consumption would already be declining.
    In the aggregate, wages are going down, and so what's 
holding up the economy are those checks that, thanks to 
Congresswoman Pelosi and thanks to the actions of the Congress, 
have kept us in positive territory.
    The headline in today's New York Times, on the Business 
page, was that economists were surprised to see that retail 
sales had not only not declined, but had increased. And, of 
course, this was driven by sales growth at Wal-Mart and at 
Costco. And of course, that is people who are having a really 
hard time making ends meet running right out and spending those 
checks.
    So Congress can help, and I will give you other ideas for 
how you can continue to help, as I go on. But first let me make 
the case for further action.
    The States are facing substantial difficulties in terms of 
balancing their budgets. Property tax receipts are down, other 
tax receipts are down. The decline in property taxes is what's 
different from the 1970s, by the way. You heard about other 
ways in which things are better now than they were in the 
1970s. But one way in which they are worse, is that we did not 
have a housing crisis in the 1970s and people were not losing 
their houses.
    In any case, tax receipts are down, expenditures are 
rising, and we have already 25 States, plus the District of 
Columbia that have announced that they face shortfalls. And we 
have several other States that have not yet measured the extent 
of the gap for them but are anticipating budget gaps.
    At the moment the aggregate projected shortfall is $40 
billion, and that is a very large number. It is about 8 to 10 
percent of what their budgets are in the aggregate.
    We have 8 States that are facing more than a billion 
dollars in gap. New York's budget gap is about $5 billion. New 
Jersey's is $3 billion. California is $16 billion. So these are 
big numbers.
    States are required, as I think everyone here knows, to 
follow balanced-budget rules. And this of course often leads to 
broad-based spending cuts as the solution.
    In the 2001 recession many States cut spending on health 
care, child care and education, and these are cutbacks in 
essential services that women rely on for themselves and their 
children, and these are also jobs that women hold.
    I want to emphasize one point. We are not necessarily 
talking about Government jobs. If you think about it, a lot of 
the spending is subsidies for private sector jobs. State 
spending subsidizes hospitals, health care, nursing homes, 
child care. These are all jobs that are either in the private 
sector or they're provided by community organizations, or 
they're provided by faith-based organizations.
    When those cuts in State spending come down, those are 
services and jobs that are going to be lost. And these are jobs 
overwhelmingly held by women.
    One thing we know is that the current State budgets were 
adopted a year ago. There was no downturn a year ago, and so we 
are still seeing the kinds of employment and employment growth 
that reflects that. But the new State budgets go into effect in 
July of this year, in a couple of weeks, and I am predicting 
that by the end of the year you will begin to see declines in 
employment for women in health, human services, child care, and 
so on. So these are jobs that are going to affect women.
    I won't repeat what we've already heard. So many of the 
jobs so far have been lost in the more cyclical industries that 
employ men, especially construction where so many of the job 
losses have occurred.
    The only thing that is keeping employment from falling even 
more dramatically, the offsets, are the fact that health and 
education have continued to grow. Those are the only bright 
spots. And these are under real threat from the cuts in 
spending at the State level.
    So the question is: What can be done?
    I just want to emphasize that Congressional action is 
important. I won't repeat what Heidi has already said about the 
American Time Use Survey. But if we are going to understand 
what is happening and how people are coping, we have to have 
that survey.
    I think it is also important that Congress pursue policies 
that will reduce the likelihood that women are going to be 
fired and lose their jobs because of sickness or care 
responsibilities.
    If they lose a job in this environment, it will be very 
difficult to get a new job. As we know, the biggest increase in 
unemployment this month is in re-entrants and new entrants into 
the work force.
    So if you lose a job, if you drop out to take care of a 
sick child, when you come back it is going to be really hard to 
get another job.
    You also asked the last panel about the 1970s. You talked 
about the rising wages. That was not driven by Government 
policy. That was driven by the fact that we still had strong 
unions. That is gone. You are not going to see that kind of 
wage growth this time.
    And so you ask what it is that Congress can do. And of 
course what Congress can do is lessen both the blow of 
unemployment and also the blow of rising prices. As we get our 
exchange rate back where it needs to be so that our 
manufacturing sector can grow--is there anybody who really 
wants to see that stop happening--we want to see manufacturing 
improve again. But that fall in the exchange rate leads to 
rising prices. And the question is: In what way can Congress 
buffer this?
    Some steps seem pretty obvious. If people knew that they 
had access to quality health care regardless of whether they 
had a job, if they knew that they had access to quality child 
care regardless of whether they could afford to pay for it, if 
they knew that they could have partial wage replacement if they 
had to take off time to take care of a sick child or to recover 
from an illness of their own, all of these things which 
Congress has been considering in other contexts would really 
make a huge difference in the current economic environment.
    But there is one more thing that Congress can do: It can 
target fiscal relief to the States.
    In the last recession, Congress waited a little too long, 
perhaps because the relief didn't come until 2003 and the 
recession of course was in 2001. But there was some fiscal help 
to the States, and it made a real difference.
    The last time the fiscal relief was on the order of $20 
billion. A package like this makes a huge difference. As States 
exhaust their rainy day funds, the question is: Will they have 
to make cuts in services and jobs?
    And if there is some help from Congress in the form of a 
fiscal relief package for the States, I think that that can 
make a huge difference, as it did the last time.
    State budgets do not recover until well after the recession 
is over, so those job cuts that affect women continue long 
after the official recession is done. I think this would be 
very important. My time is up, so I will stop there. Thank you.
    [The prepared statement of Dr. Appelbaum appears in the 
Submissions for the Record on page 62.]
    Representative Hinchey. Well thank you very, very much. I 
appreciate it.
    Ms. Furchtgott-Roth, thank you for being with us, as well.

   STATEMENT OF DIANA FURCHTGOTT-ROTH, DIRECTOR, CENTER FOR 
      EMPLOYMENT POLICY, HUDSON INSTITUTE, WASHINGTON, DC 
                          HEADQUARTERS

    Ms. Furchtgott-Roth. Well thank you very much for giving me 
the opportunity to testify before you today. I would like to 
submit my written testimony for the record, because when I 
wrote my written testimony I didn't know that this morning's 
numbers would be what they are, and even though--because they 
only came out at 8:30 this morning.
    These numbers are very troubling. Even though unemployment 
by historical standards--men 20 and over, 4.9 percent; women 20 
and over, 4.8 percent--they are low by historical standards, 
but they are still higher than they were last month, and this 
is very troubling, and this is something that we need to turn 
our attention to.
    What is also troubling is that the growth industries where 
we saw growth in payroll jobs were the Government-dominated 
sectors. So there was an increase in 17,000 jobs in the 
Government sector, 54,000 in education and health. These are 
areas that are traditionally dominated by the Government.
    Professional and business services, which has generally 
shown increases month after month, declined by 39,000.
    So there is a great need for women and for men to keep this 
private-sector growth growing, and this is something that 
Congress really needs to turn its attention to.
    First of all, women pay taxes many times at higher rates 
than men do because they are the secondary earners. So they pay 
tax at the top rate of their families.
    Congress needs to pass legislation to keep the current 
levels of tax rates low. Taxes are scheduled to go up on the 
first of January 2011, and there are many businesses that are 
not making investments because they think the top rates are 
going to jump.
    My recent book, ``Overcoming Barriers to Entrepreneurship 
in the United States,'' talked about the importance of taxes. 
Small businesses file under the Individual Tax Rate. The top 
rate is now 35 percent. It is scheduled to go up to almost 40 
percent in 2011, and that discourages investment.
    The Estate Tax goes to zero 2010. Two thousand and ten is a 
great year to die. And then it jumps up in 2011, and that just 
does not make any sense.
    Oil prices and gas prices. Women drive. They do a large 
share of their driving. And these high gasoline prices and high 
oil prices are very harmful to all Americans, and particularly 
women.
    This is something we need to be doing something about. We 
talk about being energy independent. We could be drilling 
millions of barrels of oil a day. We do not have to be going to 
the Saudis asking them to increase production. We could be 
increasing production.
    We could be tapping ANWR. We could be doing off-shore 
drilling. We could be drilling in the Gulf of Mexico for oil 
and natural gas. You know, Cuba and China have a joint project. 
They are drilling 60 miles off the Coast of Florida, but we are 
not. So they are getting the oil, and we are not getting the 
oil, and that should not be allowed to happen.
    We should be building new refineries so that when there is 
a hurricane the gasoline prices do not spike. We need to allow 
waste storage in Yuka Mountain because no nuclear power plans 
are being built because there is nowhere to put the nuclear 
waste.
    We also need to be avoiding new costs and new programs that 
are currently being discussed. The Warner-Lieberman-Boxer bill, 
this cap-and-trade bill, would be one of the highest energy tax 
increases in history, and women drive; they pay taxes; they 
don't want this.
    The housing bailout, the Frank-Dodd bill, what it would do 
is it would raise costs, raise rates--borrowing rates on future 
borrowers, many of which are women, to pay for a few imprudent 
borrowers right now.
    The Ethanol Bill. We had the ethanol mandate in the Energy 
bill in December. This is driving up prices of food. Congress 
could stall, or repeal these energy mandates. Where 8 billion 
gallons of ethanol were used last year, it is up to 9 billion 
this year. It is going to go up to 36 billion in 2022. And all 
that is raising food prices, raising prices in grocery stores 
as corn drives out other kinds of food: eggs, butter.
    You know, women are especially conscious of this.
    Now some see the solution to higher prices as more mandates 
of higher unemployment conditions for women. Some see the 
solution as having more mandates on employers. So some people 
suggest mandated sick leave. Mandated paid family leave. Equal 
pay not for equal work as the law is, but for work of equal 
worth.
    So someone has to figure out what ``equal worth'' is. That 
is in the Paycheck Fairness Act and the Fair Pay Act. This not 
only puts more mandates on employers, discouraging them from 
hiring women, but it also moves us more toward the European 
system where women have higher unemployment rates, longer 
periods of unemployment, lower rates of working outside the 
home, fewer of them work outside the home than in America, and 
lower incomes.
    And, Mr. Chairman, I would like to argue that this is not 
where we want to go. And I have the details in my written 
testimony which, as I mentioned, I would very much like to 
submit for the record.
    Thank you very much for allowing me to testify today.
    Representative Hinchey. Well thank you very much. If there 
is anything else that you want to say, there is more time.
    Ms. Furchtgott-Roth. Oh, no, no. I was told to speak for 5 
minutes.
    [The prepared statement of Ms. Furchtgott-Roth appears in 
the Submissions for the Record on page 69.]
    Representative Hinchey. OK, But we have been much more 
flexible about it today than the Committee normally is because, 
after all, I am the only one up here.
    [Laughter.]
    Dr. Hartmann. We appreciate that very much, thank you.
    Representative Hinchey. Well I appreciate all of you. I 
appreciate the things that you have said. I think that you all 
make very good points about the issues that we have to deal 
with.
    One of the questions that comes to mind immediately, based 
upon some of the things that were said is about health care, 
health insurance. That would have a major impact, I would 
think, on the economy. I would just wonder if you would like to 
make any comments about that.
    If we were to be able to set up a system of national health 
insurance so that everybody had health insurance and could get 
decent health care?
    Dr. Appelbaum. It would be huge. It would be a tremendous 
benefit to our employers. Most of our manufacturing employers 
do in fact still provide health care, health insurance for 
their employees, which adds to the cost of every automobile, 
every ton of steel, and our ability to export.
    I mean, you have a car made in Canada and it doesn't 
include the health cost. You have a car made right across the 
border in Michigan and it does include health care costs. And 
for families I think one of the largest sources of insecurity, 
one of the main things that makes losing your jobs so traumatic 
is that when you lose your job you also lose your access to the 
health insurance system. You lose the health insurance that 
you've had. You lose access to your doctors. If you have 
children, you can imagine how traumatic that is.
    I think in terms of economic security, economic fairness, 
and competitiveness--on all those grounds--we have got to 
reform the health care system.
    Dr. Hartmann. I would say right now some employers are 
basically subsidizing other employers. Government is providing 
health insurance to all of its workers. So is a lot of 
manufacturing. So are a lot of other businesses. But there are 
many businesses that are not. And all of us are picking up the 
costs for that in tax dollars that pay for emergency medicine, 
and that kind of medicine is more expensive.
    I think if we had national health insurance we would have a 
more rational health care system, potentially lower costs 
because people would be able to get preventive care and not be 
forced to wait until they are very ill and go to emergency 
rooms which is very expensive.
    I think it would also probably improve employment prospects 
in the health care industry, which of course is dominated by 
women in most of the jobs. And I think since the American 
people want good health care, that is fairly obvious that we 
would like to have excellent health care, that is an 
expenditure I think that the American people want to make. And 
we can make that expenditure a lot more rational if we have a 
national health care system rather than the hodgepodge that we 
have today.
    Ms. Furchtgott-Roth. Right. It is an extremely important 
problem. In my book, ``Overcoming Barriers to Entrepreneurship 
in The United States,'' I talk about how health care really is 
a problem for entrepreneurs and we really need to do something 
about it.
    Now we do not say, ``I am losing my job,'' or ``I am 
changing my job, I am going to lose my home insurance, I am 
going to lose my auto insurance,'' no, it is the health 
insurance. And that is because we do not have a vibrant private 
sector market.
    What we need to do is allow insurance companies to offer 
plans across State lines so we can offer national plans, so we 
do not have people in one state just being limited to small 
risk pools.
    That way we need to increase competition. It works in other 
areas of insurance, and there is no reason it should not work 
in this.
    Now if it would work better for the Government to take over 
and have universal health insurance and just provide it, why 
wouldn't it work to have universal home insurance, or universal 
car insurance? Why wouldn't the Government take over all of 
that, it would really be superior?
    So I would say that we need to basically expand and allow 
individuals, as the President proposed, $7000 of just credits 
to buy whatever health insurance program they have, at the same 
time as liberalizing all the rules that prevent health 
insurance companies from offering it.
    And then people would be able to purchase plans for 
themselves, rather than having the Government set a particular 
plan. And the President did propose that last year, and it 
wasn't met with a lot of enthusiasm, but I think the people 
should take another close look at it.
    Dr. Appelbaum. Can I just add that health expenditure in 
this country is now about 15 percent of GDP, and this is about 
double what it is in other industrialized countries. And yet we 
don't have anything like that in terms of life expectancy or 
child mortality to show that we are getting something for all 
of this extra money that we're spending. And a big chunk of it, 
I think, is because of the inefficiency that is provided by the 
private insurance system that we have in this country.
    So much of our health dollars goes for all those 
gatekeepers who keep you from seeing the doctor that you need 
to see. You know, I think no fault is really the way we want to 
go with respect to health insurance.
    We would not have to worry about doctors' liability 
insurance if a person who was injured in any way, whether it is 
an auto accident, or through some mishap in a hospital, had 
access to whatever health care they needed, this whole question 
of liability insurance for doctors would disappear.
    We have health care costs that other countries simply do 
not have that reduce our ability to provide insurance. We have 
a huge number of people, including children, who do not have 
access to health insurance and do not have regular health care 
despite the fact that we spend such a large proportion of our 
GDP on health.
    Dr. Hartmann. Another area where we might want to introduce 
some competition is the drug companies. They are allowed to 
have very long, lengthy years of patents, and they spend a lot 
of money marketing a slightly different drug here, and a 
slightly different drug there. A lot of money is wasted on that 
kind of competitive marketing, and also lobbying, and 
advertising of all kinds. One economist has estimated that 
about half of that 15 percent--I believe Huey Rhinehart from 
Princeton. So I don't really believe that Ms. Furchtgott-Roth's 
recommendation of greater competition is going to work in the 
health care market overall.
    It does require some Government action. Government action 
does affect things like the patent laws and definitely can 
affect people's purchasing power. The $7000 tax credit that the 
President proposes is not going to help an awful lot of people 
buy health insurance.
    Ms. Furchtgott-Roth. Well I think a $7,000-policy is a 
lot--there are a lot of people, 47 million people without 
health insurance right now, many of them would welcome $7000 to 
be able to purchase health insurance.
    A couple more cost-cutting ideas. One of the main ones, and 
there's been a lot of work on this, is electronic record 
keeping. We waste a lot of time with paper prescriptions, paper 
records. You go into a doctor's office and you see files of 
paper. You change doctors, you have to fill out a new folder of 
paper. And if we were to go electronic, that could save 
billions of dollars a year. And also a lot of unnecessary 
deaths caused by medical error.
    I would also like to say as an emigrant coming from 
England, which has a pretty good reputation for its national 
health service, how much superior medical care one can get here 
in the United States.
    We do pay more for it, but we get a lot more for that also. 
I took my grandmother when she had a stroke to a hospital and 
it was a Friday afternoon. I took her on a Friday afternoon. 
She had a stroke. I took her to the hospital and I said: When 
is the doctor--she was checked in. I said, When is the doctor 
going to come?
    They said, Oh, the doctor comes on Monday.
    I said, Isn't it possible to get a doctor over the weekend?
    Oh, no, the doctors don't come over the weekend.
    I said, well, you know, coming from the United States, 
could I pay a doctor to see her?
    They said, Well, you wouldn't want to trust anyone who you 
would pay.
    So, no, that wasn't an option. And they said, Besides, 
someone's had a stroke, seeing a doctor right away doesn't 
matter very much.
    So there is a kind of rationing that goes on. And that is 
why a lot of people come to the United States for our level of 
medical care. We have a lot more innovation in terms of 
pharmaceuticals, waiting times are shorter, and there's a lot 
of advantages to just keeping the kind of system that we have 
now.
    Representative Hinchey. Well it is an interesting debate 
here, but it is a very important subject. I think that one of 
things you were saying about the complexity of the paperwork, 
part of that at least, or maybe most of it comes about as a 
result of insurance companies that are making it much more 
complex and difficult for people to actually get the health 
care they need and get the payments for the health care.
    So I know that that's the kind of experience that a lot of 
people have had. But this is an interesting discussion. As you 
were pointing out, I mean we spend more for health care in the 
United States than any other country, but nevertheless we do 
not have the best health care.
    We have a number of examples of how our health care is of 
lower quality for a lot of people than it is for many other 
people in other countries. You know, we have more deaths of 
infants, and a lot of other issues that really make it more 
difficult for us, in spite of the fact that we spend more than 
any other country does for health care.
    But it is also interesting how this situation is evolving. 
I can remember back several decades ago when the American 
Medical Association was adamantly opposed to national health 
insurance. Now they are firmly in support of it.
    And as I think all three of you were observing, many 
industries and employers who had been opposed to it are now for 
it because they see how much it is costing them and how much 
better it would be for them and for our economy if we did have 
a system of national health insurance.
    Dr. Appelbaum. I would just add, a system of national 
health insurance is not the same thing as the kind of national 
health system that they have in the United Kingdom.
    The German Model, for example, is very similar to the 
United States. If you were in Germany you really would not be 
able to see the difference. You would have an insurance 
company. You would have hospitals to go to. There would be 
doctors and hospitals that were in your insurance plan, and so 
on, but Germany nevertheless has universal coverage.
    So we would need to explore the many ways of doing it. And 
I just can't help, since we've just had one example of an N of 
1, and as an economist I hate N of 1 examples, but I personally 
have had two horrible experiences in the past year myself.
    I developed a terrible headache. My doctor said, get 
yourself immediately to a hospital. You may be having a 
sentinel bleed, which is like a warning that you're going to 
have a stroke, and I got to one of the very best hospitals in 
Philadelphia. I was visiting in Philadelphia at the time. And 
it was in the evening and they could not get a neurologist--
they wanted to do a spinal tap, but I've had back surgery and 
so they couldn't do the spinal tap that they needed to do. They 
needed, I'm sorry, an X-ray type person, a radiologist, to come 
in so that they could look with a fluoroscope and see exactly 
where to put the needle, and they could not get a radiologist 
to come in.
    I didn't see a neurologist until the next morning. If I had 
had a stroke that night, right, where would we be today? So we 
could have N of 1 examples all over the place. I have other 
stories, but I'll save them.
    Only people who have health insurance and have not had to 
use it think we have great health insurance in this country.
    Representative Hinchey. Those are very good points, and I 
am awfully glad that you are here.
    Dr. Appelbaum. Me, too.
    [Laughter.]
    Representative Hinchey. Earlier, you were talking about the 
difference between women in the European Union and working 
circumstances and women in the United States. Could you touch 
on that a little bit more?
    Dr. Hartmann. Yes. I have a table\4\ in the written 
testimony that looks at women between the ages of 25 to 54, and 
one of the things this shows is that between 1994 and 2006 the 
United States was one of only two countries that had an actual 
decline in women's labor force participation. And the United 
States is the sixth lowest.
---------------------------------------------------------------------------
    \4\ See ``Table 3. U.S. Women's labor Force Participation Rate Lags 
Many Other OCEO Countries: Prime-Age Women (25 to 54)'' in the 
Submissions for the Record on page 57.
---------------------------------------------------------------------------
    In other words, of all these 25 countries, other advanced 
countries like us--you know, England, Germany, et cetera--the 
United States is sixth from the bottom in the labor force 
participation rate of women, and we had a decline in the last 
12 years, whereas every other country had an increase.
    Diana's data is different. I am not exactly sure why, but 
this is from the OECD. Then there is another set of data from 
the OECD that looks at women with a college education. And here 
the United States is at the very bottom compared to the other 
countries.
    The top rate is 90 percent or more in Sweden. Also high in 
Denmark and the United Kingdom. The United States is at the 
bottom at just under 80 percent.
    Now 80 percent labor force participation is good, but for 
college educated you would like it to be higher. I would love 
to see it be 90 percent, as in some of these other countries.
    Why? Because we are not using educated women as well as we 
could. We want to be a productive country. We want to be 
competitive, and we are leaving some of our talent out of the 
labor market. And these other countries such as Sweden have 
excellent systems of subsidized child care, paid family leave. 
These are things we are moving toward in this country, but we 
are not there yet.
    I think if we want to make the best use of all of our 
talent, you know I always say the next Einstein could be a 
Latina girl from a barrio. You know, we need to have equal 
opportunity, and we need to have things that enable women to do 
this work.
    I am sure Diana will argue that we don't need any 
Government involvement; that it's just women deciding to stay 
home. Well you know, women respond to market incentives like 
everyone else. And if I am a young woman and I am looking at my 
salary and I am seeing that my husband's salary is more than 
mine, and we want to have children, and someone maybe is going 
to work part-time, or stay home a little while with the kids, 
that is more likely to be the lower earner.
    So the market is not rewarding women as well as it does 
men, and I think women do react to those signals sometimes in 
making decisions about family care. So that would be one of the 
reasons to try to equalize the family care burden between men 
and women, and to equalize pay rates in the labor market, so to 
really kind of get us on the road toward providing more of the 
social supports that we see in Europe.
    Ms. Furchtgott-Roth. Well the data I got--and there is no 
point in arguing about data--was from the Bureau of Labor 
Statistics. Our Labor Force participation rates overall, not 
looking at a particular segment of our college-educated women, 
are higher than Australia, Japan, France, Germany, Italy, the 
Netherlands, so those are countries that have these mandated 
Government-subsidized child-care policies. They also have 
mandated family leave.
    But I think that Dr. Hartmann's expression, ``we don't use 
our women as well as we could,'' which she also said in her 
testimony, it's not a question of ``using'' our women; it is a 
question of choices. What do women want?
    The data show that labor force participation rates for 
women about 25 to 45 of child-bearing age peaked in 1999 when 
economic growth was very strong. So it is not as though they 
dropped out because of a recession. It is not like it was 2002 
and they couldn't find jobs and so they dropped out.
    They are making a choice because of higher incomes because 
they want to spend more time with their children and less time 
making money.
    On the other hand, women 55 and over, their labor force 
participation has continued to increase. So they are at an all-
time high. I would just argue that there is a lot, in the 
1970s, the 1980s, it was fashionable to say, well, you can just 
leave your kids at home, they'll be fine in daycare, they'll be 
fine in after-school care, but I think a lot of mothers just 
want to look after their kids themselves. They think they give 
them better care.
    And so a smaller percentage, a small percentage, decided 
that they wanted to stay home maybe for a small period of time, 
take time out of the work force, and that's why we have the 
decline in labor force participation rates of women.
    And I would not say it is a problem. I do not say we have 
to use them better. They need to make their own choices.
    Dr. Appelbaum. However, their choices are very much 
constrained by their opportunities. One of the things that we 
know is that what women would really like to do, or at least 
many women would like to do when their children are young, is 
to combine care of their child with a job that is less than 
full-time hours. But the jobs in this country that are less 
than full-time hours are not jobs for professionals. They're 
not jobs for managers. They are largely low-wage jobs.
    So this is a choice that many women find impossible to 
make.
    Dr. Hartmann. I would also add that it is a problem for the 
Nation if well-educated people, or any people with talent and 
skill, are not using it in a competitive economy, an 
international global economy. It is very important.
    We subsidize higher education. We subsidize public 
education at the K through 12 levels, and we want our 
investment to pay off.
    If we had a bunch of men with Ph.D.s sitting around doing 
nothing, or driving taxicabs, we would think that was a bad 
investment. I personally think that we should be encouraging 
women to move into the labor market in greater numbers, and to 
advance there.
    The way we can encourage that is to remove barriers. We do 
not have a good example of what women's free choice would be if 
the current barriers didn't exist. At the point in time when 
there are no barriers, I might agree with Diana that we could 
look and see what parents do, what fathers do and what moms do, 
when there are no barriers for anyone, but we are really not 
there yet.
    And we pretty much know, all the social science research 
evidence points to the fact that there are substantial barriers 
remaining for women in the labor market that are artificial 
barriers and that do need to be removed.
    Representative Hinchey. Well I think you're right.
    Ms. Furchtgott-Roth. Well France----
    Representative Hinchey. I think one of the ways in which we 
can advance our economy and really advance the benefits of our 
country would be to involve women more in the job market and in 
the general economic circumstances of the country. That would 
be beneficial to them, obviously, but it would beneficial I 
everybody across the board in the country.
    But excuse me.
    Ms. Furchtgott-Roth. Well women get about 60 percent of BAs 
and MA degrees in the United States, so women are heavily into 
the educational system. They are profiting from it. But it 
would be a little bit difficult to say, OK, we are only going 
to take you at university if you say you're going to work full-
time afterwards. It wouldn't really be a choice.
    And also saying it's a bad investment, people are not just 
in the work force or out permanently. They go in and out 
depending. About 25 percent of women historically have always 
worked part-time, and there are jobs in many kinds of different 
sectors of the economy.
    You can see doctors, for example, female doctors working 2 
or 3 days a week in a group practice. This is also possible for 
lawyers. So these jobs are available if people want them.
    Representative Hinchey. There was some discussion about the 
decline in employment by the end of the year. Do you want to 
say a little bit more about that?
    Dr. Appelbaum. Well I mean as you know employment has been 
declining. The only points of strength are in education, health 
care, social services, child care, and that's all--those are 
overwhelmingly jobs that are either publicly provided or 
publicly--a big part of them publicly subsidized even if they 
are in the private sector.
    And these budget gaps that the States are facing are going 
to lead, in my view, to cutbacks in those services and to 
declines in employment. I would just close this up, but I have 
some numbers, just to give you an idea.
    New Jersey has proposed $1.67 billion in spending cuts, and 
the major cuts are in hospitals--some of which are going to 
close--health care, local Government, community services, and 
after-school programs.
    Well when those programs are cut, we know whose jobs they 
are. Those are women's jobs that we are talking about.
    New York faces $2.25 billion in spending cuts with large 
reductions planned in spending on hospitals and health care. In 
addition to that, we are going to reduce nursing home 
reimbursements, cuts for economic development, cuts for 
neighborhood and rural programs. They are zeroing out training 
programs for displaced homemakers, and the State is going to 
cut back its share of spending on things like public assistance 
benefits and youth detention centers.
    California proposes cuts in school aid. Twenty thousand 
teachers in California have already received pink slips. Don't 
bother to come back in September.
    Arizona is going to eliminate child care subsidies.
    Florida is freezing reimbursements to nursing homes and 
eliminating hospice care for thousands of terminally ill 
Medicaid patients.
    So the service cuts are going to really impact families, 
but the job cuts are going to impact women. And this is all 
going to begin this July, and you are just going to see it 
accelerating.
    Some of the States have rainy day funds, so they are not 
going to have such deep cuts. So if you take a look at a State 
like New York, you are facing a $5 billion deficit, but you are 
cutting only $2.25 billion of spending because you have a rainy 
day fund.
    But what is going to happen next year when that rainy day 
fund is exhausted? So what we saw in 2001 in that recession, 
and what I think we are going to see again, is that unless the 
Congress acts and provides some fiscal relief to the States, we 
are going to see these kinds of cutbacks in this year, from 
2008 to 2009, and again 2009 to 2010.
    By that time I am hoping that the other part, the private 
sector jobs, will be recovering so you may not see it as a 
recession any longer, but nevertheless women's jobs are going 
to be negatively affected.
    My biggest concern for the economy comes from the housing 
sector. I personally do not believe that the economy will get 
back on its feet until we hit bottom in terms of the fall in 
home prices and the backlog of sales and so on, and I don't see 
that happening any time soon.
    I don't think we are in a situation like we were in the 
1970s. I am not predicting depression-level unemployment rates, 
but we have a very long period of very slow growth, or negative 
growth until the economy picks up again. We need to be thinking 
about that.
    Dr. Hartmann. You know, I'd like to----
    Representative Hinchey. Well I think what you're saying is 
absolutely right. I am deeply worried about it, too. I think 
that we are likely to be involved in a long period here of a 
very staggering economy.
    Dr. Appelbaum. That's my view.
    Representative Hinchey. Whether or not, how deep it's going 
to go----
    Dr. Appelbaum. That's right.
    Mr.
    Representative Hinchey [continuing]. Is still a big 
question.
    Dr. Appelbaum. Yes.
    Representative Hinchey. But it looks like we are going to 
have a lot of difficult experiences over an extended period of 
time.
    Dr. Appelbaum. That's my view.
    Representative Hinchey. It is something, I would agree, 
that we are going to have to try to deal with.
    Dr. Hartmann. I think that is right. And I think the 
housing crisis is complicated, but I do want to take issue with 
one thing Ms. Furchtgott-Roth said, which was that it is just a 
bunch, a few individuals who made very poor decisions.
    It is a little bit like--you know, I can't remember the 
name of the car where the gas tank blew up when it was in a 
rear-end accident--it was not a good product that was on the 
market, an unsafe product.
    We have had a lot of unsafe products on the market in the 
financial services industry. The industry as a whole did not 
look at the unscrupulous products that members of their 
industry were dishing out. They did not look at the fact that 
the people who were getting commissions for selling higher 
rates to people were falsifying people's records, and they 
securitized it anyway and said, oh, look, great, big new 
securities, buy them everybody, buy them everybody. No risk 
because all the different mortgages are all pooled together in 
these big new securities.
    So it is very hard for regulators to keep up with the 
innovations in the financial services market. They are very 
clever people out there, and they dream up these things, and 
then they turn out to increase--you know, increase the rate at 
which these poor products were sold because they gave sales 
people incentives to sell these inferior products.
    So in one of the charts I have it shows that even African 
American women, for example, with above-average income still 
had a disproportionate amount of subprime loans that they were 
holding. They qualified for better credit, but sales people 
were getting commissions to sell them a poor loan vehicle.
    Yes, quite possibly if they had read the 60 pages they were 
presented with at the closing, maybe they would have noticed 
it, but I know that I have signed closing papers and I haven't 
read every page, because if I had I would have been there 5 
hours. And you got only a few minutes, and you sign the thing 
and you walk out and you assume that the people that are 
professionals are treating you well and not doing you dirt.
    And I think these people unscrupulously targeted these 
communities, targeted disadvantaged people that had good credit 
and sold them very poor products. And I think that simply 
requires more regulation.
    Ms. Furchtgott-Roth. Right. I mean, it is a great problem 
that all these mortgage-backed securities rated AAA with very 
high ratings turned out to have far lower values. I mean, it is 
a big problem.
    Going back to your question about employment and declines 
in employment, actually men are being harder hit by the current 
downturns. They are heavily represented in manufacturing and 
construction. Those are the two sectors that have been hurting 
month after month.
    Services almost up to now have been keeping its head above 
water, and it is still in positive territory, and the service 
jobs are dominated by women. Until now. This month was an 
exception.
    But you find that women have--the unemployment rates don't 
go so low when there is a downturn, so right now the 
unemployment rate for women 20 and over is 4.8, and it is 
higher for men, 4.9. Last month it was 4.3 for women. It was 
higher for men, 4.6. And it is the same with men and women 16 
and over: 5.6 for men, and 5.3 for women.
    You also find that women do not gain as many jobs when it 
is an upturn. So there is less variation in women's employment. 
But it still means that we need to do something about the 
fundamental factors in the U.S. economy that go to job creation 
and private-sector job creation.
    I would say fixing the specter of tax rates that are going 
to rise by 5 percentage points on small businesses in 2011 I 
think should be a very high priority.
    Representative Hinchey. Well we are just about out of time. 
I just wanted to raise one last question with regard to the 
debt that people are experiencing.
    There is a dramatic increase in debt above and beyond, 
mortgage debt. A lot of that has to do with credit card debt.
    One of the things that we are beginning to consider here is 
the idea that there should be a cap on interest rates for 
credit card debt. I would be interested to hear what you might 
think about that.
    Dr. Hartmann. Well I would be very much in favor of that. I 
actually remember when we had Usury laws. That's how old I am. 
I grew up in New Jersey and I believe we had a cap of something 
like 8 or 9 percent in New Jersey at the time.
    Now it did mean that, you know, what is true is that some 
people who are high risk will perhaps not be able to borrow if 
the cap is set very low, but I think the kinds of caps that we 
have been enacting lately are honestly still way too high. I 
believe the Congress recently enacted something like a 26 
percent rate for servicemen at PayDay Lending firms.
    I mean, let's get real. How about something like 12 
percent, or 15 percent? This is pretty absurd. You know, it is 
unclear why it has been allowed to fester. I guess again Ms. 
Furchtgott-Roth would prefer the free market, blah, blah, blah. 
I would prefer us to encourage things like credit unions which 
do try to take care of the people with lower incomes and 
educate them and serve them well.
    I think we do need a lot of financial education in the 
country, but the capitalist economic system is great. It is 
very dynamic. It has created a fabulous standard of living 
overall. But I feel it works better when we kind of regulate 
that torrent of growth and we kind of moderate it and channel 
it and really help it serve the people well.
    Representative Hinchey. Thank you.
    Dr. Appelbaum. I would just agree with Heidi.
    Representative Hinchey. OK. Well thank you very much----
    Ms. Furchtgott-Roth. Oh----
    Representative Hinchey. Yes, please.
    Ms. Furchtgott-Roth. Well I would say that caps on interest 
rates, I think that you all in Congress just have so much to do 
in terms of what we are going to do about the energy situation, 
the tax situation, different kinds of things like that, that 
worrying about what is the correct interest rate at what point 
in time I think is a lot to figure out.
    You have to keep thinking about adjusting it if there is 
inflation, or lowering it. And then as Heidi mentioned, some 
people would not be able to borrow. So you have to figure out 
how many people, and what kinds of credit you don't want to 
have borrow money. And that would stop them from progressing.
    In other words, progressing in the labor force, perhaps 
borrowing money to start a small business. So I would say that 
this is something that Congress should not be addressing at the 
current time.
    Representative Hinchey. Well thank you very much.
    Dr. Hartmann. Thank you.
    Representative Hinchey. Ladies, I very much appreciate your 
being here, and all of the things you have had to say. It was 
very, very interesting and very informative.
    Dr. Appelbaum. Thank you very much.
    Dr. Hartmann. Thank you.
    Ms. Furchtgott-Roth. Thank you very much for inviting me to 
testify.
    Representative Hinchey. Thank you. The hearing is now 
adjourned.
    [Whereupon, at 11:23 a.m., Friday, June 6, 2008, the 
hearing was adjourned.]
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