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


                                                        S. Hrg. 110-663
 
                  THE EMPLOYMENT SITUATION: JULY 2008 

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

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             AUGUST 1, 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., Pennslyvania   Elijah E. Cummings, Maryland
Jim Webb, Virginia                   Lloyd Doggett, Texas
Sam Brownback, Kansas                Jim Saxton, New Jersey, Ranking 
John E. 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
                      Nan Gibson, Deputy Director
            Christopher J. Frenze, Republican Staff Director



















                            C O N T E N T S

                              ----------                              

                      Opening Statement of Members

                                                                   Page
Statement of Hon. Carolyn B. Maloney, Vice Chair, a U.S. 
  Representative from New York...................................     1

                                Witness

Statement of Dr. Keith Hall, Commissioner, Bureau of Labor 
  Statics; and Dr. John Greenlees, Research Economist, Office of 
  Prices and Living Conditions, Bureau of Labor, Statistics, U.S. 
  Department of Labor............................................     3

                       Submissions for the Record

Prepared statement of Senator Charles E. Schumer.................    14
Prepared statement of Representative Carolyn B. Maloney..........    16
Chart entitled, ``Monthly Change in Nonfarm Payrolls''...........    18
Chart entitled, ``Annual Change in Real Earnings''...............    19
Prepared statement of Dr. Keith Hall, Commissioner, Bureau of 
  Labor Statistics, together with Press Release No. 08-1049......    20
Report entitled, ``Equality in Job Loss: Women Are Increasingly 
  Vulnerable to Layoffs During Recessions''......................    22
Article from New York Times entitled, ``More Arrows Seen Pointing 
  to a Recession''...............................................    33


                  THE EMPLOYMENT SITUATION: JULY 2008

                              ----------                              


                         FRIDAY, AUGUST 1, 2008

             Congress of the United States,
                          Joint Economic Committee,
                                                    Washington, DC.
    The committee met at 9:30 a.m. in Room 562 of the Dirksen 
Senate Office Building, the Honorable Vice Chair Carolyn B. 
Maloney, presiding.
    Senators present: Brownback and Saxton.
    Representatives present: Maloney.
    Staff present: Christina Baumgardner, Ted Boll, Heather 
Boushey, Tanya Doriss, Chris Frenze, Nan Gibson, Gretta 
Goodwin, Colleen Healy, Bob Keleher, Tyler Kurtz, Annabelle 
Tamerjan, and Jeff Wrase.

  OPENING STATEMENT OF HON. CAROLYN B. MALONEY, VICE CHAIR, A 
               U.S. REPRESENTATIVE FROM NEW YORK

    Vice Chair Maloney. I would like to call the meeting to 
order and welcome all of the gentlemen who will be testifying 
today. We will be having a vote, so I will have to adhere to a 
very tight schedule.
    Good morning, and I would like to thank Commissioner Hall 
for testifying today on the July employment situation. In July 
the economy shed jobs for the seventh straight month for a 
total of 463,000 jobs lost so far in 2008, and there we see it.
    The unemployment rate rose two-tenths of a percentage point 
in July to 5.7 percent, a full percentage point higher than a 
year ago. With these grim statistics, it would be hard not to 
conclude that the labor market is in a downturn.
    Congress is already at work on a second stimulus package 
which Speaker Pelosi has announced we will take up next month.
    We continue to see mounting evidence that a significant 
downturn in the economy may be underway. Yesterday we learned 
that the U.S. economy grew by a paltry 1.9 percent in the 
second quarter of 2008--well below expectations--and that the 
fourth quarter growth in 2007 was revised to show negative 
growth of 0.2 percent.
    American families are paring back their spending because 
their real wages are as low now as they were in October 2001, 
which was when we were in a recession. The chart shows this.
    [Chart entitled, ``Monthly Change in Nonfarm Payrolls'' 
appears in the Submissions for the Record on page 18.]
    [Chart entitled, ``Annual Change in Real Earnings'' appears 
in the Submissions for the Record on page 19.]
    Gasoline and food prices are skyrocketing. They have 
severely weakened the buying power of the American consumer. 
The weak recovery of 2000 has left families especially 
vulnerable to an economic downturn.
    Real family income is about $1000 lower now than it was in 
2000, and families have accumulated little in the way of 
savings. Declining home prices means that many families will be 
unable to access home equity lines of credit to make ends meet 
as they did in prior recessions.
    For decades families could rely on women's earnings to 
boost household income during a recession, but wives and 
mothers may not be able to shelter their families from the 
economic storm that is hitting now.
    Up until the 2000s, during recessions women typically lost 
very few jobs on net. However, all this changed with the 
recession of 2001 when women lost jobs on par with men in the 
industries that were hardest hit.
    We for decades have worked for equal pay and equal wages 
and equal jobs, but where we have achieved equality is in job 
loss.
    The 2000s recovery was also unique as it was the first 
recovery in the post-World War II period during which women's 
employment rates did not return to their pre-recession peak.
    This is a trend to watch because the only families that are 
getting ahead are those with a working wife. Families without a 
working wife have real incomes today that are nearly identical 
to what they were over 35 years ago.
    Congress has already taken numerous steps to help buffer 
families from the effects of this economic downturn. Most 
families have received their recovery rebates, and the 
President has just signed into law our Housing Package aimed at 
stemming the tide of foreclosures.
    But there is more to do to get the economy back on track. 
Over half of the states are projecting budget shortfalls for 
fiscal year 2009, and this will lead not only to cutbacks in 
necessary services but likely higher unemployment for women who 
disproportionately work in social service agencies, in 
education, and in state government.
    So far this year private employers have shed 651,000 jobs 
while government has added 188,000 jobs, but government will 
not likely be able to continue to act as an engine of job 
growth once budgets are cut.
    We need a second stimulus package that includes fiscal aid 
to the states and funds for infrastructure investment to give 
our sagging economy a much-needed boost and to promote job 
creation.
    I hope the President will work with us in Congress to get 
Americans back to work as quickly as possible. Chairman Schumer 
and I look forward to the continued focus on labor market 
conditions by this Committee, along with our Ranking Members.
    [The prepared statement of Senator Charles E. Schumer 
appears in the Submissions for the Record on page 14.]
    [The prepared statement of Representative Maloney appears 
in the Submissions for the Record on page 16.]
    Vice Chair Maloney. I now will recognize Commissioner Hall.

  STATEMENT OF DR. KEITH HALL, COMMISSIONER, BUREAU OF LABOR 
STATISTICS, U.S. DEPARTMENT OF LABOR, ACCOMPANIED BY: MR. PHIL 
RONES, DEPUTY COMMISSIONER, BUREAU OF LABOR STATISTICS; AND DR. 
JOHN GREENLEES, RESEARCH ECONOMIST, OFFICE OF PRICES AND LIVING 
  CONDITIONS, BUREAU OF LABOR. STATISTICS, U.S. DEPARTMENT OF 
                             LABOR

    Commissioner Hall. Thank you, Madam Chair, Members of the 
Committee:
    I appreciate the opportunity to comment on the employment 
and unemployment data that we released this morning.
    In July, non-farm payroll employment continued to trend 
down, dropping 51,000. The unemployment rate rose from 5.5 to 
5.7 percent. Thus far in 2008, payroll employment has fallen by 
463,000, or an average of 66,000 per month.
    In July job losses continued in several industries, 
including construction, manufacturing, and employment services, 
particularly in temporary help. Health care and mining 
continued to add jobs.
    Average hourly earnings for production and nonsupervisory 
workers in the private sector rose by 6 cents, or 0.3 percent, 
in July. Over the past 12 months, average hourly earnings rose 
by 3.4 percent. From June 2007 to June 2008, the Consumer Price 
Index for Urban Wage Earners and Clerical Workers rose by 5.4 
percent.
    Turning now to some of our measures from the Household 
Survey, both the number of unemployed persons at 8.8 million 
and the unemployment rate at 5.7 percent, increased in July.
    Over the past 3 months there has been a notable increase in 
unemployment of youth aged 16 to 24. Each summer, millions of 
young people move into the labor market. This year the 
summertime influx of youth into the labor market was about the 
same as last year. However, fewer young people were able to 
find jobs.
    For the three-month period May through July, the 
unemployment rate for 16 to 19 year olds averaged 19 percent, 
compared with an average of 15.7 percent for those same three 
months last year.
    Similarly, the May through July average jobless rate for 20 
to 24 year olds was 10.2 percent this year compared with 8.0 
percent over the same period last year.
    Not all of the increase in unemployment in the last 3 
months was among youth since joblessness also rose also among 
those 25 years and older.
    The employment-to-population ratio for all persons 16 years 
and older was unchanged in July at 62.4 percent, but has 
declined from 63.0 percent a year earlier.
    Among the employed, the number of part-time workers who 
would prefer to work full time continued to rise in July. The 
number of such workers has increased by 1.4 million over the 
past 12 months to 5.7 million.
    To summarize July's labor market developments, payroll 
employment continued to trend down and the unemployment rate 
rose to 5.7 percent.
    My colleagues and I now would be glad to answer your 
questions.
    [The prepared statement of Commissioner Hall appears in the 
Submissions for the Record on page 20.]
    Vice Chair Maloney. Thank you.
    Well first of all I would like to get your comment on an 
article today in The New York Times. The headline says, ``More 
Arrows Seen Pointing To A Recession.''
    Would you agree with this headline?
    Commissioner Hall. I would say that it is generally 
accepted that a recession is a significant decline in economic 
activity spread across the economy that lasts for more than a 
few months.
    There is no established rule with respect to say the number 
of jobs lost, or the number of months of job lost, but it is 
true that in the last two recessions the National Bureau of 
Economic Research waited for 8 months of job loss before they 
declared a recession.
    I would like to add though that the severity of a labor 
market downturn is also an important determination in a 
recession, and in the last two recessions the job loss was 
around 1.5 million jobs; and over this last 7 months we have 
lost about a third of that. So it is not as severe.
    Vice Chair Maloney. Yet we have shed jobs for the seventh 
straight month.
    Commissioner Hall. That is correct.
    Vice Chair Maloney. And if we continue to shed jobs into 
the next month, would you then claim it is a recession as this 
headline says we are pointed towards?
    Commissioner Hall. You know, I don't know what--obviously I 
don't know what--the labor market is going to do in the future. 
It is important that we have had job loss for so many months in 
a row. It is important that it has not been as severe. It is 
still job loss, however.
    There is a good reason for sort of labeling something a 
recession as opposed to a downturn. The last two recessions, 
for example, lasted only about 8 months. The last recession in 
particular lasted about 8 months, but it took the labor market 
3.5 years to recover. It is a pretty significant thing when you 
have a recession because it takes so long for the labor market 
to recover.
    Vice Chair Maloney. Can you tell us what the big picture is 
in employment this month? Did the economy create jobs? And how 
does this compare to trends in recent jobs?
    We saw from today's report that since December 2007 private 
employers have shed 651,000 jobs, but government has added 
188,000 jobs. How many jobs were lost in the private sector 
last month, and did the government do any hiring last month?
    Commissioner Hall. Sure. The unemployment rate increased 
from 5.5 percent to 5.7 percent in July. To put that in a 
slightly broader perspective, over the last three months the 
unemployment rate has averaged 5.6 percent. In the prior three 
months it averaged 4.9 percent. So this is a significant trend.
    The job loss at 51,000 jobs this month brings the total 
decline this year so far to 463,000 jobs, or 66,000 jobs per 
year.
    The weakness remains in construction, manufacturing, and 
temporary help services. Wholesale and retail trades have 
posted steady losses. And after many months of declines, losses 
in financial activities have slowed a little bit.
    But we have had gains in education, health services, 
government, and mining thus far in 2008.
    Private payroll jobs this month declined by 76,000. That is 
compared to an average so far this year of a loss of 93,000.
    Vice Chair Maloney. Okay, did the government do any hiring 
last month that you're aware of?
    Commissioner Hall. Yes. The government added about 25,000 
jobs, and that job gain was centered in local government and 
state government hiring.
    Vice Chair Maloney. Okay, given the growing constraints on 
state and local governments where we are getting reports that 
they will be facing deficits, what do you think will happen to 
government employment in the months to come? And what will this 
mean for the overall labor market?
    Commissioner Hall. Obviously if state governments continue 
to have financial troubles and they do start to shed jobs, this 
is going to add to the labor market difficulties.
    Vice Chair Maloney. I would like to go back to the 
statement earlier that this is the seventh month of consecutive 
job loss and ask you specifically: Do consecutive months of job 
losses mean that the economy is in a recession?
    Commissioner Hall. It certainly means that economic growth 
is not strong enough to support job growth. I hesitate to say 
just that alone means you are in a recession, because other 
things are important in that and I think it is sort of 
important--at least from my view--that sort of a declaration of 
a recession remains with the private sector at the National 
Bureau of Economic Research, since they are a private group.
    Vice Chair Maloney. Well how many months of job losses do 
we need to see before we can say that we are in a recession?
    Commissioner Hall. The best I can say is that the last two 
recessions we had eight months of job loss before the recession 
was declared.
    Vice Chair Maloney. And what are some of the other 
indicators that are part of determining a recession on top of 
eight consecutive months of job loss?
    Commissioner Hall. The NBER cites a number of things. I 
think the labor market performance is extremely important. It 
would be the job loss and the magnitude of job loss. They also 
cite things like industrial production as being important, real 
income growth as being important.
    Vice Chair Maloney. How much of a factor do you think is 
the housing crisis playing into the economy that we are 
confronting with seven months of consecutive job loss, and the 
loss of values in homes so that resident constituents cannot 
refinance equity lines now because of the loss of value of 
their homes?
    Commissioner Hall. Well it is true that a lot of the job 
loss is centered in construction and construction-related 
industries, but the weakness is fairly broad. So it may well 
be----
    Vice Chair Maloney. So it is not particularly the housing 
market that is forcing this?
    Commissioner Hall. No. No, it is not.
    Vice Chair Maloney. So when we put all this together, it 
appears that the employment situation looks rather grim. Would 
you agree?
    Commissioner Hall. I would certainly agree that this is not 
a strong job market report.
    Vice Chair Maloney. And typically in an economic downturn 
or in a recession how long does it take for employment to 
recover to its pre-recession peak?
    Commissioner Hall. Over the last I think couple of decades 
the average recovery has been about 20 months, and this last 
recession it was 39 months.
    Vice Chair Maloney. And how long do wages and other 
compensation take to recover?
    Commissioner Hall. Well in terms of the level, typically 
compensation does not go down much more than a quarter or so 
before it starts to grow again, but the growth in compensation 
has gone down all the last few recessions and has never 
recovered.
    Vice Chair Maloney. So based on your analysis of today's 
report, does it appear that we may be in for a difficult period 
for the last market in the months to come?
    Commissioner Hall. I do not want to speculate too much 
since we do have the data that's coming out.
    Vice Chair Maloney. Well talking about data, one item that 
was very striking to me was the fact that American families are 
paring back their spending because their real wages are as low 
now as they were in October of 2001, which was our last 
recession correct. So that to me is shocking, that their wages 
are the same as 2001.
    Could you elaborate, please?
    Commissioner Hall. Sure. Although there has been some 
nominal wage growth, the wage growth clearly has not kept up 
with inflation. In particular, energy and food inflation.
    Vice Chair Maloney. Okay.
    Commissioner Hall. And to some degree it is the issue of 
how much is the problem in the labor market, how much of the 
problem is energy and food inflation, but in a sense it does 
not matter because wages have not kept up with inflation.
    Vice Chair Maloney. I would like to ask some questions on 
women and the economy. I asked the Joint Economic Committee to 
do a report on the impact of the economic downturn on women. 
Women are usually the people who buffer families during a 
recession or an economic downturn.
    They also, regrettably, are usually very poor in older age. 
One of the strongest indicators of poverty at an older age is 
being a mother, particularly a single mother.
    So I would like to turn to asking you about women's 
employment trends. Is it true that women's employment rates are 
typically below men's?
    Commissioner Hall. Yes, it is.
    Vice Chair Maloney. Are there any age groups in which 
women's employment rates are above men's, or nearly equal to 
men's?
    Commissioner Hall. Among teenagers, the employment to 
population ratios are sometimes higher for women to men, but 
that's it.
    Vice Chair Maloney. Since it is too soon to tell how the 
current labor market downturn will turn out, or the impact it 
will eventually have on women's employment, I would like to 
turn to some question about women's experiences in the 2001 
recession, which is the numbers that we looked at in our 
report.
    The report--and actually I congratulate the Committee staff 
that are sitting right here for all of their hard work on this 
report--but the report showed that women lost more jobs in the 
2001 recession than they had in prior recessions.
    So my question is: Why do you think that the 2001 recession 
was so hard on women workers compared to prior recessions?
    Commissioner Hall. Well during the labor market downturn 
during this last recession--which takes you from maybe March 
2001 to August 2003--women did lose about 670,000 jobs on net. 
That is compared to a job loss with men of just over 2 million 
jobs.
    The job loss for women had sort of a similar industry 
pattern as it did for men. Literally a million women lost jobs 
in manufacturing over that period. Six hundred thousand lost 
jobs in trade, transportation, utilities. And almost half a 
million lost jobs in professional and business services.
    So I do think women's participation by industry had a big 
influence on the job loss.
    Vice Chair Maloney. So that they are in more different 
industries is why the job loss was there. So what is so 
troubling to me is that we cannot achieve equality in wages, 
but we are achieving equality in job loss. Why do you think 
that is?
    Why do you think women cannot achieve equality in wages? We 
have passed one bill after another in this area--equal pay for 
equal work. We just passed yesterday in the House of 
Representatives the Pay Fairness Protection Act to protect and 
encourage women to be able to find out what other employees are 
making, and compare their wages and seek fair treatment. Why do 
you think it has taken so long?
    We did another report that looked at 20 years of income 
between men and women and found a consistent 40 percent gap. 
And after you factored in reasons why it might occur--because 
of having a child, or taking care of a sick parent, or family 
responsibilities--there still was a 20 percent unexplained wage 
gap. This was a General Accounting Office, a nonpartisan 
accounting office, test and report that they did.
    I am wondering if you have any ideas of why this is so 
consistent? The report looked at 20 years of work life of men 
and women and found a persistent 40 percent gap after 
explaining reasons for it, an unexplained gap of 20 percent. 
Some would say that possibly that unexplained gap was 
discrimination. So can you comment on why is changing that wage 
gap so persistent, so strong, and does not seem to budge?
    Commissioner Hall. That is getting a bit outside my 
expertise. I can say that the basic data you described, I think 
that is generally our data. That sounds correct, the 40 percent 
wage gap.
    Vice Chair Maloney. Well let's get back to the numbers. The 
2000s recovery was also different from prior recoveries as it 
was the first recovery in the post-World War II period during 
which women's employment rates did not return to their pre-
recession peak.
    Can you tell me, during the 2000s' recovery did women's 
employment rates return to where they were at their peak in the 
strong recovery of the 1990s?
    Commissioner Hall. No. The rate peaked at about 58 percent 
in April of 2000, and currently it is below that at the moment.
    Vice Chair Maloney. And was the lack of recovery of 
employment rates a sharp departure from prior trends?
    Commissioner Hall. Yes. The long-run trend for decades and 
up through the late 1990s was a steady growth in women's 
employment rates, with the exception of recessions. And since 
the 2001 recession, this long-run trend for whatever reason has 
not returned, or is showing no signs of returning, and instead 
the ratio for women has been relatively flat over the past two 
years.
    Vice Chair Maloney. And how have women fared as the economy 
has shed this year in particular, and in what industries have 
they lost the most jobs?
    Commissioner Hall. Overall, women have actually gained 
about 200,000 jobs so far this year, but that masks a 
significant loss in a number of industries. In manufacturing 
women lost about 97,000 jobs so far this year. Trade, 
transportation, utilities, there was a drop of about 70,000 
jobs. Retail trade, a drop of about 50,000 jobs. And 
professional business services was a drop in 69,000 jobs.
    The gains for women have been centered in the industries 
that have been doing well still: education and health services. 
They have still had some gains, as have men, and government as 
well.
    Vice Chair Maloney. As a New Yorker, I would like you to 
get it back to me, if you could get me a picture, or a review 
of how jobs are faring in the Great State of New York City and 
New York State, which I have the honor of representing, but you 
can get that to me later, as this is a meeting for the entire 
country.
    I feel that we need proper data in order to make good 
policy decisions, so I want to be as supportive as I can for 
you to continue your work, Commissioner, to give us the 
information that we need.
    So I would like to ask you a few questions about your 
budget, if I could, please.
    Commissioner Hall. Sure.
    Vice Chair Maloney. Can you tell us what has been happening 
to your budget over the past two years?
    Commissioner Hall. Sure. In 2007 the BLS Appropriation was 
about $15 million below the President's request. We took a 
number of temporary measures to deal with that, and we dealt 
with it well without cutting any programs.
    This year we were funded at about $30 million below the 
President's request, and I think we have done a really good job 
of maintaining our programs up to now, but we have taken a 
number of temporary measures to get by.
    Vice Chair Maloney. So what are some of those temporary 
measures that you have had to take?
    Commissioner Hall. We have everything from a hiring freeze, 
to restrictions in travel and training. We've trimmed a number 
of programs. We have done some reduction in sample size. We've 
reduced some of the detail in some of our data. Unfortunately 
we had to trim some of the Metropolitan Area Employment Data, 
some things like that. And we have delayed some improvements to 
a couple of our core programs that are very important that are 
getting due.
    Vice Chair Maloney. What would happen to the Bureau of 
Labor Statistics Programs and Surveys if you have to operate 
under a Continuing Resolution in Fiscal Year '09? And can you 
sustain another year of temporary reductions?
    Commissioner Hall. First, I do not think we can continue 
with a third year of temporary reductions. We run the risk of 
reducing the quality of our data across the board if we do not 
go ahead and restore some of the funding for a number of our 
programs.
    And we need to sort of protect two of our flagship 
programs. The Consumer Price Index in particular has an 
important part--the geographic and housing part of it is based 
right now on the 1990 Census. That has gotten quite old.
    We really need to spend some money to update that. And the 
current Population Survey, which is a lot of what we have been 
talking about right now, we have had a big jump in the cost of 
that. So we are going to really have to increase our spending 
on that.
    So as a result, if we take care of our major programs then 
it looks like we are going to have to trim as much as $50 
million permanently from our programs, which means we are going 
to have to go and try to pick some of our lower priority 
programs and cut them out.
    Vice Chair Maloney. Can you tell us the ways in which the 
quality of our economic indicators might suffer if your budget 
request is not met? And is it wise to allow our economic 
statistics to deteriorate in the midst of an economic downturn?
    Commissioner Hall. Well of course if we don't look to sort 
of trimming, permanently trimming some programs, then we've got 
a real problem, at least in my view, of continuing to maintain 
the quality of all of our data.
    Our data is extremely important not only for households and 
businesses making decisions, but government programs rely quite 
a bit on our data.
    For example, I mentioned the Consumer Price Index. That is 
used not only to adjust Income Tax rates, but it helps guide 
half a trillion dollars of Social Security Benefits that are 
based on the Consumer Price Index.
    So if we go ahead and take care of these programs, then we 
are going to have to look to some of these other smaller 
programs that have been around for years that are very valuable 
but we just--our priorities are just going to have to be to 
take care of the big things.
    Vice Chair Maloney. And how much of real wages have fallen 
over the past year? And how do real wages compare to the past 
few years for our workers?
    Commissioner Hall. Real wages have fallen. Over say the 
past 12 months, real wages have declined by about 1.8 percent.
    Vice Chair Maloney. And how does that compare to the past 
few years?
    Commissioner Hall. Real wages have been either flat or 
falling the last few years. This is a bigger decline in large 
part because of food and energy prices.
    Vice Chair Maloney. I would like to look at the shift that 
we are seeing in many businesses as employers shift more of the 
burden of rising health care costs to their workers. Doesn't 
that reduce the purchasing power of the take-home pay even more 
when their pay has been so stagnant?
    Commissioner Hall. Yes, it does. In fact, with rising 
health care costs two things can happen, and we have seen some 
trends to this.
    First, as employers may push more of the rising health care 
insurance costs onto workers, and as you say reducing the 
purchasing power of take-home pay; and the second, the rising 
costs of employer-provided health insurance may crowd out wage 
increases. There has been maybe some evidence of that, as well.
    Vice Chair Maloney. Let's talk about the effects of food 
and gas prices on wages. Last month this Committee held a 
hearing on the rising costs of food and the effects on the 
pocketbooks of American families.
    Government forecasters predicted that for 2008 we will see 
a 5 to 6 percent increase to the CPI for food consumed at home. 
Additionally, consumers are expected to experience higher 
gasoline prices.
    Given that wages are falling, prices for food and energy 
are rising, unemployment is high and lasting longer, and people 
are exhausting their unemployment benefits, it appears getting 
hard to make ends meet for a lot of Americans. Would you agree?
    Commissioner Hall. Yes. As we just discussed, the average 
wage growth has not kept up with inflation. I think it is 
particularly concerning that a lot of the inflation comes from 
food and energy, which means it is particularly hard for modest 
income families.
    Vice Chair Maloney. And what does this signal about the 
health of our economy?
    Commissioner Hall. Well besides the obvious direct effects 
of lower wages, rising food, energy, and gasoline prices may 
well be creating a drag on economic growth. It may have 
contributed to the weakening of the U.S. labor market.
    Vice Chair Maloney. We recently, as Congress, passed a 
housing bill to stabilize the housing markets. Federal Reserve 
Chairman Bernanke had testified that we needed to really 
solidify or bring stability to that market in order to move 
forward. But your testimony earlier indicated that the economic 
downturn was not just in housing, but around all of the 
different areas of our economy. Is that correct? Would you 
elaborate some more?
    Commissioner Hall. Sure. Yes, the weakness in the labor 
market is broader than just housing-related things. Obviously 
that can be for a lot of reasons. The real--certainly a concern 
with the downturn in housing is not just the direct effect but 
the indirect effect it has on people's ability to spend, and 
their confidence in spending going forward. We have perhaps 
seen evidence of that because the labor market weakness is 
broad.
    Vice Chair Maloney. Well I want to thank you for your 
testimony. I have been called for votes, so I will have to rush 
over and vote. But I want to assure you that I will work very 
hard to make sure that your budget requests are in place, and 
certainly will be a strong advocate that you have the necessary 
resources in order to get the proper information so that we in 
Congress on both sides of the aisle can make proper decisions 
in ways that we can respond to the important information that 
you are putting before us.
    I just, before parting, would like to ask if you have any 
other items that you would like to share with us that you think 
are important. Many Members are on the Floor. This is closing 
days. It is a very difficult time. The Chairman is in another 
committee meeting voting, as are other Members on this 
Committee, but I will certainly get a transcript of your 
statements to them.
    Again, I thank you for your testimony.
    Commissioner Hall. Thank you.
    Vice Chair Maloney. The meeting is adjourned.
    (Whereupon, at 10 a.m., Friday, August 1, 2008, the hearing 
was adjourned.)
                       Submissions for the Record

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   Statement of Keith Hall, Commissioner, Bureau of Labor Statistics

    Madam Chair and Members of the Committee:
    I appreciate this opportunity to comment on the employment and 
unemployment data that we released this morning.
    Nonfarm payroll employment continued to trend down in July 
(-51,000), and the unemployment rate rose from 5.5 to 5.7 percent. Thus 
far in 2008, payroll employment has fallen by 463,000, or an average of 
66,000 per month. In July, job losses continued in several industries, 
including construction, manufacturing, and employment services. Health 
care and mining continued to add jobs.
    Employment in construction declined by 22,000 in July. Since its 
September 2006 peak, construction employment has decreased by 557,000. 
Nearly three-fourths of the decline (-402,000) has occurred since 
October 2007.
    Manufacturing employment fell by 35,000 in July. Job losses have 
averaged 39,000 per month thus far in 2008 compared with an average 
loss of 22,000 per month during 2007.
    Employment services lost 34,000 jobs over the month, with nearly 
all of the decline in temporary help. Temporary help employment has 
declined by 268,000 since a peak in December 2006, with more than two-
thirds of the loss (-185,000) occurring since January.
    In July, employment in health care rose by 33,000, in line with the 
prior 12-month average. Mining added 10,000 jobs in July, the third 
consecutive gain of this magnitude.
    Average hourly earnings for production and nonsupervisory workers 
in the private sector rose by 6 cents, or 0.3 percent, in July. Over 
the past 12 months, average hourly earnings rose by 3.4 percent. From 
June 2007 to June 2008, the Consumer Price Index for Urban Wage Earners 
and Clerical Workers (CPI-W) rose by 5.4 percent.
    Turning now to some of our measures from the household survey, both 
the number of unemployed persons, at 8.8 million, and the unemployment 
rate, at 5.7 percent, increased in July.
    Over the last 3 months, there has been a notable increase in 
unemployment of youth (16 to 24 years). Each summer, millions of young 
people move into the labor market. This year, the summertime influx of 
youth into the labor market was about the same as last year; however, 
fewer young people were able to find jobs. For the 3-month period, May 
through July, the unemployment rate for 16- to 19-year-olds averaged 
19.0 percent, compared with an average of 15.7 percent for those same 3 
months in 2007. Similarly, the May-through-July average jobless rate 
for 20- to 24-year-olds was 10.2 percent this year, compared with 8.0 
percent over the same period last year. Not all of the increase in 
unemployment in the last 3 months was among youth; joblessness also 
rose among those 25 years and older.
    The employment-population ratio for all persons 16 years and older 
was unchanged in July, at 62.4 percent, but has declined from 63.0 
percent a year earlier. Among the employed, the number of part-time 
workers who would prefer to work full time continued to rise in July. 
The number of such workers has increased by 1.4 million over the past 
12 months to 5.7 million.
    To summarize July's labor market developments, payroll employment 
continued to trend down, and the unemployment rate rose to 5.7 percent.
    My colleagues and I now would be glad to answer your questions.

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