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



                                                        S. Hrg. 110-615

                THE EMPLOYMENT SITUATION: SEPTEMBER 2008

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

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                            OCTOBER 3, 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 E. Cummings, Maryland
Jim Webb, Virginia                   Lloyd Doggett, Texas
Sam Brownback, Kansas                Jim Saxton, New Jersey, Ranking 
John E. Sununu, New Hampshire            Republican
Jim DeMint, South Carolina           Kevin Brady, Texas
Robert F. Bennett, Utah              Phil English, Pennsylvania
                                     Ron Paul, Texas

                  Michael Laskawy, Executive Director
            Christopher J. Frenze, Republican Staff Director


















                            C O N T E N T S

                              ----------                              

                      Opening Statement of Members

Statement of Hon. Carolyn B. Maloney, Vice Chair, a U.S. 
  Representative from New York...................................     1
Statement of Hon. Maurice D. Hinchey, a U.S. Representative from 
  New York.......................................................     5

                               Witnesses

Statement of Dr. Keith Hall, Commissioner, Bureau of Labor 
  Statistics, U.S. Department of Labor. Accompanied by: Dr. 
  Michael W. Horrigan, Associate Commissioner for Prices and 
  Living Conditions; and Mr. John Galvin, Associate Commissioner 
  for Employment and Unemployment Statistics, Bureau of Labor 
  Statistics, U.S. Department of Labor, Washington, D.C..........     3

                       Submissions for the Record

Prepared statement of Representative Carolyn B. Maloney, Vice 
  Chair..........................................................    15
Chart entitled ``State Unemployment Rates Soar''.................    17
Chart entitled ``Too Many Workers Can't Find Jobs Before Their 
  Benefits Run Out''.............................................    18
Chart entitled ``Congress Has Extended Benefits for Hard-Hit 
  States in Every Other Recession of the Last 25 Years''.........    19
Prepared statement of Dr. Keith Hall, together with Press Release 
  No. 08-1367, Bureau of Labor Statistics, U.S. Department of 
  Labor..........................................................    20
Letter from Dr. Keith Hall to Representative Carolyn B. Maloney..    52










 
                       THE EMPLOYMENT SITUATION:
                             SEPTEMBER 2008

                              ----------                              


                        FRIDAY, OCTOBER 3, 2008

             Congress of the United States,
                          Joint Economic Committee,
                                                     Washington, DC
    The Committee met at 9:30 a.m., in room 106 of the Dirksen 
Senate Office Building, the Honorable Carolyn B. Maloney (Vice 
Chair) presiding.
    Representatives present: Maloney and Hinchey.
    Majority staff members present: Heather Boushey, Tanya 
Doriss, Nan Gibson, Colleen Healy, Aaron Kabaker, Annabelle 
Tamerjan, and Justin Ungson.
    Ranking Republican staff (Saxon) present: Ted Boll, Chris 
Frenze, Bob Keleher, Tyler Kurtz, Dan Miller, and Gordon Brady.
    Senate Republican staff (Brownback) present: Jeff Wrase.

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

    Vice Chair Maloney. It is 9:30. The meeting will come to 
order. Chairman Schumer is unable to attend today's hearing on 
the employment situation and has asked me to chair.
    Commissioner Hall, we thank you for testifying today. We 
also thank Mr. Galvin and Dr. Horrigan for joining us today. I 
understand that other Members may be coming, but we must 
proceed because I know your time is valuable. We hope that my 
colleague from the other side of the aisle will be able to join 
us at some point later on today, although it will be later, not 
at the opening.
    I want to thank Commissioner Hall and his staff for 
appearing before us today. This is an important time for 
Congress to be examining the employment situation of U.S. 
workers as we assess the broader impact of the financial crisis 
on the economy.
    Today the House will vote on the financial rescue plan that 
passed the Senate on Wednesday. If we do not pass the financial 
rescue plan today, credit markets will freeze and American 
families and businesses will suffer greatly. The risk of not 
acting is simply too great for Americans to bear.
    The troubles at our major financial institutions are 
already working their way down to Main Street. Today's grim 
unemployment data show that the problems facing working 
families are mounting as job prospects dim.
    The economy has shed nearly a million private-sector jobs 
over the past 9 months, and 9.5 million workers are 
unemployed--2.2 million more than a year ago.
    Indeed, the labor market has been deteriorating for nearly 
a year, as this chart shows. Job growth began to slow in 2005 
and job losses appeared at the beginning of 2008. The last time 
the economy lost jobs for 9 months in a row it was in the midst 
of a recession. As of this month, the labor market is really 
suffering levels of job losses.
    Wages have not been keeping pace with the rising prices for 
basic necessities like fuel and food, as this chart shows.
    As a result, U.S. workers have lost all the ground that 
they gained over the 2000s recovery. The Census Bureau recently 
reported that by the end of last year inflation-adjusted 
household income had still not recovered from the last 
recession, and all indications are that household finances have 
only deteriorated since then.
    The credit crisis will likely make the employment situation 
even worse. The lack of access to credit, combined with the 
sharp drop in home prices, and the lack of growth in real 
incomes are putting unbearable financial pressure on families.
    Families have already begun curtailing their spending, so 
much so that for the first time since 1991 real personal 
consumption expenditures fell for 3 months in a row.
    Consumer spending makes up nearly three-quarters of our 
gross domestic product. As consumers cut back on their 
spending, this will drag down economic growth, jobs, and wages.
    Congress has already taken numerous steps to help buffer 
families from the effects of the downturn. More than 130 
million American households received Recovery Rebates by July. 
Extended Unemployment Benefits for 3.5 million Americans 
looking for work were enacted. And a housing package aimed at 
stemming the tide of foreclosures was also enacted into law.
    In the wake of the financial crisis, clearly we must do 
even more. Last week the House approved a $60 billion economic 
stimulus package that would have provided an extension of 
Unemployment Benefits, an increase in Food Stamps, and aid to 
States to preserve health insurance for families and create 
jobs through investment in our Nation's infrastructure. But 
efforts to provide this relief to families and boost our 
sagging economy have been blocked by Republicans in the Senate 
and received a veto threat from the White House.
    As the chart behind me shows, unemployment is particularly 
high in nearly half of all the States.
    [Chart entitled ``State Unemployment Rates Soar'' appears 
in the Submissions for the Record on page 17.]
    In high-unemployment States, over a third of workers who 
have lost their jobs through no fault of their own are 
exhausting even their extended Unemployment Benefits, as this 
chart shows.
    [Chart entitled ``Too Many Workers Can't Find Jobs Before 
Their Benefits Run Out'' appears in the Submissions for the 
Record on page 18.]
    Starting next week, nearly 800,000 workers will be left 
without additional Federal jobless benefits when their 
extension is set to run out. Over half of these workers live in 
high unemployment States. Congress has extended benefits to the 
States hardest hit by unemployment in every other recession in 
the past 25 years, as this chart shows.
    [Chart entitled ``Congress Has Extended Benefits for Hard-
Hit States in Every Other Recession of the Last 25 Years'' 
appears in the Submissions for the Record on page 19.]
    In light of today's jobless numbers, I hope that the House 
will pass an extension of Unemployment Benefits. Congress and 
the President need to work together as never before to get 
Americans back to work as quickly as possible.
    I look forward to the continued focus on labor market 
conditions by this Committee.
    That concludes my testimony, and I would like to now 
introduce Commissioner Hall.
    Dr. Keith Hall is the Commissioner of the Bureau of Labor 
Statistics at the U.S. Department of Labor. Before becoming 
BLS's Commissioner, Dr. Hall served as Chief Economist for the 
White House Council of Economic Advisers during the current 
Administration.
    Prior to that, he was Chief Economist for the United States 
Department of Commerce. Dr. Hall received his B.A. Degree from 
the University of Virginia, and his M.S. and Ph.D. Degrees in 
Economics from Purdue University.
    Thank you for your public service and for being here today, 
Commissioner Hall.
    [The prepared statement of Vice Chair Maloney appears in 
the Submissions for the Record on page 15.]

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

    Commissioner Hall. Thank you, Madam Chairman.
    Thank you for the opportunity to discuss the employment and 
unemployment data that we released this morning. Nonfarm 
payroll employment declined by 159,000 in September. By 
comparison, from January through August payroll employment 
decreased by 75,000 a month on average.
    In September, job losses continued in manufacturing, 
construction, and retail trade. Mining and health care 
employment continued to trend up. The unemployment rate was 
unchanged at 6.1 percent following an increase of 0.4 
percentage point in August.
    Manufacturing job losses continued in September with 
employment declines occurring throughout much of the sector. In 
particular, motor vehicle and parts manufacturers shed 18,000 
jobs. And over the past 12 months, employment in this industry 
has fallen by 140,000. In September, manufacturing hours and 
overtime declined by 0.2 of an hour, and 0.1 of an hour 
respectively.
    Construction employment was down by 35,000 over the month. 
Since its peak in September 2006, employment in this industry 
has fallen by 607,000. Eighty-five percent of the job losses 
over this 2-year period have occurred in residential building 
and residential specialty trades.
    Mining employment continued to expand with an increase of 
8,000 in September. Mining has added 241,000 jobs since April 
of 2003, with most of the growth in oil and gas extraction and 
support activities.
    In the service-providing sector, retail employment fell by 
40,000 over the month with the largest job losses occurring 
among department stores and motor vehicle and parts dealers. 
Over the past 4 months, auto and parts dealerships have shed an 
average of 12,000 jobs per month, four times the average 
decline in the first 5 months of the year.
    Elsewhere in the service-providing sector, employment in 
financial activities declined by 17,000; securities and 
investment firms accounted for 8,000 of this loss.
    The employment services industry, which includes temporary 
help agencies, continued to contract in September and has lost 
303,000 jobs so far this year.
    Health care employment continued to trend up over the 
month. However, the September increase of 17,000 was only about 
half the average monthly gain for the prior 12 months.
    Average hourly earnings for production and nonsupervisory 
workers in the private sector edged up by three cents in 
September. Over the past 12 months, average hourly earnings 
have increased by 3.4 percent, while from August 2007 to August 
2008 the Consumer Price Index for Urban Wage Earners and 
Clerical Workers rose by 5.9 percent.
    Although Hurricane Ike struck the east coast of Texas and 
portions of coastal Louisiana during the September reference 
period for the establishment survey, we believe the storm did 
not substantially impact the payroll estimates that we released 
today. For weather conditions to have affected payroll 
employment, people would have had to be off work for the entire 
pay period and not paid for the time missed.
    Turning to the labor market measures from the survey of 
households, the unemployment rate held at 6.1 percent in 
September; it is now 1.4 percentage points higher than a year 
earlier.
    Among the major worker groups, the jobless rate for adult 
men rose by 0.5 percentage point over the month to 6.1 percent, 
and the rate for blacks increased to 11.4 percent. The 
unemployment rate for adult women declined to 4.9 percent in 
September, partially offsetting a sharp increase in August.
    Approximately 9.5 million persons were unemployed in 
September, little changed from August. Two million of these 
individuals had been employed for 27 weeks or more, an increase 
of 167,000 over the month, and 728,000 over the past 12 months.
    Both the labor force participation rate at 66.0 percent and 
the employment-to-population ratio at 62 percent were little 
changed over the month. Labor force participation has shown 
virtually no movement over the past 12 months, while the 
employment-to-population ratio has declined by 0.9 percentage 
point.
    The number of persons working part-time who would have 
preferred full-time work increased by 337,000 in September to 
nearly 6.1 million. Over the past 12 months, the number of such 
workers has grown by 1.6 million.
    In keeping with standard practice, this month we are also 
providing a preliminary estimate of the next benchmark revision 
to nonfarm payroll employment. Each year the Bureau revises, or 
benchmarks, the payroll survey's sample-based employment 
estimates to reflect a comprehensive employment count derived 
primarily from State unemployment insurance tax reports.
    Preliminary tabulations of employment from the State tax 
reports indicated that the March 2008 payroll employment will 
require a very small downward revision of 21,000. The final 
benchmark will be incorporated into the establishment survey 
data released on February 6 2009.
    In summary, nonfarm payroll employment declined by 159,000 
in September, and the unemployment rate was unchanged at 6.1 
percent.
    My colleagues and I now would be glad to answer your 
questions.
    [The prepared statement of Dr. Hall, together with Press 
Release No. 08-1367, appear in the Submissions for the Record 
on page 20.]
    Vice Chair Maloney. Thank you very much for your testimony. 
I would now like to recognize my colleague from the State of 
New York, Mr. Hinchey, for his opening statement.

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

    Mr. Hinchey. Well thank you very much, Madam Chairwoman, 
and I appreciate being here.
    I thank you very much for being with us and providing this 
information. I think the information that you are providing is 
very interesting and also very important in terms of the 
responsibilities of this Congress, because I think the 
employment situation in our country is continuing to decline.
    The dramatic increase in the unemployment rate just makes 
that very clear. Even though the specific rate in unemployment, 
as I understand it, is still about the same, 6.1 percent.
    In any case, I thank you very much for being here and for 
giving us this information. I think it is particularly valuable 
as well in the context of this legislation which we have before 
the Congress at this time.
    One of the things that we have to do is to upgrade this 
economy, and that is going to require some significant 
investments in the appropriate way. So I thank you very, very 
much.
    Vice Chair Maloney. Thank you, and the Chair recognizes 
herself for 5 minutes of questions.
    First of all, Commissioner Hall, the labor market has been 
shedding jobs for 9 straight months, and I am concerned that we 
are in a recession.
    Can you tell us what the big picture is on employment this 
month? How many jobs were lost in the private sector last 
month?
    Commissioner Hall. Sure. This month's Employment Report 
shows a continually weak and broadly weak labor market. The 
unemployment rate that we saw in August jumped from 5.7 percent 
to 6.1 percent unfortunately held in September.
    Now on a quarterly basis we have now seen the rise in the 
unemployment rate fairly steadily grow from 4.9 percent in the 
first quarter, to 5.3 percent in the second quarter, to 6 
percent now in the third quarter.
    We have also had perhaps an acceleration in the payroll job 
loss. After losing about 75,000 jobs a month through this year, 
through August, we have now lost--we are now losing 159,000 in 
September.
    The labor market weakness has been broad. The only 
consistent job growth over the past few months has been in 
education and health services, mining, and government. Just 
about every other portion of the economy has been weak. And 
wage growth has hovered somewhere around 3.5 percent, but high 
energy costs continue to keep inflation well above this, 
somewhere around 5.5 percent right now.
    The private-sector job loss has been generally higher than 
the job loss overall. This month we lost 168,000 private-sector 
jobs. Prior to that we had been averaging about 100,000 jobs 
lost in 2008 in the private sector.
    Vice Chair Maloney. Do consecutive months of job losses 
mean that the economy is in a recession?
    Commissioner Hall. It is generally accepted that a 
recession is a significant decline in economic activities 
spread across the economy that last for more than a few months. 
It's sort of three components.
    We have now had nine consecutive months of job loss for a 
total of 760,000 jobs. That job loss has been very widespread. 
We do not typically get nine consecutive months of job losses 
except for when we are going into a recession. So this would be 
unusual.
    However, the one bright spot, if it is a bright spot, is 
that the job loss has been 760,000 jobs. In the last two 
recessions, 9 months into job loss we had about twice as much 
job loss. So it has not been as severe as say the 2001 
recession and the 1990 recession.
    Vice Chair Maloney. So how many months of job losses do we 
need to see before we say we are in a recession?
    Commissioner Hall. Well in the past the National Bureau of 
Economic Research, the group that actually makes the recession 
call, they have called the recession after around 9 or 10 
months of job loss.
    I do think the big difference--and it is going to have to 
be their judgment--is whether we have had as deep a job loss as 
we have in the past and whether that constitutes a recession.
    Vice Chair Maloney. Some economists have argued that a 
recession began in late 2007 or early 2008. Is this conclusion 
consistent with the trends you see in the labor market?
    Commissioner Hall. That is when we started to see job loss 
happen, and consistent job loss happen.
    Vice Chair Maloney. Can the labor market be in a 
recession--that is, can unemployment be at recession levels--
even if an official recession has not yet been called?
    Commissioner Hall. I would say that is true. When an 
official recession is called, it is typically such a backward 
looking call that typically when it is made it is made several 
months down the road.
    Vice Chair Maloney. And typically in a recession how long 
does it take for employment to recover to its pre-recession 
peak?
    Commissioner Hall. Well, at least in my mind, this is one 
of the real serious costs of any recession. It takes the labor 
market a long time to recover from a recession. Since the end 
of the 2001 recession in November 2001, the last recession it 
took months for the labor market to recover, which is obviously 
quite a long time.
    Vice Chair Maloney. So how long do wages and other 
compensation take to recover? The full 39 months, you would 
say?
    Commissioner Hall. Well the level never goes down that 
much, but the growth rate in wages in the past has typically 
never recovered from a recession. With every recession we have 
had, real wage growth has declined and never recovered to pre-
recession levels.
    Vice Chair Maloney. So it appears that we are in a 
difficult time in our economy for the labor market in the 
months to come. My time has expired, and I recognize my 
colleague, Mr. Hinchey, for 5 minutes.
    Mr. Hinchey. Well thank you very much, Madam Chairman.
    Could you tell us a little bit more specifically what are 
some of the specific industries that are experiencing the most 
several drops in employment?
    Commissioner Hall. Sure. We have not had consistent job 
growth in any private-sector industry, with the exception of 
mining, and health care, and education. Health care and 
education seems to be sort of a counter-cyclical industry. So I 
have to say it has been a very broad loss.
    In September, we have seen job loss in construction, with a 
concentrated loss in residential building and specialty trades. 
We have seen job loss in credit intermediation, in real estate, 
and in automobile production and sales.
    Mr. Hinchey. We have also seen losses in manufacturing, 
haven't we? I recall back in August the drop in employment was 
about 84,000 jobs lost. I think more than 60,000 of those were 
manufacturing jobs, and the September figures are something in 
the neighborhood of 59,000, isn't it, manufacturing jobs that 
have been lost?
    Commissioner Hall. Yes, it was significant. It was 51,000 
manufacturing jobs lost.
    Mr. Hinchey. 51,000?
    Commissioner Hall. 51,000. And it is very broad through 
manufacturing. Notably, though, a large loss has been in motor 
vehicles.
    Mr. Hinchey. What is the reason for the loss in 
manufacturing jobs, particularly?
    Commissioner Hall. Well the long-run trend in the United 
States has been that manufacturing has been losing jobs 
consistently on a long-run trend, but at a fairly slow rate 
since 2004.
    What we have seen is, with this economic downturn beginning 
sometime in the last year, a real acceleration in job loss in 
manufacturing. It has just sort of mirrored the general decline 
in the labor market throughout the whole economy.
    Mr. Hinchey. A significant number of these manufacturing 
jobs are being exported, aren't they? I mean, we are sending 
specific kinds of jobs, particularly some of the highest-paying 
jobs, outside of the country?
    Commissioner Hall. Well I certainly think that that may be 
an issue in the long run picture of manufacturing job loss, and 
I am not sure how manufacturing is going to do during this 
downturn in terms of these jobs recovering.
    I will say that the manufacturing jobs lost in the 2001 
recession generally did not return.
    Mr. Hinchey. Did not return?
    Commissioner Hall. No.
    Mr. Hinchey. They were gone, and they are not showing any 
indication of coming back?
    Commissioner Hall. That is correct.
    Mr. Hinchey. So while we are losing these jobs, we are also 
seeing a downturn in the economic circumstances of working 
people, and I think that that is very significant because we 
know that the Gross Domestic Product in America is driven for 
the most part, at least two-thirds or so, by middle-income 
working people, particularly blue- and white-collar working 
people.
    So the economic circumstances of working people is 
declining, while income has gone up slightly, something in the 
neighborhood of, what, three cents, or .02 percent in 
September. Over the past 12 months, our average hourly earnings 
have increased by 3.4 percent, but the Price Index rose by 
almost 6 percent.
    So how do you evaluate that? It seems to me that the 
standard of living of the American worker is in some serious 
predicament at the moment because this situation that you have 
outlined for us is not unique in September. It is something 
that has been going on for some time, has it not?
    Commissioner Hall. Yes, that is correct. The Average Hourly 
Earnings Growth of roughly 3.5 percent is not particularly 
strong, but it is not terribly weak; but it has not kept up in 
particular with energy inflation and now food inflation for 
quite some time now.
    Mr. Hinchey. Yes. So we are seeing the cost of living going 
up, but the income of the workers who have to pay for the cost 
of living not going up, and so we are seeing essentially a 
decline in the standard of living of American workers. Is that 
true?
    Commissioner Hall. The Labor Market Data would seem to 
indicate that.
    Mr. Hinchey. Yes. It seems to me that that is just another 
example of what Mrs. Maloney was saying just a few moments ago. 
I think it is very clear that we are in a recession, and I 
think we have been in this recession for some time. A lot of us 
have been talking about that. I have been mentioning it to 
Chairman Bernanke on a number of occasions.
    But I think part of the problem that we are dealing--one of 
the issues that we are dealing with now has been not 
recognizing this issue in the right way, and then dealing with 
it in an effective way.
    It seems also that the unemployment rate, or the number of 
workers that are partly employed, temporarily employed, partly 
employed but looking for full-time employment, that number 
continues to go up.
    My estimation is that the unemployment rate now being 6.1 
percent, if you included in that people who have been 
unemployed for more than 27 weeks, and people who are looking 
for full-time employment but can only find part-time 
employment, if you include them in the unemployment number, 
what would that number be? I suspect it will be something in 
the neighborhood of 10 percent, or even higher?
    Commissioner Hall. Yes, that is correct. It is currently 
actually 11 percent.
    Mr. Hinchey. Eleven percent?
    Commissioner Hall. Yes. And that is up from 10.7 percent 
last month.
    Mr. Hinchey. Thank you very much.
    Vice Chair Maloney. Thank you.
    Commissioner Hall, later today the House is expected to 
vote on an extension of Jobless Benefits. An estimated 800,000 
workers are expected to run out of their benefits beginning 
next week, and it is my understanding that some parts of the 
country are experiencing higher joblessness than others. Which 
regions are seeing the highest job losses?
    Commissioner Hall. Two regions, the Midwest and West, have 
had the highest unemployment rates: 6.7 percent and 6.6 
percent, respectively. And three regions: the Northeast, West, 
and the South have seen statistically significant unemployment 
rate increases. But it is fairly widespread. All four regions 
have had significant increases in the unemployment rate over 
the past 12 months.
    Vice Chair Maloney. How many, and which States, have 
unemployment rates above 7 percent? Any? Is 6.7 the highest 
percentage?
    Commissioner Hall. No. There are a number of States. Eight 
States had unemployment rates above 7 percent.
    Vice Chair Maloney. Which ones are they?
    Commissioner Hall. Michigan had the highest rate at 8.9 
percent and Rhode Island was second at 8.5 percent. California 
and Mississippi had 7.7 percent unemployment rates. South 
Carolina had 7.6. Ohio had 7.4. Illinois had 7.3. And Nevada 
had 7.1.
    Vice Chair Maloney. Well I worry that a lot more States may 
find themselves in the situation sooner rather than later. Do 
you think unemployment has risen at a surprisingly fast pace?
    Commissioner Hall. I think that unemployment has risen 
consistent with the overall picture of the labor market. We 
have had a weak labor market now for 9 months. Unfortunately we 
have seen a bit of an increase in the unemployment rate in the 
last month or two, which has signalled a slight worsening, at 
least a slight worsening in the conditions of the labor market.
    Vice Chair Maloney. New applications for Unemployment 
Benefits rose slightly last week to a 7-year high, hovering 
around 500,000. Are these initial claim figures consistent with 
recessionary levels?
    Commissioner Hall. They are consistent with levels during 
past recessions. The only thing I would say about that is these 
are weekly numbers.
    Vice Chair Maloney. Could you define for me ``long-term 
unemployment''? And tell us what percentage of unemployed 
workers are among the long-term unemployed?
    Commissioner Hall. Sure. Long-term unemployment are people 
that are unemployed for basically 6 months. And at the moment, 
there are about 2 million people who are long-term unemployed, 
and that is about 21 percent of the total unemployed.
    Vice Chair Maloney. In my home State of New York more than 
one-third, 36 percent, of the unemployed have reached the end 
of their standard Unemployment Benefits. How many will make use 
of the Extended Unemployment Benefits this year in New York and 
around the Nation?
    Commissioner Hall. We do not actually forecast anything 
like that. We do not actually collect the Unemployment Benefits 
data. I have seen an estimate for the national number, if I can 
find it here, oh, good, I have seen an estimate of about 3.3 
million workers nationally through June of 2009, but that is 
not one of our numbers so I do not know what is behind that 
forecast.
    Vice Chair Maloney. Getting back to regions and the impact 
on the economy, which regions are being most impacted by fall 
offs in housing or credit-related industries, and which are 
being hit hardest by manufacturing decline?
    Commissioner Hall. On housing related, 38 States had 
construction declines over the past 12 months, with the highest 
declines in percentage terms in Arizona, Utah, South Carolina, 
and Florida. And in financial activities, we have seen the 
biggest declines in Rhode Island, California, Oregon, Nevada, 
New Jersey, Arizona, and Georgia.
    And then with respect to manufacturing, the kinds of 
manufacturing have been pretty widespread. The most affected 
States are New Mexico, Michigan, Florida, Idaho, Rhode Island.
    Vice Chair Maloney. In my home State of New York, the 
employment-to-population ratio--that is the fraction of the 
working age population with a job--is falling. The information 
you reported on today shows that the percentage of the U.S. 
population with jobs is also quite low, wouldn't you agree?
    Commissioner Hall. In September, 62 percent of the working-
age population was employed. That has fallen since late 2006. 
This is lower than the second half of the 1990's. It is still 
higher than it was say back in the late 1980's, but it is still 
a lower level compared to the more recent time.
    Vice Chair Maloney. When was the last time the National 
Employment-To-Population Ratio was as low as it has been 
recently?
    Commissioner Hall. The last time was in September of 2003, 
immediately following the recession--following the recession, I 
should say.
    Vice Chair Maloney. Well when you put it all together, the 
employment situation looks rather grim in our country now, 
wouldn't you agree?
    Commissioner Hall. This is not a strong employment report.
    Vice Chair Maloney. The Chair recognizes Mr. Hinchey for 5 
minutes.
    Mr. Hinchey. Thank you.
    As I understand it, there are nearly 5 million people who 
would like a job but who have dropped out of the labor force. 
What effect is that having on the circumstances that you are 
monitoring? And what effect do you think that is having on the 
general economic circumstances across the board?
    Commissioner Hall. The increase is similar to the overall 
picture with the job market. You know, we are seeing job loss. 
We are seeing the unemployment rate go up. And so we are also 
seeing people who are leaving the labor force. That is all 
consistent with a generally weak labor market.
    Mr. Hinchey. It is all consistent with the general decline 
in the labor market, and the general decline of the economic 
set of circumstances for working people?
    Commissioner Hall. Yes.
    Mr. Hinchey. So I think that that is the indicator of what 
we have to deal with. I think the focus of attention of this 
Congress has got to be on the economic circumstances of working 
Americans, and I do not think they are getting nearly enough 
attention.
    Some of the things that we have tried to do is investment 
in the basic infrastructure, in education, things that are 
going to promote jobs and raise the income of working people. 
Do you think that something like that makes sense?
    Commissioner Hall. Well I am going to try to steer clear of 
talking about policy issues----
    Mr. Hinchey. OK.
    Commissioner Hall [continuing]. Because we collect the 
data.
    Mr. Hinchey. OK. I would like to hear a little bit more 
about unemployment, the effects on particular groups. Can you 
tell me, for example, what is the labor market looking like for 
people who have graduated from college?
    Commissioner Hall. We have seen, the unemployment rate for 
folks with bachelor's degrees--now these are not necessarily 
people who are just out of college--has actually been fairly 
constant, somewhere around 2.5 percent unemployment rate the 
last few months, but it has ticked up over the past year. It is 
about a half a percentage point higher. It has gone from about 
2 percent unemployment to about 2.5 percent unemployment for 
college graduates.
    Mr. Hinchey. What is the situation with people with high 
school diplomas?
    Commissioner Hall. With high school diplomas, their 
unemployment rate is above the national average, about 6.3 
percent, and that has grown more significantly. That has grown 
from about 4.6 percent to 6.3 percent over the past 12 months. 
So they have had a much harder time.
    Mr. Hinchey. So this is another indication that we should 
be providing more concentration on education, making education 
more available. And the reason for that being, obviously, that 
the better education you have, particularly if you have a 
graduate degree, you are going to more likely get a decent job. 
That appears to be the case in the statistics that you put 
together. Is that right?
    Commissioner Hall. Absolutely. The unemployment rate is 
consistently lower the higher the education level in this 
country, shockingly lower, actually.
    Mr. Hinchey. Yes. Just one more question about that. What 
about teens? What is the situation with teenagers? Do you have 
any information on that?
    Commissioner Hall. Yes. With teens we have actually a 
rather high unemployment rate. We always do. The unemployment 
rate for individuals between 16 to 19 years old is 19.1 
percent, and that is up from about 16 percent a year ago.
    Mr. Hinchey. OK. Thanks. The productivity rate has gone up. 
I think it is something above 4 percent, 4.3 percent 
approximately. I am interested to know what you may have found 
out with regard to how wages are keeping pace with the 
productivity rates and the growth in productivity rates.
    Commissioner Hall. Sure. Over the past year through the 
second quarter, we have only got productivity through the 
second quarter at the moment, nonfarm business productivity 
grew about 3.4 percent.
    Over the same period, real labor compensation--which is not 
just wages but all nonwage compensation--actually declined by 
.2 percent over that time period.
    So these two numbers are normally much closer. They do in 
the long run tend to follow much closer together. Over the past 
year they have not followed very well.
    Mr. Hinchey. Last year with the change in the majority of 
the Congress we were able to increase the Minimum Wage. The 
Minimum Wage now has gone up recently to $6.55 an hour, and it 
will increase next year to $7.25 an hour.
    But that still does not bring the Minimum Wage up to where 
it has been in recent history, and I think with regard to the 
situation with productivity, with regard to unemployment, do 
you have any view as to what the unemployment rate actually 
should be if we had been consistent with the economic needs 
that we are dealing with, and with the way in which Minimum 
Wage has been handled in the past? Does it make sense to have 
that Minimum Wage at $7.25? What would you think the best 
Minimum Wage ought to be?
    Commissioner Hall. I think I want to avoid policy opinions 
like that because we produce the data.
    Mr. Hinchey. It is not policy. It is just a number.
    [Laughter.]
    Commissioner Hall. Well, we have a reputation to uphold for 
providing objective, factual data and I don't want to speculate 
or offer an opinion that's mine.
    Mr. Hinchey. My view is that it should be up close to $10 
an hour. Does that make any sense?
    Commissioner Hall. I don't----
    Mr. Hinchey. It's still off the board, right?
    Commissioner Hall. I don't have an opinion on that.
    Mr. Hinchey. All right, well thank you very much.
    Vice Chair Maloney. Thank you.
    Commissioner Hall, you testified that teen unemployed 
workers were 19 percent. So that more or less says that the 
unemployment rolls last month were mainly adults, would you 
say?
    Commissioner Hall. Yes.
    Vice Chair Maloney. OK, could you say, you know, workers 
over the age of 45, how many workers over the age of 55? Where 
was the most unemployment, and in what age group? 35? 30? In 
10-year separations?
    Commissioner Hall. Yes, let's see, I don't have that number 
handy.
    Vice Chair Maloney. You said teens were 19 percent.
    Commissioner Hall. Right. In the monthly data we do not 
publish quite that much detail.
    Vice Chair Maloney. But roughly, it was adults that lost 
the jobs. Do you have a general--how do you define an 
``adult''?
    Commissioner Hall. Well we do have individuals age 20 and 
over.
    Vice Chair Maloney. OK, 20 and over. What percentage of 
individuals of age 20 and over are unemployed now?
    Commissioner Hall. Oh, I'm sorry. I do have some numbers. 
Twenty years and over the unemployment rate is around 5.5 
percent. And in terms of numbers, it is about 8.1 million 
people out of a total of 9.4 million, 9.5 million.
    Vice Chair Maloney. I want to understand how unemployment 
for particular demographics compares to the unemployment peaks 
during the last recession in 2001, and extended period of high 
job losses that followed it.
    For men, what is unemployment now and how does it compare 
to the highest unemployment rate reached in the early 2000s?
    I would like the number also for women, for white workers, 
black workers, Hispanic workers. You gave the number for teen 
workers. Workers over age 55. For less-educated workers. And 
for higher-educated workers.
    I have been called for a vote, so I am going to have to 
leave, but I do want, if you could get me that, either testify 
it here or get it to me in writing.
    But I am also very interested in how this recession is 
impacting women in the employment situation. Earlier we did a 
study that showed that in this economic downturn, unlike other 
recessions where women held onto their jobs and were a buffer 
to the family, that women are losing their jobs at an even 
higher pace than men are.
    Are you still seeing that trend in your numbers?
    Commissioner Hall. I am not sure that we are. A lot of that 
is a matter of what industries men and women are concentrated 
in. I can follow up with more specific details if you like.
    Vice Chair Maloney. Well you did mention a series of 
industries that were losing jobs, and are women in those 
industries losing jobs at the same rate as men, or higher? That 
is one question.
    And I am interested in how women are faring in the job 
market, and have they been losing jobs in these industries at 
the same rate that men have, or higher?
    In any event, I have to run and vote. We have a very 
important economic vote before our Congress today to respond to 
a request from Secretary Paulson and Chairman Bernanke to put a 
backstop out to help our financial markets and restore access 
to credit for men and women working in America and their access 
to credit for their cars, their loans, their homes, their 
credit cards, their student loans. It is a very important vote. 
So I have to adjourn the meeting and go to that vote.
    I would like these questions, if you could answer in 
writing or to the Joint Economic staff on both the Republican 
and Democratic side. This of course is a bipartisan committee 
and we are working hard to get these numbers accurate.
    I want to thank you for all your hard work and dedication. 
Thank you for being here today, and let us hope the numbers 
improve next month. Thank you.
    [A letter to Vice Chair Maloney from Commissioner Hall 
(together with the information referenced above) appears in the 
Submissions for the Record on page 52.]
    Commissioner Hall. Thank you.
    Vice Chair Maloney. Adjourned.
    [Whereupon, at 10:10 a.m., Friday, October 3, 2008, the 
meeting was adjourned.]
                       Submissions for the Record

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


[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Prepared Statement of Carolyn Maloney, Joint Economic Committee 
                        Hearing, October 3, 2008
    I want to thank Commissioner Hall and his staff for appearing 
before us today. This is an important time for Congress to be examining 
the employment situation of U.S. workers, as we assess the broader 
impact of the financial crisis on the economy.
    Today, the House will vote on the financial rescue plan that passed 
the Senate on Wednesday. If we don't pass the financial rescue plan 
today, credit markets will freeze and American families and businesses 
will suffer greatly. The risk of not acting is simply too great for 
Americans to bear.
    The troubles at our major financial institutions are already 
working their way down to Main Street. Today's grim unemployment data 
show that the problems facing working families are mounting as jobs 
prospects dim. The economy has shed nearly a million private sector 
jobs over the past nine months and 9.5 million workers are unemployed, 
2.2 million more than a year ago.
    Indeed, the labor market has been deteriorating for nearly a year. 
Job growth began to slow in 2005 and job losses appeared at the 
beginning of 2008. The last time the economy lost jobs for nine months 
in a row, it was in the midst of a recession. As of this month, the 
labor market is at recessionary levels of job losses.
    Wages have not been keeping pace with the rising prices for basic 
necessities, like fuel and food As a result, U.S. workers have lost all 
the ground that they gained over the 2000s recovery. The Census Bureau 
recently reported that by the end of last year, inflation-adjusted 
household income had still not recovered from the last recession and 
all indications are that household finances have only deteriorated 
since then.
    The credit crisis will likely make the employment situation even 
worse. The lack of access to credit, combined with the sharp drop in 
home prices and the lack of growth in real incomes are putting 
unbearable financial pressure on families.
    Families have already begun curtailing their spending, so much so 
that for the first time since 1991, real personal consumption 
expenditures fell for three months in a row.
    Consumer spending makes up nearly three-quarters of our gross 
domestic product. As consumers cut back on their spending, this will 
drag down economic growth, jobs and wages.
    Congress has already taken numerous steps to help buffer families 
from the effects of the downturn. More than 130 million American 
households received Recovery Rebates by July,extended Unemployment 
Benefits for 3.5 million Americans looking for work were enacted, and a 
housing package aimed at stemming the tide of foreclosures was also 
enacted into law.
    In the wake of the financial crisis, clearly, we must do even more.
    Last week, the House approved a $60 billion economic stimulus 
package that would have provided an extension of unemployment benefits, 
an increase in food stamps, and aid to states to preserve health 
insurance for families and create jobs through investment in our 
nation's infrastructure. But efforts to provide this relief to families 
and boost our sagging economy stalled in the Senate and received a veto 
threat from the White House.
    As the chart behind me shows, unemployment is particularly high in 
nearly half of all states. In high-unemployment states, over a third of 
workers who have lost their jobs through no fault of their own are 
exhausting even their extended UI benefits. Starting next week, nearly 
800,000 workers will be left without additional federal jobless 
benefits when their extension is set to run out. Over half of these 
workers live in high unemployment states. Congress has extended 
benefits to the states hardest hit by unemployment in every other 
recession in the past 25 years. In light of today's jobless numbers, I 
hope that the House will pass an extension of unemployment benefits.
    Congress and the President need to work together as never before to 
get Americans back to work as quickly as possible.
    I look forward to the continued focus on labor market conditions by 
this committee.

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    Prepared Statement of Keith Hall, Commissioner, Bureau of Labor 
Statistics before the Joint Economic Committee, United States Congress, 
                        Friday, October 3, 2008
    Mr. Chairman and Members of the Committee:
    Thank you for the opportunity to discuss the employment and 
unemployment data we released this morning.
    Nonfarm payroll employment declined by 159,000 in September. By 
comparison, from January through August, payroll employment decreased 
by 75,000 a month on average. In September, job losses continued in 
manufacturing, construction, and retail trade. Mining and health care 
employment continued to trend up. The unemployment rate was unchanged 
at 6.1 percent, following an increase of 0.4 percentage point in 
August.
    Manufacturing job losses continued in September (-51,000), with 
employment declines occurring throughout much of the sector. In 
particular, motor vehicle and parts manufacturers shed 18,000 jobs; 
over the past 12 months, employment in this industry has fallen by 
140,000. In September, manufacturing hours and overtime declined by 0.2 
hour and 0.1 hour, respectively.
    Construction employment was down by 35,000 over the month. Since 
its peak in September 2006, employment in this industry has fallen by 
607,000. Eighty-five percent of the job losses over this 2-year period 
have occurred in residential building and residential specialty 
trades.Mining employment continued to expand, with an increase of 8,000 
in September. Mining has added 241,000 jobs since April 2003, with most 
of the growth in oil and gas extraction and support activities.
    In the service-providing sector, retail employment fell by 40,000 
over the month, with the largest job losses occurring among department 
stores and motor vehicle and parts dealers. Over the past 4 months, 
auto and parts dealerships have shed an average of 12,000 jobs per 
month, four times the average decline in the first 5 months of the year 
(-3,000).
    Elsewhere in the service-providing sector, employment in financial 
activities declined by 17,000 in September; securities and investment 
firms accounted for 8,000 of the loss. The employment services 
industry, which includes temporary help agencies, continued to contract 
in September and has lost 303,000 jobs thus far this year.
    Health care employment continued to trend up over the month. 
However, the September increase of 17,000 was only about half the 
average monthly gain for the prior 12 months (30,000).
    Average hourly earnings for production and nonsupervisory workers 
in the private sector edged up by 3 cents, or 0.2 percent, in 
September. Over the past 12 months, average hourly earnings have 
increased by 3.4 percent. From August 2007 to August 2008, the Consumer 
Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose by 
5.9 percent.
    Although Hurricane Ike struck the east coast of Texas and portions 
of coastal Louisiana during the September reference period for the 
establishment survey, we believe the storm did not substantially impact 
the payroll employment estimates that we released today. For weather 
conditions to have affected payroll employment, people would have had 
to be off work for the entire pay period and not paid for the time 
missed.
    Turning to labor market measures from the survey of households, the 
unemployment rate held at 6.1 percent in September; it is 1.4 
percentage points higher than a year earlier. Among the major worker 
groups, the jobless rate for adult men rose by 0.5 percentage point 
over the month to 6.1 percent, and the rate for blacks increased to 
11.4 percent. The unemployment rate for adult women declined to 4.9 
percent in September, partially offsetting a sharp increase in August.
    Approximately 9.5 million persons were unemployed in September, 
little changed from August. Two million of these individuals had been 
unemployed for 27 weeks or more, an increase of 167,000 over the month 
and 728,000 over the past 12 months.
    Both the labor force participation rate, at 66.0 percent, and the 
employment-population ratio, at 62.0 percent, were little changed over 
the month. Labor force participation has shown virtually no movement 
over the past 12 months, while the employment-population ratio has 
declined by 0.9 percentage point.
    The number of persons working part time who would have preferred 
full-time employment increased by 337,000 in September to nearly 6.1 
million. Over the last 12 months, the number of such workers has grown 
by 1.6 million.
    In keeping with standard practice, this month we are providing a 
preliminary estimate of the next benchmark revision to nonfarm payroll 
employment. Each year the Bureau revises, or benchmarks, the payroll 
survey's sample-based employment estimates to reflect comprehensive 
employment counts derived primarily from state unemployment insurance 
tax reports.
    Preliminary tabulations of employment from the state tax reports 
indicate the March 2008 payroll employment will require a small 
downward revision of 21,000. The final benchmark will be incorporated 
into the establishment survey data released on February 6, 2009.In 
summary, nonfarm payroll employment declined by 159,000 in September, 
and the unemployment rate was unchanged at 6.1 percent.
    My colleagues and I now would be glad to answer your questions.

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    From December 2007 to August 2008 (women worker data are not yet 
available for September), women workers have lost the most jobs in the 
following industries: Manufacturing (121,000), Professional and 
Business Services (119,000), Retail Trade (62,900), and Financial 
Services (60,000).
    During the same time period, men have lost the most jobs in the 
following industries: Construction (294,000), Manufacturing (220,000), 
Professional and Business Services (151,000), and Retail Trade 
(147,900).
    Women workers have lost jobs at a faster rate than men in several 
industries, including Manufacturing, Transportation and warehousing, 
and Utilities.
    Women have gained jobs at a faster rate than men in the following 
industries: Education and health services and Government.


      Table 1.--Change in Payroll Employment among Women and Men, by Industry, December 2007 to August 2008
                                                 [in thousands]
----------------------------------------------------------------------------------------------------------------
                                                                             Percent      Percent      Percent
                                     Change in    Change in    Change in    change in    change in    change in
             Industry                  women         male         all         women         male         all
                                      workers      workers     employees     workers      workers     employees
----------------------------------------------------------------------------------------------------------------
Total.............................          164         -765         -601          0.2         -1.1         -0.4
Total Private.....................          -60         -741         -801         -0.1         -1.2         -0.7
Natural Resources and Mining......            5           45           50          5.1          7.0          6.8
Construction......................          -11         -294         -305         -1.2         -4.5         -4.1
Manufacturing.....................         -121         -220         -341         -3.0         -2.2         -2.5
Wholesale Trade...................        -12.8        -51.8        -64.6         -0.7         -1.2         -1.1
Retail Trade......................        -62.9       -147.9       -210.8         -0.8         -1.9         -1.4
Transportation and Warehousing....        -23.6         -5.8        -29.4         -2.1         -0.2         -0.6
Utilities.........................         -3.7          6.3          2.6         -2.4          1.6          0.5
Information.......................          -18          -17          -35         -1.4         -1.0         -1.2
Financial Activities..............          -60            9          -51         -1.2          0.3         -0.6
Professional and Business Services         -119         -151         -270         -1.5         -1.5         -1.5
Education and Health Services.....          343           83          426          2.4          2.0          2.3
Leisure and Hospitality...........            9            1           10          0.1          0.0          0.1
Other Services....................           15            2           17          0.5          0.1          0.3
Government........................          224          -24          200          1.8         -0.2          0.9
----------------------------------------------------------------------------------------------------------------
Source: Current Employment Statistics Survey, Bureau of Labor Statistics


                          Table 2.--Unemployment Rates for Selected Demographic Groups
                                    [seasonally adjusted, except where noted]
----------------------------------------------------------------------------------------------------------------
                                                                    Time Period
                                 -------------------------------------------------------------------------------
                                                   December 2007     June 2003                      March 2001
         Characteristic                                (CES          (Overall      November 2001     (Official
                                  September 2008    Employment     Unemployment    (Official End     Start of
                                                       Peak)        Rate Peak)     of Recession)    Recession)
----------------------------------------------------------------------------------------------------------------
Sex
    Total, 16 and over..........             6.1             5.0             6.3             5.5             4.3
    Men, 16 and over............             6.7             5.1             6.7             5.7             4.3
    Adult Men, 20 and over......             6.1             4.4             6.0             5.0             3.8
    Women, 16 and over..........             5.5             4.9             5.9             5.4             4.2
    Adult Women, 20 and over....             4.9             4.4             5.2             4.8             3.6
Age
    16-19 years.................            19.1            17.1            19.0            15.9            13.8
    20-24 years.................            10.5             9.4            10.4             9.3             7.6
    25-54 years.................             5.2             4.1             5.2             4.6             3.3
    55 years and over...........             4.1             3.2             4.4             3.5             2.7
Race and Ethnicity
    White.......................             5.4             4.4             5.5             4.9             3.7
    Black.......................            11.4             9.0            11.5             9.8             8.3
    Asian (not seasonally                    3.8             3.7             7.8             5.4             3.2
     adjusted)..................
    Hispanic or Latino..........             7.8             6.3             8.4             7.3             6.2
Educational Attainment, 25 years
 and over
    Less than a high school                  9.6             7.6             9.4             8.0             6.8
     diploma....................
    High school graduates, no                6.3             4.7             5.7             5.0             3.8
     college....................
    Some college or associate                5.0             3.7             4.9             4.2             2.7
     degree.....................
    Bachelor's degree and higher             2.5             2.2             3.1             2.9             2.0
----------------------------------------------------------------------------------------------------------------
Source: Current Population Survey, Bureau of Labor Statistics

  

                                  
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