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


                                                        S. Hrg. 110-857
 
                THE EMPLOYMENT SITUATION: NOVEMBER 2008

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


                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                            DECEMBER 5, 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

Hon. Carolyn B. Maloney, a U.S. Representative from New York.....     1

                               Witnesses

Dr. Keith Hall, Commissioner, Bureau of Labor Statistics; Dr. 
  Michael Horrigan, Associate Commissioner for Prices and Living 
  Conditions, Bureau of Labor Statistics; and Mr. Philip Rones, 
  Deputy Commissioner, Bureau of Labor Statistics, U.S. 
  Department of Labor............................................     6

                       Submissions for the Record

Prepared Statement of Hon. Charles E. Schumer, Chairman, a U.S. 
  Senator from New York..........................................    24
Prepared Statement of Hon. Carolyn B. Maloney, Vice Chair, a U.S. 
  Representative from New York...................................    25
Prepared Statement of Keith Hall, Commissioner, Bureau of Labor 
  Statistics, together with Press Release No. 08-1774............    26


                THE EMPLOYMENT SITUATION: NOVEMBER 2008

                              ----------                              


                        FRIDAY, DECEMBER 5, 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, Cummings, and English.
    Staff present: Gail Cohen, Nan Gibson, Colleen Healy, 
Justin Ungson, Chris Frenze, Bob Keleher, Tyler Kurtz, Jeff 
Schlagenhauf, and Colin Willis.
    Vice Chair Maloney. The meeting will come to order.
    Chairman is unable to attend today's hearing on the 
employment situation and has asked me to chair. His statement 
will be entered into the record.
    [The prepared statement of Senator Schumer appears in the 
Submissions for the Record on page 24.]
    Vice Chair Maloney. Commissioner Hall, we thank you for 
testifying today. We also thank Mr. Horrigan and Mr. Rones for 
joining us today.
    The Chair recognizes herself for an opening statement.

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

    I sincerely 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 now have confirmation that the economy is in a 
recession.
    Today's jobless numbers take your breath away. In November 
the economy lost an astonishing 533,000 jobs, the highest 
monthly loss in 34 years. And job losses in the previous two 
months were worse than originally reported.
    The unemployment rate increased to 6.7 percent. The 
official arbiters of U.S. recessions, the National Bureau of 
Economic Research, announced on Monday that the economy entered 
this recession in December of 2007 when the private sector 
first began shedding jobs.
    Since then, the economy has lost over 2 million private 
sector jobs, and 2.7 million more workers are unemployed, for a 
total of 10.3 million.
    These stark numbers should make the decision to rescue the 
Detroit car makers much easier. The potential employment 
consequences if one or more of the big three Detroit automakers 
fails could be devastating to an already weak economy.
    Estimates show that millions of jobs, including vehicle 
assembly, parts manufacturing, suppliers, and neighborhood 
retailers, are potentially at risk. The Bureau of Economic 
Analysis has estimated that each job in the vehicle 
manufacturing industry supports from 2.5 to about 6 additional 
jobs in the wider economy. So the ripples of their collapse 
could be felt far and wide.
    Last week, third-quarter economic growth was revised 
downward to .05 percent. The economy is being pulled down by 
falling consumer spending which makes up nearly three-quarters 
of the Gross Domestic Product.
    Yesterday it was announced that retailers posted the worst 
November sales in more than 30 years. Families are conserving 
their dwindling resources and simply not buying much of 
anything, including durable goods such as cars.
    As consumers cut back on their spending, this is dragging 
down economic growth, jobs, and wages. The current downturn has 
already lasted longer than the last two recessions, bringing 
hardship to millions of American families.
    U.S. workers have lost all the ground that they gained over 
the 2000 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 is making the employment situation even 
worse. The lack of access to credit, combined with the sharp 
drop in home prices, declines in the stock market, and the lack 
of growth in real incomes are putting unbearable financial 
pressure on families.
    Retirement savings and college savings accounts have been 
decimated by the sudden drop in value in the equities market. 
College-bound seniors will be facing tuition hikes and 
diminished financial aid, making college out of reach to many 
middle-class and poor families.
    Congress has already taken numerous steps to help buffer 
families from the effects of the downturn, including extending 
Unemployment Benefits again last month. Some economists are 
already calling this the Great Recession because they fear it 
may be longer and deeper than any recession in recent history.
    This recession requires solutions that address the 
magnitude of our economic woes. In January Congress will send 
our new President a substantial recovery package that makes 
investments in our families and puts Americans back to work as 
quickly as possible.
    I want to thank Chairman Schumer and my colleagues, Mr. 
Cummings and Mr. English, for calling this hearing and being 
here today, and I look forward to the continued focus on labor 
market conditions by this Committee.
    Thank you, and I yield as much time to my colleague on the 
other side of the aisle, Congressman English, and express the 
great gratitude I have of working together on our Nation's 
economy and financial institutions' safety and soundness, 
consumer credit, and many other areas. You have served with 
great distinction and it has been an honor to serve with you. 
We will miss you.
    [The prepared statement of Representative Maloney appears 
in the Submissions for the Record on page 25.]
    Representative English. The honor has been all mine, Madam 
Chair. I would like to join you in welcoming Commissioner Hall 
before the Committee this morning.
    This is obviously grave news, and I think it is important 
for the Nation to meditate on the information that you are 
going to be bringing forward and interpreting for us today.
    The figures released this morning show that the financial 
and economic downturn continues to be reflected in worsening 
labor market conditions. According to the Payroll Survey, 
employment declined by 533,000 during the month of November. 
Separately, the Household Survey registered an increase in the 
Unemployment Rate from 6.5 percent to 6.7 percent.
    In reviewing the recent economic data it is useful to 
recall the central role played by the collapse of the housing 
market and the value of mortgage investments. While there is a 
great deal of blame to go around, and I am sure we are going to 
hear a lot of that not only now but in coming months, the fact 
remains that Federal policies promoting unsustainably low 
interest rates and excessive and risky mortgage borrowing have 
inflated the housing bubble, and that has now popped.
    The result is a crippled financial sector and a credit 
crunch that is now a major drag on the economy. As we look 
forward, Federal policy needs to avoid certain pratfalls. We 
should reject policies such as tax increases that have the 
potential, based on past history, to aggravate a recession.
    Instead, targeted tax reduction for families, for business 
investment, for savings would serve to cushion the impact of 
the downturn and build a foundation for a return to sustainable 
economic growth.
    At a time when we are facing a looming budget deficit that 
is driven by a recessionary condition and the according loss of 
revenue, I think it is especially important that we focus on 
what it takes to get back to economic growth.
    What your labor market figures, Commissioner, suggest is 
there is a lot of pain out there in places like northwestern 
Pennsylvania, which I represent. We will hopefully have a 
chance to explore not only the dimensions of this challenge, 
but for those who serve in the next Congress as well as perhaps 
some things that could be done next week if we are reconvened, 
perhaps help us lay out an agenda.
    Thank you, Madam Chair.
    Vice Chair Maloney. I recognize my very good friend and 
colleague, Congressman Cummings, for as much time as he may 
consume.
    Representative Cummings. Thank you very much, Madam Chair, 
and I thank you for holding this critical hearing on the 
Department of Labor's Employment Report for November.
    As our Nation continues to shed jobs at an alarming rate, 
and the threat of increased unemployment appears to be 
spreading with the big three automakers now asking the American 
people for $35 billion, and $9 billion more than they asked for 
two weeks ago, this hearing comes at a critical juncture in our 
Nation's history.
    And let me make it clear--so that there is no doubt--that I 
do support the automakers. I think it is very important that 
they be held accountable, strict accountability, but as I have 
said many times with regard to the $700 billion bailout we have 
placed very strict rules with regard to, and we have asked for 
a lot from them, but we have asked for very little from all the 
others--the banks. And it seems to be one standard for white-
collar jobs, and another one for blue. And I want them all to 
be held to a very, very, very strict standard.
    I think that the report that we see today indicates why it 
is so important that we lose not one more job in our Nation.
    Madam Chair, in the wake of the worst economic crisis since 
the Great Depression, we passed a $700 billion economic 
recovery package to infuse funds into Wall Street's 
institutions on October 4th, 2008. I, like many others, 
announced--I, like many others, cautiously put my faith in the 
recovery package hoping that by aiding those on Wall Street the 
pain would stop on Main Street.
    Unfortunately, the plan has yet to live up to our 
expectations. Thus far it has been riddled with CEOs that 
continue to take advantage of Taxpayer dollars by having 
junkets, pricey senior-executive payouts, and a Secretary of 
the Treasury that simply refuses to help keep people in their 
homes by dragging his feet in fully implementing the Troubled 
Asset Relief Program.
    And on top of those woes, more and more Americans continue 
to lose their jobs. And those who are desperately seeking new 
employment find their Unemployment Benefits washed up with no 
alternative left.
    As we will see shortly, there are more and more people who 
are being forced into part-time jobs involuntarily because they 
are being laid off and cannot find other employment.
    Meanwhile, the economic crisis continues to be felt across 
this great Nation. The very reports we are to receive today by 
Commissioner Hall of the Bureau of Labor Statistics indicates 
that the storm is far from over. Main Street continues to bleed 
with no end in sight, and none in the immediate future.
    As detailed in the report, Unemployment for November was 
6.7 percent, bringing the number of unemployed persons in 2008 
to a shocking 10.3 million people. Those 10.3 million people 
represent families that are trying to take care of their 
children. They represent single mother head-of-households who 
got up early this morning, four o'clock or five o'clock, to 
take their kids to a babysitter, and to go to a work, to a job 
that is not paying them a whole lot, and in many instances 
they're not even getting health benefits.
    Since the start of the recession in December of 2007, as 
recently announced by the National Bureau of Economic Research, 
the number of unemployed persons has increased by 2.7 million. 
Meanwhile, the number of marginalized workers has reached an 
astounding 1.9 million persons in November. And within those 
numbers, over 600,000 people have simply given up on finding a 
job altogether.
    Madam Chairlady, those are the folks that we have left 
behind. Considering that the Bureau of Labor Statistics does 
not include in its calculation of the Unemployment Rate those 
unemployed greater than 27 weeks, also termed long-term 
unemployed, I shudder to think what our Unemployment Rate would 
look like if these numbers were included.
    However, what is clear is that, since more than 2.2 million 
persons remain unemployed in the long term, there are a large 
number of persons who have exhausted their Unemployment 
Benefits all together. And so they suffer, and they suffer, and 
they suffer, and the number goes up.
    And even with the additional 13 to 20 weeks in Unemployment 
Insurance Benefits, it appears that the extension simply may be 
too late and may be too little.
    Against this backdrop, just yesterday our labor market was 
dealt another blow when four major companies--AT&T, DuPont, 
Viacom, and the Credit Suisse Group--announced job cuts that 
total 20,650. And on Wednesday, another 3000 job losses were 
announced by State Street Corporation, Jeffreys Group, and the 
Kalar Group.
    And let us not forget that just over--less than a month 
ago, Citigroup announced layoffs of over 52,000. And the list 
goes on, and on, and on, and on.
    To make matters worse, while this was less than expected, 
the Beige Book, which was released on Wednesday by the Federal 
Reserve, shows that our economy has continued to deteriorate in 
recent months in nearly every Federal Reserve District, with 
companies reporting slumping sales, increasing layoffs, and 
uncertainty about the future.
    The American people need real solutions for these very real 
problems, many of which would have been resolved in a second 
economic stimulus package that Congress failed to enact prior 
to adjournment.
    Congress must unite in a bipartisan effort to help Main 
Street and reaffirm our dedication to the very foundation that 
makes our Nation great: The American People.
    I have often said that our authority in this world does not 
necessarily come from our military might, but it comes from our 
moral authority, and that is defined by how we treat each other 
in this Nation. We must provide an effective and efficient 
second economic stimulus package that will help--and we must do 
this immediately--that will help small businesses that over the 
past 15 years have created more than 93 percent of our Nation's 
jobs.
    Sadly, just as in my District, many of those small 
businesses, Madam Chairlady, cannot get the consumer loans. 
They are the ones who paid taxes when they could pay them, but 
now as we put money into these banks to bail them out they 
don't see the loans coming to them.
    We must heighten job growth by rebuilding our 
transportation infrastructure systems and increase the dollar 
amount of Unemployment Benefits so that the check received in 
the mail pays for far more than simply the light bill, and more 
than just a few pennies toward a mortgage payment or rent.
    Finally, Commissioner Hall, your report highlights this 
need and further demonstrates that it is critical that we 
provided an increased and steady safety net for American 
families.
    I anxiously look forward to the testimony, and in the end, 
as I close, I want to remind us, we may be in a very difficult 
situation, and jobs have been lost, but a lot of this has been 
because of greed--of greed--on the part of many people 
throughout the system.
    I simply close by saying this, Madam Chairlady, and Tom 
Freeman put it best in his recent article. He says this, he 
says: So many people were in on it. People who had no business 
buying a home with nothing down and nothing to pay for two 
years. People who had no business pushing such mortgages, but 
made fortunes doing so. People who had no business bundling 
those loans into securities and selling them to third parties 
as if they were AAA bonds, but made fortunes doing so. People 
who had no business rating those loans as AAA but made fortunes 
doing so. And people who had no business buying those bonds and 
putting them on their balance sheets so they could earn a 
little better yield, but made fortunes doing so.
    And because of all of that, the American people now suffer. 
Many Americans who are watching us right now are being left 
behind with no job, and certainly no bonus.
    And with that, Madam Chairlady, I yield back.
    Vice Chair Maloney. Thank you.
    I would now like to 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 Commissioner, 
Dr. Hall served as Chief Economist for the White Council of 
Economic Advisors during the current Administration. Prior to 
that he was a Chief Economist for the U.S. Department of 
Commerce. Dr. Hall received his B.A. Degree from the University 
of Virginia, and his M.S. and PhD in Economics from Purdue 
University.
    Thank you for being here today and for your service. You 
are recognized.

  STATEMENT OF DR. KEITH HALL, COMMISSIONER, BUREAU OF LABOR 
     STATISTICS, U.S. DEPARTMENT OF LABOR, WASHINGTON, DC; 
 ACCOMPANIED BY: DR. MICHAEL HORRIGAN, ASSOCIATE COMMISSIONER 
 FOR PRICES AND LIVING CONDITIONS, BUREAU OF LABOR STATISTICS; 
  AND MR. PHILIP RONES, DEPUTY COMMISSIONER, BUREAU OF LABOR 
                           STATISTICS

    Commissioner Hall. Madam Chairman and Members of the 
Committee, thank you for the opportunity to discuss the 
employment and unemployment data that we are releasing this 
morning.
    Nonfarm payroll employment declined by 533,000 in November, 
with large and widespread losses occurring across major 
industry sectors. November's drop in payroll employment 
followed what were also large declines of 403,000 in September 
and 320,000 in October.
    The unemployment rate at 6.7 percent continued to trend up 
in November and has risen by 1.7 percentage points since the 
recession started in December of 2007.
    Over the past three months, job losses have averaged 
419,000 per month, sharply higher than the average loss of 
82,000 per month from January through August. About two-thirds 
of the recent job declines have occurred in the service-
providing sector of the economy. In the first eight months of 
this year, job losses were largely limited to construction and 
manufacturing.
    Manufacturing job losses continued in November. Factory job 
losses would have been larger were it not for the return to 
work of 27,000 aerospace workers who had been on strike. Over 
the month, employment declines occurred throughout the 
manufacturing sector.
    Motor vehicle and parts manufacturers shed 13,000 jobs. 
Employment in this industry has fallen by 135,000 since 
December. Manufacturing hours and overtime have declined by 
two-tenths of an hour in November.
    Construction employment was down by 82,000 over the month. 
Since a peak in September 2006, employment in this industry has 
fallen by 780,000, largely in the residential sector. Over the 
past three months, however, job losses have been evenly 
distributed between residential and nonresidential 
construction.
    Employment also declined throughout the service-providing 
sector this month. The largest loss was in employment services, 
which includes temporary help agencies.
    Retail trade employment also fell by 91,000 in November 
with the largest job losses among automobile dealers. Since 
December, automobile dealers have shed 115,000 jobs.
    Employment also decreased in clothing stores, sporting 
goods, hobby, book, and music stores, furniture and home 
furnishing stores. Wholesale trade employment also fell by 
25,000 in November and has fallen by 123,000 so far in 2008.
    Leisure and hospitality employment contracted also in 
November, along with financial activities, transportation and 
warehousing and information.
    In contrast to most industries, health care added jobs in 
November. Employment in the industry rose by 34,000 over the 
month.
    Average hourly earnings for production and nonsupervisory 
workers in the private sector rose by 7 cents in November, or 
0.4 percent in November. Over the past 12 months, hourly 
earnings have increased by 3.7 percent. While the Consumer 
Price Index through October has risen by 3.8 percent.
    Turning to the labor market measures from the Survey of 
Households, the unemployment rate continued to increase in 
November. At 6.7 percent, the rate was up by 0.2 percentage 
point over the month and by 1.7 percentage points since 
December.
    In November, 10.3 million persons were unemployed, up by 
2.7 million from December. About 2.2 million of the unemployed 
in November had been jobless for 27 weeks or more, an increase 
of 868,000 so far this year.
    Both the labor force participation rate at 65.8 percent and 
the employment to population ratio at 61.4 percent decreased 
over the month. The employment-to-population ratio has declined 
by 1.3 percentage points since December.
    The number of persons working part time who would have 
preferred full-time employment increased by 621,000 in November 
to 7.3 million. Thus far in 2008, the number of such workers 
has grown by nearly 2.7 million.
    In summary, nonfarm payroll employment declined by 533,000 
in November after having fallen by 723,000 over the prior two 
months combined. The unemployment rate rose to 6.7 percent in 
November, 1.7 percentage points above the December rate.
    My colleagues and I would now be glad to answer your 
questions.
    [The prepared statement of Keith Hall appears in the 
Submissions for the Record on page 26.]
    Vice Chair Maloney. Thank you. Thank you very much for your 
testimony.
    Commissioner Hall, unemployment is usually a lagging 
indicator but in this recession it seems to be a leading 
indicator. Would you agree?
    Commissioner Hall. Yes. In fact, I would say that almost 
all changes in the health of the economy are visible in labor 
market data.
    For example, when the economy began to weaken in early 2007 
our data show that the labor market was beginning to weaken. As 
you have pointed out in past hearings, employment in temporary 
help services seems to be a leading indicator, and probably 
signaled the deepening in the labor market weakness early in 
2007.
    Payroll employment I think is probably the most reliable 
indicator of a recession, more accurate and less subject to 
revision than almost any other economic data. Each of the past 
five recessions began either exactly when, or very close to 
when payroll employment began a long, significant decline.
    I also think the labor market data has been and is likely 
to be a lagging indicator, but at the end of a recession not at 
the start of a recession. For example, in the 2001 recession, 
from start to end the unemployment rate rose by 1.2 percentage 
points, but after the end of the recession the unemployment 
rate continued to rise for another 19 months after that until 
it was about 2.0 percentage points above the start of the 
recession.
    In the prior recession it was similar. After the end of the 
1990 recession, the unemployment rate continued to rise for 
another 15 months after the end of that recession.
    Vice Chair Maloney. Why do you think the economy has been 
shedding jobs over the past year even as the economy grew?
    Commissioner Hall. Well I think, I think in general most 
economic data has sort of been consistent with this, that most 
of the data has been weak and has reflected insufficient growth 
to promote job growth--significant job growth.
    I think--in fact, I think, like I said before, I think the 
payroll employment is very accurate in giving you something 
about the health of the economy. In fact, I don't think there's 
anything more accurate than that.
    Vice Chair Maloney. Job losses are accelerating, as we saw 
today. At what point in a recession do job losses typically 
accelerate? In the beginning, the middle, or the end?
    Commissioner Hall. Actually it's hard to say on that, 
because every recession seems to be different, and job losses 
continue for different amounts of time after the start of each.
    Sometimes job losses end in just a few months, significant 
job losses. Sometimes, like in the 2001 recession, job losses 
will continue for well over a year.
    Vice Chair Maloney. Commissioner, given what we know about 
the past recessions which you have talked about, in your best 
judgment how long do you think these job losses are likely to 
continue? Are we looking at months, or years?
    Commissioner Hall. Again that's hard to say. After the last 
recession, job growth did not start until about a year and a 
half after the end of the recession. And in other recessions, 
it has just been a matter sometimes of just a few months 
afterwards. So it is hard to say.
    Vice Chair Maloney. But the current downturn is already 
longer than the last two recessions. So based on historical 
data, how long is it likely to take for employment to recover 
to its pre-recession peak?
    Commissioner Hall. The last two recessions, the recovery to 
a pre-recession peak took a long time. The last recession it 
took over three years. In the 1990 recession it took about two-
and-a-half years.
    Vice Chair Maloney. This recession may be different from 
previous recessions given the severe housing slump, the credit 
crunch, and global downturn. How do you expect these conditions 
to affect the labor market over the coming year?
    Commissioner Hall. Again it is hard to say. I do think, 
though, that it will be hard for the labor market to begin to 
recover until there is some improvement in those three 
conditions.
    Vice Chair Maloney. And as you look at the data, what are 
the main differences between the current recession and the two 
prior recessions?
    For example, are there differences in the characteristics 
of workers who are losing jobs in this recession versus 
previous recessions? What accounts for the current trend in job 
losses that are so severe?
    Commissioner Hall. I think two things jump out as being 
different about this recession than past, recent recessions. 
One is the depth of the downturn in the labor market. The last 
three months have been a very severe downturn in the labor 
market.
    The second thing is how broad the job losses have been. For 
example, during the past two recessions less than a quarter of 
the job loss was in the service-providing industries. So far in 
this recession nearly half the job loss is in services.
    Vice Chair Maloney. Thank you very much. I recognize my 
colleague and good friend, Congressman English, for five 
minutes.
    Representative English. Thank you, Madam Chair.
    I am going to focus my questions relative to manufacturing, 
which constitutes perhaps a disproportionate part of the 
economic base of northwestern Pennsylvania and the communities 
that I represent.
    As you know, Commissioner, manufacturing is sometimes a 
little different. It goes into a recession a little later and 
tends to feel the recession a little longer than other parts of 
the economy.
    I am wondering, looking at that and the fact that our last 
recession disproportionately hit our manufacturing base, could 
you interpret to us the manufacturing indexes that you have 
laid out here in your presentation? And can you give us some 
points of comparison how the manufacturing indexes look now as 
it applies to the labor market relative to the last recession 
and the national norm?
    Commissioner Hall. I would say that the manufacturing job 
loss so far in this recession has been very widespread. Some of 
it has been concentrated in things like automobiles, but 
virtually every subsector within manufacturing has had job 
loss.
    One of the things that I--one of the points I want to make 
is that, although about half the job loss has been in services 
so far, we still have had significant job loss outside of 
services.
    I think what was different about the last recession from 
say past recessions--and I do not know about this recession--is 
not quite been the depth of the job loss in manufacturing but 
the fact that there was no recovery in the job loss in 
manufacturing from the last recession.
    Manufacturing I think peaked at a loss of something like 3 
million jobs and never really recovered after the last 
recession.
    Representative English. Can you give us an indication, I 
understand that in October the Federal Reserve's Industrial 
Production Index rebounded somewhat over September, but 
September's decline was huge. Could you interpret this for us 
and give us a sense of what you would project forward from that 
experience?
    Commissioner Hall. Yes. It is a little hard for me to 
project, in part because we produce data and it is important 
for us not to----
    Representative English. Of course.
    Commissioner Hall [continuing]. Not to guess about what the 
data is going to look like. Industrial production, I think 
along with payroll jobs, is one of the most reliable indicators 
of the health of an economy concurrently.
    I am not that familiar with the industrial production 
numbers, how it changed month to month. I think the 
manufacturing portion of that index is probably of more 
interest in part because some of that includes energy and 
utilities, which is something that cannot follow a cyclical 
pattern.
    Representative English. I understand that the Manufacturing 
Survey's overall index--and I think this is based on the work 
of the Institute of Supply Management--has dropped to its 
lowest level since 1982. Can you give us a sense of how that 
interacts with the jobs data, and what we can interpret from 
that in terms of the share of the impact of this recession that 
is being borne by manufacturing?
    Commissioner Hall. Sure. That particular index is a very 
simple survey but actually it is a remarkably good survey. I 
would say that once the industrial production numbers come out, 
you have now got better data but it does give you a good 
indication of how industrial production may look going forward.
    That number is a very low number. That is not an 
encouraging number, and I would say the industrial production 
numbers do track the jobs numbers pretty carefully, especially 
the Manufacturing Index and the Industrial Production, the 
manufacturing portion of that.
    Representative English. And finally, I notice that capacity 
utilization has also been trending downward. How would you 
interpret that in light of today's jobless numbers?
    Commissioner Hall. I would say again that is also a pretty 
reliable number. It comes out of the Industrial Production, and 
that is a pretty reliable indicator of how much excess capacity 
there is in an economy and it does tend to track the jobs 
numbers. So it is pretty much in sync and has been pretty much 
I think in sync I think with the payroll jobs.
    Representative English. Thank you, Madam Chair.
    Vice Chair Maloney. Thank you.
    Congressman Cummings is recognized for five minutes.
    Representative Cummings. Thank you very much.
    Mr. Hall, let me ask you this. You said something that was 
very interesting--you said a lot that was very interesting, but 
tell me what is the significance. You said this jobless 
situation is a little different and the recession is a little 
different in that you see such a loss of jobs in the service 
area. Tell me what the significance of that is.
    Commissioner Hall. At least in my mind it is pretty 
consistent with the real declining consumer spending. Consumer 
spending is an extremely important part of economic growth.
    To give you an example of how this might be different than 
say the last recession, consumer spending never declined a 
great deal during the last recession. That was a recession that 
seemed to be centered somewhat more in equipment and software 
investment.
    This recession we have got really quite a large drop in 
consumer spending. I think part of what that means is that that 
is probably why we have had such a broad job loss in the labor 
market.
    Representative Cummings. And so that means that we have 
gotten way down, then. In other words, we are not just talking 
about manufacturing, we are talking about people when it comes 
to maybe going to the barbershop, instead of going once a week 
they go once every three weeks, and stuff like that; and I 
guess going to restaurants, and things of that nature. Is that 
what that is? Go ahead.
    Commissioner Hall. Yes, absolutely. The job loss has been 
spread out through a lot of different industries. Now a lot of 
it has been in durable goods industries. It always is during 
recessions because certain nondurable goods people need to 
consume, but you are right that it has spread out to a lot of 
nondurables.
    Representative Cummings. There are people sitting here 
watching you, and they do not have a job. They do not have a 
job. And you are the man. You keep all the statistics on jobs. 
You have been trained in this area. They are trying to figure 
out what does this man have to tell me to give me some hope 
that I am going to get a job in the next year? What can you 
honestly tell them?
    In other words, let me give you an example. Somebody who 
has lost their job, say for example in the construction area. 
What would you tell them?
    Commissioner Hall. Well first I have got to admit, if I 
were to characterize this jobs report I would say this is a 
dismal jobs report. There is very little in this report that is 
positive. This is--this is maybe one of the worst jobs reports 
that the Bureau of Labor Statistics has ever produced.
    Representative Cummings. Ever?
    Commissioner Hall. Yes.
    Representative Cummings. And how long has the Bureau been 
around?
    Commissioner Hall. 124 years.
    Representative Cummings. 124 years. So that means that we 
are sliding--we are sliding down a slippery slope fast. Is that 
right?
    Commissioner Hall. Well, you know, I don't, I don't want to 
think about projecting the numbers----
    Representative Cummings. I am not asking you to project. I 
am asking you to tell me what is happening now.
    Commissioner Hall. But I will tell you----
    Representative Cummings. You just told me--you just told me 
and a hundred--and I am not trying to mess with you; I am just 
trying to make sure that the people who are looking at you 
right, Americans who are out of a job, who can't figure out how 
they are going to provide for their kids for Christmas, buy 
clothes, do the things that they need to do, pay their house 
payments, they are running out of Unemployment Benefits, and 
they are looking at Commissioner Hall and trying to make sure. 
They do not want you to lie to them. They just want you to be 
honest about what you see so that they can figure out what they 
have to do.
    And that is one of my problems. I think that we have to 
face up. This Congress has to face up to it, and we have to 
face the problems that we are dealing with, and they are 
urgent. And there is a lot of pain going around. And I just 
want to make sure that they at least know what they have to 
deal with so that they might prepare for the future.
    They may have to go and live with Aunt Suzie. Or they may 
have to borrow some money from Uncle Ben. But they have got to 
figure out how they are going to live their lives. And since 
they are paying your salary, and since you are supposed to be 
the expert on this stuff, they are just asking for some answers 
and they asked me to ask you.
    Commissioner Hall. Well I can tell you, that up to now, 
that this is a low point. I, I can't tell you what the data is 
going to look like going forward.
    Representative Cummings. What do you see in State and 
Federal Unemployment? I understand that there is a lag there, 
but in State Unemployment our Governor in Maryland just sadly 
had to say, and it pained him tremendously, that we were going 
to have to probably put some folk on furlough. I mean, what do 
you see in regard to State and Federal Unemployment, and what 
does that tell you about where we are and what we have to do?
    Commissioner Hall. There has still been modest growth in 
employment in state and local government----
    Representative Cummings. Why is that?
    Commissioner Hall. It actually seems to always happen. And 
I am not sure why, but even during recessions--it may well 
simply be that state and local governments go into deficit and 
continue to hold onto workers during recessions in the past.
    We have not yet seen a significant drop in state and local 
employment. That is not to say that will not happen in the 
future, I just do not know.
    Representative Cummings. Thank you, Madam Chair.
    Vice Chair Maloney. Thank you. The Chair recognizes herself 
for five minutes.
    Later today I will be at another hearing in the Financial 
Services Committee on the auto industry, so I would like to ask 
a few questions about auto-related employment and job losses.
    Through October, almost 15 percent of all job losses in 
2008 were directly associated with the auto industry. Have auto 
industry losses continued to be significant through November?
    Commissioner Hall. The answer is, yes. Motor vehicle parts 
manufacturing lost about 13,000 jobs, and automobile dealers 
lost about 24,000 jobs.
    Vice Chair Maloney. Some economists believe that the lost 
jobs and income in that sector may have tipped the U.S. economy 
into a recession. Do you share that view?
    Commissioner Hall. I do not think I do. I think that the 
job loss has been very broad, and it has been pretty 
significant for a long time in construction and other housing 
related activities and manufacturing outside of autos, and in 
financial services. It does not mean it has helped. It does not 
mean it is not significant.
    Vice Chair Maloney. Congress is considering aid to the big 
three Detroit auto makers, so I would like to ask you about the 
potential employment consequences of the failure of one or more 
of these huge companies.
    Estimates are that several millions jobs--2.5 to more than 
3 million jobs--are potentially at risk. I would like to go 
through the numbers and see if you agree:
    First, these companies directly employ about 240,000 
workers. Correct?
    Commissioner Hall. On that one, to be honest with you, I am 
not sure because companies that report data to BLS are held in 
confidence. So I cannot speak on how many workers those 
particular companies employ, whether or not they are part of 
our survey.
    I can tell you that direct employment in the domestic 
automobiles and light trucks plants industry is about 159,000 
in September, but that is just located in the U.S. and that 
includes domestic and foreign. So I am not sure where the 
240,000 comes from.
    Vice Chair Maloney. It is data that we collected from them 
directly.
    But they also support many more production workers whose 
firms supply the parts and raw materials to make the vehicles. 
As I understand it, BLS payroll data show that 840,000 workers 
are employed in assembly and parts manufacturing. Is that 
correct?
    Commissioner Hall. That is approximately correct, yes.
    Vice Chair Maloney. And over a million additional workers 
are employed by dealerships in sales and services, according to 
your surveys; is that correct?
    Commissioner Hall. Yes, 1.1 million.
    Vice Chair Maloney. 1.1. Do you know how many are linked to 
the three big car companies?
    Commissioner Hall. I don't. Again, that is a detail that we 
do not separate out.
    Vice Chair Maloney. In addition, local communities and 
retailers rely on spending by auto industry workers. The Bureau 
of Economic Analysis has estimated that each job in the 
manufacturing car industry supports 2.5 to nearly 6 additional 
jobs in the wider economy. Do you concur with the BEA?
    Commissioner Hall. That is a BEA calculation that we do not 
do, but BEA--I have no reason to doubt their calculation.
    Vice Chair Maloney. And other economists estimate even 
higher multiplier effects for these job losses; would you 
agree? Or I guess you are not going to comment on that.
    Adding all of this up, how many jobs would you estimate are 
potentially at risk if one or all of these companies go out of 
business?
    Commissioner Hall. We have never made such a calculation, 
and that is one that we probably would not try to make.
    Vice Chair Maloney. Have you seen estimates by others that 
you think are credible?
    Commissioner Hall. Again, I guess because our focus is on 
producing the data, I have not actually read and evaluated some 
of those estimates.
    Vice Chair Maloney. But these estimates that others are 
putting forward, would not job losses of this magnitude be a 
serious blow to an already weak labor market and economy?
    Commissioner Hall. Oh, absolutely. 2.5 to 3 million jobs is 
quite significant.
    Vice Chair Maloney. Do you have, or have you seen any 
estimates, of how much the unemployment rate would rise if 
these companies do not survive?
    Commissioner Hall. Yes, I think I have the same answer 
there. That is not a calculation or something that I would make 
or comment on.
    Vice Chair Maloney. Thank you. My time has expired. 
Congressman English is recognized for five minutes.
    Representative English. Thank you, Madam Chair.
    I am particularly interested to follow through on the 
situation relating to the housing market and construction. Can 
you tell me how does the change in construction employment in 
November compare to the average of previous months?
    Commissioner Hall. In November construction lost about 
82,000 jobs. Since September 2006 it has lost about 780,000 in 
total. I am not sure if I have the number about how the job 
loss looked up to November. I suspect it was pretty similar to 
the 82,000 in November.
    Representative English. Are there any unusual weather-
related factors that may have influenced the data here today?
    Commissioner Hall. None that I know of.
    Representative English. Okay. The housing and financial 
sectors have been especially weak in the last year. We have 
seen this certainly in northwestern Pennsylvania but even more 
dramatically in some other parts of the country. This has been 
reflected in their falling output and the value of related 
equities in the stock market.
    Isn't this weakness also reflected in employment in these 
sectors?
    Commissioner Hall. Yes, absolutely. For example, in 
November financial activities lost about 32,000 jobs, which is 
a very large number for that sector.
    Representative English. My understanding is that virtually 
all measures of housing activity, permits, starts, sales, and 
housing prices, have been declining sharply. I understand, and 
I know you have trouble looking forward from the perspective of 
the employment data, but these are expected to remain weak. 
Would it be reasonable to interpret at this stage in a 
recession that the housing sector would continue to deteriorate 
based on the numbers you have seen here?
    Commissioner Hall. It is hard for me to guess as to when it 
is going to bottom out, and I would be hesitant to try to 
forecast that.
    Representative English. I understand.
    Madam Chair, I have no further questions.
    Vice Chair Maloney. Thank you. The Chair recognizes 
Congressman Cummings for five minutes.
    Representative Cummings. You said, Mr. Hall, that this is 
the worst report you have seen in a hundred and twenty--well, 
your agency has put out in 124 years. I am not saying that you 
were there back 124 years ago.
    Commissioner Hall. I would say it was one of the worst.
    Representative Cummings. One of the worst.
    Commissioner Hall. Yes.
    Representative Cummings. One of the sad--you know, as I 
listen to you there is one thing that struck me. When I was 
preparing for this hearing I noticed the projection, and I know 
that you do not necessarily do the projections, was 325,000, 
you know, that we would have lost 325,000 jobs, and come to 
find out the actual number is 533,000.
    We are approaching almost double what folks had projected. 
And I assume that the people who do these projections are 
people who look at all the stats, and they are well trained, 
and what have you, but that seems to be a pretty big leap, 
doesn't it?
    Commissioner Hall. Yes. Absolutely. In fact, it may be a 
little bit worse than even you just characterized because we 
also lost another 199,000 jobs in September and October that we 
added to those numbers in revision.
    Representative Cummings. So you are saying the actual 
figure may be over, over seven--well, wait a minute--almost 
800,000 jobs?
    Commissioner Hall. Yes.
    Representative Cummings. So even this 533,000 is, you 
think, you know is not accurate? Is that what you are trying to 
say?
    Commissioner Hall. Oh, no----
    Representative Cummings. And I see Mr. Rones is looking at 
you. He looks like he's wondering about what you're saying. I 
am just watching you, Mr. Rones. You know, I keep my eye on 
you.
    Commissioner Hall. Yes. Apparently I am not being real 
clear. We discovered that we had about 200,000 fewer jobs 
created, or an additional 200,000 jobs lost in September and 
October than we had previously estimated. And then we have 
another 533,000 this month.
    Representative Cummings. So based upon, based upon what you 
have seen over the last two or three months, you are saying 
that it would not shock you if the figure is much higher than 
what it is, that the 533,000? In other words, a month from now 
when you look back? Is that what you are saying?
    Commissioner Hall. Oh, no, no, I still think that is our 
best estimate.
    Representative Cummings. Okay.
    Commissioner Hall. I would not anticipate that is going to 
change. It is just that we added some additional jobs lost in 
the prior two months. So the past three months has been worse 
than we would have expected.
    Representative Cummings. I see. And so why are most 
people--what are the reasons they give for not having a job? Do 
you know? Or becoming unemployed? Do you get that information?
    Commissioner Hall. Sure. Yes, we have reasons for 
unemployment. The number one reason is job loss.
    Representative Cummings. Meaning that they were fired, or 
laid off?
    Commissioner Hall. Correct.
    Representative Cummings. Involuntarily? Is that right?
    Commissioner Hall. Yes.
    Representative Cummings. And how high would the 
unemployment rate be if it included those who worked part-time 
for economic reasons as well as those who were marginally 
attached to the labor force?
    Commissioner Hall. This month that number would be 12.5 
percent, up from about 11.8 percent in October.
    Representative Cummings. Which is how many? I mean, can you 
give me a figure?
    Commissioner Hall. Um----
    Representative Cummings. Do you have the stats, the 
percentages?
    Commissioner Hall. Yes, I think we can come up with an 
exact number here quickly.
    Representative Cummings. All right. So we are in a pretty 
bad situation. I know you do not like to talk policy, but we do 
pay you to tell us something. I mean, so can you tell me that? 
We are in a pretty bad situation employment-wise, unemployment-
wise?
    Commissioner Hall. Yes.
    Representative Cummings. Okay. You know, I was just 
thinking, you know I have such a tremendous respect for the 
President-Elect, and he talks about The Urgency of Now. It 
seems like, I would hope--and this is not for your comment, Mr. 
Hall, I am just telling you what I feel--I believe the 
President-Elect and the President, President Bush, they need to 
get together right now, because this is The Urgency of Now. 
Because we have got people who are unemployed, and we are, as 
you agree with me, we are going down a slippery slope, and we 
are speeding down that slope.
    In some kind of way, we have got to get people back to 
work, and we have got to get them back to work soon, because 
based upon all the things that you have said to me, and as I 
listened to you and I have listened to you over the months now, 
it seems like when one thing goes, another thing goes, in other 
words one sector of unemployment has an effect a lot of times 
on another. Is that right? That's the way our economy works? Is 
that correct?
    Commissioner Hall. Um----
    Representative Cummings. In other words, if you do not have 
construction workers working, that means they are not going to 
the barber shop.
    Commissioner Hall. Right. And I think the real key in this 
downturn has been the decline in consumer spending. Whether it 
is lack of confidence, or whatever the reason, consumer 
spending is creating a very broad impact.
    Representative Cummings. Madam Chair, I am hoping we will 
have another round because I do have a burning question that I 
must ask.
    Vice Chair Maloney. I would like to focus some of our 
attention on women's employment. How have women fared in this 
economy that has shed so many jobs this year? What industries 
have lost the most jobs? And overall how are they faring in 
this job loss situation?
    Commissioner Hall. Just like the total job loss so far this 
year, job loss by women has been significant and widespread. 
Women workers have lost the most jobs in professional business 
services, about 176,000 so far this year. Manufacturing, 
174,000. Retail trade, 139,000. Financial activities, about 
90,000. Those are the most significant industries.
    Vice Chair Maloney. Financial services and real estate are 
large employers in our country and in my District, and they 
appear to have been particularly hard hit. How many jobs have 
been lost in these industries in particular? Financial 
services, and I would say real estate?
    Commissioner Hall. Well financial activities, which 
includes both, have lost about 142,000 jobs since December; 
86,000 of that has been over the past 3 months.
    Vice Chair Maloney. And have women especially been losing 
jobs in these two particular industries?
    Commissioner Hall. We do not have data available for 
November, but through October women workers have accounted for 
about 80 percent of the job loss in those industries.
    Vice Chair Maloney. Good Heavens.
    Temporary help is often a leading indicator of an 
employer's willingness to hire, and you indicated earlier that 
it has risen to roughly 12 percent loss in temporary 
employment. When was the last time that the temporary help 
industry saw this high, high level of job losses?
    Commissioner Hall. Temporary help has lost about 393,000 
jobs so far this year. The last time we saw this level of 
losses was during the 2001 recession.
    Vice Chair Maloney. 2001?
    Commissioner Hall. Yes.
    Vice Chair Maloney. And what does this trend mean, 
especially since women are typically concentrated in this 
industry?
    Commissioner Hall. Well first of all this does seem to be 
an industry that has led recessions, has been sort of a leading 
indicator, and this is an industry where about 44 percent of 
the jobs are held by women, and the job loss by women in that 
industry has been comparable to that.
    Vice Chair Maloney. I am deeply concerned about deflation. 
Just a few months ago we were worried about rising prices and 
inflation, but last month the BLS announced the steepest 
single-month drop in the 61-year history of the Consumer Price 
Index, an indication that inflation was in retreat, which has 
fueled concerns about deflation.
    What is the likely impact of deflation on the labor market?
    Commissioner Hall. Let me first note that we are not 
currently in a period of deflation. Deflation typically is 
viewed as a widespread and sustained fall in prices across the 
economy.
    Although the drop in the CPI, the Consumer Price Index, 
last month was the largest ever, it was entirely due to a 
record 8.6 percent drop in energy prices. So it therefore was 
not widespread. And despite this 1 percent drop in October, 
overall consumer prices are still up 3.7 percent over the past 
12 months.
    Vice Chair Maloney. And I would like to--I am concerned 
also about your budget. I just wanted to ask how you are coping 
with reduced funding levels under the current CR. Have any 
important programs or surveys been affected? Or can you tell us 
the ways in which the quality of our economic indicators might 
suffer if your budget request is not met in 2009?
    Commissioner Hall. Sure. Well thank you for asking this 
question.
    Vice Chair Maloney. We want to make sure we have accurate 
numbers.
    Commissioner Hall. The current Continuing Resolution is 
holding our funding level at roughly $50 million below what I 
believe is a permanently maintainable level for our current 
programs. That has affected us three ways.
    First, for the third year in a row we have had to delay a 
crucial update to the Consumer Price Index. In particular, our 
measurement of housing costs, which make up about a third of 
America's expenditures, is based on a sample drawn from the 
1990 Census. It is therefore terribly out of date. That is 
about 18 years old now. The sample suffers from steady 
attrition. So this needs to be updated. We have not been able 
to update that.
    And this is just really important. The CPI, the Consumer 
Price Index, sets Social Security benefits, it indexes tax 
brackets in dozens of other programs. I don't want to go on too 
long, but there are lots of----
    Vice Chair Maloney. Is it wise to allow our economic 
statistics to deteriorate in the midst of a downturn?
    Commissioner Hall. First of all, I do not believe it is 
ever wise to allow our statistics to decline because I consider 
the economic statistic agencies to be an important 
infrastructure for the U.S. economy, and it contributes 
considerably to the efficient function of both the economy and 
government.
    Under the current conditions, I cannot imagine asking 
households and firms to make sound judgments based on economic 
data that is deteriorating in both quality and quantity, let 
alone the fact that we could be risking the effectiveness of 
hundreds of billions of dollars already committed to fixing our 
economic problems. It is sort of a penny-wise and pound-foolish 
sort of situation.
    Vice Chair Maloney. Thank you for your testimony. My time 
has expired.
    Congressman English is recognized for five minutes.
    Representative English. Madam Chair, as an outgoing Member 
I do not think it is necessarily my place to advocate for 
policy prescriptions, but based on the statistics we have seen 
today I am very strongly disposed to think that Congress should 
act quickly.
    And as you and our colleague have previously suggested, I 
think it is very important that Republicans and Democrats come 
together now to move to give the new Administration the 
strongest possible hand by advancing what we can as soon as we 
can. I believe there is a great deal of common ground on policy 
that could move the economy forward and get it back on a growth 
path.
    You may recall, Madam Chair, the middle of this year I had 
advocated for a new stimulus package beyond what had been 
proposed. I think it is very important that if we are going to 
deal with the damage that has been done to financial markets 
that we put in place the tax incentives to encourage the 
economy to grow and encourage the stock market to recover.
    We need to send the right signals and we need to put in 
place the sorts of policies that give us the revenue we need to 
meet priorities, but at the same time allow us to get forward 
motion in the economy.
    I am extremely alarmed, as someone who has served on this 
panel for a number of years, to see the dimensions of the bad 
news that we have seen today. I think this is a Sword of 
Damocles hanging over the economy of America.
    The fact is, what we do now and whether we move promptly to 
do it is going to have a large impact on what the next 
President's options are for the next year, possibly for the 
next couple of years.
    I wish you well, and all of my colleagues well, who will be 
making decisions on this after the first of the year. I would 
hope that today the current Administration and the President-
Elect could come together and encourage Congress to move 
forward to act on what we can do now to address the problems in 
the auto industry and generally to send a message to world 
markets that the United States is determined to deal with its 
financial problems.
    I believe that if we act promptly we are going to be able 
to create the kind of environment that will allow manufacturing 
in my part of the world and the financial services in your part 
of the world to recover. Without action, I am afraid that our 
prospects are going to be extremely bleak.
    So as I contemplate leaving this Institution, I have to say 
that today's report makes a very compelling argument for 
immediate action--immediate action based not on ideological 
proclivities but on a commitment to come together to get the 
economy rolling again. There is a lot of common ground that I 
think would allow us to move.
    Mr. Commissioner, it has been a privilege to hear your 
presentation. It is sobering. It has also been professional, 
and I am very, very grateful for the opportunity to, on one of 
my last official duties, to hear your presentation. I hope that 
its significance is absorbed by policymakers here and 
throughout the country.
    Thank you, Madam Chair.
    Vice Chair Maloney. Thank you, and the Chair recognizes Mr. 
Cummings for five minutes.
    Representative Cummings. I want to thank Mr. English for 
his statement. I want to associate myself with every syllable 
that he just said because I think this is an urgent moment, and 
this is a very, very critical moment in our country's history. 
As a matter of fact not only in our country's history, but the 
world's history.
    Commissioner Hall, as you were talking I could not help but 
think about the other day when I was at the Port of Baltimore. 
We are about to lose, if things continue to go at the rate they 
are going with regard to the automobile situation, probably 
somewhere between 200 and 500 jobs, well-paying jobs.
    You know what a lot of these jobs are? Baltimore has the 
number one port for Chrysler exports. So we have got these men 
who have been working there many years who roll the cars and 
trucks up on the ship. And they are about to lose their jobs.
    That is where I just want to take us for a moment. You 
talked about how dismal this report is, but let me tell you 
what makes it even more dismal.
    Have we ever dealt with a global recession? I mean, you 
know, we have got a situation where people are not buying our 
products because consumers do not--we have got consumer 
problems all over the world. I mean, this is not just a United 
States problem.
    And we have got a situation where the markets are down all 
over the world. It is just not something that we have to 
resolve. And that is why Mr. English's comments are so 
appropriate and so timely. So we need to do what we need to do, 
but I am asking you: When you assess all of this, and again you 
are the man, you are the one who looks at these statistics and 
tries to figure out, I guess, where we are going with them, 
where our country is going, do you figure in that that whole 
idea that we are in the midst of a global recession?
    Commissioner Hall. Sure. Absolutely. And I think the 
interconnectedness of countries can often be something that is 
stabilizing, that is helpful. For example, when countries go 
into more severe economic downturns, sometimes exports help the 
country----
    Representative Cummings. Well can I tell you something? Can 
I tell you a little secret? It is not helping us in Baltimore. 
It is not helping those men who are about to lose their jobs. 
So that is nice about what it can do.
    I guess what I am trying to get to is that you look at the 
statistics, and I am trying to figure out--I mean, I think this 
recession is a lot different than others. I mean, Ms. Maloney 
and I sit on the committee that does the investigations, the 
Oversight and Government Reform Committee, and let me tell you 
something. I have looked at this thing, and there are a whole 
lot of people who did a lot of cheating along the way--in this 
country.
    It has been like dominoes. It has been fall, fall, fall, 
dominoes are falling, and now they are falling all over the 
world. So my question is: When we see that, does that affect 
how you might project--and I know you do not like to project, 
but you have got to at least think about this stuff. I mean, 
this is what you do--what is happening in our country.
    Remember I asked you a few minutes ago, I said there are 
people looking at you, and they are looking for some hope, but 
they want you to be honest, but they are looking for some hope, 
and you do not seem to have much to give them. And that is 
fine. That is fine. But I am just trying to figure out how does 
that figure in? And have we had a similar situation in recent 
history where we had a global recession?
    Commissioner Hall. You know, to be honest I have not looked 
at that very carefully.
    Representative Cummings. Do you mean to tell me that when 
you look at these figures, and you are looking at unemployment 
in this country--now let me make sure I understand this--you do 
not think about the fact that folk may not be buying, they 
might not buy our products somewhere else?
    Commissioner Hall. Oh, absolutely I think that is 
important. I am talking about looking at the global economic 
downturn compared to other time periods.
    Representative Cummings. But isn't that related to this?
    Commissioner Hall. Oh, absolutely.
    Representative Cummings. I mean, I don't know. I mean, 
you're the expert.
    Commissioner Hall. Sure. Sure. And the same thing, you 
asked--there was a global downturn during the last recession as 
well. Part of the difference perhaps in the last recession was 
that the downturn was probably less severe in the United States 
than with a lot of our trading partners. And in fact I think 
the U.S. was actually helpful to a number of other countries 
because the U.S. downturn was not so severe that imports stayed 
fairly high and we actually helped out a lot of countries from 
going into such a severe downturn.
    This year so far that might be different.
    Representative Cummings. I see my time is up.
    Vice Chair Maloney. Well I want to thank the panelists 
today for your public service, for your testimony, and to thank 
my colleagues, and in particular Congressman English's strong 
statement of a bipartisan ``future is now'' response to the 
economic downturn in our great country.
    I believe in and support his comments that we do need a 
stimulus package to kickstart our economy and to make sure that 
we move forward. We do, in my opinion, based on the numbers 
that you presented today of a possible 2.5 to 3 million job 
loss directly or indirectly related to the auto industry, it is 
important that we provide a loan that will help them to 
continue and move forward.
    I cannot imagine an America in which we do not even build 
our own cars. I know that they have come forward with a plan to 
move towards energy independence, for greater mileage per 
gallon, towards electronic cars and other new innovations. So 
this is something we need to confront and work towards.
    One economist told me that our economy is roughly 30 
percent of the world economy. We are in a global economy, and 
we need to address these problems in a global way, and these 
challenges that are before us.
    I thank you for being here. I thank my colleagues. The 
meeting is adjourned.
    (Whereupon, at 10:42 a.m., Friday, December 5, 2008, the 
hearing was adjourned.)
                       SUBMISSIONS FOR THE RECORD

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                 Prepared Statement of Carolyn Maloney
    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 now have confirmation 
that the economy is in a recession.
    Today's jobless numbers take your breath away. In November, the 
economy lost an astonishing 533,000 jobs--the highest monthly loss in 
34 years--and job losses in the previous two months were worse than 
originally reported. The unemployment rate increased to 6.7 percent.
    The official arbiters of U.S. recessions--the National Bureau of 
Economic Research--announced on Monday that the economy entered this 
recession in December 2007, when the private sector first began 
shedding jobs. Since then, the economy has lost over 2 million private 
sector jobs and 2.7 million more workers are unemployed, for a total of 
10.3 million.
    These stark numbers should make the decision to rescue the Detroit 
carmakers much easier. The potential employment consequences if one or 
more of the Big Three Detroit automakers fails could be devastating to 
an already weak labor market. Estimates show that millions of jobs--
including vehicle assembly, parts manufacturing, suppliers, and 
neighborhood retailers--are potentially at risk. The Bureau of Economic 
Analysis has estimated that each job in the vehicle manufacturing 
industry supports from two and a half to about 6 additional jobs in the 
wider economy, so the ripples of their collapse could be felt far and 
wide.
    Last week, third quarter economic growth was revised downward to -
0.5 percent. The economy is being pulled down by falling consumer 
spending, which makes up nearly three-quarters of our gross domestic 
product. Yesterday, it was announced that retailers posted the worst 
November sales in more than thirty years. Families are conserving their 
dwindling resources and simply not buying much of anything, including 
durable goods such as cars. As consumers cut back on their spending, 
this is dragging down economic growth, jobs and wages.
    The current downturn has already lasted longer than the last two 
recessions, bringing hardship to millions of families. 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 is making the employment situation even worse. 
The lack of access to credit, combined with the sharp drop in home 
prices, declines in the stock market, and the lack of growth in real 
incomes are putting unbearable financial pressure on families. 
Retirement savings and college savings accounts have been decimated by 
the sudden drop in value in the equities market. College-bound seniors 
will be facing tuition hikes and diminished financial aid, making 
college out-of-reach to many middle-class and poor families.
    Congress has already taken numerous steps to help buffer families 
from the effects of the downturn, including extended Unemployment 
Benefits again last month.
    Some economists are already calling this ``the Great Recession'' 
because they fear it may be longer and deeper than any recession in 
recent history. This recession requires solutions that address the 
magnitude of our economic woes.
    In January, Congress will send our new President a substantial 
recovery package that makes investments in our future and puts 
Americans back to work as quickly as possible.
    I thank Chairman Schumer for calling this hearing and I look 
forward to the continued focus on labor market conditions by this 
committee.
   Statement of Keith Hall, Commissioner, Bureau of Labor Statistics
    Madam Chair 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 533,000 in November, with 
large and widespread losses occurring across the major industry 
sectors. November's drop in payroll employment followed declines of 
403,000 in September and 320,000 in October, as revised. The 
unemployment rate, at 6.7 percent, continued to trend up in November 
and has risen by 1.7 percentage points since the recession started in 
December 2007 (as designated by the National Bureau of Economic 
Research).
    Over the past 3 months, job losses have averaged 419,000 per month, 
sharply higher than the average loss of 82,000 per month from January 
through August. About two-thirds of the recent job declines have 
occurred in the service-providing sector of the economy. In the first 8 
months of this year, job losses were largely limited to construction 
and manufacturing.
    Manufacturing job losses continued in November (-85,000). Factory 
job losses would have been larger were it not for the return to work of 
27,000 aerospace workers who had been on strike. Over the month, 
employment declines occurred throughout the manufacturing sector. Motor 
vehicle and parts manufacturers shed 13,000 jobs over the month; 
employment in this industry has fallen by 135,000 since December. 
Manufacturing hours and overtime each declined by 0.2 hour in November.
    Construction employment was down by 82,000 over the month. Since a 
peak in September 2006, employment in this industry has fallen by 
780,000, largely in the residential sector. Over the past 3 months, job 
losses have been evenly distributed between residential and 
nonresidential construction.
    Employment also declined throughout the service-providing sector. 
The largest loss (-101,000) was in employment services, which includes 
temporary help agencies. Employment services has lost 495,000 jobs so 
far in 2008.
    Retail trade employment fell by 91,000 in November, with the 
largest job loss among automobile dealers (-24,000); since December, 
auto dealers have shed 115,000 jobs. Employment also decreased after 
seasonal adjustment in clothing stores; sporting goods, hobby, book, 
and music stores; and furniture and home furnishings stores. Wholesale 
trade employment fell by 25,000 in November and by 123,000 so far in 
2008.
    Leisure and hospitality employment contracted by 76,000 in 
November; the accommodation and food services industry accounted for 
most of the decrease. Elsewhere in the service-providing sector, 
sizable employment declines also occurred in financial activities (-
32,000), transportation and warehousing (-32,000), and information (-
19,000).
    In contrast to most industries, health care added jobs in November. 
Employment in the industry rose by 34,000 over the month and has 
increased by 341,000 so far this year. The November gain reflected jobs 
added in nursing and residential care facilities, hospitals, and 
offices of physicians.
    Average hourly earnings for production and nonsupervisory workers 
in the private sector rose by 7 cents, or 0.4 percent, in November. 
Over the past 12 months, average hourly earnings have increased by 3.7 
percent. From October 2007 to October 2008, the Consumer Price Index 
for Urban Wage Earners and Clerical Workers (CPI-W) rose by 3.8 
percent.
    Turning to labor market measures from the survey of households, the 
unemployment rate continued to increase in November. At 6.7 percent, 
the rate was up by 0.2 percentage point over the month and by 1.7 
percentage points since December.
    In November, 10.3 million persons were unemployed, up by 2.7 
million from December. About 2.2 million of the unemployed in November 
had been jobless for 27 weeks or more, an increase of 868,000 thus far 
in 2008.
    Both the labor force participation rate, at 65.8 percent, and the 
employment-population ratio, at 61.4 percent, decreased over the month. 
The employment-population ratio has declined by 1.3 percentage points 
since December.
    The number of persons working part time who would have preferred 
full-time employment increased by 621,000 in November to 7.3 million. 
Thus far in 2008, the number of such workers has grown by nearly 2.7 
million.
    In summary, nonfarm payroll employment declined by 533,000 in 
November after having fallen by 723,000 over the prior 2 months 
combined. The unemployment rate rose to 6.7 percent in November, 1.7 
percentage points above the December rate.
    My colleagues and I now would be glad to answer your questions. 
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