[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
__________
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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
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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
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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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