[Joint House and Senate Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-308

                  THE EMPLOYMENT SITUATION: APRIL 2009

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

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 8, 2009

                               __________

          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]

HOUSE OF REPRESENTATIVES             SENATE
Carolyn B. Maloney, New York, Chair  Charles E. Schumer, New York, Vice 
Maurice D. Hinchey, New York             Chairman
Baron P. Hill, Indiana               Edward M. Kennedy, Massachusetts
Loretta Sanchez, California          Jeff Bingaman, New Mexico
Elijah E. Cummings, Maryland         Amy Klobuchar, Minnesota
Vic Snyder, Arkansas                 Robert P. Casey, Jr., Pennsylvania
Kevin Brady, Texas                   Jim Webb, Virginia
Ron Paul, Texas                      Sam Brownback, Kansas, Ranking 
Michael C. Burgess, M.D., Texas          Minority
John Campbell, California            Jim DeMint, South Carolina
                                     James E. Risch, Idaho
                                     Robert F. Bennett, Utah

                     Nan Gibson, Executive Director
               Jeff Schlagenhauf, Minority Staff Director
          Christopher Frenze, House Republican Staff Director
                            C O N T E N T S

                              ----------                              

                                Members

Hon. Amy Klobuchar, a U.S. Senator from Minnesota, presiding.....     1
Hon. Kevin Brady, a U.S. Representative from Texas...............     2

                               Witnesses

Dr. Keith Hall, Commissioner, Bureau of Labor Statistics; Mr. 
  Philip L. Rones, Deputy Commissioner, Bureau of Labor 
  Statistics; and Dr. Michael W. Horrigan, Associate Commissioner 
  for Prices and Living Conditions, Bureau of Labor Statistics, 
  U.S. Department of Labor.......................................     4

                       Submissions for the Record

Prepared statement of Representative Kevin Brady.................    22
Prepared statement of Dr. Keith Hall, Commissioner, Bureau of 
  Labor Statistics, together with Press Release No. 09-0482......    22


                  THE EMPLOYMENT SITUATION: APRIL 2009

                              ----------                              


                          FRIDAY, MAY 8, 2009

             Congress of the United States,
                          Joint Economic Committee,
                                                    Washington, DC.
    The committee met, pursuant to call, at 9:35 a.m. in Room 
104 of the Dirksen Senate Office Building, The Honorable 
Senator Amy Klobuchar presiding.
    Representatives present: Brady.
    Senators present: Casey.
    Staff present: Gail Cohen, Nan Gibson, Colleen Healy, 
Elisabeth Jacobs, Annabelle Tamerjan, Andrew Wilson, Chris 
Frenze, Bob Keleher, Robert O'Quinn, Lydia Mashburn, and Jeff 
Wrase.

   OPENING STATEMENT OF THE HONORABLE AMY KLOBUCHAR, A U.S. 
                     SENATOR FROM MINNESOTA

    Senator Klobuchar. The Joint Economic Committee will come 
to order. Welcome to our witnesses, Mr. Horrigan, Commissioner 
Hall, Mr. Rones, and Congressman Brady is here with me today. I 
want to welcome all of you. Thank you for being here for this 
important hearing. I also want to thank Chair Maloney for the 
opportunity to chair today's April hearing on the employment 
situation in our country.
    Ironically, the last time I presented over a hearing of 
this exact topic was almost exactly one year ago. Commissioner 
Hall, clearly we've seen some changes since then. I was looking 
back over the questions that you and I had going back and forth 
when we were talking about whether certain statistics were 
indicators of things to come, and as it turned out, they were.
    The Joint Economic Committee has held a series of hearings, 
as you know, on the economic outlook recently. We heard from 
both the chair of the President's Council of Economic Advisers, 
Christina Romer, and Federal Reserve Chairman Ben Bernanke, 
that there are reasons for some optimism regarding the state of 
our economy. We noted that there are green shoots in the form 
of an increase in consumer demand, and indications that the 
housing market may be bottoming out.
    On the other hand, as you all know, there's some extreme 
challenges as we see from the announcement of today's 
unemployment figures. As you know, the Bureau of Economic 
Analysis reported recently that consumer spending did rise 2.2 
percent on an annualized basis in the last quarter, the most in 
two years. Dr. Romer recently testified before this committee 
that because only a small part of the spending and tax relief 
called for in the Recovery Act had taken place, and because 
much of the economy's response to stimulus occurs with a lag, 
most of the benefits are yet to come.
    But then we have this employment situation that we're here 
to talk about today. Private employers have slashed over 
600,000 jobs. Total job losses have totaled over 5.7 million 
since the start of the last recession, 5.7 million. When I 
think about these statistics, I also try to remind myself that 
these are not just numbers. These are real people that we know, 
that we see in the grocery stores, that we see when we all get 
home in Congress to our home states.
    I just got this letter in fact about a week ago from 
someone in my state, from one of the smaller towns. She writes 
``We're almost at our wits end for our daughter and her 
husband. He is an unemployed plumber who will be out of 
unemployment help in June. This economy is ruining lives. Our 
daughter works part-time as an LPN in a clinic, and can't 
afford to finish. There are three small children. My daughter 
has no health insurance. Both Angie and her husband want to 
work, but there are no jobs. They are in danger of losing their 
homes. We have been helping financially as much as we can, but 
there's a limit to what we can do. What do we do for our 
kids?''
    The unemployment rate now stands at 8.9, a jump of four 
percentage points since the downturn began 16 months ago, and 
the broadest measure of unemployment or underemployment that 
the Bureau of Labor Statistics publishes now is at 15.8 
percent. These are real families. These are the families that 
we are supposed to help, and that we are trying very hard to 
help with some of the new policies of the Administration and 
this Congress. I think today's unemployment numbers underscores 
a need for a continuing focus, a continuing bold direction with 
this economy, that we can't back down, that we can't just let 
things take care of themselves.
    So I'm looking forward to diving into these numbers again, 
Commissioner Hall. I know we had some good exchanges last time. 
To figure out what all of this means, and what it means for our 
policies going forward. As I said, we see some glimmers of 
hope. I think that's very good, and the increasing consumer 
confidence. We also know that this is a very difficult time for 
many Americans. Thank you very much. I will turn it over to 
Congressman Brady.

    OPENING STATEMENT OF THE HONORABLE KEVIN BRADY, A U.S. 
                   REPRESENTATIVE FROM TEXAS

    Representative Brady. Thank you Chairwoman. Thank you. 
Welcome Commissioner Hall before the Committee, as well as the 
other witnesses. The labor market data reported today reflects 
continued economic weakness. Overall, employment declined by 
539,000, with losses spread across many industries. Private 
sector payroll employment declined by 611,000, while government 
employment increased by 72,000.
    The unemployment rate rose to 8.9 percent. These data are 
not surprising, given recent economic trends. Real GDP declined 
by 6.1 percent in the first quarter of this year, with business 
investment plunging by 38 percent. There are some preliminary 
signs and some other data that the rapid rate of economic 
decline may be slowing. But more evidence is needed before 
reaching any firm conclusions.
    The condition of the housing sector and the contraction of 
the auto industry are among many factors that make the economic 
outlook especially murky. Despite recent economic developments, 
including the rising unemployment rate, unfortunately the 
Administration has failed to update its unrealistic economic 
assumptions in its budget submission. For example, this week 
the Administration predicts an 8.1 percent unemployment rate 
for this year, even though it is clear the rate will 
unfortunately be much, much higher.
    The Administration projects that the economy will decline 
by only 1.2 percent in 2009, compared to the blue chip 
consensus forecast decline of almost double that, 2.6 percent. 
The Economist magazine and other experts call these economic 
assumptions deeply flawed, and the reason it's important to 
point this out is these faulty and rosy scenarios are 
dangerous, because they produce an understatement of the real 
cost of the Administration's expensive new spending proposals.
    The result will be huge budget deficits and a doubling of 
the national debt as a share of GDP by 2017, according to the 
Congressional Budget Office. In the short term, the steps the 
Fed has taken, including the huge expansion of its balance 
sheet, have helped to stabilize financial markets and will 
eventually provide a boost to the economy. However, the ongoing 
need for households and banks to reduce their outstanding debt 
does suggest that when the recovery comes, it will probably be 
weak.
    Under Administration policy, the excessive levels of 
deficits, debt, taxes and inflation will undermine long-term 
economic growth. Unfortunately, increasing the burden of 
government on an already weak economy is only going to further 
undermine economic and job growth in the years ahead.
    The Administration's proposed reductions of the incentives 
for work, saving and investment is the not the right way to 
boost the productivity, innovation and competitiveness of the 
U.S. economy in the years ahead. With that, Madam Chairman, I 
will yield back.
    [The prepared statement of Representative Brady appears in 
the Submissions for the Record on page 22.]
    Senator Klobuchar. Thank you very much, Representative 
Brady. I'd like now to introduce Commissioner Hall, the 
Commissioner of the Bureau of Labor Statistics (BLS) for the 
U.S. Department of Labor. The BLS is an independent national 
statistical agency. The Bureau of Labor Statistics processes, 
analyzes and disseminates essential statistical data for the 
American public, the U.S. Congress and federal agencies, state 
and local governments, businesses and labor.
    Dr. Hall also served as the Chief Economist for the White 
House Council of Economic Advisers for two years under 
President George W. Bush. Prior to that, he was Chief Economist 
for the U.S. Department of Commerce. Dr. Hall has spent ten 
years at the U.S. International Trade Commission. He received 
his B.A. from the University of Virginia and his M.S. and Ph.D. 
degrees in Economics from Purdue University. Commissioner Hall.

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

    Commissioner Hall. Thank you. Madam Chairman, members of 
the Committee, thank you for the opportunity to discuss the 
unemployment data we released this morning. Non-farm payroll 
employment declined by 539,000 in April, and the unemployment 
rate rose from 8.5 to 8.9 percent. Since the start of the 
recession in December 2007, job losses have totaled 5.7 
million, and the unemployment rate has increased by four 
percentage points.
    In April, widespread job losses continued throughout the 
private sector. Private employment fell by 611,000, compared to 
an average monthly decline of 700,000 in the prior four months. 
Over the month, federal government employment rose by 66,000, 
mainly due to hiring of 63,000 temporary workers, in 
preparation for the Census 2010.
    Manufacturing employment fell by 149,000 over the month, 
and job losses continue to be widespread. Since the recession 
began, this industry has shed 1.6 million jobs, representing 
more than a quarter of the total non-farm job decline during 
the period. Construction employment decreased by 110,000 in 
April. Job losses have averaged 120,000 per month in the last 
six months, compared with 46,000 per month from December 2007 
to October 2008.
    Also in the goods-producing sector, mining employment fell 
by 10,000 in April. From the start of the recession through 
September 2008, this industry has continued to add jobs, mainly 
those related to oil and gas production. Since September, 
mining employment has declined by 44,000.
    In April, employment in professional and business services 
dropped by 122,000. Temporary help services accounted for about 
half of the job losses. Since the start of the recession, 
temporary help employment has fallen by 825,000, nearly a third 
of its total. The health care industry added 17,000 jobs over 
the month, in line with its average monthly gain since January. 
In 2008, the average gain was 30,000 jobs per month.
    In April, average hourly earnings for production and non-
supervisory workers in the private sector were essentially 
unchanged.
    Over the past 12 months, average hourly earnings have risen 
by 3.2 percent. From March 2008 to March 2009, the Consumer 
Price Index for Urban Wage Earners and Clerical Workers 
declined by one percentage point. Turning now to measures of 
the Survey of Households, the unemployment rate rose to 8.9 
percent in April, an increase of 4/10ths of a percentage point. 
The number of unemployed persons increased by 563,000 to 13.7 
million. Since the start of the recession in December 2007, the 
number of unemployed has risen by 6.2 million, pushing the 
jobless rate up by four percentage points.
    Over the month, the number of long-term unemployed 
continued to grow, rising by 498,000 to 3.7 million. The long 
term jobless represented 27.2 percent of all unemployed persons 
in April, the highest proportion on record. The employment to 
population ratio held at 59.9 percent in April. When the 
recession began in December 2007, it was at 62.7 percent. Among 
the employed, the number of persons working part-time who would 
prefer full-time work was little changed over the month, at 8.9 
million.
    In summary, non-farm payroll employment fell by 539,000 in 
April. Private sector employment dropped by 611,000. Job losses 
continued to be widespread across most major industries. Since 
the recession began, payroll employment has fallen by 5.7 
million. Over the month, the unemployment rate rose by 4/10ths 
of a percentage point to 8.9 percent. My colleagues and I would 
be glad to answer your questions.
    [The prepared statement of Commissioner Hall appears in the 
Submissions for the Record on page 22.]
    Senator Klobuchar. Thank you very much, Dr. Hall. Just to 
summarize, there were 611,000 jobs lost in the private sector 
last month, is that right?
    Commissioner Hall. Yes.
    Senator Klobuchar. How many jobs have been lost since 
December 2007?
    Commissioner Hall. Nearly six million private sector jobs.
    Senator Klobuchar. What would you say, just to summarize, 
have been the biggest areas of loss for the types of jobs 
across the country?
    Commissioner Hall. I would say the job loss has been very 
widespread. Almost every sector has had job loss with the 
exception of health care and education, and even those 
industries have had a slowing of job growth. The sectors with 
the biggest job loss have probably been manufacturing and 
construction.
    Senator Klobuchar. How about for parts of the country? I 
remember when we talked about this a year ago, which was 
probably a precursor of things to come, we were trying to 
figure out if it's just a Michigan or just a regional problem. 
I remember at that point you gave me the states that were 
having problems, and in fact it wasn't just regional. The 
highest unemployment states were spread out across the country. 
What's the status of that now?
    Commissioner Hall. That's still true. We've seen literally 
every state has had significant rise in the unemployment rate 
over the past year. That continues to be the case. The job loss 
is widespread. Certain states have had bigger increases in the 
unemployment rate, job loss. For example, Oregon, South 
Carolina, North Carolina and Michigan have been the largest.
    Senator Klobuchar. I can understand Michigan, with the auto 
industry, but what do you point to when you look at Oregon and 
South Carolina and North Carolina?
    Commissioner Hall. It's hard to say, because the exact mix 
of industries vary by state. I'd probably have to spend a 
little time looking at those, to give a good answer to you. We 
can do that for you, but I don't have an obvious answer.
    Senator Klobuchar. Sometimes I wonder if you have areas 
which have seen a big increase recently, and then suddenly 
they've gone down. Just as I know in Florida and northern 
Minnesota, the mines have not been doing that well for decades, 
and suddenly in the last few years, because of the 
international economy, our iron ore mines are on the increase 
and people were going to work.
    Then suddenly with this economic crash worldwide, you saw a 
big decline. Maybe part of this, it's not just about mining. 
What you pointed out is an issue nationwide, but areas where 
they are benefiting because of an increase in either 
manufacturing or those types of jobs.
    Commissioner Hall. I suspect that there are a number of 
stories like that. There do seem to be states that even prior 
to the recession were running higher unemployment rates, and 
those states have had a bigger increase in their unemployment 
for some reason.
    Senator Klobuchar. Maybe part of that, that this was bigger 
than just a blip on the radar screen, that this was a longer-
term recession?
    Commissioner Hall. Yes.
    Senator Klobuchar. The recession, as we've talked about, 
seems to be different from previous recessions, given the 
severe housing slump, the credit crunch and the global nature 
of the economic downturn. Based on what you're seeing here, how 
long do you think this is going to last? I know when I ask this 
question you never answer it, but I thought I'd try. How long 
do you think this is going to last? We'll have another round of 
questions this morning, but do you see any glimmers of hope 
here?
    Commissioner Hall. You're quite correct. I don't want to 
speculate on how long this will last. This was another bad 
report. There wasn't anything to cherish in the labor market 
again this month. I think the story continues to be pretty 
close to the same story. The job loss is large and it's 
widespread, and it's sucking in every industry sector and every 
demographic group. If you're looking for a glimmer of hope, I 
suppose the fact that the private sector job loss is about 
611,000 and it's been averaging around 700,000. That looks like 
it might be a moderation. But it's only one month and it's not 
a large change.
    Senator Klobuchar. We've seen an increase in consumer 
confidence, which is pretty marked. We've seen consumer 
spending rise in the last quarter, and also just a little thumb 
story. Target, which is based in Minnesota, they reported they 
did better in the last four weeks than they did in the four 
weeks during this exact same time period during the last year. 
So I've heard some of these stories, but they seem very 
different from what we were seeing in December and January.
    Commissioner Hall. That's probably the most encouraging 
news that I've seen. Consumer confidence obviously leads to 
consumer spending. Consumer spending is 70 percent of GDP. 
Frankly, if consumer spending picks up everything else will 
pick up to match it. So that is the best sort of news we can 
get, if it continues to pick up in consumer spending.
    Senator Klobuchar. Thank you. I'll turn it over to 
Congressman Brady.
    Representative Brady. Thank you, Senator Klobuchar. I think 
we're all hoping to see the American economy turn up sooner 
rather than later. We're looking for indications of that. On 
the surface, the 539,000 number looks sobering. Tell us a 
little more about the private sector payroll employment decline 
of 611,000. It's down slightly from last month, but we haven't 
hit the bottom of the well yet. Can you put that in 
perspective?
    Commissioner Hall. I suppose I'd say that a job loss of 
611,000 is a large job loss. It only looks slightly encouraging 
because the job losses have been so high in the last three 
months. It's still a very large loss. It's still a very large 
spread. So the pattern of job loss really hasn't changed.
    Representative Brady. That's what I sense too. Mr. Rones, 
government jobs are growing by some 70 thousand. Is that 
attributable to Census hiring?
    Commissioner Hall. The increase in the temporary census 
hiring was 63,000. So that really accounts for the vast 
majority of the increase in government.
    Representative Brady. Just a couple of months in January, 
top Administration officials claimed that the stimulus plan 
would keep the unemployment rate at or below eight percent for 
this year.
    Obviously, we're at a much higher level already, 8.9 
percent. Any projection on what that will be for the entire 
year? Deputy Commissioner Rones.
    Mr. Rones. As you know, we don't do projections. Basically, 
we know now that we're at 8.9 percent already in April. So that 
certainly puts that number in perspective.
    Representative Brady. We're fortunate on this Committee. We 
do have a lot of experts come before us, some of the best and 
brightest. The Chairwoman of the Economic Advisers, Chair 
Romer, who is very sharp, before the Committee here recently 
cited a 150,000 job creation figure in her testimony before 
this Committee, related to the stimulus. Do your numbers 
substantiate that claim, Commissioner Hall?
    Commissioner Hall. There's no way for us to connect job 
change with the stimulus. We just don't do that sort of work.
    Representative Brady. What indicators would you be looking 
for on that? Honestly, we want a few jobs created in this 
country. We want to know if we're touching the bottom of the 
well. We can't do it? The numbers don't justify it at this 
point.
    Commissioner Hall. Right, yes. Particularly in a period of 
such significant job loss, it would be very hard to sort or 
parse out as to what would the job loss be if it weren't for 
something else going on. I will say for us to see improvement, 
certainly improvement in the unemployment rate, we're going to 
have to see the job loss moderate, and we're going to have to 
see the job loss eventually stop, and we're going to have to 
see job growth before we see the unemployment rate start to 
level off and eventually decline.
    Representative Brady. Do you think consumer confidence is 
an important measure? The uptick in consumer spending is good 
in the first quarter. Two questions. It appears like the 
biggest uptick, Deputy Commissioner Rones, that the biggest 
uptick was in January and February. Some attribute that to IRS 
tax refund checks getting back into households and people doing 
the stimulus tax incentives that equate to $1.10 per day, 
excuse me.
    In April, is there any evidence that in this data, that 
that is having an impact on consumer spending? First, what do 
you attribute to it in the first quarter? Second, do you see 
any uptick, any change because of the Obama tax cuts?
    Mr. Rones. As Commissioner Hall said, it's difficult for us 
to take that one single factor and somehow disentangle that 
from all the other things going on in the economy. Right now, 
we're still seeing rapid job loss despite any efforts. We still 
have 611,000 private sector job loss. Again, would it have been 
worse but for the stimulus? We can't really know that.
    Representative Brady. And the uptick in consumer spending 
in January and February?
    Mr. Rones. Again, it's one of the few positive signs that 
we have. Any money that goes into consumer's pockets has to be 
helpful. So I'm sure that that's part of what's going on with 
consumer confidence.
    Representative Brady. My question is since the stimulus 
credit of $1.10 a day didn't start until April, what's the 
reason for January and February?
    Mr. Rones. Again, it's hard for us to be sure. But surveys 
had seemed to indicate that there is some increase in consumer 
confidence. I'm not exactly sure why that is. Certainly, in our 
employment centers there hasn't been a lot of positive news 
over that period.
    Representative Brady. Thank you, and before the Chairwoman 
attributes it to the election of a new president, let me just 
say I respectfully disagree. I yield back, Madam Chair.
    Senator Klobuchar. Senator Casey.
    Senator Casey. Madam Chair, thank you very much. I know I 
got here late, and I want to make sure I ask unanimous consent 
to submit a statement for the record.
    Senator Klobuchar. Without objection, it will be included 
in the record.
    [The prepared statement of the Honorable Robert P. Casey 
was not available at the time of publication.]
    Senator Casey. I wanted to first of all address 
Commissioner Hall with regard to the question of minority 
unemployment. I want to make sure I got this right. The numbers 
for African-American unemployment this month, the number is 15 
percent, is that right?
    Commissioner Hall. Yes.
    Senator Casey. The number for Hispanics, I had 11.3. Is 
that right?
    Commissioner Hall. Yes, that is.
    Senator Casey. But I guess the month to month number for 
African-Americans went from 13.3 to 15, is that right?
    Commissioner Hall. That's correct.
    Senator Casey. What do you attribute that to? The Hispanic 
numbers stayed consistent month to month, is that correct?
    Commissioner Hall. Yes. It should not amount to too much. 
The numbers should not move you too much, because there's some 
volatility in these numbers to begin with. I can say that the 
increase in black unemployment was statistically significant, 
so we would characterize it as an increase. But as far as an 
explanation, I just don't know for a one month change.
    Senator Casey. I know it's difficult, and month to month 
numbers can be--I guess sometimes they can be significant. You 
can attribute it to something at times and maybe not in other 
circumstances. But the fact remains whether we're talking about 
this month or the previous month, that African-American 
unemployment is almost double what it is for whites; is that 
correct?
    Commissioner Hall. That's correct.
    Senator Casey. That alone is disturbing, because we keep 
hearing these commentators talking about the fact that there 
may be parts of the economy that are improving, as you said, 
glimmers of hope, and other places, where there's some degree 
of positive news. We also hear this ``lagging indicator'' 
phrase. I'll tell you, that's a great candy-coated way of 
describing a terrible economy, because of course if you lost 
your job or your house or your hopes and your dreams, a lagging 
indicator doesn't really do it for you. It's not really an 
accurate assessment of your life as you're going through that.
    I do want to ask you also about what you're seeing, kind of 
state by state. Fortunately for Pennsylvania, in a very 
relative sense the numbers are extraordinarily high. But we've 
gone from basically from February to March, 7.0, 7.5, whereas 
the nation in that time period was going above eight, and I 
guess in February or January. But in March to April, going from 
8.5 to 8.9. Is that where we are now?
    Commissioner Hall. Yes.
    Senator Casey. In Pennsylvania, we've been averaging about 
40,000 jobs lost month to month. When you look at some of the 
states that are highest, in terms of the unemployment rate by 
percentage, what are the three highest and what's driving most 
of that? Is it housing or is it a combination of factors? I 
know several states are in double figures. I just don't know 
the listing of them.
    Commissioner Hall. We have the data, not on my fingertips 
but----
    Mr. Rones. California is about 12.
    Commissioner Hall [continuing]. I think they're in double 
digits.
    Senator Casey. About 11 to 12.
    Mr. Rones. 11.2 percent.
    Senator Casey. That's California. Do you know the next two? 
I'm just trying to get a sense of----
    Commissioner Hall. Michigan has an unemployment rate of 
12.6; Oregon has an unemployment rate of 12.1; Indiana has an 
unemployment rate of 10; Nevada, 10.4; North Carolina, 10.8; 
South Carolina, 11.4. There are several states that are now in 
double digits.
    Senator Casey [continuing]. There's no thread you 
necessarily can identify. I would say in Michigan, the auto 
industry contributes to that. So there's no real thread that's 
really state or region-specific would you say?
    Commissioner Hall. Yes, I would say that. All the states 
have had a rise in the unemployment rate. It's been very broad 
across demographic groups, across industries, across states. 
The other states that started with higher unemployment rates 
tend to have a bigger increase for whatever reason. If you 
would look at regions, I suppose the regions that have been 
hardest-hit have been the West and the Midwest, but all the 
regions have been hit.
    Senator Casey. I know I'm over time. Just real quickly, 
Chairman Bernanke was here just a couple of days ago, and I 
asked him about unemployment data and a lot of similar 
questions that we're examining today. But he commented that the 
labor market is dynamic, and that even as we shed jobs, people 
are gaining jobs, and the overall picture is dynamic. That's a 
paraphrase. That's not an exact quotation from Chairman 
Bernanke.
    But that idea that there is a dynamic quality to this, and 
there may be areas where there's actual significant growth, 
where is the job growth, if there is any? Is there a sector 
that's growing, or are we just kidding ourselves to say that 
there's a positive dynamism to it?
    Commissioner Hall. I would guess that the dynamism he's 
referring to, which I would characterize as job churn, people 
are losing jobs in net, but there are an amount of people who 
are switching jobs, people who are switching jobs and gaining 
jobs. But in terms of net gains on a monthly basis, there's 
very few industries that have job growth. Government and 
education and health care have had some, but to be honest, even 
education and health care have had a real decline in their job 
growth in the last few months. They're still growing, but it's 
been moderating.
    Senator Casey. Thank you very much.
    Senator Klobuchar. Thank you very much. I keep wanting to 
bring up some real examples. I think it's just illustrative of 
some of the issues, and this is the story of two people in 
Minnesota, Matt and Eva Johnson, who have got college degrees. 
They thought that was the smart thing to do, and now they're 
$69,000 in debt from their college education.
    They pay about $800 a month in student loans, and they're 
having difficulty getting work. They got a house a year ago, 
before this really hit. They bought a modest two-bedroom, one-
bathroom house in Blaine, Minnesota, which is an exurban area 
for $172,000. That house has actually maintained its value, but 
they can't afford the mortgage payment. So the woman's 22-year-
old brother moved into their basement. He pays $400 a month for 
rent, utilities and groceries. If they didn't have that, they 
wouldn't be able to make it, their mortgage, and they talk 
about how they had money a few years ago. They talk about how 
they've decided not to have a child right now. They're going to 
wait four or five years. They want to, but they don't think 
they can afford it.
    They have--they push off buying groceries. They eat a lot 
of chicken noodle soup and potatoes, and the husband goes on 
Craig's List daily to try to pick up side jobs, which are 
getting harder to come by. The wife coaches soccer seven months 
of the year, which brings in about $1,000. Those are real 
stories, and I guess my question there is we've always been 
told to pursue this American dream, and a college education is 
a huge piece of this.
    I believe that, but what are the differences for the 
unemployment rates for people with college degrees and people 
without college degrees?
    Commissioner Hall. They vary significantly by education. 
This recession has been interesting, in the sense that it's 
affected everybody. It's affected people at all education 
ranges. Unemployment rates have gone up for people with college 
degrees and with people with less than a high school education. 
If they didn't start equal and the effect hasn't been equal, 
the unemployment rate for people without a high school degree 
is 14.8 percent. For people with a college degree, it's 4.4 
percent. So a huge difference.
    Senator Klobuchar. Could you go over that again for me?
    Commissioner Hall. For people without a high school degree, 
the unemployment rate is 14.8 percent. With a high school 
degree, it goes to 9.3 percent, and then with some college, it 
goes down to 7.4 percent. Then with a Bachelor's degree, a 
college degree, it's 4.4 percent. All these numbers have gone 
up, but they're nowhere near equal.
    Senator Klobuchar. You can see why the President is devoted 
to trying to make sure that people get some college. Not 
everyone has to be the same, but at least a year of post high 
school education, and one of the issues is the expense of 
college. As we can see, if we're going to compete in this world 
economy, it seems like the more we can do to try to get some 
post high school degree and at least finish high school, it 
makes a major difference in employment. Is that a correct 
assessment?
    Commissioner Hall. Absolutely. People with higher education 
have higher labor force participation rates. You get higher 
wages; they have lower unemployment rates.
    Senator Klobuchar. Another follow-up from the story that I 
just gave you of the Johnsons in Blaine, Minnesota. It will be 
something we talked about a year ago, which is what you call 
the marginally unemployed, people who would like to work longer 
hours but then their hours are reduced. That is not included. 
Those people aren't included in the 8.9 percent unemployment 
rate that we just announced today; is that correct?
    Commissioner Hall. That's correct.
    Senator Klobuchar. When you include them, where do we go 
and what are their numbers looking like?
    Commissioner Hall. When you include marginally attached.
    Senator Klobuchar. They're not necessarily like moms, who 
want to reduce their hours because they have kids, and they 
want to reduce it. You have people that are pushed to reduced 
hours when they don't want to reduce them.
    Commissioner Hall. The marginally attached are people who 
want to work but for whatever reason they haven't been looking 
lately. They include discouraged workers.
    Senator Klobuchar. Discouraged workers?
    Commissioner Hall. Part-time for economic reasons, is what 
you're talking about. People who want to work full-time but 
they can only find part-time work. If you include those folks 
as well, you get a percentage of 15.8 percent.
    Senator Klobuchar. Where is that compared to where we were 
a year ago or two years ago?
    Commissioner Hall. That's up about 6.6 percentage points 
over the last 12 months.
    Senator Klobuchar. So these are people that are discouraged 
workers, that can't quite get the money they need or the hours 
they need? It's exactly I think this kind of situation. Maybe 
they have a job, but it's getting harder and harder for them to 
pay for the mortgage and things like that.
    Commissioner Hall. Yes.
    Senator Klobuchar. And that trend is similar to the regular 
unemployment rate?
    Commissioner Hall. Yes. All are issues of labor force 
underemployment as well as unemployment, and they have all gone 
up in similar fashion. They're all showing a distressed labor 
market.
    Senator Klobuchar. And again, these are remarkable figures 
in the unemployment rate, depending on people who don't finish 
high school are at 14.8 percent; with high school, 9.3 percent; 
with some college, 7.4 percent; college degree, 4.4 percent. Is 
that similar to what we saw in some of these last recessions 
that didn't last this long?
    Commissioner Hall. These are all higher, and the recessions 
that lasted a short time period didn't have such a large 
increase in the unemployment rate. All of these numbers are 
higher than either of the last two recessions.
    Senator Klobuchar. How about the variation between the 
categories? You know what I'm trying to get at here. In these 
last recessions, did you see as much of an increase of say 
people without high school degrees?
    Commissioner Hall. I don't think a precise comparison, but 
I think that is pretty similar. Generally, for example, people 
with at least a high school degree, their unemployment rate 
starts higher. It goes up more during a recession. That's been 
true in this recession.
    Senator Klobuchar. That's historically true if we're going 
to look at long-term situations. That should make a difference. 
Congressman Brady.
    Representative Brady. Those numbers, as to the value of 
college education and stronger education, the housing financial 
sector, Commissioner, has been especially weak in recent years. 
Can you describe what's happening in those sectors?
    Commissioner Hall. Sure. Construction employment. We lost 
about 1.4 million jobs in construction. Housing-related 
industries include some other things, for a total of two 
million jobs.
    Representative Brady. In the last month?
    Commissioner Hall. In the last month, construction lost 
110,000. Job loss continues to be in triple digits there.
    Representative Brady. It's been averaging about 120,000 in 
losses in recent months. So it's a little uptick.
    Commissioner Hall. It's around the same.
    Representative Brady. How about housing and financial?
    Commissioner Hall. Credit union intermediation has now lost 
about 14,000. That's roughly in line, I think, with the last 
few months.
    Representative Brady. Is it the second week of each month 
you do the surveys?
    Commissioner Hall. Yes.
    Representative Brady. Any seasonal adjustments related to 
that? People here, I take it, have to pay their taxes on April 
15th. Were there any seasonal adjustments that you know about?
    Commissioner Hall. Our seasonals, I'm not sure what the 
seasonals were like this month. But we always take the 
seasonality into account when we do these numbers.
    Representative Brady. Nothing significant?
    Commissioner Hall. Nothing to mention. We didn't have any 
difficulties with the seasonality.
    Representative Brady. Do you measure the real hourly 
compensation figures, what payroll, what compensation is?
    Commissioner Hall. We measure wage, average hourly 
earnings.
    Representative Brady. What is going on there?
    Commissioner Hall. In nominal terms, the average hourly 
earnings have been growing maybe 3.2 percent, I believe, over 
the last 12 months. They had been going a little bit faster. 
They've gotten up to almost four percent prior to recession. So 
wages are growing, but not as fast as before. Once you define 
them in real terms, we actually have growth in real average 
hourly earnings, plus we have declining energy prices.
    Representative Brady. I don't see pressure on Consumer 
Price Index, that number at this point. Do you?
    Commissioner Hall. No. Most of the unusual action is still 
in energy. In particular, energy prices have still declined.
    Representative Brady. That takes some of the pressure off 
inflation figures, doesn't it?
    Commissioner Hall. Yes.
    Representative Brady. Business families, you get a little 
further. I understand. Great. Thank you, Madam Chairman very 
much. I appreciate it.
    Senator Klobuchar. Thank you very much Congressman Brady. 
One area that we haven't focused on is the veterans 
unemployment. I always like to bring this up, because I don't 
think people think about this as much as they should, and these 
are people who have served our country and that have come back. 
Maybe even before this recession, maybe they're serving for two 
or three years and then they came back. Their percentage of the 
total workforce, all that have been serving after September 
2001 is what I'm looking at.
    So soldiers who served recently and the percentage of young 
male veterans serving after 2001, what's the unemployment rate? 
So what we're seeing now is from 13.9 percent of young male 
veterans serving after September 2001, are now unemployed, 
which is higher than the national unemployment rate of 8.9 
percent. Are those numbers right? What do you have for those?
    Commissioner Hall. I have about 10.3 percent as the 
unemployment rate for Gulf War era veterans since 2001.
    Senator Klobuchar. It is higher, and I think the number I 
may have had was male veterans. So it's 10.3 percent. As we 
look at this, you would think these people who have served our 
country, most like I know in Minnesota we don't have many 
active duty, but we have a huge number of National Guard and 
Reserve that served, that have left their jobs. They are called 
up as citizen soldiers.
    We have the longest-serving unit, the Red Bulls in Iraq, 
the Minnesota National Guard. So the thought that they're 
coming back and the job isn't there anymore makes them so 
disadvantaged. Some people can hold onto their jobs when they 
were in the work force and they were gone. So I'm trying to 
figure out why we would see these higher numbers with these 
returning veterans? What do you think the reason is?
    Commissioner Hall. I can't say. I have to look a little 
more at the data and see if I see a pattern. But it is true 
that Gulf era veterans started at a slightly higher 
unemployment rate, and it's increased by more during this 
recession. For example, it's gone from 5.6 percent to 10.3 
percent over the last 12 months. I don't know a good 
explanation for it.
    Senator Klobuchar. If you could look into that. I'm just 
curious, because it's very depressing to me. These are people 
that served our country and they have come back, and their 
unemployment is even higher than the national average. I think 
it's very troublesome. I wanted to shift a little bit to your 
past job, when you were Chief Economist for the White House 
Council of Economic Advisers.
    If a few of your colleagues there could put your professor 
hats back on for a second, and you had to give a lecture about 
jobs and this recession, how would you explain this moment in 
our economic history? If you look at it more broadly, what 
factors led us to these unemployment numbers and having 
identified the solutions that you would suggest from an 
economic standpoint, based on the historical data, what caused 
this and what do you see to help us get out of it, with your 
overall experience? Commissioner Hall.
    Commissioner Hall. I would say that for the first part of 
this recession, we had job loss, but it wasn't large job loss.
    Senator Klobuchar. When you're talking about the first 
part, what time period are you talking about?
    Commissioner Hall. Say from December 2007 to something like 
September 2008. In fact, I would probably say that was a mild 
recession. Maybe it may not have been called a recession if 
things had improved. My feeling is that it was probably related 
to the housing market, to people losing value in their homes, 
and that affecting consumer spending. We didn't have really, 
really strong job loss like we're seeing now until the credit 
markets really locked up in September.
    So now we have this period of downturn that affected the 
housing market directly, and then the financial markets locked 
up. We have all three of these things really impacting the 
economy. We've had a severe recession now for the last six 
months, I think as a result. As far as what would fix it, 
that's out of my current job. I will say it's hard to see that 
unless the labor market's going to improve, unless some of 
these three things, the housing market, the credit markets and 
the global economy; if some of those, at least one or more of 
those things don't improve.
    Senator Klobuchar. I was actually just talking to Senator 
McCain about Asia, China, Japan and Vietnam. They're seeing 
very similar things, especially Japan, with somewhat similar 
policy focus with the recovery plans, and trying to make the 
market move again in that way, and hopefully some worldwide 
efforts, to stem some of the abuses that went on in the 
financial markets, which we know will take a while to turn that 
around.
    Yesterday, we learned that the number of workers applying 
for benefits dropped to 601,000 last week, which was slightly 
better than what we thought it was going to be, which we 
thought it was 635,000. However, we also learned that the total 
number of people receiving unemployment benefits climbed to 
6.35 million, which is a record for the 14th straight week.
    Looking behind these numbers, what does this tell you about 
our employment situation and how long term this is for these 
people?
    Commissioner Hall. Let me mention that the new initial 
claims for unemployment insurance, it's volatile. You can't 
read too much into one data point. But it does seem to have 
some ability to predict the labor market. The fact that the 
initial claims went down is potentially a good sign. But this 
doesn't mean that we're talking about today; we're talking 
about two weeks before that. So if you're looking for 
improvements in the labor market, we won't see that until next 
month.
    But the claims are at a level that's an all-time high. 
That's basically consistent with the large number of long-term 
unemployed that we have. I think the number I quoted in the 
statement about the percentage unemployed and the long-term 
unemployed is at a record right now.
    Senator Klobuchar. Congressman Brady.
    Representative Brady. Thanks, Madam Chair. I think most 
people recognize now, a growing number in America, that it's 
not simply enough to buy American. You have to sell American 
products and services throughout the world, especially with 95 
percent of the world's customers living outside the United 
States. Exports until this year, until the global financial 
collapse, have been a huge part of our economy.
    Our ability to sell our products around the world has been 
a life line to our economy, until demand started to shrink. 
Looking at the numbers for a minute from an economic 
standpoint, how critical is it that we do what we can to 
restore the demand for the sales of our American products 
around the world?
    Commissioner Hall. It is potentially important. I think 
exports have been as high as two percent. I think it's exactly 
why the interconnectedness of markets, I think, is a real 
strength for the United States, and the fact that we can sell 
abroad, actually the fact that we can buy from abroad, both 
things help our economy.
    Representative Brady. Experts estimate that because of our 
free trade agreements, the ability for consumers to have more 
choices in America, a typical family in Texas or Minnesota can 
go to the grocery store once a month for free, because of the 
savings and the choices they have. Whether it's at the 
supermarket, at the mall or when they're shopping for cars or 
other things.
    Because our ability to sell American products is so 
critical around the world, I am concerned about some new 
proposals that would actually double tax our companies that 
sell those products overseas. Some of our companies are able to 
access those foreign markets from here in the United States. 
Others, because the products they sell or the market is 
limited, actually are confined to sell U.S. products in our 
country.
    Our tax code is one of the few in the world that taxes 
worldwide income, regardless of where our companies get this 
income. Most countries tax only within their boundaries 
themselves. As a result, our U.S. companies have often faced 
double taxation.
    The tax code over a century has tried to be more 
competitive in two ways, one by saying ``Look, you can deduct 
those foreign taxes you pay over in those foreign countries 
from what you owe us, and pay us the difference.'' Another has 
been that we won't tax that income until you bring it back to 
the United States. So under the same philosophy, we don't tax 
people on their dividends when the company earns it, but when 
they actually distribute it as dividends. There is a concern 
that if we remove the ability to deduct foreign taxes, if we 
remove the ability to tax when that income comes back to the 
States, that we may well drive our U.S. companies overseas, 
where they have a more stable tax climate.
    I'm not asking your opinion on some of these tax proposals, 
but as an economist, don't new tax regimes of various countries 
have an impact on economic growth, and where economic decisions 
are made within the private sector?
    Commissioner Hall. I would say that's almost certainly 
true, that tax codes do have in fact differential treatment. 
Differential tax codes between countries can have this effect 
not only with trade costs but investment.
    Representative Brady. I think we see the difference in 
2004. Congress worried about the number of jobs being created 
overseas and created a tax code, where if companies and 
manufacturers produced, invested and create jobs in the U.S. 
they have a lower tax rate, than if you do the same thing 
overseas. That's the way the tax code is today.
    Unfortunately, this Administration and some in Congress 
have singled out certain industries like America's energy 
industry and basically said that no longer applies to you. 
We're going to tax you when you invest in the United States, 
just as if you were creating those jobs overseas. It's actually 
the opposite, I think, of what we need to do.
    I think the point you made, that tax codes do matter in job 
creation and location of companies, is very important for 
Congress to consider as we wade into the complicated area of 
international tax issues. With that, I yield.
    Senator Klobuchar. Thank you very much, Congressman Brady. 
A few more questions here. I know we discussed last year the 
health care effect here and the burden on workers of the cost 
of health care in this country, and employers, which is more 
expensive than it is in other countries. I remember that you 
suggested that to the extent the employer bears the greater 
share of the health care costs, this crowds out wage increases 
to employees.
    Obviously, to the extent that employees have the higher 
costs, it makes it more difficult for them to afford things, 
whether it's goods that we want them to buy out there or to 
stay in their homes. What does the data show regarding the 
impact of rising health care costs on wages and in general?
    Commissioner Hall. I think in general, and I'm talking back 
probably prior to the recession, because I haven't looked at 
the data a lot during the recession, but there surely has been 
evidence that the faster growing health care costs are, the 
slower growing are the wages. As you say, there's evidence of 
that. Rising health care costs can crowd out wage increases. 
This is primarily because health care is provided through work 
in this country.
    Senator Klobuchar. And as you know, we're going to be 
working on health care reform this year, and if we're able to 
bring some costs down and make it more affordable and do it in 
a different way, do you think that would help people with their 
wages?
    Commissioner Hall. That is what the research suggests, 
since obviously if health care is crowding out wage growth, 
then reducing health care costs would have the opposite effect.
    Senator Klobuchar. Just to answer with a few questions 
about the indicators, which can show some change or some 
positive things. I know the unemployment rates have gone up 
this month, and there are still way too many people out of 
jobs. We talked about the consumer spending, the 2.2 percent on 
an annualized basis in the last quarter, the most in two years. 
Does that tend to be an indicator that there is some glimmer of 
hope here?
    Commissioner Hall. Absolutely. I think consumer spending is 
probably going to be the key to everything. If consumers 
continue to spend, if consumer spending picks up, then I think 
everything else follows.
    Senator Klobuchar. The other thing you identified when you 
looked at your three-legged stool, I guess, was that consumer 
spending--I'll go back to that again--with the target numbers I 
gave you, which is for the four weeks which ended May 2, net 
retail sales for Target increased 4.5 percent when compared to 
the same four weeks ending May 3, 2008. On the same basis 
actually, April comparable store sales increased .3 percent. 
What is the usual correlation between increased sales and 
employment?
    Commissioner Hall. There is a positive relationship. If 
consumers start to spend and you start to get growth, once you 
start to get growth I think the job loss would start to 
moderate over time. If you get enough growth, then eventually 
the job loss will turn into job gain, and we'll see the labor 
market stabilize.
    Senator Klobuchar. But as you said, the other parts of this 
three-legged stool are the housing market. Have you seen any 
changes in that market yet?
    Commissioner Hall. Just what everybody else has seen. Some 
small glimmers of hope perhaps in construction, but I don't 
know that we have a real pattern yet. It's kind of like 
consumer spending. If we see consumer spending pick up, what we 
really need to see is both those things continue to improve.
    Senator Klobuchar. Then the third part you identified is 
just the credit markets, and as you know, just recently, the 
Treasury Department and the Fed announced a stress test. So 
we'll wait to see the effects of that. Some of our financial 
institutions didn't need any more to go out and capitalize and 
get increased funds. Some of them did, with this also 
affecting, since we started to get a credit market going again 
and more stabilized.
    Commissioner Hall. Absolutely. I think the real meltdown in 
the credit markets has been the biggest single problem, I 
think, in this recession. And so that's the thing that probably 
most needs to turn around.
    Senator Klobuchar. Very good. So you'll tell our 
constituents that when they call and are angry, that we're 
trying to stabilize the credit markets. I'm sure you will, 
Commissioner Hall. That's a major part of this as well. I just 
wanted to conclude here, summarizing what we've heard today, 
sort of from a layman's way of looking at this. This past 
month, we have seen 563,000 more people that are basically 
unemployed. Is that right?
    Commissioner Hall. Correct.
    Senator Klobuchar. Since the start of the recession, how 
many people are now unemployed?
    Commissioner Hall. The number of unemployed is now 13.7 
million.
    Senator Klobuchar. 13.7 million. I would think these 
numbers are important. People have to realize across the 
country that it's not just one person messing up here. There 
are a lot of people that have been affected by this recession, 
through no fault of their own. We've seen a rise in the 
unemployment rate from last month from 8.5 percent. Now it's 
8.9 percent.
    Commissioner Hall. Yes.
    Senator Klobuchar. That group that is so hard for people to 
get their arms around, the group I was talking about like the 
Johnsons of Blaine, Minnesota, who would like to work more 
hours but are discouraged. What do you call them, marginal 
workers who are trying to increase those hours and just can't 
find a job, and include them? We're at 15.9 percent 
unemployment.
    Commissioner Hall. 15.8.
    Senator Klobuchar. 15.8 percent unemployment. We also 
talked about the fact that a certain group of workers--Senator 
Casey talked about those minority workers--and we were talking 
here about when Representative Brady focused on some of the 
different industries, where you see the difference in 
construction and things like that.
    But clearly, for those who do not have a high school 
degree, what was that unemployment again?
    Commissioner Hall. 14.8 percent.
    Senator Klobuchar. Then you go down to people that have a 
high school degree. You get----
    Commissioner Hall. 9.3 percent.
    Senator Klobuchar [continuing]. People who have at least a 
year of college but haven't finished, it's----
    Commissioner Hall. 7.4.
    Senator Klobuchar [continuing]. And people with a college 
degree is at?
    Commissioner Hall. 4.4 percent.
    Senator Klobuchar. We talked about the fact that we have 
some new policies in place, and Christina Romer pointed out 
this past week that while the stimulus package has made some 
difference, it's going to take a while to see that in terms of 
the unemployment. Is that fair to say?
    Commissioner Hall. That is, although I will say that the 
job, the apparent job gains or losses are concurrent 
indicators. When the economy starts to improve, you should see 
the job loss start to decline. But it's lagging in the sense 
that we need actually a job gain of a certain amount for the 
unemployment rate to stabilize. The unemployment rate is likely 
to continue to increase even after we start to get jobs.
    Senator Klobuchar. And I think the President and Congress 
were pretty clear about this, that we aren't suddenly going to 
see this uptick. A lot of this economic recovery was actually 
replacing jobs that were lost or have been lost. The other 
parts of the policies that we pursued are putting more money in 
the hands of taxpayers, with the middle class tax cut.
    Do you think that that could be contributing some to 
consumer confidence, or also the increase, that 2.2 percent 
increase we've seen in consumer spending? Or do you think it's 
just a better feeling, that the economy has stabilized?
    Commissioner Hall. I can't say. I do think the improvement 
in consumer confidence, for whatever reason, is certainly 
related to the pickup in consumer spending. I think that part's 
very important.
    Senator Klobuchar. And as we go forward here, you do not 
predict any dramatic changes in the next month or two without 
the unemployment improving; correct?
    Commissioner Hall. I would say I wouldn't predict.
    Senator Klobuchar. Thank you, Commissioner Hall. But I 
think you said that we're in a longer-term recession, as 
opposed to just something that's a blip for the month of April?
    Commissioner Hall. Yes. We're having really significant job 
loss. Although things may improve, the job loss is not likely 
to end.
    Senator Klobuchar. And that is what led us in Congress to 
extend unemployment benefits, something that we always did in 
the past, when there's a history of looking like it's going to 
last longer than just a few months.
    Commissioner Hall. Remember I said the number of long-term 
unemployed is very high, and that number typically continues to 
rise until after the recession's over.
    Senator Klobuchar. And as we look at these potential 
hopeful signs, we see when we talk about the increase in 
consumer spending. There are surveys that show an increase in 
consumer confidence. We have some industries that haven't been 
hit as hard as others, like say health care and a few others. 
We have some evidence in some industries of some increased 
sales or stability.
    The other piece of it, just to summarize, housing market, 
we haven't seen much change. But it appears that there's some 
signs, as we heard last week, that it may have bottomed out. 
But we're not certain. Then we also have the financial 
institutions again appearing to be, though we're not certain, a 
little more stable than we saw in the fall. Are those fair 
assessments?
    Commissioner Hall. Those are fair.
    Senator Klobuchar. Good. I don't want to get out on a limb 
with you, Commissioner Hall. So I would just summarize this by 
saying that these can be viewed as grim, especially for the 
people experiencing them. You can't tell someone who has lost 
their job ``Hey, we've seen some good increases in consumer 
confidence.'' That's not going to help them.
    I think it's a testament to the continuing involvement, in 
making sure that unemployment compensation is available, making 
sure that we are looking out for people who have lost their 
jobs, and also seeing this glimmer of hope, where we're putting 
in place policies, a better infrastructure for our future, 
whether it is broadband, whether it's the electricity grid, so 
that when the economy starts moving again, we are better 
equipped to handle this.
    The last thing I would end with from my perspective is just 
the need to put in place some more sensible, pragmatic 
financial regulations that don't go in any way to hurt our 
economy, but to stabilize it. Because some of the issues we saw 
that caused this credit crunch, whether it's deals that people 
didn't understand, or too highly-leveraged financial 
institutions, or agencies, in the case of the SEC, that didn't 
do anything about it.
    We need to get our act together here in terms of these 
financial regulations. The last word I would say, and maybe 
Representative Brady would like to add something here, is just 
that as we talk about these numbers, we always have to remember 
the people behind these numbers. One of the most moving letters 
I got in the last year was a woman who wrote in and said that 
she and her husband had put their three kids to bed, and they 
kissed them good-night on the forehead and then they sat at 
their kitchen table and put their heads in their hands, and 
wondered how are we going to make it, how are we going to make 
it tomorrow? How are we going to pick up an extra job?
    I know you think about those people every day, Commissioner 
Hall. That's your job. I want to thank you for that. Let us all 
remember that there are real people behind these statistics. 
Congressman Brady.
    [No response.]
    Senator Klobuchar. Thank you everyone. The hearing is 
adjourned.
    [Whereupon, at 10:45 a.m., the hearing was adjourned.]
                       SUBMISSIONS FOR THE RECORD

       Prepared Statement of Kevin Brady, Senior House Republican
    I am pleased to join in welcoming Commissioner Hall before the 
Committee this morning.
    The labor market data reported today reflect continued economic 
weakness. Payroll employment declined by 539,000, with losses 
widespread across many industries. Private sector payroll employment 
declined by 611,000, while government employment increased by 72,000. 
The unemployment rate rose to 8.9 percent.
    These data are not surprising given recent economic trends. Real 
GDP declined by 6.1 percent in the first quarter of this year, with 
business investment plunging by 38 percent.
    There are some preliminary signs in some other data that the rapid 
rate of economic decline may be slowing, but more evidence is needed 
before reaching any firm conclusions. The condition of the housing 
sector and the contraction of the auto industry are among many factors 
that make the economic outlook especially murky.
    Despite recent economic developments, including the rising 
unemployment rate, the Administration failed to update its unrealistic 
economic assumptions in its budget submission. For example, the 
Administration projects an 8.1 percent unemployment rate for 2009, even 
though it is clear the rate will unfortunately be much higher. The 
Administration projects that the economy will decline by 1.2 percent in 
2009, compared to the Blue Chip Consensus forecast decline of 2.6 
percent.
    The Economist magazine called the economic assumptions in the 
Administration's budget ``deeply flawed'' in an article entitled, 
``Wishful, and dangerous, thinking.'' These faulty economic assumptions 
are dangerous because they produce an understatement of the real cost 
of the Administration's expensive new spending proposals. The result 
will be huge budget deficits and a doubling of the national debt as a 
share of GDP by 2017, according to CBO.
    In the short-term, the steps the Fed has taken, including the huge 
expansion of its balance sheet, have helped to stabilize financial 
markets and will eventually provide a boost to the economy. However, 
the ongoing need for households and banks to reduce their outstanding 
debts does suggest that when the recovery comes it will probably be 
weak.
    Under Administration policies the excessive levels of deficits, 
debt, taxes, and inflation will undermine long-term economic growth. 
Unfortunately, increasing the burden of government on an already weak 
economy is only going to further undermine economic and job growth in 
the years ahead. The Administration's proposed reduction of the 
incentives for work, saving, and investment is not the way to boost the 
productivity, innovation, and competitiveness of the U.S. economy in 
the years ahead.
                               __________
    Prepared 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 539,000 in April, and the 
unemployment rate rose from 8.5 to 8.9 percent. Since the start of the 
recession in December 2007, job losses have totaled 5.7 million, and 
the unemployment rate has increased by 4 percentage points.
    In April, widespread job losses continued throughout the private 
sector. Private employment fell by 611,000, compared with average 
monthly declines of 700,000 in the prior 4 months. Over the month, 
federal government employment rose by 66,000, mainly due to hiring of 
temporary workers in preparation for Census 2010.
    Manufacturing employment fell by 149,000 over the month, and job 
losses continued to be widespread. Since the recession began, this 
industry has shed 1.6 million jobs, representing more than a quarter of 
the total nonfarm job decline during the period.
    Construction employment decreased by 110,000 in April. Job losses 
have averaged 120,000 per month in the last 6 months, compared with 
46,000 per month from December 2007 to October 2008.
    Elsewhere in the goods-producing sector, mining employment fell by 
10,000 in April. From the start of the recession through September 
2008, this industry had continued to add jobs, mainly those related to 
oil and gas production. Since September, mining employment has declined 
by 44,000.
    In April, employment in professional and business services dropped 
by 122,000. Temporary help services accounted for about half of the job 
loss. Since the start of the recession, temporary help employment has 
fallen by 825,000, nearly a third of its total.
    The health care industry added 17,000 jobs over the month, in line 
with its average monthly gain since January. In 2008, the average gain 
was 30,000 jobs per month.
    In April, average hourly earnings for production and nonsupervisory 
workers in the private sector were essentially unchanged. Over the past 
12 months, average hourly earnings have risen by 3.2 percent. From 
March 2008 to March 2009, the Consumer Price Index for Urban Wage 
Earners and Clerical Workers declined by 1.0 percent.
    Turning now to measures from the survey of households, the 
unemployment rate rose to 8.9 percent in April, an increase of four-
tenths of a percentage point. The number of unemployed persons 
increased by 563,000 to 13.7 million. Since the start of the recession 
in December 2007, the number of unemployed has risen by 6.2 million, 
pushing the jobless rate up by 4 percentage points.
    Over the month, the number of long-term unemployed continued to 
grow, rising by 498,000 to 3.7 million. The long-term jobless 
represented 27.2 percent of all unemployed persons in April, the 
highest proportion on record.
    The employment-population ratio held at 59.9 percent in April. When 
the recession began in December 2007, it was 62.7 percent. Among the 
employed, the number of persons working part time who would prefer 
full-time work was little changed over the month at 8.9 million.
    In summary, nonfarm payroll employment fell by 539,000 in April. 
Private-sector employment dropped by 611,000. Job losses continued to 
be widespread across most major industries. Since the recession began, 
payroll employment has fallen by 5.7 million. Over the month, the 
unemployment rate rose by four-tenths of a percentage point to 8.9 
percent.
    My colleagues and I now would be glad to answer your questions.

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