[Joint House and Senate Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 111-311
THE EMPLOYMENT SITUATION: MAY 2009
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HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
JUNE 5, 2009
__________
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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
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Members
Hon. Elijah E. Cummings, a U.S. Representative from Maryland..... 1
Hon. Kevin Brady, a U.S. Representative from Texas............... 3
Hon. Michael C. Burgess, M.D., a U.S. Representative from Texas.. 4
Witnesses
Statement of Dr. Keith Hall, Commissioner, Bureau of Labor
Statistics; 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, United States Department of Labor,
Washington, DC................................................. 6
Submissions for the Record
Prepared statement of Representative Elijah E. Cummings.......... 28
Prepared statement of Representative Kevin Brady................. 28
Prepared statement of Dr. Keith Hall, Commissioner, Bureau of
Labor Statistics, together with Press Release No. 09-0588...... 29
Prepared statement of Senator Robert P. Casey, Jr................ 60
THE EMPLOYMENT SITUATION: MAY 2009
----------
FRIDAY, JUNE 5, 2009
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The committee met, pursuant to call, at 9:32 a.m. in Room
106 of the Dirksen Senate Office Building, The Honorable Elijah
E. Cummings, presiding.
Representatives present: Cummings, Brady, and Burgess.
Senators present: Klobuchar and Casey.
Staff present: Gail Cohen, Nan Gibson, Colleen Healy, Aaron
Kabaker, Justin Ungson, Andrew Wilson, Rachel Greszler, Lydia
Mashburn, Jeff Schlagenhauf, Jeff Wrase, and Chris Frenze.
OPENING STATEMENT OF THE HONORABLE ELIJAH E. CUMMINGS, A U.S.
REPRESENTATIVE FROM MARYLAND
Representative Cummings. Good morning. I would like to
thank Chair Maloney for holding this hearing. I also welcome
Commissioner Hall and his colleagues from the Bureau of Labor
Statistics to brief us on the most recent unemployment data.
This morning's release reported May job losses totalling
345,000--almost half of the losses in recent months--but an
unemployment rate of 9.4 percent, a jump of half a percentage
from the previous month.
Adding up discouraged workers and part-time workers who
cannot find full-time employment, the unemployment rate jumped
to 16.4 percent, the highest rate since the government started
collecting this information in 1994.
However, it was also announced recently that the initial
jobless claims for the week ending May 30th fell. The Consumer
Confidence Index experienced a small uptick, and the European
Central Bank held interest rates steady yesterday, signaling
expectations that the global economy may just have bottomed
out.
I am encouraged by the marginal improvements like Consumer
Confidence, but even this good sign is accompanied by a
sobering counterpoint. Increased consumer spending has yet to
translate into actual spending by consumers of businesses--or
businesses, rather, families are saving, and I do not blame
them. They see that more than one in four unemployed workers
has been unemployed for over six months, and that the median
duration of unemployment is now 14.9 weeks, a record high since
the series started in 1967.
The cumulative effects of the recession, seven consecutive
months of loss totaling 6 million jobs, have left these
ordinary very hardworking Americans on precarious footing.
When a worker is laid off, economists say that that person
experienced a, quote, ``income shock.'' This is a vast
understatement.
Now unemployed families must work through any savings they
have accrued to pay bills and continue to feed their children.
And then, as home values fall and mortgages go unpaid, they are
suddenly looking foreclosure in the face.
While the foreclosure crisis started with homes that fell
victim to plunging values and then moved to the subprime
sector, the borrowers facing interest rate hikes, now prime
borrowers, have been affected as well.
The New York Times wrote on May 24th that, and I quote:
This third wave of foreclosures can be attributed in large part
to the rising tide of unemployment. Fortunately, to many
homeowners some degree of help is available. We have strong
mortgage modification programs in place that allow homeowners
to decrease their payments and work out solutions to stay in
their homes.
But for the unemployed, however, when home values fall a
mortgage modification will take them only so far. What a
modification cannot do is bring back an income or health
insurance.
So without new and creative ways to help the unemployed,
these Americans may still lose their homes. We also know that a
job loss does not just affect the individual employee and his
or her home; surrounding home values fall with each
foreclosure, and some cities have seen more than 100
foreclosures every day.
Further, our safety nets are stretched thin, and that is
all some folks have. I read yesterday in USA Today that one of
every six dollars of Americans' income is from unemployment,
social security, or public benefits.
Further, ProPublica reported that 14 states have already
gone through available unemployment reserve funds. So the
effects of unemployment are being felt in so many places by all
of us.
Accordingly, this Congress and President Obama have taken
decisive action against the recession through the American
Recovery and Reinvestment Act, as well as legislation
addressing predatory mortgage lending and unfair credit card
practices.
We are also helping people at the local level. Tomorrow in
Baltimore we are putting over 500 borrowers together with 19
lenders to try to work out mortgage solutions. I hope everyone
who shows up can save his or her home, but I suspect that will
not be the case as the unemployed may not qualify for
modifications.
It would be almost impossible to modify a loan when you do
not have a job. I look forward to the testimony of Dr. Hall, as
we must understand exactly where we are in this crisis and just
how far we have to go.
With that, I will yield to Mr. Brady.
[The prepared statement of Elijah E. Cummings appears in
the Submissions for the Record on page 28.]
OPENING STATEMENT OF THE HONORABLE KEVIN BRADY, A U.S.
REPRESENTATIVE FROM TEXAS
Representative Brady. Thank you, Mr. Cummings, and I join
you in welcoming Commissioner Hall before the Committee this
morning.
The increase in the unemployment rate to a level of 9.4
percent is disturbing for several reasons.
First, the higher unemployment rate reflects greater
hardship for American workers and their families.
Second, along with other economic data it reflects the
continuing weakness in the economy.
And third, the higher unemployment rate underscores the
unrealistic nature of the Administration's economic assumptions
based on the idea that the stimulus spending would cap rising
unemployment.
The payroll employment decline reported today also shows
that the economy continues to contract. The 345,000 drop in May
payroll employment is a significant monthly job loss and is
broadly based in many industries. Although the overall pace of
job loss was not as terrible as in recent months, manufacturing
continues to suffer large employment declines.
There is some tentative evidence suggesting the economy may
bottom out in coming months. For example, financial market
conditions have improved; some measures of manufacturing
activity have stabilized; and some data related to housing and
construction are less negative.
However, measures to prevent foreclosures are not working
well, and re-default rates are very high with more loan losses
to come. Business investment has collapsed, and the commercial
real estate continues to be under stress. Consumer spending is
weak, and exports are falling as many of our major trading
partners are also experiencing recession.
I continue to be concerned about the Administration's
unrealistic economic assumptions which were the basis for the
President's budget proposal. The Economist magazine called
these economic assumptions dangerous because they understate
the true cost of the Administration's deficit spending and debt
accumulation.
Unfortunately, according to the Congressional Budget Office
Administration policies will triple the national debt to a
level of $17.3 trillion by 2019. This avalanche of government
deficits and debt is one reason long-term interest rates,
including mortgage rates, are on the rise.
A central problem is that the Administration assumed that
its stimulus spending sprees would significantly improve the
economy. As this poster shows, as we compare the projections by
the White House versus the real economy, just in January two
top Administration economists projected that the unemployment
rate would not exceed 8 percent this year or next if the
stimulus was enacted.
The Administration followed up by forecasting an average
unemployment rate of 8.1 percent for all of 2009. However, as
this poster shows, the current level of the unemployment rate,
well above 9 percent, is enough to show that the
Administration's assumptions about the positive impact of the
stimulus was wrong. If the Administration's forecast were
internally consistent, this would also indicate that the
economy will be lower, the GDP will be lower than projected.
An economic upturn should occur by next year, if only due
to the huge amounts of money and credit injected into the
economy by the Federal Reserve.
However, the economic recovery probably will be quite weak
and not consistent with the White House's rosy scenario for
2010. So what will be the sources of economic growth next year?
With many households forced to pay down debt, a surge in
consumption is not likely. Excessive levels of government
spending and debt are already rattling financial markets, so
much more government stimulus spending is not a feasible
option.
U.S. exports may be constrained by weakness in other
countries, and by retaliation against our own trade policies.
That leaves investment as a main source of growth. But how many
will undertake long-term investments when facing a tidal wave
of new taxes, entitlement spending, and inflation? Future
economic growth will rely heavily on investment, but more
taxes, government borrowing, regulation, and inflation all will
hit investors very hard.
Government is not evil, and up to a point provides more
benefits than costs, but beyond this point becomes
counterproductive. Policymakers should understand that
excessive government does have the potential to choke off
healthy economic and employment growth.
If the long-term rate of economic growth is reduced from 3
to 2 percent or below, the result will be much slower job
growth and higher levels of unemployment. Congress should wake
up to the damage that it is inflicting and stop enacting
legislation that only increases the burden of government on the
economy.
With that, I would yield back.
[The prepared statement of Kevin Brady appears in the
Submissions for the Record on page 28.]
Representative Cummings. Thank you very much, Mr. Brady.
Now we are very pleased to--Mr. Burgess, do you have an opening
statement?
Representative Burgess. Mr. Chairman, I do.
Representative Cummings. Thank you. Yield to you for five
minutes.
OPENING STATEMENT OF THE HONORABLE MICHAEL C. BURGESS, M.D., A
U.S. REPRESENTATIVE FROM TEXAS
Representative Burgess. Thank you. Thanks for the
indulgence.
Each month this Committee receives the release of the
Bureau of Labor Statistics' numbers, and each month we continue
to feel the need for what President Clinton used to call ``that
laser like focus on the economy.''
This month we see significant job losses without extreme--
without any focus on economy priorities. Perhaps Congress needs
to appoint someone solely responsible for focusing the effects
on domestic economic issues.
We could use someone in the room who will say, ``how
exactly will this new initiative, this new czar, this new
czarina, or bill that is supposed to have a causal
relationship, how will this create new jobs?''
Two weeks ago in one of my other committees we heard a lot
about cap and trade. They said cap and trade will lead to new
jobs. The report released on Tuesday by the White House Council
of Economic Advisers claims that the President's concept of
health care reform would create 500,000 jobs a year.
Well, we can all look forward to those potential jobs in
2012, 2014, 2016, when these plans take effect, but where is
the plan to build job growth this month, or even this year?
Looking at the numbers released this morning, the only
industry that appears to be on a hiring spree is us, the
Federal Government. It only makes sense that, at the rapid pace
of the size and scope of the Federal Government has increased
over the last four months, the Federal Government would need
more employees to keep up.
However, government spending is a boon for people living
here, but government hiring is not an effective method for
aggregate job growth or industry-wide all-states employment
gains.
To illustrate the real impact of the job losses, we
certainly can look at the home foreclosure numbers. Nationally,
home foreclosures--the foreclosure stated rate, the homes that
are starting to enter the foreclosure process, is 1.4 percent
compared to just 1 percent a year earlier. The foreclosure
inventory stands at 3.9 percent, compared to 2.5 percent a year
earlier. While 7.2 percent of mortgages are seriously
delinquent compared to only 4 percent a year earlier.
In Texas the inventory of foreclosed mortgages is 1.7
percent compared to 1.5 the prior quarter, and 1.45 percent for
all of the past year.
Needless to say, these trends are troubling. What is most
troubling is the fact that these are not foreclosures due to an
unexpected uptick on the adjustable rate mortgage or the result
of some subprime mortgage swindle; these problems have, for the
most part, been purged from the financial system. These
foreclosure numbers represent homes in trouble or lost due to
loss of family income related to the loss of a job.
We can take away the bank's ability to foreclose or force
bankruptcy judges to modify mortgages, but these actions ignore
the source of the problem. The downward trend in foreclosures
needs to be addressed and it needs to be addressed before major
social initiatives like environmental reform through cap and
trade legislation, and certainly before Congress undertakes to
name an additional 50 Post Offices.
Again, I call for all hands on deck and all efforts to
focus on improving the domestic economy. I would like to point
out that we are going to continue to see job losses if the
government is allowed to close 789 Chrysler dealerships, and
1100 GM dealerships, as part of the Administration's auto
industry restructuring plan.
It is interesting that all of these decisions are made by
someone in the West Wing of the White House who has never even
held a private-sector job.
If these dealerships are comfortable staying open and the
banks in the community can continue to provide the capital, I
frankly cannot see a reason why these dealerships should be
forced to close. Who else is going to sell these little green
cars if we do not have the dealerships there to provide the
services.
Well I would like to thank Dr. Hall for testifying before
the Committee, and for his team's important work at the Bureau
of Labor Statistics.
I will yield back the balance of my time.
Representative Cummings. Thank you very much, Mr. Burgess.
We are very pleased, again, to welcome Commissioner Keith
Hall of the Labor Statistics for the United States Department
of Labor, and thank you very much for being with us. I yield to
you, sir.
STATEMENT OF DR. KEITH HALL, COMMISSIONER, BUREAU OF LABOR
STATISTICS; 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, UNITED STATES DEPARTMENT OF LABOR,
WASHINGTON, DC
Commissioner Hall. Mr. Chairman, Members of the Committee:
Thank you for the opportunity to discuss the employment and
unemployment data that we released this morning.
Nonfarm payroll employment declined by 345,000 in May. Job
losses averaged 643,000 per month during the prior 6 months. In
May, the unemployment rate rose from 8.9 to 9.4 percent. Since
the recession began in December 2007, payroll employment has
fallen by 6 million, and the unemployment rate has increased by
4.5 percentage points.
Job losses continued to be widespread in May, but the rate
of decline moderated in construction and several service-
providing industries.
Large job losses continued in the manufacturing sector with
employment declines in nearly all component industries.
Employment fell sharply in motor vehicles and parts, machinery,
and fabricated metals. Since the start of the recession,
manufacturing employment has decreased by 1.8 million,
accounting for 30 percent of the jobs lost during this
downturn.
Construction employment declined by 59,000 in May, half the
average of the previous 6 months. Job losses moderated in the
private service-providing industries, with employment falling
by 113,000 in May compared with an average monthly decline of
356,000 in the prior 6 months.
Employment was little changed in temporary help, retail
trade, and leisure and hospitality, following large declines in
recent months.
Elsewhere in the service-providing sector, the health care
industry added 24,000 jobs in May. This was about in line with
the trend thus far in 2009.
In May, average hourly earnings for production and
nonsupervisory workers in the private sector were up by 2 cents
to $18.54.
Over the past 12 months, average hourly earnings have risen
by 3.1 percent. From April 2008 to April 2009, the Consumer
Price Index for Urban Wage Earnings and Clerical Workers
declined by 1.2 percent.
Turning to measures from the Survey of Households, the
unemployment rate increased from 8.9 to 9.4 percent over the
month. The number of unemployed rose by 787,000 to 14.5
million.
Since the recession began, the jobless rate has increased
by 4.5 percentage points, and the number of unemployed persons
has grown by 7 million.
Among the unemployed, the number who have been out of work
27 weeks or more increased by 268,000 to 3.9 million. These
long-term unemployed represent 2.5 percent of the labor force,
the highest proportion since 1983.
Over the month, the employment-to-population ratio edged
down to 59.7 percent, the lowest level since October 1984.
Since the recession began, the employment-to-population ratio
has fallen by 3 percentage points.
Among the employed, the number of persons working part time
who would prefer full-time work was little changed for the
second consecutive month. At 9.1 million in May, involuntary
part-time employment was 4.4 million higher than at the start
of the recession.
Among those outside the labor force--that is, persons
neither working nor looking for work--the number of discouraged
workers was 792,000 in May, up from 400,000 a year earlier.
These individuals are not currently looking for work because
they believe no jobs are available to them.
In summary, nonfarm payroll employment fell by 345,000 in
May, compared with the average monthly decline of 643,000 for
the previous 6 months. While job losses continued to be
widespread, declines moderated in construction and in a number
of service-providing industries. The unemployment rate rose by
half a percentage point to 9.4 percent.
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 29.]
Representative Cummings. Thank you very much, Commissioner
Hall.
Commissioner, I think we had a loss of about 652,000 jobs
in March. Is that right? Is that estimate right?
Commissioner Hall. Yes, that's correct.
Representative Cummings. And we had a loss of about 504,000
in April? Is that correct?
Commissioner Hall. Yes, that's correct.
Representative Cummings. And this month we are talking
about 345,000? Is that right?
Commissioner Hall. That's correct.
Representative Cummings. Now tell us the significance of
that. Is that a slowing down of the job losses, the rate of job
losses? Is that a reasonable statement there?
Commissioner Hall. Yes, it is. We have had a steady
moderation in job loss for, it looks like four straight months
now.
Representative Cummings. And what does that tell you? I
mean, when you are trying to look forward what does that say?
Does it--and what do you attribute that to?
Commissioner Hall. Well this is clearly not an improvement
in the job market yet. This is a moderation in the job loss. So
this is what we hope to see on the way towards eventually job
growth.
Representative Cummings. Now we have heard a number of,
here recently, folks, the so-called experts, say that we are,
it looks like we may be coming out of this recession at the end
of the year, or some who look at it a little more
conservatively say sometime in the next year. What do you see?
Commissioner Hall. It is hard for me to project, but I will
say this sort of moderation is consistent with an improving job
market. As far as whether it will hold, continue to moderate in
the future, I can't say.
Representative Cummings. Now is it possible to identify the
effects of the stimulus bill with regard to employment data? I
mean, is there any correlation you can make from looking at
what you see there?
Commissioner Hall. It is hard for us to do that. We are
rather focused on just sort of getting the numbers correct, and
we don't tend to try and look and see where the stimulus
spending has occurred and where we are seeing improvements.
Representative Cummings. I understand. Well where have the
improvements been?
Commissioner Hall. The improvements have been fairly
widespread outside of manufacturing. So we have had a
moderation of job loss very much in the service-providing
sector, which is interesting because in the prior six months
about half the job loss was in services. And now it is maybe a
third of the job loss.
Representative Cummings. And why is that so significant?
Commissioner Hall. I think it is significant because this
downturn sort of started in manufacturing and construction, and
when things got really severe, the most severe job loss--and
this job loss is still severe--it was very widespread and
really included even services.
So having services back out is a good sign. It's not a good
sign, obviously, for manufacturing but it's a good sign that--
well, it is a good sign that we are seeing broad moderation.
Representative Cummings. Now there have been recent reports
with regard to I think The New York Times carried an article
just recently saying basically that we have a situation where,
for example, in New York they predict now that they will not
get 44 percent of the employment taxes--in other words,
earnings' taxes--because I guess the unemployment rate is down.
When you hear figures like that, how does that affect--how
do you see that affecting this job situation? In other words,
state governments are getting less money, possibly. And there
is another report that says that number of these state
governments, in almost every area that they had predicted that
they would be gaining funds they are actually coming up very
short. And so what do you see with regard to state government
and how does that, the state and local government, how does
that relate to all of this?
Commissioner Hall. So far, even the last six or seven
months, the employment at the state and local level has been
pretty flat. Obviously the concern would be that at some point
the budgets may start to cause state and local governments to
decline in employment.
Representative Cummings. And that would be a major problem?
Commissioner Hall. It would.
Representative Cummings. The other thing that Mr. Burgess
referred to was the foreclosure situation. As a matter of fact,
Mr. Brady and Mr. Burgess referred to it. And we've got
situations where we are doing these modifications, but if
people do not have jobs that is a real problem. Do you see
that--that is, the loss of housing--does that create a problem
with regard to jobs, too?
Commissioner Hall. Sure it does. I think it is the same
sort of cycle that you see with consumption or anything else.
When you have foreclosures, or when you have consumer spending
down, it creates unemployment. Then the unemployment creates
more, a bigger decline in consumer spending. So it is a cycle.
So it would be the same thing I think with foreclosures.
Representative Cummings. I see my time has expired. Mr.
Brady for five minutes.
Representative Brady. Thank you, Mr. Chairman.
You were making the point that the job market is not
improving; it is continuing to decline at a significant rate,
just thankfully not as deep and quickly as in the past months.
What does the May decline in payroll employment say about
the current economic conditions?
Commissioner Hall. Although there has been some moderation
in the job loss, this still is a significant job loss and this
still signals a labor market that is not healthy.
Representative Brady. Well that is what I sense back home
in visiting with retailers and construction manufacturing
industry and the service, especially in the commercial real
estate. We're not seeing--the government programs to help
people with mortgages are failing. I think the hope for home
ownership--home owners program was supposed to help 400,000
people keep their homes, and it helped like 200.
The incentives for new home owners to purchase homes, again
almost no takes. We are hopeful that some of the new redrawn
plans might help, but I still think underlying, as Mr. Cummings
said, is a very weak economy that's got some future challenges
ahead.
There has been a lot of spin in Washington these past
months about the impact of the stimulus, and it is almost like
we are listening to Baghdad Bob again from Iraq tell us about
how the country is winning the war as the U.S. Troops are
rolling into his city.
Last January, two top Administration economists argued that
if we enacted the stimulus, which has added--you know, will add
almost a trillion dollars to our debt--that if we did that, we
would keep the unemployment rate at or below 8 percent this
year.
This level has already been exceeded, correct?
Commissioner Hall. Correct.
Representative Brady. And isn't there, from an economic
view looking at the poster and watching the rising
unemployment, which trails the economy as we all know, but
looking at the President's projections of 8 percent, 8.1
percent versus the current 9.4 percent, is that statistically
significant in unemployment?
Commissioner Hall. Yes, that's a significant difference.
And to reach an 8.1 percent average for the year, we would need
to see the unemployment rate drop to well below 8.1 percent for
a good portion of the year to hit that mark. It seems
difficult.
Representative Brady. Yes. And the deeper we go into the
year, the more severe--we would almost have to be in the 7
percent, or 6 percent rate at some point to be able to meet
that need, which again worries me because these are projections
that were used for the budget, which means we are hiding a
deeper level of debt.
The Administration, including the Vice President, has
claimed that the stimulus policies have added 150,000 new jobs
to the level of employment, we see this cited almost daily by
the Administration, can you substantiate that claim?
Commissioner Hall. No, that would be a very difficult thing
for anybody to substantiate.
Representative Brady. And Chairman, who is a highly
respected Chairman of the Council of Economic Advisers,
Chairman Romer, also cited that 150,000 job creation figure in
her recent testimony before this Committee. You are saying you
cannot verify that the Administration's policies have created
those additional 150,000 jobs?
Commissioner Hall. No. We are busy just counting jobs.
Representative Brady. Right. The Administration's tax
reduction went into effect in April. One of the major parts of
the stimulus bill adds about $1.10 a day to the income of
individual taxpayers. What evidence is there in this report
today that that measure had any positive effect on employment
conditions?
Commissioner Hall. I really would not be able to make a
connection between the two in this report.
Representative Brady. Okay. Mr. Chairman, thank you very
much.
Representative Cummings. Thank you very much. Just so--I
just want to make sure we are clear, Mr. Brady has asked you a
number of questions and you have said things like I'm just
counting jobs, and whatever. Are you saying that the
information that he is providing you is inaccurate? Or you do
not have the information? Or that is not a part of what you are
answering?
Because I think you are sending out a message here, I
think, that is not what you--what I think you are saying.
Commissioner Hall. Thank you for the chance to clarify.
Representative Cummings. Yes, please clarify.
Commissioner Hall. It is just not something we would be
able to measure. It does not mean it is not true.
Representative Cummings. That is a big difference.
Commissioner Hall. Right.
Representative Cummings. All right.
Representative Brady. Well, actually, Mr. Chairman----
Representative Cummings. I yield to the gentleman.
Representative Brady [continuing]. I wasn't providing
information to Mr. Hall. I was asking about the claims that
have been made by the Administration, and are they reflected in
these job numbers. And his answer was very clear: No, they are
not. He cannot verify them. They are not justifiable in here.
And I understand that he should not go beyond his scope of
expertise in these areas, but I think the time when we are
seeing so much spin on the economy it is important to go to the
facts.
Representative Cummings. Well now I have got to--I do not
want to carry this on too much longer, but, Mr. Hall, as I
heard what you--I just want to make sure we are clear.
When these statements are made, if you do not have the
information I would prefer that you say that; because you can
see what is happening here. And I do not want it out there that
you are saying you are denying the numbers when you do not have
the information.
Now can you clarify that? Let him clarify. You can go ahead
and clarify. I just want to make sure we are clear. All of us
need to understand this.
Commissioner Hall. Right. No, we do not have the
information because we are just collecting the data. We are not
trying to look to see where there are effects from the stimulus
package.
Representative Brady. But you do not have the unemployment
data?
Commissioner Hall. Sure we have the unemployment data.
Representative Brady. So when we ask you about the
unemployment projections of the Administration, 8.1 percent
versus the current unemployment rate of 9.4 percent, which you
said was significantly--significant, you're saying you didn't
have that data?
Commissioner Hall. Oh, no, we have that data. That is
absolutely true. The unemployment rate of 9.4 percent is
significantly different from 8.1.
Representative Brady. Well, the spin continues here,
clearly.
Representative Cummings. Thank you very much. Mr. Casey.
Senator Casey. Mr. Chairman, thank you very much. I did not
plan to get into this discussion, but I think it is very
important when people are losing their jobs in record numbers
that we are very clear what this hearing is about and what your
job is in the Bureau of Labor Statistics.
So let me just go through a couple of things. Your job, and
correct me if I am wrong, but your job is not to make job
projections? Is that correct?
Commissioner Hall. That is correct.
Senator Casey. Your job is not to do analysis of the impact
of the stimulus legislation? Is that correct?
Commissioner Hall. That's correct.
Senator Casey. Your job is not to speculate about the
impact of any of the Administration's economic strategies? Is
that correct?
Commissioner Hall. That's correct.
Senator Casey. You are Joe Friday. You are providing the
facts every month about what the numbers tell you. Is that
correct?
Commissioner Hall. That's correct.
Senator Casey. Okay. The rest of us can be something other
than Joe Friday. We all have different jobs here.
But I wanted to go through a couple of numbers that I tend
to ask about every month. First of all, there is some good news
here. We see that nationally, the job loss number was about--I
guess it was in March about 700,000? I have 699,000. I want to
make sure we're in the right----
Commissioner Hall. Yes, it has been revised. It is 652,000
now.
Senator Casey [continuing]. Okay, 652,000 for March. And
then for April the revised number is 504,000?
Commissioner Hall. Yes.
Senator Casey. And then this May number is 345,000?
Commissioner Hall. Yes.
Senator Casey. So 652,000 to 504,000 to 345,000. So that
number is going down, thank God.
Commissioner Hall. Yes.
Senator Casey. But the rate, the percentage went from,
what, 8.5 to 8.9 to 9.4?
Commissioner Hall. Correct.
Senator Casey. So the overall job loss number is going down
and that is good news, but the bad news is the rate seems high.
How do you--can you explain that, or analyze that for us?
Commissioner Hall. I would say that it is not uncommon for
the two numbers to not be exactly in sync, not be telling
exactly the same story----
Senator Casey. Okay.
Commissioner Hall [continuing]. Over a month. But what
typically happens is in the next month or two I would guess
that they would reconcile. Either the growth of the
unemployment rate would slow down, or the job loss might pick
up. But typically if they get out of sync, they get back into
sync fairly quickly.
Senator Casey. Okay. The numbers that I wanted to ask
about, which I ask every month, by way of comparison. African
American unemployment rate went, the month to month, went from
15 to 14.9. So basically unchanged? Is that correct?
Commissioner Hall. That's correct, although it does hide
the fact that the prior month it increased by 1.7 percentage
points. So I would sort of say it increased significantly last
month, and that number held this month. So it is not really
good news.
Senator Casey. Okay. But in terms of African American
versus White, the White unemployment rate is 8.6?
Commissioner Hall. Actually we left that out of our numbers
here. I'm sure--that sounds correct.
Senator Casey. I just want to make that distinction between
African American and White unemployment rate. And the Hispanic
rate went up from 11.3 to 12.7? Is that correct?
Commissioner Hall. Correct.
Senator Casey. So that number has gone up. That is a
substantial increase for one month. I'm not sure what that
means, but does that hold any significance necessarily? I know
month to month can be a little misleading.
Commissioner Hall. Yes. On the breakouts by demographics,
some of the numbers move around a bit because it's not a really
large sample size. So I would look more for the pattern over
the last few months, and I think it is still being consistent
with the rising unemployment rate overall.
Senator Casey. Okay. And finally, and then I am almost out
of time, about a minute, in Pennsylvania our numbers in March
and April were at 7.8, unchanged. We don't know the May State
number yet. I will know that probably in two weeks. So
fortunately in the last two months it has been steady.
But what I worry about, and what a lot of states are
concerned about, is the impact of the troubles that GM and
Chrysler have had. In our State it is not auto manufacturing
jobs per se, it is really dealers and suppliers.
Any sense of where that is going? I know that in May the
number I am seeing here is 29,800 jobs lost in auto
manufacturing and parts supply. Again, I know it is not your
job to prognosticate or to predict, but is there any indication
that that 29,800 number is going to go up? I mean, logic would
tell us it will go up because we will not see the full effect
of the GM and Chrysler problems for some time, but do you have
anything to add to that?
Commissioner Hall. Yes. I can say that this month's job
loss in the autos and auto-related is pretty much consistent
with the last few months. It is pretty much in the same
ballpark that it has been.
Senator Casey. You mean we're losing about 30,000 jobs a
month in that sector?
Commissioner Hall. Yes.
Senator Casey. Okay, thank you very much.
[The prepared statement of Robert P. Casey, Jr., appears in
the Submissions for the Record on page 60.]
Representative Cummings. Thank you very much. Mr. Burgess
for five minutes.
Representative Burgess. Thank you, Mr. Chairman.
Let's, just to finish up and close things up from
Representative Brady's line of questions, the 150,000 job
creation figure that Christina Romer cited, are those your
statistics?
Commissioner Hall. No, they're not.
Representative Burgess. So those are statistics from press
reports with wide distribution, but they're not BLS statistics?
Is that correct?
Commissioner Hall. That's correct.
Representative Burgess. So it would be unusual for you to
make projections based on that sort of number because that is
not your number?
Commissioner Hall. Correct.
Representative Burgess. Let me ask you a question because
we get a lot of conflicting information on this Committee and
just in general and I know people are confused as to the
direction of the economy. We hear economists talk. You all
almost never agree on what you're--the direction that we are
going.
We hear testimony in this Committee about green shoots, and
then we hear testimony about yellow weeds. So tell us what it
is. Are we seeing the green shoots? Or is the landscape still
pretty barren?
Commissioner Hall. Well, I would say--overall I would say
that the job loss was significant. It does seem to be a
moderation over the job loss over the previous six months.
I suppose that's the good news. We still have a
deteriorating labor market but it's not--it's not falling as
quickly as it was before. I would say that's the one sign of
encouragement here.
Representative Burgess. Now we have heard a lot this week
of course about the government's takeover of General Motors,
and prior to that the bankruptcy, the forced bankruptcy of
Chrysler Corporation, and now we are hearing about the dealers
that are losing their dealerships in this process.
Is that going to have an effect on what we see in reports
that you're going to bring to this Committee over the summer
months?
Commissioner Hall. It may well. Typically when we hear
announcements of layoffs it usually takes a few months for
those to actually occur and work their way into our data. I
don't know specifically where we are in our numbers compared to
the announcements.
Representative Burgess. And I know you can't comment on
this, but I will just tell you, not as a Member of Congress but
just as an American, it is usual to me. I find it unusual that
the government is dictating the closure of automobile
dealerships. I do find that troubling, and I hope that effect
will be moderated over the coming months but I tend to be
pessimistic about that.
As far as the government itself goes and the growth of
government, we do hear a lot about that. Did government
employment increase or decrease over the recent months?
Commissioner Hall. It was roughly flat. It decreased 7,000,
but that is still roughly flat.
Representative Burgess. And what other--you mentioned
health care I think as an industry sector that showed some
increases. Were there any others?
Commissioner Hall. I think health care was probably the
only major sector that had significant job growth.
Representative Burgess. And again I know you can't
speculate, but if the government takes over health care then of
course the health care growth will be in the government sector.
I just had to point that out. I'm sorry.
Was there anything unusual in weather patterns over the
past several weeks, or the past couple of months that would
have an impact on the report that you have given to us today?
Commissioner Hall. I don't recall hearing any stories from
our data collectors, or any stories from our industry analysts
that weather was an impact.
Representative Burgess. What about, have there been any
seasonal effects that would have an impact on these numbers
that we have in front of us today?
Commissioner Hall. No, I don't----
Representative Burgess. We're coming off the winter.
Actually you would probably expect jobs to increase this time
of year, but then you also have people concluding school so the
number of people out looking for jobs may increase. So a
profound effect one way or the other?
Commissioner Hall [continuing]. Actually, these numbers are
seasonally adjusted. So really what they are is we put them in
the context of what's normal for this time of year. So there is
a seasonal factor here.
Representative Burgess. But that's accounted for in the
numbers?
Commissioner Hall. It is.
Representative Burgess. What about employment? Are there
any significant gender differences that you've identified, male
versus female employment?
Commissioner Hall. I think the pattern has been pretty
consistent through this recession. The job loss by men versus
women, is roughly 3 to 1 men versus women. That is actually
typical of recessions. In fact, if anything the women's job
loss is a little bit higher than it normally is during a
recession.
Representative Burgess. And then as far as real hourly
compensation, what have you seen as far as changes in real
hourly compensation over the past year?
Commissioner Hall. Well the real pattern--let me talk about
nominal, first. The nominal compensation, nominal wages during
the expansion got up to almost 4 percent, and during this
recession now the nominal wage growth has declined. We're
roughly around 3.1 percent, something like that. That is
typical of recessions.
Representative Burgess. 3.1 percent is a positive number or
a negative number?
Commissioner Hall. It's a positive number. This is nominal.
Representative Burgess. Okay.
Commissioner Hall. And since energy prices have been going
down--although now they're starting to tick up--what that's
meant in the last few months is real wage growth, but that's
been primarily because of declining energy prices not because
of something that's going on in the labor market.
Representative Burgess. Okay. We just passed a big cap-and-
trade bill. Will we be able to identify the green jobs when
they show up?
Commissioner Hall. It's very difficult for us to do that at
this point, primarily because the industries and occupations
that we have got aren't designed to pull out green jobs. That
is actually something that we may be able to do over time and
adjust our measurement. It's a similar--to be honest with you,
it's a similar sort of problem as we had say in the late 1990s
with IT jobs.
Representative Burgess. But perhaps you can color-code your
reports in the future as to the green jobs. I yield back, Mr.
Chairman.
Representative Cummings. Thank you very much. Ms. Klobuchar
for five minutes.
Senator Klobuchar. Thank you very much, Mr. Chairman. Good
to see you again, Commissioner Hall; enjoyed our hearing last
month.
I think when we were talking last month at this hearing you
had--we went through the statistics and the increases, and you
indicated that we would continue to see this unemployment.
One of the things I just wanted to clarify in light of
Congressman Brady's questions was the fact that I think since
the start of the recession we have lost something like 7
million people have lost their jobs. When do you mark the start
of this recession, this economic crisis?
Commissioner Hall. December '07 was chosen by the NBER as
the start of the recession. The first payroll job loss occurred
in January 2008. So that has been a pretty good indicator I
think for the recession.
Senator Klobuchar. So December '07. So that was an entire
year before President Obama took office? Is that correct?
Commissioner Hall. That's correct.
Senator Klobuchar. All right. So we are at a 9.4 percent
unemployment rate. And just as we talked about last month,
these are real people who have lost their jobs.
I mentioned to you some stories last time, and I think we
always have to remember this when we use these statistics. I
heard just this week from a woman in Rice, Minnesota, who works
to provide residential services for the disabled. She is a
single mother of four and works two jobs, sometimes not coming
home until 3:00 in the morning. She told me that she finds it
hard to be a good mother to her children.
And one of the questions I had last time--and I want to
continue on this vein--is when people look at these
unemployment rates it is not just people that do not have any
job at all, but we have seen a decrease in hours, and people
who would like to have--they have a job, but it is not as
extensive as they like. They are not getting as many hours as
they would like.
What are those numbers this month?
Commissioner Hall. Sure. They are all telling a similar
pattern in terms of a struggling labor market. The part-time
for economic reasons we now have 9.1 million people who are
part-time who would rather be full-time. That is an increase of
174,000. They are not included in the unemployment rate.
And discouraged workers, we have about nearly 800,000
discouraged workers. And that is an increase of almost 400,000
over the year.
Senator Klobuchar. Okay. So when you include those workers,
when you include the discouraged workers, what is the
unemployment rate then?
Commissioner Hall. It goes up to 16.4 percent.
Senator Klobuchar. And those are people who have just given
up looking for a job?
Commissioner Hall. Yes. A combination of people who are
either underemployed or have given up, and those who actually
are unemployed and still looking.
Senator Klobuchar. And so when you say ``underemployed,''
does that include our people that don't have as many hours in
as they would like?
Commissioner Hall. No, it doesn't.
Senator Klobuchar. So can you include those? Or is that too
difficult?
Commissioner Hall. Well I guess it does in the sense that
people who are working part-time who want to be full-time, they
are counted.
Senator Klobuchar. Okay.
Commissioner Hall. But just--the same change in the hours,
that is not reflected in here.
Senator Klobuchar. And you said earlier in your testimony
that, as we look at different sectors that we still see the
manufacturing way down. Where is construction? Have we seen any
change in that over the last month?
Commissioner Hall. Yes, we had a little moderation in the
job loss in construction.
Senator Klobuchar. Really? Okay. What was that?
Commissioner Hall. That dropped 59,000, which is a little
bit better than it has been. 40,000 of that was nonresidential.
Senator Klobuchar. Okay. So where is that now,
construction, the unemployment rate?
Commissioner Hall. I don't know it by industry.
Senator Klobuchar. Okay. One of the things we have talked
about before is, one of the early indications to you that this
was more than just a blip was that this was crossing across
sectors, I remember you telling me, but also across geographic
areas. While some states have it worse, it was really clear
that it was going on across the United States and that is when
we realized it was a year ago that this was going to be a big
problem.
Our state now went, we lag about a month, but from the 8.2
percent down to 8.1 percent unemployment. Have you seen
improvements in certain areas of the country in the last few
months? Is there any kind of trend there?
Commissioner Hall. You know, I haven't--I haven't looked to
see what the trend is like by state. Obviously the state
unemployment numbers on average are consistent with the
national numbers, so I would expect if there's been--well,
there hasn't been much of an improvement in the unemployment
rate yet, so I expect that they have all increased.
Senator Klobuchar. Where have you seen the--what are the
highest unemployment rates? Which states, and what are they?
And does this lag by a month? Or are these the current
statistics?
Commissioner Hall. This one is lagging by a month.
Senator Klobuchar. Oh, okay.
Commissioner Hall. We will have them in a week or so. We
have nine states now in double digits: Oregon, Michigan, North
Carolina, South Carolina, Nevada, Rhode Island, California,
Ohio, and Puerto Rico. They all have double digit unemployment
rates right now.
Senator Klobuchar. So you see them really in all parts of
the country.
Commissioner Hall. Yes.
Senator Klobuchar. But could it be possible that it is more
focused with states that have more manufacturing, although
Oregon I don't think fits that.
Commissioner Hall. Yeah, I think there is a bit of a
correlation. Some of the manufacturing states actually started
with higher unemployment rates, and they have also had a higher
rise in unemployment.
Senator Klobuchar. Okay, I'll save some questions for the
second round. Thank you.
Representative Cummings. Thank you very much.
Commissioner Hall, we have got a number of our constituents
I'm sure watching you right now, and we've got young people
coming out of college, and we've got folks who have lost their
jobs. When you look at your statistics here, where would you
say to them, if they were trying to find a job, what kind of
areas might they want to look? Just based upon what you see
here, what might be their best chances of getting employment?
Commissioner Hall. Right. It's hard for me to recommend
something. The----
Representative Cummings. I'm not necessarily asking you to
recommend. I'm just trying to see where the jobs are.
Commissioner Hall [continuing]. Sure. Certainly during the
recession the only consistent job growth has been in health
care, and maybe government a little bit. Almost everything else
has seen some job loss. And in almost every sector now
continues to see some job loss.
So it is hard to say, at least right now, where there is
likely to be growth.
Representative Cummings. When I listen to your testimony--
and I don't want us to have on rosy glasses, because I want us
to be very realistic; we are dealing with the lives of people,
and people trying to take care of the families, but I see
numbers where people are losing 600,000-plus jobs in April I
think, and then 500-and-some in the last few months, and then
we go to 345,000. That seems to have some kind of significance.
I mean, any time you are cutting something in half, to me
that sounds significant. But do you see it that way?
Commissioner Hall. Yes, I do. It is encouraging that the
job loss has moderated. And while this is not good news, this
is what we would hope to see on the way to good news. In other
words, this is a labor market that is not falling as fast as it
was before.
Representative Cummings. And one of the things that I
believe is very important in all of this recovery that we are
trying to exercise here is that there must be some kind of
consumer confidence.
Is there a connection between the overall consumer
confidence and the level of direction of unemployment rates?
Commissioner Hall. I would say yes, especially when you
have large changes in consumer confidence. By far the most
important thing in the economy is consumer spending. It is 70
percent of the economy. A good portion of the rest of the
economy depends upon consumer spending.
So it is very significant if consumer confidence falls, or
starts to rise, especially if it is rising from levels that we
have seen lately. That is potentially a significant thing for
the future.
Representative Cummings. So let's do some addition here. We
have got a reduction in the rate of lost jobs, and of course
here recently we had a spike in consumer confidence. You're
aware of that?
Commissioner Hall. Yes.
Representative Cummings. Can we expect this good news to
show up in unemployment numbers in the next few months? I mean,
is that a reasonable expectation? Or is there any history of
that kind of thing happening? Because, again we are trying to
make sure the American--we want to give the American people an
accurate picture. I don't want it too rosy; don't want it too--
I just want it to be accurate.
Commissioner Hall. Right.
Representative Cummings. As best we can be that way, of
course.
Commissioner Hall. I can say it this way. If consumer
confidence leads to stronger consumer spending, that will lead
to an improvement in the labor market.
Representative Cummings. And are the effects on consumer
confidence confined to households that directly experience job
loss?
Commissioner Hall. No, it's not. It's--there's a cycle when
you start a recession where consumer spending goes down. Then
you start to have job loss. And the job loss means further
reduction in consumer spending. So there's this cycle downward.
Well there is also a cycle that can occur upwards. If
consumer confidence and spending increases, then that slows the
job loss and maybe gets the job gain. The job gain then means
higher consumer spending. So you have this cycle working
backwards.
Representative Cummings. So I mean to summarize what you
just said, it sounds like we are moving in the right direction,
maybe not as fast as we would like to, but at least we are
moving in the right direction?
Commissioner Hall. Yes.
Representative Cummings. And how high would--you know, we
have got the slow down in job loss but we have got an increase
in unemployment. At what point does that--would you think that
we would begin to see the unemployment come down in
relationship to the job loss? I mean, what kind of numbers
would you need to see for that to be the case?
Commissioner Hall. The way to think about it is we do need
to see enough job growth to match the growth in the labor
force, the growth in the population. So if we get job growth
with something like 125,000 jobs a month, that is consistent
with a constant unemployment rate.
Representative Cummings. I see.
Commissioner Hall. So we need to get it somewhere above
that to start seeing the unemployment rate going down.
Representative Cummings. I see. My time has expired. Mr.
Brady.
Representative Brady. Thank you, Mr. Chairman.
You noted a moment ago the states with the highest
unemployment rate, which brings to mind a report, a review of
the stimulus spending done by USA Today recently where it said
basically the states hit hardest by the recession has received
only a few of the government's first stimulus contracts, even
though the glut of new federal spending was meant to target
places where the economic pain has been particularly severe.
A review of the nearly $4 billion in contracts that have
been awarded by the massive stimulus package, according to this
report and review, the government has spent only about $7.42
per person in states with high unemployment--the economies are
worse there. North Dakota, with the lowest unemployment rate,
has received about $26 per person.
So apparently those contracts are not going to the states
that need it the most. That is consistent with a review by the
Associated Press that pointed out here recently that states are
planning to spend 50 percent more per person in areas with low
unemployment than areas with the highest unemployment, to quote
the AP. The early trend in the analysis runs counter to
expectations raised by the President that road and
infrastructure money from the historic $787 billion stimulus
plan would create jobs in the areas most devastated by layoffs.
Does your analysis show in those high unemployment states,
the ones that are struggling the most, that there has been an
impact from these stimulus dollars? Is there anything, again
going back to your numbers, is there anything in here that
confirms or denies this type of analysis?
Commissioner Hall. We wouldn't be able to tell.
Representative Brady. The reason I ask--and I do think it
is important to go to the numbers--is people back home really
are struggling. Texas has a better economy than most, but we
are feeling it as well. You talk to the retailers, they are not
seeing an increase in consumption spending.
There are some activities in construction due to the
infrastructure dollars, which we should have done far greater
investment there than we did in squandering some of the money
in the stimulus, but the reason I think it is important to go
to the facts are that folks back home just want to know the
truth.
You know, they hear the President's Director of the Budget,
Peter Orszag, tell CNN that the effects of the stimulus would
be felt in weeks to months. Larry Summers, Director of the
National Economic Council, told CNN's Wolf Blitzer: You'll see
effects begin almost immediately.
Christina Romer, in addition, along with the Vice President
claimed 150,000 jobs have already been created. Said, we will
turn the corner and we'll start adding jobs.
Then we've got the Press Secretary for the President saying
the stimulus has already started to save and create jobs. The
stimulus has already started to save and create jobs.
Yet, when you look at the numbers they just don't seem to
bear that out. The unemployment rate being probably the most
dramatic comparison of the claims of the Administration in the
real economy.
As you bring reports to us in the future, is it possible
for you to do deeper analysis on the effects of the stimulus,
or of targeting those states with the higher unemployment rate
so we can see if there is some impact that we ought to be
encouraged by? And again, no spin. Just facts. How do we get to
those facts?
Commissioner Hall. Yeah. We just aren't geared up, and it's
really not our mission to do that sort of analysis. We are--to
be honest, we are fully occupied just counting the number of
jobs month by month. To put it in perspective, we are talking
about 130- to 135 million payroll jobs that we are measuring
every month here. So we just could not try to figure out the
effects of the stimulus package in that.
As far as the states, obviously we produce the state-level
data, but identifying the impact of some specific policy we
really couldn't do.
Representative Brady. Okay. Well I appreciate the honesty
on that. You talked about health care, you know, again a
growing need in our country. Did government employment increase
or decline this month?
Commissioner Hall. It was roughly flat. It declined by
about 7 million. I can tell you, actually, for what it's worth,
last month we got a bump of about 63--I'm sorry 7 thousand; I
said 7 million. Census added about 63,000 employees last
month----
Representative Brady. That would be a bump, 7 million.
[Laughter.]
Commissioner Hall [continuing]. Yes.
Representative Brady. We got a bump last month because of
the Census.
Commissioner Hall. Yes. Actually we lost about 18,000
because of Census this month and the U.S. Postal Service lost
13,000. So we took away, in fact all the decline in government
employment was from Census.
Representative Brady. The losses, the 21,000 jobs lost from
the auto manufacturing, that will be reflected in the future in
the manufacturing sector?
Commissioner Hall. Yes.
Representative Brady. The jobs lost--last question--the
jobs lost from dealerships being closed is reflected in the
services?
Commissioner Hall. Yes, and under Retail Trade we've got
Auto Dealerships.
Representative Brady. Okay. Great. Thank you, Mr. Chairman.
Representative Cummings. Thank you. Mr. Casey.
Senator Casey. Thank you, Mr. Chairman.
Just a brief comment on some of the points that Congressman
Brady was making. At some point we are all going to know. We
are going to know whether this recovery bill worked or didn't
work, and you are either on one side or the other in terms of
supporting it, and I am glad that I voted for it. And I believe
that we are seeing a positive impact from it.
Can you back up that on every point with numbers? Probably
not. But we are seeing it on the ground. There are projects
started. There are jobs being created. But it is still kind of
early to tell whether or not the recovery bill has had the
impact we want it to have, but we will know soon enough.
There will be a history written of this time period, and
one side or the other is going to be mostly right or mostly
wrong. So I think it is a little early, but I know there is a
debate about that.
I wanted to go back to one point in the unemployment rate
for minorities, but in particular minority women as opposed to
the White female number.
The unemployment rate for White females, do you have that
number, as compared to African American women and Hispanic
women?
Commissioner Hall. Sure. The unemployment rate for White
women is 6.9 percent.
Senator Casey. 6.9.
Commissioner Hall. For African American women it is 11.2
percent.
Senator Casey. Okay, and how about, is the Hispanic female
number 10.5?
Commissioner Hall. Yes.
Senator Casey. Okay, so we're seeing a gap there between--
similar to the gap on overall White versus African American
versus Hispanic. It is reflected as well in the female worker
numbers.
Is there anything in the data that jumps out that explains
that? Or is that typical in terms of the month to month or year
to year job numbers? Because it is troubling that we have
double figure numbers for minorities, double figure numbers
both for minorities generally and in particular for subsets of
that, as opposed to White male or female workers. But there may
not be anything that you can tell us, but I was just curious to
see if there is anything in the numbers that jumps out to
explain that or to put that into context.
Commissioner Hall. No. In fact, that gap is typical during
economic expansions, during recessions; it's just a gap that
exists. And in fact during recessions the rise in unemployment
for the minority groups typically rises further. So I don't
have a ready explanation for it.
Senator Casey. Sure. No, thank you very much.
Representative Cummings. Ms. Klobuchar.
Senator Klobuchar. Thank you very much. One other area that
we talked about last month, Commissioner Hall, was the area of
Veterans unemployment. I think it is startling for people of
the country to know that those that come back in the last few
years, actually the unemployment rate of Veterans since the
Gulf War is higher than the unemployment rate for people who
have not served our country.
And part of that I believe is because when they leave they
have a job, and then because they are gone, as the unemployment
rate is going up and jobs are going away, it is harder for them
to get a job when they come back.
I know that last month the unemployment rate for Veterans
since the Gulf War was 10.3 percent, which includes the current
Wars in Afghanistan and Iraq. What is that rate now?
Commissioner Hall. For May, the Gulf War era Veterans'
unemployment rate is 11.4 percent.
Senator Klobuchar. So it actually, did it go up from last
month then?
Commissioner Hall. I think that's correct. I don't have
that data right in front of me. That's probably correct, but we
can check on that if you like.
Senator Klobuchar. Yes, could you? I would just like to see
how much it has gone up each month. Because I think it is a big
concern that we keep having that happen.
Chairman Cummings asked you about young people, and what
you say to young people about the foreseeable future, and I do
appreciate some of the numbers that we have seen. And we have
seen some that, as you say, we may be on the way to good news?
Were those your words, something like that, in terms of some of
the bottoming out here?
But one of the things I know we have talked about before is
the unemployment rate for different degrees of education. So
when we are talking to young people, I think it is important
for them to understand what is the unemployment rate for high
school dropouts this month?
Commissioner Hall. 15.5 percent.
Senator Klobuchar. 15.5 percent. And then what's the
unemployment rate for high school graduates?
Commissioner Hall. 10 percent.
Senator Klobuchar. And then what is the unemployment rate
for college graduates?
Commissioner Hall. 4.8 percent.
Senator Klobuchar. That is quite a difference. And I know
one of the President's main focus here has been, I think he
said that students should get at least one year of college, one
year post-high school, or some kind of an advanced education.
So you see this dramatic change from 15.5 to 10 percent to 4.8
percent, if you have a college degree. So there is a full
difference going from 15.5, if you haven't graduated from high
school, to 4.8 percent if you've graduated from college. Is
that correct?
Commissioner Hall. That's correct.
Senator Klobuchar. The other thing that I've noticed as we
look at some glimmers of hope here, we talked about our
unemployment rate in Minnesota but the Commerce Department
recently reported that pre-tax profits at U.S. corporations
rose from $42.6 billion in the first quarter, to $1.3
trillion--the first quarterly increase after six straight
declines.
Were you aware of those numbers?
Commissioner Hall. No, I wasn't.
Senator Klobuchar. This just came out recently. We do know
that profitable companies are more likely to hire than those
that are faltering. Have you seen this before in the rates for
unemployment when you have more profitable companies that you
will, not exactly that same month, but you may see more hiring
in the future?
Commissioner Hall. I'm not sure at the company level, but I
know on the national numbers you do tend to see, during early
parts of an expansion, you do see the profits going up prior to
the employment. But the employment does lag a little bit. But
it almost always goes in that order.
Senator Klobuchar. Right. So that this fact that we have
seen some better profitability rates for our companies, which
is as I said it is the first--it is the first quarterly
increase after six straight quarter declines. So that is after
like a year-and-a-half. So this could be a good sign, if you
believe my numbers, which I believe are accurate.
Commissioner Hall. Yes.
Senator Klobuchar. All right. And I know that Chairman
Cummings brought up the consumer confidence. We talked about
that a lot last month, because we have seen these increases in
unemployment, but at the same time the consumer confidence
number is going up, which may again help with people buying
things? Is that right?
Commissioner Hall. That's correct.
Senator Klobuchar. So as we look at the glimmers of hope
here, to summarize just from my perspective, we have the fact
that the companies seem to be--not in every sector, but some of
these companies seem to be evening out, or actually seeing some
improvement.
We have consumer confidence up.
What are the other glimmers of hope that you see?
Commissioner Hall. I think to me a lot of it revolves
around consumer spending. Even the profitability of companies
relies on consumer spending picking up.
Like I say, having the consumer confidence tick up is a
good sign. The consumer confidence doesn't always track well
with consumer spending, but it does for major changes.
That's the sort of thing I think that I find encouraging. I
don't know how I would judge the housing market, but that is
going to be an important thing probably in the recovery going
forward.
Senator Klobuchar. Yes. Do you have any statistics on that?
Because actually I had some realtors in my office from
Minnesota, like 30 of them, and they had been very glum every
time they came in every six months, and suddenly they were in
very upbeat moods compared to how they were before. And they
said that they were starting to sell a number of first-time
homes.
They said the tax credit was incredibly helpful, the $8000
tax credit; that is, as we reach the end of the year, that a
lot of younger people or first-time home buyers were starting
to buy. You would most likely not have those statistics, or do
you?
Commissioner Hall. Yeah, you know I don't have the
statistics right in front of me but I have a rough notion that
certainly the inventory of new home sales is still pretty high.
I think it's something like a year's worth of inventory. But I
think it is kind of like the jobs growth. It is not as high as
it was, but it is still high.
Senator Klobuchar. Exactly.
Commissioner Hall. So I haven't looked at the numbers
really carefully lately, but my general impression is that I
agree with you, that there maybe are some indications that the
decline in housing is slowing.
Senator Klobuchar. All right. Well thank you very much,
Commissioner Hall.
Representative Cummings. Just one last few questions of Mr.
Hall. According to a study by the National Center for Public
Policy and Higher Education, I just want to piggyback on some
of the excellent questions of Ms. Klobuchar.
The rising cost of college even before the recession
threatened to put higher education out of reach for most
Americans. The report found that published college tuition and
fees increased 439 percent from 1982 to 2007, while median
income rose 147 percent.
Student borrowing has more than doubled in the last decade,
and students from lower income families on the average get
smaller grants from the colleges they attend than students from
more affluent families.
The New York Times recently reported that in the face of
shrinking endowments colleges are looking more favorably upon
wealthier students as they make their admissions decisions this
year. Even institutions that have pledged to admit students
regardless of financial need are finding ways of increasing the
number of students who will pay the full cost of tuition. And
state and local government budget deficits will probably mean
that state college and community college tuitions will have to
rise.
In light of the questions Ms. Klobuchar asked about
dropouts, high school graduates, and college graduates, given
the factors I just stated, isn't it likely that income
disparities will grow if only wealthier families can afford to
send their children to college?
Commissioner Hall. The benefits to education, people with
higher education have higher wages, they have lower
unemployment rates, they have high labor force participation
rates, that's been going on for decades and that is not likely
to change in the future.
So----
Representative Cummings. So in other words, the more
education you have----
Commissioner Hall. Yes.
Representative Cummings [continuing]. The less you are
likely to lose your job.
Commissioner Hall. Correct.
Representative Cummings. And was that true in the 1980s and
1970s?
Commissioner Hall. It was. It's been true for decades.
Representative Cummings. And if workers who are less
educated are more likely to lose their jobs currently and
therefore less able to be able to send their children to
college, what does that mean about income disparities for the
next generations, with all other things being equal?
Commissioner Hall. Sure. Well obviously uneven access to
education means you have uneven outcomes in the labor market. I
think that is a safe thing to say, and that will probably
continue to be true.
Representative Cummings. Very well. Do you have anything
else, Mr. Brady?
Representative Brady. No, sir.
Representative Cummings. Ms. Klobuchar.
Senator Klobuchar. No, I don't.
Representative Cummings. I want to thank you, Mr. Hall,
very much. I think Ms. Klobuchar pretty much summarized it. It
is good to hear some news that is not going in the negative
direction. We certainly are--you know, you have given us a few
things to feel a bit optimistic about, and hopefully when we
see you next month we will have even better news. But thank
you, very much.
Commissioner Hall. Thank you.
Representative Cummings. We're adjourned.
[Whereupon, at 10:44 a.m., Friday, June 5, 2009, the
hearing was adjourned.]
SUBMISSIONS FOR THE RECORD
Prepared Statement of Representative Elijah E. Cummings
Good morning. I would like to thank Chair Maloney for holding this
hearing.
I also welcome Commissioner Hall and his colleagues from the Bureau
of Labor Statistics to brief us on the most recent employment data.
This morning's release reported May job losses totaling 345,000--
almost half of the losses in recent months, but an unemployment rate of
9.4 percent--a jump of half a percentage from the previous month.
Adding up discouraged workers and part-time workers who cannot find
full time employment, the unemployment rate jumps to 16.4 percent, the
highest rate since the government started collecting this information
in 1994.
However, it was also announced recently that the continuing jobless
claims for the week ending May 23rd fell, a consumer confidence index
experienced a small uptick, and the European Central Bank held interest
rates steady yesterday, signaling expectations that the global economy
may have bottomed out.
I am encouraged by marginal improvements like consumer confidence,
but even this good sign is accompanied by a sobering counterpoint.
Increased consumer spending has yet to translate into actual
spending by consumers or businesses. Rather, families are saving, and I
don't blame them.
They see that more than 1 in 4 unemployed workers has been
unemployed for over six months, and that the median duration of
unemployment is now 14.9 weeks, a record high since the series started
in 1967.
The cumulative effects of the recession--17 consecutive months of
job loss, totaling 6 million jobs--have left these ordinary, hard-
working Americans on precarious footing.
When a worker is laid off, economists say the person experiences an
``income shock.'' This is a vast understatement.
Now unemployed, families must work through any savings they have
accrued to pay bills and continue to feed their children; and then as
home values fall and mortgages go unpaid, they are suddenly looking
foreclosure in the face.
While the foreclosure crisis started with homes that fell victim to
plunging values, and then moved to the subprime sector and borrowers
facing interest rate hikes, now prime borrowers have been affected as
well.
The New York Times wrote on May 24th that this ``third wave'' of
foreclosures can be attributed in large part to the rising tide of
unemployment.
Fortunately, for many homeowners, some degree of help is available.
We have strong mortgage modification programs in place that allow
homeowners to decrease their payments and work out solutions to stay in
their homes.
For the unemployed, however, when home values fall, a mortgage
modification will take them only so far. What a modification cannot do
is bring back an income or health insurance.
So, without new and creative ways to help the unemployed, these
Americans may still lose their homes.
We also know that a job loss doesn't just affect the individual
employee and his or her home. Surrounding home values fall with each
foreclosure, and some cities have seen more than 100 foreclosures every
day.
Further, our safety nets are stretched thin, and that is all some
folks have.
I read yesterday in USA Today that 1 of every 6 dollars of
Americans' income is from unemployment, social security, or other
public benefits. Further, ProPublica reported that 14 states have
already gone through available unemployment reserve funds. So, the
effects of unemployment are being felt in so many places, by all of us.
Accordingly--this Congress and President Obama have taken decisive
action against the recession through the American Recovery and
Reinvestment Act, as well as legislation addressing predatory mortgage
lending and unfair credit card practices.
We are also helping people at the local level. Tomorrow, in
Baltimore, we are putting over 200 borrowers together with 19 lenders
to try to work out mortgage solutions.
I hope every one who shows up can save his or her home. But I
suspect that will not be the case, as the unemployed still may not
qualify for modifications.
Knowing this, I look forward to the testimony of Dr. Hall, as we
must understand exactly where we are in this crisis and just how far we
have to go.
Prepared Statement of Representative Kevin Brady, Senior House
Republican
I am pleased to join in welcoming Commissioner Hall before the
Committee this morning.
The increase in the unemployment rate to a level of 9.4 percent is
disturbing for several reasons. First, the higher unemployment rate
reflects greater hardship for American workers and their families.
Second, the higher unemployment rate, along with other economic data,
reflects the continuing weakness in the economy. Third, the higher
unemployment rate underscores the unrealistic nature of the
Administration's economic assumptions based on the idea that the
stimulus spending would cap rising unemployment.
The payroll employment decline reported today also shows that the
economy continues to contract. The 345,000 drop in May payroll
employment is a significant monthly job loss and is broadly based in
many industries. Although the overall pace of job loss was not as
terrible as in recent months, manufacturing continued to suffer large
employment declines.
There is some tentative evidence suggesting that the economy may
bottom out in coming months. For example, financial market conditions
have improved, some measures of manufacturing activity have stabilized,
and some data related to housing and construction are less negative.
However, measures to prevent foreclosures are not working well, and re-
default rates are very high, with more loan losses to come. Business
investment has collapsed, and commercial real estate continues to be
under stress. Consumer spending is weak, and exports are falling as
many of our major trading partners also experience recession.
I continue to be concerned about the Administration's unrealistic
economic assumptions which were the basis for the President's budget
proposal. The Economist magazine called these economic assumptions
``dangerous'' because they understate the true cost of the
Administration's deficit spending and debt accumulation. Unfortunately,
according to CBO, Administration policies will triple the national debt
to a level of $17.3 trillion by 2019. This avalanche of government
deficits and debt is one reason long-term interest rates, including
mortgage rates, are on the rise.
A central problem is that the Administration assumed that its
stimulus spending spree would significantly improve the economy. For
example, last January two top Administration economists projected that
the unemployment rate would not exceed 8.0 percent in 2009 or 2010 if
the stimulus was enacted. The Administration followed up by forecasting
an average unemployment rate of 8.1 percent for all of 2009. However,
the current level of the unemployment rate above 9 percent is enough to
show that the Administration's assumptions about the positive impact of
the stimulus were wrong. If the Administration's forecast were
internally consistent, this would also indicate that GDP will be lower
than projected.
An economic upturn should occur by next year, if only due to the
huge amounts of money and credit injected into the economy by the
Federal Reserve. However, the economic recovery probably will be quite
weak, and not consistent with the White House's rosy scenario for 2010.
What will be the sources of economic growth next year?
With many households forced to pay down debt, a surge in
consumption is not likely. Excessive levels of government spending and
debt are already rattling financial markets, so much more government
stimulus spending is not a feasible option. U.S. exports may be
constrained by weakness in other countries, and by retaliation against
our trade policies. That leaves investment as a main source of growth,
but how many will undertake long-term investments when facing a tidal
wave of new taxes, entitlement spending, and inflation? Future economic
growth will rely heavily on investment, but more taxes, government
borrowing, regulation, and inflation all will hit investors very hard.
Government is not evil, and up to a point provides more benefits
than costs, but beyond this point becomes counterproductive.
Policymakers should understand that excessive government does have the
potential to choke off healthy economic and employment growth. If the
long-term rate of economic growth is reduced from 3 percent to 2
percent or below, the result will be much slower job growth, and higher
levels of unemployment. Congress should wake up to the damage that it
is inflicting and stop enacting legislation that only increases the
burden of government on the economy.
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 that we released this morning.
Nonfarm payroll employment declined by 345,000 in May. Job losses
had averaged 643,000 per month during the prior 6 months. In May, the
unemployment rate rose from 8.9 to 9.4 percent. Since the recession
began in December 2007, payroll employment has fallen by 6.0 million,
and the unemployment rate has increased by 4.5 percentage points.
Job losses continued to be widespread in May, but the rate of
decline moderated in construction and several service-providing
industries. Large job losses continued in the manufacturing sector
(-156,000), with employment declines in nearly all component
industries. Employment fell sharply in motor vehicles and parts
(-30,000), machinery (-26,000), and fabricated metals (-19,000). Since
the start of the recession, manufacturing employment has decreased by
1.8 million, accounting for 3 out of 10 jobs lost during this downturn.
Construction employment declined by 59,000 in May, half the average
of the previous 6 months. Job losses moderated in the private service-
providing industries, with employment falling by 113,000 in May
compared with an average monthly decline of 356,000 in the prior 6
months. Employment was little changed in temporary help, retail trade,
and leisure and hospitality, following large declines in recent months.
Elsewhere in the service-providing sector, the health care industry
added 24,000 jobs in May. This was about in line with the trend thus
far in 2009.
In May, average hourly earnings for production and nonsupervisory
workers in the private sector were up by 2 cents to $18.54. Over the
past 12 months, average hourly earnings have risen by 3.1 percent. From
April 2008 to April 2009, the Consumer Price Index for Urban Wage
Earners and Clerical Workers declined by 1.2 percent.
Turning to measures from the survey of households, the unemployment
rate increased from 8.9 to 9.4 percent over the month. The number of
unemployed rose by 787,000 to 14.5 million. Since the recession began,
the jobless rate has increased by 4.5 percentage points, and the number
of unemployed persons has grown by 7.0 million.
Among the unemployed, the number who have been out of work 27 weeks
or more increased by 268,000 in May to 3.9 million. These long-term
unemployed represented 2.5 percent of the labor force, the highest
proportion since 1983.
Over the month, the employment-population ratio edged down to 59.7
percent, the lowest level since October 1984. Since the recession
began, the employment-population ratio has fallen by 3.0 percentage
points.
Among the employed, the number of persons working part time who
would prefer full-time work was little changed for the second
consecutive month. At 9.1 million in May, involuntary part-time
employment was 4.4 million higher than at the start of the recession.
Among those outside the labor force--that is, persons neither
working nor looking for work--the number of discouraged workers was
792,000 in May, up from 400,000 a year earlier. These individuals are
not currently looking for work because they believe no jobs are
available for them.
In summary, nonfarm payroll employment fell by 345,000 in May,
compared with the average monthly decline of 643,000 for the previous 6
months. While job losses continued to be widespread, declines moderated
in construction and in a number of service-providing industries. The
unemployment rate rose by half a percentage point to 9.4 percent.
My colleagues and I now would be glad to answer your questions.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Prepared Statement of Senator Robert P. Casey, Jr.
Mister Chairman, thank you for holding this hearing today on this
very important monthly jobs report.
Although the numbers of Americans applying for unemployment
benefits have continued to decrease in recent weeks, the overall
employment picture is bleak with 350,000 jobs lost in May, bringing the
total to 7 million jobs lost since the recession began in December
2007. A monthly job loss of 350,000 may look better compared to the
700,000 lost in March but we are still shedding hundreds of thousands
of jobs a month.
Furthermore, once unemployed, people are struggling tremendously to
find work. According to the Bureau of Labor Statistics May report, of
the 14.5 million unemployed, 3.9 million--over one-quarter--were
``long-term unemployed,'' meaning that they have been out of work and
searching for a new job for at least six months. Of those out of work
for more than six months, over one-half were unemployed for a full year
or longer.
We have seen that the employment situation is especially
challenging within certain demographic groups. The BLS reports over the
last year have shown that rising unemployment is affecting minority
populations in particular. The unemployment rate for African Americans
is 15.0 percent while the rate for Hispanics rose from 11.3 percent to
12.7 in the last month alone--well above the unemployment rate for
whites, which is 8.6 percent. I am concerned that relief from this
recession will be all too slow for those most likely to be impacted.
Given these startling facts, we need to take action now on two
tracks. First, we need to continue to take the immediate steps
necessary to stabilize the housing market, thaw the credit markets, and
spur job creation. Passage of the Recovery and Reinvestment Act was an
essential component of our strategy to create and retain good paying
jobs. In the long term, we need to pass healthcare legislation this
summer, strengthen job training programs and make sure that the doors
to higher education remain open.