[Joint House and Senate Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 112-15
THE EMPLOYMENT SITUATION: MARCH 2011
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
APRIL 1, 2011
__________
Printed for the use of the Joint Economic Committee
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JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
SENATE HOUSE OF REPRESENTATIVES
Robert P. Casey, Jr., Pennsylvania, Kevin Brady, Texas, Vice Chairman-
Chairman-designate designate
Jeff Bingaman, New Mexico Michael C. Burgess, M.D., Texas
Amy Klobuchar, Minnesota John Campbell, California
Jim Webb, Virginia Sean P. Duffy, Wisconsin
Mark R. Warner, Virginia, Justin Amash, Michigan
Bernard Sanders, Vermont Mick Mulvaney, South Carolina
Jim DeMint, South Carolina Maurice D. Hinchey, New York
Daniel Coats, Indiana Carolyn B. Maloney, New York
Mike Lee, Utah Loretta Sanchez, California
Pat Toomey, Pennsylvania Elijah E. Cummings, Maryland
William E. Hansen, Executive Director
Robert P. O'Quinn, Republican Staff Director
C O N T E N T S
----------
Opening Statement of Members
Hon. Robert P. Casey, Jr., Chairman-designate, a U.S. Senator
from Pennsylvania.............................................. 1
Hon. Kevin Brady, Vice Chairman-designate, a U.S. Representative
from Texas..................................................... 7
Witnesses
Dr. Keith Hall, Commissioner, Bureau of Labor Statistics; Dr.
Michael Horrigan, Associate Commissioner for Prices and Living
Conditions, Bureau of Labor Statistics; and Mr. Philip Rones,
Deputy Commissioner, Bureau of Labor Statistics................ 3
Submissions for the Record
Chart titled ``Monthly Change in Private Payrolls''.............. 28
Prepared statement of Dr. Keith Hall, Commissioner, Bureau of
Labor Statistics, together with Press Release No. 11-0436...... 29
Letter dated April 19, 2011, transmitting Commissioner Hall's
response to Representative Hinchey............................. 68
Prepared statement of Representative Kevin Brady................. 71
Chart titled ``Labor Force Participation Rate''.................. 72
Chart titled ``An Exceptionally Weak Employment Recovery''....... 73
Chart titled ``Private Sector Jobs Increase When Private
Investment Increases''......................................... 74
Chart titled ``Increased Federal Spending Has Not Led to Private
Sector Job Creation''.......................................... 75
Chart titled ``Forecast vs. Reality''............................ 76
Letter dated April 19, 2011, transmitting Commissioner Hall's
response to Senator Casey...................................... 77
Chart titled ``GDP Grows for Sixth Consecutive Quarter''......... 79
Prepared statement of Elijah E. Cummings......................... 80
Letter dated April 22, 2011, transmitting Commissioner Hall's
response to Representative Cummings............................ 81
THE EMPLOYMENT SITUATION: MARCH 2011
----------
FRIDAY, APRIL 1, 2011
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The committee met, persuant to call, at 9:32 a.m. in Room
106 of the Dirksen Senate Office Building, the Honorable Robert
P. Casey, Jr., Chairman-designate, presiding.
Senators present: Casey.
Representatives present: Brady, Duffy, Amash, Mulvaney,
Hinchey, and Cummings.
Staff present: Will Hansen, Gail Cohen, Colleen Healy,
Jessica Knowles, Andrew Wilson, Rachel Greszler, Sean Ryan,
Jayne McCullough, and Ted Boll.
OPENING STATEMENT OF HON. ROBERT P. CASEY, JR., CHAIRMAN-
DESIGNATE, A U.S. SENATOR FROM PENNSYLVANIA
Chairman-designate Casey. The Joint Economic Committee
hearing will come to order. I know we have a number of members
of the House who will be joining us, but they are voting this
morning so we will welcome them as they arrive.
I appreciate this opportunity to review the employment
situation across the country. We are particularly happy that we
have some good news to report, which we will review in a
moment. But I do want to thank the members of the Committee for
their work in preparing for this hearing, and for our witness,
Dr. Hall; and also the continuing opportunity we are going to
have on this Committee to examine not just the employment data
but areas that we can focus on to create jobs, strategies to
create jobs, and also to focus on important sectors in our
economy like manufacturing and other indicators of our economic
strength as we are recovering.
I do want to thank Vice Chairman-designate Brady,
Congressman from the State of Texas, who is working with us
today to make sure that we focus on critically important issues
that affect jobs.
We do, as I said, have some good news to report. I know
that Commissioner Hall will highlight this, but the report
today shows that the economy added 230,000 private-sector jobs
last month, making March the 13th straight month that we have
employment gains in the private sector.
Also, we gained 216,000 jobs overall, despite the loss of
many government jobs. I wanted to point to one chart on my left
that shows the upward trend in employment over the past 13
months. In fact, during the last 13 months the economy has
added 1.8 million private-sector jobs.
That is good news, but it is not good enough. We have to
continue to focus on ways to create jobs at a faster pace every
month, not just one month, and not just two months in a row; we
need to continue to move in the right direction.
The overall unemployment rate dropped to 8.8 percent, so it
has come down. That is down from the peak from October of 2009
of 10.1 percent. But as I said before, the unemployment rate is
too high and we have to focus intensively--and especially on
particular demographic groups, whether it's veterans who have
lost their jobs, very high numbers still for African Americans,
for Hispanic Americans, and workers with a disability.
And I also know that when Members appear today, some may
not have a chance to do an opening statement, but I want to
make sure that Vice Chairman-designate Brady has that
opportunity when he arrives after voting.
But I think we will get right to our witness. I want to
introduce someone who has appeared before this Committee a
number of times. He does not necessarily need an introduction,
but I want to make sure that those who may not remember his
background and are not familiar with his biography, to give you
just a brief sketch.
Dr. Keith Hall is the Commissioner of the Bureau of Labor
Statistics for the U.S. Department of Labor--what we know as
the BLS. BLS is an independent national statistical agency that
collects, processes, analyzes, and disseminates essential
statistical data to the American public, to the United States
Congress, and to other federal agencies, state and local
governments, business, and labor.
Dr. Hall has also served as Chief Economist for the White
House's Council of Economic Advisers for two years under
President George W. Bush. Prior to that, he was Chief Economist
for the United States Department of Commerce, and he also spent
10 years at the United States International Trade Commission.
Dr. Hall received his bachelor's degree from the University
of Virginia; his M.S. and Ph.D. degrees in Economics from
Purdue University.
Before turning to Dr. Hall, just one brief interlude.
Congressman Hinchey just arrived and, Congressman, I was just
saying that some will have the opportunity to give openings
depending on when they get here. But if you have any opening
comments, I wanted to offer you that opportunity.
Representative Hinchey. Well not really, no. I am anxious
to hear what is about to be said, because we are dealing with
an issue which is critically important for the future of this
country, and also for the political operations in both the
House and the Senate.
And so I deeply appreciate the opportunity to be here with
you. Thank you very much for setting up this very important
hearing here, I appreciate you being here, and I am anxious to
hear everything that you are going to say. Thank you, very
much.
Chairman-designate Casey. Thanks, Congressman.
Dr. Hall.
[The chart titled ``Monthly Change in Private Payrolls''
appears in the Submissions for the Record on page 28.]
STATEMENT OF DR. KEITH HALL, COMMISSIONER, BUREAU OF LABOR
STATISTICS, U.S. DEPARTMENT OF LABOR; ACCOMPANIED BY: DR.
MICHAEL HORRIGAN, ASSOCIATE COMMISSIONER FOR PRICES AND LIVING
CONDITIONS, BUREAU OF LABOR STATISTICS; AND MR. PHILIP RONES,
DEPUTY COMMISSIONER, BUREAU OF LABOR STATISTICS
Commissioner Hall. Thank you, Mr. Chairman.
Mr. Chairman, and Members of the Committee:
Thank you for the opportunity to discuss the employment and
unemployment data we released this morning.
In March, nonfarm payroll employment rose by 216,000, and
private-sector employment rose by 230,000. The unemployment
rate was little changed at 8.8 percent; the rate has declined
by 1 percentage point since November of 2010.
Since a recent low point in February of 2010, nonfarm
payroll employment has risen by 1.5 million. Private-sector
employment rose by 1.8 million over the same period, an average
of 138,000 per month.
In March, job growth occurred in professional and business
services, health care, leisure and hospitality, and mining.
Manufacturing employment continued to trend up over the month.
Professional and business services employment rose by
78,000 in March. This industry has added 692,000 jobs since a
recent low in September of 2009. In March, employment in
temporary help services rose by 29,000. Temporary help services
has added about a half million jobs since August of 2009.
Employment in health care continued to rise in March. The
increase was spread among several components, including
ambulatory health care services, hospitals, and nursing and
residential care facilities. Since the start of the recent
Recession in December of 2007, health care employment has risen
by 902,000, while total nonfarm employment has declined by 7.2
million.
The leisure and hospitality industry added 37,000 jobs in
March. Growth in food services and drinking places accounted
for most of the increase.
Within goods-producing industries, mining employment rose
by 14,000 in March, mostly due to an increase in support
activities for mining. Since a recent low in October of 2009,
mining employment has risen by 96,000.
Employment in manufacturing continued to trend up in March.
Factory job gains continued to be concentrated in durable
goods, with over-the-month increases in fabricated metal
products and machinery. Construction employment changed little
over the month.
Employment in local government continued to trend down over
the month. This sector has lost 416,000 jobs since its
employment peak in September of 2008.
Turning to measures from the survey of households, the
unemployment rate was little changed at 8.8 percent in March.
The jobless rate has declined by one percentage point since
November of 2010. Over that period, unemployment declined by
nearly 1.5 million, and employment rose by 1.4 million, leaving
the labor force nearly unchanged on net.
In March, the labor force participation rate held at 64.2
percent, and the employment-to-population ratio at 58.5 percent
was little changed.
The number of long-term unemployed remained high at 6.1
million, or 45.5 percent of total unemployment. Over the month,
the number of individuals who were working part-time, although
they would have preferred full-time work, was 8.4 million, down
from 9 million a year earlier.
In summary, nonfarm payroll employment rose by 216,000 in
March, and the unemployment rate was little changed at 8.8
percent.
My colleagues and I would now be glad to answer your
questions.
[The prepared statement of Commissioner Hall, together with
Press Release No. USDL-11-0436, appears in the Submissions for
the Record on page 29.]
Chairman-designate Casey. Doctor, thank you very much.
I wanted to ask you about, first of all, the sectors of our
economy that we should be most positive about based upon the
data. I wanted to get your perspective on, first of all,
manufacturing, which is so essential to the strength of our
economy.
I just wanted to get your sense of how you compare this
month's numbers not just with last month's but with what you
have seen over, say, the last six months?
Commissioner Hall. Sure. This month, manufacturing grew by
about 17,000 jobs, which has continued a recent trend. We have
had job growth in manufacturing. In fact, we have added about
205,000 jobs in manufacturing since February of 2010, which is
the employment trough.
Chairman-designate Casey. And do you have a--I guess it is
not in the nature of an opinion, but when you compare how we
are doing overall with job growth this month, about 216,000,
and the fact that the private-sector job growth has hit 230,000
this month, 222,000 last month, are there any trends, or any
insights that you can provide as it relates to the significance
of those private-sector numbers, at least over the last two
months?
Commissioner Hall. Sure. Well we have had--for more than
two months we have had pretty steady job growth. It has been
around 135,000-140,000 a month. In the last two months it looks
like we may be getting an acceleration in job growth, which
would be a good sign.
Chairman-designate Casey. Would you tell us, based upon
your experience, how many months, when you see a number of
months of consecutive positive job numbers, especially at what
we are seeing, which is basically on average about 200,000 jobs
added the last two months--192,000 and 216,000--how many months
like that in a row would you like to see as evidence that we
are growing and recovering at a pace at which we could fully
recover? If you can understand my question. Would it be that we
would need three months of positive job growth at that number?
Or six months? Or how do you analyze that?
Commissioner Hall. Sure. Well of course even one month, or
two months of faster job growth is positive. I do tend to look
at the data at about three-month segments. I think steady
growth of three months does put you into another--you get a
real picture, I think, of where you are. So three months,
typically.
But also if you look back to the trend further than that,
we continue to have job growth. Again, that is positive. But
like I say, three months is a good rule-of-thumb that I use.
Chairman-designate Casey. How about the total number? When
you look at 200,000 in each of these months, roughly, that is a
good number. But of course I am trying to get a sense of the
historical comparison between this two- or three-month period
versus another two- or three-month period when we had a full,
and maybe even more, robust recovery.
Obviously I think we would prefer if it were 250,000 a
month rather than 200,000, or even higher than that. Is there
any way to analogize or to compare where we are now as compared
to another three-month period that you can recall, or that you
have data for?
Commissioner Hall. I would say the last expansion after the
2001 recession was not a strong expansion. And that averaged at
its peak somewhere over 200,000. That was growth, but it was
not as strong as it has been in some other periods.
In the 1990s expansion, we frequently had job growth well
over 300,000, 400,000 at times. So like I say, 200,000-plus is
solid growth, but we could see more.
Chairman-designate Casey. And I know my time is up, but I
will come back to you about some of the demographic groups.
Congressman Hinchey.
Representative Hinchey. Thank you very much. Thank you for
everything that you are doing in the context of leadership of
this very important Committee.
And thank you very much for everything that you were
saying. We are very delighted to see the economic circumstances
changing now in light of the fact that we had been experiencing
an economic situation which was second only to the Great
Depression. During the most recent recession, we saw the loss
of more than 2 million jobs, something in the neighborhood of
2.3 million jobs in.
Now the situation is improving and changing. I know that
you are analyzing this situation, but do you have any
inclination to see what the main objectives have been, or
rather what is the main driver of this economic growth?
One of the things that we did over the course of the
previous two years was pass a major stimulus bill, which
injected a very significant amount of funding into the economy,
which the economy had not seen in a long time.
I would be very interested to hear what you think are the
main elements of the promotion of this economic activity now,
and the growing of these jobs?
Commissioner Hall. Well, sure. Well this Recession has been
remarkable in how broad the job loss was. So just about every
industry, with maybe the exception of health care, lost
significant numbers of jobs during this Recession. And the job
growth now has been also pretty broad.
Industries like professional business services, education
and health, leisure and hospitality, and even manufacturing
have all been growing since the trough. Financial activities,
construction, are probably still struggling. They are not
growing very much. And government is really the only sector
that is losing jobs right now. It's primarily in local
government.
Representative Hinchey. Okay. Anything else?
Commissioner Hall. No, I think that is about it. The job
growth has been relatively broad. You know, the biggest drivers
probably of the job loss have been construction and
manufacturing, and it has been nice to see manufacturing job
growth start up.
Representative Hinchey. Yes.
Commissioner Hall. But construction still remains pretty
flat.
Representative Hinchey. And what you were saying in your
opening remarks were that there were significant improvements
in the economy in the context of health care and education,
things of that nature. What would you say about the prospects
of cutting the funding for operations like health care and
education by this government?
Commissioner Hall. I would not want to comment on policy
things like that. I stay away from that.
Representative Hinchey. No, I understand that, but I was
just trying to see if there might be something that you might
say about it.
In any case, this is something that I think we need to be
deeply concerned about because it would be a deep mistake to
reduce the funding for those important elements like education,
and health care, as well as other activities which stimulate
this economy--like transportation and things of that nature.
In any case, thanks very much. Let me just ask you one or
two other things, if I may, if there is time. The Recession
hurt certain demographics more than others, as we know. For
instance, as of February individuals without a high school
diploma had an unemployment rate of 13.9 percent, while those
with a college degree had an unemployment rate of 4.3 percent.
Can you talk about which sectors of our economy typically
hire individuals without a high school diploma? What has
happened to those sectors during this Recession?
Commissioner Hall. Well first let me confirm your picture
of job loss by education. For those with less than a high
school diploma, the unemployment rate remains high; it's at
13.7 percent this month. Those with a bachelor's degree and
higher, it's at 4.4 percent.
This has been a typical recession in the sense that the
group with the lower education have started with higher
unemployment rates and they've had the unemployment rates go up
by more than those with higher education.
As far as the industry breakout, I am probably going to
have to get back with you on that, about where the folks are
distributed. I don't know that we have the data handy, but I
can give you some idea of where the folks with less than a high
school diploma, what sort of industries they are employed in.
Representative Hinchey. Thank you very much.
[Letter dated April 19, 2011, transmitting Commissioner
Hall's response to Representative Hinchey appears in the
Submissions for the Record on page 68.]
Chairman-designate Casey. Thanks, Congressman.
As I mentioned before, the House was voting and Vice
Chairman-designate Brady is here now. I do not know how he
could have voted and run that fast, but he made it here in
record time. I want to turn to our Vice Chairman-designate for
an opening statement, if he would like, and questions as well.
OPENING STATEMENT OF HON. KEVIN BRADY, VICE CHAIRMAN-DESIGNATE,
A U.S. REPRESENTATIVE FROM TEXAS
Vice Chairman-designate Brady. Great. Well first I would
like to congratulate Senator Casey on the Chairmanship of the
Joint Economic Committee. I look forward to a productive
working relationship with the Senator and to insightful
hearings as we move forward in the new Congress.
I would also like to welcome Dr. Hall and his staff back
again. You have guided this Committee through many employment
reports in the past. We appreciate the work you do and the
explanation of the data that you provide.
Today's employment report shows some positive signs.
Everyone wants the economy to improve, particularly the labor
market, and we are glad for the increases in jobs we are
seeing. But looking at it closely, while there are job gains,
the rate of job creation has not accelerated enough to keep up
with the population growth and encourage all of the people who
lost their jobs that they soon can find work again.
It has been 21 months since the Recession ended, and we are
still down 7.2 million nonfarm payroll jobs from when it
started. The unemployment rate at 8.8 percent of course remains
unacceptably high, but also is not telling us the whole story--
as I will explain in a moment.
There have been fundamental disagreements about the proper
role of government in facilitating an economic recovery between
Republicans and Democrats and that disagreement continues even
now, 39 months after the last recession started. Democrats,
unfortunately, in Congress do not want to change course, but
the federal spending spree has not been productive.
It loaded up the Nation with debt so large the focus of
business managers, investors, foreign governments,
international institutions, and the public at large now is how
the United States can meet its financial obligations.
How high will taxes rise? And what form will they take? Is
the government resorting to money creation to ease its interest
and principal payments? Is there a chance it will default on
its obligations?
These questions--incredible as it may seem--are being asked
of the United States Government. This is a big part of the
reason why private investment and hiring have not resurged as
they did in the past after similarly severe recessions.
I want to show you a chart of payroll jobs. You know, as
you can see we have not moved far from the bottom we hit
shortly after the Recession officially ended, and the
trajectory of job growth is far weaker than in past recoveries.
I also want to show you a chart of the U.S. labor force
participation rate. This chart shows the percentage of the
population in the labor force as defined by the Bureau of Labor
Statistics, and the percentage has shrunk.
The chain of causation is clear: businesses fear the costs
of an encroaching and intrusive government and are reluctant to
expand sufficiently to create enough job openings for all of
our workers. In turn, many people have simply left the labor
force.
The labor force now is smaller than 39 months ago, despite
the fact that the working age population of 16 years and older
has been increasing. This is happening in what used to be
called the ``land of opportunity.''
Republicans want to cut federal spending to relieve the
pressure on the private economy. We must reassure the Nation
and the world that the United States will bring its deficits
and its debts under control, and it will not burden the economy
with stifling taxes either.
Increasing taxes to fund the expansion of government
depresses the private economy's growth prospects over the
longer term, and that has chilling effects on businesses and
consumers right now.
The Keynesian argument that increased government spending
boosts aggregate demand and that a spending reduction would
hurt the recovery falls apart completely when investors,
businesses, and consumers focus on the increased future size of
government, the permanently larger share of resources it will
claim, and the myriad ways in which it will hamper private
economic growth.
The tepid job and employment growth so long after the
Recession ended should convince everyone that high levels of
federal spending are not what the economy needs.
To reduce federal borrowing, we must cut federal spending
not try to lock it in or raise taxes. The expected after-tax
real rate of return drives business investment and hiring
decisions. If we want businesses to offer hundreds of thousands
of additional jobs month after month for years to come--which
is what it will take to return the labor force and the
unemployment rate to normal levels--then we must not burden
expected returns with higher taxes, inflation, interest rates,
and restrictive regulations. And if the private economy grows,
there will be more money for government to spend as well, but
let us not put that cart before the horse.
With that, I yield back, Mr. Chairman.
[The prepared statement of Representative Brady appears in
the Submissions for the Record on page 71.]
[The chart titled ``Labor Force Participation Rate''
appears in the Submissions for the Record on page 72.]
[The chart titled ``An Exceptionally Weak Employment
Recovery'' appears in the Submissions for the Record on page
73.]
[The chart titled ``Private Sector Jobs Increase When
Private Investment Increases'' appears in the Submissions for
the Record on page 74.]
[The chart titled ``Increased Federal Spending Has Not Led
to Private Sector Job Creation'' appears in the Submissions for
the Record on page 75.]
[The chart titled ``Forecast vs. Reality'' appears in the
Submissions for the Record on page 76.]
Chairman-designate Casey. We can proceed with questions.
Vice Chairman-designate Brady, do you want to do questions now,
or move to Congressman Duffy?
Vice Chairman-designate Brady. Why don't I take a quick
question. Can we talk about the participation rate really
quickly, Commissioner Hall? Obviously it's always good to see
the unemployment rate go down, at least in general appearances,
but there is more to that story.
There is no reason to celebrate a lower unemployment rate
that is caused by more Americans leaving the workforce and
fewer entering it. As we know long term, a smaller work force
means millions of discouraged workers, lower output in the
future, and a weak recovery. Those are not healthy signs.
What can you tell us about the number of discouraged
workers? What is the number of marginally attached workers?
When can we expect to see the labor participation rate begin to
go back up?
Commissioner Hall. The number of discouraged workers is
just a little under a million right now. And workers who are
marginally attached--which includes discouraged workers, but
workers of other types--is about nearly 2.5 million people. So
those numbers are still fairly high.
Our broadest measure of labor under-utilization that
includes both marginally attached and people working part-time,
that remains fairly high. It's at 15.7 percent, although it did
go down 2/10ths of a percent this month.
Labor force participation remains at a low level. It is
still 64.2 percent. We have not seen big movement lately at all
on the labor force. It has actually been fairly flat. But I
would expect that if we do start to get strong job growth, and
we get a little more confidence, we probably should start to
see the labor force participation rate go up.
Vice Chairman-designate Brady. Is the labor force
participation rate critical for output for a sustainable
recovery?
Commissioner Hall. Yes. Absolutely.
Vice Chairman-designate Brady. Any projections going
forward? I know you are very careful about doing those things,
but internally have you done any work on what we might see when
people will start re-entering the work force?
Commissioner Hall. I would say we are more in the mode of
looking for signs that they are, rather than projecting. So we
really do not--I really do not think that way very much.
Vice Chairman-designate Brady. I understand. Construction,
we lost some jobs last month, we had about 30,000 additional--
in manufacturing and construction--manufacturing did okay,
17,000 new jobs; construction shrank. Any reasons for that in
the data?
Commissioner Hall. Well, no. Construction has remained
pretty flat, and I think just historically what you would
probably need to see with the construction is you would need to
see new housing starts, and new home sales pick up, and pick up
for a while before we start to see any significant change in
the construction employment.
Vice Chairman-designate Brady. Within manufacturing, what
did you see?
Commissioner Hall. In manufacturing we are seeing growth. I
mean, 17,000 was not a lot, but there has been a trend of
growth in manufacturing. And it is something we have not seen
for a while, but you are right, it is not really strong; but it
is positive growth. A lot of that has been in durable goods. So
I would say, for example, the last recession we did not see any
growth in manufacturing out of the last recession at all, so
that is part of what makes this recovery so far different than
the last recession.
Vice Chairman-designate Brady. I understand.
And, Senator Casey, we are pleased to be joined by one of
our new Members from Wisconsin, Congressman Sean Duffy. You are
chairing the meeting, but I just wanted to welcome Congressman
Duffy to the Joint Economic Committee.
Chairman-designate Casey. Thank you very much.
Congressman Duffy.
Representative Duffy. Thank you.
Chairman-designate Casey. And welcome.
Representative Duffy. I appreciate it. I have got to figure
out where the ``talk button'' is here. I am new to the Senate.
Commissioner Hall, good morning. I appreciate you coming in
this morning. I just have a few questions.
As I am looking at historical data in regard to downturns
and then recoveries, usually there is symmetry or a correlation
between the depth of the decline and then the strength of the
recovery, whether it is a V-shaped decline we will have a V-
shaped recovery, or a U-shaped decline a U-shaped recovery.
If you look at what has happened in this Recession, we have
seen a pretty significant decline, but then a flat line really
in regard to the recovery, which is not consistent with prior
recoveries.
Do you have any idea why that is taking place?
Commissioner Hall. No, I really do not. I can say that
there have been two schools of thought going into this
recovery.
The one is the folks who have observed what you have, that
the deeper recessions have had stronger recoveries, the more V-
shaped. And those folks of course were optimistic that we are
going to get a strong recovery.
Then there are those who have pointed out that the last two
recessions had very mild recoveries. But both of the last two
recessions were also mild recessions, as well. So it has been
one of the instances where nobody has known whether we just now
have milder recoveries from recessions, that is the way the
labor market has changed; or whether we will go back to the V-
shape where when we have a steep drop we have a steep recovery.
Representative Duffy. And maybe I could throw some ideas
out there. Because I am from a district in central and northern
Wisconsin, and as I talk to job creators in our area I
continually hear them talk about uncertainty in the
marketplace. And I think if you look at what's happened in
Washington in recent years we have done things that we
traditionally have not done.
With the new health care bill, I think if you are an
employer that creates uncertainty in the marketplace. If you
have a $14 trillion debt, and then this year we are projected
to borrow $1.6 trillion. And then if you look at the
President's budget, we are projected to borrow $1 trillion a
year on average for the next 10 years. If you are a small
businessman and you are looking at investing or growing your
business, what I keep hearing is this potentially leads to much
higher taxes, much less growth, and they are unwilling then to
invest in the businesses.
Or if you are a larger business and you can look anywhere
in the world to invest, and you look at these massive debt
charts in America, they go this has serious economic
consequences in America, and they are choosing to invest
elsewhere.
I mean, do you have any ideas on what I am hearing in
central and northern Wisconsin from our job creators?
Commissioner Hall. I would probably stay away from cause-
and-effect, because we are very much a fact-oriented place. So
I will beg off on sort of discussing why I think things are
happening how they are happening.
Representative Duffy. Let me, if I could do this, are you
aware of any economic studies that show a correlation between
excessive deficits and large debts and long-term unemployment
conditions, a correlation between those two that you have seen
in your studies?
Commissioner Hall. Not really. I am not really familiar. I
do not know that there is a consensus on any of that. That is
not a thing that I have studied before in the past.
Representative Duffy. Okay. I yield back my time.
Chairman-designate Casey. Thank you, Congressman.
Congressman Mulvaney.
Representative Mulvaney. Thank you, Mr. Chairman. I
apologize for being late. I think we just voted on--well,
anyway.
Mr. Hall, Commissioner Hall, I have very brief comments. I
apologize for missing your testimony, and if these questions
have been asked previously please let me know and I will be
quiet and yield back my time.
I look at these three graphs, and was looking at them
yesterday as we prepared for this meeting, and I wonder, sir,
if you are aware of what the unemployment regime was like, what
the unemployment benefit regime was like during these last, or
these three recessions that are set forth on this board--
specifically in 1981, 1982, 1973, 1975. Do you recall that off
the top of your head, sir?
Commissioner Hall. I really do not; I am sorry.
Representative Mulvaney. Would it be fair to say that it
was some place between 26 and 39 weeks? Because that is where
it was during most of the last several recessions?
Commissioner Hall. That sounds reasonable, but I really do
not know.
Representative Mulvaney. And it is probably also fair to
say that unemployment in 1981-82, unemployment benefits did not
extend for 99 weeks? Nor did they do that in 1973-75, because
the 99 weeks that we are getting to now is unprecedented in our
Nation's history, isn't it?
Commissioner Hall. Yes, the long-term unemployed is really
quite--it is unprecedented right now, the number of long-term
unemployed.
Representative Mulvaney. Correct. But also the benefits
that we have extended is unprecedented? I recognize you are
getting to my point, which is that I recognize that you all are
not in the business of cause-and-effect looking forward; I am
more interested, however, in possible correlations looking
backward with the benefit of hindsight.
And I am just asking you if you have seen any correlation
between the length of benefits that we offer and the length of
time that folks actually stay unemployed.
Commissioner Hall. I am not an expert in that area. I do
know that there has been some research that correlates when
people return to work and UI benefits, that there tends to be a
pickup in re-employment at the end of benefits.
Representative Mulvaney. And also I think there are some
studies that show that there is an increase in re-entrants into
the market, folks that have been identified as actually
dropping out of the job market do come back at the end of--once
benefits go back to their ordinary lengths.
All right, well thank you, Commissioner Hall. I look
forward to your testimony in the future.
Chairman-designate Casey. Thanks, Congressman. And,
welcome. Thanks for taking the time to be here with us.
Commissioner, I had some follow-up questions on the
demographic breakdown. Even as we are happy about the fact that
we are at 216,000 by way of an increase overall, and a 230,000
increase in private-sector jobs, there are some demographic
numbers which are pretty disturbing.
I was looking at the number, for example, for veterans. Am
I correct to say that unemployment among veterans is 9 percent?
Commissioner Hall. Um----
Chairman-designate Casey. I just want to make sure I have
the right number.
Commissioner Hall [continuing]. Sure. I believe that is
correct. Yes, it is 9 percent.
Chairman-designate Casey. So just for context, 8.8 percent
unemployment overall; but 9 percent for veterans?
Commissioner Hall. Yes, that is correct.
Chairman-designate Casey. And would I be correct to say
that so-called Gulf Era II Veterans, meaning Iraq and
Afghanistan veterans face an unemployment rate of 10.9 percent?
Is that right?
Commissioner Hall. That is correct.
Chairman-designate Casey. So substantially higher than both
veterans overall, almost 2 points higher, and significantly
higher than the overall unemployment rate. So I think we have
got to pay particular attention to those veterans coming back
from overseas. That is intolerably too high, 10.9.
I was also looking at the African American unemployment
rate, which is--again I just want to make sure I am right--15.5
percent? Is that right?
Commissioner Hall. That is correct.
Chairman-designate Casey. And that number is almost double,
more than double, I should say, from the African American
unemployment rate of 7.7 in August of 2007. That is the number
that I have.
Commissioner Hall. Yes, that sounds right. It was 9.0
percent at the beginning of the Recession, but that would be
right back to August.
Chairman-designate Casey. So 15.5 percent unemployment for
African Americans. For Hispanic workers, the rate is 11.3? Is
that correct?
Commissioner Hall. That is correct.
Chairman-designate Casey. And for workers with a
disability, 15.6 percent? Is that correct?
Commissioner Hall. We will get the number here.
Chairman-designate Casey. Okay.
Commissioner Hall. You have been right so far, so I am----
Chairman-designate Casey. I am just trying to make sure we
get the record right. But in particular, is there anything you
can tell us about--based upon your knowledge of the labor
market, based upon trends you have been able to both identify
and analyze over the years, and even more recently, is there
anything you can tell us about those particular demographic
categories, why they are that high? Or whether these numbers
are typical for a time of recession and then recovery? Or maybe
there is no conclusion you can reach based upon the numbers
only?
Commissioner Hall [continuing]. Sure. It is absolutely true
that the unemployment rates for these groups start out higher
than other groups, and in recessions they go up by more. So
they are hit more by recessions.
This Recession has been no exception. They have gone up
quite a bit. As you mentioned, for example, African American
going from 9.0 percent to 15.5 percent is a very large
increase.
As far as why, I do not have great insight as to why that
happens, but it does happen. And it is a similar pattern I
think as some other groups.
Chairman-designate Casey. Do you have any data that
compares, for example, if we just take two or three numbers,
the African American number at 15.5 and the Hispanic worker
number at 11.3, any way to compare those two numbers in
particular to a comparable time period, say in the 1990s as we
were coming out of a downturn then? Or maybe even 2001-2002? Is
there any way to compare those, whether 15.5 is substantially
higher for African Americans at a comparable time, or not?
Commissioner Hall. Right. We do not have a time series for
that group that goes back quite that far, at least with us. We
could probably follow up on that. But the number of 15.5
percent I am sure is a very high rate, but we can follow up
and----
Chairman-designate Casey. Yes, that would be great for the
Committee, if you can just do kind of a comparison----
Commissioner Hall [continuing]. Okay.
Chairman-designate Casey. Because anyone can tell that it
is very high. I am just kind of curious about the historical--
oh, you might have something?
Commissioner Hall. Okay, actually I do have an answer. We
had a table I did not realize we had. This is a very high rate.
This is a higher unemployment rate than the last recession, or
the 1991 recession. The last time it was this high for African
Americans, it was in the early 1980s it looks like. So this is
a very high unemployment rate.
Chairman-designate Casey. Thank you. I am over time.
Vice Chairman-designate Brady.
[Letter dated April 19, 2011, transmitting Commissioner
Hall's response to Senator Casey appears in the Submissions for
the Record on page 77.]
Vice Chairman-designate Brady. Thank you, Chairman.
We talked a moment ago about the unemployment rate going
down, but principally because fewer people are in the workforce
and many have left it.
We have an honest disagreement in Congress about what the
role of federal spending is in our economy and its recovery.
You know, following the numbers, I know after we spent some
$800-and-some billion, we have 2 million fewer workers today
than when the Stimulus began.
The unemployment rate was predicted to be 6.8 percent this
month; we are off by a mile. And many of the economists who
were saying don't reduce any spending in Washington, today are
the same ones who like Mark Zandi predicted that by the end of
2010 we would see 4 million new jobs. We actually had 3.3
million fewer. He was off by 7 million jobs.
The Joint Economic Committee took a look for the last 40
years, at my request, at the relationship between federal
spending and job creation in the private sector along Main
Street. This chart identifies it. The black line is federal
spending; the darker blue line--remind me to do a different
color on that one--is private payroll employment. Not
government jobs, jobs along Main Street.
What you can see is there is no correlation between the
two--actually, I am wrong. There is a negative correlation. For
each of the four decades, as government spending grew jobs
along Main Street actually shrunk.
In the next chart, though, it shows sort of a different
story. Over the last 40 years we tracked one key indicator.
Along with workforce participation and output, the key
indicator is private investment, business investment: companies
that buy new buildings, new software, new equipment.
As you can tell, there is a very high correlation. When
businesses, large and small, buy buildings, buy equipment, buy
software to go along with that new technology, jobs along Main
Street grow.
As we look forward from here, in looking at the data that
you have, what indicators are you following that indicate where
and at what speed private business investment is restoring, is
picking up, is still fairly flat, where is it in America today?
Commissioner Hall. I do not know that--I do not spend a lot
of time looking at leading indicators, because we are not
trying to forecast. But I will say such things as hours worked,
and things like that, give us some idea of future job growth
and future investment levels. In the data, things like
temporary help tends to come back quicker than other types of
jobs.
Those are the sort of things that tend to be sort of
leading indicators of investment and job growth.
Vice Chairman-designate Brady. Are there any sectors that
would reflect--obviously new buildings, you are looking at
construction, new equipment you would be looking at the more
durable goods, correct? The larger types of equipment? And new
software? Are there within those sectors signs we need to be
following?
Commissioner Hall. Well I do think the equipment and
software investment, out of the GDP numbers, does track pretty
well with payroll jobs. And if that tends to get out ahead of
payroll jobs, it shows up in productivity gains but it also
signals sometimes future job growth.
Vice Chairman-designate Brady. How many jobs are we short
of the pre-Recession level right now?
Commissioner Hall. We are down about 7.3 million jobs since
January 2008.
Vice Chairman-designate Brady. How large would the monthly
job gains need to be over the next 18 months for employment to
return to that level, to the pre-Recession level?
Commissioner Hall. I think we are looking at--sorry, I am
doing my math here; excuse me--I guess we are looking at
403,000. Does that sound about right?
Vice Chairman-designate Brady. It would probably need to be
higher than that.
Commissioner Hall. Is it higher than that? Okay.
Vice Chairman-designate Brady. That is my back-of-the-
envelope estimate. If we continued around 200,000 or so job
gains per month, how long will that take for us--my gut feel is
around 5 years at that level. Your thoughts?
Commissioner Hall. I have not done that calculation, but if
you are talking about something like 2.5 million a year, you
are talking about, well, certainly 36.3 months to recover at a
rate of 200,000 per month.
Vice Chairman-designate Brady. What monthly job gains--we
sort of have an indicator, and I am running out of time, how
much job gains a month is needed just to keep up with the
population growth? We are often asked that question.
Commissioner Hall. Yes, that seems to vary over time. I
would say right now probably at least on the order of 130,000-
140,000 jobs a month just to maintain, with the population
growth.
Vice Chairman-designate Brady. Okay, thank you.
Thank you, Mr. Chairman.
Chairman-designate Casey. Thank you, Congressman.
And Congressman Hinchey.
Representative Hinchey. Thank you, very much.
We know what the situation is, how bad it has been, how
much employment has declined, and how it is now showing
indications of improvement as a result of a number of
initiatives by this Congress. And this chart here is very
illustrative. It shows the deep drop in employment, and the
increase in employment as a result of the activities that were
taking place over the course of the previous two years.
I want to talk about manufacturing employment which
increased for the fourth straight month, as employers added
33,000 jobs in February. Fortunately, the number of
manufacturing jobs has increased by 186,000 since January of
2010. This is a turnaround, a dramatic turnaround, from the 2.3
million jobs that were cut during the deep Recession.
Can you tell us, what is the future of the manufacturing
sector? What do you anticipate will be the most influential
policies that will affect the manufacturing sector?
Commissioner Hall. Well, you are getting into two areas I
try to avoid. One is forecasting; the other is policy. I will
say, though, that the last recession we lost 3 million
manufacturing jobs and gained none of them back. This Recession
we lost another 2 million manufacturing jobs, and we are
starting to gain some of them back. We are not anywhere near 2
million back, but we are gaining some back. And that has not
happened for a few recessions, a couple of recessions.
Representative Hinchey. Yes, well what do you anticipate
will be the most influential policies that will affect the
manufacturing sector? What do you think of some of the things
that are trying to be done now, will have a positive or
negative effect?
Commissioner Hall. I don't think I would want to comment on
likely impact of policies, I'm sorry.
Representative Hinchey. Okay. Over 44 percent of the
unemployed are considered long-term unemployed, meaning that
they have been out of work for 27 weeks or more.
Nearly 73 percent of the long-term unemployed have been
unemployed for a year or more. What do you think is the
reasoning behind why so many of our unemployed have been
unemployed for a year or more? Do you think we are facing a
skills mismatch where workers do not have the skills of a
changing economy, that they have not been prepared for?
Commissioner Hall. In terms of what the data shows, the
number of long-term unemployed during the most recent expansion
after the 2001 recession, it never went down very much. The
expansion after 2001 was not a strong expansion, and normally
the long-term unemployed goes down a lot more than it did
during this expansion.
So the first thing that is a contributor to this is the
number of long-term was already high when this Recession
started. And the second thing is, this was a very deep and a
very long Recession, so it really added to that. And those two
things made the number at an unprecedented level. It is
extremely high.
I do not know. I do not know what sort of issue there is
with job matching, job mismatching. I would say that that is
certainly something that is going to be of great interest as
this expansion goes forward as to how the long-term unemployed
get re-employed, and whether there is an issue with job
matching or not.
Representative Hinchey. Well based upon your experience, do
you come to the conclusion that intelligent economic investment
by the government has positive effects on the economy?
Commissioner Hall. I think I will not comment on----
Representative Hinchey. You will pass on that one?
Commissioner Hall. Yes.
Representative Hinchey. Mr. Rones, or Dr. Horrigan, any
indications of anything on any of the questions that we have
asked?
Mr. Rones. No. I think you will be hard-pressed to find
someone from the statistical community willing to comment on
policy. I think it is in everyone's interest that the reality
and the perception is that the statistical community, the
federal statistical community, is really separate from the
policy issues. So I think Mr. Hall speaks for--Dr. Hall speaks
for all of us in that.
Representative Hinchey. Well, no, I appreciate, because we
have done this on a number of occasions in the past--I
appreciate how you separate the logic of how things can be
improved, and base all of your attention on what the
circumstances are, what the facts are, but not how they
arrived, and what we might do to make them better.
But nevertheless, we continue to just keep asking questions
like that to see if there might be something that you could
provide that might be insightful. In any case, I appreciate the
responses that you gave to these questions.
Thanks.
Chairman-designate Casey. Commissioner, if you and your
team were not so disciplined you could make big news here
today, but I know you----[Laughter.]
Are doing your job.
Congressman Amash.
Representative Amash. Thank you, Mr. Chair.
Commissioner Hall, long-term unemployment is costly both
for individuals who lose valuable skills and experience, as
well as the government, which is now providing unemployment
insurance benefits to workers for up to 99 weeks.
What impact does long-term unemployment have on workers'
future employment prospects?
Commissioner Hall. Well that is one of those areas where
the economic research is pretty clear that the longer somebody
is unemployed, the harder it is for them to become re-employed.
That is why I think, at least for me, one of the absolutely
most important things to watch coming out of this Recession is
what happens to the long-term unemployment because it is at a
very high level.
Representative Amash. And when unemployment benefits run
out, what typically happens to the unemployment rate?
Commissioner Hall. I am not sure that I necessarily see a
big impact on the unemployment rate when those numbers work
out. People are more likely to stay in the labor force when
they are receiving benefits, so there may be some issue where
people stop looking once their benefits run out, so that may
have an impact on the labor force. But it's not been clear, at
least in this data yet, that that is having an impact. It has
not been in the past.
Representative Amash. Thank you. When arguing for the
Stimulus, the President's economic advisors issued a report
projecting the likely effects of unemployment and output with
and without a Stimulus similar to that which eventually passed.
The President's advisors projected that the unemployment
rate would be about 6.8 percent today if Stimulus was passed,
and about 8.2 percent if Stimulus was not passed. What is the
unemployment rate today?
Commissioner Hall. It is 8.8 percent.
Representative Amash. And the President's advisors
projected total payroll employment at the end of 2010 would be
about 138 million with Stimulus and about 134 million without
Stimulus. What was the level of payroll employment at the end
of 2010?
Commissioner Hall. Let's see. How about if I tell you
January. I've got that one handy. It's 130,328,000.
Representative Amash. So that is lower than the President's
estimates?
Commissioner Hall. Yes.
Representative Amash. Massive increases in Federal
Government spending have been aimed at increasing employment.
Can you reconcile the poor job market with the effects of the
spending?
Commissioner Hall. I would not speculate on that.
Representative Amash. Are there indications that private
employers are wary of hiring new workers, given the
uncertainties surrounding the new health care entitlement and
the looming U.S. fiscal crisis?
Commissioner Hall. I do not have any view as to why hiring
may be slower.
Representative Amash. So you cannot speculate on--is it
possible that the huge amount of spending and the country's
indebtedness has been counterproductive to job creation?
Commissioner Hall. I just would not want to comment on
that.
Representative Amash. Okay. The Recession has been
characterized by a large exit of workers from the labor force.
The labor force participation rate has dropped nearly 2
percentage points since the Recession began. Is the absolute
number of workers in the labor force smaller now than before
the Recession? And by how much?
Commissioner Hall. In terms of payroll jobs we are down by
almost 7.3 million payroll jobs.
Representative Amash. And why have workers left the labor
force?
Commissioner Hall. Oh, I'm sorry. The question was a labor
force question?
Representative Amash. Yes.
Commissioner Hall. I guess it is various reasons. This is
part of what always happens during recessions. The unemployment
rate goes up and, to some degree, that does not tell you
everything that is going on in the labor market because lots of
people dropping out of the labor force does not show up in the
standard unemployment rate.
The labor force level is about a half a million below what
it was before the Recession started. That is despite the
population increase.
Representative Amash. And what can you tell us about
workers re-entering the labor force?
Commissioner Hall. Let me--we will pull up some data here.
[Pause.]
Yes, the levels are still low, people who are coming from
unemployed to employed. That still has not picked up much--in
and out of the labor force, that is still at a fairly low
level. It is well below prior to the Recession.
Representative Amash. Thank you. I see my time has expired.
Yield back.
Chairman-designate Casey. Thank you, Congressman.
Congressman Duffy.
Representative Duffy. Thank you. Commissioner, just to
follow up on some of your points, I think a lot of people are
pleased that we have a report of, what, 216,000 jobs this
month. But you indicated with regard to the chart that is up
here with labor force participation rates, that it happens in
all recessions. And I would agree with you.
But also when we see this decline, and then we are this far
into the Recession, or this far into job growth, do we not
usually see greater participation? Don't we see these rates
actually rise in the recovery?
Commissioner Hall. Yes, I would expect that we would at
some point see that start to rise in a recovery. It happens
every recovery.
Representative Duffy. Right. But isn't this a sign that
there is a great deal of weakness in the marketplace right now
in regard to jobs, when more people are not coming back into
the marketplace to seek employment? That would be a leading
indicator, potentially, of the strength of the market?
Commissioner Hall. I would say that is true. I would say
that seeing people start to re-enter the labor force would be a
sign of growing confidence that job growth is going to pick up,
and we do typically see that at some point during recoveries.
Representative Duffy. But we are not seeing it right now?
Commissioner Hall. Not yet.
Representative Duffy. Which, if we are concerned about
putting our people back to work, that would give all of us
concern right now? Is that right?
Commissioner Hall. Yes, well certainly we would like to see
that.
Representative Duffy. Just in regard to long-term, the
long-term unemployed, there is a concern about that. Just so I
get this right, if you are out of the work force for several
years, you potentially lose skills? Is that right? And it is
harder to get those who have been long-term unemployed back
into the work force? Is that right?
Commissioner Hall. I think that is right. You know, a lot
of it probably depends on why people have been unemployed for a
long-term time period. Obviously some percentage of them are
folks whose skills are no longer consistent with industries
that have strong job growth.
This time, the number of long-term unemployed is so high I
would suspect that a large number of the long-term unemployed
have different characteristics than in the past; that their
skills may not have eroded; it just may be that we have had a
very weak labor market.
Representative Duffy. And I guess my point is leading up
to, you know I think all of us would like to--if you lose your
job, we want to help people out. I think we all agree in an
American safety net. But when you look at extending
unemployment benefits for a great length of time, would it be
your position that that can encourage people to stay out of the
job market until those benefits run out? And then are we really
doing a service to those who we are actually trying to help? Or
are we doing a disservice with the lengthy extension of
unemployment benefits?
Commissioner Hall. I would not want to comment on the
impact of something like that. I just don't know.
Representative Duffy. Okay. Well but it is fair to say that
with regard to long-term unemployment benefits, people will
stay unemployed until their benefits are about running out, and
then they will get back into the job market?
Is that a fair assumption of what happens?
Commissioner Hall. Well in the past statistically that has
shown up in research. There have been questions about why that
is, but that has shown up in research in the past.
Representative Duffy. And there is also a correlation that
the longer you stay out of the marketplace the harder it is to
find a job that is equivalent to the one you had before you
left the marketplace?
Commissioner Hall. That is correct.
Representative Duffy. And so is it fair then to say there
is a correlation between long-term unemployment benefits,
people staying unemployed for a long period of time, and the
difficulty there is for them to get back into the marketplace?
Commissioner Hall. I am not sure I would draw that
connection.
Representative Duffy. Okay. I have nothing further. Yield
back.
Chairman-designate Casey. Thank you, Congressman.
Commissioner, you are really staying on your job here. We
talked earlier about some of the difficult numbers here for
large segments of the American people. I mentioned before still
high numbers for African Americans, for veterans, and for
Hispanic workers. So we want to balance the positive aspects of
these numbers overall with the difficulties many people are
still having.
I did want to turn to another chart. Maybe we could just
move to the GDP chart, to walk through some of these numbers.
What this chart depicts--and the source that I am going to
read, this chart was prepared by the Joint Economic Committee
staff based upon data from the Bureau of Economic Analysis, and
I may have a question that gets to Commissioner Hall's work and
his team--but just to review what it depicts, it is GDP growth
for the sixth consecutive quarter. Percent change in real GDP
from the 4th quarter of 2007 to 4th quarter of 2010.
Obviously at the end of--or I should say, on the left-hand
side--you have negative 4.0 in the 3rd quarter of 2008;
negative 6.8 in the 4th quarter of 2008. So the last two
quarters of 2008, you have negative growth.
And then you move to the first quarter of 2009, which is
when you get into the blue color there, the 4.9 percent, the
negative 4.9 percent in early 2009. I would note for the
record, there have been a lot of references by our colleagues
here to the Recovery Act and other strategies put in place by
the Administration, and a lot of votes by Democrats, I might
add, that as President Bush was leaving office in the early
part of 2009, President Obama is coming into office, you have
basically two quarters which are negative, -6.8 in the end of
2008; -4.9 in the first quarter of 2009.
Then of course you see a much-improved number, the -.7 in
the second quarter of 2009. Third quarter 2009, 1.6 in
positive. So basically it took all those quarters to get into
positive territory. You had to go from the second quarter of
2008 to the third quarter of 2009 to get it back into positive
territory. Fourth quarter 2009, 5.0 on the plus side. And then
every quarter since then in 2010 in positive territory.
I would ask you this. When people see a set of data like
that, they say, okay, you are getting growth. You are getting
positive GDP growth quarter after quarter, which is good news.
But, they say, where are the job numbers to reflect that? And I
would ask you this about one theory, and I know you cannot
endorse or speculate on theories, but one theory is that one of
the basic reasons why you are not seeing nearly enough job
growth, even though you are getting positive GDP growth, is
because workers and businesses are becoming both more
efficient--well, maybe not ``both''--but one or the other,
either more efficient or more productive, which may go hand in
hand. Anything you can say about average hours per week now,
this month or the most recent quarter, versus another period,
say in 2008 or 2007, anything you can add to that about average
hours per week?
[The chart titled ``GDP Grows for Sixth Consecutive
Quarter'' appears in the Submissions for the Record on page
79.]
Commissioner Hall. Sure. We will pull some data up. I can
talk about the GDP and payroll jobs, if you like, a little bit.
Chairman-designate Casey. Sure.
Commissioner Hall. As well, more broadly. It is typically
the case that GDP starts to grow out of a recession in advance
of job growth.
Chairman-designate Casey. Good point.
Commissioner Hall. That is typical. This Recession, it was
about an 8-month lag between the end of the Recession and when
we started to get job growth. That is not atypical. In fact,
that is faster than the last couple of recessions.
Chairman-designate Casey. Let me just interject for a
second. Just so we have a point of reference, technically--and
we know how many people feel about this--but technically the
Recession ended when?
Commissioner Hall. In June of 2009.
Chairman-designate Casey. Okay.
Commissioner Hall. Yes, we have not seen a lot of movement
in the hours worked, average weekly hours, all employees. That
has actually been pretty flat now for quite awhile. We really
have not seen a big pick up at all since the Recession started.
Chairman-designate Casey. So that has been flat?
Commissioner Hall. Yes.
Chairman-designate Casey. Okay. And typically would you see
a correlation between that number, average hours worked per
week, going up in a further increase in jobs?
Commissioner Hall. Yes, typically you would. In fact,
typically that would give you some indication that the labor
market is starting to tighten up, and you are going to see job
growth. So it is a little bit interesting that we are seeing
the job growth occur without having the hours go up.
Chairman-designate Casey. Okay. I know I am over time, but
Congressman Mulvaney, did you want a second round?
Representative Mulvaney. Very briefly, Mr. Chairman, if I
may.
Mr. Hall, I appreciate your discipline, and for someone who
has only been here a couple of months it is actually kind of
refreshing to actually see somebody just want to answer
questions as opposed to sit up here and letting us testify. So
I am going to do something probably unheard of in this
environment and actually ask you questions that I do not know
the answers to in advance.
Do you all break these things down by different segments? I
am particularly interested in the job growth, or lack of it,
within small business. Do you have any information that you
could provide us on that?
Commissioner Hall. Yes, actually we do. It is not part of
this data release, but we do have a couple of different surveys
where we do look at job growth by firm size, or establishments.
Representative Mulvaney. Recognizing that you do not have
it immediately available to you, what can you tell us about job
growth within the realm of small business?
Commissioner Hall. Okay. I think one of the ways this
recession has stood out compared to other recessions is the job
loss has been very broad across all sized firms.
For example, in the last recession in 2001 the job loss
there was focused in large firms. This recession has been much
more even. We have had a lot more job loss in smaller firms
than we have in past recessions.
Now in terms of the recovery so far, I think there has been
a little stronger recovery in the larger firms. But we are
still not seeing a lot of job growth in some of the smaller
firms.
Representative Mulvaney. To what would you attribute that?
Again, I am not asking for policy; I am just asking, based upon
the previous recoveries that you have seen, why would you think
that small business--to me, for example, let me tell you why I
ask the question.
It strikes me, having been involved in primarily small
business but also familiar with large businesses, that small
business is able to react a little bit more quickly, especially
in an upturn. They see opportunities a little bit more quickly
and are a little bit more nimble from an organizational
standpoint.
So am I wrong about that? Or is there something different
here? Why do you think we are seeing a situation where small
businesses are slower to return to the job creation than larger
businesses?
Commissioner Hall. I will say what I think is the most, one
of the most important characteristics of this recession
compared to other recessions. In fact, I would say that we were
in a mild recession, maybe even borderline not a recession,
until the credit market lockup, until the financial market just
locked up credit markets.
And that coincided with a real drop off in new-firm
creation, which is in large part small firms, and sort of
establishment deaths, firms going out of business. So that is
one of the most notable things, that the credit markets have
been really involved in this recession.
And that is sort of consistent with the idea that the
smaller firms have been harder hit, and perhaps--I am not sure
why they are slower to recover, I do not really follow the
credit markets that closely----
Representative Mulvaney. No, I see where you are going. It
actually makes some sense. So what I can divine from that is
that small businesses rely probably more heavily on the overall
credit markets. It is harder for them to raise credit.
Commissioner Hall. Yes.
Representative Mulvaney. And if the credit markets remain
tight, it might be possible for a larger business to gain
access to the credit market, but harder for small business. And
that might explain why small businesses are slower to create
jobs in the recovery.
Commissioner Hall. It might.
Representative Mulvaney. Let me ask you the same question,
very briefly. I have only got a minute-and-a-half. We hear a
lot about green jobs, and the green economy. Do you break it
down by that as well?
Commissioner Hall. We have not in the past. But in fact we
are in the process of doing that. We actually have a new
initiative where we are--we have done a fair amount of research
in defining ``green jobs,'' and we will start collecting data
on that in fact later this year.
So that next year we will in fact start producing some of
this same data we are seeing right now, but broken out by
industries that are primarily producing green products.
Representative Mulvaney. Thank you, Doctor. Thank you, Mr.
Chairman, I yield back the balance of my time.
Chairman-designate Casey. Thanks, Congressman.
Congressman Cummings.
Representative Cummings. Thank you very much, Mr. Chairman.
Commissioner, it is always good to see you, and
particularly good to see you when you bring good news.
I want to just pick up on where my colleague left off just
a moment ago. A lot of people seem not to fully appreciate the
lock up of the credit market and how it does affect small
businesses big time.
In my District, a few months ago we had small businesses of
all kinds come together and talk to the Federal Reserve. And
what they said was: We have opportunities, but we cannot get
lines of credit. Our lines of credit have been torn down, and
we do not have them.
And so that is very, very significant. And I think the more
we can open up those lines of credit, the better off folks will
be. Because, again, without a line--I mean, I ran a small
business for 15 years--without a line of credit, and it could
be for only $50,000, but it would make a big difference.
Dr. Hall, I wanted to ask you, do you see the unemployment
rate continuing to decrease in the near term?
Commissioner Hall. I would not want to speculate. I mean,
we have been on a nice trend here where the unemployment rate
has dropped and now that drop has held. Obviously I don't know,
going forward.
Representative Cummings. All right. Well let me ask you
this: What factors, in your opinion, are currently the biggest
drivers of job creation? I mean, looking at your stats, I know
you look at trends and that kind of thing.
Commissioner Hall. Sure. You know, we are getting job
growth that is reasonably broad. You know, more than a half of
the industries are now adding jobs rather than losing jobs. We
have been at that for a while. So it is fairly broad.
It just has not--we have not had it in every industry.
Construction and financial activities have been kind of flat,
and government has been declining. But everything else has had
essentially job growth throughout. So it has been pretty broad.
Representative Cummings. Despite the steady job figures and
the positive economic indicators, other indicators present a
worrisome picture, Dr. Hall. For instance, a recent Reuters-
University of Michigan survey shows a 10 percent drop in
consumer confidence last month, the 10th largest drop on
record.
An editorial by former Labor Secretary Robert Reich
explains that this drop is attributable to a number of factors,
including rising food and fuel prices, as well as expectations
of fewer jobs and lower wages in the months ahead.
Theoretically, interconnectedness of consumer confidence
and employment levels can lead to a somewhat self-fulfilling
prophesy. If consumers are unwilling to spend money, the
economy slows leading to fewer jobs, thereby further depressing
consumer confidence.
However, is consumer anxiety about fewer jobs and lower
wages appropriate? And are they right to feel anxious? And I
know you do not like to give opinions, but, you know, help me.
Commissioner Hall. I do not know if they are right or not.
You know, this is a----
Representative Cummings. Well I am looking at the data.
Looking at the data, if it were you, would you feel anxious?
Based upon the data that you collect?
Commissioner Hall [continuing]. I would say we are down a
lot of jobs still since the Recession started. The unemployment
rate is very high. Labor force participation is low. So that is
plenty to worry about.
Representative Cummings. Moreover, what impact, if any, do
you believe that this drop in consumer confidence will have on
job creation in the months ahead?
Commissioner Hall. I think there the real question is will
the consumer confidence lead to lower consumer spending. It
does not always happen. Consumer confidence can fluctuate, and
the real issue would be does it lower spending? And if consumer
spending lowers, then it is going to slow down the economy.
That is the real key, that link between buying and confidence.
Representative Cummings. And to what extent is the housing
market influencing job creation in the employment outlook?
Commissioner Hall. Housing has not contributed for awhile.
In fact, construction employment just has been flat throughout
the recovery so far.
Representative Cummings. Now you know I always ask you two
questions that I always like to hear your answer to.
One, if you were talking to the President right now, the
President called you up and said: Hall, what's the situation?
What would you--I mean, where are we right now? And what do you
see for the future? What would you say?
And the other one is, the other question I always ask you,
as people look at this on C-SPAN and they are looking at you as
the guru of these numbers, and they say, I am wondering what
kind of field I ought to go into. What training should I do?
Where should I go in the country to find a job? What would you
say?
Commissioner Hall. Sure. The first question, I think I
would characterize it kind of as I did in my statement. It is a
positive thing that unemployment rate, after having fallen for
a percentage point, has held. We have not had any big movements
in the labor force, so that fall in the unemployment rate has
been from a reduction in the number of unemployed and an
increase in the number of employed.
Job growth at 216,000 is job growth, and that is a bit
faster than it has been in prior months. So I would say on the
whole this is a positive report. We have got growth in a number
of industries.
Going forward in terms of job growth, you know, two things
come to mind. In fact, we do have--the one place where we do
forecasts is we do 10-year projections on occupations where we
try to give people an idea of exactly the answer to your
question: Where are the jobs going to be in the next 10 years?
And et cetera.
And the thing that continues to jump out there is a lot of
the service sector jobs, along with health care, et cetera,
jump out as likely areas where we are going to have growth. And
a lot of it is going to depend upon, interestingly, I think the
demographics. Because one of the things people underestimate is
that we have a certain number of jobs that are replacement
jobs. As people retire, jobs are going to open up behind them.
And that is an important thing in this. So it is not just
identifying sectors where the number of jobs is growing, but
also where you have the demographics such that people are
retiring and you have replacements in there.
But very broadly, like I say, services in health care jump
out at you, especially health care with respect to some of this
demographics that I am talking about jump out. And if you like,
I can get you some more detail on our forecasts. If you like,
next time I can bring some of those numbers with me.
Representative Cummings. Just one thing you left out, and I
thank you for your indulgence, Mr. Chairman. Geography.
Commissioner Hall. Sure.
Representative Cummings. I mean, if they are sitting there
in a state where things are just really, really, really bad,
where would they be looking based upon what you--where might
they want to look in other areas of the country?
Commissioner Hall. That is a good question. To be honest, I
do not recall the regional aspect to that, but I can----
Representative Cummings. You will get that to me?
Commissioner Hall [continuing]. Yes.
Representative Cummings. All right. Thank you, Mr.
Chairman.
[The prepared statement of Representative Cummings appears
in the Submissions for the Record on page 80.]
[Letter dated April 22, 2011, transmitting Commissioner
Hall's response to Representative Cummings appears in the
Submissions for the Record on page 81.]
Chairman-designate Casey. Congressman, thanks very much. I
know we are ready to wrap up, unless my colleagues have more
questions.
I just had one quick one, though, about the split by
gender, men versus women, in the job growth. There is some
sense that women make up a greater share of state and local
government jobs, but I just wanted to ask you:
Since February 2010, we have created about a million and a
half jobs. I am wondering if you have the number of men versus
women on that? Because I know men were way down in this recent
report, but I forgot to ask that earlier.
Commissioner Hall. Sure. Yes, the job growth, we added
about 1.2 million jobs for men, and about 237,000 jobs for
women. So it was pretty male-oriented in terms of the job
growth.
Chairman-designate Casey. Since February 2010?
Commissioner Hall. That's right, since February 2010. That
also was reflected, for what it's worth, in the job loss as
well. Men lost jobs something like 3-to-1 compared to women.
Chairman-designate Casey. Thanks very much. Unless Vice
Chairman-designate Brady, or Members have any other questions,
I think we are adjourned.
Commissioner, thank you, and Dr. Horrigan and Mr. Rones,
thank you very much for being here.
We are adjourned.
[Whereupon, at 10:51 a.m., Friday, April 1, 2011, the
hearing of the Joint Economic Committee was adjourned.]
SUBMISSIONS FOR THE RECORD
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Prepared Statement of Keith Hall, Commissioner, Bureau of Labor
Statistics
Mr. Chairman and Members of the Committee:
Thank you for the opportunity to discuss the employment and
unemployment data we released this morning.
In March, nonfarm payroll employment rose by 216,000, and private-
sector employment rose by 230,000. The unemployment rate was little
changed at 8.8 percent; the rate has declined by one percentage point
since November 2010. Since a recent low point in February 2010, nonfarm
payroll employment has risen by 1.5 million. Private-sector employment
rose by 1.8 million over the same period, an average of 138,000 per
month. In March, job growth occurred in professional and business
services, health care, leisure and hospitality, and mining.
Manufacturing employment continued to trend up over the month.
Professional and business services employment rose by 78,000 in
March. This industry has added 692,000 jobs since a recent low point in
September 2009. In March, employment in temporary help services rose by
29,000. Temporary help services has added about a half million jobs
since August 2009.
Employment in health care continued to rise in March (+37,000). The
increase was spread among several components, including ambulatory
health care services (+18,000), hospitals (+10,000), and nursing and
residential care facilities (+9,000). Since the start of the recent
recession in December 2007, health care employment has risen by
902,000, while total nonfarm employment has declined by 7.2 million.
The leisure and hospitality industry added 37,000 jobs in March.
Growth in food services and drinking places (+27,000) accounted for
most of the increase.
Within goods-producing industries, mining employment rose by 14,000
in March, mostly due to an increase in support activities for mining
(+9,000). Since a recent low point in October 2009, mining employment
has risen by 96,000. Employment in manufacturing continued to trend up
in March (+17,000). Factory job gains continued to be concentrated in
durable goods, with over-the-month increases in fabricated metal
products (+8,000) and machinery (+5,000). Construction employment
changed little over the month.
Employment in local government continued to trend down over the
month (-15,000). This sector has lost 416,000 jobs since its employment
peak in September 2008.
Average hourly earnings of all employees on private nonfarm
payrolls were unchanged in March at $22.87. Over the past 12 months,
average hourly earnings have risen by 1.7 percent. From February 2010
to February 2011, the Consumer Price Index for All Urban Consumers
(CPI-U) increased by 2.2 percent.
Turning to measures from the survey of households, the unemployment
rate was little changed at 8.8 percent in March. The jobless rate has
declined by one percentage point since November 2010. Over that period,
unemployment declined by nearly 1.5 million, and employment rose by 1.4
million, leaving the labor force nearly unchanged on net (after
accounting for the population adjustment in January).
In March, the labor force participation rate held at 64.2 percent,
and the employment-population ratio, at 58.5 percent, was little
changed. The number of long-term unemployed remained high at 6.1
million, 45.5 percent of total unemployment. Over the month, the number
of individuals who were working part time although they would have
preferred full-time work was 8.4 million, down from 9.0 million a year
earlier.
In summary, nonfarm payroll employment rose by 216,000 in March,
and the unemployment rate was little changed at 8.8 percent.
My colleagues and I now would be glad to answer your questions.
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Prepared Statement of Representative Kevin Brady, Vice Chairman-
designate, Joint Economic Committee
I would like to congratulate Senator Casey on the Chairmanship of
the Joint Economic Committee. I look forward to a productive working
relationship with the Senator and to insightful hearings as we move
forward in the new Congress.
I also would like to welcome Dr. Hall and his staff again. You have
guided this committee through many employment reports in the past. We
appreciate the work you do and the explanations of the data you
provide.
Today's employment report shows some positive signs. Everyone wants
the economy to improve, particularly the labor market, and we are glad
for the increases in jobs we are seeing. But let us be frank, while
there are job gains, the rate of job creation has not accelerated
enough to keep up with population growth and encourage all the people
who lost their jobs that they soon can find work again. It has been 21
months since the recession ended and we are still down 7.2 million
nonfarm payroll jobs from when it started. The unemployment rate at
8.8%, of course, remains unacceptably high but also is not telling us
the whole story, as I will explain shortly.
There has been fundamental disagreement about the proper role of
government in facilitating an economic recovery between Republicans and
Democrats and that disagreement continues even now, 39 months after the
last recession started. Democrats still do not want to change course.
The federal spending spree has not been productive. It loaded up
the Nation with debt so large that the focus of business managers,
investors, foreign governments, international institutions, and the
public at large now is on how the United States can meet its
obligations. How high will taxes rise and what form will they take? Is
the government resorting to money creation to ease its interest and
principal payments? Is there a chance it will default on its
obligations? These questions--incredible as it may seem--are being
asked of the U.S. government. This is a big part of the reason why
private investment and hiring have not resurged as they did in the past
after similarly severe recessions.
I want to show you a chart of payroll jobs. As you can see, we have
not moved far from the bottom we hit shortly after the recession
officially ended and the trajectory of job growth is far weaker than in
past recoveries. I also want to show you a chart of the U.S. labor
force participation rate. This chart shows the percentage of the
population in the labor force as defined by the Bureau of Labor
Statistics, and the percentage has shrunk. The chain of causation is
clear: businesses fear the costs of an encroaching and intrusive
government and are reluctant to expand sufficiently to create enough
job openings for all of our workers; in turn, many people have left the
labor force. The labor force now is smaller than 39 months ago, despite
the fact that the working age population of 16 years and older has been
increasing. This is happening in what used to be called the ``land of
opportunity.''
Republicans want to cut federal spending to relieve the pressure on
the private economy. We must reassure the Nation and the world that the
United States will bring its deficit and debt under control and that we
will not burden the economy with stifling taxes either.
Increasing taxes to fund the expansion of government depresses the
private economy's growth prospects over the longer term, and that has
chilling effects on businesses and consumers right now. The Keynesian
argument that increased government spending boosts aggregate demand and
that a spending reduction would hurt the recovery falls apart
completely when investors, businesses, and consumers focus on the
increased future size of government, the permanently larger share of
resources it will claim, and the myriad ways in which it will hamper
private economic growth.
The tepid job and employment growth so long after the recession
ended should convince everyone that high levels of federal spending are
not what the economy needs. To reduce federal borrowing we must cut
federal spending, not try to lock it in by raising taxes. The expected
after-tax real rate of return drives business investment and hiring
decisions. If we want businesses to offer hundreds of thousands of
additional jobs month after month for years to come--which is what it
will take to return the labor force and the unemployment rate to normal
levels--then we must not burden expected returns with higher taxes,
inflation, interest rates, and restrictive regulations. If the private
economy grows, there will be more money for government to spend as
well, but let us not put that cart before the horse.
Dr. Hall, I look forward to hearing your testimony.
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Prepared Statement of Representative Elijah E. Cummings
Thank you, Mr. Chairman.
I thank you for calling the first hearing of the Joint Economic
Committee in the 112th Congress, to enable us to examine the current
state of employment in America.
I congratulate you, Senator Casey, on your new position as Chairman
of this Committee, and look forward to your leadership.
I also thank our witness, Dr. Keith Hall, for appearing before us
today to help us examine the latest jobs report. It is good to see you
as always.
We learn from today's report that in March, nonfarm payrolls
increased by 216,000 and the unemployment rate is 8.8 percent.
These numbers build on the 881,000 private sector jobs created
throughout the preceding six months, and the 1.5 million jobs created
over the past year.
When contrasted to an earlier period--January of 2008, through
February of 2010, during which our economy shed 8.8 million jobs--it is
clear that we have averted disaster.
Yet, a lot of work remains before we can confidently say that our
Nation is back on the path to prosperity and growth.
Despite increased hiring, 13.5 million Americans remain unemployed.
Almost a third of these individuals have been unable to find work for
more than one year.
Moreover, those without a high-school or college diploma continue
to experience unemployment rates of 13.7 percent, and 9.5 percent,
respectively. African-American workers remain unemployed at an
unacceptably high rate of 15.5 percent.
Certain critical factors continue to hamper job creation and
economic growth, notably, consumer confidence, which has dropped
considerably in recent months. However, the heaviest drag on our
economy is the continuing foreclosure crisis--a crisis that is being
driven by mortgage servicing companies that continue to put their
bottom lines before American homeowners and the Nation's economic
stability.
Given this mixed picture, I believe that we are at a critical
juncture in our Nation's journey.
We avoided the iceberg that threatened in 2008, yet too many of our
fellow Americans are floating adrift, or are even drowning in the
recession's aftermath.
To complicate matters, we are faced with a national debt that has
doubled over the past decade.
I believe that the path forward requires smart choices, and
compromise.
Nobel-Prize winning economist Joseph Stiglitz wrote in Politico
earlier this week, ``the ballooning of the deficit . . . has
understandably moved deficit reduction back to the center of the
debate. But the best way to reduce the deficit is to put America back
to work.''
I agree with Mr. Stiglitz when he argues that we must invest in
infrastructure, education, and technology; increase the progressivity
of the tax system; and eliminate the corporate welfare hidden in our
tax system and in the giveaways of our country's natural resources to
oil, gas and mining companies.
By making these smart choices, according to Mr. Stiglitz, our
Nation can easily generate trillions in revenue while also creating a
fairer society, a cleaner environment, and a more stable economy.
Instead of making such investments, however, the House majority's
fiscal year 2011 budget proposal cuts job training programs, Head
Start, Pell Grants for college, and veterans housing programs.
According to calculations by the Congressional Budget Office and
economist Mark Zandi, the GOP's budget plan will reduce our projected
FY2011 deficit by less than 4 percent, and yet is projected to cost our
Nation 400,000 jobs through the end of 2011, and 700,000 jobs through
the end of 2012.
These cuts are ostensibly defended with the argument that tough
times require tough choices and sacrifice.
I would submit, however, that tough choices and sacrifice have
already been borne by those who can afford them the least--the
children, the elderly, the vulnerable, and America's middle-class.
This is not the time for symbolism.
This is the time for smart choices that will create jobs and once
again make our Nation the land of opportunity for all Americans.
Again, I thank the Chairman and our witness and I yield back.
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