[Joint House and Senate Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 112-190
THE EMPLOYMENT SITUATION: JULY 2011
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
AUGUST 5, 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 Michael C. Burgess, M.D., Texas
Jeff Bingaman, New Mexico John Campbell, California
Amy Klobuchar, Minnesota Sean P. Duffy, Wisconsin
Jim Webb, Virginia Justin Amash, Michigan
Mark R. Warner, Virginia, Mick Mulvaney, South Carolina
Bernard Sanders, Vermont Maurice D. Hinchey, New York
Jim DeMint, South Carolina Carolyn B. Maloney, New York
Daniel Coats, Indiana Loretta Sanchez, California
Mike Lee, Utah Elijah E. Cummings, Maryland
Pat Toomey, Pennsylvania
William E. Hansen, Executive Director
Robert P. O'Quinn, Republican Staff Director
C O N T E N T S
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Opening Statement of Members
Hon. Robert P. Casey, Jr., Chairman, a U.S. Senator from
Pennsylvania................................................... 1
Hon. Kevin Brady, Vice Chairman, a U.S. Representative from Texas 3
Hon. Elijah E. Cummings, a U.S. Representative from Maryland..... 5
Witnesses
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..................................................... 7
Submissions for the Record
Prepared statement of Representative Kevin Brady................. 20
Chart titled ``May to June Change in Sector Employment''..... 22
Chart titled ``Employment Change in Government Since the
Beginning of the Recession''............................... 23
Chart titled ``Employment Change in Various Sectors Since the
Beginning of the Recession''............................... 24
Prepared statement of Representative Elijah E. Cummings.......... 25
Prepared statement of Dr. Keith Hall, Commissioner, Bureau of
Labor Statistics, together with Press Release No. 11-1151...... 26
THE EMPLOYMENT SITUATION: JULY 2011
----------
FRIDAY, AUGUST 5, 2011
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The committee met, pursuant to call, at 12:46 p.m. in Room
106 of the Dirksen Senate Office Building, the Honorable Robert
P. Casey, Jr., Chairman, presiding.
Senators present: Casey.
Representatives present: Brady and Cummings.
Staff present: Gail Cohen, Will Hansen, Colleen Healy,
Jesse Hervitz, Matt Solomon, Connie Foster, and Robert O'Quinn.
OPENING STATEMENT OF HON. ROBERT P. CASEY, JR., CHAIRMAN, A
U.S. SENATOR FROM PENNSYLVANIA
Chairman Casey. The Committee hearing will come to order. I
want to thank everyone for being here. Today I am pleased to
have Commissioner Hall with us again. We are all pleased by
that, and we are also here to recognize Deputy Commissioner
Phil Rones, who is retiring at the end of this month. We just
had a picture taken. Phil, if it does not turn out, we will do
it again.
[Laughter.]
But we are grateful for your many years of service. I am
told that Phil has been working at BLS--for those who do not
know in the television audience, the Bureau of Labor
Statistics, BLS--since 1974. And he has served as the Deputy
Commissioner since 2003, including a year-and-a-half as Acting
Commissioner during the Bush Administration.
So thank you, Phil, for your years of service and your
dedicated commitment to the United States of America. We are
grateful for that service.
Is this your last hearing in Congress?
Mr. Rones. Yes, it is.
Chairman Casey. We will try to make it memorable for you.
[Laughter.]
Mr. Rones. That's okay.
[Laughter.]
Chairman Casey. In the past few weeks we have gotten a
number of economic reports, including today's Employment Report
about which we will talk mostly about, and no matter what
report it is I think so many of them indicate to us the
fragility of this economy, and some of the basic weaknesses
that we are seeing.
The Gross Domestic Product numbers released last Friday
showed the economic growth in the first half of this year was
weak, growing at an annual rate of less than--unfortunately,
less than one percent during the first half of 2011.
This week we have received additional data that suggest
that the pace of the recovery is decelerating. Months ago we
were saying it was moving too slowly; now there is some
evidence to indicate actual deceleration of it.
Two examples of that, or two highlights:
First, the so-called ISM Manufacturing Index dropped to
50.9 percent in July. While this marked the 24th consecutive
month of expansion in the manufacturing sector, it was the
lowest reading since 2009, since July of 2009.
On Tuesday we learned that in the month of June consumer
spending declined for the first time since September of 2009.
Consumer spending, as many of you know, accounts for 70 percent
of U.S. economic activity. So that needs to be growing and not
shrinking, obviously.
I know that the Committee members and those in the audience
agree that we need much, much stronger economic growth. And
there will be, and there should be, and will continue to be a
vigorous debate about how to achieve that.
The labor market we know--and we will get further into this
today--faces significant challenges. More than eight quarters
into the recovery, unemployment remains above 9 percent, and
nearly 45 percent of the unemployed have been out of work for
six months or longer. It is hard to comprehend that, that
almost half of them, out of work for six months or longer.
We need to be immediately focused on providing incentives
for job creation. Just yesterday this Committee, the Joint
Economic Committee, released a report on the near-record long-
term unemployment workers continue to face. Just a couple of
highlights from that:
First of all, while so many groups within this study are
having a great difficulty, if you are one of the following your
challenges are even greater than the population at large. The
following categories: Those with a high school degree or less,
older workers, construction workers, and African Americans.
Those categories, those groups of unemployed Americans face
disproportionately high rates of long-term unemployment.
Second, the longer an individual is unemployed, the harder
it is to find work. If you look at both ends of the spectrum--
those out of work for more than six months, and those out of
work at the other end of the spectrum for as little as five
weeks--those who are at that end of the spectrum are three
times as likely to find work in comparison to those at the
other end.
Third, employers report that they are having difficulty
finding skilled workers. We know that that is a continuing
problem. So I think we can move quickly, despite all that bad
news, I think we can move very quickly on a couple of
strategies that will help.
I and others have been pushing for a small business jobs--
the so-called Small Business Jobs Tax Credit Act, which would
create a one-year quarterly tax credit equal to 20 percent of
the total increase in employee wages. So if you are hiring and
you are increasing your payroll, you are increasing your wage
levels in total, you can get a tax credit for that.
Certainly Vice Chairman Brady and I and others have been
working on the Life Sciences Jobs and Investment Act, a good
idea. It is a way to both create high-paying jobs in all parts
of the country, but also to move forward on healing and hope
that comes from the discovery of new scientific advancements.
And thirdly, I would say it is a way to get jobs back from
overseas.
Many people here agree--both Democrats and Republicans--
that we ought to make the Research and Development Tax Credit
permanent. It makes a lot of sense to do that. I don't know why
we have not, but we should.
We also I believe need a new approach to manufacturing, and
actually have a strategy to make sure that we are following in
the years ahead, and especially in the next year, because one
of the small glimmers of hope in some of this bad economic and
jobs data has been manufacturing.
Since the end of 2009 manufacturing has added 290,000 jobs,
a little bit of good news in the midst of all this bad news.
So we are going to hear a lot more about today's report. We
know that during the month of July the economy added 154,000
private-sector jobs. That is good news, but obviously not
enough. The overall number, when you net it out, is 117,000, a
lot better than maybe the last two months individually, but
certainly not nearly enough.
So we have got a long way to go with strategies to create
jobs and incentivize the creation of jobs.
And with that, I will turn to our Vice Chairman, Vice
Chairman Brady.
OPENING STATEMENT OF HON. KEVIN BRADY, VICE CHAIRMAN, A U.S.
REPRESENTATIVE FROM TEXAS
Vice Chairman Brady. Thank you, Chairman.
Commissioner Hall, members of your staff, welcome back to
the Joint Economic Committee for another hearing on the jobs
situation.
Mr. Rones, thank you for your many years of service to our
country. You will be missed, and we appreciate all that you
have done for the Committee.
Clearly today's increase in the number of payroll jobs
provided relief to the market, mainly because it exceeded such
very low expectations. It is certainly nothing to celebrate
today. And the unemployment rate fell largely because of a
193,000 decline in the labor force. The actual number of
employed people in the household survey fell by 38,000. The
broader measure of unemployment remains over 16 percent. And
what troubles me is that we have the fewest--we have the fewest
number of people participating in the workforce than in a
quarter of a century. Those are not signals of a healthy
economy.
Two and a half years ago this month, President Obama signed
his historic stimulus bill, promising to jump-start the
economy, restore consumer confidence, and put people back to
work. Today, with historic numbers of Americans desperate for
work, consumer confidence plunging, the risk of a double-dip
recession growing, and the stock market reeling, it is long
past time to pull the plug on the President's failed economic
policies.
I do not fault the President for trying. Lord knows he has
thrown every big government solution at this economy. But it
has not worked, as we warned, and I now have concluded that the
White House simply does not understand how to create jobs in
America--or certainly at least not government jobs in America.
How much longer must Americans watch their economy stumble?
After trillions of dollars in poorly designed stimulus and
monetary intervention, must 9 percent unemployment be the new
norm? After all the big-government bullets have been spent, how
many more years will families and businesses suffer until
America enjoys a strong, prosperous economy again?
Mr. President, America is fair. It has been patient, more
than patient. But after two and a half years, enough is enough.
You have tried and failed to revive this economy. America
deserves better than a second-rate economy that is held up to
ridicule by other nations.
When the economy is headed in the wrong direction, common
sense dictates you change course. Instead of threatening to
raise taxes on job creators along Main Street, we need to lower
the cost of capital to increase business investment that has
proven time and time again to create real jobs.
Instead of branding companies as somehow un-American for
competing in the global marketplace, we should tear down the
barriers to sales abroad, reduce the cost of regulation and
taxes that place them miles behind at the starting line, and
lower the tax gate so an estimated one trillion dollars in
American profits stranded abroad can flow back home to be
invested here in America right now in new jobs, more research,
business expansions, and a stronger financial future.
Passing the three pending trade agreements will create
250,000 new American jobs. Putting our energy companies back to
work in the Gulf, Alaska, and in abundant American fields
onshore and off will create more than one million new American
jobs this decade.
Another 800,000 jobs will be saved this decade merely by
calling a halt to the President's new national health care law.
That will also eliminate a costly cloud of worry among small,
medium, and large job creators throughout the country.
There is much more that needs to be done, but perhaps
nothing more important that the White House ending its campaign
of demonizing in press conferences the free market and our job
creators who built the greatest economy in the world and can do
so again if Washington will simply get out of its way.
It is telling that news reports on the economy today are
often given with the Capitol or the White House as a backdrop--
not along Main Street or in front of the headquarters of an
American company. The entrepreneurs who make the critical
decisions that create jobs have been forced to become
Washington-centric because Washington is directing this economy
to a degree not seen in our lifetimes.
That is the problem. Washington needs to get out of the
way. It needs to end its job-killing rhetoric, the regulations,
and intervention and give Americans confidence to do what we do
best: innovate and lead the world in creating economic
opportunity based on what the market demands, not on what
Washington demands.
Finally, America's financial health does matter. We know
our perilous debt and deficits are shaking markets and
confidence at home and abroad. We also know from 40 years of
economic study that our global competitors in similar straits
have boosted their economies significantly and quickly by
reducing their debt, by cutting spending, and restoring
business and consumer confidence.
Congress has taken an important first step to reduce the
size of government this decade with passage of the Budget
Control Act, which the President signed. Excluding the winding
down of the wars in Iraq and Afghanistan, without recent
passage of the Budget Control Act, the government would grow to
over 23 percent of the size of our economy this decade. With
its passage, the Federal Government will shrink to 21.6 percent
of GDP this decade.
President Reagan began to reduce the size of the Federal
Government relative to the economy, as well. As Federal
spending shrank from 22.2 percent of GDP in 1981 to around 18
percent in 2001, entrepreneurs on Main Street created 37
million--37 million--new private-sector jobs. But since the
Federal Government began to grow again, adding $5.5 trillion in
new debt just in the last 4 years, we have lost almost 3
million private sector jobs.
I will conclude with this: America deserves a strong,
growing economy that fully employs our people and is the envy
of the world. We cannot do that until we pry Washington's hands
off the throats of America's job creators. Our free market
economy will create jobs, Mr. President, if we change course
today and get government out of the way.
Dr. Hall, I look forward to your testimony.
[The prepared statement of Representative Brady appears in
the Submissions for the Record on page 20.]
[Chart titled ``May to June Change in Sector Employment''
appears in the Submissions for the Record on page 22.]
[Chart titled ``Employment Change in Government Since the
Beginning of the Recession'' appears in the Submissions for the
Record on page 23.]
[Chart titled ``Employment Change in Various Sectors Since
the Beginning of the Recession'' appears in the Submissions for
the Record on page 24.]
Chairman Casey. Thank you, Vice Chairman Brady.
Congressman Cummings.
OPENING STATEMENT OF HON. ELIJAH E. CUMMINGS, A U.S.
REPRESENTATIVE FROM MARYLAND
Representative Cummings. Thank you very much, Mr. Chairman.
It is good to be with you again, Commissioner Hall.
To Mr. Rones, I want to thank you for your service since
1974. I am sure you have given your blood, sweat, and tears to
support our Nation. And in a time when so many of our public
employees are being called everything but a Child of God, I
pause here to thank you. I thank you for what you have given. I
thank you for the lives you have touched. And I say thank you
for a grateful Congress, and certainly a grateful Senate, but
also a grateful Nation.
I also want to take a moment to talk about the issue before
us. Today's report indicates that in July employers created
117,000 jobs, and the unemployment rate dropped to 9.1 percent.
These numbers are moving in the right direction, but obviously
we have a long way to go to resolve our economic challenges and
to ensure that everyone who wants to work can work.
Last week we learned that the economy grew just .4 percent
in the first three months of this year, and only 1.3 percent in
the second quarter. In June, American consumers decreased their
spending. Additionally, the already battered housing market,
which continues to be a severe drag on the economy and thus on
job creation, took another hit in June as existing home sales
fell sharply due to cancelled sales contracts.
Unfortunately, the policies coming out of Congress are
doing nothing to rebuild confidence or spur economic growth.
According to many experts, they may even hinder the recovery
and cause us to give up the small gains we have already won.
Thus, an economist at Barclays Capital has warned that the
debt deal that Congress struck earlier this week could reduce
economic growth by a tenth of a percent in the first year
alone. He said, and I quote, ``When the economy is only growing
a point and a half, a lot of economists feel that this is not
the right time to be finding fiscal restraint.''
Similarly, a chief global economy's Deutsche Bank advisor
asked: ``Why would you want to impose restraint on an economic
recovery that is already fragile? You are removing spending
power from the economy at a time when it needs it. It is likely
to make the economy weaker and, in turn, the budget gets weaker
because tax revenues are going slow.''
The recent nosedive in the Dow suggests others may agree
with this assessment, and that investors like frankly all
Americans are worried that Congress is unable or unwilling to
address the most important issue facing this Nation: the need
to create jobs, jobs, jobs.
Some of the terrible consequences of our failure to focus
on restoring economic growth are made clear in the results of a
recent Pew Research Center analysis which found that the wealth
gap between white households and African American and Hispanic
households is the largest since the government began reporting
on income a quarter of a century ago.
Specifically, the analysis finds that the housing bubble
and the Great Recession took a much deeper toll on Black
families and Hispanic families than it did on White families.
We can do better, and we must do better.
I voted against the debt deal because I could not in good
conscience support the use of a manufactured crisis to
implement ideologically based policies that will further
threaten our Nation's economic growth and job creation
potential.
Further, the debt deal intends to reduce our debt by
limiting discretionary spending, potentially requiring deep
cuts in programs critical to our most vulnerable citizens. At
the same time, the deal demands nothing--nothing--from the
wealthiest Americans, or from corporations that are receiving
billions in tax breaks.
I believe that, as we work to reduce what certainly is an
unsustainable level of debt, we need a balanced plan that
prioritizes the restoration of economic growth and that upholds
the full faith and credit of the United States through what
should be a national commitment that entails shared sacrifice.
I believe this is only fair, given that the national debt
we now face has been created both by increased spending and by
foregone revenues resulting from tax cuts provided to the
wealthiest among us.
With that, Mr. Chairman, I yield back.
[The prepared statement of Representative Cummings appears
in the Submissions for the Record on page 25.]
Chairman Casey. Thank you, Congressman.
I want to introduce Dr. Keith Hall before his testimony.
Dr. Keith Hall is the Commissioner of Labor Statistics for the
U.S. Department of Labor. As I mentioned before, the BLS is an
independent national statistical agency that collects,
processes, analyzes, and disseminates essential statistical
data to the American public, the U.S. Congress, other Federal
agencies, state and local governments, business, and labor.
Dr. Hall served as the Chief Economist for the White House
Council of Economic Advisers for two years under President
George W. Bush. And prior to that he was Chief Economist for
the United States Department of Labor. Dr. Hall also spent 10
years at the U.S. International Trade Commission. He received
his B.A. Degree from the University of Virginia and his M.S.
and Ph.D. Degrees in Economics from Purdue University.
Dr. Hall, we are grateful you are here with us again, and
we look forward to your testimony.
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 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 rose by 117,000 in July,
following 2 months of little change. The unemployment rate was
9.1 percent in July and has shown little definitive movement
since April. Private-sector employment increased by 154,000
over the month.
Health care employment rose by 31,000 in July, as both
hospitals and ambulatory care services added jobs. Retail trade
employment increased by 26,000. In the manufacturing sector,
employment expanded by 24,000, with gains in motor vehicles and
semiconductors.
Mining employment grew by 9,000 over the month and was up
by 140,000 since the most recent low in October 2009.
Employment in professional and technical services continued to
trend up in July; this industry has added 246,000 jobs since a
recent low in March of 2010.
Employment in temporary help services was flat over the
month and on net has changed little in 2011. Other private-
sector industries showed little or no change in July.
Employment in state government decreased by 23,000 over the
month. The decline was almost entirely due to the partial
government shutdown in Minnesota. Local government employment
continued to trend down over the month. Since an employment
peak in September 2008, local government has shed 475,000 jobs.
Turning to measures from the survey of households, the
unemployment rate was 9.1 percent in July. The jobless rate has
held in a narrow range between 9.0 and 9.2 percent since April.
Of the 13.9 million persons unemployed in July, 44.4
percent have been out of work for 27 weeks or longer. This
proportion was unchanged over the month and essentially
unchanged over the year.
Labor force participation edged down from 64.1 to 63.9
percent in July. The proportion of the population that was
employed was essentially unchanged over the month at 58.1
percent.
In summary, nonfarm payroll employment rose by 117,000 in
July, with the private sector adding 154,000 jobs. The
unemployment rate was little changed at 9.1 percent.
As I close my official statement, I also would like to take
a moment to recognize my colleague, Phil Rones, the Deputy
Commissioner of BLS.
As you have noted, this is his last appearance before the
Joint Economic Committee after a 37-year career with the Bureau
of Labor Statistics. Phil is retiring on August 26th, and I
thought I would just take a moment to voice my appreciation for
his work and make a note about his career and accomplishments
over the years.
As you have noted, Phil joined BLS in 1974, graduating from
the University of Maryland's system with degrees in economics
and social work. His first position was a GS-7 economist
position in the Office of Employment and Unemployment
Statistics, and he has now risen almost entirely through the
ranks.
He has held several positions, including Supervisory
Economist, Chief of The Division of Labor Force Statistics, and
Assistant Commissioner for Current Employment Analysis. He has
been the Deputy Commissioner since 2003, and served as the
Acting Commissioner between 2006 and 2008.
And during my three-and-a-half years as Commissioner, Phil
has been by my side not only at these hearings but in the day-
to-day operations of the Bureau.
Throughout his career, Phil has directly worked with
literally most of the members of the BLS family. He has
always--even now, he continually meets with every new staff
member to welcome them to the Bureau as part of our new
employee orientation.
He has actually been I think a really big part of our long,
rich tradition as an independent agency charged with providing
impartial, timely, and accurate data free of political
considerations or manipulations. He has been a big part of
that, and he will be missed.
And on behalf of all BLS employees, I want to convey our
sincere gratitude to Phil for a career of dedicated and
exemplary service to the Bureau and to the American People. We
at the Bureau wish him a long and happy retirement.
[The prepared statement of Commissioner Hall, together with
Press Release No. 11-1151, appears in the Submissions for the
Record on page 26.]
Mr. Rones. Thank you, very much.
Chairman Casey. Dr. Hall, thank you very much for your
testimony, as well as your tribute to Phil. I wish some of the
economic news was as upbeat as your tribute to Phil, but we
have to look at only the numbers. But thank you very much for
that.
I wanted to start with--there is a lot to talk about, and a
lot to be concerned about, frankly. One of the sentences from
your statement that just jumps off the page is at the bottom of
page 2, and I am quoting: ``Of the 13.9 million persons
unemployed in July, 44.4 percent had been out of work for 27
weeks or longer.'' Unquote.
That is a stunning number, and I know it has been a
recurring problem about long-term unemployment. And as I
mentioned before, our Committee has taken a close look at this.
Can you put that in some historical context in terms of the
length of months of those who were in the category of long-term
unemployed?
Commissioner Hall. Sure. I will start with the basic facts.
The number of long-term unemployed, the share of the unemployed
that are long-term unemployed, were at easily record levels. It
has never been nearly this high in the history that we have
been collecting this data. So the number is extremely high.
It is particularly concerning because one of the things
that economic research has pretty consistently shown is the
longer somebody is unemployed the longer it takes to get them
re-employed. So this is going to be a real challenge going
forward.
To give you some idea, the median week of unemployment
before someone finds a job has basically doubled during this
Recession. It has gone from about 5 weeks to 10 weeks. And we
are at a very high share of the long-term unemployed, or the
people who are unemployed for longer than a year.
So these numbers are clearly very concerning.
Chairman Casey. And you said they are historic numbers?
Commissioner Hall. Yes. Both in level and percent and
almost any way you look at it, yes.
Chairman Casey. In the testimony I gave today, I mentioned
a couple of categories where the numbers are disproportionately
higher. I just wanted to--I didn't put the numbers in, but I
wanted to review those.
The African American unemployment rate in this report is
what, by way of percentage?
Commissioner Hall. It is 15.9 percent.
Chairman Casey. 15.9. What was it the month before?
Commissioner Hall. It actually declined three-tenths of a
percent, but that is not really statistically significant. So I
would call it essentially unchanged.
Chairman Casey. But that number alone, the African American
number for most of the last year seems like it has been in the
14 to 15 range? Is that about right?
Commissioner Hall. Yes. It has been probably over 15 for
most of the time.
Chairman Casey. And I also mentioned a few other
categories. I will just mention one more to get the number.
Those Americans who were unemployed and have a high school
diploma or less, what number is that?
Commissioner Hall. The unemployment rate for those folks is
15 percent.
Chairman Casey. And that has been about--it has been that
high that long?
Commissioner Hall. Yes.
Chairman Casey. For awhile. I wanted to ask you about, I
think we--because there are so many reports, so much data out
there and sometimes it is hard for even people that follow it
closely to keep it straight--we know that we get the
unemployment rate, it is derived from the so-called Household
Survey. And that of course those numbers have not been very
encouraging.
That Household Survey has indicated a weaker employment
situation than the Survey of Employers. Can you talk about that
in terms of comparing the two sets of data and what that means,
if anything, that would be relevant?
Commissioner Hall. Sure. From month to month you will
sometimes see different signals between the Household and the
Payroll, but I find that if you look at it over slightly longer
time periods, say three months, they do tend to move together
pretty well. So you do not typically get a conflicting picture
for very long between the two.
Chairman Casey. And in terms of, if you could just describe
the Survey of Employers, how that is arrived at, that number?
Commissioner Hall. Sure. The Employer Survey is an
establishment survey. So what we are doing is we are surveying
places of work, businesses, establishments, and it is a very
large survey. In fact, it is something on the order of 440,000
establishments, but it represents something like 40 million
people that we are counting directly every month. So it
actually really is a very large survey. So the number is really
pretty accurate.
But the drawback of it is that we are surveying employers.
So we are just looking at the number of jobs on payroll, what
their average hourly earnings are doing, et cetera. When we
want to get more rich detail, we go to the Household Survey
where we collect all sorts of demographic information about
education, ethnicity, et cetera.
So the two together really give you a complete picture, I
think, or as complete a picture as we can of the labor market
by month.
Chairman Casey. Thank you very much.
Vice Chairman Brady.
Vice Chairman Brady. I share Chairman Casey's concerns
about the long-term unemployed. Clearly the longer they are
without a job, the bigger the challenge it is getting them back
to work.
One of the areas that continues to trouble me, because it
is the sign of weakness in the labor market rather than
strength, is the labor force participation--how many people are
actually in the labor force, or are actively participating. It
has declined yet again in July to about 63.9 percent. This is
the lowest since the early 1980s, and it continues to stay
there.
So just an editorial question. Are we, Commissioner,
settling into a new norm where there are, going forward, going
to be fewer people participating in the workforce and where
there is a higher unemployment rate?
Commissioner Hall. Well obviously I hope not. To tell the
truth, I don't know. But I can tell you that so far in this
recovery we have really seen no recovery at all in the labor
force participation. That is something that is typically
starting to rise at some point during a recovery. And I think
as I have noted before, I think that is an important phase of
the recovery, is when we start to get people entering back into
the labor force.
I think once that starts to happen, we may get a better
idea of what the new norm will be; what the new labor force
participate rate is going to be like.
Vice Chairman Brady. Well it looks like it may take awhile,
because I think the decline is twice that of any previous
recession. Any ideas what the factors are for that lower
participation rate?
Commissioner Hall. It is not obvious to me that it is
anything but this has been a very severe, long Recession and we
have had a very large number of long-term unemployed. And
although the long-term unemployed have stayed in the labor
market a bit longer than they have in the past, we have still
had quite a few people exit the labor force entirely.
So I just think it is the severity and the length of the
Recession.
Vice Chairman Brady. At the current rate this month, for
example, of 117,000 net jobs, how--just for the average person
back home wondering how long we are going to be stuck in a
tough economic time--at the current rate of 117,000 per month,
how long would it take to regain the payroll jobs total we had
prior to the Recession? I understand it will be years.
Commissioner Hall. Yes. I don't want to be flip, but at
117,000 we would never regain. You need about 130,000, at least
by my rough calculation, to keep up with the population growth.
So really, if you are looking in terms of recovery, I think
the way you should look at these numbers if how far above
130,000 we can get. And that is really the recovery. 117,000
still is treading water, I think.
Vice Chairman Brady. Right. Thank you. Yield back,
Chairman.
Chairman Casey. Congressman Cummings.
Representative Cummings. Thank you very much, Mr. Chairman.
Commissioner Hall, I was listening to what you were saying
in response to one of Mr. Brady's questions with regard to
people in the labor market, or coming back in. Let's talk about
those who are starting out.
A few months ago, millions of our young people graduated
from high school and college. And while many of them are
pursuing higher education--and we have had testimony actually
before this Committee in the past where young people were--we
were told that young people, many of them, were basically kind
of suspending going into the job market and actually depending
upon their parents and staying in school to get masters and
graduate degrees.
And I am just wondering what kind of pressure does the
influx of job seekers place on the labor market? And what are
the employment prospects for recent high school or college
graduates?
Commissioner Hall. Well first of all I think our data
supports what you said, that the new entrants into the labor
market are having a very difficult time finding work.
If you look at something like the employment-to-population
ratio and break it out by age range, those members of the
population that are working age, that are let's say 25 and
below, the employment-to-population ratio is very low and has
declined considerably during this Recession.
And of course the big concern of course is that at some
point you start to feel like you are getting a generation, a
cohort of high school and college graduates who are not finding
work. And that could put a real strain on the labor market
going forward. I would say it is something that we should be
concerned about.
Representative Cummings. A significant part of the 2009
Recovery Act was a provision to aid the state and local
governments to protect jobs for teachers, fire fighters, police
officers, et cetera. As we know, much of that aid is coming to
an end.
How is the state and local government job market trending?
And how much are the trends in this market contributing to the
overall rise in unemployment?
Commissioner Hall. Well I would say that right now in most
industries we are no longer losing jobs. We are at least
holding constant. We are growing in some. But one notable area
where we do continue to lose jobs is in government employment,
and in particular with both state government employment and
local government employment.
They both lost significant numbers of jobs. More so for
state government than in most past recessions; probably with
state government it might be the biggest decline we have had
ever during a recession.
Representative Cummings. It appears that less money will be
going to the states. And, you know, it has always puzzled me,
you know we hear these comments that we should not raise taxes
on the richest of the rich during a fragile economy, but at the
same time in my State we have had to lay off people, and we had
furloughs, and I am sure that is happening in a number of
states. And yet these people--and even on the Hill, in our
committee, the committee I am the Ranking Member over, we have
got employees who have taken a 5 percent to 10 percent cut. And
we have got Federal employees who their wages have been
frozen--in a fragile economy, by the way.
And I am just wondering, can you talk about this Minnesota
situation? You referenced it. Tell me about that as it relates
to state jobs.
Commissioner Hall. Sure.
Representative Cummings. Your statistics.
Commissioner Hall. Right. We have not produced official
statistics yet for Minnesota, but the Governor's office has
released the numbers; that the State of Minnesota laid off
about 22,000 workers. I believe they held on to about 13,000.
But that was a pretty significant layoff. And that was, as I
mentioned, that was pretty much the bulk of the decline in
state employment this month.
Representative Cummings. And we are about to--we have got
some folks who are getting ready to run out of unemployment
benefits, and it is predicted that it is possible that those
unextended may have a point five percent decrease in GDP.
How might that affect this jobs situation?
Commissioner Hall. I do not want to speculate too much on
that. Certainly the Unemployment Insurance benefits is a real
serious policy concern and such, but I am not sure I want to
try to make a connection between the two.
Representative Cummings. Thank you very much.
Chairman Casey. Thank you, Congressman.
Commissioner, I wanted to look at some of the areas where
there has been an increase, trying to add some good news here.
The private sector number is up 154,000. That is good news--but
let's call it good news, but not good enough. That number I
noticed, and I just want to see if you have this information
nearby. I do not have it right in front of me, but I remember
going back into kind of the January to April period we were
getting at least three months that I can recall in a row where
private-sector job creation, or private-sector job growth was
above 220, I think three months in a row, it was like 220, 230,
240, somewhere in there.
Commissioner Hall. Yes, your memory is good. It averaged
about 240,000 jobs per month over that period.
Chairman Casey. Basically January to April.
Commissioner Hall. That's right.
Chairman Casey. And this month is a good number. But I was
also noticing where we got growth--in other words, the reason
we got 154,000 private-sector, and then if you net it out for
the overall number 117,000, health care is up by 31,000, right?
Commissioner Hall. Yes.
Chairman Casey. Retail trade is up 26,000.
Commissioner Hall. Yes.
Chairman Casey. Manufacturing is up 24,000. And Mining is
up 9,000. The one that took the biggest hit, I guess, was
government, and I guess that is all government, right, the
37,000?
Commissioner Hall. That is correct.
Chairman Casey. I guess in terms of the private-sector
number, which I think is a pretty important number for us to
watch, ideally what would we want? Maybe not the ideal number,
but what would be a healthier number? In other words, if we
were averaging just on the private sector increase, say 125 to
150 the next few months. Would that be enough? Or does the
private number have to be very close to what the overall number
is? In other words, we know we cannot recover on the 117,000--
--
Commissioner Hall. Right.
Chairman Casey [continuing]. We know we have got to get
that closer to 200,000 or more. But any correlation between
private-sector growth and the health of the economy? Or is it
better to focus on the overall number?
Commissioner Hall. Well I think it is fine to focus on
either one. Obviously the private sector is giving you some
idea of private-sector job creation; whereas, you know, the
government numbers, while they are also important, they are an
indication obviously of government employment but not quite the
private-sector.
In terms of strong job growth, we are so deep into job
loss--we have really lost quite a few jobs; we have really
fallen really behind--that we really need really significantly
higher job growth than we have had to make a dent, and even
then it would probably take years to recover the jobs.
Chairman Casey. I was noticing as well the manufacturing
numbers I mentioned was up. I guess part of that, or a good
part of that is automobile manufacturing? Is that up?
Commissioner Hall. Yes. This month motor vehicles were
about half that.
Chairman Casey. Half? Okay. And I was wondering if you
think that this part of the manufacturing number going up, the
automobile manufacturing number, is the rebound partly the
result of supply issues as it relates to what happened in
Japan? Or do you think, is there any way to attribute it to
that?
Commissioner Hall. I think it would have been hard to
figure out much of the impact of Japan all along, but I do
think the evidence now is, if you look at something like motor
vehicle inventories, that whatever Japan effect there was
before, it is now out of the system; that inventories are back
up to normal levels.
So certainly now, and maybe going forward, we are probably
not going to see any impact.
Chairman Casey. And I am over time, but just one question,
one more question. On the government number, can you tell us
what the overall government number, the decline, has been say
from July 2009 to July 2010 to now? In other words, over the
last year, or the last two years? In other words, how many
government jobs have we lost?
Commissioner Hall. We are down about a half a million jobs
in that period.
Chairman Casey. A half a million. Thank you.
Vice Chairman Brady.
Vice Chairman Brady. Thank you, Chairman. I can't resist
asking this. Earlier this morning when the jobs numbers came
out, Mark Zandi, one of the White House's chief economic
cheerleaders, called these numbers ``fabulous.''
Commissioner, would you call these numbers fabulous?
Commissioner Hall. I would say it is welcome to see the
numbers, the job growth increase, but, no, they are not
fabulous. They are still not strong.
Vice Chairman Brady. It is Mr. Rones' last meeting. Can I
ask him that, as well? No, I'm kidding. You don't need to go
there.
[Laughter.]
I agree. I think it provides some relief only because we
were so worried about, especially in the last few days, where
this economy is headed.
It is no secret that I am not a big fan of the stimulus. A
lot of money. A lot of debt. Few jobs. The impact was pretty
minor and pretty limited. We were told if we passed it that
unemployment would be about 6.3 percent today. Way off. We are
about 6 million jobs short of the claims we would have in new
jobs if we passed that stimulus. So I felt like--continue to
feel like we were told: Take the debt; you will get jobs. We
certainly got the debt, and now that too is a drag on our
economy, on business confidence and on family confidence.
And when you look at the job gains in today's report, you
know one view of the job market is that, as layoffs return to
what they were before the Recession, the job numbers improved
because separations didn't exceed any more the hires. But new
hires have increased very little. They are far below what there
were before the Recession.
So it seems to me premature to speak of a real job market
recovery to begin with, and the meager job gains recently
really are not a surprise. This is an argument that the former
Council of Economic Advisers Chairman Professor Ed Lazear of
Stanford makes, and I agree with that.
As you look at this report, Commissioner, is there a way to
distinguish between job gains that result from fewer people
leaving their jobs and job gains from a sustained increase in
hiring? Because they send significantly different signals of
the health of our labor market.
Commissioner Hall. We do collect data--we call them Gross
Flows--where we look at how many people are exiting jobs, and
how many people are entering the labor market. And actually
your observation is correct. Most of the improvement has been
that the number of people losing jobs has leveled out and
stopped going down, but we have not yet gotten a significant
increase in the number of people entering the employed.
Vice Chairman Brady. And the second portion is critical.
Commissioner Hall. Yes.
Vice Chairman Brady. And the fact that that is struggling,
is that also why we have fewer people in that market while we
again had 190-some-thousand step back out of the labor market
this month?
Commissioner Hall. Yes, I think that is consistent with
what I mentioned about the labor force. You know, I think one
of the things we would like--we need to see at some point is
the labor force start to grow because people think they are
going to get jobs, and we are going to see--people are going to
start to expect, reasonably expect that they are going to be
able to move from unemployed to employed, and that has not
happened very strongly yet.
Vice Chairman Brady. You know, I noticed--and I will finish
with this--I noticed that retail jobs were up slightly in the
report. But recent reports have the consumer spending and
consumption down for the first time in a long time. Is there a
mismatch there? Or maybe it's a timing issue because of when
the survey was taken versus the lastest data on consumer
demand?
Commissioner Hall. There is certainly a timing issue. This
is some of the very earliest data we have for July, and this is
the start of the third quarter; and the consumer spending
numbers are back from say the second quarter. So there is a
timing issue there.
Vice Chairman Brady. What kind of seasonal adjustments do
you make this time of the year in the Jobs Report?
Commissioner Hall. It sort of depends by industry. For
example, in motor vehicle production there is a pretty good
seasonal because plants often close down in July to retool, and
they reopen in August. So there is a part of it there.
There are workers in education that leave the labor market
for the summer. So we have a seasonal there. Last month's
seasonal actually was the really big one. That one overall was
about a million. So we expect the labor employment to go down
by a million because of seasonal job loss in June.
Vice Chairman Brady. So you adjust for that?
Commissioner Hall. We adjust for that. The seasonal this
month is not quite so big.
Vice Chairman Brady. Good. Thank you, Commissioner.
Chairman.
Chairman Casey. Congressman Cummings.
Representative Cummings. Do you think that when you look at
the rate of loss of government jobs and when you look at that
as a portion of all jobs lost, is it trending pretty much the
same over the last year or so? Do you follow my question? In
other words, if you lose 50,000 jobs and 10,000 of them are
government jobs, is that 20 percent pretty much the norm for
the last say several months, or year?
Commissioner Hall. For example, say over the last two years
we have grown about 700,000 jobs, but we have lost about a half
a million government jobs. So the job growth would have been
not double, but it would have been close to double what it has
been without the loss of government jobs.
Representative Cummings. You know, I also heard Mr. Zandi,
who was one of John McCain's--at first people used to say he
was John McCain's advisor; now John McCain, Senator McCain has
made it clear that he was ``one'' of his advisors during the
campaign. So one of his advisors, Mr. Zandi. I also heard his
testimony, his comments this morning. And one of the things he
said is: We've got to move from cutting to creating, creating
jobs.
And, you know, I was just trying to figure out if we
continue to go at the rate we are going--in other words, if we
do not come up with methodologies to create jobs and push that,
we are going to find ourselves in some real difficulty. And we
can only slide downward. And I do not want to see that happen.
I know the numbers are not great, but can you tell us, what
would you tell the President today if he called you right now
and said, you know, I usually do not bother you but since Mr.
Rones is leaving today, could both of you all get on the phone
and tell me what the deal is? What would you say?
Commissioner Hall. Well I would say that it is of course
welcome news that the job growth in July accelerated over the
May and June growth. So that is good news. But it is not yet
strong. In fact, this is pretty tepid job growth. And going
forward, we really are going to have to do better in job growth
in order to start to really recover in the labor market.
Representative Cummings. And the African American numbers
are pretty stubborn, aren't they?
Commissioner Hall. Yes, they are.
Representative Cummings. And what about the Hispanic
numbers?
Commissioner Hall. Yes, the unemployment rate there is
above average, too. That is about 11.3 percent. And let me just
mention, I just throw this out, but those unemployment rates to
some degree underestimate the problem because the labor force
participation rates for both those groups are below average as
well.
So actually they sound bad, but it actually may be worse
than it sounds.
Representative Cummings. Yes. And I would venture to guess
that there are some areas in my District where the African
American male unemployment rate may be as much as 50 percent.
And so whenever I see those numbers, I am, you know, I say to
myself that they are probably very, very low.
The Chairman talked briefly about this whole correlation
between the amount of education and the impact that this
recession has had on folks. And do you see that trend
continuing? In other words, the less education you have, the
more negative impact the Recession has on folks?
Commissioner Hall. Absolutely. For example, the
unemployment rate for those with less than a high school
diploma is about 15 percent. For those with a bachelor's degree
or higher it is only about 4 percent. So that is a pretty
significant difference.
Representative Cummings. And finally, let me ask you this.
I always ask you if someone was watching us right now and they
were trying to figure out what kind of field they might want to
go into, what kind of training they might want to get, what
area they might want to move to to get a job, what would you
say, just based upon--I know you do not like to draw a lot of
conclusions, but just tell me based on what you have there in
front of you, what would you say?
Commissioner Hall. Well obviously education pays off and is
very important. And the United States is, like other wealthy
countries, we are a country of service jobs, service-providing
jobs. Something like 70 to 80 percent of our jobs are in fact
in the service-providing sector. So that is important.
And then you get into, you know, some of the things like
some of the demographics that we have got going on. So a lot of
the health care jobs are, I would expect are going to have
strong growth going forward as we have an aging population,
some things like that. That is the sort of thing I think is the
sort of advice I would give.
Representative Cummings. Thank you very much.
Chairman Casey. Unless there are further questions, Dr.
Hall, Commissioner Hall, we are grateful for your testimony
again. Dr. Horrigan, your colleague, we didn't say hello
earlier. And, Phil, we hope you can come back here in your
years of retirement. You said you were going to be fishing a
lot. If you can squeeze in a couple of hearings between
fishing, we would love to have you back.
But unless there any further questions or comments, we are
adjourned.
[Whereupon, at 1:41 p.m., Friday, August 5, 2011, the
hearing was adjourned.]
SUBMISSIONS FOR THE RECORD
Prepared Statement of Representative Kevin Brady, Vice Chairman, Joint
Economic Committee
Commissioner Hall, members of your staff, welcome back to the Joint
Economic Committee for another hearing on the employment situation.
Today's increase in the number of payroll jobs barely exceeded very low
expectations, and the unemployment rate fell largely because of a
193,000 decline in the labor force. The actual number of employed
people in the household survey fell by 38,000.
Two and half years ago President Obama signed his historic stimulus
bill, promising to jump-start the economy, restore consumer confidence,
and put people back to work. Today, with historic numbers of Americans
desperate for work, consumer confidence plunging, the risk of a double-
dip recession growing, and the stock market reeling, it is long past
time to pull the plug on the President's failed economic experiment.
How much longer must Americans watch their economy stumble? After
trillions of dollars in poorly designed stimulus and monetary
intervention, must nine percent unemployment be the ``new norm''? After
all of the big-government bullets have been spent, how many more years
will families and businesses suffer until America enjoys a strong,
prosperous economy again?
Mr. President, America is fair. It has been patient, more than
patient. But after two and a half years, enough is enough. You've tried
and failed to revive this economy. America deserves better than a
second-rate economy that's held up to ridicule by other nations.
When the country is headed in the wrong direction, common-sense
dictates that you should change course.
Instead of threatening to raise taxes on job creators along Main
Street, we need to lower the cost of capital to increase business
investment that has proven time and time again to create real jobs.
Instead of branding companies as somehow un-American for competing
in the global marketplace, we should tear down the barriers to sales
abroad, reduce the cost of regulation and taxes that place them miles
behind at the starting line, and lower the tax gate so an estimated one
trillion dollars in American profits stranded abroad can flow back
home--to be invested here in America right now in new jobs, more
research, business expansions, and a stronger financial future.
Passing the three pending trade agreements will create 250,000 new
American jobs. Putting our energy companies back to work in the Gulf,
Alaska, and in abundant American fields onshore and off will create
more than one million new American jobs.
Another 800,000 jobs will be saved this decade merely by calling a
halt to the President's new national health care law. That will
eliminate a costly cloud of worry among small, medium and large job
creators throughout the nation.
There's much more that needs to be done, but perhaps nothing more
important than the White House ending its campaign of demonizing the
free market and the job creators--who built the greatest economy in the
world--and can do so again if Washington will get out of its way.
It's telling that news reports on the economy today are given with
the Capitol or the White House as a backdrop--not along Main Street or
in front of the headquarters of an American company. The entrepreneurs
who make the critical decisions that create jobs have been forced to
become Washington-centric because Washington is directing this economy
to a degree not seen in our lifetimes.
That's the problem. Government needs to get out of the way. It
needs to end its job-killing rhetoric, regulations, and intervention
and give Americans confidence to do what we do best--innovate and lead
the world in creating economic opportunity based on what the market
demands--not what Washington demands.
Finally, America's financial health matters. We know our perilous
debt and deficits are shaking markets and confidence at home and
abroad. We also know from forty years of economic study that our global
competitors in similar straits have boosted their economies
significantly and soon by reducing their debt, cutting spending, and
restoring business and consumer confidence.
Congress has taken an important first step to reduce the size of
government this decade with passage of the Budget Control Act, which
the President signed. Excluding the winding down of the wars in Iraq
and Afghanistan--without recent passage of the Budget Control Act, the
government would grow to over 23% of the size of our economy. With its
passage, the federal government will shrink to 21.6% of GDP this
decade.
President Reagan began to reduce the size of the federal government
relative to the economy. As federal spending shrank from 22.2% of GDP
in 1981 to 18.2% of GDP in 2001, entrepreneurs on Main Street created
37 million new private-sector jobs. Since the federal government began
to grow again--adding five and a half trillion dollars in new debt the
last four years--we have lost almost three million private-sector jobs.
America deserves a strong, growing economy that fully employs our
people and is the envy of the world. We cannot do that until we pry
Washington's hands off the throats of America's job creators. Our free
market economy will create jobs, Mr. President, if we change course
today and get government out of the way.
Dr. Hall, I look forward to hearing your testimony.
[GRAPHIC] [TIFF OMITTED] T0623.039
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[GRAPHIC] [TIFF OMITTED] T0623.041
Prepared Statement of Representative Elijah E. Cummings
I thank Chairman Casey for holding today's hearing to examine the
most recent data on the employment situation across America. I also
thank Commissioner Hall for joining us today--it is always nice to see
you. Today's report indicates that in July, employers created 117,000
jobs and the unemployment rate dropped to 9.1 percent. These numbers
are moving in the right direction--but obviously we have a long way to
go to resolve our economic challenges and to ensure that everyone who
wants to work can work.
Last week, we learned that the economy grew just .4 percent in the
first three months of this year, and only 1.3 percent in the second
quarter. In June, American consumers decreased their spending.
Additionally, the already-battered housing market, which continues to
be a severe drag on the economy--and thus on job creation--took another
hit in June as existing home sales fell sharply due to canceled sales
contracts.
Unfortunately, the policies coming out of Congress are doing
nothing to rebuild confidence or spur economic growth. According to
many experts, they may even hinder the recovery and cause us to give up
the small gains we have won. Thus, an economist at Barclays Capital has
warned that the debt deal that Congress struck earlier this week could
reduce economic growth by a tenth of a percent in the first year alone.
He said, ``When the economy is only growing a point and half, a lot of
economists feel that this is not the right time to be finding fiscal
restraint.''
Similarly, a chief global economist at Deutsche Bank Advisors,
asked: ``Why would you want to impose restraint on an economic recovery
that's already fragile? You're removing spending power from the economy
at a time when it needs it. That's likely to make the economy weaker .
. . [and in turn] the budget gets weaker, because tax revenues are
going to slow.''
The recent nosedive in the Dow suggests others may agree with this
assessment--and that investors, like frankly almost all Americans--are
worried that Congress is unable or unwilling to address the most
important issue facing this nation: the need to create jobs.
Some of the terrible consequences of our failure to focus on
restoring economic growth are made clear in the results of a recent Pew
Research Center analysis, which found that the wealth gap between white
households and African American and Hispanic households is the largest
since the government began reporting on income a quarter century ago.
Specifically, the analysis finds that the housing bubble and Great
Recession took a much deeper toll on Black families and Hispanic
families than it did on white families.
We can do better, and we must do better. I voted against the debt
deal because I could not, in good conscience, support the use of a
manufactured crisis to implement ideologically based policies that will
further threaten our nation's economic growth and job creation
potential.
Further, the debt deal intends to reduce our debt by limiting
discretionary spending, potentially requiring deep cuts in programs
critical to our most vulnerable citizens. At the same time, the deal
demands nothing from the wealthiest Americans or from corporations that
are receiving billions in tax breaks.
I believe that as we work to reduce what certainly is an
unsustainable level of debt, we need a balanced plan that prioritizes
the restoration of economic growth and that upholds the full faith and
credit of the United States through what should be a national
commitment that entails a shared sacrifice.
I believe this is only fair given that the national debt we now
face has been created both by increased spending and by forgone
revenues resulting from tax cuts provided to the wealthiest among us.
Again, I thank the Chairman and I yield back.
__________
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.
Nonfarm payroll employment rose by 117,000 in July, following 2
months of little change. The unemployment rate was 9.1 percent in July
and has shown little definitive movement since April. Private-sector
employment increased by 154,000 over the month.
Health care employment rose by 31,000 in July, as both hospitals
and ambulatory care services added jobs. Retail trade employment
increased by 26,000. In the manufacturing sector, employment expanded
by 24,000, with gains in motor vehicles and semiconductors. Mining
employment grew by 9,000 over the month and was up by 140,000 since the
most recent low in October 2009. Employment in professional and
technical services continued to trend up in July; this industry has
added 246,000 jobs since a recent low in March 2010. Employment in
temporary help services was flat over the month and on net has changed
little in 2011. Other private-sector industries showed little or no
change in July.
Employment in state government decreased by 23,000 over the month.
The decline was almost entirely due to the partial government shutdown
in Minnesota. Local government employment continued to trend down over
the month. Since an employment peak in September 2008, local government
has shed 475,000 jobs.
Average hourly earnings of all employees on private nonfarm
payrolls were up by 10 cents in July to $23.13. Over the past 12
months, average hourly earnings have risen by 2.3 percent. From June
2010 to June 2011, the Consumer Price Index for All Urban Consumers
(CPI-U) increased by 3.4 percent.
Turning to measures from the survey of households, the unemployment
rate was 9.1 percent in July. The jobless rate has held in a narrow
range between 9.0 and 9.2 percent since April.
Of the 13.9 million persons unemployed in July, 44.4 percent had
been out of work for 27 weeks or longer. This proportion was unchanged
over the month and essentially unchanged over the year.
Labor force participation edged down from 64.1 to 63.9 percent in
July. The proportion of the population that was employed was
essentially unchanged over the month at 58.1 percent.
In summary, nonfarm payroll employment rose by 117,000 in July,
with the private sector adding 154,000 jobs. The unemployment rate was
little changed at 9.1 percent.
My colleagues and I now would be glad to answer your questions.
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