[Joint House and Senate Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 112-264
THE EMPLOYMENT SITUATION: OCTOBER 2011
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HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
NOVEMBER 4, 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 Statements of Members
Hon. Maurice D. Hinchey, a U.S. Representative from New York..... 1
Hon. Kevin Brady, Vice Chairman, a U.S. Representative from Texas 2
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. Jack Galvin, Acting Deputy Commissioner, Bureau of
Labor Statistics............................................... 5
Submissions for the Record
Prepared statement of Vice Chairman Kevin Brady.................. 20
Prepared statement of Dr. Keith Hall, together with Press Release
No. USDL-11-1576............................................... 21
Chart submitted by Vice Chairman Brady titled ``Monthly Change in
Government Payrolls Seasonally Adjusted January 2008-October
2011''......................................................... 60
Chart submitted by Vice Chairman Brady titled ``Monthly Change in
Private Payrolls Seasonally Adjusted January 2008-October
2011''......................................................... 61
Chart submitted by Vice Chairman Brady titled ``Monthly Change in
Private Payrolls Seasonally Adjusted January 2008-September
2011''......................................................... 62
Letter dated November 22, 2011, transmitting Dr. Keith Hall's
response to Representative Carolyn Maloney..................... 63
Letter dated December 1, 2011, transmitting Dr. Keith Hall's
response to Representative Michael C. Burgess.................. 67
THE EMPLOYMENT SITUATION: OCTOBER 2011
----------
FRIDAY, NOVEMBER 4, 2011
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The committee met, pursuant to call, at 10:00 a.m., in Room
210, Cannon House Office Building, Hon. Maurice Hinchey
presiding.
Representatives present: Brady, Burgess, Mulvaney, Hinchey,
and Maloney.
Staff present: Ted Boll, Robert O'Quinn, Sean Ryan, Gail
Cohen, Cary Elliott, Will Hansen, Colleen Healy, and Jesse
Hervitz.
OPENING STATEMENT OF HON. MAURICE D. HINCHEY, A U.S.
REPRESENTATIVE FROM NEW YORK
Representative Hinchey. Gentlemen, thank you very much. We
are about to start. We are under a little pressure because we
are going to have votes coming up sometime probably within the
next half-hour. So let me just open with a few statements.
First of all, Chairman Casey couldn't be here today, and I
am very pleased to stand in for him this morning.
I would like to welcome Commissioner Hall back this month
and also welcome Acting Deputy Commissioner Jack Galvin, who is
joining Commissioner Hall and Dr. Horrigan at the table for the
first time today.
Thank you very much for being here, all three of you. I
appreciate it.
Dr. Galvin previously served as associate commissioner for
employment and unemployment statistics from 1998 to September
2011 and in other senior positions at the Bureau of Labor
Statistics.
In the past few weeks, we have gotten several economic
reports, including today's employment report, which have shown
a mixed economic picture. The data are better than a few months
ago but not strong enough to significantly bring down the
unemployment rate.
On the positive side, the 2.5 percent increase in gross
domestic product in the third quarter was stronger than the
growth achieved during the first half of the year, showing
movement in the right, appropriate direction. However, real
disposable personal income declined in the third quarter,
indicating that consumers are continuing to feel the pressure
of stagnant wages.
The ISM Manufacturing Index reading of 50.8 percent in
October marked the 27th consecutive month of expansion in the
manufacturing sector. But the sector, so important to our
economic growth, decelerated slightly from September, 51.6
percent in the reading.
As today's employment numbers show, economic growth is
still not strong enough to make significant headway cutting
into the unemployment rate. More than nine quarters into the
recovery, unemployment remains at 9 percent, officially 9.1
percent, and more than 42 percent of the unemployed have been
out of work for 6 months or more. We need to move from
discussion of the American Jobs Act to passing legislation that
will help to create jobs and strengthen this economy.
Before I turn to today's employment report, I want to
highlight a few actions we could take to bolster the economy.
First of all, we should provide new incentives for small
firms to hire. Chairman Casey has introduced legislation which
creates a 1-year quarterly tax credit equal to up to 20 percent
of the total increase in employee wages. Also, we should extend
and expand the employee payroll tax cut, which is set to expire
at the end of the year. This will boost demand, create jobs,
and strengthen our economy.
We must support our State and local governments, which have
been forced to lay off hundreds of thousands of workers,
including teachers and first responders, to meet balanced-
budget requirements.
The House should take up legislation already passed by the
Senate to crack down on China's currency manipulation. And we
need to strengthen U.S. manufacturing by creating a national
manufacturing strategy that supports manufacturing companies
and workers in our country.
There are a number of other things that we could say here,
but I want to just wrap it up and ask Mr. Brady for some
statements.
Mr. Brady, thank you.
OPENING STATEMENT OF HON. KEVIN BRADY, VICE CHAIRMAN, A U.S.
REPRESENTATIVE FROM TEXAS
Vice Chairman Brady. Commissioner Hall, I want to thank you
for spending your morning with us as we review the employment
situation. For some time now, you have had the difficult job of
being the bearer of bad news as many hardworking Americans have
desperately sought a sustained economic recovery. You will be
happy to know that we don't shoot the messenger here in
Washington, at least not yet.
I would like to begin with some potential hope for our
economy following two dismal quarters of anemic growth. Real
gross domestic product grew at an annual rate of 2.5 percent in
the third quarter of this year. So, finally, America's economy
is marginally larger than it was when the recession began in
December of 2007.
Unfortunately, the outlook going forward looks less rosy.
Projections of future economic growth for the balance of this
year and next have been significantly lowered by the Fed as
well as international economic organizations. The turbulence
from a potential financial crisis in Europe could still
precipitate a double-dip recession here--a very real threat
which could have been avoided had poor economic policies from
the White House not resulted in a very weak and a very slow
recovery.
Equally troubling is this jobless recovery. More than 2
years after the recession officially ended, there are 6.4
million fewer payroll jobs in America than when the recession
began and more than 5.9 million Americans are long-term
unemployed. The President's policies are simply not working.
By comparison, the Reagan expansion which followed the
similarly deep 1981-1982 recession outperforms Obama's economy
by all metrics, including economic growth and job creation. The
difference is the Reagan expansion occurred in a political
environment that fostered private business investment and
encouraged Americans to work and save.
President Reagan's policies were a favorable tailwind. In
contrast, the American economy now confronts policy headwinds.
Virtually every step of the way, President Obama and
congressional Democrats have increased, not decreased,
uncertainty that Americans and American businesses have faced.
This uncertainty has discouraged businesses from making
investment in new buildings, equipment, and software that would
create millions of new jobs and cause a rapid fall in the
unemployment rate. Instead, Washington should create a
political environment that incentivizes Americans to work and
save and incentivizes American businesses to invest. Then
Washington should get out of the way.
This is the first employment hearing since President
Obama's proposal for a second round of stimulus spending that
would require massive new borrowing from foreign entities,
creating debt which future generations of hardworking Americans
would have to pay for. Stimulus II is not paid for. It will add
billions more to the national debt and is wrongly focused on
creating taxpayer-funded government jobs.
Not only can we not afford it, but it is a glaring
admission that the first stimulus failed. Remember, we still
have 1.3 million fewer American jobs than when the original
stimulus began. That is 1.3 million fewer Americans working
than when the stimulus began.
Enough is enough. Hardworking Americans deserve a fresh
start. America needs to grow jobs, not grow the Federal
Government. Ultimately, private business investment drives
private-sector payroll job growth. Businesses make their
investments based on the outlook for the long term, not just
the next year. The President's proposal, which even Senate
Democrats quickly rejected, seeks to spur investment through
temporary tax reductions but does little to encourage
businesses to increase their investments over time.
Rather than Washington taking more of what Americans earn,
our Nation craves a simple, fair Tax Code that increases the
incentives for Americans to work and save and for American
businesses to invest. This requires a permanent reduction in
the effective marginal tax rates on both capital and labor.
Moreover, tax reform should help and not hinder American
businesses who want to invest here in America. As I have
proposed, Washington should immediately lower the tax gate to
allow American firms competing successfully overseas to bring
home their profits that are stranded abroad so these firms can
invest in America--in new jobs, in new research and
development, new expansions, and financial stability.
Repatriation, as it is called, is a free market stimulus of
nearly $1 trillion that will create up to 3 million American
jobs, increase Federal tax revenues, and boost the economy by
between 1 and 4 percent. Now, that is a stimulus America can
get behind.
I urge President Obama to join congressional Republicans in
supporting a comprehensive, bipartisan tax reform that results
in a permanent reduction in marginal tax rates.
Twice in my lifetime I have seen the benefit of such plans,
first under Kennedy and then under Reagan. Both men trusted in
the American people. Put another way, they placed their faith
in the marketplace, which is nothing more than the collective
judgment of the American people as to where to invest their
money. Their sound economic policies fueled the economic booms
of the 1960s and the 1980s and the 1990s. Kennedy and Reagan
helped spawn entirely new industries, kept our great Nation
first in research and development, patents, inventions, and
entrepreneurship.
President Obama has a real chance to be a game-changer
here, or, as he likes to say, a transformational President. All
he needs to do is follow his predecessors' lead. Republicans in
Congress are ready and willing to work with the President to
create real jobs along the Main Streets across America.
With that, Dr. Hall, I look forward to hearing your
testimony.
[The prepared statement of Representative Brady appears in
the Submissions for the Record on page 20.]
Representative Hinchey. Thank you very much.
Because of the fact we are going to have votes very
shortly, we ask unanimous consent to have written statements
and we will have those statements as time goes on.
Representative Hinchey. First of all, I would like to
introduce Commissioner Hall.
Dr. Keith Hall is the commissioner of labor statistics for
the U.S. Department of Labor. 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, businesses, and labor.
Dr. Hall also served as chief economist for the White House
Council of Economic Advisors for 2 years under President George
W. Bush. Prior to that, he was chief economist for the U.S.
Department of Commerce. Dr. Hall also spent 10 years at the
U.S. International Trade Commission.
Dr. Hall received his B.A. degree from the University of
Virginia, his M.S. and Ph.D. degrees in economics from Purdue
University.
Dr. Hall, Mr. Galvin, Dr. Horrigan, please. Thank you.
STATEMENT OF DR. KEITH HALL, COMMISSIONER, BUREAU OF LABOR
STATISTICS, ACCOMPANIED BY: DR. MICHAEL HORRIGAN, ASSOCIATE
COMMISSIONER FOR PRICES AND LIVING CONDITIONS, BUREAU OF LABOR
STATISTICS; AND MR. JACK GALVIN, ACTING 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.
This microphone doesn't work.
Representative Hinchey. Do the best you can.
Commissioner Hall. Nonfarm payroll employment continued to
trend up in October, and the unemployment rate, at 9 percent,
was little changed. Over the past 12 months, payroll employment
has increased by an average of 125,000 per month.
In October, private-sector employment increased by 104,000,
with continued growth in professional and business services,
leisure and hospitality, health care, and mining. Government
employment continued to trend down.
Employment in professional and business services continued
to trend up in October. In recent months, there have been
modest job gains in temporary help services and in management
and technical consulting services.
Employment in leisure and hospitality continued to trend up
over the month. Since a recent low in January of 2010, the
industry has added 344,000 jobs.
Health care employment edged up by 12,000 in October,
following a gain of 45,000 in September. The 2-month average
increase of 29,000 was in line with the industry's recent
trend. In October, offices of physicians gained 8,000 jobs.
Construction employment was down by 20,000 in October,
largely offsetting a gain in the prior month. Both over-the-
month movements largely occurred in nonresidential construction
industries. Employment in other major private-sector industries
changed little in October.
Employment in government continued to trend down. State
government, excluding education, lost 16,000 jobs over the
month. Employment in both State government and local government
has been falling since the second half of 2008.
Turning now to measures from our survey of households, the
unemployment rate was essentially unchanged at 9 percent in
October. The jobless rate has held in a narrow range from 9.0
to 9.2 percent since April. In October, there were 13.9 million
unemployed persons, little changed from the prior month. The
number of persons jobless for 27 weeks and over declined by
366,000 to 5.9 million, or 42.4 percent of total unemployment.
The employment-to-population ratio, at 58.4 percent, was
little changed in October. Among the employed, those working
part-time for economic reasons fell by 374,000, to 8.9 million.
The labor force participation rate, at 64.2 percent, was
unchanged over the month. Thus far in 2011, the participation
rate has held at about 64 percent.
Among those outside of the labor force--persons neither
working nor looking for work--the number of discouraged workers
in October was 967,000, down from 1.2 million a year earlier.
In summary, nonfarm payroll employment continued to trend
up in October. The unemployment rate was little changed at 9
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-11-1576, appears in the Submissions for
the Record on page 21.]
Representative Hinchey. Anything else?
Commissioner Hall. No.
Representative Hinchey. Just a couple of questions. First
of all, how would you characterize the state of the labor
market today?
Commissioner Hall. Well, I think the first thing, and it is
an important thing, there is continued job growth. In fact,
since the labor market trough in, let's say, February of 2010,
from March on we have had continuous job growth, if you take
out the temporary effects of Decennial Census workers being
hired and fired for the Decennial. We have had steady job
growth; it just hasn't been strong.
I think my best characterization now is that we seem to be
growing jobs at about 125,000 a month, we have over the past
year. Actually, that is job growth, but it is still not enough
job growth to start really making headway. It is keeping up or
close to keeping up with the population, which means it is not
strong enough to start lowering the unemployment rate.
Representative Hinchey. Uh-huh.
As we know, prior to losing jobs in August and September,
the manufacturing sector had added jobs for 9 straight months
and has been a source of strength for the recovery.
In your view, how important is the manufacturing sector to
employment in other sectors? And why do you believe the
employment growth has slowed or stopped in recent months in
manufacturing? And is it typical to see strong growth, then a
couple of months where there is no job growth, and then a
resumption of the earlier growth?
Commissioner Hall. Well, the manufacturing sector does have
fairly strong linkages to other sectors. In particular,
particularly with wholesale trade, management of companies and
enterprises, services to buildings and dwellings, truck
transportation, and food service and drinking places, those are
probably the top industries that are related to manufacturing.
So manufacturing is important. The importance goes beyond just
manufacturing.
I am not sure I can tell you why employment growth has
stopped. It did pick up, start to pick up, again this month. I
think the more remarkable thing, to be honest, is that it has
been growing at all, because if you look at any of the recent
recessions, job loss in manufacturing has not recovered.
Manufacturing just hasn't recovered at all from recent past
recessions. So the fact now that we have had some job growth is
encouraging.
And you are right, in terms of the fluctuation of growth
and not growth, that is not uncommon in any industry. And I
think what you are seeing with manufacturing is just some
variation in the growth. And it is not really strong growth,
but it is pretty consistent growth, I think.
Representative Hinchey. Yeah, it is--the fact of the matter
is, I think, that the growth is very, very slow, and the
unemployment rate is still 9 percent. And there are an awful
lot of things that could be done, that should be done, to try
to stimulate this economy.
If you look at different sectors, we are now more than 2
years into the economic recovery, but unemployment is still
far, far too high. During the great recession, the construction
and manufacturing sectors were hard-hit, while education and
health services added jobs throughout the recession in every
month but one; that was March of 2009.
In the past year, what are the sectors that are continuing
to face weakness in employment? And have any sectors shown new
strength in the past year?
Commissioner Hall. By far the weakest sector continues to
be government employment. Over the past year, government
employment has dropped by about somewhere over 300,000 jobs.
That has been split between State government and local
government.
A number of other industries have had either little growth
or little job loss over, say, the past year--for example,
utilities, financial activities, in construction and other
services. Those are all industries that have had relatively
flat over the past year.
The industries that have had the biggest job growth,
professional business services has had over half a million jobs
over the past year; education and health services, as you
mentioned, mostly health services, that has grown by over
400,000 jobs; and then we have had some job growth in places
like manufacturing, a couple hundred thousand jobs in
manufacturing; leisure and hospitality we have had some job
growth.
So the strong growth, anyway, is not widespread, and a
number of industries haven't had very strong growth at all, but
we are having a little growth in a couple of industries.
Representative Hinchey. Well, thank you, Commissioner Hall.
Mr. Brady.
Vice Chairman Brady. Thank you, Mr. Chairman.
If you are one of the 25 million Americans who are out of
work and can't find a full-time job, today's numbers are
disheartening yet again.
But, Commissioner, at this monthly rate of a net 80,000 job
growth, how long would it take for us to return to the
unemployment levels before the recession?
Commissioner Hall. Well, the short answer is never. To keep
up with just the population growth, you probably need, my
estimate is around 130,000 jobs. So at 80,000, you are not
quite even keeping up with population. So, in fact, over a long
time period, you might even see the unemployment rate edge back
up.
Vice Chairman Brady. So, you made the comment that for the
past year we are averaging less than the 130,000 as well. So if
we looked at the broader picture, the past 12 months, the
answer still would be, we are never going--at this pace, never
going to get back to the point before this recession began.
Commissioner Hall. That is right.
Vice Chairman Brady. Can I ask you about the number of
workers who are actually in the workforce today? It has
recently hit 30-year lows. It has been a long time since we
have had this low a percentage of people in the workforce.
It has ticked up very slightly here in the last month or
so. Do you expect that to continue? And isn't that one of the
indicators of restoring a healthy economy that, today, we just
don't see?
Commissioner Hall. Yeah, I wouldn't want to speculate about
expectations, but the point--that it is a valid point. I think
the labor force is probably something on the order of 4 million
below what it would be under normal times.
And I think, to get strong job growth, we are going to have
to see this sort of confidence in the economy where people need
to get back in the labor force, and we need to see the labor
force start to grow again, and that just hasn't happened.
Vice Chairman Brady. Well, Chairman, because I know the
votes are coming shortly, I would like to cut my time short so
we can get more questions in.
Representative Hinchey. Thank you.
Mrs. Maloney.
Representative Maloney. Welcome.
I always like to start with the good news. What are the
bright spots in the report today?
Commissioner Hall. Well, we do have job growth, and we do
have the job growth in a few industries. Mining added some
jobs, and retail trade added some jobs, professional business
services, education, leisure and hospitality.
And, you know, we have had a pick-back-up, I think, in
temporary help services. And the reason I focus on that is that
that very often is a leading indicator of a pickup in job
growth. And for a little while there, the job growth in
temporary help services flattened out, we got none. And it
seems to be picking up a little bit, and that is good news.
And then the unemployment rate, you know, it was
essentially unchanged, but it did tick down a little bit. At
least our point estimate went from 9.1 to 9.0. I am not sure I
would put a lot of stock into that because it is a very small
change, but that could be an encouraging sign.
Representative Maloney. This recession has, in some ways,
been characterized as a man's recession because of the big
losses we have seen in manufacturing and construction. So I am
worried about how these employment gains for women during this
recovery are doing, especially due to the losses in the State
and local government, which you mentioned was roughly 300,000.
Can you tell me how women are faring in the past 2 years or
during this recession? And if you have the numbers, fine; if
not, if you can get it to us, we would love it.
Commissioner Hall. Okay. I can get you the numbers. I can
generally characterize it, though.
Representative Maloney. Okay.
[Letter dated November 22, 2011, transmitting Dr. Keith
Hall's response to Representative Carolyn Maloney appears in
the Submissions for the Record on page 63.]
Commissioner Hall. Although this has been termed a man's
recession because so many more men lost jobs than women, women
did lose a significant number of jobs. And that actually
doesn't always happen. In the last couple of recessions, the
employment by women didn't really go down very much.
And then the other end of that is, in the recovery so far,
it really has been mostly men in the recovery. There have been
very few women re-employed in the recovery so far, and for
exactly the reason you cited, I think. Women, in particular,
are over-represented in government, particularly local
government, and they actually have fairly strong representation
in financial activities, and that hasn't recovered very
strongly.
Representative Maloney. Could you characterize--and this is
my last question so that Dr. Burgess can get in some questions.
It has been characterized also as the credit recession. And
how is this different from other recessions? Particularly,
didn't other recessions have trouble with access to credit? Why
is this called the credit recession?
Commissioner Hall. I think it is fair to say that that--it
is fair to say that the real depth of this recession, and
length--it has been very, very deep and very long--has been
due, in large part, to the credit markets. At least that is the
way it appears to me. That is what makes it probably a great
recession as opposed to a recession, has been the credit
markets.
Representative Maloney. But didn't other recessions have
challenges with access to credit?
Commissioner Hall. Not to the extent that this recession
did. In fact, that is a really----
Representative Maloney. And the causes were different. What
do you say was the cause of this recession?
Commissioner Hall. I think in the early stages it was what
you might call a wealth effect. I think people lost housing
value and they lost wealth, and that sort of started to cause
consumer demand to drop off.
But it really got bad when the credit markets locked up.
And once credit markets locked up and businesses started having
trouble getting loans----
Representative Maloney. So the financial crisis.
Commissioner Hall. Yes, exactly.
Representative Maloney. Thank you.
Representative Hinchey. Unfortunately, we have about 5
minutes for the votes that are on the floor. Do you have time
to stay here for a little while? There are two votes, and we
will be right back after these votes.
Commissioner Hall. Sure, absolutely.
Representative Hinchey. All right. Thank you very much.
[Recess.]
Representative Hinchey. Well, thank you very much,
gentlemen, for waiting for us. This session of votes is over,
but there is a new session coming up shortly. And we want to
just thank you very much for everything you are doing.
I want now to ask Mr. Mulvaney if he has some interesting
questions.
Representative Mulvaney. I have questions. I don't know if
they are interesting or not. We will find out. Thank you, Mr.
Chairman.
Commissioner Hall, is it possible--you hear a lot of
discussion in this town as to what life would have been like
with or without whatever it is that we do. In this particular
circumstance, it is with or without the stimulus.
Is it possible to estimate what the unemployment rate would
have been without the stimulus program?
Commissioner Hall. Yeah, that is--generally, what we do is,
sort of, reality-based. So what we are doing is we are trying
to give you our best picture of where the economy is. Our
surveys really aren't designed to, sort of, get reasons of
things from people when we send out a survey, especially our
establishment survey. So there is really no way for us to
collect data on what would have been without the stimulus or
without anything really.
Representative Mulvaney. The CBO recently put out a report
that said that the unemployment rate would have been between
0.3 points to 1.1 point higher than it otherwise would have
been. Are you familiar with that report at all or not?
Commissioner Hall. A little bit, yes.
Representative Mulvaney. And how are you familiar with it,
sir?
Commissioner Hall. I have some notion of the sort of
methodology that they have used and, sort of, how they are
arriving at that number.
Representative Mulvaney. Do you think it is fairly sound,
being familiar with their methodology?
Commissioner Hall. Yeah, it certainly is sound in the sense
that it is using common methodology that economists use. And,
you know, what they are essentially doing is they are taking
estimates of the impact things have had in the past, government
spending has had in the past, and sort of applying it to the
current situation, doing it that way.
The difficulty of that, of course, is that it is sort of a
model estimate, and it really is very much based on assumptions
and views about how the economy works.
So, while the methodology is fairly standard and et cetera,
again, it is not really giving you data, it is not really
giving you anything like what we give you with the employment
numbers.
Representative Mulvaney. Got you. If you take their
numbers--we are at 9.1 percent this morning, is that where we
are?
Commissioner Hall. Yes.
Representative Mulvaney. Then someplace--according to them,
it would be between 9.4 and 10.2. That is their range of 0.3
percent to 1.1 percent.
Are there any set of circumstances, any set of reasonable
assumptions, that anybody could come out and say that the
unemployment rate today would be 15 percent but for the
stimulus program? Is there any way, you know, in any reasonable
analysis, you could get to that number?
Commissioner Hall. I don't know. I don't want to try to
characterize that. It is making assumptions that the economy
was going to get a lot worse than it did get and a lot worse
than anybody was forecasting. So, in that sense, it is a
stretch.
Representative Mulvaney. Have you seen any scientific or
educational or intellectual-backed studies that have justified
a claim that the unemployment rate would be 15 percent today
but for the stimulus program?
Commissioner Hall. Yeah, it is just that the sort of work
that can be done is pretty similar to what the CBO did, and
that is with a model and with some assumptions about what they
believe would be the typical effect of government spending. You
get an answer that way.
Representative Mulvaney. Have you seen any reputable
studies that would lead you to believe or that would show that
the unemployment rate today would be 15 percent but for the
stimulus program?
Commissioner Hall. No, but I haven't looked. And I am not
sure I would call--if the CBO--was the CBO estimating that?
Representative Mulvaney. No, that is actually Mrs. Pelosi's
office this morning.
Commissioner Hall. Oh, okay. Yeah, I haven't looked at that
study. I haven't looked at other studies.
Representative Mulvaney. Do you think there is a study?
Commissioner Hall. I really have no idea.
Representative Mulvaney. So you have never heard of any
study that would say that unemployment would be 15 percent?
Commissioner Hall. No, but we are pretty focused on the
real data, so I am not looking.
Representative Mulvaney. I am focused on the real data, as
well. I just sort of wondered if this had anything to do with
real data, and it sounds like it doesn't.
I will yield back my time and hope we get a second round of
questions on some other topics. Thank you.
Representative Hinchey. Thank you very much.
I will just ask a couple of simple questions.
The relationship between regulation, the connection between
regulation and job loss--we understand there are a lot of
different theories out there as to why the labor market has
been slow to recover. Some point to the weak overall economic
growth. Some say there is too much uncertainty and that is
preventing firms from hiring. Others say there is too much
regulation.
I saw a piece recently in The New York Times which
referenced data BLS collects on why businesses carry out mass
layoffs. Interestingly enough, government regulation was listed
by businesses as a reason for the layoffs just 0.2 percent of
the time in the first half of 2011, just 0.2 percent of the
time in 2010 and 2009.
By contrast, lack of demand was given--lack of demand,
particularly, was given as the reason for 29.7 percent of
layoffs in the first half of 2011, 30.6 percent in 2010, 39.1
percent in 2009. Other surveys by small business groups get
similar results.
I wonder, have you seen any data to suggest regulation is
interfering with hiring?
Commissioner Hall. I am not sure too much of our data
addresses that point. This is, sort of, again, back to the
issue of, you know, we collect the data; we don't do a lot of
things that would tell us why things happen.
The study you are referring to actually is based on BLS
data. We have something called a Mass Layoff Statistics
program. And what we do there is, any time there are 50
unemployment claims, or initial unemployment claims, over a 5-
week period, we actually call up that establishment and verify
that they have laid off 50 or more workers in a month, and we
define that as a mass layoff.
And once we identify a mass layoff, then we send them a
questionnaire and ask why. And the data you are quoting is from
this program. And so, for these mass layoffs--we had about 18
mass-layoff events, for example, in 2010. Some of them cited
government regulation as the reason.
All right, so, while that is absolutely true and this does
give you some insight on it, one thing to just sort of keep in
mind is, that is only talking about mass-layoff events. Smaller
events wouldn't be captured there, and there would be no effect
of regulation on job growth, holding back job growth or
something like that.
But, I mean, this does give you some information. It is
just sort of limited. Other than that, I don't think we have a
lot that informs you about regulations' impact on employment.
Representative Hinchey. So--oh, Mr. Burgess. Nice to have
you back. Please.
Representative Burgess. Thank you.
Commissioner Hall, you were talking a moment ago before we
broke about the manufacturing sector and beginning to see some
upticks there and then the influence of the other sectors on
the manufacturing sector. And I am particularly interested in
what is broadly characterized as in the mining, which would
include the oil field expansions.
And some of the bright spots in the country are areas where
domestic production of oil and natural gas has really come
forward in a big way in literally the last decade, sort of the
last 15 years.
But do you have any thoughts on areas like the Bakken Shale
in North Dakota, the Barnett Shale where I live, Eagle Ford
Shale in South Texas, Marcellus Shale in Pennsylvania, the
effect that the development in these areas has had, not just on
the mining sector, but on the manufacturing sector?
Commissioner Hall. Yeah, and I don't know a lot about the
specifics. This month we had about 6,000 jobs in mining.
It is not a big sector, it is not a lot of employment, but
that has been supporting employment. In places like--you
mentioned North Dakota. North Dakota has the lowest
unemployment rate in the country, and it seems to be largely
based on growth in mining employment. So that may or may not--
that may be related. I just don't know enough about the
specifics.
Representative Burgess. Well, there are, of course,
concerns about doing it properly and having all the necessary
environmental controls, and I don't disagree with that. But I
will just tell you, in North Texas, where the Barnett Shale is,
where I live, we found out about the recession a year after it
started. December of 2007, I believe, is when the economists
pinpoint the start of the recession nationally. We were
probably January of 2009 before it really became evident in
that part of Texas that, in fact, there was a problem.
I don't think the entire economy can recover on the
strength of this one sector, and so I agree with you that the
numbers, compared to the overall economy, may be small. But I
am certainly concerned that some of the things that I am seeing
happen on the regulatory side, particularly through the
Environmental Protection Agency, could be damaging. And this, I
think, has to be part of our recovery.
Last month, or really just a week and a half ago, I did an
economic development summit in a part of Fort Worth that I
represent that is fairly economically challenged. And we had
some business owners--we actually had Richard Fisher, who is
the president of the Dallas Federal Reserve Bank, come and talk
to us, and it was fairly revealing.
Now, a quote from Dr. Fisher: ``Those with the capacity to
hire American workers, small business as well as large,
publicly created or private, are immobilized, not because they
lack entrepreneurial zeal or do not wish to grow, not because
they can't access cheap and available credit, rather they
simply cannot budget or manage for the uncertainty of fiscal
and regulatory policy.''
Is that a statement that you would generally agree with?
Commissioner Hall. I think I would like to not comment on
that sort of thing, given my role.
Representative Burgess. Very well. Okay. I will, then. And
I think he is right on the mark.
And I guess the bigger question for up here, I mean, here
we are receiving some numbers, and the numbers today look
better than they have perhaps in previous months, but then, by
your own admission, at this rate of growth, to get back to pre-
2008 levels, we are not going to get there. And not just for
the last month, but if you broaden it out to the past 12
months, 3 years into this administration, continuing to follow
the trajectory, we don't get back to pre-recession levels.
But I guess the bigger question is--and I had some small-
business owners as part of that economic development summit,
and, I mean, they kept talking about the crushing burden of
paperwork, the uncertainty regarding financial regulations,
health-care regulations, environmental regulations. And, you
know, it is no great surprise they are in a hunker-down mode
because they just don't know what the future is going to bring.
I hope when we have these visits in the future that you
bring good news to us, but, honestly, I think we have a lot of
work to do on the regulatory end here in the People's House.
So thank you, Mr. Chairman. I will yield back.
Representative Hinchey. Thank you very much.
Mr. Brady.
Vice Chairman Brady. Well, I know a vote is on, so I will
be brief.
Commissioner, you mentioned at this rate of 80,000 jobs and
at last year's rate of 125,000 jobs we literally will never get
back to our pre-recession levels.
Don't we need about 250,000 jobs a month to really begin
whittling down the unemployment rate? And even then, it would
take a number of years, roughly 2, 3 years, do you think, at
that height and rate for us to really start to bring this down?
Commissioner Hall. Yeah, actually, I like your number of
about a quarter-million jobs to start to make headway. But even
at that rate, it may be more than 3 years.
Vice Chairman Brady. Gosh.
Commissioner Hall. It is----
Vice Chairman Brady. Longer than that.
Commissioner Hall. It may be longer than that.
Vice Chairman Brady. Yeah. Look, I want this economy to
recover. I think the Obama economy has been disheartening for
people. We have to have a fresh start.
Let me ask you this. Recently, Senate Majority Leader Reid
made the comment that jobs along Main Street are doing fine; it
is government jobs that he is worried about. But I took a look
at your numbers for the past 3 years since this recession
began, and it appears we have lost more than 4 million jobs
along Main Street and have lost a little less than 700,000 in
government jobs. And we have a chart that shows here what the
difference is. And, obviously, the private-sector job loss has
been considerably greater than that within government.
[Chart titled ``Monthly Change in Government Payrolls
Seasonally Adjusted January 2008-October 2011'' appears in the
Submissions for the Record on page 60.]
[Chart titled ``Monthly Change in Private Payrolls
Seasonally Adjusted January 2008-October 2011'' appears in the
Submissions for the Record on page 61.]
[Chart titled ``Monthly Change in Private Payrolls
Seasonally Adjusted January 2008-September 2011'' appears in
the Submissions for the Record on page 62.]
So, just sort of fact-checking the Senator's comments, is
it accurate to say that in this recession public-sector jobs
have been hit harder by this downturn than private-sector jobs?
Commissioner Hall. No, it isn't. I would say the private
sector has been hit very hard by this recession.
Vice Chairman Brady. As we go forward and look for a way to
get out of this, out of the Obama economy, isn't it private-
sector growth that traditionally has brought us back into the
more stable economy and created the sustainable recovery I
think we are all hoping for?
Commissioner Hall. Sure, absolutely. The private sector has
most of the jobs, and that is absolutely true. If you want to
look at the health of the economy, you look at the private-
sector job growth.
Vice Chairman Brady. Commissioner, thanks for being here
today. I know we are anxious for the day you bring us some good
news going forward. So, thanks.
Representative Hinchey. Mr. Mulvaney.
Representative Mulvaney. Very briefly, to follow up on what
Vice Chairman Brady just said, if 250,000 jobs per month is
that goal--and I think we all agree that more is better and
less is worse. But if 250,000 is sort of the target--the data I
have in front of me only goes back to mid-2009. How many times
since January of 2009 has the economy created more than 250,000
jobs in a month?
I only have one in front of me, which is----
Commissioner Hall. Right.
Representative Mulvaney [continuing]. Sometime in the
spring of 2010. But, again, my data doesn't go all the way back
to the beginning of this administration. So, since January of
2009, how many times has the economy created more than 250,000
jobs in a month?
Commissioner Hall. I see 2 months, but, to be honest, both
of those months were Census was hiring temporary workers for
the Decennial. If you take out those Census effects, I am not
sure we had any months where we had a quarter of a million
jobs.
Representative Mulvaney. So, since 2009, January of 2009,
since the Obama administration took over, we have never
generated 250,000 jobs on a monthly basis, on a permanent
basis, when you make exceptions for the Census hiring?
Commissioner Hall. I believe that is--I don't have the
exact numbers in front of me, but I believe that is correct.
Representative Mulvaney. And to follow up on the other
thing Mr. Brady mentioned regarding the Federal hiring. We just
heard some interesting testimony yesterday in the Oversight and
Government Regulation Committee that said that--and to follow
on what you said, Mr. Vice Chairman--there is 12 percent more
Federal workers since this recession began. There are 14.8
percent more, that is 275,000 more, workers in the executive
branch and 100,000 more civilian workers at the Department of
Defense since this recession began.
So I was glad to hear you say you think that the private
sector has taken it on the chin a little bit heavier than the
public sector. Because, certainly, if you go back to the
beginning of this recession, there are actually more government
workers at the Federal level than there were when things began.
So, thank you, Mr. Commissioner.
Thank you, Mr. Chairman.
Representative Burgess. Would you yield to me?
Representative Mulvaney. And I will yield to Mr. Burgess
the balance of my time.
Representative Burgess. It is interesting about, backing
up, the Census data where the job growth did see 250,000. I
recall those hearings where we had those discussions.
The health care sector that you reference in your report to
us today, those are private-sector jobs, correct? This does not
reflect government growth in the public sector.
Commissioner Hall. Correct.
Representative Burgess. It doesn't reflect government jobs
in the health-care sector, is that correct?
Commissioner Hall. No, that is--yeah, the government jobs
in the health sector are in government jobs.
Representative Burgess. One of the things that has
continued to worry me, when we started the recession there were
essentially two areas that were not affected. One was health
care. Has the growth in health-care job creation, has that
continued to be where it was pre-recession?
Commissioner Hall. That is a good question. My recollection
is that it has been roughly that. I don't think--if it slowed
down, it didn't slow down by much. So I am guessing--I will
have to get back with you on that for sure, but I think it has
been pretty much pre-recession growth.
Representative Burgess. If I could ask you to get back to
the committee on that.
Commissioner Hall. Okay. Sure.
Representative Burgess. If you could also, over that same
time period, track the growth in public-sector health-care
employment--because, as you know, there have been some big
changes in the policy side of health care that have occurred
over the last 15 months--it would be interesting to see that,
as well.
Commissioner Hall. Okay.
[Letter dated December 1, 2011, transmitting Dr. Keith
Hall's response to Representative Michael C. Burgess appears in
the Submissions for the Record on page 67.]
Representative Burgess. Thank you, Chairman, for the
indulgence. I yield back.
Representative Hinchey. Thank you very much.
One of the points that I think we should focus on is that
the last administration didn't create private-sector jobs. That
healthy job-creation rate of 250,000 per month was absent
during the previous administration.
Commissioner Hall. That is absolutely correct. The
expansion between the two recessions this time was not very
strong, and we did not exceed 250,000. I don't know if we
exceeded it--we must have once or twice, but if we did, we
didn't do it very much. That is correct.
Representative Hinchey. I just have one last question. The
first decade of the 21st century has been characterized by
rising income inequality in addition to the loss of jobs--the
loss of jobs, unemployment, and then rising income inequality,
the rich getting richer while middle-class incomes are being
stagnated.
I am worried that the unemployment rate is exacerbating
this inequality. Do you have any information on the
characteristics of the unemployed, such as, for example,
whether they tended to have worked in lower-wage jobs?
Commissioner Hall. Not directly, but I really do think we
have a pretty good proxy, and that is by education. Because the
education levels really are very closely related to income and
wages and labor force participation and unemployment rates. And
the higher the education, the better off you are.
So there is a pretty significant difference. So if you get,
for example, people with less than a high school diploma, their
current unemployment rate is 13.8 percent, and they have been
much--it is much higher than people with, say, a bachelor's
degree, at 4.4 percent.
Representative Hinchey. Thank you very much. I appreciate
the answers you have given to all of these questions. The
Members deeply appreciate it.
We have about 3 minutes to go back and do some more votes,
so we will adjourn the committee now.
Thank you. I deeply appreciate it. Thank you very much. I
look forward to doing it again soon.
[Whereupon, at 11:17 a.m., the committee was adjourned.]
SUBMISSIONS FOR THE RECORD
Prepared Statement of Representative Kevin Brady, Vice Chairman, Joint
Economic Committee
Commissioner Hall, I want to thank you for spending your morning
with us as we review the employment situation. For some time now,
you've had the difficult job of being the bearer of bad news as many
hardworking Americans have desperately sought a sustained economic
recovery. You'll be happy to know that we don't shoot the messenger
here in Washington.
I'd like to begin with some potential hope for our economy.
Following two dismal quarters of anemic growth, real gross domestic
product grew at an annual rate of 2.5 percent in the third quarter of
this year. Finally, America's economy is marginally larger that it was
when the recession began in December 2007.
Unfortunately, the outlook going forward looks less rosy.
Projections of future economic growth for the balance of this year and
next have been significantly lowered by the Fed as well as
international economic organizations. The turbulence from a potential
financial crisis in Europe could still precipitate a double-dip
recession here--a very real threat which could have been avoided had
poor economic policies from the White House not resulted in a very weak
and slow recovery.
Equally troubling is this jobless recovery. More than two years
after the recession officially ended, there are 6.4 million fewer
payroll jobs in America than when the recession began in December 2007,
and more than 5.9 million Americans are long-term unemployed.
The President's policies are just not working. By comparison, the
Reagan expansion, which followed the similarly deep 1981-1982
recession, outperforms the Obama economy by all metrics, including
economic growth and job creation. The difference is that the Reagan
expansion occurred in a political environment that fostered private
business investment and encouraged Americans to work and save.
President Reagan's policies were a favorable tailwind.
In contrast, the American economy now confronts policy headwinds.
Virtually every step of the way President Obama and Congressional
Democrats have increased, not decreased, the uncertainty that Americans
and American businesses face. This uncertainty has discouraged
businesses from making the investments in new buildings, equipment, and
software that would create millions of new jobs and cause a rapid fall
in the unemployment rate. Instead, Washington should create a political
environment that incentivizes Americans to work and save and
incentivizes American businesses to invest. Then, Washington should get
out of the way.
This is the first employment hearing since President Obama's
proposal for a second round of stimulus spending that would require
massive new borrowing from foreign entities, creating debt, which
future generations of hardworking Americans would have to service.
Stimulus II is not paid for. It will add billions more to the national
debt and is wrongly focused on creating taxpayer-funded government
jobs. Not only can we not afford it, but it is a glaring admission that
the first stimulus failed. Remember, we still have 1.3 million fewer
American jobs than when the original stimulus began; a million and a
half fewer jobs. Enough is enough. Hardworking Americans deserve a
fresh start.
America needs to grow jobs, not grow the federal government.
Ultimately, private business investment drives private sector payroll
job growth. Businesses make their investment based on the outlook for
the next decade, not just the next year. The President's proposal--
which even Senate Democrats quickly rejected--seeks to spur investment
through temporary tax reductions, but does little to encourage
businesses to increase their investment over time.
Rather than Washington taking more of what Americans earn, our
nation craves a simple, fairer tax code that increases the incentives
for Americans to work and save and for American businesses to invest in
new buildings, equipment, and software. This requires a permanent
reduction in the effective marginal tax rates on both capital and
labor.
Moreover, tax reform should help instead of hinder American
businesses who want to invest in America. As I have proposed,
Washington should immediately lower the tax gate to allow American
firms competing successfully overseas to bring home their profits that
are stranded abroad so that these firms can invest in America: in new
jobs; research and development; expansions; and financial stability.
Repatriation is a free-market stimulus of nearly $1 trillion that will
create up to three million American jobs, increase federal tax revenues
and boost the economy by between one and four percent.
Now that's a stimulus America can get behind.
I urge President Obama to join Congressional Republicans in
supporting a comprehensive, bipartisan tax reform that results in a
permanent reduction in marginal tax rates. Twice in my lifetime, I have
seen the benefits of such plans: first under Kennedy, and then under
Reagan. Both men trusted in the American people. Put another way, they
placed their faith in the ``marketplace'' which is nothing more than
the collective judgment of the American people as to where to invest
their money. Their sound economic policies fueled the economic booms of
the 1960s and the 1980s and 1990s. Kennedy and Reagan helped spawn
entirely new industries and kept our great nation first in R&D,
patents, inventions, and entrepreneurship. President Obama has a real
chance to be a ``game changer,'' here, or, as he likes to say a
``transformational'' president. All he needs do is follow his
predecessors' lead.
Republicans in Congress are ready and willing to work with the
President to create real jobs along the Main Streets across America.
With that, Dr. Hall, I look forward to hearing your testimony.
__________
Prepared Statement of Dr. 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 continued to trend up in October
(+80,000), and the unemployment rate, at 9.0 percent, was little
changed. Over the past 12 months, payroll employment has increased by
an average of 125,000 per month.
In October, private-sector employment increased by 104,000, with
continued growth in professional and business services, leisure and
hospitality, health care, and mining. Government employment continued
to trend down.
Employment in professional and business services continued to trend
up in October (+32,000). In recent months, there have been modest job
gains in temporary help services and in management and technical
consulting services.
Employment in leisure and hospitality continued to trend up over
the month (+22,000). Since a recent low in January 2010, the industry
has added 344,000 jobs.
Health care employment edged up by 12,000 in October, following a
gain of 45,000 in September. The two-month average increase of 29,000
was in line with the industry's recent trend. In October, offices of
physicians gained 8,000 jobs.
Mining employment continued to expand in October (+6,000). Since
October 2009, mining has added 152,000 jobs, largely due to gains in
support activities for mining.
Construction employment was down by 20,000 in October, largely
offsetting a gain in the prior month. Both over-the-month movements
largely occurred in nonresidential construction industries. Employment
in other major private-sector industries changed little in October.
Employment in government continued to trend down (-24,000). State
government, excluding education, lost 16,000 jobs over the month.
Employment in both state government and local government has been
falling since the second half of 2008.
Average hourly earnings of all employees on private nonfarm
payrolls rose by 5 cents to $23.19 in October, following a gain of 6
cents in September. Over the past 12 months, average hourly earnings
have risen by 1.8 percent. From September 2010 to September 2011, the
Consumer Price Index for All Urban Consumers (CPI-U) increased by 3.9
percent.
Turning now to measures from our survey of households, the
unemployment rate was essentially unchanged at 9.0 percent in October.
The jobless rate has held in a narrow range from 9.0 to 9.2 percent
since April. In October, there were 13.9 million unemployed persons,
little changed from the prior month. The number of persons jobless for
27 weeks and over declined by 366,000 to 5.9 million, or 42.4 percent
of total unemployment.
The employment-population ratio, at 58.4 percent, was little
changed in October. Among the employed, those working part time for
economic reasons fell by 374,000, to 8.9 million.
The labor force participation rate, at 64.2 percent, was unchanged
over the month. Thus far in 2011, the participation rate has held at
about 64 percent.
Among those outside of the labor force--persons neither working nor
looking for work--the number of discouraged workers in October was
967,000, down from 1.2 million a year earlier.
In summary, nonfarm payroll employment continued to trend up in
October (+80,000). The unemployment rate was little changed at 9.0
percent.
My colleagues and I now would be glad to answer your questions.
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