[Joint House and Senate Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-379

                 THE EMPLOYMENT SITUATION: JANUARY 2012

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

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 3, 2012

                               __________

          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

                              ----------                              

                     Opening Statements of Members

Hon. Elijah E. Cummings, a U.S. Representative from Maryland.....     1
Hon. Kevin Brady, Vice Chairman, a U.S. Representative from Texas     2
Hon. Carolyn B. Maloney, a U.S. Representative from New York.....     4
Hon. Michael C. Burgess, M.D., a U.S. Representative from Texas..     4

                               Witnesses

John M. Galvin, Acting Commissioner, Bureau of Labor Statistics, 
  Accompanied by: Michael Horrigan, Associate Commissioner for 
  Prices and Living Conditions, Bureau of Labor Statistics; and 
  Thomas Nardone, Acting Associate Commissioner for Employment 
  and Unemployment Statistics, Bureau of Labor Statistics........     8

                       Submissions for the Record

Prepared statement of Representative Elijah E. Cummings..........    26
Chart submitted by Vice Chairman Brady titled ``Total Hires and 
  Layoffs Since 2006''...........................................    28
Prepared statement of Vice Chairman Kevin Brady..................    29
Chart submitted by Representative Burgess titled ``U.S. 
  Unemployment Rate & Minimum Wage (2002-2011)''.................    31
Prepared statement of Acting Commissioner John M. Galvin, 
  together with Press Release No. USDL-12-0163...................    32
Letter dated February 24, 2012, transmitting Acting Commissioner 
  John M. Galvin's response to Representative Carolyn B. Maloney.    76
Letter dated February 12, 2012, transmitting Acting Commissioner 
  John M. Galvin's response to Representative Michael C. Burgess.    79
Letter dated February 12, 2012, transmitting Acting Commissioner 
  John M. Galvin's response to Representative Mick Mulvaney......    84

 
                 THE EMPLOYMENT SITUATION: JANUARY 2012

                              ----------                              


                        FRIDAY, FEBRUARY 3, 2012

             Congress of the United States,
                          Joint Economic Committee,
                                                    Washington, DC.
    The committee met, pursuant to call, at 9:30 a.m., in Room 
210, Cannon House Office Building, Hon. Elijah E. Cummings 
presiding.
    Representatives present: Cummings, Brady, Burgess, 
Campbell, Mulvaney, Maloney, and Sanchez.
    Staff present: Gail Cohen, Cary Elliott, Will Hansen, Jesse 
Hervitz, Patrick Miller, Ted Boll, and Colleen Healy.

     OPENING STATEMENT OF HON. ELIJAH E. CUMMINGS, A U.S. 
                  REPRESENTATIVE FROM MARYLAND

    Representative Cummings. Good morning. Chairman Casey could 
not be here today and I am very pleased to stand in for him 
this morning.
    I would like to welcome Acting Commissioner John Galvin 
this morning as well as Mr. Thomas Nardone, Acting Associate 
Commissioner for Employment and Unemployment Statistics, and 
Dr. Michael Horrigan, Associate Commissioner for Prices and 
Living Conditions.
    I want to make a couple of overall comments about the 
economic recovery before diving into this month's employment 
numbers. In the second half of 2011, economic momentum picked 
up. The labor market continued to strengthen, adding 100,000 or 
more jobs for 4 straight months.
    Additionally, we learned last week that the GDP grew at a 
2.8 percent annual rate in the fourth quarter, an improvement 
over the previous three quarters of 2011, though inventory 
rebuilding accounted for much of that growth.
    There are other encouraging signs. The manufacturing sector 
continues to show strength. The ISM Manufacturing Index, 
reading 54.1 percent in January, marked the thirtieth 
consecutive month of expansion in the manufacturing sector. And 
the unemployment rate has been moving in the right direction. 
During 2011 the national unemployment rate fell from 9.4 
percent to 8.5 percent. However, workers who have been out of 
work for long periods continue to struggle to find new jobs.
    More than 42 percent of the unemployed have been jobless 
for 6 months or more. We need to help workers regain their 
footing and bolster the recovery by extending the payroll tax 
cut for the remainder of the year and continuing unemployment 
insurance for workers who are counting on these benefits to 
make ends meet. Both of these policies put money in people's 
pockets, boosting demand, creating jobs, and strengthening our 
economy.
    As the January jobs report shows, we are making progress. 
As Mark Zandi said just this morning, this report was 
unambiguously positive. But we must continue to invest in 
education, infrastructure and our workers. As I have said 
before, we must also take on the housing crisis. Without a 
smart sensible path forward in housing we simply cannot sustain 
this economic recovery.
    Today's unemployment report from BLS shows jobs gains. The 
economy added private sector jobs for the twenty-third straight 
month. During January the economy gained 257,000 private sector 
jobs. Due to the loss of government jobs overall the economy 
added 243,000 jobs during the month. The manufacturing sector, 
which added 237,000 jobs in 2011, gained 50,000 jobs in 
January, and that is always good news. In addition, the 
professional and business services sector added 70,000 jobs and 
hasn't lost jobs since March 2010.
    Employment in State and local government was basically 
unchanged in January. In 2011, State and local governments shed 
235,000 jobs and continue to face budget challenges that 
present a head wind for the economy.
    The overall unemployment rate was 8.3 percent, the lowest 
since February 2009. Even with this progress more than 12.7 
million people are looking for work, simply can't find it. The 
unemployment rate in the African American community was 13.6 
percent, among Hispanic workers the unemployment rate was 10.5 
percent, while the overall unemployment rate for veterans was 
7.5 percent. Gulf War-era II veterans faced an unemployment 
rate of 9.1 percent.
    Today's employment report shows that the labor market 
continues to recover. The job gains in January continued the 
momentum from the fourth quarter of 2011. However, unemployment 
remains too high, unacceptably high, and we need to stay 
focused on creating jobs.
    Acting Commissioner Galvin, I look forward to your 
testimony. Now it gives me pleasure to yield to Mr. Brady.
    [The prepared statement of Representative Cummings appears 
in the Submissions for the Record on page 26.]

 OPENING STATEMENT OF HON. KEVIN BRADY, VICE CHAIRMAN, A U.S. 
                   REPRESENTATIVE FROM TEXAS

    Vice Chairman Brady. Thank you, Chairman. Commissioner 
Galvin, we welcome you in your new capacity to the Joint 
Economic Committee on unemployment numbers. Of course we know 
you well from your experience in prior employment hearings and 
as a dedicated BLS employee for many years. We appreciate your 
service and look forward to your testimony. We also welcome the 
members of your staff.
    Now these new jobs numbers are encouraging, are long 
overdue, but encouraging. The unemployment rate going down 
slightly is as well, but I have to caution you it masks an 
underlying weakness in our economy. Fewer Americans are 
actually participating in the workforce than in almost 28 
years. The labor force participation rate at 63.7 percent 
hasn't been this low since March of 1983. The labor market 
simply isn't recovering fast enough, considering especially how 
depressed it has been.
    By comparison, at this point 31 months into the Reagan 
recovery, we had already added 8.7 million new payroll jobs. 
Today, however, the U.S. economy at best is uncertain, stopping 
and starting. We are still 6 million jobs short of where we 
were before the recession began. Labor force participation, as 
I said, is the lowest in decades. Yet unemployed workers still 
account for more than 8 percent of this shrunken workforce. I 
think whatever claims the President has made about how much 
worse the recession has been, his policies have not stimulated 
the economy. We now have a huge Federal debt, continuing large 
deficits, and again, a stop and start uncertain job growth.
    More than 2\1/2\ years have passed since the recession 
formally ended, yet real GDP growth is now expected to decline 
this year from a less-than-stellar 2.8 percent in the fourth 
quarter of last year. The contrast, we averaged over 6 percent 
economic growth during the first 10 quarters of the Reagan 
recovery. Business in America is still hoarding cash as it 
still holds investment below what it was before the recession 
began and is still not materially stepping up hiring despite 
what the new payroll job numbers say.
    Well, consider the chart behind me. The top line, the green 
line, shows hires and the bottom line layoffs. The huge churn 
in this chart is striking, over 4 million hires and 1.7 million 
layoffs, an image quite different from that of simply just 
looking at net job changes. The key observations here is the 
hires still remain where they were during the middle of the 
recession. With all the money the White House and Members of 
Congress have spent to stimulate employment, hires are still 
down about 1\1/2\ million per month from before the recession. 
In that light the 243,000 payroll jobs gained today just aren't 
that impressive. The magnitude of annual benchmark revisions, 
the most recent of which BLS has introduced with today's 
report, only underscores this problem.
    [Chart submitted by Vice Chairman Brady titled ``Total 
Hires and Layoffs Since 2006'' appears in the Submissions for 
the Record on page 28.]
    The low hires help explain why labor force participation is 
down. If hiring has not risen in well over 3 years with the 
huge pool of unemployed competing for jobs, then why stay in 
the labor force? They are simply dropping out.
    The unemployment rate and payroll job numbers are important 
statistics but they don't reveal the full extent of the problem 
that America faces. The President's current actions and 
proposals, in my view, are feeble attempts to lift a $15 
trillion economy with the equivalent of matchsticks at the same 
time that it is tightening regulations, imposes an avalanche of 
new regulations, and thwarts the biggest shovel ready projects 
such as the Keystone Pipeline. They raise taxes all the while 
adding to our national debt with continued undisciplined 
deficit spending.
    Strong private investment and job creation requires a 
balanced regulatory environment that actually encourages 
operation of the free market economy and a tax environment that 
engenders expansion, not retrenchment. The President is working 
against this free market economy with his policies, undermining 
it with subsidies and special favors in some areas and harshly 
constraining and punishing it in others. That will cause anemic 
growth, and this labor chart shows it.
    According to the CBO, a slowing economic growth will cause 
the unemployment rate to rise this year and next. The 
Congressional Budget Office predicts the unemployment rate will 
hit 8.9 percent in the fourth quarter of this year and over 9 
percent next. Americans are eager for work and willing to work 
hard. The economic policies of our President have failed. We 
need a change in course, hard working taxpayers deserve better, 
and the Federal Government needs to get out of the way so 
private job creation and hiring can accelerate.
    Mr. Galvin, I look forward to hearing your testimony. I 
yield back.
    [The prepared statement of Vice Chairman Brady appears in 
the Submissions for the Record on page 29.]
    Representative Cummings. Thank you very much, and now I 
yield to Mrs. Maloney.

     OPENING STATEMENT OF HON. CAROLYN B. MALONEY, A U.S. 
                  REPRESENTATIVE FROM NEW YORK

    Representative Maloney. First of all, congratulations on 
your interim appointment, Mr. Galvin. And thank you for your 
many years of hard work for the Joint Economic Committee and 
testimony and also for the BLS, and also Dr. Horrigan and Mr. 
Nardone, we welcome you.
    And finally we have continuing good news. For the fifth 
month there has been a drop in the unemployment rate to 8.3 
percent and for the twenty-third month we have been gaining 
jobs to 243,000 jobs. So I fail to understand the doomsday 
testimony of my good friend Mr. Brady. With unemployment 
numbers falling and the number of jobs growth gaining, that 
shows that we are making steady progress in recovering from the 
Great Recession.
    Still we have much more work to do, including extending the 
payroll tax cut through all of 2012, which is a priority of 
President Obama and Democrats. And I am hopeful the House will 
approve that before the current extension expires at the end of 
the month.
    I look forward to your testimony and I hope it contains 
even more good news than these very encouraging numbers in 
unemployment and job growth. I yield back.
    Representative Cummings. Yield to Mr. Burgess.

  OPENING STATEMENT OF HON. MICHAEL C. BURGESS, M.D., A U.S. 
                   REPRESENTATIVE FROM TEXAS

    Representative Burgess. Thank you, Mr. Chairman, and, Mr. 
Galvin, welcome to our committee and to your staff. We welcome 
you here. It goes without saying we all miss Dr. Hall. He 
certainly had a great deal of candor. He was the epitome of 
impartiality and nonpartisanship in his office. I tried several 
times to bait him, but I was never successful, and certainly 
look forward for your service here.
    The job numbers today, good news? I almost feel like I am 
in a Charles Dickens novel: It was the best of times, it was 
the worst of times. The American economy is just hard to keep 
down. No matter what the Congress does to it, no matter what an 
administration does to it, the American economy has a unique 
and remarkable ability to recover. I know this having seen what 
happened to the economy when I was in the private sector during 
the savings and loan crash in Texas in the late 1980s. 
Certainly no government action seemed to be responsible for the 
recovery that eventually occurred there, but it was a fairly 
strong recovery and lasted for the next 20, 25 years and a 
period of unparalleled prosperity in our State. Our State 
continues to enjoy significant prosperity. People move to Texas 
because of the lower regulation environment, the low litigation 
environment, the lack of State income tax, right-to-work State. 
And as a consequence Texas has added four new congressional 
districts, essentially a population the size of Arkansas which 
has moved to Texas in the last 10 years.
    So it goes without saying that it is possible for the 
American public to do the right thing as far as job creation is 
concerned. It is not always possible that the government does 
the right thing.
    In fact, I just think I would align myself obviously close 
with Mr. Brady's comments than Mrs. Maloney's comments. But it 
is the private sector, it is the real economy, it is the folks 
out there that create something of their own and make it their 
own. That is what drives our economy.
    I really don't have a lot of faith in the administration's 
ability. I think the things that they have done and watching 
through this committee, the Joint Economic Committee in the 
last 3 years, hearing various people from the administration 
come in and testify, I cannot tell you the number of times that 
we were told by Christina Romer that the green shoots were 
sprouting and the economy was recovering only to find that 
those were weeds proliferating in the parking lot because no 
one was showing up for work because there were no jobs.
    Now as far as the administration is concerned, we have 
examples of where they have had the ability to make decisions 
and made the wrong decisions. Vice Chairman Brady referenced 
the Keystone Pipeline. Thousands of new jobs, no government 
spending required at all, just an international boundary that 
was crossed and therefore the President's office was involved 
and he made the wrong decision.
    The President is out even as we speak barnstorming around 
the country, talking about how he is creating jobs, and here 
was something at his fingertips that would have created 
thousands of jobs, no government spending involved, put people 
back to work, given them jobs where they could have restored 
some self-dignity and some self-worth, and he turned his back 
on it.
    We have got other examples, the Maximum Achievable Control 
Technology that is now affecting the boiler MACT rules, the 
utility MACT rules, cross-state air pollution rules where Texas 
was included at the last minute with a group of northeastern 
states that there was no inclination prior to the issuance of 
the rule that the EPA was even considering Texas, and now we 
may be faced with having to close coal fired power plants and 
rolling brownouts or blackouts during our hot summer months. 
The war on natural gas which continues. Let's face it, domestic 
energy production is going to be part of this economic 
recovery, whether this administration likes it or not. It is 
high time that they stopped interfering with that.
    The Affordable Care Act, I mean I could go on and on about 
just that, and the chilling effect. And I hear it every week 
when I go home. Employer after employer says I don't know what 
is ahead, I don't know what you are going to do to me next, 
what is the court going to do, what is the election going to 
do? People are so uncertain about what they are going to have 
to be providing in terms of employee benefits they are 
genuinely frightened to add that employee.
    Now the President goes around the country talking about his 
job proposals but they all involve more government. Let's let 
the private sector do what it does best. We are America, we 
have a history of doing this over and over again. We need to 
decrease government regulations, taxes and let our economy 
grow. I have the utmost faith in the American people. I think 
when they are left to their own devices they can create jobs. I 
think whatever Congress does is an impediment, and I know 
whatever the administration does is certainly 
counterproductive. Let's have faith in the American people. Let 
them continue to grow.
    I look forward to your testimony today, and I am certain we 
will learn a great deal. I yield back the balance of my time.
    [Chart submitted by Representative Burgess titled ``U.S. 
Unemployment Rate & Minimum Wage (2002-2011)'' appears in the 
Submissions for the Record on page 31.]
    Representative Cummings. Thank you very much. As I turn to 
Ms. Sanchez, I want to let Mr. Burgess know that just a half an 
hour ago on MSNBC Mark Zandi, one of Mr. McCain's main 
advisers, said that the business community is definitely 
starting to engage and again he said when he looked at this 
report it was unambiguously positive.
    Ms. Sanchez.
    Representative Burgess. Would the gentleman yield?
    Vice Chairman Brady. Go ahead, Mr. Burgess. I was going to 
make the point that Mark Zandi was 3 million jobs off in the 
first year of the stimulus in estimations and has been 
consistently off.
    Mr. Burgess.
    Representative Burgess. Well, I would just point out that 
the President's own jobs and economic council has beseeched the 
President to remove some of these regulations and allow things. 
The cross-state air pollution law regulation was something they 
distinctly referenced in their reports that have come before 
this committee.
    Representative Cummings. Thank you.
    Representative Burgess. It is time for the administration 
to get out of the way.
    Representative Cummings. The fact is we are going in the 
right direction. You would think this was some doomsday report. 
The fact is that we are going in the right direction, thank 
God.
    Representative Maloney. Would the gentleman yield?
    Representative Cummings. Very briefly.
    Representative Maloney. My colleague, you have to remember 
that when President Obama took office this country was losing 
700,000 jobs a month. The first 4 months before President Obama 
took office this country lost 4 million jobs. The President has 
put in a recovery package that is moving us in the right 
direction. Can't we at least agree that it is good news that 
for 5 months the unemployment has fallen and that for 23 months 
we have been gaining jobs in this country? We should be pleased 
with this news.
    Vice Chairman Brady. Madam Chairman, if I may. My only 
point, I think ours, is we do think these numbers are 
encouraging. Our concern is the unemployment rate is going down 
because people are giving up, because they are not getting jobs 
and we think that is the wrong reason.
    Representative Cummings. The unemployment rate is 8.3 
percent, last month it was 8.5 percent.
    Ms. Sanchez.
    Representative Sanchez. Thank you, Mr. Chairman. I don't 
have a statement and I will not be putting one in for the 
record. But I came this morning to try to figure out where we 
really are and to get some ideas from people about how we 
continue the good trend that we have seen in these last 5 
months with respect to unemployment going down. I really didn't 
come here to hear a lot of political posturing and babble and 
everything. I am really struck by the fact that this 
committee's job I think is really to contemplate and think 
about and suggest and move forward ideas for other legislative 
writing committees to implement. And, you know, this going back 
and forth and this really degrading, honestly, you guys of this 
committee it is really a frustrating thing for somebody who 
understands that we--that when we see good numbers and that 
when people say economists, all the economists this morning 
that I saw on television and in writing were saying, hey, this 
is good. Let's just stop it. This is good and what can we do to 
make it better?
    Mr. Chairman, that is what this committee is charged with, 
and I am really looking forward to hearing from the three 
gentlemen before us to try to figure out where do we go from 
here. How do we go from here? How do we make this a positive 
thing for the American people? So I am open to hear the--you 
are my friends on the other side. So . . .
    Vice Chairman Brady. If I may, I think you are right.
    Representative Sanchez. I hope you will pull away from 
that.
    Representative Cummings. The gentlelady has a good point.
    Representative Sanchez. Thank you, Mr. Chairman.
    Vice Chairman Brady. I do apologize.
    Representative Sanchez. Thank you, Mr. Chairman. Let's work 
together on this, guys.
    Representative Cummings. Mr. Campbell.
    Representative Campbell. Oh, no.
    Representative Cummings. Mr. Mulvaney.
    Mr. Galvin, thank you very much for being here and we 
welcome you.

  STATEMENT OF JOHN M. GALVIN, ACTING COMMISSIONER, BUREAU OF 
 LABOR STATISTICS; ACCOMPANIED BY MICHAEL HORRIGAN, ASSOCIATE 
COMMISSIONER FOR PRICES AND LIVING CONDITIONS, BUREAU OF LABOR 
 STATISTICS AND THOMAS NARDONE, ACTING ASSOCIATE COMMISSIONER 
  FOR EMPLOYMENT AND UNEMPLOYMENT STATISTICS, BUREAU OF LABOR 
                           STATISTICS

    Acting Commissioner Galvin. Mr. Chairman, and Members of 
the Committee, thank you for the warm welcome and for the 
opportunity to discuss the employment and unemployment data 
that we released this morning.
    The unemployment rate decreased to 8.3 percent in January.
    Representative Cummings. A little louder, please. The green 
light should come on.
    Acting Commissioner Galvin. It is on, it is on.
    Representative Cummings. There you go.
    Acting Commissioner Galvin. The unemployment rate decreased 
to 8.3 percent in January, and nonfarm payroll employment rose 
by 243,000. In 2011, nonfarm employment increased by an average 
of 152,000 per month. Job growth was widespread in the private 
sector in January, with the largest gains occurring in 
professional and business services, leisure and hospitality, 
and manufacturing.
    Professional and business services added 70,000 jobs over 
the month, compared with an average monthly gain of 48,000 in 
2011. Nearly half of the January increase occurred in 
employment services as temporary help employment continued to 
trend up. Also within professional and business services, 
employment rose in accounting and bookkeeping and in 
architectural and engineering services.
    Employment in leisure and hospitality increased by 44,000, 
mostly in food services. Health care employment rose by 31,000, 
with job gains in hospitals and ambulatory care services. 
Employment in both wholesale and retail trade continued to 
trend up over the month.
    In the goods-producing sector, manufacturing employment 
increased by 50,000 in January, nearly all in durable goods 
manufacturing. Fabricated metal products, machinery, and motor 
vehicles each added jobs. Over the past 2 months, construction 
employment rose by 52,000, mainly among nonresidential 
specialty trade contractors. Mining employment continued to 
expand in January. Since a recent low point in October 2009, 
mining has added 172,000 jobs.
    Government employment was little changed in January. Over 
the last 12 months employment in the sector has decreased by 
276,000 with declines in local government, State government, 
excluding education, and the U.S. Postal Service.
    Average hourly earnings of all employees on private nonfarm 
payrolls increased by $0.04 in January. Over the past 12 
months, average hourly earnings have risen by 1.9 percent. From 
December 2010 to December 2011, the Consumer Price Index for 
All Urban Consumers increased by 3.0 percent.
    In accordance with annual practice, the establishment 
survey data released today reflect the incorporation of 
benchmark revisions. Each year, BLS reanchors the sample-based 
survey estimates to full universe accounts of employment, 
primarily derived from administrative records of the 
unemployment insurance tax system. The level of nonfarm payroll 
employment in March 2011 was revised up by 162,000, or 0.1 
percent. This compares to an average benchmark revision over 
the past 10 years of plus or minus about 0.3 percent.
    Before discussing the data from our survey of households, I 
would note that, as is our annual practice, we have 
incorporated new population controls into the January 
estimates. Data beginning in January 2012 reflect population 
controls based on Census 2010, as well as updated information 
on net international migration, and some methodological 
adjustments in the estimation process. Official estimates for 
December 2011 and earlier months will not be revised to 
incorporate the Census 2010-based controls. The impact of the 
new controls on the unemployment rate is negligible. However, 
two important Household Survey measures, the employment 
population ratio and the labor force participation rate, are 
lowered by the change in the composition of the population as 
seen in these new controls. The new controls raise the 
population of persons 55 years and older and, to a lesser 
extent, persons 16 to 24 years of age. Both of these groups are 
less likely to be in the labor force than the general 
population.
    So now returning to the data for January, the unemployment 
rate continued to decline over the month. Since August 2011, 
the jobless rate has fallen from 9.1 to 8.3 percent, and the 
number of unemployed persons has declined by about 1.2 million. 
In January, the number of persons unemployed for 27 weeks or 
more was little changed at 5.5 million and made up 42.9 percent 
of the total. The employment population ratio increased over 
the months and the labor force participation rate was unchanged 
after accounting for the impact of the Census 2010-based 
population controls.
    To summarize January's labor market developments, nonfarm 
payroll employment increased by 243,000 and the unemployment 
rate decreased by 8.3 percent.
    My colleagues and I would now be glad to answer your 
questions.
    [The statement of Acting Commissioner Galvin, together with 
Press Release No. USDL-12-0163, appears in the Submissions for 
the Record on page 32.]
    Representative Cummings. Thank you very much. I want you to 
clarify, Mr. Galvin, one point. How much of the drop in the 
unemployment rate in January was due to people finding jobs and 
how much was due to people dropping out of the labor force?
    Acting Commissioner Galvin. Well, the level was down about 
381,000 in January, and over these 5 months since August, while 
it has been declining, the unemployment rate has been 
declining, the level of unemployment is down about 1.2 million. 
Over that same period employment measured by the Household 
Survey is up about 1.7 million. So, you know, the numbers add 
up to a story of the unemployed finding jobs over this 5-month 
period. The labor force has risen a little bit.
    Representative Cummings. The economic momentum that has 
occurred over the past few months seems to have carried into 
the labor market. In addition to the 100,000 plus jobs being 
created each month, weekly applications for initial 
unemployment benefits fell last week to 367,000 and have 
remained below 400,000 for 10 of the last 12 weeks. 
Furthermore, the unemployment rate last month fell to 8.3 
percent, the lowest since February, 2009. However, some 
observers have raised concerns that the improved numbers are a 
blip, or a reflection of the increased hiring that always 
occurs during the winter holidays or in the case of the 
unemployment rate it is a reflection of reduced labor force 
participation.
    Commissioner, what is your perspective regarding the 
accuracy of the positive job creation numbers and the extent to 
which they are attributable to the winter holiday shopping 
season or other factors?
    Acting Commissioner Galvin. Well, I am confident in the 
accuracy of the numbers this month and every month. We adjust 
the numbers to remove normal recurring seasonal variation from 
things like winter--Christmastime hiring.
    Representative Cummings. Now, the overall unemployment rate 
has fallen. Are all demographic groups facing lower 
unemployment rates? In particular how are our African American 
teenagers doing, Hispanic teenagers and African American and 
Hispanic adults?
    Acting Commissioner Galvin. Well, I have easily accessible 
the overall African American unemployment rate. It dropped 2.2 
points this month down to 13.6 percent.
    Representative Cummings. Is that significant?
    Acting Commissioner Galvin. That is significant.
    Representative Cummings. And what do you attribute that to? 
Do you have any idea from what you can see?
    Acting Commissioner Galvin. Well, again the numbers add up 
to African Americans leaving unemployment and finding jobs.
    Representative Cummings. Okay. And Hispanics?
    Acting Commissioner Galvin. Hispanic rate was 10.5 percent 
in January, down about half a point but not a significant 
difference.
    Representative Cummings. Now one of the most persistent 
challenges since the 2007 economic collapse is the issue of 
long-term unemployment. As I mentioned in my opening remarks, 
more than 42 percent of the people who are unemployed have been 
jobless for 6 months or more, and 70 percent of the long-term 
unemployed have been out of work for a year longer. What long-
term unemployment trends are you seeing? And then I will turn 
it over to Mr. Brady.
    Acting Commissioner Galvin. Well, the number of people 
looking for work for 27 weeks or more has fallen over the last 
year about 700,000 just as unemployment has fallen over the 
last year. But in percentage terms the long-term unemployed 
still represents a large share of the unemployed, well 42.9 
percent this month, a little different from 43.9 percent a year 
earlier.
    Representative Cummings. Mr. Brady.
    Vice Chairman Brady. Thank you, Mr. Chairman. Mr. Galvin, 
obviously we are always encouraged by new jobs numbers. We see 
the unemployment rate going down, but again we want it to go 
down because people are getting jobs and not just getting out 
of the workforce. When the recession began the labor 
participation rate, the people who were actively in this 
workforce, was 66 percent. Today it is now according to the 
latest report 63.7 percent. That is the lowest since 1983. Are 
fewer workers in the workforce indicative of a healthy economy?
    Acting Commissioner Galvin. Well.
    Vice Chairman Brady. I mean honestly, is that a sign of a 
healthy economy that fewer people are working in the workforce?
    Acting Commissioner Galvin. Some of the decline in the 
labor force since the recession is due to demographic reasons. 
Overall the productive capacity of the economy is higher. The 
more the work the more the participation of workers in the 
labor force.
    Vice Chairman Brady. The CBO this week indicated that 
unemployment will rise this year and next and that at this pace 
of job growth that America won't get back to its level of 
unemployment before the recession until 2015. Do you have any 
reason to disagree with those projections?
    Acting Commissioner Galvin. Well, BLS avoids forecasting 
like that. It is sort of an exercise that requires a lot of 
assumptions and judgments. And we try to stick to the facts of 
describing the current labor market.
    Vice Chairman Brady. In taking a look at the numbers this 
month, in the jobs report numbers you report each month, it is 
a net number, isn't it, that could go up if businesses lay off 
fewer workers than before even though they may not be hiring 
more new ones. I don't know if that fact is widely recognized. 
And could you comment on this point on the term ``job 
creation'' in this context? It doesn't necessarily mean that 
everyone keeps their jobs and more jobs are filled, does it?
    Acting Commissioner Galvin. Correct. There is lots of 
churning in the economy each month. This number we report from 
the payroll survey is a net number reflecting the difference 
between the additions to payrolls or hiring and the 
subtractions from payrolls or separations and quits.
    Vice Chairman Brady. In the chart behind me we are still, 
again, looking at the bigger picture, what does it take to have 
a healthy recovery. Here we are years after the recession 
officially ended, we are still in the stop and start mode and 
fairly uncertain. Clearly the new hires continue to be about 
where they were in the middle of the recession.
    Can you comment? We get these reports. I guess they are 
called the JOLTS report, not as frequently as we get your 
employment situation reports. How could we get more insight 
into critical numbers like this before the next JOLTS report 
comes out? How can we look more quickly at important indicators 
like this?
    Acting Commissioner Galvin. You are right, the JOLTS 
numbers are lagged about a month and a half behind the payroll 
survey numbers. We don't have any data that is more timely than 
JOLTS to tell you about what is going on beneath this net 
change in payroll employment from the payroll survey.
    Vice Chairman Brady. Let me finish with this, again going 
back. We are looking for indicators of a healthy economy. The 
new jobs numbers are good, the number of people working is a 
key indicator. My numbers show that if we actually had a count 
of those who have given up or not in the workforce today, that 
this month their unemployment rate actually would have gone up 
from 11.6 percent to 11.7 percent. Do you figure those numbers 
as you do your reports?
    Acting Commissioner Galvin. No, we don't.
    Vice Chairman Brady. Yield back, Mr. Chairman.
    Representative Cummings. Thank you very much. Mrs. Maloney.
    Representative Maloney. Well, thank you for this report. It 
is good news, especially in the number of unemployment rate 
dropping for 5 straight months. That is very good news and we 
are trending in the right direction with 23 months of job 
gains, 243,000 for this month alone. Could you point out other 
bright spots in this report, any other good news that you see 
that the country is trending in the right direction?
    Acting Commissioner Galvin. Well, the rise in payroll 
employment this month of 243,000 is a sizable one compared to 
the path of payroll employment last year, which averaged 
monthly gains of 152,000. Some of the gains this month in the 
private sector were widespread. Notably we saw large gains in 
professional and business services, and leisure and 
hospitality, and health care employment, in manufacturing which 
gained 50,000 jobs. And in construction which has been flat 
since early 2010, but has now recorded a couple of increases 
totaling 52,000, mostly in nonresidential specialty trade 
contractors.
    Representative Maloney. Often January numbers don't show 
this kind of gains; is this unusual for January numbers?
    Acting Commissioner Galvin. No, we adjust the numbers for 
normal recurring seasonal variation in January and any month. 
We try to take that normal variation out of there so what you 
are looking at is the underlying labor trend in the labor 
market.
    Representative Maloney. And Mr. Galvin, I am interested in 
making sure that the economy improves for all sectors. Can you 
tell me whether the unemployment rate has been dropping for 
women or just men seeing this unemployment rate drop?
    Acting Commissioner Galvin. I will get right with you on 
that.
    Mr. Nardone. We have seen the unemployment rate for men has 
dropped a bit more than for women. It went up more during the 
recession than the rate for women did. Although both went up, 
they are both lower than they were; they are not as low as they 
were at the start of the recession obviously.
    Representative Maloney. Well, we know that many State and 
local governments have been laying off workers and women 
predominantly work in State and local governments. Do you think 
that is part of the cause, the women's unemployment rate?
    Mr. Nardone. I think the fact that the men's rate has come 
down more than the women's is that it is a reflection of the 
fact that men were more affected in industries that were very 
hard hit cyclically like manufacturing and construction.
    Representative Maloney. Now, when you were talking about 
the long-term unemployed and you said earlier that the long-
term unemployed was continuing, do you have a breakdown in age 
of the people that are saying they are--and the people who are 
giving up? Is it predominantly 55 and older? Do you have a 
breakdown in age in the long-term unemployed? Is there a trend 
in that sector?
    Acting Commissioner Galvin. One second, we do have that. 
Let's move on and Mr. Nardone will find that.
    Representative Maloney. Okay. And also do you see any--do 
you break down regions? Are there certain regions that are 
booming or doing better with the employment and the dropping of 
the unemployed rate? Do you see the South, the East, the West 
or any areas that are urban areas, are they more hard hit than 
others? Do you have any trends in geography and how the workers 
of our country are faring?
    Acting Commissioner Galvin. We will have to get back to you 
on the breakdown of the long-term unemployed. It is not 
something we brought today. As well we can get back to you on 
the geographic differentials and the dropping of the 
unemployment rate.
    [Letter dated February 24, 2012, transmitting Acting 
Commissioner John M. Galvin's response to Representative 
Carolyn B. Maloney appears in the Submissions for the Record on 
page 76.]
    Representative Maloney. Thank you for your hard work. My 
time has expired, thank you.
    Representative Cummings. Mr. Campbell.
    Representative Campbell. Thank you, Mr. Chairman. You know, 
sometimes we get these statistics, it happens with CPI as well, 
and the feel on the ground is different than what the statistic 
is. And certainly recently where CPI was kind of low but the 
feel on the ground was that the things that people were buying 
were going up at a faster rate than CPI. Now I admittedly come 
from one of the states with the highest unemployment rates, 
California. But as much as these statistics are good--the feel 
on the ground isn't as good. One of the things I wanted to ask 
about, and correct me if I am wrong on this, but where is the 
employment in the percentage drop, from 8.5 to 8.3, since the 
widest measure of unemployment, which includes discouraged, 
marginally attached, and part-time people who would prefer to 
be full time, actually increased slightly to 23.8 percent if I 
have my numbers correct. So how--what does that mean or how 
does that happen? So this sort of headline number went down but 
the broader number went up?
    Acting Commissioner Galvin. Well, the widest measure that 
BLS produces we refer to as U-6, which does include all of the 
marginally attached and the part-time for economic reasons, and 
that is at 15.1 percent in January as compared to 8.3 percent 
for the base unemployment rate. That was unchanged over the 
month, the widest measure.
    Representative Campbell. Okay. So that was unchanged but 
the other went down. So that means that maybe some of these 
people who became employed became employed as part-time; is 
that what that means? And by the way what does marginally 
attached mean?
    Acting Commissioner Galvin. That means workers who want and 
are available for work, they have looked in the last year for 
jobs but they haven't looked in the last month.
    Representative Campbell. They have looked in the last year 
but haven't looked in the last month.
    Acting Commissioner Galvin. They need to have looked in the 
last month to be counted as unemployed.
    Representative Campbell. I see. All right. So they aren't 
employed but you don't count them in the number that includes 
the 8.3.
    Acting Commissioner Galvin. Correct.
    Representative Campbell. So on the broadest number, and I 
read the wrong number, but 15.1 percent of the population is 
the broad number that is unemployed or under employed with the 
part-time and that didn't change from last?
    Acting Commissioner Galvin. Correct. It has declined pretty 
much in step with the decline in the regular unemployment rate 
over the last 5 months.
    Representative Campbell. All right, okay. And then the 
total workforce, civilian labor force was actually up, was it, 
so the total labor force was up as well; is that right? I am 
trying to understand.
    Acting Commissioner Galvin. Uh-huh.
    Representative Campbell. Sometimes, as we know, the 
numerator and the denominator of unemployment drop when people 
drop out of the workforce and it makes it look like we are 
doing better but we are actually not employing more people.
    Acting Commissioner Galvin. Well, over these 5 months where 
the unemployment rate has come down eight-tenths of a percent 
the level of unemployed has declined by 1.2 million, but at the 
same time the level of employed from the Household Survey is up 
1.7 million. So the sum of those is the labor force. So you 
have got the unemployed subtracted from the employed and you 
get a rise in the labor force of about a half million over this 
time period.
    Representative Campbell. Thank you. I yield back, Mr. 
Chairman.
    Representative Cummings. Thank you very much. Ms. Sanchez.
    Representative Sanchez. Thank you very much and thank you, 
gentlemen, for being before us today. I want to go along some 
of the discussion points that my colleague from Orange County 
on the other side was talking about. I am interested in, first 
of all, because you mention population in your report or 
population groups, so I am trying to understand what does that 
mean. In particular, when you look at the overall numbers there 
is a thing called the baby boomers and a lot of them are 
getting to retirement age, and supposedly that was the largest 
group of people in a particular time frame that the United 
States had seen. So my question to you is are we seeing the 
baby boomers retire and therefore be out of the workforce? And 
is that having some impact to that? And are we graduating or 
are we seeing enough young people enter into the workforce that 
they are making up those numbers, or what is the relationship 
between those two ends of the employment line?
    And then my next question is could you in some way 
characterize what is going on with the youth in particular, 
those without a college degree and maybe those with a college 
degree, because it does seem that on--that in the weeds where 
we are when we go home that kids aren't getting employment 
despite getting an education.
    Acting Commissioner Galvin. I will have my colleague, Mr. 
Nardone, handle that.
    Mr. Nardone. In terms of looking at--one thing that will be 
useful is to look at labor force participation rates and taking 
a somewhat longer view. One thing that is been happening is the 
labor force participation rates for people age 55 and over, 
which would include that baby boom group, has actually been 
going up a little bit over time. Labor force participation 
rates for younger people over a longer period have been 
trending down, partly--there has also been an increase in 
school enrollment of those young people, too. Young people who 
are in school can be in the labor force obviously, they are 
having a part-time job or they can be looking for work, but in 
general people who are in school are less likely to be in the 
labor force than those who aren't.
    Representative Sanchez. So what you are basically telling 
me is--and do you think that would be attributed to the fact 
that maybe people who thought they had a retirement sort of 
lost their retirement or they don't feel as comfortable, maybe 
they are living longer, whether it is a McDonald's job or part-
time consultant, or what have you, and they tend to take up 
those places that we might have seen young people before? Could 
that be what is going on?
    Mr. Nardone. We don't really know the exact reasons. One 
thing we do know is that the increase in labor force 
participation rate for people 55 and over actually predated the 
recession. It had been going on since the 1990s really.
    Representative Sanchez. Interesting, okay. I know that Mrs. 
Maloney I think asked about this, this is about geography. It 
seems to me, can we tell where these jobs are being created? 
Because it seems to me like a lot of these jobs that are being 
created may be moving south or southwest in the country. Do we 
have numbers on that or would you be able to get us numbers so 
that we could take a look at where jobs are really be creating 
and where we are really losing them.
    Acting Commissioner Galvin. I do have some numbers on that 
with me today. Now our State numbers are lagged a month, so we 
reported the national number for January today but our State 
numbers are only available through December. But looking at the 
December numbers the States with the largest gain since the 
national employment trough in early 2010 job basis have been 
Texas, California, Florida, simply the largest States. On a 
percentage basis, percentage growth basis, the States with the 
largest change, North Dakota, Utah, Texas, Oklahoma, Wyoming.
    Representative Sanchez. Thank you. And my last question, 
real fast, when we talk about going back to this whole maybe 
underemployed or still searching for the real job you want, do 
we have--I know you gave us a particular cost or average per 
wage of $23 or $24, but does that include benefits? And are we 
seeing any changes in the type of jobs we are getting and what 
type--is there a smaller benefit package going with those jobs? 
Are there any numbers available with that in the aggregate?
    Acting Commissioner Galvin. Yeah, those numbers I gave you 
are wages only. We issued an employment cost index report 
earlier this week, I believe it was, which showed the 
continuation of the trend of the cost of benefits to employers 
growing faster than the cost of wages. I don't have any 
information though about the nature of the benefit packages of 
jobs that are being created right now.
    Representative Sanchez. So let me just rephrase that. So 
you are saying that if I am an average employer and I am 
getting an average person on the payroll for the first time, I 
am paying them about $24 but the benefit package to them is 
actually costing me more than it used to per employee?
    Acting Commissioner Galvin. Correct.
    Representative Sanchez. Thank you. Thank you, Mr. Chairman 
I appreciate that. Mr. Mulvaney.
    Representative Mulvaney. Thank you, Mr. Chairman.
    Mr. Galvin, I am going to stay away from the policy issues 
and just make sure I can understand the data. So I am going to 
run down a list relatively quickly and make sure I am reading 
it correctly. The labor force participation rate dropped last 
month from 64 percent to 63.7 percent.
    Acting Commissioner Galvin. Correct.
    Representative Mulvaney. The number of discouraged workers 
was up from roughly 945,000 to 1.05 million people; is that 
correct?
    Acting Commissioner Galvin. Correct.
    Representative Mulvaney. That the number of other 
marginally attached workers grew from 1.595 million to 1.75 
million last month, U5?
    Acting Commissioner Galvin. Yeah. The other--I have to do 
the math there. That looks right.
    Representative Mulvaney. The number of folks who are 
employed part time for economic reasons grew from 8.098 million 
people to 8.23 million people last month?
    Acting Commissioner Galvin. Correct.
    Representative Mulvaney. And that the unemployed by the 
widest measure grew then from 23.74 million to 23.8 million 
people last month; is that correct?
    Acting Commissioner Galvin. I have to dig for that level. I 
have the rate.
    Representative Mulvaney. The rate went from 15.2 to 15.1?
    Acting Commissioner Galvin. Correct.
    Representative Mulvaney. That the percent of total long-
term unemployed--excuse me, the long-term as a percentage of 
the total unemployed last month rose from 42.7 percent to 43.3 
percent. That is defined by folks out of work more than 6 
months, 27 weeks?
    Acting Commissioner Galvin. It rose four-tenths of a 
percent to 42.9 percent.
    Representative Mulvaney. Okay. And then the graph that Vice 
Chairman Brady offered, is up here behind us, shows that the 
number of total hires is roughly the same now on a monthly 
basis as it was in late 2008. Would you agree with that, sir?
    Acting Commissioner Galvin. If those numbers are correct, 
yes, I would. I have some data from our JOLT survey which show 
that JOLT hires have increased some since the end of the 
recession. It doesn't appear that that line is going up.
    Representative Mulvaney. I think that is correct, sir. That 
is the end of the recession. Those were the new hires last 
month. So I think your statement is probably correct but I 
think mine is as well. If you go back to late 2008, which is 
the blue dotted vertical line there.
    Acting Commissioner Galvin. Current hires are below that 
level.
    Representative Mulvaney. Exactly. If we add this 
discouraged workers, other marginally attached workers and 
folks who are unemployed part time for economic reasons, then 
the unemployment rate in this country is 15.1 percent this 
month?
    Acting Commissioner Galvin. Correct.
    Representative Mulvaney. Thank you, sir.
    You mentioned earlier that the labor force has grown 
slightly and it looks like it has from 15.--excuse me 153.9 
million people to 154.4. Given the population growth over the 
same period of time, is that the growth in the size of the 
labor force that you would expect to see?
    Acting Commissioner Galvin. That depends on the degree to 
which the growth and the population participates in the labor 
force, but generally you would expect an increase of somewhere 
from 100 to 150,000 per month just to keep up with the 
population and their rate of participating.
    Representative Mulvaney. I am sorry. Say that again. You 
would expect the job, the number of jobs to grow 150,000 jobs 
per month?
    Acting Commissioner Galvin. You would expect the labor 
force--well, you need about 100 to 150,000 jobs per month to 
keep up with the growth in the labor force.
    Representative Mulvaney. So if we had 150,000 jobs per 
month, all other things being equal, the unemployment rate will 
not come down?
    Acting Commissioner Galvin. Correct. All other things being 
equal, the participation rate will stay the same and the jobs 
being found will go to the new folks coming into the labor 
force.
    Representative Mulvaney. So at the rate of job creation 
last month, all other things being equal, how long will it take 
for to us get employment down to say 6\1/2\ percent?
    Acting Commissioner Galvin. Yeah, that requires a lot of 
speculation I need to avoid because I really can't predict the 
rates at which people will enter the labor force. I can tell 
you that the job growth we have seen since employment turned 
around is measured by the Payroll Survey. It is still about 5.6 
million below, there is still about a 5.6 million drop or loss 
from--there is still 5.6 million jobs to be gained in order for 
us to regain all of the jobs lost during this downturn.
    Representative Mulvaney. Thank you, Mr. Galvin.
    Lastly, on page 3 of your report you indicate that 
government jobs are down considerably since--over the course of 
the last 12 months, 276,000 jobs lost, with declines in local 
government, State government, excluding education and the U.S. 
Postal Service. If you add education back into those numbers, 
what does that job loss within the government sector look like?
    Acting Commissioner Galvin. One second, I will get that for 
you. Well, that is the total over the year that you just gave 
me.
    Representative Mulvaney. Yes, sir.
    Acting Commissioner Galvin. 276,000 jobs were lost in 
government for January 2011 to January 2012, and that is the 
total of Federal, State, both the education and the non-
education components, and local, both the education and non-
education components.
    Representative Mulvaney. I am sorry. I am looking at your 
notes on page 3, and it specifically says State government, 
excluding education. So I took that to mean that any gains in 
education were excluded from that number, is that not correct?
    Acting Commissioner Galvin. No, that is just a way of 
breaking down the State government total, because some people 
are interested in that. The education sector and then the non-
education sector of the State government.
    Representative Mulvaney. I guess I apologize for going a 
little long, Mr. Chairman. I guess my question is where are the 
education jobs contained on the list on page 3? If we added one 
education job--it looks like we have added education jobs since 
the beginning of the recession, we added education jobs from 
November to December. So on the list on page 3 if we hire a 
teacher what category does it go into?
    Mr. Nardone. I think just in terms of local government 
education, looking over the year, currently there are 7.8 
million in local government education. That is down from 7.9 
million a year ago. State government education, you had--it is 
essentially flat, about 2.4 million. Private education has gone 
up 80,000.
    Representative Mulvaney. Okay. So education is roughly flat 
over the course of the last year?
    Mr. Nardone. If you are looking at government education, 
State and local, it is down mainly in local areas. The State 
government education is flat over the year.
    Representative Mulvaney. I gotcha. Gentlemen, thank you 
very much.
    Representative Cummings. Mr. Burgess.
    Representative Burgess. Thank you, Mr. Chairman. Mr. 
Galvin, the current state of the economy when we look at this 
recession and compare it to the previous recessions and the 
recovery--and I apologize for not having the graphics here, but 
everyone understands that the recovery has been slower and much 
more prolonged than other recessions, certainly that have 
occurred during my lifetime and in years preceding that. Can 
you give us some reasons why the recovery has been so painfully 
slow in occurring?
    Acting Commissioner Galvin. Well, I don't know that I have 
the reasons, but I certainly can confirm that as compared, say, 
to the recessions in 1975 and 1982 job recovery in this 
recession is much slower as compared to the recessions of 1991 
and 2003, or that ended in 1991 and 2003. Job recovery after 
this recession is somewhat slower.
    Representative Burgess. Well, I did take the liberty of 
preparing some economic data, and I realize that is not my 
forte, and at the risk of relating two things that are not 
related I decided to plot the unemployment rate for the last 10 
years and I put on the graph also, since it has been the 
subject of some national discussion, the minimum wage increases 
that have recently occurred, and you can see there that there 
does appear to be a parallel. Now, I realize there is a risk in 
relating two things that may not be related, but do you have a 
comment on the association of those two lines on the graph?
    Acting Commissioner Galvin. Yeah. We don't engage in that 
sort of policy analysis. We don't want to do anything to 
undermine your trust in our objectivity and fairness.
    Representative Burgess. The reality is, though, that this 
changes the unemployment rate. You know, I referenced in my 
opening statement that there are some things the administration 
has done, but there are other things that the Congress has 
done. There are some things that the Congress did during the 
last administration when Speaker Pelosi took over as Speaker of 
the House, and this was one of those things.
    Now, it is relevant because it also--people are discussing 
maybe we should just index the minimum wage to inflation, and 
what I see in looking at this is a period of relative stability 
while the minimum wage stayed at $5.15 an hour. Perhaps we are 
achieving a new equilibrium up at the other end of the graph. 
And if you index the minimum wage to inflation, would it likely 
have this disruptive effect that perhaps occurred during 2007, 
2008, 2009 and 2010?
    Acting Commissioner Galvin. Again, I really can't comment 
on policy questions like that.
    Representative Burgess. Let me ask you this: Did the size 
of the labor force change this past month?
    Acting Commissioner Galvin. It did.
    Representative Burgess. The civilian labor force.
    Acting Commissioner Galvin. Yes--well, after adjustment for 
the population controls it was up 250,000. That is a small 
change.
    Representative Burgess. But another way of looking at it 
those not in the labor force increased from 86.7 million to 
87.9 million; is that an accurate reflection?
    Mr. Nardone. There is an issue with this month's numbers. 
As was mentioned in the testimony, we incorporated new 
population estimates that are based on the Census 2010, which 
makes the difference between December and January not strictly 
comparable. Essentially those new population controls show that 
there were more people who were over the age of 55 and more 
people who were between the ages of 16 to 24, groups that are 
less likely to be in the labor force than the general 
population. So you have what looks like a big bump-up in the 
number of people not in the labor force. If you adjust for that 
artificial--for population control it is actually down by 
75,000, the size--the population that is not in the labor 
force.
    Representative Burgess. This may fall into that broad 
category of lies, darn lies and statistics, but still 1.2 
million people lost from the labor force. That is a big chunk 
of folks. Okay, we massage numbers and make it look not so bad, 
but, you know, you just have to worry if we are losing people 
from the labor force at that rate, yeah, you make your numbers 
look better as far as the unemployment rate if your goalpost is 
November 2012, but what people are feeling out in the country, 
what people are experiencing out in the country, and this is 
what I encounter when I go home, people say don't talk to me 
about the economic recovery because even in Texas we are not 
feeling it. And I rather suspect that if I was visiting 
California or Ohio or Michigan I would hear those same 
sentiments perhaps even a little more strongly.
    Let me just ask you in the time I have remaining, the fact 
that there are fewer payroll jobs than there were pre-recession 
and this month you gain 200,000, so coming back at a rate of 
200,000 a month, say this month is the new normal, this is the 
new benchmark, every month is going to be just like this month 
going forward. When do we get back to the pre-recession level?
    Acting Commissioner Galvin. It would take 23 more months of 
growth at this month's pace, 243,000 per month, to regain all 
those jobs.
    Representative Burgess. And if the number drifted down from 
that obviously, the length of time is going to extend. What do 
you look to--let me ask you this, you referenced in your 
figures the mining, is that the oil and gas development that 
occurs also?
    Acting Commissioner Galvin. Uh-huh.
    Representative Burgess. We did some positive reflection 
there; is that correct?
    Acting Commissioner Galvin. Correct.
    Representative Burgess. Even with the price of natural gas 
fairly low, the price of oil has maintained a high level, but 
the overall outlook for that sector is it something that is 
positive or negative?
    Acting Commissioner Galvin. Well, we avoid forecasting, but 
mining has been growing recently due to oil--support activities 
for oil and gas mining.
    Representative Burgess. And again I would just reemphasize 
the administration could go a long way toward the economic 
recovery of this country, producing American jobs and American 
energy, and I think your data today supports that.
    Mr. Chairman, I cannot see the clock so I have no earthly 
idea of whether I am yielding back time or whether I have run 
over.
    Representative Cummings. About 2 minutes over.
    Representative Burgess. I appreciate your indulgence and I 
yield back whatever time remains. We might in the future try to 
have the clock visible.
    Representative Cummings. I agree.
    Just one last question. Let me just pick up on something 
that Mr. Mulvaney was talking about, the public sector jobs. We 
have lost a lot of jobs in the public sector, have we not? What 
did you say, 276,000?
    Acting Commissioner Galvin. Correct, over the year. That 
was lost.
    That is correct, 276,000 government jobs lost over the 
year.
    Representative Cummings. And do you see a trend with regard 
to the loss of those jobs? In other words, is that a steady 
trend going down? We hear a lot of complaints about public 
service workers and making government smaller. I know we are 
talking about--I think you said State, local and Federal; is 
that right?
    Acting Commissioner Galvin. Correct. Government has been 
losing since--well, pretty steadily since near the end of 2010. 
State and local government had employment peaks in August 2008 
and USPS has been losing jobs for far longer.
    Representative Cummings. All right, the question that I 
always ask is if somebody were watching this today and they 
were trying to find employment based upon what you see there, 
what are the areas, fields that you would tell them are--not 
that you would be giving them advice, you would be telling them 
what seems to be growing, the fields that seem to be growing, 
and the geographic areas, somebody who is really desperate for 
a job and trying to get something out of this hearing as to 
where they might go to get a job?
    Acting Commissioner Galvin. Well, this week BLS just 
published our employment projections for the period ending 
2020. So they provide sort of a job outlook for occupations. 
Just to summarize, these projections showed the largest number 
of jobs are in three sort of classes of occupations. One is 
called office and administrative support occupations; these are 
jobs like customer service representatives and bookkeeping 
clerks. Second big category of projected growth is in health 
care practitioners and technical occupations. Jobs like 
registered nurses, which we project to grow by 700,000 jobs by 
2020. And physicians and surgeons are in that group, too. The 
group with the third largest rate of increase or projected 
growth is sales and related occupations, like sales 
representatives and cashiers.
    Representative Cummings. And what about geographic areas? 
If somebody wants to move from a State that has a very high 
unemployment rate--I think you mentioned a little bit earlier a 
few States that were doing pretty good with regard to jobs, 
what States would you tell them that they might want to look 
at?
    Acting Commissioner Galvin. We don't do----
    Representative Cummings. I know Texas would be one.
    Acting Commissioner Galvin. Uh-huh. We don't do these 
projections by State but regarding unemployment rates, States 
with the lowest unemployment rates in our most recent release, 
December 2011, were North Dakota, Nebraska, South Dakota, New 
Hampshire, Vermont, Iowa, Minnesota.
    Representative Cummings. Mr. Mulvaney, just 2 minutes, 3 
minutes.
    Representative Mulvaney. I won't need that much time, Mr. 
Chairman. Mr. Galvin, just to follow up on a question the 
chairman asked you a second ago, the 276,000 government jobs 
that were lost in 2011, approximately what percentage of the 
overall government workforce does that number represent?
    Acting Commissioner Galvin. We will have to dig that up.
    Representative Mulvaney. I thought I had seen a number of 
roughly 22 million government jobs as of last month.
    Representative Cummings. Is that State, local and Federal?
    Representative Mulvaney. Uh-huh. Yes, sir, I believe it to 
be.
    Mr. Nardone. That would be a decline of 1.2 percent of the 
level in January 2011.
    Representative Mulvaney. So for all of 2011 the size of the 
government workforce, Federal, State and local, shrank by 1.2 
percent?
    Mr. Nardone. I believe that is correct.
    Representative Mulvaney. Mr. Galvin said earlier in his 
testimony that we are still 5.6 million jobs short in the 
overall economy from the beginning of the recession. What 
percentage does that represent of the overall workforce?
    Mr. Nardone. That is about 4 percent of the current 
workforce. I don't really have what it was, the decline from 
the start.
    Representative Mulvaney. It would be a little bit higher 
but about the same. Thank you, gentlemen. That is all I have.
    Representative Burgess. Could I just?
    Representative Cummings. Mr. Burgess for 2 minutes.
    Representative Burgess. One last question. We are grappling 
with the unemployment insurance extension here on the floor 
this week, next week. Typically in your experience, just purely 
from a statistical perspective and not a policy perspective, I 
am not asking you to speculate, but when unemployment benefits 
run out, what typically happens to the unemployment rate?
    Acting Commissioner Galvin. Well, that is a policy 
question.
    Representative Burgess. No, I am asking you for statistical 
analysis. You have looked at it from previous years. Is there a 
trend or is this a non sequitur?
    Acting Commissioner Galvin. We really haven't looked at the 
relationship between the rise in the unemployment rate and the 
rise in unemployment insurance.
    Representative Burgess. Would you be good enough to look at 
that for me and respond to me between this month and next 
month? It is something I know that holds a lot of interest for 
a lot of us.
    Acting Commissioner Galvin. It is not something BLS does, 
but we can certainly look around at what other studies are out 
there and bring it to your attention.
    Representative Burgess. I would appreciate it.
    [Letter dated dated February 12, 2012, transmitting Acting 
Commissioner John M. Galvin's response to Representative 
Michael C. Burgess appears in the Submissions for the Record on 
page 79.]
    Representative Cummings. Mr. Mulvaney.
    Representative Mulvaney. The Bureau clearly tracks the 
length of period of time that folks are on unemployment. Is 
there data available that would or could show us when folks on 
the average come off of employment and go back into the 
workforce, whether it would be in week 2 or 8 or 27?
    Mr. Nardone. We don't actually track when people are on 
unemployment insurance. We do have some statistics for people 
who are unemployed, how long they are unemployed before they 
either find employment or go out. We developed that over the 
past year and we could provide an article that we wrote about 
that to you.
    [Letter dated February 12, 2012, transmitting Acting 
Commissioner John M. Galvin's response to Representative Mick 
Mulvaney appears in the Submissions for the Record on page 84.]
    Representative Mulvaney. Thank you, gentlemen. I appreciate 
that.
    Representative Cummings. Gentlemen, I want to thank you 
very much. And Mr. Galvin, welcome again. It does appear that 
we are moving in the right direction, not moving as fast as all 
of us would like because there are so many people unemployed. I 
know particularly in my district I see it every day, I live I 
amongst it, high rate of unemployment, but the fact is we are 
moving in the right direction, and I want to thank you very 
much.
    [Whereupon, at 10:43 a.m., the committee was adjourned.]
                       SUBMISSIONS FOR THE RECORD

          Prepared Statement of Representative Elijah Cummings
    Good morning. Chairman Casey couldn't be here today and I'm pleased 
to stand in for him this morning.
    I'd like to welcome Acting Commissioner John Galvin this morning as 
well as Mr. Thomas Nardone, Acting Associate Commissioner for 
Employment and Unemployment Statistics, and Dr. Michael Horrigan, 
Associate Commissioner for Prices and Living Conditions.
    I want to make a couple of overall comments about the economic 
recovery before diving into this month's employment numbers.
    In the second half of 2011, economic momentum picked up.
    The labor market continued to strengthen--adding 100,000 or more 
jobs for four straight months.
    Additionally, we learned last week that GDP grew at a 2.8 percent 
annual rate in the fourth quarter, an improvement over the previous 
three quarters of 2011, though inventory rebuilding accounted for much 
of the growth.
    There are other encouraging signs. The manufacturing sector 
continues to show strength.

      The ISM Manufacturing Index reading of 54.1 percent in 
January marked the 30th consecutive month of expansion in the 
manufacturing sector.

    And the unemployment rate has been moving in the right direction. 
During 2011, the national unemployment rate fell from 9.4 percent to 
8.5 percent.
    However, workers who have been out of work for long periods 
continue to struggle to find new jobs. More than 42 percent of the 
unemployed have been jobless for six months or more.
    We need to help workers regain their footing and bolster the 
recovery by extending the payroll tax cut for the remainder of the year 
and continuing unemployment insurance for workers who are counting on 
these benefits to make ends meet.
    Both of these policies put money in people's pockets--boosting 
demand, creating jobs and strengthening our economy.
    As the January Jobs report shows, we are making progress. But we 
must continue to invest in education, infrastructure and our workers.
    As I have said before, we must also take on the housing crisis. 
Without a smart, sensible path forward in housing, we cannot sustain 
this economic recovery.
                   today's employment report from bls
Job Gains

      The economy added private-sector jobs for the 23rd 
straight month.
      During January, the economy gained 257,000 private sector 
jobs. Due to the loss of government jobs, overall, the economy added 
243,000 jobs during the month.
      The manufacturing sector, which added 237,000 jobs in 
2011, gained 50,000 jobs in January.
      In addition, the professional and business services 
sector added 70,000 jobs, and hasn't lost jobs since March 2010.
      Employment in state and local government was basically 
unchanged in January. In 2011, state and local governments shed 235,000 
jobs and continue to face budget challenges that present a headwind for 
the economy.

Unemployment

      The overall unemployment rate was 8.3 percent, the lowest 
since February, 2009.
      Even with this progress, more than 12.7 million people 
are looking for work, but can't find it.
      The unemployment rate in the African-American community 
was 13.6 percent.
      Among Hispanic workers, the unemployment rate was 10.5 
percent.
      While the unemployment rate for Veterans was 7.5 percent, 
Gulf War-era II Veterans faced an unemployment rate of 9.1 percent.

Summary

      Today's employment report shows that the labor market 
continues to recover. The job gains in January continued the momentum 
from the fourth quarter of 2011.
      However, unemployment remains too high, unacceptably 
high, and we need to stay focused on creating jobs.
      Acting Commissioner Galvin, I look forward to your 
testimony.

    I would like to introduce today's witness. Mr. John M. (Jack) 
Galvin serves as Acting Commissioner of the Bureau of Labor Statistics. 
He has worked at the BLS since 1978 in various capacities including 
Deputy Commissioner, Associate Commissioner for Employment and 
Unemployment Statistics and Assistant Commissioner for Producer Price 
Indexes. Mr. Galvin holds a B.A. in Economics from the University of 
Illinois and an M.A. in Economics from George Washington University.




Prepared Statement of Representative Kevin Brady, Vice Chairman, Joint 
                           Economic Committee
    Commissioner Galvin, we welcome you in your new capacity to the 
Joint Economic Committee's hearing on the employment situation. Of 
course, we know you well from your appearances at prior employment 
hearings and as a dedicated BLS employee for many years. We appreciate 
your service and look forward to your testimony. We also welcome the 
members of your staff.
    The labor market is not recovering fast enough considering how 
depressed it has been. Thirty-one months into the Reagan recovery, we 
had added 8.7 million new payroll jobs. Today, however, the economy, at 
best, is at a crawl. We still are 6 million jobs short of the 
prerecession employment level; labor force participation is the lowest 
in decades; and yet unemployed workers still account for more than 8% 
of the shrunken workforce. Whatever claims that President Obama makes 
about how much worse the recession could have been, his policies have 
not ``stimulated'' the economy. We now have a huge federal debt, 
continuing large deficits, and sluggish growth.
    More than 2\1/2\ years have passed since the recession formally 
ended, yet real GDP growth is now expected to decline this year from a 
less-than-stellar 2.8% in the last quarter. In contrast, we averaged 
6.1% real GDP growth during the first 10 quarters of the Reagan 
recovery. Business is hoarding cash as it still holds investments below 
pre-recession levels, and it still is not materially stepping up 
hiring, despite what the payroll job number says.
    Consider the chart behind me. The top line shows hires and the 
bottom line layoffs. The huge churn is striking: over 4 million hires 
and 1.7 million layoffs, an image quite different from that of simply 
looking at net job changes.






    But the key observation is that hires remain at the mid-recession 
level. With all the money the Administration has spent to stimulate 
employment, hires are still down about 1.4 million per month from 
before the recession. In that light, the 243,000 payroll jobs gained 
today are not that impressive. The magnitude of annual benchmark 
revisions, the most recent of which BLS is introducing with today's 
report on the employment situation, only underscores this point.
    The low hires help to explain why labor force participation is 
down. If hiring has not risen in well over three years with a huge pool 
of unemployed competing for jobs, then why stay in the labor force?
    The unemployment rate and the payroll jobs number are important 
statistics, but they do not reveal the full extent of the problem we 
have.
    The President's current actions and proposals are feeble attempts 
to lift a $15 trillion economy and with the equivalent of matchsticks 
at the same time that it is tightening regulations, imposes an 
avalanche of new regulations, and thwarts the biggest shovel ready 
project, the Keystone pipeline, in the country. It threatens to raise 
taxes all the while adding to our national debt with continued 
undisciplined deficit spending.
    Strong private investment and job creation require a regulatory 
environment that facilitates operation of the free market economy and a 
tax environment that engenders expansion, not retrenchment. President 
Obama is working against the free market economy, undermining it with 
subsidies and special favors in some areas and harshly constraining and 
punishing it in others. That will cause anemic growth, and the labor 
market shows it.
    According to the Congressional Budget Office (CBO) slowing economic 
growth will cause the unemployment rate to rise during this year and 
the next. The CBO projects that the unemployment rate will hit 8.9% in 
the fourth quarter and 9.2% in the last quarter of 2013. Americans are 
eager for work and willing to work hard. The economic policies of 
President Obama and congressional Democrats have failed. Hardworking 
taxpayers deserve better. The federal government needs to get out of 
the way so private job creation and hiring can accelerate.
    Mr. Galvin, I look forward to hearing your testimony.



    
 Prepared Statement of John M. Galvin, Acting 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.
    The unemployment rate decreased to 8.3 percent in January, and 
nonfarm payroll employment rose by 243,000. In 2011, nonfarm employment 
increased by an average of 152,000 per month. Job growth was widespread 
in the private sector in January, with the largest gains occurring in 
professional and business services, leisure and hospitality, and 
manufacturing.
    Professional and business services added 70,000 jobs over the 
month, compared with an average monthly gain of 48,000 in 2011. Nearly 
half of the January increase occurred in employment services (+33,000), 
as temporary help employment continued to trend up. Also within 
professional and business services, employment rose in accounting and 
bookkeeping (+13,000) and in architectural and engineering services 
(+7,000).
    Employment in leisure and hospitality increased by 44,000, mostly 
in food services (+33,000). Health care employment rose by 31,000, with 
job gains in hospitals (+13,000) and ambulatory care services 
(+13,000). Employment in both wholesale and retail trade continued to 
trend up over the month.
    In the goods-producing sector, manufacturing employment increased 
by 50,000 in January, nearly all in durable goods manufacturing. 
Fabricated metal products, machinery, and motor vehicles each added 
jobs. Over the past 2 months, construction employment rose by 52,000, 
mainly among nonresidential specialty trade contractors. Mining 
employment continued to expand in January (+10,000). Since a recent low 
point in October 2009, mining has added 172,000 jobs.
    Government employment changed little in January. Over the last 12 
months, employment in the sector has decreased by 276,000 with declines 
in local government; state government, excluding education; and the 
U.S. Postal Service.
    Average hourly earnings of all employees on private nonfarm 
payrolls increased by 4 cents in January to $23.29. Over the past 12 
months, average hourly earnings have risen by 1.9 percent. From 
December 2010 to December 2011, the Consumer Price Index for All Urban 
Consumers (CPI-U) increased by 3.0 percent.
    In accordance with annual practice, the establishment survey data 
released today reflect the incorporation of benchmark revisions. Each 
year, BLS re-anchors the sample-based survey estimates to full universe 
counts of employment, primarily derived from administrative records of 
the unemployment insurance tax system. The level of nonfarm payroll 
employment in March 2011 was revised up by 162,000 (not seasonally 
adjusted) or 0.1 percent. The average benchmark revision over the past 
10 years was plus or minus 0.3 percent. (Further information about the 
impact of the benchmark revision is contained in our news release and 
on our Web site at http://www.bls.gov/web/empsit/cesbmart.htm.)
    Before discussing the data from our survey of households, I would 
note that, as is our annual practice, we have incorporated new 
population controls into the January estimates. Data beginning in 
January 2012 reflect population controls based on Census 2010, updated 
information on net international migration, and some methodological 
adjustments in the estimation process. Official estimates for December 
2011 and earlier months will not be revised to incorporate the Census 
2010-based controls. The impact of the new controls on the unemployment 
rate is negligible. However, two important household survey measures, 
the employment-population ratio and the labor force participation rate, 
are lowered by a change in the composition of the population (based on 
comparisons of December 2011 estimates computed using the old and new 
controls). The new controls raise the population of persons 55 years 
and older and, to a lesser extent, persons 16-24 years of age. Both of 
these groups are less likely to be in the labor force than the general 
population. (Additional information about the Census 2010-based 
population controls and impact can be found in our news release and on 
our Web site at http://www.bls.gov/cps/cps12adj.pdf.)
    Returning to the data for January, the unemployment rate continued 
to decline over the month. Since August 2011, the jobless rate has 
fallen from 9.1 to 8.3 percent, and the number of unemployed persons 
has declined by about 1.2 million. In January, the number of persons 
unemployed for 27 weeks or more was little changed at 5.5 million and 
made up 42.9 percent of the total. The employment-population ratio 
increased over the month, and the labor force participation rate was 
unchanged, after accounting for the impact of Census 2010-based 
population controls.
    To summarize January's labor market developments, nonfarm payroll 
employment increased by 243,000, and the unemployment rate decreased to 
8.3 percent.
    My colleagues and I now would be glad to answer your questions.





                                  
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