[Joint House and Senate Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 113-220
THE EMPLOYMENT SITUATION: DECEMBER 2013
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JANUARY 10, 2014
__________
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]
HOUSE OF REPRESENTATIVES SENATE
Kevin Brady, Texas, Chairman Amy Klobuchar, Minnesota, Vice
John Campbell, California Chair
Sean P. Duffy, Wisconsin Robert P. Casey, Jr., Pennsylvania
Justin Amash, Michigan Mark R. Warner, Virginia
Erik Paulsen, Minnesota Bernard Sanders, Vermont
Richard L. Hanna, New York Christopher Murphy, Connecticut
Carolyn B. Maloney, New York Martin Heinrich, New Mexico
Loretta Sanchez, California Dan Coats, Indiana
Elijah E. Cummings, Maryland Mike Lee, Utah
John Delaney, Maryland Roger F. Wicker, Mississippi
Pat Toomey, Pennsylvania
Robert P. O'Quinn, Executive Director
Niles Godes, Democratic Staff Director
C O N T E N T S
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Opening Statements of Members
Hon. Kevin Brady, Chairman, a U.S. Representative from Texas..... 1
Hon. Amy Klobuchar, Vice Chair, a U.S. Senator from Minnesota.... 3
Witnesses
Hon. Erica L. Groshen, Commissioner, Bureau of Labor Statistics,
U.S. Department of Labor, Washington, DC; accompanied by Dr.
Michael Horrigan, Associate Commissioner for Prices and Living
Conditions, Bureau of Labor Statistics; and Mr. Thomas J.
Nardone, Jr., Associate Commissioner for Employment and
Unemployment Statistics, Bureau of Labor Statistics............ 5
Submissions for the Record
Prepared statement of Hon. Kevin Brady........................... 22
Prepared statement of Hon. Erica L. Groshen...................... 22
Questions for the record from Representative Coats to
Commissioner Groshen........................................... 23
Letter dated February 26, 2014, from Commissioner Groshen to
Representative Coats........................................... 25
Letter dated January 29, 2014, from Commissioner Groshen to
Senator Klobuchar.............................................. 27
Letter dated January 30, 2014, from Commissioner Groshen to
Representative Hanna........................................... 29
Letter dated January 27, 2014, from Commissioner Groshen to
Representative Paulsen......................................... 31
THE EMPLOYMENT SITUATION:
DECEMBER 2013
----------
FRIDAY, JANUARY 10, 2014
United States Congress,
Joint Economic Committee,
Washington, DC.
The committee met, pursuant to call, at 9:34 a.m. in Room
G-50 of the Dirksen Senate Office Building, the Honorable Kevin
Brady, Chairman, presiding.
Representatives present: Brady of Texas, Duffy, Amash,
Paulsen, Hanna, Carolyn B. Maloney, Sanchez, Delaney.
Senators present: Klobuchar.
Staff present: Ted Boll, Hank Butler, Gail Cohen, Al
Felzenberg, Niles Godes, Paige Halen, Colleen Healy, Patrick
Miller, Robert O'Quinn, and Andrew Silvia.
OPENING STATEMENT OF HON. KEVIN BRADY, CHAIRMAN, A U.S.
REPRESENTATIVE FROM TEXAS
Chairman Brady. Good morning, everyone, Vice Chair
Klobuchar, Members of the Committee, and Commissioner Groshen.
Good morning, and welcome to the New Year.
This is Commissioner Groshen's first appearance before the
Joint Economic Committee. On behalf of the millions of
Americans who cannot yet find jobs, we are hopeful and we hope
that you can bring us better news in the future.
I would like to recognize Tom Nardone, who is retiring from
the Bureau of Labor Statistics after 37 years of service. He
has been ``Mr. Numbers'' for the Commissioner and this
Committee over the last several years.
Tom, we thank you for your dedicated service and wish you
the very best in your future endeavors--which, by the way,
sound wonderful.
Payroll job growth was, unfortunately, incredibly weak last
month. December saw a gain of only 87,000 private sector jobs
and 74,000 nonfarm jobs.
The unemployment rate did fall by 0.3 percentage points to
6.7 percent. However, this drop was largely due to falling
labor force participation. More than a half a million Americans
left the labor force last month. Consequently, the labor force
participation rate dropped to 62.8 percent, tying a 36-year
low.
While it sounds impressive to boast that the U.S. economy
added 8.2 million private-sector jobs over the past 46 months,
economic growth in an average recovery during the past half
century has been 50 percent larger than in the Obama recovery.
As a result of this growth gap, America today is missing a
whopping 4.5 million jobs along Main Street--and I don't think
that is acceptable to anyone.
Consider this: the best--the best--monthly private sector
jobs report of the Obama recovery is lower than the equivalent
of the average private jobs report of the Reagan recovery. In
other words, not a single month of the current recovery matches
even the equivalent of an average month of the Reagan recovery.
And that is disappointing. We all know we have got to do
better.
We should be encouraged that the unemployment rate has
declined from its peak of 10 percent in October, 2009, to 6.7
percent today. However, that is nowhere near the 5 percent
level the White House promised the American people when the
controversial $800 billion stimulus was rushed through Congress
on a party-line vote.
Now unfortunately the decline in the unemployment rate is
largely due to falling labor force participation. If you look
at it, if the labor force participation rate had not declined
since President Obama took office, the unemployment rate would
be nearly 11 percent. Another disappointing jobs indicator: a
smaller percentage of Americans are employed today than when
the recession ended over four-and-a-half years ago.
The American people are deeply dissatisfied with the
President's leadership on the economy. We need solutions that
get Washington out of the way so Main Street businesses can
start hiring with confidence again.
Raising the minimum wage and forcing small businesses to
pay nearly $5,000 more per worker won't increase hiring.
Washington mandating the equality of income won't increase
hiring. Extending emergency unemployment programs won't
increase hiring because what the long-term unemployed really
need and are crying for are new jobs.
The emergency unemployment program is designed for
extraordinary circumstances when America's unemployment rate is
high and going higher. As the White House reminds us, the
unemployment rate has declined in all 50 states and is at the
lowest since 2008.
So you ask why are the President and the Senate seemingly
turning their backs on job creation? Why doesn't the Senate
pick up and pass, and the President sign into law, any of the
dozens of jobs bills the House has already approved, including
the Keystone XL pipeline which would create thousands of well-
paying middle-class jobs.
It is not helpful, either, that the White House continues
to delay bipartisan unemployment reforms the President signed
into law two years ago to make it easier for states to match
local workers with local jobs and conduct drug testing for
applicants seeking jobs that require those tests.
We all know it is an election year, and some in Washington
are trying to change the conversation from the disappointing
economy and the bungled roll-out of the troubled Affordable
Care Act. I just hope my colleagues on both sides of the aisle
remember that the measure of America's compassion is not how
long we provide unemployment benefits, but how soon we get
people into good-paying jobs. That should be Washington's
focus.
Commissioner Groshen, welcome again, and I look forward to
your testimony.
I recognize the Vice Chair.
[The prepared statement of Chairman Brady appears in the
Submissions for the Record on page 22.]
OPENING STATEMENT OF HON. AMY KLOBUCHAR, VICE CHAIR, A U.S.
SENATOR FROM MINNESOTA
Vice Chair Klobuchar. Thank you very much, Chairman Brady,
and thank you for holding this hearing today.
I also want to thank Mr. Nardone for his 37 years of
numbers, of experience crunching numbers for us so we can do
our jobs. And also, welcome, Dr. Horrigan.
I am pleased we are having this hearing on the monthly
employment situation, and I look forward to hearing from all of
you today, not just on the past month but really on the past
year. This would be a good time to talk about the past year.
These hearings are an opportunity to dig more deeply into
the numbers and have a chance to get a more complete
understanding of the employment data.
I want to make a couple of overall comments first about the
economy. As we know, the economy has grown for 10 straight
quarters, with GDP growing at a 4.1 percent annual rate in the
third quarter of 2013. Each month, an average of 182,000 jobs
were added on average last month, and that would include last
month's numbers.
Consumer spending, which accounts for about 70 percent of
economic activity, was the strongest it has been in nearly two
years. And as a home state for Target and Best Buy in
Minnesota, we like that consumers are getting more confidence
in buying things.
Critical industries like housing are recovering. Housing
starts were up almost 23 percent in November. Home prices in 20
leading cities have increased by nearly 14 percent over the
past 12 months.
Manufacturing, which is of course the engine of innovation,
has rebounded, adding 568,000 jobs since February of 2010.
Exporting, which Chairman Brady and I were just talking
about, is another bright spot. Exports are growing in each of
the past four years, exceeding the pre-recession peak.
While all this is good news and shows that the economy has
improved greatly since the worst of the downturn when, I
remember in January of 2009 we lost more jobs in a single
month, more than there were people in the State of Vermont. We
have seen great improvement since then. We all know, as the
Chairman has pointed out, that there is still more work to do.
Five years later, though, we are still adding jobs. And if
you look at the chart here, it is showing 46 consecutive months
of private-sector job growth. It is not exactly where we want
to be, but we still have seen 46 straight months of private-
sector job growth.
In that time, 8.2 million private-sector jobs have been
created since the downturn.
The number of unemployed workers per job opening has
decreased from nearly 7 in July of 2009 to less than 3
approaching the pre-recession level of roughly 2 unemployed
workers for every job opening.
In 2013, the recovery in the labor market continued to
strengthen with the private sector adding 2.2 million jobs
during the course of the year, including the 87,000 jobs in
December. But because of the drop in government employment,
total nonfarm payrolls increased by only 74,000, which is a
number we are talking about today.
The unemployment rate, currently 6.7 percent, is down more
than a percentage point from last December when it was 7.9
percent. In my State, the unemployment rate is at 4.6 percent.
The truth is that for most workers the job market is better
today than it has been for a number of years.
Commissioner Groshen, I do look forward to your assessment
of the labor market in 2013.
Despite the recent progress and the drop in the national
unemployment rate to its lowest level in five years, long-term
unemployment is still a very real problem. Nearly 4 million
Americans, over one-third of unemployed workers, have been out
of work for more than 6 months. Long periods of joblessness do
significant damage to our Nation's productivity, as we
discussed at our Long-Term Unemployment Hearing last year. In
fact, Chairman Bernanke came yesterday to speak to some of the
Senators, looking back at his term, and he talked about the
fact that there has been significant economic progress but he
sees the challenges ahead being productivity and also the
income disparity issue.
I know that we are making progress on an agreement to
provide a one-year extension of unemployment benefits to people
who have been out of work for more than six months in the
United States Senate. That is a bipartisan bill sponsored by
Senator Jack Reed and Senator Heller, Republican of Nevada.
Extending unemployment insurance benefits will ensure that the
1.3 million workers whose benefits were cut off on December
28th will get the support that they need, allowing them to pay
their rent and fill their gas tanks as they continue their job
search.
Earlier this week I released a JEC report laying out the
economic case for continuing Federal Unemployment Insurance. It
showed that the long-term unemployment rate is nearly twice
what it was--nearly twice what it was--when Congress allowed
Federal Unemployment Insurance to expire after the recessions
of 1990 to 1991 and 2001. And you can see that chart of the
level at which we had long-term unemployment in past cases,
where the unemployment was allowed to expire.
So I would like to hear about the data you have,
Commissioner Groshen, on long-term unemployment. The report
also showed that in several states high long-term unemployment
is masked by a lower overall unemployment rate. For example,
Florida has an unemployment rate below the national rate, but
46 percent of its unemployed have been jobless for more than 6
months.
This leads us to look at things like ramping up our job
training. I can tell you in my State 60 percent of our
manufacturers say they have openings for jobs where they cannot
find workers with quite the right skills. And I think this is
something that is a bipartisan issue.
Senator Hoeven, Republican of North Dakota, and I have a
bill about investing in effective workforce training. And there
are a number of other ideas out there.
So I would say overall today's employment report shows that
we still have recovery in the labor market. The economy proved
resilient in 2013. The numbers are not, as I have said many
times, where we want to have them, but we continue, when you
look back at the entire year to that average gain of about
182,000 jobs a month, we have seen significant change that
shows we are heading in the direction of being a country that
does not just churn money but a country that makes stuff,
invents things, exports to the world, and most importantly has
a strong private-sector job economy.
Thank you, very much. I look forward to your testimony.
Chairman Brady. I would like to welcome the 14th
Commissioner of the Bureau of Labor Statistics, Erica Groshen.
Prior to joining BLS she was a Vice President of the
Research and Statistics Group at the Federal Reserve Bank of
New York. She also served on advisory boards for BLS and the
U.S. Census Bureau.
She has been a Visiting Assistant Professor of Economics at
Barnard College, at Columbia University, and a Visiting
Economist at the Bank for International Settlements in Basel,
Switzerland.
She earned a Ph.D. in Economics from the Harvard
University, and a Bachelor's Degree in Economics and
Mathematics at the University of Wisconsin Madison.
Commissioner, welcome, and we look forward to your
testimony.
STATEMENT OF HON. ERICA L. GROSHEN, COMMISSIONER, BUREAU OF
LABOR STATISTICS, U.S. DEPARTMENT OF LABOR, WASHINGTON, DC;
ACCOMPANIED BY: DR. MICHAEL HORRIGAN, ASSOCIATE COMMISSIONER
FOR PRICES AND LIVING CONDITIONS, BUREAU OF LABOR STATISTICS;
AND MR. THOMAS J. NARDONE, JR., ASSOCIATE COMMISSIONER FOR
EMPLOYMENT AND UNEMPLOYMENT STATISTICS, BUREAU OF LABOR
STATISTICS, WASHINGTON, DC
Commissioner Groshen. Mr. Chairman and Members of the
Committee:
Thank you for recognizing Tom's public service and
retirement, and for the opportunity to discuss the employment
and unemployment data that we released this morning. I must say
that you had very prescient timing in choosing a very
interesting report for me to discuss.
So the unemployment rate declined from 7.0 to 6.7 percent
in December, and nonfarm payroll employment edged up by 74,000
jobs.
Monthly job gains averaged 182,000 jobs in 2013, about the
same as in 2012. In December, employment rose in retail trade
and wholesale trade but fell in the information industry.
Incorporating the revisions for October and November, which
increased employment by 38,000 on net, monthly job gains have
averaged 172,000 over the past 3 months.
Retail trade added 55,000 jobs in December. Job gains
occurred in food and beverage stores which added 12,000;
clothing stores, which also added 12,000 jobs; general
merchandise stores, which added 8,000 jobs; and motor vehicles
and parts dealers, which added 7,000 jobs. Retail trade
employment increased by an average of 32,000 per month in 2013.
Wholesale trade employment rose by 15,000 in December. Over
the past year, wholesale trade added an average of 8,000 jobs
per month.
Employment in professional and business services continued
to trend up in December, adding 19,000 new jobs. This industry
has added 637,000 jobs over the past 12 months. Within this
industry, temporary help services added 40,000 jobs in
December. In contrast, accounting and bookkeeping services lost
25,000 jobs over the month.
Manufacturing employment continued to trend up in December,
adding 9,000 jobs. Manufacturing added 77,000 jobs in 2013,
compared with an increase of 154,000 jobs in 2012.
Employment in the information industry decreased by 12,000
jobs in December. This reflected a decline in motion picture
and sound recording of 14,000 jobs. Employment in the motion
picture industry can be very volatile from month to month. Over
the year, employment in information has shown little net
change.
Construction employment edged down in December, losing
16,000 jobs. However, in 2013 the industry added an average of
10,000 jobs per month.
Employment in nonresidential specialty trades contractors
declined by 13,000 in December, possibly reflecting unusually
cold weather in parts of the country.
Health care employment changed little in December, with a
decrease of 6,000 jobs. Over the past year, job growth in this
industry has slowed to an average of 17,000 per month, compared
with an average monthly gain of 27,000 in 2012.
In December, employment in most other major industries
changed little.
Average hourly earnings of all employees on private nonfarm
payrolls edged up by 2 cents in December. Over the past 12
months, average hourly earnings have risen by 42 cents, or 1.8
percent. From November 2012 to November 2013, the Consumer
Price Index--a measure for inflation--for All Urban Consumers,
the CPI-U, rose by 1.2 percent.
Turning now to our survey of households, the unemployment
rate decreased by 0.3 percentage points in December to 6.7
percent. Over the year, the unemployment rate declined by 1.2
percentage points, and the number of unemployed persons fell by
1.9 million.
In December, there were 3.9 million unemployed persons who
had been jobless for 27 weeks or more. This was little changed
over the month, but down by 894,000 over the past year.
The labor force participation rate declined to 62.8 percent
in December. And over the year, this rate has declined by 0.8
percentage point. The employment to population ratio, at 58.6
percent, was unchanged in December, and over the past 12
months. In fact, this measure has held at or near this level
since late 2009.
Among those neither working nor looking for work in
December, 2.4 million were classified as marginally attached to
the labor force, and this is little changed from a year
earlier.
These individuals wanted a job, were available for work,
and had looked for a job within the past 12 months. The number
of discouraged workers, which is a subset of the marginally
attached who believed that no jobs were available for them, was
917,000 in December, down by 151,000 from a year earlier.
In summary, the unemployment rate declined from 7 percent
to 6.7 percent in December, and nonfarm payroll employment
edged up by 74,000.
My colleagues and I would now be glad to answer your
questions.
[The prepared statement of Hon. Erica L. Groshen appears in
the Submissions for the Record on page 22.]
Chairman Brady. Thank you, Commissioner. As you know, the
unemployment rate fell pretty dramatically. Do you see this
as--would you describe it as an encouraging sign of a
sustainable recovery?
Commissioner Groshen. This is one--this is one month's
number. Of course you don't want to get hung up on one
particular number. But most of the change in the unemployment
rate, about two-thirds of it probably, was due to falling labor
force participation, which is----
Chairman Brady [continuing]. People simply giving up on the
market, the workforce?
Commissioner Groshen. Well the interesting thing is that
when we looked at flows, it looked like most of the flows into
nonparticipation were from employment rather than from
unemployment. But generally speaking, it is not as robust a
sign as if the fall in unemployment had come from creation of a
lot of jobs.
Chairman Brady. Do you think that drop, and the reasons for
it, is a troubling indicator, or a concerning indicator?
Commissioner Groshen. Um, well I guess it depends on the
question you are asking. It is certainly not a sign of
strength.
Chairman Brady. When we look at, in your report you make
the case that here we are four-and-a-half years after the
Recession ended and there are still fewer payroll jobs than
when the Recession began, which is creating a dramatic gap in
jobs in America. So at the rate of the 180,000 jobs a month
that has occurred over the last two years, how long will it
take before America is simply back to even in payroll jobs?
Commissioner Groshen. In total payroll jobs, it would take
about seven months, into July. For private-sector payrolls, it
would take about four months, to April.
Chairman Brady. Okay, so we are looking at mid-year before
we get back to break-even on the pre-Recession payroll----
Commissioner Groshen. That's right.
Chairman Brady. Good. The numbers of 74,000 and 87,000
private-sector jobs were disappointing I think for most of us
who want to see a much stronger recovery, far below the
consensus for the report. From an economic standpoint, I am
told that numbers that small are statistically insignificant in
the sense of what you read.
What in your report--where were the areas--I think you
mentioned retail, information, perhaps wholesale--what areas
last month were statistically significant that you can tell us
about?
Commissioner Groshen. The 55,000 jobs created in retail
trade were statistically significant.
Chairman Brady. And that was in food and clothing,
predominantly?
Commissioner Groshen. Widespread in retail trade. So quite
a few of the subsectors.
Wholesale, the wholesale trade increase of 15,000 jobs was
also statistically significant.
Chairman Brady. Is there any insight into that number?
Commissioner Groshen. Well a lot of that was in electronic
trading. So these are services provided to firms that are
buying products, and they do it electronically. So they do not
actually take possession of the products that they purchase on
behalf of other firms, but they facilitate the purchase of
these products by firms.
Chairman Brady. Right.
Commissioner Groshen. The other sector that had growth that
I want to call your attention to is not a super sector but it
is very important is the temporary help services industry. That
added a statistically significant 40,000 new jobs. That is
often a harbinger of further growth.
Chairman Brady. Right. Thank you.
Vice Chair Klobuchar.
Vice Chair Klobuchar. Thank you very much. Thank you,
Commissioner.
This morning's report shows job growth not exactly where it
was expected, but I think we do know that December marks the
46th consecutive month of private-sector job growth. During
this time, more than 8.2 million private-sector jobs have been
added.
What employment trends did you see in 2013 as a whole in
the last year? And how would you characterize the state of the
labor market this year?
Commissioner Groshen. Okay. Well, yes, well overall today's
report is not strongly encouraging. There was growth. And
month-to-month variation is normal in our measures. So it is
not entirely surprising. I don't think we should----
Vice Chair Klobuchar. So you are just basing your
assessment on December? I was asking about----
Commissioner Groshen. About the entire year, yes.
So over the year, what we have seen is steady, modest
growth mostly in the services. We do still have a ways to go to
return to pre-Recession conditions, but we have seen growth in
the industries that we talked about, primarily in professional
and business services, in health care, in leisure and
hospitality that are some of the areas where we've had the
strongest growth.
Vice Chair Klobuchar. One number I did want to ask about
for December, you made some reference to the construction
number, and you talked about the severe cold. I am aware of
this since people keep citing the number that northern
Minnesota was colder than Mars for a period of time last week.
[Laughter.]
And so what was the----
Chairman Brady. We tweeted that a lot, by the way, just so
you know.
Vice Chair Klobuchar. Oh, I see Representative Duffy. That
was probably true of northern Wisconsin, as we know from the
Green Bay Packers game, but I won't go into that.
So could you talk about that construction number and how
the cold could have affected it?
Commissioner Groshen. Right. So over the year we have added
122,000 jobs in construction. And the average--let me take a
quick look here--okay, but this particular month most of the
decline was in nonresidential specialty trade. And when we
looked into this further, we found that most of these declines
were concentrated in the Northeast and the Midwest, and those
were the areas that had lower temperatures than normal over the
past month.
Vice Chair Klobuchar. But overall there's been 122,000 jobs
added in construction?
Commissioner Groshen. Yes.
Vice Chair Klobuchar. When you mention the regional issues,
I remember in the past that at these hearings we've discussed
that. Do you see any regional trends overall, not just
construction, with the numbers for 2013?
Commissioner Groshen. I'm not sure.
Vice Chair Klobuchar. You can get back to me with that in
writing.
Commissioner Groshen. Yes, I'm going to let Tom look this
up for me.
[The response from Commissioner Groshen to Senator
Klobuchar appears in the Submissions for the Record on page
27.]
Vice Chair Klobuchar. All right, and how about Veterans
unemployment? Do we know where that is?
Commissioner Groshen. Yes. Okay, Gulf War Era II Veterans
had an unemployment rate of 7.3 percent in December. And this
is down from 10.8 percent a year earlier. In December 2013,
there were 2.9 million Gulf War Era II Veterans, and they
served anywhere in the world since September 2001.
In December 2013, the unemployment rate for Veterans aged
18 to 24 was 15.6 percent, which is little different because
these sample sizes are so small. This is a little different
from the 11.4 percent unemployment rate for non-Veterans of
that age.
Veterans overall make up about 4.6 percent of unemployed
persons as of December.
Vice Chair Klobuchar. Okay. I do remember. We have been
working hard in various ways on this issue because of the fact
that for awhile we were having extraordinarily high
unemployment rates with Veterans, and I know we have seen some
improvement.
Commissioner Groshen. Okay, so let me get back to the
regional question. Looking at the November numbers, which is
the latest for which we have unemployment rates, the states
with the highest unemployment rates, seasonally adjusted, are
Nevada at 9 percent; Rhode Island at 9 percent; Michigan at 8.8
percent; Illinois at 8.7 percent. And the other ones were kind
of in that rate: District of Columbia, California, Mississippi,
Kentucky, Tennessee, Arizona, New Jersey, they top out, the top
group, at 7.8 percent.
The states with the lowest unemployment rates are North and
South Dakota at 2.6 percent and 3.6 percent, respectively;
Nebraska at 3.7 percent; Utah at 4.3 percent; Hawaii, Iowa,
Vermont, Wyoming, all at 4.4 percent. Here comes Minnesota at
4.6 percent. And then Kansas and New Hampshire at 5.1 percent.
Vice Chair Klobuchar. All right, I am not going to go into
an analysis of that because it does not seem to be in a
particular region, but I think it does have something to do
with what industries are in those states, or what type of
employment are in those states. And that is something that you
have mentioned by what you are seeing with growth in certain
areas and not growth in others.
Commissioner Groshen. Also the aftermath of the housing
crisis.
Vice Chair Klobuchar. Exactly. And as I have pointed out,
we have seen some pretty dramatic improvements in just the past
year in that area.
So I appreciate it. Thank you, very much.
Commissioner Groshen. You're welcome.
Chairman Brady. Thank you.
Representative Hanna.
Representative Hanna. Thank you. Thank you for being here.
Commissioner, the labor participation rate is pretty well
at an historic low. And if we took that into consideration
based on the Bureau of Labor Statistics, the actual
unemployment rate would be closer to someplace between 10 and
11, closer to 11 percent.
I want to talk about that in the context of the jobs that
you have said have been created: food, merchandise, retail,
wholesale, service-oriented jobs, and relate that back to what
Senator Klobuchar talked about, which is something that is
generally referred to as a skills gap.
Do you have an idea of what that looks like in the real
world? We talk about our lack of capacity to provide people to
the employment that is available that are higher tech, higher,
more technologically oriented jobs, and what that means, and
what we should be doing differently than we are.
Chairman Brady. If you could hit the microphone, please?
Commissioner Groshen. Sorry. You are getting perilously--
you are getting really into the realm of policy right here, and
here I want to remind you that the BLS and other statistical
agencies don't engage in policy analysis. With all due respect,
that's your job.
Representative Hanna. Right.
Commissioner Groshen. We, um, in particular we don't study
and make determinations about whether policies are achieving
their goals, or propose policies to achieve those goals,
because such work could raise questions about our neutrality
and our impartiality.
Chairman Brady. Commissioner, if I could stop you there, I
may have misheard Representative Hanna's question, but I think
it was: How does the growth that you're seeing in certain of
these significant industries tie into the labor participation
rate, which is, we've all agreed, is at a very low rate.
Commissioner Groshen. It's not obvious what connection
there is between laborforce participation and where growth is
occurring. I don't think I have an answer for that.
Representative Hanna. So clearly there's an increasing
number of people dropping out of the workforce, and I accept
your notion that that's not necessarily where you're going with
the Bureau of Labor Statistics. But as an economist you must
have an opinion about that. Would you like to talk about that?
Maybe not?
Commissioner Groshen. Well, so I have to, you know, right
now my job is as Commissioner and I really think it is most
important for me to uphold the principles and practices of
statistical agencies.
But I can talk a little bit about where growth has been
occurring, and what we've seen in terms of industry wage growth
is that by and--much of the growth when you divide it up by
broad industries, much of the wage growth has been in the lower
wage industries.
When you divide it up by occupations, which is a different
kind of way to divide up job growth, there you see growth in
high-wage--more growth in high-wage occupations and low-wage
occupations than you see in the middle of the distribution.
Representative Hanna. Thank you for that. I yield back.
Chairman Brady. Commissioner, can I ask one question,
because again I want to be clear. In your testimony you said
the employment rate, or labor participation rate was
principally due not to people dropping out but people leaving
jobs. And Mr. Hanna's question was----
Commissioner Groshen. Oh, okay. Yes, I may have
misunderstood.
Chairman Brady [continuing]. You know, in those growth
industries, clearly there probably is a relationship between
which industries you are seeing contributing to the labor
participation rate. I think that is what he's trying to get to;
not a policy issue, more of an insight into this.
Commissioner Groshen. Okay, so we can look into that for
you. That is something that we see. We do track flows, so I
think we can do that.
[The response from Commissioner Groshen to Representative
Hanna appears in the Submissions for the Record on page 29.]
Chairman Brady. Great. Representative Delaney.
Representative Delaney. Thank you, Mr. Chairman. And,
Commissioner, welcome.
Commissioner Groshen. Thank you.
Representative Delaney. And I want to tie my comments into
some of the comments my friend, Mr. Hanna, just made.
Could you expand upon this disaggregation of the employment
statistics around low-, middle-, and high-skilled workers? What
trends that we've observed in the last year, and perhaps in the
last several years, with respect to those categories?
Commissioner Groshen. All right, let's see what I'm going
to look at. I'll take a quick look by education, yes. I'm going
to look at--we're taking a look at what's happening to
unemployment rates by education.
Representative Delaney. Sure.
Commissioner Groshen. Okay? We have seen declines in
unemployment rates by education for all of the categories: for
less-than-high school, for high school graduates, for some
college and associate degrees. They have all declined.
The largest decline has been for less-than-a-high school
diploma, and that is partly a factor because it increased also
the most during the recession.
Representative Delaney. But that is getting into employment
attainment based on educational attainment and the correlation
there. I am more getting at the growth in jobs based on the
skill profile of the jobs.
Commissioner Groshen. Uh-huh.
Representative Delaney. So you made the observation that we
have seen growth in high-skilled jobs----
Commissioner Groshen. Um-hmm.
Representative Delaney [continuing]. And low-skill jobs----
Commissioner Groshen. Yes.
Representative Delaney [continuing]. And a lack of growth
in these middle-skill jobs, which implies a barbelling of our
economy, which is something that I have tried to be very
focused on in the last year or two because I think it reflects
a broader trend about how highly specialized our economy is
becoming and the implications of that.
But do you have any data to show the materiality of the
growth of high- versus low- as compared to middle-skill jobs?
Commissioner Groshen. So I don't have a single measure of
skill, but I can tell you which major occupational groups had
the most wage growth--I'm sorry, most employment growth.
So in the 2012 to 2013 timeframe, we added 669,000 jobs in
management, professional, and related occupations.
Representative Delaney. And that's the numerator. What's
the denominator of jobs in those areas?
Commissioner Groshen. Uh, this is not a--oh, I'm sorry. So
that was a 1.2 percent----
Representative Delaney. Growth.
Commissioner Groshen [continuing]. Growth.
Representative Delaney. Okay, got it.
Commissioner Groshen. And in natural resource construction
maintenance occupation, there was 1.8 percent growth. Sales and
office occupations, 3/10ths of a percent growth. Production,
transportation, and material moving occupations, a decrease of
a tenth of a percent. And in service occupations, an increase
of 1.8 percent.
Representative Delaney. Got it. Do you broadly categorize
jobs in these categories of high, middle, or low skilled? Or do
you not disaggregate the data, generally speaking, that way?
Commissioner Groshen. Generally, we do not.
Representative Delaney. Got it.
Commissioner Groshen. I have, though----
Representative Delaney. No, I understand, because that is
somewhat of a subjective or qualitative assessment.
Commissioner Groshen. Right. And it may be in the bottom
part of these distributions, or in the top part, yes.
Representative Delaney. Do you observe any--as we've seen
the rate of growth of health care has slowed significantly over
the last several years, has that--does that correlate to growth
of jobs in the health care sector?
Commissioner Groshen. We are still adding, although not in
this past month, but generally we've been adding jobs in the
health care sector. It has just been--the pace has slowed over
the past year.
Representative Delaney. So you do see correlations between
health care expenditures and growth in the health care sector?
Commissioner Groshen. I haven't done that correlation.
Representative Delaney. Got it. Okay, thank you.
Commissioner Groshen. Yes.
Chairman Brady. Thank you.
Representative Paulsen.
Representative Paulsen. Thank you, Mr. Chairman, and thanks
also for being here today to testify.
You know, it goes without saying that today's employment
report has some disappointing news. As you mentioned, it's not
strongly encouraging. The numbers are well below what the
country needs to add on a monthly basis--130,000 need to be
added per month just to keep up with population growth. So I'm
sure you'd agree we have a long way to go on the road to
recovery.
We are still well over a million jobs short of where we
were in December of 2007 at the start of the last Recession,
and labor force participation is still really, really low, just
almost dropping 350,000 last month alone.
Let me just turn to something that many of us refer to as
the jobs gap, the difference between the average employment
growth following a recession and the more anemic employment
growth that has followed the most recent recession.
Four-and-a-half years after the Recession ended, there are
still fewer payroll jobs than pre-Recession. So by various
measures there is a huge jobs gap. The Brookings Institution,
for example, estimates that it is as high as 8 million jobs.
Has the BLS done an estimate at all of that jobs gap, of
those type of numbers?
Commissioner Groshen. We have made a comparison to where we
were when the Recession started, but we generally don't do the
kind of forecasting that would be required about what job
growth would have been in the absence of the Recession. That's
not really within our skill set.
Representative Paulsen. Okay. Chairman Brady mentioned in
his opening statement that when the stimulus bill was passed--
and that was controversial for many reasons when it was pushed
through--the Administration had said at this point we would be
at about a 5 percent unemployment rate, which we're not
anywhere near. At the average rate of job creation during 2013,
how much longer would it take for unemployment, for the rate to
reach 5 percent? How long would it take?
Commissioner Groshen. I have not done that calculation. I
know it will take about seven months for us to get back to the
total payroll, where we were, total payrolls where we were
before.
Representative Paulsen. But there will be a longer period
of time to get to that 5 percent level?
Commissioner Groshen. I mean, we can estimate that. We can
straight-line that for you.
[The response from Commissioner Groshen to Representative
Paulsen appears in the Submissions for the Record on page 31.]
Representative Paulsen. And let me turn a little bit to
part-time, because part-time employment and full-time
employment have been something else discussed with some
concerns. I would like to ask some questions about that.
Part-time employment for economic reasons is a measure,
some would say, of weakness in the labor market. As an
economist, would you agree that part-time employment could be
viewed as a weakness in the labor market?
Commissioner Groshen. Well generally speaking, during
recessions you do see an increase in the number of people who
are part-time, for economic reasons. These people are not
getting as many hours as they would like, or that they would
prefer to work full-time, and that's why they are in that
category.
So either they are not getting as many hours, or they have
taken a part-time job because they have not found a full-time
job.
Representative Paulsen. And we have been post-Recession now
for awhile, technically, right, on the technical side?
Commissioner Groshen. Um-hmm.
Representative Paulsen. So a lot of employers are unsure
they need workers long-term, or there are regulatory
disincentives for employers to hire full-time workers. Is it
both of those factors, would you say? Or are there other
factors as well that would contribute to that measure?
Commissioner Groshen. Well, so let me make a distinction.
Actually, the number of part-time workers as a percent of the
total employed has not changed very much of late. That has been
fairly constant.
Representative Paulsen. Okay.
Commissioner Groshen. So, and so we have had a decline in
the part-time for economic reasons, although it is still
historically high.
Representative Paulsen. One of the things it will be
interesting to watch in the near future is the implementation
now of the Affordable Care Act, or the President's new health
care law. I have spoken with several employers in Minnesota,
for example, that are now concerned about being forced to scale
back full-time workers into part-time jobs because of the
Affordable Care Act.
And one restaurateur--and restaurants normally have part-
time workers--there is one restaurateur I spoke with who has
530-some employees, and 41 percent of those workers are full-
time. But now he has essentially looked at moving all of those
full-time workers into 29 hours, into part-time status.
And so there are consequences, obviously, of moving good
full-time jobs into part-time jobs. Along those lines what role
do mandated employer benefits play in employer decisions to
hire workers part-time as opposed to full time?
Commissioner Groshen. Our data wouldn't allow us to answer
that question.
Representative Paulsen. It wouldn't? Okay.
Commissioner Groshen. It would be a policy research
question.
Representative Paulsen. Okay. Good. I think we are going to
be hearing more about that, Mr. Chairman, so I was just
curious. I yield back.
Chairman Brady. Thank you, sir. Representative Sanchez.
Representative Sanchez. Thank you, Mr. Chairman.
I want to say something before I ask our panel a question.
Thank you, Mr. Chairman, for this morning, actually trying to
delve into these numbers instead of, you know, doing real
partisan bickering and everything, because I think we are all
at that point where we want to try to understand what is going
on. So I appreciate that the majority of the Members who have
been talking this morning have been really trying to stick to
what the picture looks like in hopes to move and to try and do
the policy, as you said, Commissioner, that we are supposed to
do.
I want to go back to something that Mr. Delaney asked about
and this whole issue of barbelling, or the fact that you said
that employment has occurred at the higher, at least higher
educational level, and lower educational level; and that that
middle portion I guess we're trying to figure out what types of
jobs would those be that aren't growing, and if you have some
indication of that.
And, if you are a--because you have it by education and not
necessarily skill set, which of course when we're looking at it
we're trying to figure out skill set--if you are an employer
trying to figure out skill sets, not whether somebody went to
college or not, so my question to you is: When we see these
young people coming out of university and they have a college
degree but they may not have a set, a skill set because they
maybe don't have the work experience, would those students fall
into that barbell middle portion where hiring is not happening?
Do you have any statistics on that?
Commissioner Groshen. Yeah, let me see. Well, the middle,
the middle area of these very large occupational groups that I
am talking about are sales and office occupations where we
added only 94,000 jobs.
Representative Sanchez. So would that be like entry sales
person, entry, like, you know, cold calling, entry
receptionist, that type of thing?
Commissioner Groshen. Administrative work, it could be.
Sure. And then the other areas are production, transportation,
and material moving occupations, which usually you would not
associate with a college degree, but actually I am sure some of
them probably will have.
Representative Sanchez. Well, logistics maybe, or something
of the sort. I mean, when you're trying to get your foot in, if
you don't have a lot of work experience, you probably start at
the bottom of the rung.
Commissioner Groshen. Um-hmm.
Representative Sanchez. My next question for you is: as
you've seen over the last month or two, I am trying to feel--I
am trying to figure out if companies--because I look at
companies' balance sheets, the ones that we can see, and we see
two things happening. And we've seen it for awhile now, years
now, of capital accumulation, cash on hand, growth, as well as
buy-back of stock. And this is where at least the public
companies, those that I can see, are using their cash.
So do you think that the shutdown we had is reflective in
any way of these numbers? I know these are policy issues, but
did that have--do you think that that had anything--and I am
trying to figure out how we get companies to begin to spend
cash. I mean, it's a risk. Our Orange County Register, my
hometown newspaper for the County of Orange where I represent,
and they are creating journalist jobs. They've hired over 400
new people in the newspaper business, which supposedly is
totally contrarian to what we've seen in the news business
these days.
So do you think that when we do certain things that that's
maybe what is holding people, companies back?
Commissioner Groshen. Let me answer something a little
related, which is that a characteristic of the market where we
are now is that we have seen a decline in job destruction rates
back down to essentially pre-Recession levels.
So one area in which our labor market has improved is that
our job destruction rates are now more typical of what you
would see in an expansion. So what has lagged for us has been
job creation. And you can see this in new firms, both in the
number of new firms, and in the number of jobs created by new
firms. And you can see it also in expansions by firms, and this
is from our business employment dynamics data.
So that corroborates some of perhaps what you are picking
up. We did look at the effect--we have looked at the effect of
the shutdown in a very direct way, and we saw an increase in
temporary layoffs associated with the shutdown, and then a
decrease after that.
So we did not see numbers that were suggestive of a lot of
very quick multiplier effects in the payroll data from the
shutdown. We think maybe there was some displacement rather
than actually multiplier effects.
Representative Sanchez. Thank you, Commissioner. Thank you,
Mr. Chairman.
Chairman Brady. Thank you.
Representative Duffy.
Representative Duffy. Thank you, Mr. Chairman, and
Commissioner thank you for being here today.
I just want to go back to I think some things that Mr.
Paulsen brought up. You would agree that with population growth
we have to see about 130,000 new jobs created every month just
to maintain the status quo? Is that right?
Commissioner Groshen. You know, it's not a very precise
number but, you know, there are numbers kind of along those
lines, yes.
Representative Duffy. Am I hitting the middle point there?
Is that a number that is a range, around 130,000?
Commissioner Groshen. Yes.
Representative Duffy. Am I off?
Commissioner Groshen. No, Tom agrees. Therefore, it's true.
[Laughter.]
Representative Duffy. Thank you, Tom.
And this month we created only 74,000 new jobs, right?
Commissioner Groshen. Um-hmm.
Representative Duffy. So if you look at just to maintain
our employment rate it has to be 130,000, but this month we are
at 74,000. And I think oftentimes America will hear the
unemployment rate going from 7 percent down to 6.7 percent and
they would view that as the country going in the right
direction in regard to job creation and economic growth, but
would you agree that actually the reduction in the unemployment
rate is not an indicator of strong job growth like many
Americans may think?
Commissioner Groshen. Um, so I am going to unpack things
just a little bit.
Representative Duffy. Thank you.
Commissioner Groshen. So the decline in the unemployment
rate certainly this month we think is somewhere around two-
thirds due to the decline in laborforce participation, and
about a third to job creation.
Generally speaking, though, the employment to population
ratio has essentially stayed about the same since late 2009. So
that is problematic. But we have two different forces acting on
employment to population.
One is demographic changes that would tend to depress
participation. Just as Baby Boomers like myself age, our
population is generally getting older and we are getting into
times--we are more heavily weighted towards parts of the
population that participate less.
So we have to increase employment to population. We not
only have--we need to compensate for this downward pressure. So
that is one effect.
The other effect is the recovery from the Recession, and
that would require creation of many more jobs.
Representative Duffy. This may be going back to the
question for Tom earlier----
Commissioner Groshen. Yes, employment.
Representative Duffy. So since pre-2009 traditionally we
needed 130,000 jobs per month to maintain employment with
population growth. Are you saying that this year, and the year
before, that that is actually not true? It's been static, our
population growth, so if we actually have a 74,000 dollar--
74,000 job gain, that's actually 74,000--we're moving in the
right direction? Are you saying that our population growth is
taking place at 130,000 roughly per month right now?
Commissioner Groshen. Well, our average monthly job gain
has been, over this past year has been 182,000. But Tom is
going to take a stab at this.
Mr. Nardone. Just in general, what the EP ratio, Employment
to Population ratio, that being steady would indicate that job
growth is basically enough to keep track with population
growth--the growth of the population 16 and over.
You're not--but obviously it's lower than it was at the
start of the Recession, so we are not gaining ground in terms
of increasing the proportion of the population that's employed,
getting it back to the pre-Recession levels. But we're
basically keeping track with population growth, is a way to
look at it.
Representative Duffy. Okay. I just want to quickly switch
gears. I think a lot of the disagreement that we find on both
sides of the aisle over the last several years comes to the
economy and job growth.
Do you guys look at statistics and have an analysis on
whether raising the minimum wage will create more jobs? Or does
the effect of that create less jobs?
Commissioner Groshen. This is very much a policy question.
Representative Duffy. But I'm asking statistically do you
look at--do you analyze that on the statistics' front?
Commissioner Groshen. We do not have any statistics that
would allow us to answer that question.
Representative Duffy. Okay. I yield back.
Chairman Brady. Thank you. A vote has been called in the
House, and so the former Chairman of the Joint Economic
Committee, Representative Maloney, will be our final
questioner.
Representative Maloney. Thank you.
First of all I want to congratulate you on your
appointment. You are the fourth woman to head this important
panel, building on the fine work of Katharine Abraham, whom I
believe is still on the Council of Economic Advisers. So thank
you.
Commissioner Groshen. You're welcome. She actually stepped
down in I think April.
Representative Maloney. Well, but in the statistics of the
Women's Movement, they say more important than the first woman
appointed is consistent, fine performance of women where it is
no longer something unexpected. But I believe that you are
going to be adding to that very important statistic.
And I think the statistics today are very, very
encouraging. With the employment increase by 74,000,
unemployment fell to 6.7 percent, but if you put it into the
context of the overall economy, private-sector jobs have grown
for 46 consecutive months, and a total of 8.2 million private-
sector jobs have been created over that period.
And I believe that in 2013, private-sector employment
increased by 2.2 million jobs, largely unchanged from the 2.3
million private-sector jobs added in 2012. So I believe that
this shows that the economy is steady, it's durable, it's
improving, and I would also like to note that the private-
sector job growth has been revised upwards generally. In
October, from 217,000 and in November to 226,000 for an average
of 177,000 new jobs per month being created.
And could you elaborate on how these numbers fit into the
overall economy, and comment on the trend? It looks to me like
we are trending in the right direction. We are trending with an
improved economy--not as good as we would like--but could you
comment in the overall context of the economy and trends in the
economy?
Commissioner Groshen. All right. Well, I would say that
generally speaking what we have been seeing over the past year
is very steady, modest job growth that has been primarily in
the services.
And this has led to improvements by many measures. Yet
there's still a long ways to go to return to pre-Recession
conditions.
Representative Maloney. Well in the report you say that the
payroll growth was concentrated in wholesale, retail, temporary
help services added jobs.
Commissioner Groshen. Um-hmm.
Representative Maloney. Last night there were very
disturbing numbers out of New York City, that I have the
privilege of representing, one of our great retail stores,
Macy's, laid off 2,500 people. Now this is not the trend in New
York State where we have added more than 140,000 private-sector
jobs during the past 12 months. But the progress in the City,
the unemployment rate has been slower. We are now at 8.5
percent unemployed to 8.9 percent.
My question is: Is New York City's experience, how does
that fit into the broader perspective, or the broader national
picture? Are other urban areas experiencing higher rates of
unemployment than the Nation as a whole?
Commissioner Groshen. Well the Nation is a combination of
many different regions and many different cities within those
regions. So there's always quite a variety of experiences
because cities are affected both by their long-term secular
trends, as well as by the cycle that they're under, that
they're within.
Representative Maloney. Now in joblessness recovery, is it
faster usually in rural and suburban parts of the country over
urban areas? Is there any data on that?
Commissioner Groshen. (Nods in the negative.)
Representative Maloney. No? Okay----
Commissioner Groshen. I think it varies, yes.
Representative Maloney. I really want to publicly
congratulate Senator Klobuchar on the Unemployment Insurance
Report that she did. And I think our Report also shows that
there is a need for this type of support. Because of the drop,
you said in your testimony the decline was driven primarily by
a drop in the laborforce participation rate. And it seems that
keeping people hoping to find a job, working to find a job,
having that support system while they try to become part of the
economy, and also that she noted in her report: this is a
passthrough.
Anyone who is unemployed is obviously going to put that
money right back in to the economy and help to create other
jobs, and to help the hope of the country in this very
difficult time moving forward.
I do want to note that manufacturing employment rose by
9,000. I was thrilled to see the auto industry added jobs. As
one that supported the restructuring of the auto industry, to
see that it has added over 8,000 jobs. But I did note that
women have been losing jobs in manufacturing, while men have
gained them.
Do you understand? That I noticed in the Report, and I
guess basically the question is: Are sectors of the economy
where men are more heavily represented adding more jobs than
other sectors where women traditionally have a larger presence?
Your numbers showed that there's been a more rapid drop in
the unemployment rate for men.
What explains that rapid drop in the unemployment rate for
men? In the beginning, during the Recession men faced a
significantly higher unemployment rate than women, and
unemployment for men peaked at 11 percent in October of 2009,
while the unemployment rate for women never exceeded 9 percent.
Chairman Brady. Commissioner, this is a very important
question. We have run out of time. Could you briefly answer,
but provide a written response to Representative Maloney?
Representative Maloney. Thank you, Mr. Chairman.
Commissioner Groshen. Right. We certainly can.
Commissioner Groshen. The basic answer we found is that, is
that there's no very strong pattern of job growth being
concentrated in male- or female-dominated industries. So it
doesn't seem to be a simple industry mix story.
Chairman Brady. Commissioner, thank you for your
professional presentation. This was a cakewalk, and we look
forward to having you back.
Tom, best of luck in retirement.
The hearing is adjourned.
(Whereupon, at 10:35 a.m., Friday, January 10, 2014, the
hearing was adjourned.)
SUBMISSIONS FOR THE RECORD
Prepared Statement of Hon. Kevin Brady, Chair, Joint Economic Committee
Vice Chair Klobuchar, Members of the Committee, and Commissioner
Groshen, good morning and welcome to the New Year.
This is Commissioner Groshen's first appearance before the Joint
Economic Committee. On behalf of the millions of Americans who cannot
yet find jobs, we hope that you can bring us better news in the future.
I would like to recognize Tom Nardone, who is retiring from the
Bureau of Labor Statistics after 37 years of service. He has been ``Mr.
Numbers'' for the Commissioner and this Committee over the last several
years. Tom, we thank you for your dedicated service, and wish you the
very best in your future endeavors.
Payroll job growth was incredibly weak last month. December saw a
gain of only 87,000 private-sector jobs and 74,000 nonfarm jobs.
The unemployment rate fell by 0.3 percentage points to 6.7%.
However, this drop was largely due to falling labor force
participation. More than \1/2\ million Americans left the labor force
in December. Consequently, the labor force participation rate dropped
to 62.8%, tying a 36-year low.
While it sounds impressive to boast that the U.S. economy added 8.2
million private-sector jobs over the past 46 months, economic growth in
an average recovery during the past half century has been 50% larger
than in the Obama recovery. As a result of this growth gap, America
today is missing a whopping 4.5 million jobs along Main Street--and
that's not acceptable.
Consider this: the best monthly private sector jobs report of the
Obama recovery is lower than the equivalent of the average private jobs
report of the Reagan recovery. In other words, not a single month of
the current recovery matches even the equivalent of an average month of
the Reagan recovery. That's disappointing. We've got to do better.
We should be encouraged that the unemployment rate has declined
from its peak of 10.0% in October 2009 to 6.7% today. However, that is
nowhere near the 5% level the White House promised the American people
when the controversial $800 billion stimulus was rushed through
Congress on a party-line vote.
Unfortunately, the decline in the unemployment rate is largely due
to falling labor force participation. If the labor force participation
rate had not declined since President Obama took office, the
unemployment rate would be nearly 11%. Another disappointing jobs
indicator: a smaller percentage of Americans are employed today than
when the recession ended over four and a half years ago.
The American people are deeply dissatisfied with the President's
leadership on the economy. We need solutions that get Washington out of
the way so Main Street businesses can start hiring with confidence
again.
Raising the minimum wage and forcing small businesses to pay nearly
$5,000 more per worker won't increase hiring. Washington mandating the
equality of income won't increase hiring. Extending emergency
unemployment programs won't increase hiring because what the long-term
unemployed really need are new jobs.
The emergency unemployment program is designed for extraordinary
circumstances, when America's unemployment rate is high and rising. As
the White House reminds us, the unemployment rate has declined in all
50 states and is at the lowest since 2008.
Why are the President and the Senate turning their backs on job
creation? Why doesn't the Senate pick up and pass and the President
sign into law any of the dozens of jobs bills the House has already
approved, including the Keystone XL pipeline, which would create
thousands of well-paying middle-class jobs.
It's not helpful, either, that the White House continues to delay
bipartisan unemployment reforms the President signed into law two years
ago to make it easier for states to match local workers with local jobs
and conduct drug testing for applicants seeking jobs that require such
tests.
We all know it's an election year, and some in Washington are
trying to change the conversation from the disappointing economy and
the bungled roll-out of the troubled Affordable Care Act. I just hope
my colleagues remember that the measure of America's compassion is not
how long we provide unemployment benefits, but how soon we get people
into good-paying jobs. That should be Washington's focus.
Commissioner Groshen, welcome again, and I look forward to your
testimony.
__________
Statement of Erica L. Groshen, 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 declined from 7.0 to 6.7 percent in December,
and nonfarm payroll employment edged up (+74,000). Monthly job gains
averaged 182,000 in 2013, about the same as in 2012. In December,
employment rose in retail trade and wholesale trade but fell in the
information industry.
Incorporating the revisions for October and November, which
increased employment by 38,000 on net, monthly job gains have averaged
172,000 over the past 3 months.
Retail trade added 55,000 jobs in December. Job gains occurred in
food and beverage stores (+12,000), clothing stores (+12,000), general
merchandise stores (+8,000), and motor vehicle and parts dealers
(+7,000). Retail trade employment increased by an average of 32,000 per
month in 2013.
Wholesale trade employment rose by 15,000 in December. Over the
past year, wholesale trade added an average of 8,000 jobs per month.
Employment in professional and business services continued to trend
up in December (+19,000). This industry has added 637,000 jobs over the
past 12 months. Within this industry, temporary help services added
40,000 jobs in December. In contrast, accounting and bookkeeping
services lost 25,000 jobs over the month.
Manufacturing employment continued to trend up in December
(+9,000). Manufacturing added 77,000 jobs in 2013, compared with an
increase of 154,000 jobs in 2012.
Employment in the information industry decreased by 12,000 in
December, reflecting a decline in motion picture and sound recording
(-14,000). Employment in the motion picture industry can be volatile
from month to month. Over the year, employment in information has shown
little net change.
Construction employment edged down in December (-16,000). However,
in 2013, the industry added an average of 10,000 jobs per month.
Employment in nonresidential specialty trade contractors declined by
13,000 in December, possibly reflecting unusually cold weather in parts
of the country.
Health care employment changed little in December (-6,000). Over
the past year, job growth in this industry slowed to an average of
17,000 per month, compared with an average monthly gain of 27,000 in
2012.
In December, employment in most other major industries changed
little.
Average hourly earnings of all employees on private nonfarm
payrolls edged up by 2 cents in December. Over the past 12 months,
average hourly earnings have risen by 42 cents, or 1.8 percent. From
November 2012 to November 2013, the Consumer Price Index for All Urban
Consumers (CPI-U) rose by 1.2 percent.
Turning now to our survey of households, the unemployment rate
decreased by 0.3 percentage point in December to 6.7 percent. Over the
year, the unemployment rate declined by 1.2 percentage points, and the
number of unemployed persons fell by 1.9 million. In December, there
were 3.9 million unemployed persons who had been jobless for 27 weeks
or more, little changed over the month but down by 894,000 over the
past year.
The labor force participation rate declined to 62.8 percent in
December. Over the year, this rate declined by 0.8 percentage point.
The employment-population ratio, at 58.6 percent, was unchanged in
December and over the past 12 months. In fact, this measure has held at
or near this level since late 2009.
Among those neither working nor looking for work in December, 2.4
million were classified as marginally attached to the labor force,
little changed from a year earlier. These individuals wanted a job,
were available for work, and had looked for a job within the last 12
months. The number of discouraged workers, a subset of the marginally
attached who believed that no jobs were available for them, was 917,000
in December, down by 151,000 from a year earlier.
I would like to note that seasonal adjustment factors for the
household survey are updated each year with the release of the December
data. Seasonally adjusted estimates going back 5 years (to January
2009) were subject to revision.
In summary, the unemployment rate declined from 7.0 to 6.7 percent
in December, and nonfarm payroll employment edged up (+74,000).
My colleagues and I now would be glad to answer your questions.
__________
Questions for the Record
Senior Senate Republican Dan Coats
Hearing on ``The Employment Situation: December 2013''
The Honorable Erica L. Groshen, Commissioner, Bureau of Labor
Statistics
Friday, January 10, 2014
Coats staff contact: [email protected]
EPA's fossil fuel restrictions have greatly increased the
cost of power to Hoosiers. How many Hoosier jobs may be lost as a
result of increased power costs?
What is the economic multiplier of a lost Hoosier job?
What is the rate of college tuition inflation in Indiana
and how does this compare to other states?
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