[Joint House and Senate Hearing, 113 Congress]
[From the U.S. Government Publishing Office]






                                                        S. Hrg. 113-335

                  THE EMPLOYMENT SITUATION: MARCH 2014

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

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 4, 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               Bernard Sanders, Vermont
Erik Paulsen, Minnesota              Christopher Murphy, Connecticut
Richard L. Hanna, New York           Martin Heinrich, New Mexico
Carolyn B. Maloney, New York         Mark L. Pryor, Arkansas
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

                              ----------                              

                     Opening Statements of Members

Hon. Hon. Erik Paulsen, Presiding Chairman, a U.S. Representative 
  from Minnesota.................................................     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, D.C. Accompanied by: Dr. 
  Michael Horrigan, Associate Commissioner for Prices and Living 
  Conditions, Bureau of Labor Statistics, U.S. Department of 
  Labor, Washington, DC; and Ms. Sandra L. Mason, Assistant 
  Commissioner for Current Employment Analysis, Bureau of Labor 
  Statistics, U.S. Department of Labor, Washington, DC...........     5

                       Submissions for the Record

Prepared statement of Hon. Erik Paulsen..........................    18
Prepared statement of Hon. Erica L. Groshen......................    19
Chart titled ``49 Months of Private-Sector Job Growth'' submitted 
  by Vice Chair Klobuchar........................................    21
Chart titled ``Unemployed Workers per Job Opening'' submitted by 
  Vice Chair Klobuchar...........................................    22
Response from Hon. Erica L. Groshen to Question for the Record 
  posed by Vice Chair Klobuchar..................................    23

 
                  THE EMPLOYMENT SITUATION: MARCH 2014

                              ----------                              


                         FRIDAY, APRIL 4, 2014

             Congress of the United States,
                          Joint Economic Committee,
                                                    Washington, DC.
    The committee met, pursuant to call, at 9:32 a.m. in Room 
216 of the Hart Senate Office Building, the Honorable Erik 
Paulsen, presiding.
    Representatives present: Paulsen, Hanna, Cummings, Delaney, 
and Carolyn B. Maloney of New York.
    Senators present: Klobuchar.
    Staff present: Ted Boll, Gail Cohen, Connie Foster, Niles 
Godes, Paige Halen, Colleen Healy, J.D. Mateus, Patrick Miller, 
Robert O'Quinn, and Andrew Silvia.

 OPENING STATEMENT OF HON. ERIK PAULSEN, PRESIDING CHAIRMAN, A 
               U.S. REPRESENTATIVE FROM MINNESOTA

    Representative Paulsen. We'll call the Joint Economic 
Committee to order. Vice Chair Klobuchar is not here yet, but 
Members and Commissioner Groshen:
    Chairman Brady went to Dallas this morning to attend the 
funeral of Ray Hutchinson, the Chairman's friend and also the 
husband of the former Senator Kay Bailey Hutchinson. In 
Chairman Brady's absence, he asked me to preside at this 
hearing this morning. I was hoping we would have a little bit 
of the Minnesota Mafia starting off the hearing this morning. 
Senator Klobuchar will be here shortly, though.
    The recovery that began in June 2009 is now nearly five 
years old. Yet, a NBC News/Wall Street Journal poll last month 
found that 57 percent of Americans still think the economy is 
in a recession. This is likely due to the persistent weakness 
in our labor market.
    The fact that nonfarm payrolls increased by 192,000 and the 
official unemployment rate remained unchanged at 6.7 percent 
last month is positive news, but it is simply not enough.
    I agree with Federal Reserve Chair Janet Yellen's recent 
assessment of our economy. In a speech on Monday at the 2014 
National Interagency Community Reinvestment Conference, she 
said, ``[w]hile there has been steady progress, there is also 
no doubt that the economy and the job market are not back to 
normal health.''
    By several measures, the recovery from the most recent 
recession is far below the average of prior recoveries over the 
last 50 years. Here at the Joint Economic Committee we often 
refer to that as the Growth Gap.
    Since the recession ended in June 2009:
    Real GDP growth is a cumulative 9 percentage points below 
the average recovery;
    Private payroll employment growth is more than 5 percentage 
points below the average recovery; and
    The real disposable income of a family of four grew by 
$13,032 less than it did during an average recovery. Clearly 
our economy is underperforming, and we should be doing better 
than five consecutive years of below average.
    In her speech, Chair Yellen cited a number of statistics 
indicating that our labor market is weaker than the official 
unemployment rate would suggest. For example: More than seven 
million people are working part-time even though they would 
prefer full-time jobs.
    The falling unemployment rate has not sparked a significant 
increase in real wages. Real average weekly earnings for all 
private, nonfarm employees are up by less than 1 percent since 
the recession ended.
    Nearly 36 percent of the unemployed have been unemployed 
six months or longer. I'll say that again: More than one-third 
of the unemployed in this country have been unemployed for six 
months or more.
    The labor force participation rate has fallen from 66 
percent in December 2007 to 63.2 percent, and only half of this 
decline may be attributable to demographic factors.
    Some may blame the housing bubble, its collapse and the 
ensuing financial panic for this persistent weakness in our 
labor market. While the collapse of the housing bubble 
undoubtedly has some lingering effects, it is not the main 
factor, let alone the only factor, for this weakness.
    What is unique about this recovery is the combination of 
the economic policies that the President has pursued.
    From 1982 to 2000, federal spending declined as a percent 
of GDP, and the private sector created more than 37 million 
jobs. Under President Obama, federal spending reached a post-
World War II high of 24.4 percent of GDP and remains above its 
postwar average of 18.9 percent of GDP.
    Presidents Kennedy and Reagan passed tax cuts that 
encouraged new business investment. This Committee has shown a 
strong correlation between new business investment and the 
creation of new private-sector jobs. In contrast, President 
Obama increased taxes on successful small businesses, capital 
gains, and dividends.
    Presidents Reagan and Clinton took a balanced approach 
toward environmental, health, and safety regulations. In 
contrast, the Obama Administration has pursued an aggressive 
agenda of regulation without carefully weighing costs and 
benefits.
    Presidents Reagan, Kennedy, and Clinton opened new markets 
to American products through international trade agreements. 
There are several trade opportunities on the horizon that are 
proven job creators, but the Administration has not yet fully 
engaged on this issue. There's been bipartisan support for 
trade in the past, and I am confident that there is bipartisan 
support in Congress for trade agreements today.
    Presidents Kennedy, Reagan, and Clinton did not burden a 
weak economy with costly new entitlement programs. In contrast, 
President Obama pushed forward the Affordable Care Act through 
Congress on party-line votes.
    The President's health care law has increased uncertainty, 
raised taxes by nearly half a trillion dollars, undermined the 
medical device industry that is so important to our home State 
of Minnesota--as Senator Klobuchar knows--and has caused 
millions of Americans to lose access to some of the doctors and 
health insurance plans that they liked.
    The economic policies that America needs now are well 
known: stable prices, a gradual decline in federal spending as 
a percent of GDP, tax reform that encourages new business 
investment, balanced regulation, and trade liberalization.
    It is the best way to strengthen our economy, create good 
jobs, and boost the wages of hardworking Americans; and it is 
time that the Administration work together with both 
Republicans and Democrats to move our country forward.
    With that, Commissioner Groshen, I look forward to your 
testimony, but Senator Klobuchar has arrived so I recognize the 
Vice Chair for her opening statement.
    [The prepared statement of Hon. Erik Paulsen appears in the 
Submissions for the Record on page 18.]

  OPENING STATEMENT OF HON. AMY KLOBUCHAR, VICE CHAIR, A U.S. 
                     SENATOR FROM MINNESOTA

    Vice Chair Klobuchar. Well thank you very much. Sorry I was 
a few minutes late. I was in a dentist's chair--can you kind of 
tell? Well, all right. But how much more fun to be here with 
all of you.
    [Laughter.]
    It is great to be here with Representative Paulsen chairing 
this hearing, as well as Commissioner Groshen. It's good to see 
you again. And I would like to welcome Sandy Mason who is the 
Assistant Commissioner for the Office of Current Employment 
Analysis.
    I am pleased we are having this hearing on the monthly 
employment situation. I think we all know these hearings give 
us an opportunity to dig deeper into the numbers, March, as we 
discuss a gain of 192,000 total nonfarm gains with all of these 
job gains in the private sector--something we like to hear.
    Recent economic news, as we know, has been encouraging. The 
economy has grown for 11 straight quarters, and the 2.6 percent 
GDP growth over the course of 2013 exceeds the gains in 2011 
and in 2012.
    Manufacturing, which is the engine of innovation and 
generates 90 percent of all patents, has rebounded, adding more 
than 600,000 jobs since February of 2010.
    Exporting has been another bright spot, with exports 
growing in each of the past four years, and exceeding the 
prerecession peak.
    All of this is good news, and I think we all know that we 
have a lot of room to go, but we also have accomplished much in 
terms of the private sector adding jobs.
    I think back to the first half of 2009 when we shed more 
jobs in this country. We were losing jobs at a rate of 700,000 
per month. We shed more jobs in one month than there are people 
in Vermont.
    Five years later we are now adding jobs. We have recorded 
49 straight months, as you can see from that graph, 49 straight 
months of private-sector job growth. And with this month's gain 
of 192,000 private-sector jobs, we have now regained all of the 
8.8 million private-sector jobs that were lost during the 
recession.
    So this is the month that we finally have gotten to where 
we were, and now I hope we are going to expand from there.
    The number of unemployed workers per job opening has 
decreased from nearly 7 in July 2009 to 2.6 in January of 2014, 
approaching the prerecession level of roughly 2 unemployed 
workers for every job opening.
    The unemployment rate currently is at 6.7 percent and is 
down nearly a full percentage point from last March when it was 
7.5 percent. The unemployment rate is better than average at 
4.8 percent in the State of Minnesota.
    For most workers, the job market is better today than it 
has been in years, but we all know that recovery has not 
reached everyone, particularly the long-term unemployed, those 
who have been out of work for more than six months.
    Nearly 4 million Americans, over one-third of unemployed 
workers, have been out of work for more than six months. As 
this Committee has discussed, long periods of joblessness do 
significant damage to affect workers' future earnings and to 
our Nation's productivity.
    I am pleased that the Senate is moving forward on Monday to 
pass an extension of Unemployment Insurance, and I hope the 
House will act as well.
    It would help people like Linda and her husband from Little 
Falls, Minnesota, who lost their jobs, are both over 55, and 
who need some support as they continue to look for work.
    Linda wrote me recently, urging Congress to extend 
unemployment. She wrote: ``I feel like the people who are still 
jobless are being forgotten.''
    We've got to approach this issue from all sides. Obviously 
there are openings in some parts of the country, and in certain 
industries, and we need to make sure the workers are trained to 
do those jobs. That is a major part of this, is the skills' 
training.
    The second part of it is to continue to increase our 
exports. The third part of it is to get more kids to go into 
math and science and engineering and technology.
    The next is immigration reform, which I think would be very 
helpful to the economy, as the numbers have shown, in 
decreasing the debt by $160 billion in ten years, nearly $700 
billion in ten years, according to the CBO.
    One of the things that I'll want to ask you, Commissioner 
Groshen, is just about the unemployment with Veterans, with 
young people, where we are as we move forward on that. We have 
made some improvement, with more to go.
    Our focus should be on long-term policies that create jobs 
in the short term, while laying the groundwork for prosperity 
in the long term. I am very much looking forward to hearing 
about the numbers today, and to get some analysis from all of 
you.
    Thank you very much. Thank you, Chairman Paulsen.
    Representative Paulsen. Well thank you. Erica Groshen is 
the 14th Commissioner of the Bureau of Labor Statistics. Prior 
to joining the BLS, she was Vice President in the Research and 
Statistics Group at the Federal Reserve Bank of New York. She 
has also been a Visiting Assistant Professor of Economics at 
Columbia University, and a Visiting Economist at the Bank for 
International Settlements in Basil, Switzerland.
    She earned a Ph.D. in Economics from Harvard University, 
and a Bachelor's Degree in Economics and Mathematics from the 
University of Wisconsin-Madison. I was a mathematics major, as 
well, so welcome back to the Committee and you are recognized 
for five minutes, Commissioner Groshen.

STATEMENT OF HON. ERICA L. GROSHEN, COMMISSIONER, UNITED STATES 
   DEPARTMENT OF LABOR, WASHINGTON, DC; ACCOMPANIED BY: DR. 
MICHAEL HORRIGAN, ASSOCIATE COMMISSIONER FOR PRICES AND LIVING 
CONDITIONS; AND MS. SANDRA L. MASON, ASSISTANT COMMISSIONER FOR 
                  CURRENT EMPLOYMENT ANALYSIS

    Commissioner Groshen. Thank you, Mr. Chairman.
    Mr. Chairman and Members of the Committee, thank you for 
the opportunity to discuss the employment and unemployment data 
that we released this morning.
    Nonfarm payroll employment rose by 192,000 in March, and 
the unemployment rate was unchanged at 6.7 percent. Employment 
increased in professional and business services, in health 
care, and in mining and logging.
    Incorporating the revisions for January and February which 
increased total nonfarm employment by 37,000 on net, monthly 
job gains have averaged 178,000 over the past 3 months. In the 
past 12 months prior to March, employment growth averaged 
183,000 per month.
    All of the net job growth in March occurred in the private 
sector which has now exceeded its employment level in December 
2007 when the most recent recession began.
    So this is a milestone.
    The private sector lost 8.8 million jobs during the job 
market downturn, and it has now gained 8.9 million jobs since 
the employment low in February 2010.
    However government employment is down since the recession 
began, and therefore total nonfarm employment remains below its 
December 2007 peak.
    In March, employment in professional and business services 
rose. It rose in line with the prior 12-month average. Within 
the industry, temporary help services added 29,000 jobs in 
March.
    Health care employment rose by 19,000 in March with gains 
in ambulatory services. In the prior 12 months, job growth in 
health care had averaged 17,000 per month, with most of the 
growth occurring in ambulatory care.
    Employment in mining and logging rose by 7,000 in March, 
led by gains in support activities for mining.
    Employment in food services and drinking places continued 
to trend up in March. This industry has added 323,000 jobs over 
the year.
    Employment continued to trend up in construction in March, 
and is up by 151,000 over the past 12 months.
    Employment in other major industries--including 
manufacturing, wholesale trade, and retail trade--changed 
little in March.
    Average hourly earnings of all employees on private nonfarm 
payrolls edged lower by 1 cent in March, after rising by 9 
cents in February. Over the past 12 months, average hourly 
earnings have risen by 2.1 percent. In comparison from February 
2013 to February 2014, the Consumer Price Index rose by 1.1 
percent.
    In March, the average workweek for all employees increased 
to 34.5 hours, offsetting a net decline over the prior 3 
months.
    Turning now to our survey of households, the unemployment 
rate at 6.7 percent was unchanged in March, and the number of 
unemployed persons remained at 10.5 million.
    The number of unemployed persons who had been jobless for 
27 weeks or more was also little changed. These individuals 
accounted for 35.8 percent of the unemployed.
    Both the civilian labor force and total employment 
increased in March. The labor force participation rate and the 
employment to population ratio though changed little over the 
month.
    Among persons who were neither working nor looking for work 
in March, 2.2 million were classified as marginally attached to 
the labor force. And this is little changed from a year 
earlier.
    The number of discouraged workers who believed that no jobs 
were available for them edged down over the year to 698,000 in 
March.
    In summary, employment rose by 192,000 in March, and the 
unemployment rate was unchanged at 6.7 percent.
    My colleagues and I now would be glad to answer your 
questions.
    [The prepared statement of Commissioner Erica L. Groshen 
appears in the Submissions for the Record on page 19.]
    Representative Paulsen. Thank you, Commissioner.
    Federal Reserve Chair Janet Yellen earlier this week gave a 
speech in which she listed signs of weakness in the U.S. labor 
market that indicate conditions are worse than the unemployment 
rate suggests.
    Chair Yellen, among other things, specifically mentioned 
the meager increases in labor compensation, an average of 
little more than 2 percent a year since the Recession, and the 
large number of part-time workers of more than 7 million, as 
you referenced as well, who want full-time work, many more than 
one would expect when you have a 6.7 percent unemployment rate.
    Could you explain why, and give some thoughts about why the 
unemployment rate does not convey the same extent of weakness 
as these other labor market indicators might show?
    Commissioner Groshen. The employment situation contains--
the release that we released today, contains I think it's over 
1,000 numbers in them, all of which give you different 
perspectives on what is going on in the labor market. So no one 
particular number is going to be able to convey all facets of 
what is the largest market in the country.
    So it is really important for educated users like 
yourselves to look at many different measures, as Janet Yellen 
has done as well. And some part of the answer to the question 
lies in not only what the numbers have been doing lately, but 
also how they are compared to what is normal for the economy 
for what are pre-Recession levels.
    So that is all to preface saying that we have had a lot of 
improvement lately since the Recession was over, but we have 
not made--we have not fully returned to pre-Recession levels.
    Representative Paulsen. Yes.
    Commissioner Groshen. So, for example, the number of people 
who are part-time for economic reasons, who would like a full-
time job but who do not have one, or who have had their hours 
cut, has come down dramatically since the Recession began, but 
it is still much higher than its pre-Recession levels. And this 
is a measure of under-utilization of labor in the economy, and 
those continue to be high.
    Even the unemployment rate, although it has come down a 
lot, is still much higher than its pre-Recession levels.
    Representative Paulsen. Do you have some thoughts on why 
those indicators might be so weak, those other indicators might 
appear more weak?
    Commissioner Groshen. Well, I guess we at the BLS are more 
about counting the way things are than, you know, measuring the 
current conditions than on actually dividing this up. But we 
know that the labor market is large and complex, and so what 
happens when you have this big decline in aggregate demand is 
that this under-utilization of labor goes into many different 
ways. It goes into people working fewer hours. It goes into 
more people unemployed. It goes--it spreads through all 
different parts of the labor market, and it takes awhile for 
all of these different parts of the labor market to return.
    Representative Paulsen. Maybe you could explain, too, the 
linkage that exists between private investment and economic 
growth on the one hand, and then on the other hand labor 
demand, employment, and the labor force participation rate.
    Commissioner Groshen. Well, we know we have had a lot of--
there has been a very--during the Recession we had--the biggest 
hit in the Recession immediately was a big increase in job 
destruction.
    We had a huge number of layoffs of workers. At the same 
time, we had a slowing in the hiring. We have now returned to 
normal in our job destruction rates by most measures. What has 
not returned to normal have been the job creation rates. Job 
creation rates have not been high enough to absorb all of the 
slack that has remained in the labor market.
    Representative Paulsen. Is it fair to say that the slower 
economic growth we've had is the root cause of the labor market 
problems? And that the unemployment rate has been declining 
mostly because more and more people are disengaged from the 
labor market?
    Commissioner Groshen. I--so going to the labor force 
participation, about--the estimates are that about half of the 
decline in the labor force participation rate is due to 
demographic factors. So that would not be associated with the 
slowdown.
    About half of the remaining part--and this is work being 
done largely in the Federal Reserve, rather than at the BLS--
estimates there are that about half of the remaining part is 
due to changing behavior of various demographic groups. For 
example, young people enrolling in college more and staying in 
high school longer; and women no longer increasing their labor 
force participation rates.
    The remaining quarter seems to be associated with the 
downturn in the economy, with the assumption that when the 
economy--as the economy improves, that part will generally go 
away. And so we will see at least a slower decline in labor 
force participation.
    So not that much of decline in participation by these 
estimates is due to the slower economy.
    Representative Paulsen. Thank you, Commissioner.
    With that, Vice Chair Klobuchar is recognized for five 
minutes.
    Vice Chair Klobuchar. Thank you very much. Thank you, and 
also welcome to you, Dr. Horrigan.
    As we have talked about, there have been some improvements. 
I think the last few months, looking at our weekly/monthly 
reports, were affected somewhat by the cold weather. Did that 
have a negative impact the last few months, Ms. Groshen, as I 
look at 10 more inches of snow in Minnesota as we speak this 
morning?
    Commissioner Groshen. Yes. We see some--we definitely see 
some evidence that is consistent with the weather having had an 
impact on the last few months of the employment reports, 
particularly in hours.
    So we have now--in March, we recovered most of the decline 
in hours that we were seeing. So that is the clearest part.
    The impact on job creation is a little harder to judge.
    Vice Chair Klobuchar. I just think it had a very temporary 
effect over the last few months. The Recession was especially 
tough on younger workers, we know that, who were faced with 
very high levels of unemployment, and older workers who faced 
longer durations of unemployment.
    What is the unemployment rate for workers who are like 20 
to 24 years old? And how about the long-term unemployment rate 
for them?
    Commissioner Groshen. So the unemployment rate for 20 to 
24-year-olds declined over the year from 13.3 percent to 12.2 
percent in March. And of those people in that age range, 31 
percent were unemployed long term for 27 weeks.
    Vice Chair Klobuchar. Do you know--and you may not have 
this right now; you can get it to me later--but what it was 
pre-Recession, like the year before the Recession? That age 
group?
    Commissioner Groshen. Much lower. Let me see if I've got it 
here.
    Vice Chair Klobuchar. Okay. That's okay. We'll get it. But 
you think it was lower.
    Commissioner Groshen. Yes.
    [Commissioner Erica L. Groshen's response to Vice Chair 
Klobuchar's question appears in the Submissions for the Record 
on page 23.]
    The unemployment rate was 7.7% in March of 2007, before the 
recession, and 13 percent of the unemployed had looked for work 
for 27 weeks or longer.
    Vice Chair Klobuchar. It's something we clearly have to be 
focused on. Older workers? What's the unemployment rate for 
workers 55 and older?
    Commissioner Groshen. 4.7 percent.
    Vice Chair Klobuchar. Wow. Okay. And did that improve over 
the last year, too?
    Commissioner Groshen. Yes. It was 5.5 percent a year ago.
    Vice Chair Klobuchar. And do you know how that was in pre-
Recession?
    Commissioner Groshen. It was 3.2% in December 2007 when the 
recession began.
    Vice Chair Klobuchar. Women now have about a half a million 
more jobs than when the Recession began, while men still need 
to add over a million jobs to return to the December 2007 
level. Is that right?
    Commissioner Groshen. Yes, it's about a million jobs for 
men.
    Vice Chair Klobuchar. So I think they call it the 
``mansession''?
    [Laughter.]
    And I still think we have an issue, and I touched on this, 
with the long-term unemployed, we have an issue with some of 
the wages that people make; that even though they have jobs, 
that they are not able to support their families.
    And one of the ways we know works here is education. A two-
year or a four-year college degree makes a big difference. What 
is the unemployment rate for college graduates right now?
    Commissioner Groshen. Um, let's see.
    [Pause.]
    Let me see if we've got that.
    [Pause.]
    Vice Chair Klobuchar. That's okay. You can give it to me 
later. I'm just trying to see--I used to ask this every month 
to try to get where we were in relation----
    Commissioner Groshen. Oh, here we go. Unemployment rates. 
Got it. For college graduates, 3.7 percent.
    Vice Chair Klobuchar. Okay. And then do you know what it is 
for high school, or even for people who didn't complete high 
school?
    Commissioner Groshen. 7.5 percent for high school graduates 
with no college, and 11 percent for those without a high school 
diploma.
    Vice Chair Klobuchar. Okay. And have there been any trends 
on that over the last few years?
    Commissioner Groshen. All of these have been declining 
since the Recession was over.
    Vice Chair Klobuchar. And how about the Veteran 
unemployment rate? We've had a major focus all across the 
country, really, on private employers focusing on trying to 
employ some of our post-Gulf War II Era Veterans and trying to 
make sure that we are getting people employed that left, 
especially while the numbers were--when they left, the numbers 
were high, and then the Recession happened and they had trouble 
getting employed. Where is it now for Veterans?
    Commissioner Groshen. Well focusing on the unemployment 
rate for Gulf War Era II Veterans, that is at 6.9 percent in 
March.
    Vice Chair Klobuchar. Oh, yes, that has improved I think.
    Commissioner Groshen. Yes.
    Vice Chair Klobuchar. Do you know where it was before?
    Commissioner Groshen. Oh, yeah. Last month it was 9.2 
percent, so this is a huge drop--although these numbers can be 
somewhat volatile.
    Vice Chair Klobuchar. Yes, they are a smaller group of 
people. I just was thinking more over the long term it has 
improved because it was for many years--so it is around the 
same as our Nation's unemployment rate.
    Commissioner Groshen. Yes, yes.
    Vice Chair Klobuchar. That is a big shift, because for a 
long time it was a number of percentage points above the 
Nation's unemployment rate.
    Commissioner Groshen. Yes.
    Vice Chair Klobuchar. So this is probably some of the best 
news out of the report. So thank you, very much.
    I think I am out of time. I had one last question on rural 
areas. Is there a difference in unemployment numbers between 
rural and urban?
    Commissioner Groshen. Yes, there is. And I think I have 
this--okay. Yes, the unemployment rate for urban areas was 7.5 
percent; but for rural areas it was 6.7 percent. So lower in 
the rural areas than urban areas.
    Vice Chair Klobuchar. That is surprising. Okay, thank you 
very much. I appreciate it.
    Commissioner Groshen. You're welcome.
    Representative Paulsen. Mr. Hanna is recognized for five 
minutes.
    Representative Hanna. Thank you. Thank you, very much.
    There is a purported skill, or education job gap, and it is 
suggested that it poses a hindrance to employment and may 
relate to a decline in labor force participation rate, and the 
employment-to-population ratio.
    When the economy is growing at a healthy pace and demand 
for labor is strong, are skill differentials as great a factor 
in getting a job offer as when there is excessive labor? 
Perhaps that is a subjective question, but--I mean, it is, but 
if you have any ideas I'd appreciate it.
    Commissioner Groshen. Generally speaking, the lower skilled 
people have bigger increases in their unemployment rate during 
recessions than higher skilled people. So it's possible that 
the wages of higher skilled people and employment of higher 
skilled people are preserved much more than lower skilled 
people during recessions.
    Representative Hanna. So using that suggestion, do you 
believe that we have a long-term structural problem in terms of 
what Senator Klobuchar referred to in terms of matching those 
skills up and education? And therefore is it somehow something 
that is structural in a way that we have to respond to 
differently than we are? And are many of these people 
permanently displaced? Do you see some change in that? Does the 
demand in a growing economy help that, whatever you think.
    Commissioner Groshen. Sure. So generally speaking the BLS 
does not have data about the specific skills required for job 
vacancies that employers are trying to fill. However, we would 
say that from what we can see there does not appear to be a 
larger than normal mismatch between the skills employers are 
seeking and those that job seekers have.
    One of the reasons why we say this is because we have not 
seen an increase in wages. And that is what you would--that is 
what you would expect if you had a big, sudden mismatch in what 
the employers--between what employers were demanding and the 
skills that workers had.
    You would see an increase in wages for those workers who 
had those skills. So we are not seeing that.
    Representative Hanna. But other things could be the reason 
for that, as well. I mean, you are talking about basic supply 
and demand, but wage growth in general has been relatively 
stagnant in some areas, even in the decline.
    Commissioner Groshen. That's right. But if you had some 
employers who were--you know, a group of employers who really 
wanted to get workers with a certain skill, you would expect 
that they would start hiring, they'd start poaching each 
other's workers. And in response, employers would then raise 
their wages to be able to retain them.
    Representative Hanna. Thank you. Perhaps this has been 
asked, but do you think that the--there has been some 
conversation about there is a population in our country that 
has not really been well prepared for retirement. We know that. 
And even young people going towards--50-year-olds, and 55-and-
older, are not prepared. We have seen a lot of elderly old 
people that might otherwise wish to be retired, or not, 
engaging in the laborforce. And there is also suggestion that 
there is a displacement because of that for younger people who 
might enter that same workforce, for those same jobs.
    Would you talk a little about that, if you actually think 
that is the case? Or what that maybe will look like on the 
ground?
    Commissioner Groshen. The increase in labor force 
participation amongst older workers seems to be an important--
well, an important part of that may be that the jobs that they 
are in are increasingly ones that one can do later in life. So 
they are less likely to be blue collar jobs where the physical 
demands become difficult for people at older ages.
    So this is seen as one of the most--you know, an important 
factor in an increasing participation rate for the elders.
    Representative Hanna. Well wouldn't those same jobs be the 
ones that people entering the workforce would also be likely to 
take?
    Commissioner Groshen. Usually the sort of crowding out that 
people think about is not, you know--internationally has not 
been seen as that much of a factor in whether or not you have 
overall wage and employment growth.
    Usually when you have a growing economy, then you can 
accommodate all the workers who come in.
    Representative Hanna. So growth helps everyone.
    Commissioner Groshen. Growth helps everyone.
    Representative Hanna. Thank you.
    Representative Paulsen. Thank you. Mr. Cummings is 
recognized for five minutes.
    Representative Cummings. Thank you, very much.
    Commissioner, while the unemployment rate among African 
Americans had been declining, last month it increased to 12.4 
percent. Why did the rate of unemployment for African Americans 
increase in March? Do you have any idea? Do the numbers tell us 
anything?
    Commissioner Groshen. Yeah. It didn't--while it did 
increase, so our point estimate of it went up, this is based on 
a small enough sample, unfortunately, that it is not 
statistically significant. So my best guess is that this is 
noise around a high level. I mean, clearly the unemployment 
rate for African Americans is very high. But this particular 
tick up is probably noise, although it will take another couple 
of months for us to see if it sticks or goes higher.
    Representative Cummings. Well when we are looking at the 
situation with Latinos, we see the unemployment rate has gone 
down significantly. Is that accurate?
    Commissioner Groshen. Not in this particular month.
    Representative Cummings. But overall?
    Commissioner Groshen. But it has been--the change over the 
year is a decline of 1.3 percentage points; whereas the decline 
for Black and African Americans is .08 of a percentage point.
    Representative Cummings. So today's jobs report shows that 
in March the unemployment rate for Hispanic workers is 7.9 
percent? Is that right?
    Commissioner Groshen. That's right.
    Representative Cummings. And 5.2 percentage points lower 
than the peak?
    Commissioner Groshen. Let's see. For--let's see.
    Representative Cummings. The peak I think was 16.8.
    Commissioner Groshen. Well, for Hispanics I have a decline 
of 4.3 percent since January '09.
    Representative Cummings. That is significant, is it not?
    Commissioner Groshen. Yes.
    Representative Cummings. And do we know why that is? I 
mean, do the numbers tell us anything?
    Commissioner Groshen. Well this is consistent with what has 
been happening with all of--you know, throughout the labor 
market. And since they had a particularly large increase in 
unemployment over the course of the Recession, then they would 
expect them to have a larger decrease when the labor market 
returns to normal.
    Representative Cummings. You know, I was at the University 
of Maryland Law School, which is where I went to school, and 
they were telling me that law schools throughout the country 
are having less and less people apply. And they said there were 
reasons for that, and one being people do not have the money; 
and two, they do not see the jobs.
    I always ask this question when you all come in: For 
somebody watching this right now who does not have a job, what 
would you tell them? I mean, are there certain areas of the 
country that are doing well? What areas might one who graduated 
from high school, or getting ready to enter college, want to go 
into?
    Because I think more and more people are concerned that 
when they get out of college they will not have a job. So based 
upon the numbers--I know you do not give a lot of advice--but 
just putting the numbers out there, what would you say to young 
people who are trying to figure out their way? And who do not 
want to go back and live with their mother and father after 
they get out of college?
    Commissioner Groshen. Well the main advice I would give 
them is to get a good education; that there is one thing that 
is under people's control and has a very important role in 
determining people's unemployment rate, is how much education 
they have. So that would be the main thing.
    And then the choice of industry makes a difference. We 
project that occupations and industries related to health care 
will add the most new jobs over the next 10 years. So we think 
health care and social assistance jobs, we project them to add 
nearly a third of all new jobs, 5 million of the 15.6 million 
total jobs expected to be added between now and 2022.
    We also actually project large gains in construction jobs, 
primarily to reflect recovery from the very severe downturn 
that we had in construction jobs.
    Representative Cummings. Are there any particular regions 
of the country that you would tell them that they might want to 
travel to?
    Commissioner Groshen. Well of late the regions that have 
had most--the most job growth have been in the South and the 
West. So for instance the average, let's see, the average 
change in employment in the South, the South has been adding 
about 49,000 jobs per month from June 2009 to February 2014 and 
the West has been adding 32,000 jobs per month. So these are 
the areas where we have seen most of the job growth regionally.
    Representative Cummings. Thank you, very much.
    Commissioner Groshen. You're welcome.
    Representative Paulsen. Mr. Delaney is recognized for five 
minutes.
    Representative Delaney. Thank you, Mr. Chairman.
    And thank you, Commissioner, for being here today to 
provide what I view as a positive report with a fair amount of 
evidence that things are getting back on track after a winter 
slowdown. And there was some very good news in the numbers you 
reported--not that there is not a lot for us to do, but 
certainly some good things to build upon.
    My question is in keeping with my friend and colleague's 
theme of, of--mine are more kind of direct questions as opposed 
to advice--is trying to disaggregate some of this data.
    Do you compile any analysis of how jobs break down between 
low, middle, and high skilled in terms of their profile? Now 
those are obviously subjective categorizations, but do you 
disaggregate any of your data along those lines? And if so, can 
you observe any trends that are relevant?
    Commissioner Groshen. Okay, let's see.
    [Pause.]
    I am looking for . . .
    Representative Delaney. Or while you are looking for that, 
I will add another question which is related, which is: The 
concern I have is obviously the headline unemployment number, 
and kind of subsidiary numbers that flow from that, are largely 
affected by choices people are making about the type of jobs 
they want to pursue.
    Do you compile any data about trends in the standard of 
living of average jobs, which would effectively be an 
aggregation of the low, middle, and high skilled composite, if 
you will?
    Commissioner Groshen. Yes, let me try--yes. So we have--
let's see.
    Representative Delaney. If it's easier, you can get me the 
information after the fact.
    Commissioner Groshen. Right.
    Well, so what we have been finding is that the largest 
over-the-year employment increases have come in professional 
and business services. And this industry has a relatively high 
earnings.
    Representative Delaney. Right. And high skills.
    Commissioner Groshen. And high skills, right.
    Representative Delaney. So those are growing.
    Commissioner Groshen. Yes. But the next highest job gains 
occurred in the industry which has the lowest average hourly 
earnings, leisure and hospitality. So we are having growth at 
both ends of the spectrum.
    Representative Delaney. So would that lead us to conclude 
that we continue to see this kind of barbell job creation where 
we are creating high-skill jobs at a decent rate, reflecting 
kind of the country's competitiveness position in industries 
like technology, medical devices, et cetera, et cetera? And 
that the income driven by those high-skill jobs is actually 
creating a fair amount of low-skill jobs. But we continue to 
see a hollowing out, if you will, of the middle-skill jobs? 
Would the data suggest that is continuing, or decelerating, or 
accelerating?
    Commissioner Groshen. I would say it is continuing, 
certainly by industry. It is a little more mixed by occupation.
    Representative Delaney. Got it. And a related point, you 
talked about this ratio, this kind of framing the job 
destruction rate over the job creation rate.
    Commissioner Groshen. Yes.
    Representative Delaney. The impact of technology on the 
workforce here is obviously fairly profound as it relates to 
those two statistics, the job creation rate and the job 
destruction rate. Obviously technology is destroying a lot of 
jobs, and technology is also creating a lot of jobs.
    Do you have a view as to what that ratio is based on 
technology? And is it changing? In other words, is technology 
creating more jobs relative to the number it is destroying? Or 
is it going the other way? Do you have a view on that?
    Commissioner Groshen. Well the simplest question is that by 
and large it is balanced. Within any net job change that we 
observe for the economy as a whole, the amount of churn in the 
U.S., in this dynamic U.S. economy that we have, is very high.
    So we will, you know, for every job, every net job we 
create, we probably destroy eight or nine jobs. And we have a 
huge number of--at the same time, we have a huge number of jobs 
being created, you know, nine gross jobs for every eight jobs.
    Representative Delaney. Got it.
    Commissioner Groshen. So getting back to one of the 
questions you had, the STEM jobs, if we want to focus on those, 
have grown much faster than total employment during this time. 
They grew at 5.1 percent between 2009 and 2013, while total 
employment grew by just 1.5 percent.
    So certainly our demand for STEM jobs is much faster than 
for other jobs.
    Representative Delaney. We may follow up with some more 
specific questions on some of that. Thank you.
    Commissioner Groshen. You're welcome.
    Representative Paulsen. Thank you, Commissioner, for taking 
the time to be here with your team and testifying this morning. 
I know that Senator Klobuchar and I are getting ready to head 
back to several inches of snow in Minnesota, and we thank 
everyone for being here this morning. The Committee is 
adjourned.
    (Whereupon, at 10:16 a.m., Friday, April 4, 2014, the 
hearing in the above-entitled matter was adjourned.)
                       SUBMISSIONS FOR THE RECORD

  Prepared Statement of Hon. Erik Paulsen, Presiding Chairman, Joint 
                           Economic Committee
    Vice Chair Klobuchar, Members, and Commissioner Groshen:
    Chairman Brady went to Dallas this morning to attend the funeral of 
Ray Hutchinson, the Chairman's friend and the husband of former Senator 
Kay Bailey Hutchinson. In Chairman Brady's absence, he asked me to 
preside at this hearing.
    The recovery that began in June 2009 is now nearly five years old. 
Yet, a NBC News/Wall Street Journal poll last month found that 57% of 
Americans still think the economy is in a recession. This is likely due 
to the persistent weakness in our labor market.
    The fact that nonfarm payrolls increased by 192,000 and the 
official unemployment rate remained unchanged at 6.7% last month is 
positive news, but it's simply not enough. I agree with Federal Reserve 
Chair Janet Yellen's recent assessment of our economy. In a speech on 
Monday at the 2014 National Interagency Community Reinvestment 
Conference, she said, ``[w]hile there has been steady progress, there 
is also no doubt that the economy and the job market are not back to 
normal health.''
    By several measures, the recovery from the most recent recession is 
far below the average of prior recoveries over the last 50 years. Here 
at the Joint Economic Committee, we often refer to that as the Growth 
Gap. Since the recession ended in June 2009,

      Real GDP growth is a cumulative 9 percentage points below 
the average recovery;
      Private payroll employment growth is more than 5 
percentage points below the average recovery; and
      The real disposable income of a family of four grew by 
$13,032 less than it did during an average recovery.

    Clearly, our economy is underperforming. We should be doing better 
than five consecutive years of below average.
    In her speech, Chair Yellen cited a number of statistics indicating 
that our labor market is weaker than the official unemployment rate 
would suggest. For example,

      More than seven million people are working part-time even 
though they would prefer full-time jobs.
      The falling unemployment rate has not sparked a 
significant increase in real wages. Real average weekly earnings for 
all private, nonfarm employees are up by less than 1% since the 
recession ended.
      35.8% of the unemployed have been unemployed six months 
or longer. I'll say that again. More than one-third of the unemployed 
in this country have been unemployed for six months or more.
      The labor force participation rate has fallen from 66.0% 
in December 2007 to 63.2%. Only half of this decline may be 
attributable to demographic factors.

    Some blame the housing bubble, its collapse, and the ensuing 
financial panic for this persistent weakness in our labor market. While 
the collapse of the housing bubble undoubtedly has some lingering 
effects, it is not the main factor, let alone the only factor, for this 
weakness.
    What is unique about this recovery is the combination of the 
economic policies that President Obama has pursued:

      From 1982 to 2000, federal spending declined as a percent 
of GDP, and the private sector created more than 37 million jobs. Under 
President Obama, federal spending reached a post-World War II high of 
24.4% of GDP and remains above its postwar average of 18.9% of GDP.
      Presidents Kennedy and Reagan passed tax cuts that 
encouraged new business investment. This Committee has shown a strong 
correlation between new business investment and the creation of new 
private-sector jobs. In contrast, President Obama increased taxes on 
successful small businesses, capital gains, and dividends.
      Presidents Reagan and Clinton took a balanced approach 
toward environmental, health, and safety regulations. In contrast, the 
Obama Administration has pursued an aggressive agenda of regulation 
without carefully weighing costs and benefits.
      Presidents Kennedy, Reagan, and Clinton opened new 
markets to American products through international trade agreements. 
There are several trade opportunities on the horizon that are proven 
job creators, but the Administration has not fully engaged on this 
issue. There's been bipartisan support for trade in the past, and I'm 
confident that there's bipartisan support in Congress for trade 
agreements today.
      Presidents Kennedy, Reagan, and Clinton did not burden a 
weak economy with costly new entitlement programs. In contrast, 
President Obama pushed the Affordable Care Act through Congress on 
party-line votes.
      The President's health care law has increased 
uncertainty, raised taxes by nearly half a trillion dollars, undermined 
the medical device industry that is so important to my home state of 
Minnesota, and caused millions of Americans to lose access to the 
doctors and health insurance plans they liked.
    The economic policies America needs now are well known--stable 
prices, a gradual decline in federal spending as a percent of GDP, tax 
reform that encourages new business investment, balanced regulation, 
and trade liberalization.
    It's the best way to strengthen our economy, create good jobs, and 
boost the wages of hardworking Americans; and it's time that the 
Administration work with Republicans and Democrats in Congress to move 
our country forward.
    With that, Commissioner Groshen, I look forward to your testimony.
                               __________
 Prepared 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.
    Nonfarm payroll employment rose by 192,000 in March, and the 
unemployment rate was unchanged at 6.7 percent. Employment increased in 
professional and business services, in health care, and in mining and 
logging.
    Incorporating the revisions for January and February, which 
increased total nonfarm employment by 37,000 on net, monthly job gains 
have averaged 178,000 over the past 3 months. In the 12 months prior to 
March, employment growth averaged 183,000 per month.
    All of the net job growth in March occurred in the private sector, 
which now has exceeded its employment level in December 2007, when the 
most recent recession began. The private sector lost 8.8 million jobs 
during the labor market downturn and has gained 8.9 million since the 
employment low in February 2010. However, government employment is down 
since the recession began (-535,000), and therefore total nonfarm 
employment remains below (-422,000) its December 2007 level.
    In March, employment in professional and business services rose 
(+57,000) in line with the prior 12-month average. Within the industry, 
temporary help services added 29,000 jobs in March. Employment growth 
in temporary help services had averaged 20,000 per month in the prior 
12 months.
    Health care employment rose by 19,000 in March, with gains in 
ambulatory health care services (which includes home health care and 
outpatient care centers). In the prior 12 months, job growth in health 
care had averaged 17,000 per month, with most of the growth occurring 
in ambulatory care. In March, nursing care facilities lost 5,000 jobs.
    Employment in mining and logging rose by 7,000 in March, led by 
gains in support activities for mining (+5,000). Mining and logging has 
added 38,000 jobs over the year.
    Employment in food services and drinking places continued to trend 
up in March (+30,000). This industry has added 323,000 jobs over the 
year.
    Employment continued to trend up in construction in March (+19,000) 
and is up by 151,000 over the past 12 months.
    Employment in other major industries, including manufacturing, 
wholesale trade, and retail trade, changed little in March.
    Average hourly earnings of all employees on private nonfarm 
payrolls edged lower by 1 cent in March, after rising by 9 cents in 
February. Over the past 12 months, average hourly earnings have risen 
by 2.1 percent. From February 2013 to February 2014, the Consumer Price 
Index for All Urban Consumers (CPI-U) rose by 11.1 percent.
    In March, the average workweek for all employees on private nonfarm 
payrolls increased to 34.5 hours, offsetting a net decline over the 
prior 3 months.
    Turning now to our survey of households, the unemployment rate, at 
6.7 percent, was unchanged in March, and the number of unemployed 
persons remained at 10.5 million. The number of unemployed persons who 
had been jobless for 27 weeks or more was little changed (3.7 million). 
These individuals accounted for 35.8 percent of the unemployed.
    Both the civilian labor force and total employment increased in 
March. The labor force participation rate (63.2 percent) and the 
employment-population ratio (58.9 percent) changed little over the 
month.
    Among persons who were neither working nor looking for work in 
March, 2.2 million were classified as marginally attached to the labor 
force, little changed from a year earlier. (These individuals had not 
looked for work in the 4 weeks prior to the survey but 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, edged down 
over the year to 698,000 in March.
    In summary, employment rose by 192,000 in March, and the 
unemployment rate was unchanged at 6.7 percent.
    My colleagues and I now would be glad to answer your questions.




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