[Congressional Record (Bound Edition), Volume 149 (2003), Part 19]
[Extensions of Remarks]
[Pages 26139-26140]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          JOBS AND THE ECONOMY

                                 ______
                                 

                         HON. NICK J. RAHALL II

                            of west virginia

                    in the house of representatives

                       Tuesday, October 28, 2003

  Mr. RAHALL. Mr. Speaker, the deafening silence we hear tonight is the 
silence of the Republican leadership and its lack of support for 
unemployment benefits to millions of Americans thrown out of work 
during the Republican reign of ruinous indifference to families and 
livelihoods.
  Mr. Speaker, where oh where have the jobs gone? A crisis of epic 
economic proportions is upon us.
  Since the Administration has taken control, this Nation has lost 3.2 
million private sector jobs, and those are the ones we are able to 
count. Who knows how many more are out there uncounted? This fact alone 
is bad enough, but under this Administration it gets much, much worse.
  According to a study in the August issue of Current Issues in 
Economics and Finance reviewed by Charlie Cook in this mornings 
Congress Daily AM, almost 80% of the jobs that have been lost since the 
President took office are permanent. A figure that is drastically worse 
than had been the case in previous economic downturns of the mid-1970's 
and early 1980's. I include in the record Mr. Cook's thoughtful 
comments on this important study.
  This finding should shock every business and every worker in the 
Nation, Mr. Speaker.

                         A New Kind of Job Loss

                           (By Charlie Cook)

       When we get the first look Thursday at economic growth 
     numbers for the third quarter of this year, those gross 
     domestic product figures may well show impressive economic 
     growth: a sign that President Bush's tax cut-oriented, 
     economic growth package did in fact stimulate the economy. 
     History has shown that economic growth through the second 
     quarter of the election year usually results in re-election 
     for incumbent presidents. But the question today is whether 
     that relationship will remain as strong in 2004 as it has 
     been in the past.
       Despite the fact that the economic downturn ``officially'' 
     began in March 2001 and ended in November 2001, a net loss of 
     2.6 million jobs has occurred since Bush took office, giving 
     weight to the term ``jobless recovery.'' A recent paper by 
     two economists with the Federal Reserve Board of New York 
     shows quite clearly the most recent economic downturn and 
     recovery are very different from past ones. Furthermore, it 
     suggests economic growth figures in the near term might not 
     be accompanied by the same kind of net job growth in the 
     future.
       Writing in the August issue of an FRBNY publication, 
     ``Current Issues in Economics and Finance,'' Erica Groshen 
     and Simon Potter looked at the pattern of layoffs and job 
     creation during and after the past six economic downturns. 
     Observing that ``recessions mix cyclical (temporary) and 
     structural (permanent) adjustments,'' Groshen and Potter 
     found, for example, in the economic downturns of both the 
     mid-1970s and the early 1980s, 49 percent of the job losses 
     were cyclical. These are temporary layoffs, whereby an 
     employer ``suspends'' an employee's job because of reduced 
     demand for goods or services, then recalls that employee when 
     the economy turns around, fueling fast payroll growth.
       In those two downturns, the other 51 percent of job losses 
     were more structural or permanent, as when an employee's job 
     is simply eliminated and the laid-off employee is forced to 
     seek a new job. Given new job creation takes much longer than 
     recalling former workers, structural losses are far more 
     serious than cyclical ones.
       That 49 percent-cyclical/51 percent-structural loss mix of 
     the 1970s and 1980s changed to 43 percent-cyclical/57 
     percent-structural in the economic downturn of the early 
     1990s, as more jobs were completely eliminated or relocated 
     to other countries. For the most part, this shift went 
     unnoticed.
       It became much more pronounced in the current economic 
     downturn and recovery, with Groshen and Potter finding 79 
     percent of job losses were structural and only 21 percent 
     temporary. During this most recent downturn and recovery, 
     jobs in the fields of electronic equipment securities and 
     commodities brokerage and communications were largely 
     eliminated. Indeed, the only field that has truly prospered 
     through this period is in the standard industrial code 
     ``nondepository institutions,'' a group that notably includes 
     mortgage brokers, who have benefited greatly from 
     historically low interest rates and strong home buying and 
     refinancing.
       Equally alarming, but more anecdotal than quantitative, are 
     stories of more and more high-technology or other 
     ``knowledge-based'' jobs shifting abroad, whether to call 
     centers handling customer service and even technical support 
     or in computer programming and other highly skilled fields I 
     recently heard of some corporate legal departments shifting 
     more rudimentary legal work--drafting contracts and the 
     like--to India, an English-speaking country that uses the 
     same English common-law system as the United States.
       No doubt some of these structural job losses are the result 
     of the impressive productivity gains that American 
     corporations have enjoyed in recent years as a result of 
     automation and more efficient processes. But it is also clear 
     many of these losses were confined largely to relatively low-
     skilled manufacturing jobs, many thought this was an 
     unfortunate but inevitable shift. Low-skilled jobs like 
     producing pencils could be done abroad more cheaply and 
     efficiently than by higher-paid Americans under more strict 
     environmental and safety standards. But as the job losses 
     have shifted from lower-skilled to higher-skilled--the very 
     jobs that displaced workers were told they should re-train 
     for--this has become a far more serious problem.

[[Page 26140]]

       While few believe the solution to job losses is to 
     construct trade barriers in this country, it is a far 
     different and greater problem than we experienced in the 
     past. And it isn't just an economic or trade problem; it is 
     also a political problem. Sooner or later, voters will demand 
     solutions from their elected officials or candidates for 
     Congress and president.

                          ____________________