[Congressional Record (Bound Edition), Volume 152 (2006), Part 10]
[Senate]
[Pages 12852-12854]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          STATE OF THE ECONOMY

  Mr. BENNETT. Mr. President, yesterday, in the Joint Economic 
Committee, we heard from the chairman of

[[Page 12853]]

the President's Council of Economic Advisers. As often happens in that 
committee, there were a number of issues raised. I would like to take 
the floor simply to clarify where we really are with respect to the 
economy. There are so many things being said in this election period 
about the economy that it is always nice to reflect on what the late 
Senator Moynihan used to say:

       Everyone is entitled to his own opinion, but not to his own 
     facts.

  Let's spend a little time talking about the facts and understand 
where the economy is. With a series of charts, I will try to do it as 
quickly as I can, with an understanding of where the economy currently 
is.
  This first chart demonstrates economic growth as measured by GDP, 
gross domestic product. The bars on the chart represent quarters. The 
quarters with positive GDP growth are represented by blue bars. 
Quarters with declines in GDP are represented by red bars. If you will 
notice here in the beginning of 2000, the economy started to shrink--
that which we refer to as the recent recession which began in 2000. 
These are the quarters in which that happened. We got a recovery 
starting in the fourth quarter of 2001, but as these bars above the 
zero line demonstrate, the recovery was pretty anemic. Not much 
happened for a little over a year, as the recovery did not get 
traction. The recovery took off in the second quarter of 2003. That 
happens to be the time that we passed tax relief. Economists will argue 
as to whether the tax relief that was passed at that time is 
responsible for the recovery, but as they say in Manhattan, ``it 
couldn't hurt,'' because the tax relief was passed there, and we see 
the strong economic growth that has occurred ever since the second 
quarter of 2003.
  Let's go to the next chart. There was talk that, well, we may be in 
recovery, but we are not getting any jobs; this is a jobless recovery. 
Where are the jobs? This chart demonstrates that, indeed, that is 
correct. Starting in 2000, the jobs started to disappear, and we had a 
long period that went on where the job base was shrinking in this 
country. In 2003, that turned around, and we started to see strong job 
creation since the second quarter of 2003. Once again, that is the 
quarter where we passed tax relief. Did the tax relief cause the job 
recovery? Nobody can prove that it did or it didn't. Once again, it 
didn't hurt.
  Now we go to the question of business investment. The recession, once 
again, started in 2000. Business investment went into negative 
territory all through 2001, 2002, and then, in the third quarter of 
2003, after we passed tax relief, business investment picked up. All of 
these things started going up after this one event of the passage of 
tax relief. Did the tax relief cause the business investment to go up? 
No one knows, but once again, it couldn't hurt.
  All right. With those facts before us, and they are indisputable, we 
now hear the argument: Yes, maybe the GDP growth is occurring; yes, 
maybe the jobs have come back; yes, maybe business investment has come 
back. But the big problem is that real wages are down; because 
productivity has gone up, real wages have gone down.
  Here is a historic demonstration of the tie between productivity and 
real wages. This goes back to 1950. The blue line on the chart is 
productivity growth; the red line is growth in real compensation 
including benefits. The two grow together. The outstanding increase in 
productivity we have had since 2003 has not produced a lowering of real 
compensation to workers. The best thing that can happen for real wages, 
historically, is for productivity to go up. So those who are bemoaning 
the increase in productivity, saying, yes, but real wages are down, are 
ignoring 50 years of history and the current facts.
  We are told that the wages people take home are down; the wages 
people have in their pocketbooks are down in this recovery. Here on 
this chart, from the Bureau of Labor Statistics, is the evidence of 
what is happening to real hourly wage growth. We can see that, in 
previous recessions, every time there was a recession, real wage growth 
went down; recession, real wage growth went down; recession, real wage 
growth went down. In this recession, real wage growth did not go down 
as much as it historically has; real wages stayed higher than they have 
been in the past.
  During this period of recovery, it looks like--yes, that argument has 
merit--real wages are going down. However, one of the things we have to 
recognize is that this chart does not include benefits. When you add 
benefits to wages and get the total compensation that goes into 
someone's pocket, the picture changes. Consider the next chart. Again, 
the dark blue line on the chart is productivity, and it shows that 
employee compensation in total in a recession goes down as productivity 
goes up. It goes down as productivity goes up. It goes down as 
productivity goes up. It goes down as productivity goes up. And then, 
when the recovery takes hold, real compensation comes back up above the 
line.
  Here are the facts. Taking this as the line between growth and 
shrinkage, real employee compensation, including benefits, has been in 
positive territory. It went below that, just as it has in every 
previous recession, but when the recovery took hold, employee 
compensation has gone into positive territory and come back up to join 
productivity, just as it has done historically.
  Where do we get these arguments that real wages are going down? It is 
the difference between the two charts. The difference is that one chart 
looks at wages only, and ignores benefits. The other shows total worker 
compensation that includes wages and salaries, but also benefits 
workers receive. Now we can consider some statistics that I hope make 
the importance of the distinction between wages only and wages plus 
benefits very clear. The employment cost index data shown in the final 
chart shows that in the 1980s, real compensation growth grew at a 0.82 
percent rate. In the 1990s, coming after the recession--we have taken 
the recession out of this--the period of growth during the Clinton 
administration stayed at virtually the same level. But from 2001 to the 
present, it is much stronger, at 1.11 percent.
  How can that be, given the rhetoric we have heard? Well, if you go to 
the salary growth, take out the benefits, you find that portion of that 
wage and salary growth was 0.46 in the 1980s. It was 0.82 percent in 
the 1990s. It was only 0.39 since the beginning of 2001. This is the 
number which is being focused on as a demonstration of the fact that 
people's wages are not that good. But when you look at the benefits 
growth, you find that benefits grew in the 1980s at 1.76 percent. In 
the 1990s, at 0.73 percent growth, there was very anemic benefit 
growth. That is why this number is so close to this number, because the 
benefit growth actually pulled this number down. But when you get to 
what has happened from the beginning of 2001 to now, people are 
contracting for more benefits. The benefit growth is extremely strong, 
which is why real compensation is stronger in the post-2000 period than 
it was in either of the previous two decades--not a bad economic record 
since the year 2000 and the recession we had.
  I have more to say on this, but I recognize that other Senators wish 
to speak, so I will conclude here. I wish to make it clear that the 
facts demonstrate that we have a strong economy currently going, and 
the facts demonstrate that real compensation is keeping up with it. 
Productivity is going up at an accelerated rate, and real compensation 
is also going up at an accelerated rate. We should be proud of what we 
have accomplished since coming out of the recession of 2000.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois is recognized.
  Mr. DURBIN. Mr. President, can you tell me what the order before the 
Senate is at this moment?
  The PRESIDING OFFICER. The majority has 2 minutes remaining in 
morning business.
  Mr. DURBIN. Thank you, Mr. President.
  The PRESIDING OFFICER. The Senator from Maine is recognized.
  Ms. COLLINS. Mr. President, I ask unanimous consent that Senator 
Lieberman and I be recognized for 30 minutes equally divided, but that 
prior

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to that recognition, my colleague from South Dakota be recognized for 
not to exceed 10 minutes.
  The PRESIDING OFFICER. Is there objection?
  Mr. DURBIN. Mr. President, I will not object, but I ask to be 
recognized for 10 minutes after the Senator from South Dakota, and I 
believe the Senator from North Dakota will be seeking recognition for 
20 minutes. I don't know when Senator Lieberman is arriving. Would it 
be appropriate now to lock in these three requests--10 minutes for the 
Senator from South Dakota, 10 minutes for myself, and 20 minutes for 
the Senator from North Dakota?
  Ms. COLLINS. Mr. President, I know of no objection to that request. I 
would not object.
  Mr. DURBIN. Mr. President, I make a unanimous consent request that 
the Senator from South Dakota be recognized for 10 minutes, I be 
recognized for 10 minutes, followed by the Senator from North Dakota 
for 20 minutes, and the Senators from Maine and Connecticut be 
recognized for 30 minutes.
  Ms. COLLINS. If the Senator will withhold, I will object to that 
because the Senator from Connecticut and I had been planning to speak 
at 11:30. So what I would suggest, if it would be acceptable to the 
Senator from Illinois, is that the Senator from Connecticut and I would 
cut our time from 30 minutes to 20 minutes but proceed immediately 
before the other Members are recognized. Would that be acceptable to 
the Senator from Illinois, since we were here first?
  Mr. DURBIN. The Senator from Maine is so persuasive. I don't know if 
the Senator from South Dakota still wants recognition.
  Mr. THUNE. Yes.
  Mr. DURBIN. So I ask unanimous consent that the Senator from South 
Dakota be recognized for 10 minutes, the Senators from Connecticut and 
Maine for 20 minutes combined, and then the Senator from North Dakota 
and myself for 30 minutes.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  The Senator from South Dakota is recognized.

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