[Congressional Record (Bound Edition), Volume 152 (2006), Part 2]
[House]
[Pages 1953-1954]
[From the U.S. Government Publishing Office, www.gpo.gov]




           JOB STATISTICS NOT ACCURATELY TRACKING JOB GROWTH

  The SPEAKER pro tempore (Mr. Boozman). Under a previous order of the 
House, the gentleman from California (Mr. Dreier) is recognized for 5 
minutes.
  Mr. DREIER. Mr. Speaker, last night I stood here in the well to talk 
about our out-of-date job surveys that we have, the payroll versus the 
household surveys. I discussed the changing nature of job creation in 
the 21st century economy.
  We have evolved into a technologically advanced, upwardly mobile, 
highly flexible workforce. The types of jobs, the way jobs are created 
and our methods for finding new work have all changed dramatically in 
the 6\1/2\ decades since our job surveys were developed; and yet, Mr. 
Speaker, our surveys remain fundamentally unchanged over that period of 
time. The result has been job statistics that are increasingly 
incapable of accurately tracking job growth in a dynamic economy.
  This afternoon I would like to talk about another economic indicator 
that is unable to fully portray the true state of our modern economy, 
that being the gross domestic product.
  Growth in GDP is our broadest measure of economic strength; and, as 
such, it is perhaps the most commonly cited and heavily relied upon 
statistic. And yet, like our job surveys, our methods for calculating 
GDP were developed in the industrial age and have remained unchanged 
while our economy has been transformed dramatically, as we all know.
  The need for assessing and tracking GDP was borne out of the Great 
Depression. As our Nation faced the worst economic crisis in its 
history, policymakers found that they lacked the tools to assess 
whether our economy was getting better or getting worse, so the 
Department of Commerce began

[[Page 1954]]

the first accounting of national income and output. In an industrial 
economy, this meant tallying such tangibles as machines, tractors and 
buildings.
  Purchasing new factory equipment or building a new facility was 
counted as long-term investment, while spending on research or training 
was not. For example, AT&T's investment in Bell Labs where the 
transistor radio was invented didn't show up at all in the GDP numbers. 
Even at the time, the economists who developed the methodology 
recognized the limitations. But an economy based on heavy industrial 
manufacturing could be adequately analyzed, by and large, on the basis 
of tangible, easily identified and easily quantified investments.
  However, as we all know, Mr. Speaker, today's economy is drastically 
different from the economy that we faced following the Great 
Depression. Our knowledge-based economy is based on ideas rather than 
things. Investing in research and development, developing brand equity 
and exporting best practices are driving successful businesses in our 
innovation economy. Yet they are absent from our most important measure 
of economic vitality, and by missing these intangible but fundamentally 
important factors, our GDP numbers are misleading.
  For example, Mr. Speaker, since 2000, the 10 largest U.S. companies 
that report research and development spending have increased capital 
spending by only 2 percent. That means that the types of investments 
that are captured in the GDP calculation, new buildings and more 
equipment, have been meager over the last half decade. Based on this 
number, we would be led to believe that some of the country's greatest 
engines of growth are stagnating and failing to make long-term 
investments.
  But, Mr. Speaker, these same 10 companies have actually increased 
R&D, research and development spending, by a whooping 42 percent over 
that period of time. They are investing rigorously in tomorrow's 
innovations, better products, better services, better ways of doing 
things. Our economy's creative thinkers are propelling our economy 
forward and ensuring growth in the future. Yet our old economy 
calculations miss this good economic news entirely.
  To give another example, look at how the value of Apple's iPod is 
incorporated into GDP. While superior design, quality and marketing, 
all developed in my State of California, have led to a global 
powerhouse brand, the actual product, the iPod, is assembled in China. 
So when the Commerce Department's Bureau of Economic Analysis 
calculates our GDP, it does not count the $800 million, nearly a 
billion dollars, that Apple spent in research and development and brand 
development last year. It merely counts the number of units shipped 
here from China and sold in the United States. As Business Week put it 
in an article 2 weeks ago, this sort of accounting reduces Apple, one 
of the world's greatest innovators, to nothing but a reseller of 
imported goods.
  Mr. Speaker, there is no doubt that quantifying intangibles like 
technical innovation and marketing savvy presents some formidable 
challenges; and adopting hasty changes that make our GDP numbers too 
confusing or complicated would obviously be no improvement to the 
status quo. It is essential that we begin to look at ways to make our 
economic statistics more meaningful by bringing them into the 21st 
century. We need to do that by looking at these major modifications.

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