U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

96–629 PDF 2004

S. HRG. 108–689

THE EMPLOYMENT SITUATION: APRIL 2004

HEARING

BEFORE THE

JOINT ECONOMIC COMMITTEE

CONGRESS OF THE UNITED STATES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

MAY 7, 2004

Printed for the use of the Joint Economic Committee

(

(II)

JOINT ECONOMIC COMMITTEE

[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]

SENATE

ROBERT F. BENNETT, Utah, Chairman

SAM BROWNBACK, Kansas

JEFF SESSIONS, Alabama

JOHN SUNUNU, New Hampshire

LAMAR ALEXANDER, Tennessee

SUSAN COLLINS, Maine

JACK REED, Rhode Island

EDWARD M. KENNEDY, Massachusetts

PAUL S. SARBANES, Maryland

JEFF BINGAMAN, New Mexico

HOUSE OF REPRESENTATIVES

JIM SAXTON, New Jersey, Vice Chairman

PAUL RYAN, Wisconsin

JENNIFER DUNN, Washington

PHIL ENGLISH, Pennsylvania

ADAM H. PUTNAM, Florida

RON PAUL, Texas

PETE STARK, California

CAROLYN B. MALONEY, New York

MELVIN L. WATT, North Carolina

BARON P. HILL, Indiana

DONALD B. MARRON, Executive Director and Chief Economist

WENDELL PRIMUS, Minority Staff Director

CHRISTOPHER J. FRENZE, Chief Economist to the Vice Chairman

(III)

CONTENTS

OPENING STATEMENT OF MEMBERS

Representative Jim Saxton, Vice Chairman .......................................................... 1

Senator Jack Reed, U.S. Senator from Rhode Island ........................................... 2

WITNESS

Statement of Hon. Kathleen P. Utgoff, Commissioner, Bureau of Labor

Statistics, accompanied by Dr. John Greenlees, Associate Commissioner,

Office of Prices and Living Conditions, and John Galvin, Associate Commissioner, Employment and Unemployment Statistics .......................................... 3

SUBMISSIONS FOR THE RECORD

Prepared statement of Representative Jim Saxton, Vice Chairman ................... 11

Prepared Statement of Senator Jack Reed, U.S. Senator from Rhode Island .... 11

Prepared Statement of Commissioner Kathleen P. Utgoff, together with Press

Release No. 04-818, entitled, ‘‘The Employment Situation: April 2004,’’

Bureau of Labor Statistics, Department of Labor ............................................. 12

(1)

THE EMPLOYMENT SITUATION:

APRIL 2004

FRIDAY, MAY 7, 2004

CONGRESS OF THE UNITED STATES, JOINT ECONOMIC COMMITTEE, Washington, DC

The committee met, pursuant to call, at 9:27 a.m., in room 1334,

Longworth House Office Building, the Honorable Jim Saxton, Vice

Chairman of the Committee, presiding.

Senator present: Senator Reed.

Representative present: Representative Saxton.

Staff Present: Chris Frenze, Robert Keleher, Brian

Higginbotham, Colleen J. Healy, Mike Ashton, Chad Stone, Matt

Salomon, and Nan Gibson.

OPENING STATEMENT OF REPRESENTATIVE JIM SAXTON,

VICE CHAIRMAN

Representative Saxton. Good morning. I am pleased to

welcome Commissioner Utgoff once again to testify on the monthly

employment statistics.

According to the payroll survey, economic employment increased

by 288,000 jobs in April following a revised gain of 337,000 new

jobs in March. The April payroll employment gains were broadbased, as reflected in the diffusion index, remaining well over 50

percent in April. The 1-month diffusion index has been well above

50 for the last 4 months. The manufacturing employment increased

for the third consecutive month. Overall, 1.1 million payroll jobs

have been created since last August.

Separately, the household survey showed a similar monthly increase in employment, and the unemployment rate went from 5.7

percent in March to 5.6 in April. The unemployment population

ratio edged up to 62.2 percent in April.

The employment data reported today follow the release of many

other economic figures that reflect a healthy pace of economic expansion. Investment has been strong in recent quarters, providing

a faster and more balanced pattern of economic growth. Overall,

the economy has grown at a rate of about 5 percent during the last

year.

The rebound in business investment is reflected in the manufacturing sector where capital goods are produced. The Institute for

Supply Management (ISM) index of manufacturing activity has

trended upward for many months and remains at historically high

levels. Meanwhile, consumption remains strong, as reflected by retail sales and other measures. Housing and construction activity is

2

robust. Independent economists note the important contributions of

tax relief and low interest rates in improving economic conditions.

The consensus of Blue Chip economic forecasters projects that

economic growth will be nearly 5 percent in 2004. This sustained

period of economic growth will continue to improve the opportunities of both workers and businesses. The outlook for the U.S. economy remains very positive for the foreseeable future.

[The prepared statement of Representative Saxton appears in the

Submissions for the Record on page 11.]

Representative Saxton. Senator Reed, do you have an opening

statement?

OPENING STATEMENT OF SENATOR JACK REED,

U.S. SENATOR FROM RHODE ISLAND

Senator Reed. Thank you very much, Chairman Saxton. I want

to welcome Commissioner Utgoff and thank her for testifying here

today.

It is encouraging to note that 288,000 payroll jobs were created.

But we still have a significant jobs deficit, and long-term unemployment remains high.

Although the recession officially ended nearly two-and-a-half

years ago, we still have a payroll unemployment gap of 1.5 million

jobs since President Bush took office. We have not seen such persistent job loss since the 1930s. It appears that job creation has

turned the corner, and that is very good news. But it will take

many months of solid payroll growth to erase the huge gap that

has developed since early 2001.

Meanwhile, we are waiting for another gap to close; that is the

wage gap. Most measures of workers’ earnings have barely kept up

with inflation over the past 3 years despite remarkable productivity growth. The gap between the growth in productivity and

growth in real hourly wages is unusually wide.

For example, the productivity data reported yesterday show that

since the start of the recession in early 2001, output per hour in

non-farm businesses has grown at a staggering 4.5 percent average

annual rate. However, those same data show that, once you take

out inflation, workers’ hourly compensation has grown at just a 1.1

percent annual rate over that same period.

Moreover, some of that growth in compensation reflects the rising costs of benefits, like employer contributions to health insurance. For some time now, wages and salaries, which is what shows

up in the workers’ paychecks, have been growing more slowly than

benefits. Thus far, at least, strong productivity growth has done

more for the bottom line of companies than it has done for the

take-home pay of workers.

Another nagging concern in the labor market is that long-term

unemployment remains stubbornly high. April was the 19th consecutive month in which at least 20 percent of the unemployed had

been without work for more than 6 months. That is the longest

such streak in the more than six decades that the Labor Department has kept these records.

Congress can do something now to help the long-term unemployed by extending federal unemployment benefits. With bipartisan majorities in both Houses of Congress and the support of FedVerDate 03-FEB-2003 10:36 Nov 17, 2004 Jkt 096629 PO 00000 Frm 00006 Fmt 6601 Sfmt 6601 D:\DOCS\96629.TXT SSC1 PsN: SSC1
3

eral Reserve Chairman Alan Greenspan, it is stunning that the

President and Congress have been yet to decide this important

issue for American workers.

The economy is growing, but middle-class families still face an

uncertain jobs picture, stagnant wages, higher prices at the pump,

and rising consumer interest rates. It may be some time before

workers and their families experience the benefits of this emerging

recovery firsthand.

I look forward to the Commissioner’s testimony.

[The prepared statement of Senator Reed appears in the

Submissions for the Record on page 11.]

Representative Saxton. Commissioner, thank you for being

with us this morning. I could not help but think how good it must

feel after all this time. It was the second half of the last year of

the Clinton Administration when the economy turned and headed

toward a recession. So last month and today were the first really

good months, real good-news months that we have had since the

second half of 2000. So thank you for being here with us. We are

anxious to hear your good news.

OPENING STATEMENT OF HON. KATHLEEN P. UTGOFF, PH.D.,

COMMISSIONER, BUREAU OF LABOR STATISTICS, ACCOMPANIED BY DR. JOHN GREENLEES, ASSOCIATE COMMISSIONER, OFFICE OF PRICES AND LIVING CONDITIONS, AND

JOHN GALVIN, ASSOCIATE COMMISSIONER, EMPLOYMENT

AND UNEMPLOYMENT STATISTICS

Commissioner Utgoff. Thank you very much, Mr. Chairman. I

appreciate this opportunity to comment on the labor market data

that we released this morning.

As you already said, non-farm payroll employment rose by

288,000 in April, on the heels of an even larger job gain in March.

Since August 2003, payroll employment has risen by 1.1 million. In

April, job growth was widespread for the second consecutive month.

Employment increased substantially in several service-providing

industries, construction employment continued to expand, and

there was a noteworthy job gain in durable goods manufacturing.

The unemployment rate, at 5.6 percent in April, was little changed

over the month.

Among the goods-producing industries, construction employment

continued to trend upward in April. Since March 2003, the industry has added 213,000 jobs, bringing construction employment

slightly above its most recent peak in March 2001.

Following a protracted period of job decline, factory employment

edged up over the past 3 months. I would note that the data for

February and March were revised slightly upward into positive territory. The recent improvement in manufacturing employment has

occurred largely in the durable goods components. In April, durable

goods employment rose by 20,000, with notable job gains in both

fabricated metals and machinery.

A number of service-providing industries added jobs over the

month. Employment in professional and business services increased by 123,000 and has risen by about a half million since

March 2003. Roughly half of the over-the-month gain in this diverse sector occurred in employment services, where the temporary

4

help industry added 35,000 jobs. Employment in temporary help

has grown by 261,000 over the past year. In April, employment increased by 7,000 in architectural and engineering services and by

8,000 in management consulting. In addition, employment in businesses that supply services to buildings and dwellings rose by

30,000, with most of the gain occurring in landscaping services.

Within education and health services, employment increased by

30,000 in health care and social assistance. Job gains occurred in

hospitals and in outpatient care centers. In leisure and hospitality,

the food services industry continued to add jobs in April. So far this

year, employment increases in food services have averaged 28,000

a month, twice the average monthly increase for 2003.

Elsewhere in the service-providing industries, employment in retail trade edged up over the month, following a sizable increase in

March. In April, building material and garden supply stores added

10,000 jobs, and employment in motor vehicle and parts dealerships rose by 6,000. Wholesale trade employment was little

changed in April, but the industry has added 49,000 jobs since October. Within the financial sector, employment in credit intermediation and in real estate continued to edge up, reflecting strength

in the housing market.

In April, average hourly earnings for production or nonsupervisory workers rose by 5 cents to $15.59. Over the year, average hourly earnings grew by 2.2 percent.

Looking at some of our measures obtained from the survey of

households, the April unemployment rate was 5.6 percent. The jobless rate has shown essentially no movement since last December.

In April, the labor force participation rate was 65.9 percent for

the third consecutive month. Nearly 8.2 million persons were unemployed in April. The number of persons who had been jobless for

27 weeks or longer declined by 188,000, to 1.8 million.

In summary, non-farm payroll employment increased by 288,000

and is up by 1.1 million since last August. The unemployment rate

was little changed over the month, at 5.6 percent.

Thank you. My colleagues and I now would be glad to answer

your questions.

[The prepared statement of Commissoner Utgoff, together with

Press Release 04-818, appears in the Submissions for the Record on

page 12.]

Representative Saxton. Thank you very much, Commissioner.

Given the health of the economy reflected in other economic statistics, it is not surprising that employment has finally begun to

pick up. Strong productivity growth had delayed the resumption of

healthy employment growth, but it is now evident that the lag in

employment growth is over.

In your testimony, you describe the April payroll gain as widespread. Is this statement supported by the level of the April diffusion index? And in your opinion, what does the diffusion index say

to us?

Commissioner Utgoff. My statement was supported by the diffusion index. And what that says is how widespread the increase

is over the different industries that we tracked. So a number above

50 indicates more widespread diffusion.

5

Representative Saxton. So this is not limited to a sector two.

It is generally widespread across all sectors.

Commissioner Utgoff. Yes.

Representative Saxton. What does the level of the diffusion

index in manufacturing suggest about the improving situation in

that sector?

Commissioner Utgoff. Well, as you know, manufacturing had

declined, before the last 3 months, for more than 3 years. And now

we see small increases in the prior 2 months and an increase of

21,000 this month, which is significant. And one of the significant

sectors among that was machinery, which is considered a good portent for the future.

Representative Saxton. And the diffusion index in manufacturing, if I am not mistaken, has been over 50 for the last several

months. Is that correct?

Commissioner Utgoff. Yes. It has been 3 months above 50.

Representative Saxton. Thank you. What are the greatest

areas of strength in the April payroll data?

Commissioner Utgoff. The business services area increased

significantly, and construction has reached a new high level. And

there were significant increases in health care. As I said, it was

fairly widespread.

Representative Saxton. And how significant is the upward revision in payroll employment for March?

Commissioner Utgoff. It was not significant, but it was positive. In the stream of things, when you get a revision of 30,000 or

so, that is very small compared to the overall base of 131 million.

But it was positive, adding to the increases since August.

Representative Saxton. Certainly significant is that the average increase in employment over the past 2 months has been over

300,000 jobs. That is significant.

Commissioner Utgoff. Yes. Yes.

Representative Saxton. In February, the monthly consecutive

declines in manufacturing ended. Didn’t the consecutive declines in

manufacturing employment begin in August of 2000?

Commissioner Utgoff. Yes.

Representative Saxton. Aren’t the payroll numbers reported

today consistent with other data showing expansion of the economy? And how significant do you believe these numbers are?

Commissioner Utgoff. These numbers are, as you say, in a

somewhat lagged fashion consistent with other positive signs in the

economy. The initial claims for unemployment insurance dropped

to very low rates yesterday for the latest weekly period for which

they are calculated.

Representative Saxton. Let me move to another element here.

What does the April index in the index of aggregate weekly hours

suggest about the current state of the economy?

Commissioner Utgoff. The index of hours went up.

Representative Saxton. Right.

Commissioner Utgoff. I thought you were talking about the average number of hours. The index, which is the hours multiplied

by the employment, went up.

Representative Saxton. And that is also a significant positive

indicator?

6

Commissioner Utgoff. Yes.

Representative Saxton. Aren’t the construction employment

figures consistent with other data showing strong construction activity?

Commissioner Utgoff. Yes.

Representative Saxton. Let me just move to another issue.

The unemployment rate decreased this month from 5.7 to 6 percent. We would probably say that one-tenth of 1 percent is not statistically significant. Is that right?

Commissioner Utgoff. That is correct.

Representative Saxton. However, if we look back to last June

and note that the unemployment rate was 6.3 percent, to see it

drop today to 5.6 percent, that would be statistically significant,

would it not?

Commissioner Utgoff. Yes.

Representative Saxton. That would be, obviously, a positive

sign.

To review the data reported today: Payrolls are up. Household

employment is up. Diffusion indices remain well above 50. Positive

employment revisions occurred for March. Manufacturing employment is up for 3 months in a row. Unemployment has been

trending downward. These are all very positive signs.

Isn’t the employment gain reported today consistent with other

recent positive economic data?

Commissioner Utgoff. Yes.

Representative Saxton. Thank you, Commissioner.

Senator Reed.

Senator Reed. Thank you very much, Mr. Chairman.

Thank you, Commissioner, for your testimony. How does the current unemployment rate compare with the unemployment rate in

March 2001 when the recession began?

Commissioner Utgoff. I will have to look up that number. Just

a moment.

Senator Reed. And March 2001 was the official beginning of the

recession?

Commissioner Utgoff. Yes, that is right—4.3 percent. It was

4.3 percent in March of 2001.

Senator Reed. So it is 1.3 percent higher.

Commissioner Utgoff. Yes, that is right.

Senator Reed. The recent trend in labor force participation

rate, has the labor force been growing rapidly or just keeping up

with population growth?

Commissioner Utgoff. Are you asking about the participation

rate?

Senator Reed. The labor rate, the labor force participation rate.

Commissioner Utgoff. Yes. The participation rate since March

2001 has declined.

Senator Reed. So fewer people are actually working, based on

population.

Commissioner Utgoff. That is right.

Senator Reed. How does the current labor force participation

rate compare with the rate in March of 2001 when the recession

began?

7

Commissioner Utgoff. The decline in the participation rate has

been 1 full percentage point.

Senator Reed. So we have, essentially, fewer people working.

Commissioner Utgoff. Yes.

Senator Reed. Do you think that is voluntary?

Commissioner Utgoff. It is very hard to say whether that is

voluntary or not. A great deal of that decline has been among

young people, teenagers and those in their early 20s. And there is

some indication that that may be related to increased school participation, but we really do not know.

There have been significant declines in participation in all

groups except for age 55 and older men. They seem to be coming

back into the labor market.

Senator Reed. This suggests, I believe, that there is considerable slack in the labor market. Is that fair, that there is a considerable untapped potential of people who could work?

Commissioner Utgoff. It is very hard to predict whether there

will be an increase in the participation rate. The conventional wisdom is that when the participation rate goes up, the unemployment

rate will go up also. But if you look at historical trends where you

compare the participation rate and the unemployment rate, they do

not follow that pattern.

So in the future, it will depend upon how fast the labor demand

grows relative to the labor supply. And in many recoveries, the

labor demand has grown faster than the labor supply, so that the

unemployment rate has not gone up when the participation rate

goes up.

Senator Reed. Is this one of those situations where we have an

unusually large number of people who have left the labor force?

Commissioner Utgoff. Participation rates have declined considerably since March 2001.

Senator Reed. So at least this might represent a situation

where as the economy picks up and people enter the labor force,

the unemployment rate could go up.

Commissioner Utgoff. That is a possibility.

Senator Reed. Let me ask you a few questions about inflation

rates. What were the reasons for the spike in the CPI last month?

Commissioner Utgoff. Energy is a principal factor behind increases in the CPI.

Senator Reed. And my impression is that wages have not been

contributing significantly to increased inflationary pressures. Is

that accurate?

Commissioner Utgoff. When we compute the CPI, we do not

take wages into account. It is consumer goods. So wages would not

be contributing to that measure of inflation.

Senator Reed. But in terms of—since it is a component of production of consumer goods, at least there is a notion that, as wages

go up, that would be reflected in the prices of consumer goods.

Commissioner Utgoff. That can be true, yes.

Senator Reed. But you have not noticed any increase in terms

of wage pressures in your statistics?

Commissioner Utgoff. No.

8

Senator Reed. There is tremendous productivity growth, which

my estimate—which I think it is accurate—is 4.5 percent at an annual rate.

Commissioner Utgoff. That is right.

Senator Reed. Those productivity gains do not appear to be reflected yet in wages. Is that correct?

Commissioner Utgoff. That is correct.

Senator Reed. The other aspect of this, benefits, seem to be rising faster than wages and salaries. And is that accurate also?

Commissioner Utgoff. Yes.

Senator Reed. Also it seems to me, and particularly troubling

to families, I think, across the country, it is not only the cost of

benefits, particularly health care, for the employer, but more and

more employees are paying larger portions of their health care benefits. Is that accurate?

Commissioner Utgoff. Yes.

Senator Reed. So that they are getting very insignificant increases in wages, and yet they, too, are paying more and more for

their health care benefits. Is that an accurate sort of description?

Commissioner Utgoff. Yes.

Senator Reed. Which puts a tremendous squeeze on family incomes.

Let me ask another question, about investment. We have seen,

over the last several months, a significant increase in profits. And

there are some good signs, as the Chairman noted, of increased investment. But is investment at the level you would expect it to be

given the profitability we have seen over the last several quarters

for companies?

Commissioner Utgoff. I am sorry, the BLS does not track investment, so I am not the person to be speaking to that.

Senator Reed. The Chairman mentioned the ISM data. Is that

a statistic that you——

Commissioner Utgoff. No, it is not.

Senator Reed. So you have no insights into the ISM data or the

investment?

Commissioner Utgoff. We do watch the ISM data as one other

indication, particularly of the labor market. A subpart of these indexes are future employment projections. And I keep track of that.

We all do.

Senator Reed. Let me ask, Commissioner, in that context, to

continue robust growth in employment would presume that corporate profits will begin to be directed more and more to investment in new plant and equipment expansion; is that fair?

Commissioner Utgoff. I cannot speak to that.

Senator Reed. I do not want to take you on terrain that is unfamiliar. You are already ahead of me in the march.

Let me thank the Chairman for his gracious hospitality this

morning. And thank you, Commissioner.

Representative Saxton. Commissioner, thank you.

We are just going to thank you for being here this morning and

bringing us this strong news.

I would like to close on this note. I note that the top unemployment rate during the decade of the 1970s was 8.5 percent. The top

unemployment rate during the 1980s was 9.7 percent. The top unVerDate 03-FEB-2003 10:36 Nov 17, 2004 Jkt 096629 PO 00000 Frm 00012 Fmt 6601 Sfmt 6601 D:\DOCS\96629.TXT SSC1 PsN: SSC1
9

employment rate during the 1990s was 7.5 percent. And we have

peaked and are now declining from the peak rate in the decade of

2000s at 6.3 percent.

So we have topped out at 8.5, 9.7, 7.5 and now just 6.3, and now

we have fallen back to 5.6 percent unemployment. So we think that

is because you are the Commissioner and want to thank you for the

great job you are doing. Thank you very much.

Commissioner Utgoff. Let me correct the record. When Senator

Reed asked what the decline in the participation rate was, I said

1 percentage point. It is 1.2 percentage points.

Representative Saxton. Commissioner, thank you. It has been

a pleasure.

When we have this strong news, it seems like our hearings do

not last as long, but not because we do not appreciate you being

here and the fine job you are doing.

[Whereupon, at 9:53 a.m., the hearing was adjourned.]

(11)

Submissions for the Record

PREPARED STATEMENT OF REPRESENTATIVE JIM SAXTON,

VICE CHAIRMAN

I am pleased to welcome Commissioner Utgoff once again to testify on the monthly employment statistics.

According to the payroll survey, employment increased by 288,000 in April, following a revised gain of 337,000 in March. The April payroll employment gains were

broad-based, as reflected in the diffusion index remaining well over 50 in April. The

one-month diffusion index has been above 50 for the last four months. Manufacturing employment increased for the third consecutive month. Overall, 1.1 million

payroll jobs have been created since last August.

Separately, the household survey showed a similar monthly increase in employment, and the unemployment rate went from 5.7 percent in March to 5.6 percent

in April. The employment-population ratio edged up to 62.2 percent in April.

The employment data reported today follow the release of many other economic

figures that reflect a healthy pace of economic expansion. Investment has been

strong in recent quarters, providing a faster and more balanced pattern of economic

growth. Overall, the economy has grown at a rate of about 5 percent in the last

year.

The rebound in business investment is reflected in the manufacturing sector,

where capital goods are produced. The ISM index of manufacturing activity has

trended upward for many months, and remains at historically high levels. Meanwhile, consumption remains strong, as reflected in retail sales and other measures.

Housing and construction activity is robust. Independent economists note the important contributions of tax relief and low interest rates in improving economic conditions.

The consensus of Blue Chip economic forecasters projects that economic growth

will be nearly 5 percent in 2004. This sustained period of economic growth will continue to improve the opportunities of both workers and businesses. The outlook for

the U.S. economy remains very positive for the foreseeable future.

PREPARED STATEMENT OF SENATOR JACK REED,

U.S. SENATOR FROM RHODE ISLAND

Thank you, Chairman Bennett. I want to welcome Commissioner Utgoff and

thank her for testifying here today.

The Bureau of Labor Statistics’ (BLS) April employment situation shows that the

unemployment rate was little changed at 5.6 percent. More than 8 million Americans remain unemployed—with nearly 2 million out of work for 6 months or more.

While 288,000 payroll jobs were created, we still have a jobs deficit and long-term

unemployment remains high.

Although the recession officially ended nearly 21⁄2 years ago, we still have a payroll employment gap of 1.5 million jobs since President Bush took office. We haven’t

seen such persistent job loss since the 1930s. It appears that job creation has turned

a corner, but it will take many months of solid payroll growth to erase the huge

gap that has developed since early 2001.

Meanwhile we are also waiting for another gap to close—the wage gap. Most

measures of workers’ earnings have barely kept up with inflation over the past

three years, despite remarkable productivity growth. The gap between the growth

of productivity and growth in real hourly wages is unusually wide.

For example, the productivity data reported yesterday show that since the start

of the recession in early 2001, output per hour in nonfarm businesses has grown

at a staggering 4.5 percent average annual rate. However, those same data show

12

that once you take out inflation, workers’ hourly compensation has grown at just

a 1.1 percent annual rate over that same period.

Moreover, some of that growth in compensation reflects the rising costs of benefits

like employer contributions to health insurance. For some time now, wages and salaries—which is what shows up in workers’ paychecks—have been growing more

slowly than benefits. Thus far, at least, strong productivity growth has done more

for the bottom line of companies than it has done for the take-home pay of workers.

Another nagging concern in the labor market is that long-term unemployment remains stubbornly high. April was the 19th consecutive month in which at least 20

percent of the unemployed had been without work for more than 6 months. That

is the longest such streak in the more than six decades that the Labor Department

has kept these records.

Congress can do something now to help the long-term unemployed by extending

federal unemployment benefits. With bipartisan majorities in both houses of Congress and the support of Federal Reserve Chairman Alan Greenspan, it’s stunning

that the President and the Republican-controlled Congress have been dragging their

feet on this.

The economy is growing, but middle-class families still face an uncertain jobs picture, stagnant wages, higher prices at the pump, and rising consumer interest rates.

It may be some time before workers and their families experience the benefits of

this recovery firsthand.

I look forward to the Commissioner’s testimony.

PREPARED STATEMENT OF KATHLEEN P. UTGOFF, COMMISSIONER,

BUREAU OF LABOR STATISTICS

Mr. Chairman and Members of the Committee: I appreciate this opportunity to

comment on the labor market data that we released this morning.

Nonfarm payroll employment rose by 288,000 in April, on the heels of an even

larger job gain in March (337,000). Since August 2003, payroll employment has

risen by 1.1 million. In April, job growth was widespread for the second consecutive

month. Employment increased substantially in several service-providing industries,

construction employment continued to expand, and there was a noteworthy job gain

in durable goods manufacturing. The unemployment rate, at 5.6 percent in April,

was little changed over the month.

Among the goods-producing industries, construction employment continued to

trend upward in April (18,000). Since March 2003, the industry has added 213,000

jobs, bringing construction employment slightly above its most recent peak in March

2001.

Following a protracted period of job decline, factory employment edged up over the

past 3 months. I would note that data for both February and March were revised

slightly upward into positive territory. The recent improvement in manufacturing

employment has occurred largely in the durable goods component. In April, durable

goods employment rose by 20,000, with notable job gains in both fabricated metals

(10,000) and machinery (4,000).

A number of service-providing industries added jobs over the month. Employment

in professional and business services increased by 123,000 and has risen by about

a half million since March 2003. Roughly half of the over-the-month gain in this diverse sector occurred in employment services, where the temporary help industry

added 35,000 jobs. Employment in temporary help has grown by 261,000 over the

past year. In April, employment increased by 7,000 in architectural and engineering

services and by 8,000 in management consulting. In addition, employment in businesses that supply services to buildings and dwellings rose sharply (30,000), with

most of the gain occurring in landscaping services.

Within education and health services, employment increased by 30,000 in health

care and social assistance. Job gains occurred in hospitals and in outpatient care

centers. In leisure and hospitality, the food services industry continued to add jobs

in April (34,000). So far this year, employment increases in food services have averaged 28,000 a month, twice the average monthly increase for 2003.

Elsewhere in the service-providing industries, employment in retail trade edged

up over the month, following a sizable increase in March. In April, building material

and garden supply stores added 10,000 jobs, and employment in motor vehicle and

parts dealerships rose by 6,000. Wholesale trade employment was little changed in

April, but the industry has added 49,000 jobs since October. Within the financial

sector, employment in credit intermediation and in real estate continued to edge up,

reflecting strength in the housing market.

13

In April, average hourly earnings for production or nonsupervisory workers rose

by 5 cents to $15.59. Over the year, average hourly earnings grew by 2.2 percent.

Looking at some of our measures obtained from the survey of households, the

April unemployment rate was 5.6 percent. The jobless rate has shown essentially

no movement since last December.

In April, the labor force participation rate was 65.9 percent for the third consecutive month. Nearly 8.2 million persons were unemployed in April. The number of

persons who had been jobless for 27 weeks or longer declined by 188,000, to 1.8 million.

In summary, nonfarm payroll employment increased by 288,000 in April and is

up by 1.1 million since last August. The unemployment rate was little changed over

the month, at 5.6 percent.

My colleagues and I now would be glad to address your questions.

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

Æ