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48–280 PDF 2008

S. HRG. 110–857 

THE EMPLOYMENT SITUATION: NOVEMBER 2008 

HEARING 

BEFORE THE

JOINT ECONOMIC COMMITTEE 

CONGRESS OF THE UNITED STATES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

DECEMBER 5, 2008 

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 

CHARLES E. SCHUMER, New York, Chairman 

EDWARD M. KENNEDY, Massachusetts 

JEFF BINGAMAN, New Mexico 

AMY KLOBUCHAR, Minnesota 

ROBERT P. CASEY, JR., Pennsylvania 

JIM WEBB, Virginia 

SAM BROWNBACK, Kansas 

JOHN E. SUNUNU, New Hampshire 

JIM DEMINT, South Carolina 

ROBERT F. BENNETT, Utah 

HOUSE OF REPRESENTATIVES 

CAROLYN B. MALONEY, New York, Vice Chair 

MAURICE D. HINCHEY, New York 

BARON P. HILL, Indiana 

LORETTA SANCHEZ, California 

ELIJAH E. CUMMINGS, Maryland 

LLOYD DOGGETT, Texas 

JIM SAXTON, New Jersey, Ranking Republican 

KEVIN BRADY, Texas 

PHIL ENGLISH, Pennsylvania 

RON PAUL, Texas 

MICHAEL LASKAWY, Executive Director 

CHRISTOPHER J. FRENZE, Republican Staff Director 

(III) 

C O N T E N T S 

OPENING STATEMENT OF MEMBERS

Hon. Carolyn B. Maloney, a U.S. Representative from New York ...................... 1 

WITNESSES

Dr. Keith Hall, Commissioner, Bureau of Labor Statistics; Dr. Michael 

Horrigan, Associate Commissioner for Prices and Living Conditions, Bureau 

of Labor Statistics; and Mr. Philip Rones, Deputy Commissioner, Bureau 

of Labor Statistics, U.S. Department of Labor .................................................. 6 

SUBMISSIONS FOR THE RECORD

Prepared Statement of Hon. Charles E. Schumer, Chairman, a U.S. Senator 

from New York ..................................................................................................... 24 

Prepared Statement of Hon. Carolyn B. Maloney, Vice Chair, a U.S. Representative from New York ................................................................................. 25 

Prepared Statement of Keith Hall, Commissioner, Bureau of Labor Statistics, 

together with Press Release No. 08–1774 .......................................................... 26 

(1) 

THE EMPLOYMENT SITUATION: NOVEMBER 

2008 

FRIDAY, DECEMBER 5, 2008 

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

The committee met at 9:30 a.m. in Room 106 of the Dirksen Senate Office Building, the Honorable Carolyn B. Maloney (Vice 

Chair), presiding. 

Representatives present: Maloney, Cummings, and English. 

Staff present: Gail Cohen, Nan Gibson, Colleen Healy, Justin 

Ungson, Chris Frenze, Bob Keleher, Tyler Kurtz, Jeff 

Schlagenhauf, and Colin Willis. 

Vice Chair Maloney. The meeting will come to order. 

Chairman is unable to attend today’s hearing on the employment 

situation and has asked me to chair. His statement will be entered 

into the record. 

[The prepared statement of Senator Schumer appears in the Submissions for the Record on page 24.] 

Vice Chair Maloney. Commissioner Hall, we thank you for testifying today. We also thank Mr. Horrigan and Mr. Rones for joining us today. 

The Chair recognizes herself for an opening statement. 

OPENING STATEMENT OF HON. CAROLYN B. MALONEY, VICE 

CHAIR, A U.S. REPRESENTATIVE FROM NEW YORK 

I sincerely want to thank Commissioner Hall and his staff for appearing before us today. This is an important time for Congress to 

be examining the employment situation of U.S. workers as we now 

have confirmation that the economy is in a recession. 

Today’s jobless numbers take your breath away. In November the 

economy lost an astonishing 533,000 jobs, the highest monthly loss 

in 34 years. And job losses in the previous two months were worse 

than originally reported. 

The unemployment rate increased to 6.7 percent. The official arbiters of U.S. recessions, the National Bureau of Economic Research, announced on Monday that the economy entered this recession in December of 2007 when the private sector first began shedding jobs. 

Since then, the economy has lost over 2 million private sector 

jobs, and 2.7 million more workers are unemployed, for a total of 

10.3 million. 

These stark numbers should make the decision to rescue the Detroit car makers much easier. The potential employment conVerDate Nov 24 2008 09:56 Jul 30, 2009 Jkt 045037 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\48280.TXT SHAUN PsN: DPROCT
2 

sequences if one or more of the big three Detroit automakers fails 

could be devastating to an already weak economy. 

Estimates show that millions of jobs, including vehicle assembly, 

parts manufacturing, suppliers, and neighborhood retailers, are potentially at risk. The Bureau of Economic Analysis has estimated 

that each job in the vehicle manufacturing industry supports from 

2.5 to about 6 additional jobs in the wider economy. So the ripples 

of their collapse could be felt far and wide. 

Last week, third-quarter economic growth was revised downward 

to .05 percent. The economy is being pulled down by falling consumer spending which makes up nearly three-quarters of the Gross 

Domestic Product. 

Yesterday it was announced that retailers posted the worst November sales in more than 30 years. Families are conserving their 

dwindling resources and simply not buying much of anything, including durable goods such as cars. 

As consumers cut back on their spending, this is dragging down 

economic growth, jobs, and wages. The current downturn has already lasted longer than the last two recessions, bringing hardship 

to millions of American families. 

U.S. workers have lost all the ground that they gained over the 

2000 recovery. The Census Bureau recently reported that by the 

end of last year inflation-adjusted household income had still not 

recovered from the last recession, and all indications are that 

household finances have only deteriorated since then. 

The credit crisis is making the employment situation even worse. 

The lack of access to credit, combined with the sharp drop in home 

prices, declines in the stock market, and the lack of growth in real 

incomes are putting unbearable financial pressure on families. 

Retirement savings and college savings accounts have been decimated by the sudden drop in value in the equities market. Collegebound seniors will be facing tuition hikes and diminished financial 

aid, making college out of reach to many middle-class and poor 

families. 

Congress has already taken numerous steps to help buffer families from the effects of the downturn, including extending Unemployment Benefits again last month. Some economists are already 

calling this the Great Recession because they fear it may be longer 

and deeper than any recession in recent history. 

This recession requires solutions that address the magnitude of 

our economic woes. In January Congress will send our new President a substantial recovery package that makes investments in our 

families and puts Americans back to work as quickly as possible. 

I want to thank Chairman Schumer and my colleagues, Mr. 

Cummings and Mr. English, for calling this hearing and being here 

today, and I look forward to the continued focus on labor market 

conditions by this Committee. 

Thank you, and I yield as much time to my colleague on the 

other side of the aisle, Congressman English, and express the great 

gratitude I have of working together on our Nation’s economy and 

financial institutions’ safety and soundness, consumer credit, and 

many other areas. You have served with great distinction and it 

has been an honor to serve with you. We will miss you. 

3 

[The prepared statement of Representative Maloney appears in 

the Submissions for the Record on page 25.] 

Representative English. The honor has been all mine, Madam 

Chair. I would like to join you in welcoming Commissioner Hall before the Committee this morning. 

This is obviously grave news, and I think it is important for the 

Nation to meditate on the information that you are going to be 

bringing forward and interpreting for us today. 

The figures released this morning show that the financial and 

economic downturn continues to be reflected in worsening labor 

market conditions. According to the Payroll Survey, employment 

declined by 533,000 during the month of November. Separately, the 

Household Survey registered an increase in the Unemployment 

Rate from 6.5 percent to 6.7 percent. 

In reviewing the recent economic data it is useful to recall the 

central role played by the collapse of the housing market and the 

value of mortgage investments. While there is a great deal of blame 

to go around, and I am sure we are going to hear a lot of that not 

only now but in coming months, the fact remains that Federal policies promoting unsustainably low interest rates and excessive and 

risky mortgage borrowing have inflated the housing bubble, and 

that has now popped. 

The result is a crippled financial sector and a credit crunch that 

is now a major drag on the economy. As we look forward, Federal 

policy needs to avoid certain pratfalls. We should reject policies 

such as tax increases that have the potential, based on past history, to aggravate a recession. 

Instead, targeted tax reduction for families, for business investment, for savings would serve to cushion the impact of the downturn and build a foundation for a return to sustainable economic 

growth. 

At a time when we are facing a looming budget deficit that is 

driven by a recessionary condition and the according loss of revenue, I think it is especially important that we focus on what it 

takes to get back to economic growth. 

What your labor market figures, Commissioner, suggest is there 

is a lot of pain out there in places like northwestern Pennsylvania, 

which I represent. We will hopefully have a chance to explore not 

only the dimensions of this challenge, but for those who serve in 

the next Congress as well as perhaps some things that could be 

done next week if we are reconvened, perhaps help us lay out an 

agenda. 

Thank you, Madam Chair. 

Vice Chair Maloney. I recognize my very good friend and colleague, Congressman Cummings, for as much time as he may consume. 

Representative Cummings. Thank you very much, Madam 

Chair, and I thank you for holding this critical hearing on the Department of Labor’s Employment Report for November. 

As our Nation continues to shed jobs at an alarming rate, and 

the threat of increased unemployment appears to be spreading with 

the big three automakers now asking the American people for $35 

billion, and $9 billion more than they asked for two weeks ago, this 

hearing comes at a critical juncture in our Nation’s history. 

4 

And let me make it clear—so that there is no doubt—that I do 

support the automakers. I think it is very important that they be 

held accountable, strict accountability, but as I have said many 

times with regard to the $700 billion bailout we have placed very 

strict rules with regard to, and we have asked for a lot from them, 

but we have asked for very little from all the others—the banks. 

And it seems to be one standard for white-collar jobs, and another 

one for blue. And I want them all to be held to a very, very, very 

strict standard. 

I think that the report that we see today indicates why it is so 

important that we lose not one more job in our Nation. 

Madam Chair, in the wake of the worst economic crisis since the 

Great Depression, we passed a $700 billion economic recovery package to infuse funds into Wall Street’s institutions on October 4th, 

2008. I, like many others, announced—I, like many others, cautiously put my faith in the recovery package hoping that by aiding 

those on Wall Street the pain would stop on Main Street. 

Unfortunately, the plan has yet to live up to our expectations. 

Thus far it has been riddled with CEOs that continue to take advantage of Taxpayer dollars by having junkets, pricey senior-executive payouts, and a Secretary of the Treasury that simply refuses 

to help keep people in their homes by dragging his feet in fully implementing the Troubled Asset Relief Program. 

And on top of those woes, more and more Americans continue to 

lose their jobs. And those who are desperately seeking new employment find their Unemployment Benefits washed up with no alternative left. 

As we will see shortly, there are more and more people who are 

being forced into part-time jobs involuntarily because they are 

being laid off and cannot find other employment. 

Meanwhile, the economic crisis continues to be felt across this 

great Nation. The very reports we are to receive today by Commissioner Hall of the Bureau of Labor Statistics indicates that the 

storm is far from over. Main Street continues to bleed with no end 

in sight, and none in the immediate future. 

As detailed in the report, Unemployment for November was 6.7 

percent, bringing the number of unemployed persons in 2008 to a 

shocking 10.3 million people. Those 10.3 million people represent 

families that are trying to take care of their children. They represent single mother head-of-households who got up early this 

morning, four o’clock or five o’clock, to take their kids to a babysitter, and to go to a work, to a job that is not paying them a whole 

lot, and in many instances they’re not even getting health benefits. 

Since the start of the recession in December of 2007, as recently 

announced by the National Bureau of Economic Research, the number of unemployed persons has increased by 2.7 million. Meanwhile, the number of marginalized workers has reached an astounding 1.9 million persons in November. And within those numbers, over 600,000 people have simply given up on finding a job altogether. 

Madam Chairlady, those are the folks that we have left behind. 

Considering that the Bureau of Labor Statistics does not include in 

its calculation of the Unemployment Rate those unemployed greater than 27 weeks, also termed long-term unemployed, I shudder to 

5 

think what our Unemployment Rate would look like if these numbers were included. 

However, what is clear is that, since more than 2.2 million persons remain unemployed in the long term, there are a large number of persons who have exhausted their Unemployment Benefits 

all together. And so they suffer, and they suffer, and they suffer, 

and the number goes up. 

And even with the additional 13 to 20 weeks in Unemployment 

Insurance Benefits, it appears that the extension simply may be 

too late and may be too little. 

Against this backdrop, just yesterday our labor market was dealt 

another blow when four major companies—AT&T, DuPont, Viacom, 

and the Credit Suisse Group—announced job cuts that total 20,650. 

And on Wednesday, another 3000 job losses were announced by 

State Street Corporation, Jeffreys Group, and the Kalar Group. 

And let us not forget that just over—less than a month ago, 

Citigroup announced layoffs of over 52,000. And the list goes on, 

and on, and on, and on. 

To make matters worse, while this was less than expected, the 

Beige Book, which was released on Wednesday by the Federal Reserve, shows that our economy has continued to deteriorate in recent months in nearly every Federal Reserve District, with companies reporting slumping sales, increasing layoffs, and uncertainty 

about the future. 

The American people need real solutions for these very real problems, many of which would have been resolved in a second economic stimulus package that Congress failed to enact prior to adjournment. 

Congress must unite in a bipartisan effort to help Main Street 

and reaffirm our dedication to the very foundation that makes our 

Nation great: The American People. 

I have often said that our authority in this world does not necessarily come from our military might, but it comes from our moral 

authority, and that is defined by how we treat each other in this 

Nation. We must provide an effective and efficient second economic 

stimulus package that will help—and we must do this immediately—that will help small businesses that over the past 15 years 

have created more than 93 percent of our Nation’s jobs. 

Sadly, just as in my District, many of those small businesses, 

Madam Chairlady, cannot get the consumer loans. They are the 

ones who paid taxes when they could pay them, but now as we put 

money into these banks to bail them out they don’t see the loans 

coming to them. 

We must heighten job growth by rebuilding our transportation 

infrastructure systems and increase the dollar amount of Unemployment Benefits so that the check received in the mail pays for 

far more than simply the light bill, and more than just a few pennies toward a mortgage payment or rent. 

Finally, Commissioner Hall, your report highlights this need and 

further demonstrates that it is critical that we provided an increased and steady safety net for American families. 

I anxiously look forward to the testimony, and in the end, as I 

close, I want to remind us, we may be in a very difficult situation, 

and jobs have been lost, but a lot of this has been because of 

6 

greed—of greed—on the part of many people throughout the system. 

I simply close by saying this, Madam Chairlady, and Tom Freeman put it best in his recent article. He says this, he says: So 

many people were in on it. People who had no business buying a 

home with nothing down and nothing to pay for two years. People 

who had no business pushing such mortgages, but made fortunes 

doing so. People who had no business bundling those loans into securities and selling them to third parties as if they were AAA 

bonds, but made fortunes doing so. People who had no business 

rating those loans as AAA but made fortunes doing so. And people 

who had no business buying those bonds and putting them on their 

balance sheets so they could earn a little better yield, but made fortunes doing so. 

And because of all of that, the American people now suffer. Many 

Americans who are watching us right now are being left behind 

with no job, and certainly no bonus. 

And with that, Madam Chairlady, I yield back. 

Vice Chair Maloney. Thank you. 

I would now like to introduce Commissioner Hall. Dr. Keith Hall 

is the Commissioner of the Bureau of Labor Statistics at the U.S. 

Department of Labor. Before becoming BLS Commissioner, Dr. 

Hall served as Chief Economist for the White Council of Economic 

Advisors during the current Administration. Prior to that he was 

a Chief Economist for the U.S. Department of Commerce. Dr. Hall 

received his B.A. Degree from the University of Virginia, and his 

M.S. and PhD in Economics from Purdue University. 

Thank you for being here today and for your service. You are recognized. 

STATEMENT OF DR. KEITH HALL, COMMISSIONER, BUREAU OF 

LABOR STATISTICS, U.S. DEPARTMENT OF LABOR, WASHINGTON, DC; ACCOMPANIED BY: DR. MICHAEL HORRIGAN, 

ASSOCIATE COMMISSIONER FOR PRICES AND LIVING CONDITIONS, BUREAU OF LABOR STATISTICS; AND MR. PHILIP 

RONES, DEPUTY COMMISSIONER, BUREAU OF LABOR STATISTICS 

Commissioner Hall. Madam Chairman and Members of the 

Committee, thank you for the opportunity to discuss the employment and unemployment data that we are releasing this morning. 

Nonfarm payroll employment declined by 533,000 in November, 

with large and widespread losses occurring across major industry 

sectors. November’s drop in payroll employment followed what 

were also large declines of 403,000 in September and 320,000 in 

October. 

The unemployment rate at 6.7 percent continued to trend up in 

November and has risen by 1.7 percentage points since the recession started in December of 2007. 

Over the past three months, job losses have averaged 419,000 

per month, sharply higher than the average loss of 82,000 per 

month from January through August. About two-thirds of the recent job declines have occurred in the service-providing sector of 

the economy. In the first eight months of this year, job losses were 

largely limited to construction and manufacturing. 

7 

Manufacturing job losses continued in November. Factory job 

losses would have been larger were it not for the return to work 

of 27,000 aerospace workers who had been on strike. Over the 

month, employment declines occurred throughout the manufacturing sector. 

Motor vehicle and parts manufacturers shed 13,000 jobs. Employment in this industry has fallen by 135,000 since December. 

Manufacturing hours and overtime have declined by two-tenths of 

an hour in November. 

Construction employment was down by 82,000 over the month. 

Since a peak in September 2006, employment in this industry has 

fallen by 780,000, largely in the residential sector. Over the past 

three months, however, job losses have been evenly distributed between residential and nonresidential construction. 

Employment also declined throughout the service-providing sector this month. The largest loss was in employment services, which 

includes temporary help agencies. 

Retail trade employment also fell by 91,000 in November with 

the largest job losses among automobile dealers. Since December, 

automobile dealers have shed 115,000 jobs. 

Employment also decreased in clothing stores, sporting goods, 

hobby, book, and music stores, furniture and home furnishing 

stores. Wholesale trade employment also fell by 25,000 in November and has fallen by 123,000 so far in 2008. 

Leisure and hospitality employment contracted also in November, along with financial activities, transportation and warehousing 

and information. 

In contrast to most industries, health care added jobs in November. Employment in the industry rose by 34,000 over the month. 

Average hourly earnings for production and nonsupervisory 

workers in the private sector rose by 7 cents in November, or 0.4 

percent in November. Over the past 12 months, hourly earnings 

have increased by 3.7 percent. While the Consumer Price Index 

through October has risen by 3.8 percent. 

Turning to the labor market measures from the Survey of Households, the unemployment rate continued to increase in November. 

At 6.7 percent, the rate was up by 0.2 percentage point over the 

month and by 1.7 percentage points since December. 

In November, 10.3 million persons were unemployed, up by 2.7 

million from December. About 2.2 million of the unemployed in November had been jobless for 27 weeks or more, an increase of 

868,000 so far this year. 

Both the labor force participation rate at 65.8 percent and the 

employment to population ratio at 61.4 percent decreased over the 

month. The employment-to-population ratio has declined by 1.3 

percentage points since December. 

The number of persons working part time who would have preferred full-time employment increased by 621,000 in November to 

7.3 million. Thus far in 2008, the number of such workers has 

grown by nearly 2.7 million. 

In summary, nonfarm payroll employment declined by 533,000 in 

November after having fallen by 723,000 over the prior two months 

combined. The unemployment rate rose to 6.7 percent in November, 1.7 percentage points above the December rate. 

8 

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

[The prepared statement of Keith Hall appears in the Submissions for the Record on page 26.] 

Vice Chair Maloney. Thank you. Thank you very much for 

your testimony. 

Commissioner Hall, unemployment is usually a lagging indicator 

but in this recession it seems to be a leading indicator. Would you 

agree? 

Commissioner Hall. Yes. In fact, I would say that almost all 

changes in the health of the economy are visible in labor market 

data. 

For example, when the economy began to weaken in early 2007 

our data show that the labor market was beginning to weaken. As 

you have pointed out in past hearings, employment in temporary 

help services seems to be a leading indicator, and probably signaled 

the deepening in the labor market weakness early in 2007. 

Payroll employment I think is probably the most reliable indicator of a recession, more accurate and less subject to revision than 

almost any other economic data. Each of the past five recessions 

began either exactly when, or very close to when payroll employment began a long, significant decline. 

I also think the labor market data has been and is likely to be 

a lagging indicator, but at the end of a recession not at the start 

of a recession. For example, in the 2001 recession, from start to end 

the unemployment rate rose by 1.2 percentage points, but after the 

end of the recession the unemployment rate continued to rise for 

another 19 months after that until it was about 2.0 percentage 

points above the start of the recession. 

In the prior recession it was similar. After the end of the 1990 

recession, the unemployment rate continued to rise for another 15 

months after the end of that recession. 

Vice Chair Maloney. Why do you think the economy has been 

shedding jobs over the past year even as the economy grew? 

Commissioner Hall. Well I think, I think in general most economic data has sort of been consistent with this, that most of the 

data has been weak and has reflected insufficient growth to promote job growth—significant job growth. 

I think—in fact, I think, like I said before, I think the payroll 

employment is very accurate in giving you something about the 

health of the economy. In fact, I don’t think there’s anything more 

accurate than that. 

Vice Chair Maloney. Job losses are accelerating, as we saw 

today. At what point in a recession do job losses typically accelerate? In the beginning, the middle, or the end? 

Commissioner Hall. Actually it’s hard to say on that, because 

every recession seems to be different, and job losses continue for 

different amounts of time after the start of each. 

Sometimes job losses end in just a few months, significant job 

losses. Sometimes, like in the 2001 recession, job losses will continue for well over a year. 

Vice Chair Maloney. Commissioner, given what we know about 

the past recessions which you have talked about, in your best judgment how long do you think these job losses are likely to continue? 

Are we looking at months, or years? 

9 

Commissioner Hall. Again that’s hard to say. After the last recession, job growth did not start until about a year and a half after 

the end of the recession. And in other recessions, it has just been 

a matter sometimes of just a few months afterwards. So it is hard 

to say. 

Vice Chair Maloney. But the current downturn is already 

longer than the last two recessions. So based on historical data, 

how long is it likely to take for employment to recover to its prerecession peak? 

Commissioner Hall. The last two recessions, the recovery to a 

pre-recession peak took a long time. The last recession it took over 

three years. In the 1990 recession it took about two-and-a-half 

years. 

Vice Chair Maloney. This recession may be different from previous recessions given the severe housing slump, the credit crunch, 

and global downturn. How do you expect these conditions to affect 

the labor market over the coming year? 

Commissioner Hall. Again it is hard to say. I do think, though, 

that it will be hard for the labor market to begin to recover until 

there is some improvement in those three conditions. 

Vice Chair Maloney. And as you look at the data, what are the 

main differences between the current recession and the two prior 

recessions? 

For example, are there differences in the characteristics of workers who are losing jobs in this recession versus previous recessions? 

What accounts for the current trend in job losses that are so severe? 

Commissioner Hall. I think two things jump out as being different about this recession than past, recent recessions. One is the 

depth of the downturn in the labor market. The last three months 

have been a very severe downturn in the labor market. 

The second thing is how broad the job losses have been. For example, during the past two recessions less than a quarter of the job 

loss was in the service-providing industries. So far in this recession 

nearly half the job loss is in services. 

Vice Chair Maloney. Thank you very much. I recognize my colleague and good friend, Congressman English, for five minutes. 

Representative English. Thank you, Madam Chair. 

I am going to focus my questions relative to manufacturing, 

which constitutes perhaps a disproportionate part of the economic 

base of northwestern Pennsylvania and the communities that I represent. 

As you know, Commissioner, manufacturing is sometimes a little 

different. It goes into a recession a little later and tends to feel the 

recession a little longer than other parts of the economy. 

I am wondering, looking at that and the fact that our last recession disproportionately hit our manufacturing base, could you interpret to us the manufacturing indexes that you have laid out 

here in your presentation? And can you give us some points of comparison how the manufacturing indexes look now as it applies to 

the labor market relative to the last recession and the national 

norm? 

Commissioner Hall. I would say that the manufacturing job 

loss so far in this recession has been very widespread. Some of it 

10 

has been concentrated in things like automobiles, but virtually 

every subsector within manufacturing has had job loss. 

One of the things that I—one of the points I want to make is 

that, although about half the job loss has been in services so far, 

we still have had significant job loss outside of services. 

I think what was different about the last recession from say past 

recessions—and I do not know about this recession—is not quite 

been the depth of the job loss in manufacturing but the fact that 

there was no recovery in the job loss in manufacturing from the 

last recession. 

Manufacturing I think peaked at a loss of something like 3 million jobs and never really recovered after the last recession. 

Representative English. Can you give us an indication, I understand that in October the Federal Reserve’s Industrial Production Index rebounded somewhat over September, but September’s 

decline was huge. Could you interpret this for us and give us a 

sense of what you would project forward from that experience? 

Commissioner Hall. Yes. It is a little hard for me to project, in 

part because we produce data and it is important for us not to—— 

Representative English. Of course. 

Commissioner Hall [continuing]. Not to guess about what the 

data is going to look like. Industrial production, I think along with 

payroll jobs, is one of the most reliable indicators of the health of 

an economy concurrently. 

I am not that familiar with the industrial production numbers, 

how it changed month to month. I think the manufacturing portion 

of that index is probably of more interest in part because some of 

that includes energy and utilities, which is something that cannot 

follow a cyclical pattern. 

Representative English. I understand that the Manufacturing 

Survey’s overall index—and I think this is based on the work of the 

Institute of Supply Management—has dropped to its lowest level 

since 1982. Can you give us a sense of how that interacts with the 

jobs data, and what we can interpret from that in terms of the 

share of the impact of this recession that is being borne by manufacturing? 

Commissioner Hall. Sure. That particular index is a very simple survey but actually it is a remarkably good survey. I would say 

that once the industrial production numbers come out, you have 

now got better data but it does give you a good indication of how 

industrial production may look going forward. 

That number is a very low number. That is not an encouraging 

number, and I would say the industrial production numbers do 

track the jobs numbers pretty carefully, especially the Manufacturing Index and the Industrial Production, the manufacturing portion of that. 

Representative English. And finally, I notice that capacity utilization has also been trending downward. How would you interpret that in light of today’s jobless numbers? 

Commissioner Hall. I would say again that is also a pretty reliable number. It comes out of the Industrial Production, and that 

is a pretty reliable indicator of how much excess capacity there is 

in an economy and it does tend to track the jobs numbers. So it 

11 

is pretty much in sync and has been pretty much I think in sync 

I think with the payroll jobs. 

Representative English. Thank you, Madam Chair. 

Vice Chair Maloney. Thank you. 

Congressman Cummings is recognized for five minutes. 

Representative Cummings. Thank you very much. 

Mr. Hall, let me ask you this. You said something that was very 

interesting—you said a lot that was very interesting, but tell me 

what is the significance. You said this jobless situation is a little 

different and the recession is a little different in that you see such 

a loss of jobs in the service area. Tell me what the significance of 

that is. 

Commissioner Hall. At least in my mind it is pretty consistent 

with the real declining consumer spending. Consumer spending is 

an extremely important part of economic growth. 

To give you an example of how this might be different than say 

the last recession, consumer spending never declined a great deal 

during the last recession. That was a recession that seemed to be 

centered somewhat more in equipment and software investment. 

This recession we have got really quite a large drop in consumer 

spending. I think part of what that means is that that is probably 

why we have had such a broad job loss in the labor market. 

Representative Cummings. And so that means that we have 

gotten way down, then. In other words, we are not just talking 

about manufacturing, we are talking about people when it comes 

to maybe going to the barbershop, instead of going once a week 

they go once every three weeks, and stuff like that; and I guess 

going to restaurants, and things of that nature. Is that what that 

is? Go ahead. 

Commissioner Hall. Yes, absolutely. The job loss has been 

spread out through a lot of different industries. Now a lot of it has 

been in durable goods industries. It always is during recessions because certain nondurable goods people need to consume, but you 

are right that it has spread out to a lot of nondurables. 

Representative Cummings. There are people sitting here 

watching you, and they do not have a job. They do not have a job. 

And you are the man. You keep all the statistics on jobs. You have 

been trained in this area. They are trying to figure out what does 

this man have to tell me to give me some hope that I am going to 

get a job in the next year? What can you honestly tell them? 

In other words, let me give you an example. Somebody who has 

lost their job, say for example in the construction area. What would 

you tell them? 

Commissioner Hall. Well first I have got to admit, if I were to 

characterize this jobs report I would say this is a dismal jobs report. There is very little in this report that is positive. This is— 

this is maybe one of the worst jobs reports that the Bureau of 

Labor Statistics has ever produced. 

Representative Cummings. Ever? 

Commissioner Hall. Yes. 

Representative Cummings. And how long has the Bureau 

been around? 

Commissioner Hall. 124 years. 

12 

Representative Cummings. 124 years. So that means that we 

are sliding—we are sliding down a slippery slope fast. Is that 

right? 

Commissioner Hall. Well, you know, I don’t, I don’t want to 

think about projecting the numbers—— 

Representative Cummings. I am not asking you to project. I 

am asking you to tell me what is happening now. 

Commissioner Hall. But I will tell you—— 

Representative Cummings. You just told me—you just told me 

and a hundred—and I am not trying to mess with you; I am just 

trying to make sure that the people who are looking at you right, 

Americans who are out of a job, who can’t figure out how they are 

going to provide for their kids for Christmas, buy clothes, do the 

things that they need to do, pay their house payments, they are 

running out of Unemployment Benefits, and they are looking at 

Commissioner Hall and trying to make sure. They do not want you 

to lie to them. They just want you to be honest about what you see 

so that they can figure out what they have to do. 

And that is one of my problems. I think that we have to face up. 

This Congress has to face up to it, and we have to face the problems that we are dealing with, and they are urgent. And there is 

a lot of pain going around. And I just want to make sure that they 

at least know what they have to deal with so that they might prepare for the future. 

They may have to go and live with Aunt Suzie. Or they may 

have to borrow some money from Uncle Ben. But they have got to 

figure out how they are going to live their lives. And since they are 

paying your salary, and since you are supposed to be the expert on 

this stuff, they are just asking for some answers and they asked 

me to ask you. 

Commissioner Hall. Well I can tell you, that up to now, that 

this is a low point. I, I can’t tell you what the data is going to look 

like going forward. 

Representative Cummings. What do you see in State and Federal Unemployment? I understand that there is a lag there, but in 

State Unemployment our Governor in Maryland just sadly had to 

say, and it pained him tremendously, that we were going to have 

to probably put some folk on furlough. I mean, what do you see in 

regard to State and Federal Unemployment, and what does that 

tell you about where we are and what we have to do? 

Commissioner Hall. There has still been modest growth in employment in state and local government—— 

Representative Cummings. Why is that? 

Commissioner Hall. It actually seems to always happen. And 

I am not sure why, but even during recessions—it may well simply 

be that state and local governments go into deficit and continue to 

hold onto workers during recessions in the past. 

We have not yet seen a significant drop in state and local employment. That is not to say that will not happen in the future, I 

just do not know. 

Representative Cummings. Thank you, Madam Chair. 

Vice Chair Maloney. Thank you. The Chair recognizes herself 

for five minutes. 

13 

Later today I will be at another hearing in the Financial Services 

Committee on the auto industry, so I would like to ask a few questions about auto-related employment and job losses. 

Through October, almost 15 percent of all job losses in 2008 were 

directly associated with the auto industry. Have auto industry 

losses continued to be significant through November? 

Commissioner Hall. The answer is, yes. Motor vehicle parts 

manufacturing lost about 13,000 jobs, and automobile dealers lost 

about 24,000 jobs. 

Vice Chair Maloney. Some economists believe that the lost jobs 

and income in that sector may have tipped the U.S. economy into 

a recession. Do you share that view? 

Commissioner Hall. I do not think I do. I think that the job 

loss has been very broad, and it has been pretty significant for a 

long time in construction and other housing related activities and 

manufacturing outside of autos, and in financial services. It does 

not mean it has helped. It does not mean it is not significant. 

Vice Chair Maloney. Congress is considering aid to the big 

three Detroit auto makers, so I would like to ask you about the potential employment consequences of the failure of one or more of 

these huge companies. 

Estimates are that several millions jobs—2.5 to more than 3 million jobs—are potentially at risk. I would like to go through the 

numbers and see if you agree: 

First, these companies directly employ about 240,000 workers. 

Correct? 

Commissioner Hall. On that one, to be honest with you, I am 

not sure because companies that report data to BLS are held in 

confidence. So I cannot speak on how many workers those particular companies employ, whether or not they are part of our survey. 

I can tell you that direct employment in the domestic automobiles and light trucks plants industry is about 159,000 in September, but that is just located in the U.S. and that includes domestic and foreign. So I am not sure where the 240,000 comes 

from. 

Vice Chair Maloney. It is data that we collected from them directly. 

But they also support many more production workers whose 

firms supply the parts and raw materials to make the vehicles. As 

I understand it, BLS payroll data show that 840,000 workers are 

employed in assembly and parts manufacturing. Is that correct? 

Commissioner Hall. That is approximately correct, yes. 

Vice Chair Maloney. And over a million additional workers are 

employed by dealerships in sales and services, according to your 

surveys; is that correct? 

Commissioner Hall. Yes, 1.1 million. 

Vice Chair Maloney. 1.1. Do you know how many are linked 

to the three big car companies? 

Commissioner Hall. I don’t. Again, that is a detail that we do 

not separate out. 

Vice Chair Maloney. In addition, local communities and retailers rely on spending by auto industry workers. The Bureau of Economic Analysis has estimated that each job in the manufacturing 

14 

car industry supports 2.5 to nearly 6 additional jobs in the wider 

economy. Do you concur with the BEA? 

Commissioner Hall. That is a BEA calculation that we do not 

do, but BEA—I have no reason to doubt their calculation. 

Vice Chair Maloney. And other economists estimate even higher multiplier effects for these job losses; would you agree? Or I 

guess you are not going to comment on that. 

Adding all of this up, how many jobs would you estimate are potentially at risk if one or all of these companies go out of business? 

Commissioner Hall. We have never made such a calculation, 

and that is one that we probably would not try to make. 

Vice Chair Maloney. Have you seen estimates by others that 

you think are credible? 

Commissioner Hall. Again, I guess because our focus is on producing the data, I have not actually read and evaluated some of 

those estimates. 

Vice Chair Maloney. But these estimates that others are putting forward, would not job losses of this magnitude be a serious 

blow to an already weak labor market and economy? 

Commissioner Hall. Oh, absolutely. 2.5 to 3 million jobs is 

quite significant. 

Vice Chair Maloney. Do you have, or have you seen any estimates, of how much the unemployment rate would rise if these 

companies do not survive? 

Commissioner Hall. Yes, I think I have the same answer there. 

That is not a calculation or something that I would make or comment on. 

Vice Chair Maloney. Thank you. My time has expired. Congressman English is recognized for five minutes. 

Representative English. Thank you, Madam Chair. 

I am particularly interested to follow through on the situation relating to the housing market and construction. Can you tell me 

how does the change in construction employment in November 

compare to the average of previous months? 

Commissioner Hall. In November construction lost about 

82,000 jobs. Since September 2006 it has lost about 780,000 in 

total. I am not sure if I have the number about how the job loss 

looked up to November. I suspect it was pretty similar to the 

82,000 in November. 

Representative English. Are there any unusual weather-related factors that may have influenced the data here today? 

Commissioner Hall. None that I know of. 

Representative English. Okay. The housing and financial sectors have been especially weak in the last year. We have seen this 

certainly in northwestern Pennsylvania but even more dramatically 

in some other parts of the country. This has been reflected in their 

falling output and the value of related equities in the stock market. 

Isn’t this weakness also reflected in employment in these sectors? 

Commissioner Hall. Yes, absolutely. For example, in November 

financial activities lost about 32,000 jobs, which is a very large 

number for that sector. 

Representative English. My understanding is that virtually all 

measures of housing activity, permits, starts, sales, and housing 

prices, have been declining sharply. I understand, and I know you 

15 

have trouble looking forward from the perspective of the employment data, but these are expected to remain weak. Would it be reasonable to interpret at this stage in a recession that the housing 

sector would continue to deteriorate based on the numbers you 

have seen here? 

Commissioner Hall. It is hard for me to guess as to when it 

is going to bottom out, and I would be hesitant to try to forecast 

that. 

Representative English. I understand. 

Madam Chair, I have no further questions. 

Vice Chair Maloney. Thank you. The Chair recognizes Congressman Cummings for five minutes. 

Representative Cummings. You said, Mr. Hall, that this is the 

worst report you have seen in a hundred and twenty—well, your 

agency has put out in 124 years. I am not saying that you were 

there back 124 years ago. 

Commissioner Hall. I would say it was one of the worst. 

Representative Cummings. One of the worst. 

Commissioner Hall. Yes. 

Representative Cummings. One of the sad—you know, as I listen to you there is one thing that struck me. When I was preparing 

for this hearing I noticed the projection, and I know that you do 

not necessarily do the projections, was 325,000, you know, that we 

would have lost 325,000 jobs, and come to find out the actual number is 533,000. 

We are approaching almost double what folks had projected. And 

I assume that the people who do these projections are people who 

look at all the stats, and they are well trained, and what have you, 

but that seems to be a pretty big leap, doesn’t it? 

Commissioner Hall. Yes. Absolutely. In fact, it may be a little 

bit worse than even you just characterized because we also lost another 199,000 jobs in September and October that we added to 

those numbers in revision. 

Representative Cummings. So you are saying the actual figure may be over, over seven—well, wait a minute—almost 800,000 

jobs? 

Commissioner Hall. Yes. 

Representative Cummings. So even this 533,000 is, you think, 

you know is not accurate? Is that what you are trying to say? 

Commissioner Hall. Oh, no—— 

Representative Cummings. And I see Mr. Rones is looking at 

you. He looks like he’s wondering about what you’re saying. I am 

just watching you, Mr. Rones. You know, I keep my eye on you. 

Commissioner Hall. Yes. Apparently I am not being real clear. 

We discovered that we had about 200,000 fewer jobs created, or an 

additional 200,000 jobs lost in September and October than we had 

previously estimated. And then we have another 533,000 this 

month. 

Representative Cummings. So based upon, based upon what 

you have seen over the last two or three months, you are saying 

that it would not shock you if the figure is much higher than what 

it is, that the 533,000? In other words, a month from now when 

you look back? Is that what you are saying? 

16 

Commissioner Hall. Oh, no, no, I still think that is our best estimate. 

Representative Cummings. Okay. 

Commissioner Hall. I would not anticipate that is going to 

change. It is just that we added some additional jobs lost in the 

prior two months. So the past three months has been worse than 

we would have expected. 

Representative Cummings. I see. And so why are most people—what are the reasons they give for not having a job? Do you 

know? Or becoming unemployed? Do you get that information? 

Commissioner Hall. Sure. Yes, we have reasons for unemployment. The number one reason is job loss. 

Representative Cummings. Meaning that they were fired, or 

laid off? 

Commissioner Hall. Correct. 

Representative Cummings. Involuntarily? Is that right? 

Commissioner Hall. Yes. 

Representative Cummings. And how high would the unemployment rate be if it included those who worked part-time for economic reasons as well as those who were marginally attached to 

the labor force? 

Commissioner Hall. This month that number would be 12.5 

percent, up from about 11.8 percent in October. 

Representative Cummings. Which is how many? I mean, can 

you give me a figure? 

Commissioner Hall. Um—— 

Representative Cummings. Do you have the stats, the percentages? 

Commissioner Hall. Yes, I think we can come up with an exact 

number here quickly. 

Representative Cummings. All right. So we are in a pretty 

bad situation. I know you do not like to talk policy, but we do pay 

you to tell us something. I mean, so can you tell me that? We are 

in a pretty bad situation employment-wise, unemployment-wise? 

Commissioner Hall. Yes. 

Representative Cummings. Okay. You know, I was just thinking, you know I have such a tremendous respect for the President– 

Elect, and he talks about The Urgency of Now. It seems like, I 

would hope—and this is not for your comment, Mr. Hall, I am just 

telling you what I feel—I believe the President–Elect and the President, President Bush, they need to get together right now, because 

this is The Urgency of Now. Because we have got people who are 

unemployed, and we are, as you agree with me, we are going down 

a slippery slope, and we are speeding down that slope. 

In some kind of way, we have got to get people back to work, and 

we have got to get them back to work soon, because based upon 

all the things that you have said to me, and as I listened to you 

and I have listened to you over the months now, it seems like when 

one thing goes, another thing goes, in other words one sector of unemployment has an effect a lot of times on another. Is that right? 

That’s the way our economy works? Is that correct? 

Commissioner Hall. Um—— 

17 

Representative Cummings. In other words, if you do not have 

construction workers working, that means they are not going to the 

barber shop. 

Commissioner Hall. Right. And I think the real key in this 

downturn has been the decline in consumer spending. Whether it 

is lack of confidence, or whatever the reason, consumer spending 

is creating a very broad impact. 

Representative Cummings. Madam Chair, I am hoping we 

will have another round because I do have a burning question that 

I must ask. 

Vice Chair Maloney. I would like to focus some of our attention 

on women’s employment. How have women fared in this economy 

that has shed so many jobs this year? What industries have lost 

the most jobs? And overall how are they faring in this job loss situation? 

Commissioner Hall. Just like the total job loss so far this year, 

job loss by women has been significant and widespread. Women 

workers have lost the most jobs in professional business services, 

about 176,000 so far this year. Manufacturing, 174,000. Retail 

trade, 139,000. Financial activities, about 90,000. Those are the 

most significant industries. 

Vice Chair Maloney. Financial services and real estate are 

large employers in our country and in my District, and they appear 

to have been particularly hard hit. How many jobs have been lost 

in these industries in particular? Financial services, and I would 

say real estate? 

Commissioner Hall. Well financial activities, which includes 

both, have lost about 142,000 jobs since December; 86,000 of that 

has been over the past 3 months. 

Vice Chair Maloney. And have women especially been losing 

jobs in these two particular industries? 

Commissioner Hall. We do not have data available for November, but through October women workers have accounted for about 

80 percent of the job loss in those industries. 

Vice Chair Maloney. Good Heavens. 

Temporary help is often a leading indicator of an employer’s willingness to hire, and you indicated earlier that it has risen to roughly 12 percent loss in temporary employment. When was the last 

time that the temporary help industry saw this high, high level of 

job losses? 

Commissioner Hall. Temporary help has lost about 393,000 

jobs so far this year. The last time we saw this level of losses was 

during the 2001 recession. 

Vice Chair Maloney. 2001? 

Commissioner Hall. Yes. 

Vice Chair Maloney. And what does this trend mean, especially since women are typically concentrated in this industry? 

Commissioner Hall. Well first of all this does seem to be an industry that has led recessions, has been sort of a leading indicator, 

and this is an industry where about 44 percent of the jobs are held 

by women, and the job loss by women in that industry has been 

comparable to that. 

Vice Chair Maloney. I am deeply concerned about deflation. 

Just a few months ago we were worried about rising prices and inVerDate Nov 24 2008 09:56 Jul 30, 2009 Jkt 045037 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 C:\DOCS\48280.TXT SHAUN PsN: DPROCT
18 

flation, but last month the BLS announced the steepest singlemonth drop in the 61-year history of the Consumer Price Index, an 

indication that inflation was in retreat, which has fueled concerns 

about deflation. 

What is the likely impact of deflation on the labor market? 

Commissioner Hall. Let me first note that we are not currently 

in a period of deflation. Deflation typically is viewed as a widespread and sustained fall in prices across the economy. 

Although the drop in the CPI, the Consumer Price Index, last 

month was the largest ever, it was entirely due to a record 8.6 percent drop in energy prices. So it therefore was not widespread. And 

despite this 1 percent drop in October, overall consumer prices are 

still up 3.7 percent over the past 12 months. 

Vice Chair Maloney. And I would like to—I am concerned also 

about your budget. I just wanted to ask how you are coping with 

reduced funding levels under the current CR. Have any important 

programs or surveys been affected? Or can you tell us the ways in 

which the quality of our economic indicators might suffer if your 

budget request is not met in 2009? 

Commissioner Hall. Sure. Well thank you for asking this question. 

Vice Chair Maloney. We want to make sure we have accurate 

numbers. 

Commissioner Hall. The current Continuing Resolution is hold- ing our funding level at roughly $50 million below what I believe 

is a permanently maintainable level for our current programs. That 

has affected us three ways. 

First, for the third year in a row we have had to delay a crucial 

update to the Consumer Price Index. In particular, our measurement of housing costs, which make up about a third of America’s 

expenditures, is based on a sample drawn from the 1990 Census. 

It is therefore terribly out of date. That is about 18 years old now. 

The sample suffers from steady attrition. So this needs to be updated. We have not been able to update that. 

And this is just really important. The CPI, the Consumer Price 

Index, sets Social Security benefits, it indexes tax brackets in dozens of other programs. I don’t want to go on too long, but there are 

lots of—— 

Vice Chair Maloney. Is it wise to allow our economic statistics 

to deteriorate in the midst of a downturn? 

Commissioner Hall. First of all, I do not believe it is ever wise 

to allow our statistics to decline because I consider the economic 

statistic agencies to be an important infrastructure for the U.S. 

economy, and it contributes considerably to the efficient function of 

both the economy and government. 

Under the current conditions, I cannot imagine asking households and firms to make sound judgments based on economic data 

that is deteriorating in both quality and quantity, let alone the fact 

that we could be risking the effectiveness of hundreds of billions of 

dollars already committed to fixing our economic problems. It is 

sort of a penny-wise and pound-foolish sort of situation. 

Vice Chair Maloney. Thank you for your testimony. My time 

has expired. 

Congressman English is recognized for five minutes. 

19 

Representative English. Madam Chair, as an outgoing Member I do not think it is necessarily my place to advocate for policy 

prescriptions, but based on the statistics we have seen today I am 

very strongly disposed to think that Congress should act quickly. 

And as you and our colleague have previously suggested, I think 

it is very important that Republicans and Democrats come together 

now to move to give the new Administration the strongest possible 

hand by advancing what we can as soon as we can. I believe there 

is a great deal of common ground on policy that could move the 

economy forward and get it back on a growth path. 

You may recall, Madam Chair, the middle of this year I had advocated for a new stimulus package beyond what had been proposed. I think it is very important that if we are going to deal with 

the damage that has been done to financial markets that we put 

in place the tax incentives to encourage the economy to grow and 

encourage the stock market to recover. 

We need to send the right signals and we need to put in place 

the sorts of policies that give us the revenue we need to meet priorities, but at the same time allow us to get forward motion in the 

economy. 

I am extremely alarmed, as someone who has served on this 

panel for a number of years, to see the dimensions of the bad news 

that we have seen today. I think this is a Sword of Damocles hanging over the economy of America. 

The fact is, what we do now and whether we move promptly to 

do it is going to have a large impact on what the next President’s 

options are for the next year, possibly for the next couple of years. 

I wish you well, and all of my colleagues well, who will be making decisions on this after the first of the year. I would hope that 

today the current Administration and the President–Elect could 

come together and encourage Congress to move forward to act on 

what we can do now to address the problems in the auto industry 

and generally to send a message to world markets that the United 

States is determined to deal with its financial problems. 

I believe that if we act promptly we are going to be able to create 

the kind of environment that will allow manufacturing in my part 

of the world and the financial services in your part of the world to 

recover. Without action, I am afraid that our prospects are going 

to be extremely bleak. 

So as I contemplate leaving this Institution, I have to say that 

today’s report makes a very compelling argument for immediate action—immediate action based not on ideological proclivities but on 

a commitment to come together to get the economy rolling again. 

There is a lot of common ground that I think would allow us to 

move. 

Mr. Commissioner, it has been a privilege to hear your presentation. It is sobering. It has also been professional, and I am very, 

very grateful for the opportunity to, on one of my last official duties, to hear your presentation. I hope that its significance is absorbed by policymakers here and throughout the country. 

Thank you, Madam Chair. 

Vice Chair Maloney. Thank you, and the Chair recognizes Mr. 

Cummings for five minutes. 

20 

Representative Cummings. I want to thank Mr. English for 

his statement. I want to associate myself with every syllable that 

he just said because I think this is an urgent moment, and this is 

a very, very critical moment in our country’s history. As a matter 

of fact not only in our country’s history, but the world’s history. 

Commissioner Hall, as you were talking I could not help but 

think about the other day when I was at the Port of Baltimore. We 

are about to lose, if things continue to go at the rate they are going 

with regard to the automobile situation, probably somewhere between 200 and 500 jobs, well-paying jobs. 

You know what a lot of these jobs are? Baltimore has the number 

one port for Chrysler exports. So we have got these men who have 

been working there many years who roll the cars and trucks up on 

the ship. And they are about to lose their jobs. 

That is where I just want to take us for a moment. You talked 

about how dismal this report is, but let me tell you what makes 

it even more dismal. 

Have we ever dealt with a global recession? I mean, you know, 

we have got a situation where people are not buying our products 

because consumers do not—we have got consumer problems all 

over the world. I mean, this is not just a United States problem. 

And we have got a situation where the markets are down all over 

the world. It is just not something that we have to resolve. And 

that is why Mr. English’s comments are so appropriate and so 

timely. So we need to do what we need to do, but I am asking you: 

When you assess all of this, and again you are the man, you are 

the one who looks at these statistics and tries to figure out, I guess, 

where we are going with them, where our country is going, do you 

figure in that that whole idea that we are in the midst of a global 

recession? 

Commissioner Hall. Sure. Absolutely. And I think the interconnectedness of countries can often be something that is stabilizing, that is helpful. For example, when countries go into more severe economic downturns, sometimes exports help the country—— 

Representative Cummings. Well can I tell you something? 

Can I tell you a little secret? It is not helping us in Baltimore. It 

is not helping those men who are about to lose their jobs. So that 

is nice about what it can do. 

I guess what I am trying to get to is that you look at the statistics, and I am trying to figure out—I mean, I think this recession 

is a lot different than others. I mean, Ms. Maloney and I sit on the 

committee that does the investigations, the Oversight and Government Reform Committee, and let me tell you something. I have 

looked at this thing, and there are a whole lot of people who did 

a lot of cheating along the way—in this country. 

It has been like dominoes. It has been fall, fall, fall, dominoes are 

falling, and now they are falling all over the world. So my question 

is: When we see that, does that affect how you might project—and 

I know you do not like to project, but you have got to at least think 

about this stuff. I mean, this is what you do—what is happening 

in our country. 

Remember I asked you a few minutes ago, I said there are people 

looking at you, and they are looking for some hope, but they want 

you to be honest, but they are looking for some hope, and you do 

21 

not seem to have much to give them. And that is fine. That is fine. 

But I am just trying to figure out how does that figure in? And 

have we had a similar situation in recent history where we had a 

global recession? 

Commissioner Hall. You know, to be honest I have not looked 

at that very carefully. 

Representative Cummings. Do you mean to tell me that when 

you look at these figures, and you are looking at unemployment in 

this country—now let me make sure I understand this—you do not 

think about the fact that folk may not be buying, they might not 

buy our products somewhere else? 

Commissioner Hall. Oh, absolutely I think that is important. 

I am talking about looking at the global economic downturn compared to other time periods. 

Representative Cummings. But isn’t that related to this? 

Commissioner Hall. Oh, absolutely. 

Representative Cummings. I mean, I don’t know. I mean, 

you’re the expert. 

Commissioner Hall. Sure. Sure. And the same thing, you 

asked—there was a global downturn during the last recession as 

well. Part of the difference perhaps in the last recession was that 

the downturn was probably less severe in the United States than 

with a lot of our trading partners. And in fact I think the U.S. was 

actually helpful to a number of other countries because the U.S. 

downturn was not so severe that imports stayed fairly high and we 

actually helped out a lot of countries from going into such a severe 

downturn. 

This year so far that might be different. 

Representative Cummings. I see my time is up. 

Vice Chair Maloney. Well I want to thank the panelists today 

for your public service, for your testimony, and to thank my colleagues, and in particular Congressman English’s strong statement 

of a bipartisan ‘‘future is now’’ response to the economic downturn 

in our great country. 

I believe in and support his comments that we do need a stimulus package to kickstart our economy and to make sure that we 

move forward. We do, in my opinion, based on the numbers that 

you presented today of a possible 2.5 to 3 million job loss directly 

or indirectly related to the auto industry, it is important that we 

provide a loan that will help them to continue and move forward. 

I cannot imagine an America in which we do not even build our 

own cars. I know that they have come forward with a plan to move 

towards energy independence, for greater mileage per gallon, towards electronic cars and other new innovations. So this is something we need to confront and work towards. 

One economist told me that our economy is roughly 30 percent 

of the world economy. We are in a global economy, and we need 

to address these problems in a global way, and these challenges 

that are before us. 

I thank you for being here. I thank my colleagues. The meeting 

is adjourned. 

(Whereupon, at 10:42 a.m., Friday, December 5, 2008, the hearing was adjourned.) 

(23) 

SUBMISSIONS FOR THE RECORD 

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Insert offset folio 1 here 48280.001
25 

PREPARED STATEMENT OF CAROLYN MALONEY

I want to thank Commissioner Hall and his staff for appearing before us today. 

This is an important time for Congress to be examining the employment situation 

of U.S. workers, as we now have confirmation that the economy is in a recession. 

Today’s jobless numbers take your breath away. In November, the economy lost 

an astonishing 533,000 jobs—the highest monthly loss in 34 years—and job losses 

in the previous two months were worse than originally reported. The unemployment 

rate increased to 6.7 percent. 

The official arbiters of U.S. recessions—the National Bureau of Economic Research—announced on Monday that the economy entered this recession in December 

2007, when the private sector first began shedding jobs. Since then, the economy 

has lost over 2 million private sector jobs and 2.7 million more workers are unemployed, for a total of 10.3 million. 

These stark numbers should make the decision to rescue the Detroit carmakers 

much easier. The potential employment consequences if one or more of the Big 

Three Detroit automakers fails could be devastating to an already weak labor market. Estimates show that millions of jobs—including vehicle assembly, parts manufacturing, suppliers, and neighborhood retailers—are potentially at risk. The Bureau 

of Economic Analysis has estimated that each job in the vehicle manufacturing industry supports from two and a half to about 6 additional jobs in the wider economy, so the ripples of their collapse could be felt far and wide. 

Last week, third quarter economic growth was revised downward to -0.5 percent. 

The economy is being pulled down by falling consumer spending, which makes up 

nearly three-quarters of our gross domestic product. Yesterday, it was announced 

that retailers posted the worst November sales in more than thirty years. Families 

are conserving their dwindling resources and simply not buying much of anything, 

including durable goods such as cars. As consumers cut back on their spending, this 

is dragging down economic growth, jobs and wages. 

The current downturn has already lasted longer than the last two recessions, 

bringing hardship to millions of families. U.S. workers have lost all the ground that 

they gained over the 2000s recovery. The Census Bureau recently reported that by 

the end of last year, inflation-adjusted household income had still not recovered 

from the last recession and all indications are that household finances have only deteriorated since then. 

The credit crisis is making the employment situation even worse. The lack of access to credit, combined with the sharp drop in home prices, declines in the stock 

market, and the lack of growth in real incomes are putting unbearable financial 

pressure on families. Retirement savings and college savings accounts have been 

decimated by the sudden drop in value in the equities market. College-bound seniors 

will be facing tuition hikes and diminished financial aid, making college out-of-reach 

to many middle-class and poor families. 

Congress has already taken numerous steps to help buffer families from the effects of the downturn, including extended Unemployment Benefits again last month. 

Some economists are already calling this ‘‘the Great Recession’’ because they fear 

it may be longer and deeper than any recession in recent history. This recession requires solutions that address the magnitude of our economic woes. 

In January, Congress will send our new President a substantial recovery package 

that makes investments in our future and puts Americans back to work as quickly 

as possible. 

I thank Chairman Schumer for calling this hearing and I look forward to the continued focus on labor market conditions by this committee. 


42773.001
26 

STATEMENT OF KEITH HALL, COMMISSIONER, BUREAU OF LABOR STATISTICS

Madam Chair and Members of the Committee: 

Thank you for the opportunity to discuss the employment and unemployment data 

we released this morning. 

Nonfarm payroll employment declined by 533,000 in November, with large and 

widespread losses occurring across the major industry sectors. November’s drop in 

payroll employment followed declines of 403,000 in September and 320,000 in October, as revised. The unemployment rate, at 6.7 percent, continued to trend up in 

November and has risen by 1.7 percentage points since the recession started in December 2007 (as designated by the National Bureau of Economic Research). 

Over the past 3 months, job losses have averaged 419,000 per month, sharply 

higher than the average loss of 82,000 per month from January through August. 

About two-thirds of the recent job declines have occurred in the service-providing 

sector of the economy. In the first 8 months of this year, job losses were largely limited to construction and manufacturing. 

Manufacturing job losses continued in November (-85,000). Factory job losses 

would have been larger were it not for the return to work of 27,000 aerospace workers who had been on strike. Over the month, employment declines occurred throughout the manufacturing sector. Motor vehicle and parts manufacturers shed 13,000 

jobs over the month; employment in this industry has fallen by 135,000 since December. Manufacturing hours and overtime each declined by 0.2 hour in November. 

Construction employment was down by 82,000 over the month. Since a peak in 

September 2006, employment in this industry has fallen by 780,000, largely in the 

residential sector. Over the past 3 months, job losses have been evenly distributed 

between residential and nonresidential construction. 

Employment also declined throughout the service-providing sector. The largest 

loss (-101,000) was in employment services, which includes temporary help agencies. 

Employment services has lost 495,000 jobs so far in 2008. 

Retail trade employment fell by 91,000 in November, with the largest job loss 

among automobile dealers (-24,000); since December, auto dealers have shed 

115,000 jobs. Employment also decreased after seasonal adjustment in clothing 

stores; sporting goods, hobby, book, and music stores; and furniture and home furnishings stores. Wholesale trade employment fell by 25,000 in November and by 

123,000 so far in 2008. 

Leisure and hospitality employment contracted by 76,000 in November; the accommodation and food services industry accounted for most of the decrease. Elsewhere in the service-providing sector, sizable employment declines also occurred in 

financial activities (-32,000), transportation and warehousing (-32,000), and information (-19,000). 

In contrast to most industries, health care added jobs in November. Employment 

in the industry rose by 34,000 over the month and has increased by 341,000 so far 

this year. The November gain reflected jobs added in nursing and residential care 

facilities, hospitals, and offices of physicians. 

Average hourly earnings for production and nonsupervisory workers in the private 

sector rose by 7 cents, or 0.4 percent, in November. Over the past 12 months, average hourly earnings have increased by 3.7 percent. From October 2007 to October 

2008, the Consumer Price Index for Urban Wage Earners and Clerical Workers 

(CPI-W) rose by 3.8 percent. 

Turning to labor market measures from the survey of households, the unemployment rate continued to increase in November. At 6.7 percent, the rate was up by 

0.2 percentage point over the month and by 1.7 percentage points since December. 

In November, 10.3 million persons were unemployed, up by 2.7 million from December. About 2.2 million of the unemployed in November had been jobless for 27 

weeks or more, an increase of 868,000 thus far in 2008. 

Both the labor force participation rate, at 65.8 percent, and the employment-population ratio, at 61.4 percent, decreased over the month. The employment-population 

ratio has declined by 1.3 percentage points since December. 

The number of persons working part time who would have preferred full-time employment increased by 621,000 in November to 7.3 million. Thus far in 2008, the 

number of such workers has grown by nearly 2.7 million. 

In summary, nonfarm payroll employment declined by 533,000 in November after 

having fallen by 723,000 over the prior 2 months combined. The unemployment rate 

rose to 6.7 percent in November, 1.7 percentage points above the December rate. 

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

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