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92–506 PDF 2004

S. HRG. 108–402

THE EMPLOYMENT SITUATION: OCTOBER 2003

HEARING

BEFORE THE

JOINT ECONOMIC COMMITTEE

CONGRESS OF THE UNITED STATES

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

NOVEMBER 7, 2003

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

(III)

CONTENTS

OPENING STATEMENT OF MEMBERS

Senator Robert F. Bennett, Chairman ................................................................... 1

Representative Pete Stark, Ranking Minority Member ....................................... 2

WITNESS

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

Statistics, Accompanied by Kenneth V. Dalton, Associate Commissioner,

Office of Prices and Living Conditions; and John M. Galvin, Associate

Commissioner, Employment and Unemployment Statistics ............................. 4

SUBMISSIONS FOR THE RECORD

Prepared statement of Senator Robert F. Bennett, Chairman ............................ 29

Prepared statement of Representative Jim Saxton, Vice Chairman ................... 30

Prepared Statement of Representative Pete Stark, Ranking Minority Member 30

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

Release No. 03-675, entitled, ‘‘The Employment Situation: October 2003,’’

Bureau of Labor Statistics, Department of Labor ............................................. 35

Response of John M. Galvin, Associate Commissioner, to Representative

Baron Hill ............................................................................................................. 60

(1)

THE EMPLOYMENT SITUATION:

OCTOBER 2003

FRIDAY, NOVEMBER 7, 2003

CONGRESS OF THE UNITED STATES, JOINT ECONOMIC COMMITTEE, Washington, D.C.

The Committee met at 9:30 a.m., in room SD–628 of the Dirksen

Senate Office Building, the Honorable Robert Bennett, Chairman of

the Committee, presiding.

Senators present: Senators Bennett, Sessions, Reed and

Sarbanes.

Representatives present: Representatives Saxton, Ryan,

Putnam, Stark and Hill.

Staff present: Donald Marron, Ike Brannon, Jeff Wrase, Colleen

Healy, Melissa Barnson, Chris Frenze, Robert Keleher, Rebecca

Wilder, Wendell Primus, Chad Stone, Daphne Clones-Federing,

Nan Gibson, Josh Shakin, and Rachel Klastorin.

OPENING STATEMENT OF SENATOR ROBERT F. BENNETT,

CHAIRMAN

Chairman Bennett. The hearing will come to order. Good morning to all and welcome to today’s employment hearing.

Like virtually every other economic statistic reported in the past

month, the employment numbers released today are definitely good

news for the American worker.

No matter how you cut it, the economy is adding new jobs at a

rapid pace and will likely continue to do so for the foreseeable future.

The official payroll statistics indicate that the U.S. economy created 126,000 new jobs in the month of October, the third month in

a row that payroll employment rose. The revised numbers now indicate that 125,000 jobs were added in September and that even

August, previously reported as negative, is now considered to have

been positive.

The unemployment rate declined to 6 percent. The household

survey reported that employment increased by an astounding

441,000 in September, and according to the household survey, our

economy has now essentially replaced all of the jobs lost during the

2001 recession, and the number of jobs is now at an all-time high.

Now I understand that we’re going to be talking about payroll

survey numbers. But I want to continue to examine the question

of the disparity between these two surveys.

As I have looked at it, I have found that, historically, they’ve

been very close together and the divergence began during our reVerDate 03-FEB-2003 14:25 Apr 22, 2004 Jkt 092506 PO 00000 Frm 00005 Fmt 6601 Sfmt 6601 D:\DOCS\92506.TXT SSC1 PsN: SSC1
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cent economic difficulty. And I would like to talk about why and

what might be done to reconcile these two conflicting messages.

I believe that today’s employment numbers, along with the steep

drop in new jobless claims and the large increases in productivity

and output, indicate quite clearly that the U.S. economy is returning to a period of strong growth.

The Bureau of Labor Statistics reported yesterday that productivity grew at an annual rate of 8.1 percent in the third quarter

of 2003.

Now some of my colleagues tend to gnash their teeth at the high

productivity growth of late, lamenting that firms are learning how

to do without workers. However, our experience over 30 years tells

us that periods of rapid increases in the productivity capacity of

our economy are almost always accompanied by low unemployment.

Increasing the standard of living and employment at the same

time requires healthy productivity growth.

Now it’s too easy for the party in power to take the blame when

the economy slows. And for that reason, it is all too tempting to

take all the credit when things turn around.

I’m sure there are some who will insist that today’s numbers are

a consequence of Arnold Schwarzeneggar’s having won in California.

[Laughter.]

But in reality, the government holds little sway over the business

cycle, despite what some may think or desire.

Our economy floundered in the middle of the year 2000, in large

part, due to a hang-over from the high-tech boom, likely abetted by

a rise in interest rates. The stagnant economy was prolonged by

the 9/11 disaster, resultant uncertainties in the Middle East, high

energy prices, and various scandals in financial markets.

That our economy steadily expanded in the face of so many potentially calamitous events in succession is a testament to the ability and dedication of the American worker, as well as to our economic system.

This is not to say that government cannot spur the economy. I’m

one who believes that the Bush tax cut enacted in 2001 undoubtedly softened the blow of the events that befell the economy and

served to make the recession shallower than it otherwise would

have been, and that the tax cuts passed this year provided some

needed impetus at the right time.

Dr. Utgoff, it’s always a pleasure to have you visit us, but we especially enjoy it when you come bearing good news.

So we welcome you to the Joint Economic Committee and look

forward to hearing your testimony.

Mr. Stark, we’d appreciate hearing from you.

[The prepared statement of Senator Bennett appears in the

Submissions for the Record on page 29.]

OPENING STATEMENT OF REPRESENTATIVE PETE STARK,

RANKING MINORITY MEMBER

Representative Stark. Thank you, Mr. Chairman.

I find myself in the uncomfortable position of trying to make a

sow’s ear out of a silk purse this morning.

3

[Laughter.]

You are to be congratulated on the good news. We’re not so far

from Halloween, so I watched George the Lesser hop out of an airplane in his pilot’s suit and say, ‘‘The war’s over.’’

I now expect him to put on his pinstripe suit, get out of a limousine and say, ‘‘The Depression is over.’’

We’ll see if he’s any more accurate on the state of the economy

than he was on the war.

We did create some jobs in the last couple of months. And you

forgot to mention, I think, that the recalculation showed that even

perhaps September’s numbers were better than we had previously

thought. And without switching to the household numbers, it

looked good.

We’re still facing a trillion dollars’ worth of debt. We still have

in San Jose, California, and in the Silicon Valley area, for instance,

300,000 highly skilled computer workers, programmers, out of

work.

Now, it’s one thing to say—‘‘Great, fellas. You can go and get 20

hours a week at Wal-Mart.’’ Of course, without benefits and, if Secretary Chao has her way, without union representation. But that’s

what’s happening.

The good jobs aren’t there.

High productivity—you’re saying, yes, they’re making stuff. But

they’re making it in Asia, and then they’re bringing it back here.

It isn’t so much that we’re bringing the Indo-American workers

over from India. We’re now shipping the whole nine yards, the company and the factory and the workers, back to India, importing the

stuff here, and our guys are out of work.

And the penultimate area is the South. It should be your territory.

The Republican owners of the textile mills have figured out that

shipping the textile jobs overseas is closing their plants.

And yes, it gives us cheap T-shirts at Wal-Mart. But it also gives

us pretty cheap jobs.

So we’ve got still about 9 million unemployed. We’ve got almost

5 million people who are employed less than full time and would

like to work full time. 45 million people without health insurance,

about 12 or 13 million of which are children.

Half of the people in America are earning less in the aggregate

than the top 1 percent are earning. And if, Mr. Chairman, interest

rates go up, which I think they’ll have to do to refinance the trillion-dollar debt, then the housing market goes in the tank and

we’ve got real problems.

And I’m happy to accord credit for creating these jobs. It’s not

enough. It’s the worst job creation record since Herbert Hoover.

But to not recognize the dangers is what scares me, to not have an

exit plan. We’ve done that once in a different kind of war.

But to not recognize the danger of this swelling deficit and to

know that it could really destroy the lives of many people if the

real estate market, for instance, tanks, is what’s missing.

Credit where credit is due and, as I say, I hate to be the skunk

at the picnic, but I certainly would like us to be concerned about

the almost 15 million people, 14 million people, who are under- and

unemployed.

4

Thank you.

[The prepared statement of Representative Stark appears in the

Submissions for the Record on page 30.]

Chairman Bennett. I’m tempted to respond.

Representative Stark. Oh, c’mon.

Chairman Bennett. And I shall resist the temptation.

Representative Stark. C’mon, c’mon.

Chairman Bennett. We’re here to hear Commissioner Utgoff.

We can have these debates back and forth, perhaps during the

question period, or maybe even another forum.

Commissioner, we appreciate you being here and look forward to

hearing what you have to say.

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

COMMISSIONER, BUREAU OF LABOR STATISTICS U.S.

DEPARTMENT OF LABOR, ACCOMPANIED BY KENNETH V.

DALTON, ASSOCIATE COMMISSIONER, OFFICE OF PRICES

AND LIVING CONDITIONS; AND JOHN M. GALVIN, ASSOCIATE

COMMISSIONER, EMPLOYMENT AND UNEMPLOYMENT STATISTICS

Commissioner Utgoff. Thank you, Mr. Chairman, and Members of the Committee. I appreciate this opportunity to comment on

the labor market data we released this morning.

Non-farm payroll employment rose by 126,000 in October, following increases in August and September that totaled 160,000,

after revision.

I would note that the payroll survey estimates for the prior 2

months are always subject to revision as we receive reports from

additional survey respondents. This increase in payroll employment

over the last 3 months contrasts with declines in the February-July

period that averaged 85,000 per month.

Several service industries added jobs in October. Manufacturing

employment continued to decline, although at a slower pace than

earlier in the year. The unemployment rate, at 6.0 percent, was essentially unchanged over the month.

Professional and business services added 43,000 jobs in October,

with gains in many of its component industries. Employment in

temporary help services continued to rise and is up by 150,000

since April.

Employment in private educational services grew by 23,000 in

October. Job gains over the last 3 months have more than offset

declines that occurred in June and July.

Over the year, employment in private education expanded by

56,000. Health care and social assistance added 34,000 jobs, with

noteworthy gains in doctors’ offices and in child daycare services.

In the leisure and hospitality sector, employment in food services

and drinking places rose by 23,000. Job growth in food services has

picked up in recent months; since July, employment has increased

by 57,000. Within retail trade, food stores added 13,000 jobs in October. Employment in food stores was boosted by the hiring of additional workers in anticipation of strike.

Employment in construction was little changed over the month,

but the industry has added 147,000 jobs since its most recent

trough in February. In October, employment in credit intermediVerDate 03-FEB-2003 14:25 Apr 22, 2004 Jkt 092506 PO 00000 Frm 00008 Fmt 6601 Sfmt 6601 D:\DOCS\92506.TXT SSC1 PsN: SSC1
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ation decreased by 10,000, reflecting the decline in mortgage refinancing activity.

Manufacturing job losses continued in October. Declines in the

sector have moderated in recent months, particularly in durable

goods manufacturing. In October, both the factory work week and

overtime were unchanged.

After posting a small increase in September, employment in air

transportation fell in October. Since reaching its most recent peak

in March, 2001, the industry has lost more than 20 percent of its

jobs.

Average hourly earnings for production or non-supervisory work- ers, at $15.46, were essentially unchanged in October. Over the

year, average hourly earnings rose by 2.4 percent.

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

the October unemployment rate of 6.0 percent was about the same

as in September. The jobless rates for all the major worker groups

showed little change over the month. About 8.8 million persons

were unemployed, of whom 2.0 million had been without a job for

27 weeks or longer.

Employment as measured by our household survey rose over the

month.

In summary, non-farm payroll employment rose by 126,000 in

October. Since July, employment is up by 286,000. The unemployment rate, at 6.0 percent in October, was about unchanged.

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

questions that you have.

[The prepared statement of Commissioner Utgoff, together with

Press Release No. 03-675, appear in the Submissions for the Record

on page 35.]

Chairman Bennett. Thank you very much.

I do want to get into the question of the disparity between the

household survey and the payroll survey. And I want to make it

clear to everybody that these are not competing surveys from competing think tanks.

This is not Brookings versus Heritage. This is not the Cato Institute versus the Citizens for Tax Justice, each one going out and

doing its own analysis.

They both come out of BLS. They’re both done by the organization over which you preside. And I’m not challenging the validity

of either one, understanding the methodology. But I’m trying to

find out what can be done to change the methodology so that they

come into some kind of coordination between the two.

Because, as I said, historically, they’ve run pretty much together.

They started to diverge around the time of the economic difficulty

we’ve just gone through, and they tell very different stories.

So it’s to the interest of everybody that we try to understand why

they are diverging, see what can be done to not necessarily bring

them together, but to come up with some kind of understanding of

exactly what is going on.

If I could share with you an example that came out of Bob Woodward’s book on Alan Greenspan, called ‘‘Maestro.’’ I’m not sure how

many people have read it.

But in that work, Woodward records how Chairman Greenspan

became convinced, looking at all of the data, that the way the FedVerDate 03-FEB-2003 14:25 Apr 22, 2004 Jkt 092506 PO 00000 Frm 00009 Fmt 6601 Sfmt 6601 D:\DOCS\92506.TXT SSC1 PsN: SSC1
6

eral Reserve Board was calculating productivity numbers was

wrong. And he said to the various economists and technicians at

the Fed—‘‘Your productivity number has got to be wrong. Productivity has got to be going up.’’

And they said, ‘‘No. Productivity is clearly going down. We are

measuring it in the way that it has always been measured and it

is going down.’’

And in a phrase that I have heard the Chairman use often, he

said, ‘‘That violates the laws of mathematics. Productivity cannot

be going down and the equation that produces the other numbers

still work because we’ve got the final number out of the equation

and the other numbers connected to it dictate that productivity has

to be going up.’’

And so, in an effort described in the book as an economist’s

version of the Manhattan Project, they went into their methodology

and discovered that the Chairman’s instincts were correct, that

their method of measuring productivity, however time-honored it

may have been, was wrong, and that the overall information with

respect to the economy did indeed dictate that productivity had to

have been going up in the period and they had to change their

ways of measuring it.

Now I tell you that because I think it might be instructive here

on this question of the payroll survey versus the household survey.

What are we missing? How can we account for the disparity?

Now I understand that the household survey picks up agricultural jobs which the payroll survey misses. The household survey

picks up the unemployed, which the payroll survey misses. But the

gap is too big to be filled with those two numbers.

If there’s a statistical problem—that is, statistical noise in one or

the other of surveys, or both—we ought to do what we can to try

to fix that. We ought to do what we can to try to eliminate that

noise.

Some have suggested as they’ve looked at this that the gap is

partly due to immigration. That is, the household survey picks up

illegal aliens who are in the country and working in situations

where they would not be on payrolls.

I think there may be some of that, but that number can’t be

large enough to explain the disparity in the surveys.

A very quick anecdote that I would share with you.

Flying back from Utah this last time, my seatmate on the airplane and I got into a conversation. She described her employment

situation. She was one of those software engineers that Congressman Stark has talked about who lost her job.

She was flying first-class to Washington on a platinum medallion

status, obviously very much involved. And I said, ‘‘What do you do

now?’’ And she said, ‘‘Well, now, after I lost my job working for a

large company, I got together with a few other software engineers.

We formed a small company. We’ve got a niche that we’re operating in. I’m earning more money now. I’m busier now. I’m flying

to Washington every week on a lucrative consulting agreement

with the government and doing far better than I did before.’’

But the firm that was formed that she’s involved with now does

not show up in the payroll survey in any way. And she would not

7

say that she’s at Wal-Mart selling T-shirts. She’d say that this was

the greatest thing that ever happened to her.

I don’t know how many of those firms there are out there, little

firms that fly under the radar screen of the payroll survey.

And so, just quickly, could we have a discussion about what can

be done to try to reconcile the differences between these two surveys?

And once again, I stress—these are not ideological surveys being

pushed by two different think tanks. These are both surveys carefully constructed and managed over time by the Bureau of Labor

Statistics which in previous eras did not diverge that much, and

now are diverging a great deal.

Can we discuss this? Have we got any ideas as to which one

comes the closest to telling us what’s really happening in the economy and what methodology might have to be changed in either or

both to bring them back to a range where you can explain the differences between the two of them?

Commissioner Utgoff. Mr. Chairman, first I’d like to point out

that the payroll and the household series have behaved differently.

In the late 1990s, the payroll series grew faster than the household series. The BLS and the Census Bureau have undertaken a

thorough review of that period to try to explain the differences so

that it might shed some light on the current period.

It’s difficult to understand, but we really couldn’t explain a good

portion of those differences. Some of them were due to the factor

that you talked about, the immigration factor that was under-estimated in a recovery period.

It may in fact be that in a slow labor market, immigration and

new jobs through immigration have been over-estimated.

But I can’t tell you that we can explain all the difference. As you

know, there are different surveys. They measure different things.

But when they’re adjusted for that, they still show different patterns since November and we really can’t explain a good deal of

that difference.

Chairman Bennett. Not to inject partisanship into this, but you

understand how the two surveys get used in political oratory, with

some saying that the one survey demonstrates that we’ve got a terrible job market and the other survey demonstrates that we have

replaced all of the jobs that were lost in the recession.

That’s a fairly significant statistical gap that needs to be filled

in some way or another.

I’m glad to hear that you’re working on trying to deal with it and

I look forward to hearing the results of your efforts at some future

time.

Congressman Stark.

Representative Stark. Thank you, Mr. Chairman.

Commissioner Utgoff, thank you once again for being with us

and I guess thank you for brightening the Republicans’ day.

I did want to ask you just——

Chairman Bennett. Can we at least say that all Americans are

probably happy about this, including a few Democrats?

[Laughter.]

Representative Stark. Well, no. That’s the problem, Mr. Chairman.

8

As I was going to say, at the beginning of the recession, in

March, 2001, correct?

Commissioner Utgoff. Yes.

Representative Stark. I believe there were 1321⁄2 million people employed.

Is that correct?

Commissioner Utgoff. Yes.

Representative Stark. And how many people are employed

today?

Commissioner Utgoff. A little over 130 million.

Representative Stark. Two-and-one-half million fewer people

employed. And how many months of job growth at the level we had

last month would it take us to get back to the pre-recession employment level?

I’ve got an answer here. Let me make it quickly.

Commissioner Utgoff. OK. I know roughly, but your

answer——

Representative Stark. You tell me first.

Commissioner Utgoff. No, I don’t have that calculation.

[Laughter.]

Representative Stark. I’ve got 19 months. Is that about right?

Commissioner Utgoff. OK. That’s about right.

Representative Stark. So we’ve got a long time, Mr. Chairman,

to go before we get back to where we were.

Now, just a little bit off the subject, but not completely.

In my other life, I worry about something obscure called TANF.

And you keep some figures about unemployment among women

who maintain families. And again, what my numbers show is that

while we had 710,000 unemployed women who are maintaining

families back in November of 2001, we’re up now—and we even

went up in October over September—but up to 781,000.

That’s not a big change, but I think those are ballpark figures.

My question is, where we’re requiring under TANF women to, or

TANF recipients, most of whom are women, to work 40 hours,

which is kind of an elusive number because there aren’t many 40-

hour jobs, a lot of 37, aren’t we putting pressure on the labor market in an area where very fragile families—that’s my editorial description of women who are working to maintain families—isn’t

that putting pressure on their finding jobs by pushing the welfare

beneficiaries to work longer hours in the private market?

Commissioner Utgoff. Well, as the economy improves, it is

likely that employment for all groups will improve, particularly for

groups that are having labor market problems.

That is their best situation, is to have an improved labor market.

Representative Stark. OK. I guess I wish you’d said, if the

economy improves.

But how many jobs—and I know this is an area in which you

would still call this experimental or tentative data. But is it not

correct that whether or not the JOLTS program has been determined to be accurate and technically correct, that we had fewer

jobs open at the end of August—I think 3 million is the number—

and that prior to that, we had something like 31⁄4 million jobs?

Can you give me a little estimate? How many jobs are out there

that are open, and has that gone up or down?

9

Commissioner Utgoff. Yes, Mr. Galvin will answer that. He

has the figures.

Representative Stark. OK.

Mr. Galvin. Our JOLTS survey showed about 3 million vacancies in our latest data point, August, 2003. That’s down from about

3.2 million a year earlier.

This is a very short series. We’ve only been putting it together

since December 2000.

Representative Stark. I’ll give you the disclaimer. I know that

this is a very new and tentative figure that you’re keeping and I

didn’t mean to—but it’s interesting, and mostly interesting not so

much in the change from 3.0 to 3.3, where, if you’re learning,

there’s a learning experience on how to get this.

But the fact that somehow, we’ve got 9 to 10 million people that

we’re trying to cram into those 3 million jobs. And that to me is

like trying to pour a quart of milk into an eight-ounce cup.

Something doesn’t fit. If we’ve got 3 million vacancies out there

and 9 million people, not to count the unemployed, the part-time

employed, we’ve got a shortage of jobs.

Is that right? Does that make sense?

Mr. Galvin. Well, again, we don’t have much experience with

the relationship between these levels of openings and the relationship of the employment levels.

Representative Stark. But if that’s right, then we’re short 6

million jobs somewhere, roughly.

Right? We’ve got roughly 10 million people looking, or 9.8, and

you’ve got roughly 3 million openings, as I look at it—this is hypothetical, but doesn’t that say that we’ve got about three times as

many people unemployed as we have jobs available, if your figures

are right?

Mr. Galvin. That’s the relative size of the numbers. There will

always be some search unemployment, people, when they leave

jobs, will take some time to find other jobs.

Representative Stark. There’s entropy in the system. I understand that.

But I just wanted to get some order of magnitude here. So that

a couple hundred-thousand jobs doesn’t make a real big dent in

that discrepancy of somewhere around 6 million jobs.

And that, Mr. Chairman, is what I was alluding to in my opening

remarks, is that there doesn’t seem to be a program, other than tax

cuts, to deal with the 6 million people, or, if poetic license, 5. But

a big number of people who are looking for work for whom openings don’t exist.

Thank you.

Chairman Bennett. Thank you.

Mr. Ryan.

Representative Ryan. Thank you.

Commissioner, I wanted to go back to the difference between the

two surveys because that, too, is very fascinating to me. A couple

of questions.

Since the household survey counts the self-employed and the

payroll survey seems not to do that, is the payroll survey missing

a significant development in the labor markets? Question number

one.

10

Question number two: compared with the results of all the other

indicators we’ve been getting over the past week—and we’ve gotten

quite a few, and most of them are pretty good—which employment

survey, in your opinion, has been more consistent with other economic indicators as they interact with those?

Commissioner Utgoff. The question about self-employment, we

know from the household survey, we know how many people are

self-employed, and you can correct for that in comparing the household and payroll series.

Self-employment has been up about a half-million, a little more

than half-a-million over the last year. And that accounts for much

of the difference over the last year.

But the difference since November 2001 has been greater than

that when the economy started at the trough of the recession. It’s

more difficult to explain the difference since then.

Representative Ryan. Would self-employment be the largest

piece of the puzzle, so to speak, to explain this anomaly, this huge

divergence between these two indicators, or these two measurements?

Commissioner Utgoff. In the last year, that’s been the most

discrepancy.

Representative Ryan. OK. What about a trend? Or looking at

the other indicators, which one seems to be a little more consistent

with the other indicators?

And do you see a trend emerging now that we have September

and October data, which seem to be moving very much in the same

direction, building momentum? Do you see a trend emerging?

Commissioner Utgoff. The BLS measures current conditions.

Representative Ryan. I know.

Commissioner Utgoff. We don’t really predict what future conditions will be.

Representative Ryan. And you’re not willing to take note of

something that looks to be like a trend?

Commissioner Utgoff. There have been 3 months of job increases.

Representative Ryan. OK. Manufacturing—that’s the other

quick question, while I still have some time.

Now the big knock that you hear rhetorically between the payroll

survey and the household survey is it’s really people losing their

jobs in manufacturing and going over to the service sector.

I think that pretty much describes what some people are saying.

Is there evidence of that?, number one. Number two: are the

manufacturing sector employment losses unique to this country, or

is it indicative of a worldwide trend that’s occurring in many countries around the world where factory employment and manufacturing employment is down, perhaps due to productivity?

So is it a unique trend to America or is it a worldwide trend?

And is the claim valid that the difference between these two surveys indicates that people working in higher-paying manufacturing

jobs are losing those jobs and going to service jobs? Whether they’re

higher- or lower-paying, we don’t know.

But is there a lot of validity to that claim?

11

Commissioner Utgoff. No, that wouldn’t be correct because the

payroll survey picks up people in both the manufacturing and in

the service industries.

So that a shift would not affect the total numbers.

Representative Ryan. That’s helpful. Thank you.

What about worldwide versus America trends?

Commissioner Utgoff. A decline in manufacturing employment

has been widespread throughout the developed countries.

Representative Ryan. So the decline is worldwide. Is that pretty much a productivity story?

Commissioner Utgoff. Yes, the decline in manufacturing employment for many developed countries is a productivity story.

Representative Ryan. OK. I think that’s all I have.

Chairman Bennett. Senator Reed.

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

Thank you, Commissioner. How does the current level of nonfarm payroll employment compare to the level at the start of the

recession in March, 2001?

Commissioner Utgoff. It’s roughly 2.4 million jobs.

Senator Reed. Less, today.

Commissioner Utgoff. Yes.

Senator Reed. And we’ve been now about 31 months in declining jobs.

So today’s news is good news. But the question I think we all

have is, is it sufficient to begin replacing simply the jobs that we’ve

lost over these last 31 months? Just as importantly, are we potentially generating new jobs because of new entrants into the labor

force?

I think Secretary Snow talked about 200,000 jobs a month, which

is a revision downward of his previous suggestion. We grew about

124,000 jobs this month.

Commissioner Utgoff. 126,000.

Senator Reed. 126,000. So we’re falling short of enough jobs to

begin to basically fill the gap.

Is that correct?

Commissioner Utgoff. Yes.

Senator Reed. So it’s good news. But in context, we’ve got such

a long way to go to rebuild employment, that we’re not over the

hump yet by any stretch of the imagination, even by Secretary

Snow’s calculations.

Is that accurate?

Commissioner Utgoff. Well, Secretary Snow’s calculations

would be that about 200,000 jobs a month is more than is needed

to reduce the unemployment rate. You need about 125,000 to about

150,000 jobs a month to reduce the unemployment rate.

Senator Reed. And we had 126,000 new jobs, so there’s a slight

reduction this month. This month.

Could you comment on the participation rates, the trends, because information that I have suggests that there is a growing

number of people not participating in the labor force, therefore, not

being counted as unemployed technically, but certainly not with

employment.

Can you comment on that?

12

Commissioner Utgoff. Well, participation rates have declined

about 1 percent since the peak of the cycle.

Participation rates tend to weaken during a recession and then

tend to strengthen during the recovery period.

Senator Reed. But as these participation rates strengthen, and

correct me, then you have more people looking for jobs. And essentially, that could be a break on the unemployment rate going down.

Am I correct, as more people enter the force?

Commissioner Utgoff. Well, when the economy is at a level

state, an increase in the participation rate will tend to put upward

pressure on the unemployment rate.

But the relationship is if jobs are growing faster than the labor

force is growing, then the unemployment rate will still decline.

And what you see in practice is that during periods of recovery,

employment increases faster than the labor force. And the reverse

in a recession.

And during the late 1990s, for instance, there was a strong increase in the participation rate and the unemployment rate went

down.

Senator Reed. Do you anticipate that happening in the months

ahead? Do you have any sense of that?

Commissioner Utgoff. No.

Senator Reed. And that’s because you haven’t sampled it or because the data is unclear, or you don’t do it?

Commissioner Utgoff. The BLS does not make projections.

Senator Reed. Well, again, I think this is good news today. But

the struggle is not over. We have a long way to go to replace 21⁄2

million jobs that were lost in the last 31 months.

And there are still some variables, one of which is the participation rate, which is unclear yet. You look backwards, but you don’t

look forward.

And so, again, I think we should take some comfort from the

numbers, but not satisfaction that the job is done.

I guess the other question I would raise in terms of—what would

the unemployment rate be if the participation rate had stayed the

same rather than changed?

Would we have had higher unemployment numbers?

Commissioner Utgoff. That’s unclear because the people who

participate in the labor force, you have to ask how many of them

become unemployed and how many of them go straight into employment.

So you really can’t say what the unemployment rate would be if

the participation rate stayed the same.

Senator Reed. And the final question, the reports of significant

productivity increases, which raises perhaps in my mind—it might

not be accurate in terms of the statistics or the models—sometimes

it’s the result of a replacement of workers by machines, computers,

et cetera.

If productivity grows dramatically, does that take the pressure

off hiring? Does that mean that companies, because of mechanization, computerization, new techniques, that they can still have impressive gains in their bottom line without hiring more people?

Commissioner Utgoff. In the short run, productivity can put

downward pressure on jobs.

13

But in the long run, productivity increases are what’s needed for

economic growth and for employment growth.

So it’s a question of whether we’re talking about the short-run

or the long term.

Senator Reed. How would you define the short run?

Commissioner Utgoff. In the matter of years.

Senator Reed. Years.

Commissioner Utgoff. Yes.

Senator Reed. So that there is the possibility, unclear yet, that

because of the significant productivity increases, which might be

driven by capital investment rather than employment, that that

could be another downward pressure on employment.

Commissioner Utgoff. That’s correct.

Senator Reed. Thank you very much, Commissioner. Thank

you.

Chairman Bennett. Mr. Putnam.

Representative Putnam. Thank you, Mr. Chairman.

I’d like to follow up on the productivity line. To what degree do

we attribute the gains in productivity to structural changes in the

economy like the continued advances in information technology, the

continued automation of manufacturing?

And to what degree are they more temporal than structural in

that people are fearful of their jobs so that there is some angst and

therefore, this emotional productivity that is derived that is not

sustainable, to what degree are the productivity gains structural

versus temporal?

Commissioner Utgoff. I can’t answer that question. I have no

data to answer that question.

Representative Putnam. We don’t know, then, we don’t have

a good sense then of what is driving these productivity gains.

Commissioner Utgoff. Well, there have been strong increases

in output and it has been suggested that this was due to a heavy

investment in IT technology in the late 1990s.

Representative Putnam. The IT technology has been something that you and Mr. Greenspan and others have attributed tremendous productivity gains to for a number of years now.

Do you have a sense of how long we can ride that wave? How

long will the IT improvements continue to fuel the productivity?

Is that a long-term structural increase in productivity that will

be with us for some time, or are we on the backside of the IT productivity curve and we need to find the next big thing?

Commissioner Utgoff. I really can’t answer that question. But

I would note that business investment has been up.

Representative Putnam. OK. What’s the regional nature—is

there a regional nature to the employment numbers?

And if you would elaborate on who’s winning and who’s losing?

And is there a regional nature to the productivity?

Commissioner Utgoff. We don’t have regional measures on productivity. But the changes in employment have been widespread

throughout the country.

Mr. Galvin. I’ll search for that.

[Pause.]

14

Representative Putnam. While you’re doing that, give me

some sense of the historical unemployment average since World

War II.

What is the average unemployment rate in this country in the

post-war economy?

Commissioner Utgoff. Can I get back to you on that?

Representative Putnam. I’m striking out here. Give me this

sense.

There used to be a number that was considered an unemployment rate that was largely considered full employment.

Has that number shifted over the last several decades?

Commissioner Utgoff. Well, for a while unemployment rates in

the area of 5 percent were considered what you would call the natural rate of unemployment.

The experience in the late 1990s has called that into question.

Representative Putnam. But up until the mid-1990s, that was

largely considered the natural number.

Commissioner Utgoff. Yes.

Representative Putnam. And the unemployment today is

what?

Commissioner Utgoff. 6 percent.

Representative Putnam. 6 percent.

Commissioner Utgoff. Yes.

Representative Putnam. So a percent over what, until recently, may have been considered the standard natural unemployment rate in the country.

Commissioner Utgoff. Right.

Representative Putnam. Thank you. Have you had any luck,

Mr. Galvin?

Mr. Galvin. Well, I’ve got the unemployment rate with me back

to 1956. I don’t have averages over that period.

You asked for the long-term unemployment average back to

World War II.

Representative Putnam. Well, the 1950s will do. You’re still

way beyond my time, so——

[Laughter.]

Mr. Galvin. 1950s, it was in the 4.2 percent vicinity in 1956.

Representative Putnam. OK. And let me go back to the Commissioner, if I may, just for a final question.

Does your household survey, and this is something that the

Chairman and Mr. Ryan have gotten into extensively. Do you feel

that it adequately captures independent contractors and the selfemployed and the budding small businesses?

Is it really an adequate model to capture those folks?

Commissioner Utgoff. It does capture those categories of workers.

Representative Putnam. OK. Thank you very much.

Thank you, Mr. Chairman.

Chairman Bennett. Mr. Hill.

Representative Hill. Thank you, Mr. Chairman. Thank you,

Commissioner, for being here.

I want to get into some of the ways of how you conduct your

household survey.

15

Can you kind of explain how you do it? Do you contract it out?

Do you do it in-house?

Commissioner Utgoff. The Census Bureau conducts a survey of

households under contract to BLS.

Representative Hill. What kind of questions are you asking?

Commissioner Utgoff. There are a number of questions on the

survey.

Did you search for work in the last 4 weeks? If not, do you want

a job? And it just goes through many categories of labor force status.

Representative Hill. And what’s the sample?

Commissioner Utgoff. The sample is about 60,000 households

a month.

Representative Hill. OK. I want to get into what—by the way,

Mr. Chairman, I am encouraged by this data here. I’m one Democrat who hopes that this economy is going to be recovering.

I’m from Indiana. And we’ve lost a lot of jobs in my District. And

in particular, we’ve lost a lot of manufacturing jobs.

In your survey, as Congressman Ryan was talking about earlier,

we have had a loss in this last month of manufacturing jobs.

And the question I have for you, do we know what kind of jobs

these are, these manufacturing jobs, that have been lost and we

are continuing to lose?

Commissioner Utgoff. The manufacturing losses have been

throughout subsectors of the manufacturing industry. They have

been, for part of this last 2 years, concentrated in durable goods,

and in other things like textiles.

Representative Hill. OK. The reason why I ask you about how

you conduct your survey, do you ask questions as to what kind of

manufacturing job a person had that they lost?

Commissioner Utgoff. The payroll survey, the other survey,

goes to employers. And they are classified under a system that tells

you what industries they are in so that you can group them and

describe them.

So we don’t ask the people what industries they’re in. We ask the

employers.

Representative Hill. OK. What I’m trying to get at, Commissioner, is I’m trying to determine whether or not these manufacturing jobs are going to come back.

Is there any way when you’re asking your questions, can you determine whether or not there is the possibility—what I’m trying to

get at, are these permanently lost jobs or are they jobs that some

day we can regain?

Do you have any idea when you’re asking your questions?

Commissioner Utgoff. The BLS doesn’t project activities in the

future. But I can say that since the 1950s, and even before that,

manufacturing’s share of employment has declined fairly steadily.

Representative Hill. And you said earlier that this is not

unique just to the United States, that this is worldwide.

Commissioner Utgoff. In most developed countries.

Representative Hill. How about non-developed countries?

Commissioner Utgoff. Well, in some non-developed countries,

manufacturing has increased.

Representative Hill. Could you cite some of those countries?

16

Commissioner Utgoff. We don’t produce information on manufacturing or any other jobs in developing countries.

Representative Hill. OK.

Senator Sarbanes. China, obviously, one would think. Just the

man in the street would say China, wouldn’t he?

Representative Hill. Yes, they would.

Commissioner Utgoff. Well, the conventional wisdom and the

anecdotal evidence seems to be that China has had a very large increase in manufacturing jobs.

Senator Sarbanes. Right.

Commissioner Utgoff. But again, we don’t measure those.

Representative Hill. Commissioner, what I’m trying to get a

feel for is these jobs in manufacturing that are being reported lost

every month, I’m trying to get a feel for whether or not they are

ever going to be coming back. Or are they lost forever?

And what I take it, and in your data that you collect, you can’t

make that determination.

Commissioner Utgoff. No, our data is for current and previous

periods.

The long-term trend has been that manufacturing as a share of

employment has gone down.

Representative Hill. OK. Congressman Ryan was also talking

about the shift from manufacturing jobs into the service sector,

that people who have lost their manufacturing job that are now in

the service sector.

Do we have any idea what difference in wages that person is experience? Is it a decrease in wages? An increase in wages?

Do you ask that question in your surveys?

Mr. Galvin. We do not track on a current basis employees from

one job to another job. We could get you information after the hearing about average salary levels in the service sector versus the

manufacturing sector.

Representative Hill. OK. Thank you, Mr. Chairman.

[Response of Mr. John Galvin to Representative Hill appears in

the Submissions for the Record on page 60.]

Chairman Bennett. Senator Sessions.

Senator Sessions. Mr. Chairman, I’ll pass.

Chairman Bennett. All right.

Senator Sarbanes.

Senator Sarbanes. Well, thank you very much, Mr. Chairman.

Commissioner, welcome. It’s nice to see you again.

I want to take just a moment to address the subject you were addressing with Congressman Putnam on the concept of NAIRU, the

Nonaccelerating Inflation Rate of Unemployment.

A number of people don’t accept that concept, including Alan

Greenspan, who has testified about that at some length.

And the figure has been all over the lot, depending on who’s invoking it, and for what purpose. But it’s very clear that in the recent past, we experienced 4 percent unemployment without an inflation problem. And that led everyone to sort of revise their views.

And of course, the Chairman of the Federal Reserve spoke at great

length about the marked increase in productivity.

17

The Humphrey-Hawkins bill had a 4-percent unemployment

rate. So it was premised on the view that we could get down to that

rate before we encountered an inflation problem.

Everyone said, oh, it can’t be done, and then of course, we did

it.

And I just want to put that into the history bank, as it were, because the recent past, at least, and earlier times, going back some

number of years, have had unemployment down in the 4-percent

range without an inflation problem.

So if one adopts this concept, and I’m not arguing for adopting

it, I just want to address it—the non-accelerating inflation rate of

unemployment—that would suggest that we could go down to 4

percent and not get an inflation problem.

I just want to add that for the record.

Now I want to address this morning the long-term unemployment situation, which is an issue I’m quite interested in because

it directly relates to whether we should extend unemployment benefits again, as we have done in previous economic down-turns, and

whether the increase in jobs we see this month is adequate to, in

effect, put that problem on the shelf.

My own strongly held view is that it is not, and I want to try

to walk through this problem with you.

We define the long-term unemployed as those unemployed for

more than 26 weeks and continuing to look for work.

Is that right?

Commissioner Utgoff. That’s right.

Senator Sarbanes. How many such individuals were there in

October?

Commissioner Utgoff. It was about 23 percent of the unemployed, 2 million persons.

Senator Sarbanes. 2 million.

Commissioner Utgoff. A little more than 2 million.

Senator Sarbanes. How many long-term unemployed workers

were there a year ago?

Commissioner Utgoff. 1.7 million.

Senator Sarbanes. So we’ve gone from 1.7 to 2 million unemployed.

In January of 2001, how many long-term unemployed were

there?

Commissioner Utgoff. 660,000.

Senator Sarbanes. So since January of 2001, we’ve gone from

660,000 long-term unemployed—people out of work for more than

26 weeks and looking for work—and we’re now at 2 million.

Is that correct?

Commissioner Utgoff. Yes.

Senator Sarbanes. So the number has tripled over that period

of time.

Commissioner Utgoff. That’s correct.

Senator Sarbanes. OK. Now, what percentage of the total unemployed who are looking for work are long-term unemployed

workers?

In other words, if we take the unemployed workers, people looking for work, what percentage of that are long-term unemployed?

Commissioner Utgoff. 23 percent.

18

Senator Sarbanes. 23 percent. What was that percentage a

year ago?

Commissioner Utgoff. 20.5 percent.

Senator Sarbanes. So it’s gone from 20.5 percent to 23 percent

since last year.

Is that correct?

Commissioner Utgoff. That’s correct.

Senator Sarbanes. Now, historically, that’s a pretty high figure,

isn’t it?

Commissioner Utgoff. Relatively, yes.

Senator Sarbanes. And it’s been fairly high over most of this

year, hasn’t it?

What’s the figure roughly been over the course of this year?

Commissioner Utgoff. It’s been in the low 20s, 22 to 23.

Senator Sarbanes. I’ve been informed that the last time the figure of long-term unemployed was this high for such a continuous

period—in other words, 21-, 22-, 23-percent—was 20 years ago, in

1983.

Would that be correct?

Commissioner Utgoff. Yes.

Senator Sarbanes. Now what’s the median duration of unemployment for all unemployed workers?

Commissioner Utgoff. 10.3 weeks.

Senator Sarbanes. The median duration of unemployment for

all unemployed workers?

Commissioner Utgoff. Is 10.3 weeks.

Senator Sarbanes. You’re giving me the median or the average?

Commissioner Utgoff. I was giving you the median. The average is 19.1 weeks.

Senator Sarbanes. OK. 19.1 weeks. And how long has it been

above 19 weeks, the average?

Commissioner Utgoff. Since April.

Senator Sarbanes. And am I correct that we have to go back

about 20 years to find comparable figures in terms of the average

duration of unemployed, for all unemployed workers?

Commissioner Utgoff. Yes.

Senator Sarbanes. Would you take issue with me if I was to

say that the issue of the long-term unemployed is as serious now

as it has been in 20 years?

Commissioner Utgoff. Yes. The percent of the unemployed who

are out of work for 27 weeks or longer has increased and is approximately the way it was in the early 1980s.

Senator Sarbanes. Mr. Chairman, I’ve gone through this step

by step because I think it’s very important to understand these figures.

I still remain very seriously concerned about the condition of the

long-term unemployed. I think we picked up some jobs and I’m

pleased to see that.

The rate has dropped a tenth of a point.

Have you seen any sign that people are coming back into the

labor market? We have this phenomenon, apparently, that when

unemployment goes up, people drop out of the labor market.

19

But when they think that employment is picking up again, they

come back into the labor market. As a consequence, the unemployment rate may in fact go up or not go down markedly, even though

we’re picking up jobs because more people are coming back in looking for jobs.

Do you see any signs of that phenomenon?

Commissioner Utgoff. The participation rate tends to weaken

in a recession and then to strengthen in a recovery.

Senator Sarbanes. Right.

Commissioner Utgoff. An increase in the participation rate

might put pressure on the unemployment rate.

But what you can see over the long term, as an economy recovers, that employment increases faster than the labor force. So you

see increasing participation with a declining unemployment rate.

Senator Sarbanes. Right.

Commissioner Utgoff. As we saw in the late 1990s, where the

participation rate increased, but the unemployment rate went

down as well.

Senator Sarbanes. Yes. Do you see increases in the participation rate taking place yet?

Commissioner Utgoff. No, we do not see any increases in the

participation rate.

Senator Sarbanes. Do you anticipate that there would be increases in the participation rate on the basis of past history?

Commissioner Utgoff. Yes. I would say that in a recovery period, participation rates tend to increase.

Senator Sarbanes. So that the job production you will need in

order to bring down the unemployment rate would be greater in

order to encompass or accommodate an increase in the participation rate.

Would that be correct?

Commissioner Utgoff. Yes.

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

Chairman Bennett. Thank you.

Senator Sarbanes. Obviously, as we discuss extending the unemployment insurance issue, I’ll be referring back to these figures.

Chairman Bennett. I understand that and I think it’s a useful

exercise to go through because this recovery, while it looks very

strong in some of the macro numbers, still has some problems connected with it in the areas that you are describing.

Commissioner Utgoff, to continue to flog the same horse because

I want to have as accurate numbers as possible, is it possible that

the productivity rate is overstated, because if the payroll survey is

too low—and we’re talking about the gap again—but if the payroll

survey is too low, that would artificially change the equation and

suggest that the productivity number is too high.

Commissioner Utgoff. That’s correct, if the payroll survey were

incorrect.

Chairman Bennett. So if we start to get increased jobs, even

though the productivity number is higher than the GDP number,

wouldn’t that suggest that there has to be some mathematical adjustment to the payroll number?

I’m back to the Greenspanesque example of these are all of the

parts of the equation. And typically, you say if productivity is highVerDate 03-FEB-2003 14:25 Apr 22, 2004 Jkt 092506 PO 00000 Frm 00023 Fmt 6601 Sfmt 6601 D:\DOCS\92506.TXT SSC1 PsN: SSC1
20

er than GDP, you’re going to lose jobs. And GDP has to be higher

than productivity in order to create new jobs.

But if we’re in a situation where the productivity number is

higher than the GDP number, and we’re still creating jobs, doesn’t

that say that the payroll number has to be adjusted?

Commissioner Utgoff. Well, it would also depend on the hours.

But in general, you need more GDP growth than productivity

growth to create jobs.

Chairman Bennett. Yes. But I’m saying, we’ve had this last

quarter where the GDP number was 7.2. We’ve got a productivity

number of 8.1, which would suggest a loss of jobs. And yet, for the

last 3 months, we’ve had an increase in jobs.

Commissioner Utgoff. But that’s for——

Chairman Bennett. A very short period of time. I understand.

Commissioner Utgoff. The quarter that’s covered is before the

job growth began.

This is for the third quarter.

Chairman Bennett. Yes. But the increase in jobs was in August, September and October. And that’s the third quarter.

Don’t I have that right?

[Pause.]

It’s July, August, and September. OK. Well, the July increase

was the smallest increase we have. So, OK.

So we have August and September. So all right. So you’re saying,

third quarter, August and September, you’ve still got to get October’s numbers. And the GDP numbers, you do have October’s numbers.

Commissioner Utgoff. No. I’m saying that there was not a complete overlap between the 3 months where employment increased

and the quarter from which productivity and GDP were measured.

Chairman Bennett. So there’s 1-month difference.

Commissioner Utgoff. Yes.

Chairman Bennett. Yes, OK.

Senator Sarbanes. On-the-job numbers or on the productivity

and GDP growth numbers?

Commissioner Utgoff. The job numbers are more current than

the GDP and productivity numbers.

Senator Sarbanes. OK. Thank you.

Chairman Bennett. Yes, all right. Jobs fell in July, grew in August, September and October.

Commissioner Utgoff. Yes.

Chairman Bennett. OK. And August, September and October

are the third quarter.

But you’re saying the GDP numbers are lagging? Help me understand this. I thought I had it and then——

Commissioner Utgoff. July, August and September are the

third quarter.

Chairman Bennett. OK. Sure. Sorry about that. All right.

Let’s talk about the manufacturing sector. You said that unemployment—pardon me—employment in manufacturing has been

going down historically now for half a century or so.

Commissioner Utgoff. Yes.

Chairman Bennett. Not only in the United States but throughout the developed world.

21

Commissioner Utgoff. It hasn’t been going down consistently.

But what I said was that manufacturing, as a share of total employment, has been going down steadily since the 1940s or 1950s.

Chairman Bennett. OK. But output has been going up.

Commissioner Utgoff. Yes, over that period.

Chairman Bennett. So the long-term trend is that employment

as a share of the economy has been going down while output has

been going up.

I think that’s important to note because the employment has not

been going down because the jobs have been exported. The employment has been going down in the long-term trend because productivity has been going up.

And whether it’s robots or computers or simply better management, just-in-time inventories, things of that kind, we’ve been continually as a society squeezing costs out of manufacturing and seeing the output go up with fewer and fewer workers.

And of course, long term, that’s a trend we want to encourage.

When I discuss this sometimes with student groups, I say, if you

look at history, at one point in our country, when Thomas Jefferson

was President, agriculture was almost the entire economic activity

of the country, with manufacturing being a very small percentage.

Agriculture has continued to shrink in terms of the amount of

employment in agriculture, and yet, our output in agriculture has

gone up very dramatically as we become more and more efficient

in the way we farm.

And agriculture now as a percentage of jobs is a relatively small

part of the economy. But agriculture, as part of GDP, continues to

be a very significant factor.

And I think it’s a sign of the growth and maturity of an economy

that the same thing that happened to agriculture is now happening

to manufacturing. And it’s becoming a smaller percentage of the

economy, but the overall output continues to go up as we become

more and more efficient.

And when people say, yes, but service jobs are flipping hamburgers at McDonald’s, service jobs are writing software for Microsoft at six figures a year.

And that is part of the reason why the manufacturing sector continues to go through the changes that it does.

Do you have any reaction to that?

Commissioner Utgoff. I think your analogy between farming

and manufacturing is a fair one.

Chairman Bennett. Thank you.

Mr. Ryan.

Senator Sarbanes. Do you have any figures, Commissioner,

that verify how much of the loss in manufacturing jobs is because

of the increase in productivity and how much of it is because manufacturing jobs have moved overseas and the products that we used

to produce here are now being produced over there and imported

into the country?

Do you have any analysis on that?

Commissioner Utgoff. No, we don’t have any such analysis.

Senator Sarbanes. So we don’t know how much is from—at

least you don’t know how much is from one cause as opposed to the

other cause.

22

Commissioner Utgoff. No.

Chairman Bennett. Mr. Ryan.

Representative Ryan. I was very interested in the last dialog

that the Chairman just had. I want to just go down the same path,

if I could.

Third-quarter growth, July through September, gave us 7.2 percent economic growth. The productivity numbers are from when,

exactly?

Commissioner Utgoff. Same time.

Representative Ryan. Same time, right?

Commissioner Utgoff. Yes.

Representative Ryan. OK. So the rule of thumb is you have to

outpace the growth in productivity with GDP to get jobs back in

the economy.

That’s pretty much a general rule of thumb.

Is it not the case at the beginning of an economic expansion that

productivity is typically over-estimated because firms are expanding and they’re working more hours. The denominator and the productivity formula is usually under-valued because that’s not being

caught up in the payroll survey or in the other surveys?

Isn’t it the case that, in the beginning of an expansion, you don’t

capture all of the additional jobs or the additional hours worked?

And so, you actually over-estimate productivity in some cases.

Therefore, the required level of economic growth that is needed

to get jobs back into the economy may indeed have to be lower than

what we currently expect.

Is that not typically a trend?

Commissioner Utgoff. We have no evidence about any consistent problem in estimation.

Representative Ryan. OK. Let me ask it this way, then.

When we’re measuring productivity, we do output divided by

workers and the hours that they work.

Correct?

Commissioner Utgoff. Yes.

Representative Ryan. OK. And when we’re seeing that jobs are

increasing, when we have economic growth at a level that appears

to be lower than the level of productivity, that begs a few questions, does it not, as to whether or not the required level of economic growth to get jobs back into this economy is sufficient or

not?

So doesn’t it beg some questions about what really is the productivity number in this economy, given that the first numbers on productivity are so high that you would think that we have to grow

even faster than we are to add jobs. But when we’re actually adding, according to the payroll survey, 126,000 jobs to this economy

in this last month, it raises a question about whether in fact, productivity growth may not be as high.

I hope that productivity growth is high because that’s very good

for the long-term standard of living for this country. It’s good for

wages. It’s good for our standard of living in so many ways.

But my basic question is, is the Greenspan theory playing itself

out here that our productivity numbers may not be as high, given

that we are really producing some jobs now at these rates?

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Commissioner Utgoff. The productivity numbers when we publish them at first are the best job that we can do with available

information.

I’m not aware of any consistent revisions that would indicate the

pattern that you’re talking about.

Representative Ryan. OK. And do you not see any unique behavior in these statistics that suggests that? Not a trend, but do

you see anything different?

Mr. Galvin.

Mr. Galvin. Our numbers show from the productivity program,

non-farm business output rose 8.8 percent in the third quarter,

which is slightly higher than what GDP rose in the third quarter.

Representative Ryan. I know it’s not an apples-to-apples kind

of a thing. But it seems that, with the kind of growth rate that

we’re getting in GDP, and the productivity gains—ideally, we want

high GDP and high productivity, which will get us really good jobs,

and a very much higher standard of living.

And it seems that that is exactly what’s occurring right now.

Would that be an accurate statement?

Commissioner Utgoff. Both the economy and the productivity

numbers are growing.

Representative Ryan. All right. Well, I won’t go down this road

any more, but I’d like to talk with you another time about getting

deeper into these statistics to see what the productivity story is, in

fact, and the link between GDP and productivity and what is that

magic intersection of the numbers to produce jobs in this economy?

Commissioner Utgoff. We be happy to answer your questions.

Representative Ryan. Right. Thanks.

Chairman Bennett. Mr. Putnam.

Representative Putnam. Pass, Mr. Chairman.

Chairman Bennett. Senator Sessions.

Senator Sessions. Thank you. Thank you, Mr. Chairman, and

it is great to be here.

Certainly, productivity I’ve always thought was good. And we

definitely believe that increased jobs is good. So when you have

them both, that’s better than the alternative, I think, Mr. Ryan, for

sure.

I was looking at the Reuters article about first-time unemployment claims, which I think is pretty stunning to me, looking at the

numbers.

They report that initial claims—that is, somebody who’s lost

their job and made their first claim for unemployment—fell in the

week of November 1st, 43,000 to 348,000, which results in, it seems

to me, about a 12-percent decline in first-time claims for unemployment.

Have you discussed that earlier today?

Commissioner Utgoff. No, I haven’t.

Senator Sessions. Of course, that pays off, does it not, in the

weeks and months to come.

In other words, if a person making those unemployment claims,

they may be on unemployment for months before they get another

job.

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But if you have a net kind of drop, what would you share with

us about that? How do you see those numbers and the importance

of them?

Commissioner Utgoff. To smooth out the series because it has

variation in it, you look at the 4-week moving average of the

claims.

That tends to be a leading indicator of the unemployment rate.

Senator Sessions. This is a pretty hard number, is it not? In

the surveys, people can complain about it. But do you have confidence in the accuracy of these reported claims for unemployment

compensation, that seems to me to be a hard number that’s not

much dispute about.

Commissioner Utgoff. Well, the BLS does not collect those

numbers.

Senator Sessions. But they come from states.

Commissioner Utgoff. Yes.

Senator Sessions. Who maintain the unemployment compensation payments.

Commissioner Utgoff. Yes.

Senator Sessions. Well, it seems to me that those numbers are

based on actual checks being paid by the states and ought to be

accurate, and I’ve heard little dispute about it.

I think that’s good news.

And I won’t beat the dead horse about the good news of productivity and job increases. That means, it seems to me, at least it

means that something good is happening if you can sustain a 7-percent or more productivity increase and also a nice job increase at

the same time.

Jobs are critical to us, Mr. Chairman, and there are a lot of

things that impact that. We think about them. If we allow energy

prices to continue to soar—we have an energy bill right now that

will allow some things to happen—I think we could contain the cost

of energy increasing productivity.

We have some efforts to reduce litigation costs on American industry that’s at least double or more than that of the rest of the

world.

We’ve got environmental costs that we hold very dear. But if

we’re passing laws or regulations that impose environmental costs

that are not producing benefits for the environment, then that is

a burden on our productivity that makes us more difficult to compete in manufacturing around the world.

Fair trade is important. I think we’ve not always been effective

in insisting on fairness in trade.

I’m concerned about immigration. Illegal immigrants are here by

the millions and they take jobs. And the numbers I saw in the

paper today, there were 2.3 million, I believe, immigrants in 2001

and half of those were reported to be illegal.

I don’t know if those numbers are correct or if they’re being confirmed. But that does take jobs out there.

And of course, the tax burden on private industry is significant.

I am really intensely interested in the job question. I think

Americans need to be able to have a decent job and we need to ensure that we take policies that protect that. The unemployment

rate is not extraordinarily high by the worst of times.

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Six percent—I guess it’s dropped down to six now. That’s still too

high. So we’re concerned about it.

And Mr. Chairman, you’ve been doing an excellent job with these

hearings. I’m so sorry I was tied up in this Medicare conference

this morning. I’m trying to get some information on that bill, that

I could not be with you.

We appreciate your leadership and your insight into these numbers.

I thank you again and yield my time back.

Chairman Bennett. Thank you. I’m going to turn to Senator

Sarbanes again. But I’ve just come across some information that I

think would answer a question that the Senator has raised.

This is a report that appeared in The Wall Street Journal on the

20th of October of this year.

‘‘Factory Employment Is Falling Worldwide’’, is the headline.

Study of 20 big economies finds 22 million jobs lost. Even China

shows decline.

This is very interesting. Quoting from the article, it says:

Contrary to conventional U.S. beliefs, research found that American manufacturing workers weren’t the biggest losers. The U.S.

lost about 2 million manufacturing jobs in the 1995 to 2002 period,

an 11-percent drop.

Brazil had a 20 percent decline. Japan’s factory workforce shed

16 percent of its jobs, while China’s was down 15 percent.

The Director of Global Economic Research at Alliance, Joseph

Carson, says that the reasons for the declines are similar across

the globe. Gains in technology and competitive pressure have

forced factories to become more efficient, allowing them to boost

output with far fewer workers.

Indeed, even as manufacturing employment declined, said Mr.

Carson, global industrial output rose more than 30 percent.

And here is the chart that shows the countries that lost the most

and the countries that gained the most. I am interested that the

country that gained the most manufacturing employment in the period of 1995 to 2002 was Spain, with 24 percent increase, followed

by Canada, with 22 percent increase.

Then the Philippines with 6.9, Taiwan, 4.7, Mexico, 1.1 percent,

Malaysia, 1 percent, the Netherlands, 0.9, Australia, 0.3.

India is the median at zero.

And then the losses start: Italy, France—France lost 1.9, Germany, 5.6, Sweden, 6.9, the United States, 11.3, South Korea, 11.6,

Russia, 11.7, the United Kingdom, 12.4, China, 15.3, Japan, 16.1,

and Brazil, 19.9.

This is a very interesting survey that perhaps challenges conventional wisdom in both parties and in the media at large.

And I will be happy to share the hard copy with Senator Sarbanes or anyone else who is interested.

Senator Sessions. Mr. Chairman, on that point, it sounds

counter-intuitive, but if we develop new technology so that 90 people can do what 100 did the previous year, I’ll ask your wisdom on

this. It appears what happens is that those 10 people don’t do nothing. They do something productive. Whereas before, if you could do

it with 90, then they really weren’t productive because the work

could be done for less people.

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And that tends to produce growth in the economy, it appears. I’ve

never quite understood it, but it surprises me how we continue to

down-size our work force all over America and it’s more productive.

But the net result is our unemployment rates are not exceedingly

high by historical terms.

Chairman Bennett. Well, Senator Sarbanes has pointed out

that the historical number is kind of in the eye of the beholder and

it has historically been all over the place.

Senator Sessions. Well, on the percentage basis of 6

percent——

Chairman Bennett. I was taught in college that 6-percent unemployment was full employment. And we’ve demonstrated that

that is not true.

I think your point, Senator Sessions, about the people who lose

their jobs don’t do nothing, they go off to some place else, is very

clear.

And I go back to my analogy about what happened in agriculture

and what’s happening in manufacturing.

Senator Sessions. That wrestles with those numbers in manufacturing. And then it transfers work to the service sector, which

is sometimes bad for people, that the payment may not be as good

as it had been. And that certainly has occurred.

And some things develop well for them. They do exceptionally

well.

Chairman Bennett. I should, in the spirit of full disclosure,

point out that there are those who dispute the numbers I’ve just

quoted.

Particularly, and understandably, Jerry Jasinowski, President of

the National Association of Manufacturers, says these numbers are

not right. There are other economists that support them.

But I find it an interesting study that should be part of this conversation.

Senator Sarbanes, did you have a second round?

Senator Sarbanes. Mr. Chairman, before Senator Sessions

leaves, I ought to just note that these people who he said lost their

jobs and then went off and did other things, one of the other things

they do is they become part of the long-term unemployed.

So it all depends on the context of your economy.

In January of 2001, we had 660,000 people, long-term unemployed, out of work for 27 weeks or more.

Now we have 2 million. We had 1.7 million a year ago. So that’s

one of the places they go to, regrettably, I might say.

Mr. Chairman, I just wanted to draw out of the Commissioner

a few more figures before we close out here this morning.

How many people are working part-time for economic reasons?

As I understand, we have 8.8 million unemployed. Is that correct,

what you would categorize as unemployed?

Commissioner Utgoff. Yes, 8.8 million people are characterized

as unemployed.

Senator Sarbanes. All right. Now, how about those working

part-time for economic reasons? How many of them are there?

Commissioner Utgoff. 4.8 million.

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Senator Sarbanes. 4.8 million. And do you have any estimate

on how many have dropped out of the labor force, or what’s a reasonable number that might flow back into the labor force?

Commissioner Utgoff. We do not predict how many people

would come back into the labor force.

Senator Sarbanes. Well, what’s the participation rate right

now?

Commissioner Utgoff. It’s 66.1 percent.

Senator Sarbanes. And what was it 2 or 3 years ago?

Commissioner Utgoff. It’s declined a percentage point since the

peak, March of 2001.

Senator Sarbanes. And a percentage point translates into how

many people?

Commissioner Utgoff. Today about 1.5 million.

Senator Sarbanes. 1.5 million. You calculate a different unemployment figure, as I recall, factoring in all of the various groups

that are left out of the standard unemployment figure.

I know that part-time for economic reasons is one of those. Is

there another category, other categories?

Commissioner Utgoff. There’s another category of discouraged

workers.

Senator Sarbanes. How many of those are there?

Commissioner Utgoff. 239,000.

Senator Sarbanes. What’s the unemployment rate when you

take in all categories into account?

Commissioner Utgoff. You mean all the categories that you

talked about?

We have discouraged plus marginally attached workers. Then

you have the unemployed for part-time.

Senator Sarbanes. Right. If you factor all of that in, what do

you get as the unemployment rate?

Commissioner Utgoff. This is not seasonally adjusted, but it

was 9.5 percent.

Senator Sarbanes. 9.5 percent. Has it been running above 10

percent this year, or is that generally where it’s been?

Commissioner Utgoff. In the last 3 months, it’s not been above

10 percent.

Senator Sarbanes. It’s not been above 10 percent.

Commissioner Utgoff. No.

Senator Sarbanes. OK. Thank you very much.

Now, Mr. Chairman, I’d like to put one other question. A number

of years ago, we worked hard, a number of us in the Congress, to

get the BLS new quarters there down at the railroad station.

My question is, has that worked out OK? Are you appropriately

situated in terms of your physical environment?

And second, is the budget you’re getting from the OMB and the

Congress adequate to your challenges? Or do you feel that you’re

really in any significant way constrained, fiscally constrained in

terms of carrying out your responsibilities?

Commissioner Utgoff. First, the Postal Square building is a

beautiful building and we’re very happy to be there.

As you know, the BLS was scattered throughout town before

that. It’s much better to have everybody in the same building and

the building is a very nice building.

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Senator Sarbanes. OK. Good. It’s close to the Congress, too.

Whether that’s a plus or minus, I don’t know.

[Laughter.]

Commissioner Utgoff. We walk up here.

[Laughter.]

Senator Sarbanes. And what about your budget?

Commissioner Utgoff. Our budget has been adequate. We have

not had any significant decreases in our budget.

Senator Sarbanes. Do you have enough resources to do what

you have to do?

Commissioner Utgoff. All of us could do more things with more

resources. But we are funded to do the research and data collection

that we have done in the past.

Senator Sarbanes. All right. There aren’t any upgrades and revisions in indices or other measuring tools used by the BLS that

you think need to be really addressed that would require some sort

of plus-up in your resources in order to get that done?

We’re always confronted with updating the various series that

you use. Where are you on that front?

Commissioner Utgoff. In every one of our surveys and on our

reports, we always see things that we could do to make them better, and we have had some new initiatives funded in recent years.

That’s adequate to keep us doing the work that we have been

doing.

Senator Sarbanes. Thank you, Mr. Chairman.

Chairman Bennett. Thank you very much. We appreciate your

patience as we wrestle with these issues here on the Committee.

The hearing is adjourned.

[Whereupon, at 11:05 a.m., the hearing was adjourned.]

(29)

Submissions for the Record

PREPARED STATEMENT OF SENATOR ROBERT F. BENNETT, CHAIRMAN

Good morning and welcome to today’s employment hearing. Like virtually every

other economic statistic reported in the past month, the employment numbers released today are definitely good news for the American worker. No matter how you

cut it, the economy is adding new jobs at a rapid pace and will likely continue to

do so for the foreseeable future.

The official payroll statistics indicate that the U.S. economy created 126,000 new

jobs in the month of October, the third month in it row that payroll employment

rose. The revised numbers now indicate that 125,000 jobs were added in September.

The unemployment rate declined to six percent.

The household survey reported that employment increased by an astounding

441,000 in September. According to the household survey, our economy has now essentially replaced all of the jobs lost during the 2001 recession and the number of

jobs is now at an all-time high.

I believe that today’s employment numbers, along with the steep drop in new jobless claims and the large increases in productivity and output, indicate quite clearly

that the U.S. economy is returning to a period of strong growth.

For instance, the Bureau of Labor Statistics reported yesterday that productivity

grew at an annual rate of 8.1 percent in the third quarter of 2003. Some of my colleagues tend to gnash their teeth at the high productivity growth of late, lamenting

that firms are learning how to do without workers. However, our experience in the

last 30 years tells us that periods of rapid increases in the productive capacity of

our economy are almost always accompanied by low unemployment. Increasing our

standard of living and employment at the same time requires healthy productivity

growth.

Today’s data remind us again of the ongoing divergence between total employment as measured by the two surveys conducted by the BLS. While the payroll survey reports a decline of roughly 750,000 payroll jobs since the end of the recession

in November 2001, the household survey still reports nearly one-and-a-half million

newly employed workers since then. I encourage the BLS to continue researching

this discrepancy and welcome any additional information you might provide us on

this topic.

It is too easy for the party in power to take the blame when the economy slows,

and for that reason it is all too tempting to try to take all the credit when things

turn around. In reality, government holds little sway over the business cycle, despite what some may think or desire. Our economy floundered in the middle of the

year 2000 in large part due to a hangover from the high-tech boom, likely abetted

by a rise in interest rates. The stagnant economy was prolonged by the 9/11 disaster

and the resultant uncertainties in the Middle East, high energy prices, and the various scandals in the financial markets. That our economy steadily expanded in the

face of so many potentially calamitous events in succession is a testament to the

ability and dedication of the American worker as well as to our economic system.

That is not to say that government cannot spur the economy. The Bush tax cuts

enacted in 2001 undoubtedly softened the blow of the events that befell the economy

and served to make the recession shallower than it otherwise would have been, and

the tax cuts passed this year provided some needed impetus at the right time.

Dr. Utgoff, it is always a pleasure having you visit us, but we especially enjoy

it when you come bearing such good news. Welcome to the Joint Economic Committee, and we look forward to hearing your testimony.

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PREPARED STATEMENT OF REPRESENTATIVE JIM SAXTON,

VICE CHAIRMAN

It is a pleasure to join in welcoming Commissioner Utgoff once again before the

Joint Economic Committee.

Today’s employment report is good news for American workers. Payroll employment increased 126,000 in October, while the September increase was revised upward to 125,000. October marks the third consecutive increase in payroll employment after accounting for the revised increase in August. The household measure

of employment increased by 441,000 in October, while the unemployment rate

slipped one-tenth of a percentage point to 6.0 percent. The improvement in the employment data reported today reflects the progress made in emerging from the economic slowdown of recent years.

The economic weakness that began with the bursting of the stock market and

technology bubbles early in 2000, followed by recession, terrorist attacks, and wars,

now appears to be over. Although the economy has shown great resilience in recent

years, the unusual combination of shocks, and the investment-led nature of the economic slowdown, made the timing of the recent economic acceleration highly uncertain.

Consecutive declines in business investment had undermined economic growth

since the fourth quarter of 2000. However, data from recent quarters show that investment and economic growth is on the rebound. The provision of tax relief in 2003,

including the boosting of write-offs for investment, is widely credited for the recent

strength of the economy. The 7.2 percent growth of GDP in the third quarter of 2003

indicates that this policy of tax relief has worked as intended. Recent increases in

both ISM indexes, durable goods orders, and construction show that the economic

expansion is broadly based.

As has been noted previously, the best prospect for job growth is created by a

strong economic expansion. As the economy continues to grow as predicted by the

Blue Chip Consensus forecast, it is reasonable to expect sizable employment gains

into the future. Several quarters of healthy economic growth through next year, as

the Consensus forecast suggests, should bring sustained and significant growth in

employment and opportunity for American workers.

PREPARED STATEMENT OF REPRESENTATIVE PETE STARK,

RANKING MINORITY MEMBER

Thank you Chairman Bennett for holding this hearing. I would like to welcome

Commissioner Utgoff and thank her for testifying here today.

The Bureau of Labor Statistics’ October employment situation continued to paint

a disappointing labor market picture. The unemployment rate was essentially unchanged at 6.0 percent. And by any meaningful measure, the jobless recovery drags

on. When we need a few hundred thousand jobs a month, only 126,000 payroll jobs

were added in October. Nearly 9 million Americans remain unemployed—with over

2 million out of work for 6 months or more.

This level of job creation, while better than expected, is probably not strong

enough to keep up with the growing labor force, let alone erase the enormous jobs

deficit any time soon. With this rate of job growth, it will still take another 19

months to climb out of the jobs hole we’re in. The Democratic staff of the JEC has

estimated that, because the labor force is growing, somewhem between 135,000 and

170,000 jobs per month need to be added to payrolls just to keep the unemployment

rate from rising—that’s only to maintain the status quo, not reduce unemployment.

Treasury Secretary John Snow recently predicted that about 2 million payroll

jobs, or roughly 200,000 jobs per month, would be created over the next 12 months.

This represents a substantial scaling back of expectations from what the Administration was predicting earlier this year, and it implicitly concedes that President

Bush’s record on job creation is going to be the worst of any President since Herbert

Hoover.

In October, President Bush tied his father’s dubious record as payroll jobs failed

to return to their pre-recession level 31 months after the recession began (Chart 1).

In fact, this is the only administration since Hoover’s with a decline in total payroll

jobs (Chart 2). We are in a deep hole in terms of job creation, and one that is far

worse than in past business cycles (Chart 3). President Bush is presiding over the

most persistent jobs slump since the 1930s, and he will smash—by a wide margin—

the modern (post World War II) record for job creation futility currently held by his

father.

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Indeed, if Secretary Snow’s estimate of 200,000 jobs per month proves to be on

target, the non-farm payroll deficit of 2.4 million jobs will not be erased until October 2004.

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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 we released this morning.

Non-farm payroll employment rose by 126,000 in October, following increases in

August and September that totaled 160,000, after revision. I would note that the

payroll survey estimates for the prior 2 months are always subject to revision as

we receive reports from additional survey respondents. The increase in payroll employment over the last 3 months contrasts with declines in the February-July period

that averaged 85,000 per month. Several service industries added jobs in October.

Manufacturing employment continued to decline, although at slower pace than earlier in the year. The unemployment rate, at 6.0 percent, was essentially unchanged

over the month.

Professional and business services added 43,000 jobs in October, with gains in

many of its component industries. Employment in temporary help services continued to rise and is up by 150,000 since April.

Employment in private educational services grew by 23,000 in October. Job gains

over the last 3 months have more than offset declines that occurred in June and

July. Over the year, employment in private education expanded by 56,000. Health

care and social assistance added 34,000 jobs, with noteworthy gains in doctors, offices and in child day care services.

In the leisure and hospitality sector, employment in food services and drinking

places rose by 23,000. Job growth in food services has picked up in recent months;

since July, employment has increased by 57,000. Within retail trade, food stores

added 13,000 jobs in October. Employment in food stores was boosted by the hiring

of additional workers in anticipation of strikes.

Employment in construction was little changed over the month, but the industry

has added 147,000 jobs since its most recent trough in February. In October, employment in credit intermediation decreased by 10,000, reflecting the decline in

mortgage refinancing activity.

Manufacturing job losses continued in October (-24,000). Declines in the sector

have moderated in recent months, particularly in durable goods manufacturing. In

October, both the factory workweek and overtime were unchanged.

After posting a small increase in September, employment in air transportation fell

in October. Since reaching its most recent peak in March 2001, the industry has

lost more than 20 percent of its jobs.

Average hourly earnings for production or non-supervisory workers, at $15.46,

were essentially unchanged in October. Over the year, average hourly earnings rose

by 2.4 percent.

Looking at some of the measures from our survey of households, the October unemployment rate of 6.0 percent was about the same as in September. The jobless

rates for all the major worker groups showed little change over the month. About

8.8 million persons were unemployed, of whom 2.0 million had been without a job

for 27 weeks or longer. Employment as measured by our household survey rose over

the month.

In summary, non-farm payroll employment rose by 126,000 in October. Since July,

employment is up by 286,000. The unemployment rate, at 6.0 percent in October,

was about unchanged.

My colleagues and I would be glad to answer any questions you might have.

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