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53–864 2010

S. HRG. 111–308 

THE EMPLOYMENT SITUATION: APRIL 2009 

HEARING 

BEFORE THE

JOINT ECONOMIC COMMITTEE 

CONGRESS OF THE UNITED STATES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

MAY 8, 2009 

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] 

HOUSE OF REPRESENTATIVES 

CAROLYN B. MALONEY, New York, Chair 

MAURICE D. HINCHEY, New York 

BARON P. HILL, Indiana 

LORETTA SANCHEZ, California 

ELIJAH E. CUMMINGS, Maryland 

VIC SNYDER, Arkansas 

KEVIN BRADY, Texas 

RON PAUL, Texas 

MICHAEL C. BURGESS, M.D., Texas 

JOHN CAMPBELL, California 

SENATE 

CHARLES E. SCHUMER, New York, Vice 

Chairman 

EDWARD M. KENNEDY, Massachusetts 

JEFF BINGAMAN, New Mexico 

AMY KLOBUCHAR, Minnesota 

ROBERT P. CASEY, JR., Pennsylvania 

JIM WEBB, Virginia 

SAM BROWNBACK, Kansas, Ranking Minority 

JIM DEMINT, South Carolina 

JAMES E. RISCH, Idaho 

ROBERT F. BENNETT, Utah 

NAN GIBSON, Executive Director 

JEFF SCHLAGENHAUF, Minority Staff Director 

CHRISTOPHER FRENZE, House Republican Staff Director 

(III) 

C O N T E N T S 

MEMBERS

Hon. Amy Klobuchar, a U.S. Senator from Minnesota, presiding ....................... 1 

Hon. Kevin Brady, a U.S. Representative from Texas ......................................... 2 

WITNESSES

Dr. Keith Hall, Commissioner, Bureau of Labor Statistics; Mr. Philip L. 

Rones, Deputy Commissioner, Bureau of Labor Statistics; and Dr. Michael 

W. Horrigan, Associate Commissioner for Prices and Living Conditions, 

Bureau of Labor Statistics, U.S. Department of Labor ..................................... 4 

SUBMISSIONS FOR THE RECORD

Prepared statement of Representative Kevin Brady ............................................ 22 

Prepared statement of Dr. Keith Hall, Commissioner, Bureau of Labor Statistics, together with Press Release No. 09–0482 .................................................. 22 

(1) 

THE EMPLOYMENT SITUATION: APRIL 2009 

FRIDAY, MAY 8, 2009 

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

The committee met, pursuant to call, at 9:35 a.m. in Room 104 

of the Dirksen Senate Office Building, The Honorable Senator Amy 

Klobuchar presiding. 

Representatives present: Brady. 

Senators present: Casey. 

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

Elisabeth Jacobs, Annabelle Tamerjan, Andrew Wilson, Chris 

Frenze, Bob Keleher, Robert O’Quinn, Lydia Mashburn, and Jeff 

Wrase. 

OPENING STATEMENT OF THE HONORABLE AMY KLOBUCHAR, 

A U.S. SENATOR FROM MINNESOTA 

Senator Klobuchar. The Joint Economic Committee will come 

to order. Welcome to our witnesses, Mr. Horrigan, Commissioner 

Hall, Mr. Rones, and Congressman Brady is here with me today. 

I want to welcome all of you. Thank you for being here for this important hearing. I also want to thank Chair Maloney for the opportunity to chair today’s April hearing on the employment situation 

in our country. 

Ironically, the last time I presented over a hearing of this exact 

topic was almost exactly one year ago. Commissioner Hall, clearly 

we’ve seen some changes since then. I was looking back over the 

questions that you and I had going back and forth when we were 

talking about whether certain statistics were indicators of things to 

come, and as it turned out, they were. 

The Joint Economic Committee has held a series of hearings, as 

you know, on the economic outlook recently. We heard from both 

the chair of the President’s Council of Economic Advisers, Christina 

Romer, and Federal Reserve Chairman Ben Bernanke, that there 

are reasons for some optimism regarding the state of our economy. 

We noted that there are green shoots in the form of an increase 

in consumer demand, and indications that the housing market may 

be bottoming out. 

On the other hand, as you all know, there’s some extreme challenges as we see from the announcement of today’s unemployment 

figures. As you know, the Bureau of Economic Analysis reported recently that consumer spending did rise 2.2 percent on an 

annualized basis in the last quarter, the most in two years. Dr. 

Romer recently testified before this committee that because only a 

2 

small part of the spending and tax relief called for in the Recovery 

Act had taken place, and because much of the economy’s response 

to stimulus occurs with a lag, most of the benefits are yet to come. 

But then we have this employment situation that we’re here to 

talk about today. Private employers have slashed over 600,000 jobs. 

Total job losses have totaled over 5.7 million since the start of the 

last recession, 5.7 million. When I think about these statistics, I 

also try to remind myself that these are not just numbers. These 

are real people that we know, that we see in the grocery stores, 

that we see when we all get home in Congress to our home states. 

I just got this letter in fact about a week ago from someone in 

my state, from one of the smaller towns. She writes ‘‘We’re almost 

at our wits end for our daughter and her husband. He is an unemployed plumber who will be out of unemployment help in June. 

This economy is ruining lives. Our daughter works part-time as an 

LPN in a clinic, and can’t afford to finish. There are three small 

children. My daughter has no health insurance. Both Angie and 

her husband want to work, but there are no jobs. They are in danger of losing their homes. We have been helping financially as 

much as we can, but there’s a limit to what we can do. What do 

we do for our kids?’’ 

The unemployment rate now stands at 8.9, a jump of four percentage points since the downturn began 16 months ago, and the 

broadest measure of unemployment or underemployment that the 

Bureau of Labor Statistics publishes now is at 15.8 percent. These 

are real families. These are the families that we are supposed to 

help, and that we are trying very hard to help with some of the 

new policies of the Administration and this Congress. I think today’s unemployment numbers underscores a need for a continuing 

focus, a continuing bold direction with this economy, that we can’t 

back down, that we can’t just let things take care of themselves. 

So I’m looking forward to diving into these numbers again, Commissioner Hall. I know we had some good exchanges last time. To 

figure out what all of this means, and what it means for our policies going forward. As I said, we see some glimmers of hope. I 

think that’s very good, and the increasing consumer confidence. We 

also know that this is a very difficult time for many Americans. 

Thank you very much. I will turn it over to Congressman Brady. 

OPENING STATEMENT OF THE HONORABLE KEVIN BRADY, A 

U.S. REPRESENTATIVE FROM TEXAS 

Representative Brady. Thank you Chairwoman. Thank you. 

Welcome Commissioner Hall before the Committee, as well as the 

other witnesses. The labor market data reported today reflects continued economic weakness. Overall, employment declined by 

539,000, with losses spread across many industries. Private sector 

payroll employment declined by 611,000, while government employment increased by 72,000. 

The unemployment rate rose to 8.9 percent. These data are not 

surprising, given recent economic trends. Real GDP declined by 6.1 

percent in the first quarter of this year, with business investment 

plunging by 38 percent. There are some preliminary signs and 

some other data that the rapid rate of economic decline may be 

3 

slowing. But more evidence is needed before reaching any firm conclusions. 

The condition of the housing sector and the contraction of the 

auto industry are among many factors that make the economic outlook especially murky. Despite recent economic developments, including the rising unemployment rate, unfortunately the Administration has failed to update its unrealistic economic assumptions in 

its budget submission. For example, this week the Administration 

predicts an 8.1 percent unemployment rate for this year, even 

though it is clear the rate will unfortunately be much, much higher. 

The Administration projects that the economy will decline by 

only 1.2 percent in 2009, compared to the blue chip consensus forecast decline of almost double that, 2.6 percent. The Economist magazine and other experts call these economic assumptions deeply 

flawed, and the reason it’s important to point this out is these 

faulty and rosy scenarios are dangerous, because they produce an 

understatement of the real cost of the Administration’s expensive 

new spending proposals. 

The result will be huge budget deficits and a doubling of the national debt as a share of GDP by 2017, according to the Congressional Budget Office. In the short term, the steps the Fed has 

taken, including the huge expansion of its balance sheet, have 

helped to stabilize financial markets and will eventually provide a 

boost to the economy. However, the ongoing need for households 

and banks to reduce their outstanding debt does suggest that when 

the recovery comes, it will probably be weak. 

Under Administration policy, the excessive levels of deficits, debt, 

taxes and inflation will undermine long-term economic growth. Unfortunately, increasing the burden of government on an already 

weak economy is only going to further undermine economic and job 

growth in the years ahead. 

The Administration’s proposed reductions of the incentives for 

work, saving and investment is the not the right way to boost the 

productivity, innovation and competitiveness of the U.S. economy 

in the years ahead. With that, Madam Chairman, I will yield back. 

[The prepared statement of Representative Brady appears in the 

Submissions for the Record on page 22.] 

Senator Klobuchar. Thank you very much, Representative 

Brady. I’d like now to introduce Commissioner Hall, the Commissioner of the Bureau of Labor Statistics (BLS) for the U.S. Department of Labor. The BLS is an independent national statistical 

agency. The Bureau of Labor Statistics processes, analyzes and disseminates essential statistical data for the American public, the 

U.S. Congress and federal agencies, state and local governments, 

businesses and labor. 

Dr. Hall also served as the Chief Economist for the White House 

Council of Economic Advisers for two years under President George 

W. Bush. Prior to that, he was Chief Economist for the U.S. Department of Commerce. Dr. Hall has spent ten years at the U.S. 

International Trade Commission. He received his B.A. from the 

University of Virginia and his M.S. and Ph.D. degrees in Economics from Purdue University. Commissioner Hall. 

4 

STATEMENT OF DR. KEITH HALL, COMMISSIONER, BUREAU OF 

LABOR STATISTICS, U.S. DEPARTMENT OF LABOR, WASHINGTON, DC; ACCOMPANIED BY: MR. PHILIP L. RONES, DEPUTY COMMISSIONER, BUREAU OF LABOR STATISTICS; AND 

DR. MICHAEL W. HORRIGAN, ASSOCIATE COMMISSIONER 

FOR PRICES AND LIVING CONDITIONS 

Commissioner Hall. Thank you. Madam Chairman, members of 

the Committee, thank you for the opportunity to discuss the unemployment data we released this morning. Non-farm payroll employment declined by 539,000 in April, and the unemployment rate rose 

from 8.5 to 8.9 percent. Since the start of the recession in December 2007, job losses have totaled 5.7 million, and the unemployment rate has increased by four percentage points. 

In April, widespread job losses continued throughout the private 

sector. Private employment fell by 611,000, compared to an average 

monthly decline of 700,000 in the prior four months. Over the 

month, federal government employment rose by 66,000, mainly due 

to hiring of 63,000 temporary workers, in preparation for the Census 2010. 

Manufacturing employment fell by 149,000 over the month, and 

job losses continue to be widespread. Since the recession began, 

this industry has shed 1.6 million jobs, representing more than a 

quarter of the total non-farm job decline during the period. Construction employment decreased by 110,000 in April. Job losses 

have averaged 120,000 per month in the last six months, compared 

with 46,000 per month from December 2007 to October 2008. 

Also in the goods-producing sector, mining employment fell by 

10,000 in April. From the start of the recession through September 

2008, this industry has continued to add jobs, mainly those related 

to oil and gas production. Since September, mining employment 

has declined by 44,000. 

In April, employment in professional and business services 

dropped by 122,000. Temporary help services accounted for about 

half of the job losses. Since the start of the recession, temporary 

help employment has fallen by 825,000, nearly a third of its total. 

The health care industry added 17,000 jobs over the month, in line 

with its average monthly gain since January. In 2008, the average 

gain was 30,000 jobs per month. 

In April, average hourly earnings for production and non-supervisory workers in the private sector were essentially unchanged. 

Over the past 12 months, average hourly earnings have risen by 

3.2 percent. From March 2008 to March 2009, the Consumer Price 

Index for Urban Wage Earners and Clerical Workers declined by 

one percentage point. Turning now to measures of the Survey of 

Households, the unemployment rate rose to 8.9 percent in April, an 

increase of 4/10ths of a percentage point. The number of unemployed persons increased by 563,000 to 13.7 million. Since the start 

of the recession in December 2007, the number of unemployed has 

risen by 6.2 million, pushing the jobless rate up by four percentage 

points. 

Over the month, the number of long-term unemployed continued 

to grow, rising by 498,000 to 3.7 million. The long term jobless represented 27.2 percent of all unemployed persons in April, the highest proportion on record. The employment to population ratio held 

5 

at 59.9 percent in April. When the recession began in December 

2007, it was at 62.7 percent. Among the employed, the number of 

persons working part-time who would prefer full-time work was little changed over the month, at 8.9 million. 

In summary, non-farm payroll employment fell by 539,000 in 

April. Private sector employment dropped by 611,000. Job losses 

continued to be widespread across most major industries. Since the 

recession began, payroll employment has fallen by 5.7 million. Over 

the month, the unemployment rate rose by 4/10ths of a percentage 

point to 8.9 percent. My colleagues and I would be glad to answer 

your questions. 

[The prepared statement of Commissioner Hall appears in the 

Submissions for the Record on page 22.] 

Senator Klobuchar. Thank you very much, Dr. Hall. Just to 

summarize, there were 611,000 jobs lost in the private sector last 

month, is that right? 

Commissioner Hall. Yes. 

Senator Klobuchar. How many jobs have been lost since December 2007? 

Commissioner Hall. Nearly six million private sector jobs. 

Senator Klobuchar. What would you say, just to summarize, 

have been the biggest areas of loss for the types of jobs across the 

country? 

Commissioner Hall. I would say the job loss has been very 

widespread. Almost every sector has had job loss with the exception of health care and education, and even those industries have 

had a slowing of job growth. The sectors with the biggest job loss 

have probably been manufacturing and construction. 

Senator Klobuchar. How about for parts of the country? I remember when we talked about this a year ago, which was probably 

a precursor of things to come, we were trying to figure out if it’s 

just a Michigan or just a regional problem. I remember at that 

point you gave me the states that were having problems, and in 

fact it wasn’t just regional. The highest unemployment states were 

spread out across the country. What’s the status of that now? 

Commissioner Hall. That’s still true. We’ve seen literally every 

state has had significant rise in the unemployment rate over the 

past year. That continues to be the case. The job loss is widespread. Certain states have had bigger increases in the unemployment rate, job loss. For example, Oregon, South Carolina, North 

Carolina and Michigan have been the largest. 

Senator Klobuchar. I can understand Michigan, with the auto 

industry, but what do you point to when you look at Oregon and 

South Carolina and North Carolina? 

Commissioner Hall. It’s hard to say, because the exact mix of 

industries vary by state. I’d probably have to spend a little time 

looking at those, to give a good answer to you. We can do that for 

you, but I don’t have an obvious answer. 

Senator Klobuchar. Sometimes I wonder if you have areas 

which have seen a big increase recently, and then suddenly they’ve 

gone down. Just as I know in Florida and northern Minnesota, the 

mines have not been doing that well for decades, and suddenly in 

the last few years, because of the international economy, our iron 

ore mines are on the increase and people were going to work. 

6 

Then suddenly with this economic crash worldwide, you saw a 

big decline. Maybe part of this, it’s not just about mining. What 

you pointed out is an issue nationwide, but areas where they are 

benefiting because of an increase in either manufacturing or those 

types of jobs. 

Commissioner Hall. I suspect that there are a number of stories like that. There do seem to be states that even prior to the recession were running higher unemployment rates, and those states 

have had a bigger increase in their unemployment for some reason. 

Senator Klobuchar. Maybe part of that, that this was bigger 

than just a blip on the radar screen, that this was a longer-term 

recession? 

Commissioner Hall. Yes. 

Senator Klobuchar. The recession, as we’ve talked about, 

seems to be different from previous recessions, given the severe 

housing slump, the credit crunch and the global nature of the economic downturn. Based on what you’re seeing here, how long do 

you think this is going to last? I know when I ask this question 

you never answer it, but I thought I’d try. How long do you think 

this is going to last? We’ll have another round of questions this 

morning, but do you see any glimmers of hope here? 

Commissioner Hall. You’re quite correct. I don’t want to speculate on how long this will last. This was another bad report. There 

wasn’t anything to cherish in the labor market again this month. 

I think the story continues to be pretty close to the same story. The 

job loss is large and it’s widespread, and it’s sucking in every industry sector and every demographic group. If you’re looking for a 

glimmer of hope, I suppose the fact that the private sector job loss 

is about 611,000 and it’s been averaging around 700,000. That 

looks like it might be a moderation. But it’s only one month and 

it’s not a large change. 

Senator Klobuchar. We’ve seen an increase in consumer confidence, which is pretty marked. We’ve seen consumer spending 

rise in the last quarter, and also just a little thumb story. Target, 

which is based in Minnesota, they reported they did better in the 

last four weeks than they did in the four weeks during this exact 

same time period during the last year. So I’ve heard some of these 

stories, but they seem very different from what we were seeing in 

December and January. 

Commissioner Hall. That’s probably the most encouraging 

news that I’ve seen. Consumer confidence obviously leads to consumer spending. Consumer spending is 70 percent of GDP. Frankly, if consumer spending picks up everything else will pick up to 

match it. So that is the best sort of news we can get, if it continues 

to pick up in consumer spending. 

Senator Klobuchar. Thank you. I’ll turn it over to Congressman Brady. 

Representative Brady. Thank you, Senator Klobuchar. I think 

we’re all hoping to see the American economy turn up sooner rather than later. We’re looking for indications of that. On the surface, 

the 539,000 number looks sobering. Tell us a little more about the 

private sector payroll employment decline of 611,000. It’s down 

slightly from last month, but we haven’t hit the bottom of the well 

yet. Can you put that in perspective? 

7 

Commissioner Hall. I suppose I’d say that a job loss of 611,000 

is a large job loss. It only looks slightly encouraging because the 

job losses have been so high in the last three months. It’s still a 

very large loss. It’s still a very large spread. So the pattern of job 

loss really hasn’t changed. 

Representative Brady. That’s what I sense too. Mr. Rones, 

government jobs are growing by some 70 thousand. Is that attributable to Census hiring? 

Commissioner Hall. The increase in the temporary census hiring was 63,000. So that really accounts for the vast majority of the 

increase in government. 

Representative Brady. Just a couple of months in January, top 

Administration officials claimed that the stimulus plan would keep 

the unemployment rate at or below eight percent for this year. 

Obviously, we’re at a much higher level already, 8.9 percent. Any 

projection on what that will be for the entire year? Deputy Commissioner Rones. 

Mr. Rones. As you know, we don’t do projections. Basically, we 

know now that we’re at 8.9 percent already in April. So that certainly puts that number in perspective. 

Representative Brady. We’re fortunate on this Committee. We 

do have a lot of experts come before us, some of the best and 

brightest. The Chairwoman of the Economic Advisers, Chair 

Romer, who is very sharp, before the Committee here recently cited 

a 150,000 job creation figure in her testimony before this Committee, related to the stimulus. Do your numbers substantiate that 

claim, Commissioner Hall? 

Commissioner Hall. There’s no way for us to connect job 

change with the stimulus. We just don’t do that sort of work. 

Representative Brady. What indicators would you be looking 

for on that? Honestly, we want a few jobs created in this country. 

We want to know if we’re touching the bottom of the well. We can’t 

do it? The numbers don’t justify it at this point. 

Commissioner Hall. Right, yes. Particularly in a period of such 

significant job loss, it would be very hard to sort or parse out as 

to what would the job loss be if it weren’t for something else going 

on. I will say for us to see improvement, certainly improvement in 

the unemployment rate, we’re going to have to see the job loss 

moderate, and we’re going to have to see the job loss eventually 

stop, and we’re going to have to see job growth before we see the 

unemployment rate start to level off and eventually decline. 

Representative Brady. Do you think consumer confidence is an 

important measure? The uptick in consumer spending is good in 

the first quarter. Two questions. It appears like the biggest uptick, 

Deputy Commissioner Rones, that the biggest uptick was in January and February. Some attribute that to IRS tax refund checks 

getting back into households and people doing the stimulus tax incentives that equate to $1.10 per day, excuse me. 

In April, is there any evidence that in this data, that that is having an impact on consumer spending? First, what do you attribute 

to it in the first quarter? Second, do you see any uptick, any change 

because of the Obama tax cuts? 

Mr. Rones. As Commissioner Hall said, it’s difficult for us to 

take that one single factor and somehow disentangle that from all 

8 

the other things going on in the economy. Right now, we’re still 

seeing rapid job loss despite any efforts. We still have 611,000 private sector job loss. Again, would it have been worse but for the 

stimulus? We can’t really know that. 

Representative Brady. And the uptick in consumer spending 

in January and February? 

Mr. Rones. Again, it’s one of the few positive signs that we 

have. Any money that goes into consumer’s pockets has to be helpful. So I’m sure that that’s part of what’s going on with consumer 

confidence. 

Representative Brady. My question is since the stimulus credit of $1.10 a day didn’t start until April, what’s the reason for January and February? 

Mr. Rones. Again, it’s hard for us to be sure. But surveys had 

seemed to indicate that there is some increase in consumer confidence. I’m not exactly sure why that is. Certainly, in our employment centers there hasn’t been a lot of positive news over that period. 

Representative Brady. Thank you, and before the Chairwoman 

attributes it to the election of a new president, let me just say I 

respectfully disagree. I yield back, Madam Chair. 

Senator Klobuchar. Senator Casey. 

Senator Casey. Madam Chair, thank you very much. I know I 

got here late, and I want to make sure I ask unanimous consent 

to submit a statement for the record. 

Senator Klobuchar. Without objection, it will be included in 

the record. 

[The prepared statement of the Honorable Robert P. Casey was 

not available at the time of publication.] 

Senator Casey. I wanted to first of all address Commissioner 

Hall with regard to the question of minority unemployment. I want 

to make sure I got this right. The numbers for African-American 

unemployment this month, the number is 15 percent, is that right? 

Commissioner Hall. Yes. 

Senator Casey. The number for Hispanics, I had 11.3. Is that 

right? 

Commissioner Hall. Yes, that is. 

Senator Casey. But I guess the month to month number for African-Americans went from 13.3 to 15, is that right? 

Commissioner Hall. That’s correct. 

Senator Casey. What do you attribute that to? The Hispanic 

numbers stayed consistent month to month, is that correct? 

Commissioner Hall. Yes. It should not amount to too much. 

The numbers should not move you too much, because there’s some 

volatility in these numbers to begin with. I can say that the increase in black unemployment was statistically significant, so we 

would characterize it as an increase. But as far as an explanation, 

I just don’t know for a one month change. 

Senator Casey. I know it’s difficult, and month to month numbers can be—I guess sometimes they can be significant. You can attribute it to something at times and maybe not in other circumstances. But the fact remains whether we’re talking about this 

month or the previous month, that African-American unemployment is almost double what it is for whites; is that correct? 

9 

Commissioner Hall. That’s correct. 

Senator Casey. That alone is disturbing, because we keep hearing these commentators talking about the fact that there may be 

parts of the economy that are improving, as you said, glimmers of 

hope, and other places, where there’s some degree of positive news. 

We also hear this ‘‘lagging indicator’’ phrase. I’ll tell you, that’s a 

great candy-coated way of describing a terrible economy, because of 

course if you lost your job or your house or your hopes and your 

dreams, a lagging indicator doesn’t really do it for you. It’s not really an accurate assessment of your life as you’re going through that. 

I do want to ask you also about what you’re seeing, kind of state 

by state. Fortunately for Pennsylvania, in a very relative sense the 

numbers are extraordinarily high. But we’ve gone from basically 

from February to March, 7.0, 7.5, whereas the nation in that time 

period was going above eight, and I guess in February or January. 

But in March to April, going from 8.5 to 8.9. Is that where we are 

now? 

Commissioner Hall. Yes. 

Senator Casey. In Pennsylvania, we’ve been averaging about 

40,000 jobs lost month to month. When you look at some of the 

states that are highest, in terms of the unemployment rate by percentage, what are the three highest and what’s driving most of 

that? Is it housing or is it a combination of factors? I know several 

states are in double figures. I just don’t know the listing of them. 

Commissioner Hall. We have the data, not on my fingertips 

but—— 

Mr. Rones. California is about 12. 

Commissioner Hall [continuing]. I think they’re in double digits. 

Senator Casey. About 11 to 12. 

Mr. Rones. 11.2 percent. 

Senator Casey. That’s California. Do you know the next two? 

I’m just trying to get a sense of—— 

Commissioner Hall. Michigan has an unemployment rate of 

12.6; Oregon has an unemployment rate of 12.1; Indiana has an 

unemployment rate of 10; Nevada, 10.4; North Carolina, 10.8; 

South Carolina, 11.4. There are several states that are now in double digits. 

Senator Casey [continuing]. There’s no thread you necessarily 

can identify. I would say in Michigan, the auto industry contributes 

to that. So there’s no real thread that’s really state or region-specific would you say? 

Commissioner Hall. Yes, I would say that. All the states have 

had a rise in the unemployment rate. It’s been very broad across 

demographic groups, across industries, across states. The other 

states that started with higher unemployment rates tend to have 

a bigger increase for whatever reason. If you would look at regions, 

I suppose the regions that have been hardest-hit have been the 

West and the Midwest, but all the regions have been hit. 

Senator Casey. I know I’m over time. Just real quickly, Chairman Bernanke was here just a couple of days ago, and I asked him 

about unemployment data and a lot of similar questions that we’re 

examining today. But he commented that the labor market is dynamic, and that even as we shed jobs, people are gaining jobs, and 

10 

the overall picture is dynamic. That’s a paraphrase. That’s not an 

exact quotation from Chairman Bernanke. 

But that idea that there is a dynamic quality to this, and there 

may be areas where there’s actual significant growth, where is the 

job growth, if there is any? Is there a sector that’s growing, or are 

we just kidding ourselves to say that there’s a positive dynamism 

to it? 

Commissioner Hall. I would guess that the dynamism he’s referring to, which I would characterize as job churn, people are losing jobs in net, but there are an amount of people who are switching jobs, people who are switching jobs and gaining jobs. But in 

terms of net gains on a monthly basis, there’s very few industries 

that have job growth. Government and education and health care 

have had some, but to be honest, even education and health care 

have had a real decline in their job growth in the last few months. 

They’re still growing, but it’s been moderating. 

Senator Casey. Thank you very much. 

Senator Klobuchar. Thank you very much. I keep wanting to 

bring up some real examples. I think it’s just illustrative of some 

of the issues, and this is the story of two people in Minnesota, Matt 

and Eva Johnson, who have got college degrees. They thought that 

was the smart thing to do, and now they’re $69,000 in debt from 

their college education. They pay about $800 a month in student loans, and they’re having difficulty getting work. They got a house a year ago, before this 

really hit. They bought a modest two-bedroom, one-bathroom house 

in Blaine, Minnesota, which is an exurban area for $172,000. That 

house has actually maintained its value, but they can’t afford the 

mortgage payment. So the woman’s 22-year-old brother moved into 

their basement. He pays $400 a month for rent, utilities and groceries. If they didn’t have that, they wouldn’t be able to make it, 

their mortgage, and they talk about how they had money a few 

years ago. They talk about how they’ve decided not to have a child 

right now. They’re going to wait four or five years. They want to, 

but they don’t think they can afford it. 

They have—they push off buying groceries. They eat a lot of 

chicken noodle soup and potatoes, and the husband goes on Craig’s 

List daily to try to pick up side jobs, which are getting harder to 

come by. The wife coaches soccer seven months of the year, which 

brings in about $1,000. Those are real stories, and I guess my question there is we’ve always been told to pursue this American 

dream, and a college education is a huge piece of this. 

I believe that, but what are the differences for the unemployment 

rates for people with college degrees and people without college degrees? 

Commissioner Hall. They vary significantly by education. This 

recession has been interesting, in the sense that it’s affected everybody. It’s affected people at all education ranges. Unemployment 

rates have gone up for people with college degrees and with people 

with less than a high school education. If they didn’t start equal 

and the effect hasn’t been equal, the unemployment rate for people 

without a high school degree is 14.8 percent. For people with a college degree, it’s 4.4 percent. So a huge difference. 

Senator Klobuchar. Could you go over that again for me? 

11 

Commissioner Hall. For people without a high school degree, 

the unemployment rate is 14.8 percent. With a high school degree, 

it goes to 9.3 percent, and then with some college, it goes down to 

7.4 percent. Then with a Bachelor’s degree, a college degree, it’s 4.4 

percent. All these numbers have gone up, but they’re nowhere near 

equal. 

Senator Klobuchar. You can see why the President is devoted 

to trying to make sure that people get some college. Not everyone 

has to be the same, but at least a year of post high school education, and one of the issues is the expense of college. As we can 

see, if we’re going to compete in this world economy, it seems like 

the more we can do to try to get some post high school degree and 

at least finish high school, it makes a major difference in employment. Is that a correct assessment? 

Commissioner Hall. Absolutely. People with higher education 

have higher labor force participation rates. You get higher wages; 

they have lower unemployment rates. 

Senator Klobuchar. Another follow-up from the story that I 

just gave you of the Johnsons in Blaine, Minnesota. It will be something we talked about a year ago, which is what you call the marginally unemployed, people who would like to work longer hours 

but then their hours are reduced. That is not included. Those people aren’t included in the 8.9 percent unemployment rate that we 

just announced today; is that correct? 

Commissioner Hall. That’s correct. 

Senator Klobuchar. When you include them, where do we go 

and what are their numbers looking like? 

Commissioner Hall. When you include marginally attached. 

Senator Klobuchar. They’re not necessarily like moms, who 

want to reduce their hours because they have kids, and they want 

to reduce it. You have people that are pushed to reduced hours 

when they don’t want to reduce them. 

Commissioner Hall. The marginally attached are people who 

want to work but for whatever reason they haven’t been looking 

lately. They include discouraged workers. 

Senator Klobuchar. Discouraged workers? 

Commissioner Hall. Part-time for economic reasons, is what 

you’re talking about. People who want to work full-time but they 

can only find part-time work. If you include those folks as well, you 

get a percentage of 15.8 percent. 

Senator Klobuchar. Where is that compared to where we were 

a year ago or two years ago? 

Commissioner Hall. That’s up about 6.6 percentage points over 

the last 12 months. 

Senator Klobuchar. So these are people that are discouraged 

workers, that can’t quite get the money they need or the hours they 

need? It’s exactly I think this kind of situation. Maybe they have 

a job, but it’s getting harder and harder for them to pay for the 

mortgage and things like that. 

Commissioner Hall. Yes. 

Senator Klobuchar. And that trend is similar to the regular 

unemployment rate? 

12 

Commissioner Hall. Yes. All are issues of labor force underemployment as well as unemployment, and they have all gone up 

in similar fashion. They’re all showing a distressed labor market. 

Senator Klobuchar. And again, these are remarkable figures in 

the unemployment rate, depending on people who don’t finish high 

school are at 14.8 percent; with high school, 9.3 percent; with some 

college, 7.4 percent; college degree, 4.4 percent. Is that similar to 

what we saw in some of these last recessions that didn’t last this 

long? 

Commissioner Hall. These are all higher, and the recessions 

that lasted a short time period didn’t have such a large increase 

in the unemployment rate. All of these numbers are higher than 

either of the last two recessions. 

Senator Klobuchar. How about the variation between the categories? You know what I’m trying to get at here. In these last recessions, did you see as much of an increase of say people without 

high school degrees? 

Commissioner Hall. I don’t think a precise comparison, but I 

think that is pretty similar. Generally, for example, people with at 

least a high school degree, their unemployment rate starts higher. 

It goes up more during a recession. That’s been true in this recession. 

Senator Klobuchar. That’s historically true if we’re going to 

look at long-term situations. That should make a difference. Congressman Brady. 

Representative Brady. Those numbers, as to the value of college education and stronger education, the housing financial sector, 

Commissioner, has been especially weak in recent years. Can you 

describe what’s happening in those sectors? 

Commissioner Hall. Sure. Construction employment. We lost 

about 1.4 million jobs in construction. Housing-related industries 

include some other things, for a total of two million jobs. 

Representative Brady. In the last month? 

Commissioner Hall. In the last month, construction lost 

110,000. Job loss continues to be in triple digits there. 

Representative Brady. It’s been averaging about 120,000 in 

losses in recent months. So it’s a little uptick. 

Commissioner Hall. It’s around the same. 

Representative Brady. How about housing and financial? 

Commissioner Hall. Credit union intermediation has now lost 

about 14,000. That’s roughly in line, I think, with the last few 

months. 

Representative Brady. Is it the second week of each month 

you do the surveys? 

Commissioner Hall. Yes. 

Representative Brady. Any seasonal adjustments related to 

that? People here, I take it, have to pay their taxes on April 15th. 

Were there any seasonal adjustments that you know about? 

Commissioner Hall. Our seasonals, I’m not sure what the 

seasonals were like this month. But we always take the seasonality 

into account when we do these numbers. 

Representative Brady. Nothing significant? 

Commissioner Hall. Nothing to mention. We didn’t have any 

difficulties with the seasonality. 

13 

Representative Brady. Do you measure the real hourly compensation figures, what payroll, what compensation is? 

Commissioner Hall. We measure wage, average hourly earnings. 

Representative Brady. What is going on there? 

Commissioner Hall. In nominal terms, the average hourly 

earnings have been growing maybe 3.2 percent, I believe, over the 

last 12 months. They had been going a little bit faster. They’ve gotten up to almost four percent prior to recession. So wages are growing, but not as fast as before. Once you define them in real terms, 

we actually have growth in real average hourly earnings, plus we 

have declining energy prices. 

Representative Brady. I don’t see pressure on Consumer Price 

Index, that number at this point. Do you? 

Commissioner Hall. No. Most of the unusual action is still in 

energy. In particular, energy prices have still declined. 

Representative Brady. That takes some of the pressure off inflation figures, doesn’t it? 

Commissioner Hall. Yes. 

Representative Brady. Business families, you get a little further. I understand. Great. Thank you, Madam Chairman very 

much. I appreciate it. 

Senator Klobuchar. Thank you very much Congressman 

Brady. One area that we haven’t focused on is the veterans unemployment. I always like to bring this up, because I don’t think people think about this as much as they should, and these are people 

who have served our country and that have come back. Maybe even 

before this recession, maybe they’re serving for two or three years 

and then they came back. Their percentage of the total workforce, 

all that have been serving after September 2001 is what I’m looking at. 

So soldiers who served recently and the percentage of young 

male veterans serving after 2001, what’s the unemployment rate? 

So what we’re seeing now is from 13.9 percent of young male veterans serving after September 2001, are now unemployed, which is 

higher than the national unemployment rate of 8.9 percent. Are 

those numbers right? What do you have for those? 

Commissioner Hall. I have about 10.3 percent as the unemployment rate for Gulf War era veterans since 2001. 

Senator Klobuchar. It is higher, and I think the number I may 

have had was male veterans. So it’s 10.3 percent. As we look at 

this, you would think these people who have served our country, 

most like I know in Minnesota we don’t have many active duty, but 

we have a huge number of National Guard and Reserve that 

served, that have left their jobs. They are called up as citizen soldiers. 

We have the longest-serving unit, the Red Bulls in Iraq, the Minnesota National Guard. So the thought that they’re coming back 

and the job isn’t there anymore makes them so disadvantaged. 

Some people can hold onto their jobs when they were in the work 

force and they were gone. So I’m trying to figure out why we would 

see these higher numbers with these returning veterans? What do 

you think the reason is? 

14 

Commissioner Hall. I can’t say. I have to look a little more at 

the data and see if I see a pattern. But it is true that Gulf era veterans started at a slightly higher unemployment rate, and it’s increased by more during this recession. For example, it’s gone from 

5.6 percent to 10.3 percent over the last 12 months. I don’t know 

a good explanation for it. 

Senator Klobuchar. If you could look into that. I’m just curious, because it’s very depressing to me. These are people that 

served our country and they have come back, and their unemployment is even higher than the national average. I think it’s very 

troublesome. I wanted to shift a little bit to your past job, when 

you were Chief Economist for the White House Council of Economic 

Advisers. 

If a few of your colleagues there could put your professor hats 

back on for a second, and you had to give a lecture about jobs and 

this recession, how would you explain this moment in our economic 

history? If you look at it more broadly, what factors led us to these 

unemployment numbers and having identified the solutions that 

you would suggest from an economic standpoint, based on the historical data, what caused this and what do you see to help us get 

out of it, with your overall experience? Commissioner Hall. 

Commissioner Hall. I would say that for the first part of this 

recession, we had job loss, but it wasn’t large job loss. 

Senator Klobuchar. When you’re talking about the first part, 

what time period are you talking about? 

Commissioner Hall. Say from December 2007 to something like 

September 2008. In fact, I would probably say that was a mild recession. Maybe it may not have been called a recession if things 

had improved. My feeling is that it was probably related to the 

housing market, to people losing value in their homes, and that affecting consumer spending. We didn’t have really, really strong job 

loss like we’re seeing now until the credit markets really locked up 

in September. 

So now we have this period of downturn that affected the housing market directly, and then the financial markets locked up. We 

have all three of these things really impacting the economy. We’ve 

had a severe recession now for the last six months, I think as a 

result. As far as what would fix it, that’s out of my current job. I 

will say it’s hard to see that unless the labor market’s going to improve, unless some of these three things, the housing market, the 

credit markets and the global economy; if some of those, at least 

one or more of those things don’t improve. 

Senator Klobuchar. I was actually just talking to Senator 

McCain about Asia, China, Japan and Vietnam. They’re seeing 

very similar things, especially Japan, with somewhat similar policy 

focus with the recovery plans, and trying to make the market move 

again in that way, and hopefully some worldwide efforts, to stem 

some of the abuses that went on in the financial markets, which 

we know will take a while to turn that around. 

Yesterday, we learned that the number of workers applying for 

benefits dropped to 601,000 last week, which was slightly better 

than what we thought it was going to be, which we thought it was 

635,000. However, we also learned that the total number of people 

15 

receiving unemployment benefits climbed to 6.35 million, which is 

a record for the 14th straight week. 

Looking behind these numbers, what does this tell you about our 

employment situation and how long term this is for these people? 

Commissioner Hall. Let me mention that the new initial claims 

for unemployment insurance, it’s volatile. You can’t read too much 

into one data point. But it does seem to have some ability to predict the labor market. The fact that the initial claims went down 

is potentially a good sign. But this doesn’t mean that we’re talking 

about today; we’re talking about two weeks before that. So if you’re 

looking for improvements in the labor market, we won’t see that 

until next month. 

But the claims are at a level that’s an all-time high. That’s basically consistent with the large number of long-term unemployed 

that we have. I think the number I quoted in the statement about 

the percentage unemployed and the long-term unemployed is at a 

record right now. 

Senator Klobuchar. Congressman Brady. 

Representative Brady. Thanks, Madam Chair. I think most 

people recognize now, a growing number in America, that it’s not 

simply enough to buy American. You have to sell American products and services throughout the world, especially with 95 percent 

of the world’s customers living outside the United States. Exports 

until this year, until the global financial collapse, have been a huge 

part of our economy. 

Our ability to sell our products around the world has been a life 

line to our economy, until demand started to shrink. Looking at the 

numbers for a minute from an economic standpoint, how critical is 

it that we do what we can to restore the demand for the sales of 

our American products around the world? 

Commissioner Hall. It is potentially important. I think exports 

have been as high as two percent. I think it’s exactly why the interconnectedness of markets, I think, is a real strength for the United 

States, and the fact that we can sell abroad, actually the fact that 

we can buy from abroad, both things help our economy. 

Representative Brady. Experts estimate that because of our 

free trade agreements, the ability for consumers to have more 

choices in America, a typical family in Texas or Minnesota can go 

to the grocery store once a month for free, because of the savings 

and the choices they have. Whether it’s at the supermarket, at the 

mall or when they’re shopping for cars or other things. 

Because our ability to sell American products is so critical 

around the world, I am concerned about some new proposals that 

would actually double tax our companies that sell those products 

overseas. Some of our companies are able to access those foreign 

markets from here in the United States. Others, because the products they sell or the market is limited, actually are confined to sell 

U.S. products in our country. 

Our tax code is one of the few in the world that taxes worldwide 

income, regardless of where our companies get this income. Most 

countries tax only within their boundaries themselves. As a result, 

our U.S. companies have often faced double taxation. 

The tax code over a century has tried to be more competitive in 

two ways, one by saying ‘‘Look, you can deduct those foreign taxes 

16 

you pay over in those foreign countries from what you owe us, and 

pay us the difference.’’ Another has been that we won’t tax that income until you bring it back to the United States. So under the 

same philosophy, we don’t tax people on their dividends when the 

company earns it, but when they actually distribute it as dividends. 

There is a concern that if we remove the ability to deduct foreign 

taxes, if we remove the ability to tax when that income comes back 

to the States, that we may well drive our U.S. companies overseas, 

where they have a more stable tax climate. 

I’m not asking your opinion on some of these tax proposals, but 

as an economist, don’t new tax regimes of various countries have 

an impact on economic growth, and where economic decisions are 

made within the private sector? 

Commissioner Hall. I would say that’s almost certainly true, 

that tax codes do have in fact differential treatment. Differential 

tax codes between countries can have this effect not only with 

trade costs but investment. 

Representative Brady. I think we see the difference in 2004. 

Congress worried about the number of jobs being created overseas 

and created a tax code, where if companies and manufacturers produced, invested and create jobs in the U.S. they have a lower tax 

rate, than if you do the same thing overseas. That’s the way the 

tax code is today. 

Unfortunately, this Administration and some in Congress have 

singled out certain industries like America’s energy industry and 

basically said that no longer applies to you. We’re going to tax you 

when you invest in the United States, just as if you were creating 

those jobs overseas. It’s actually the opposite, I think, of what we 

need to do. 

I think the point you made, that tax codes do matter in job creation and location of companies, is very important for Congress to 

consider as we wade into the complicated area of international tax 

issues. With that, I yield. 

Senator Klobuchar. Thank you very much, Congressman 

Brady. A few more questions here. I know we discussed last year 

the health care effect here and the burden on workers of the cost 

of health care in this country, and employers, which is more expensive than it is in other countries. I remember that you suggested 

that to the extent the employer bears the greater share of the 

health care costs, this crowds out wage increases to employees. 

Obviously, to the extent that employees have the higher costs, it 

makes it more difficult for them to afford things, whether it’s goods 

that we want them to buy out there or to stay in their homes. 

What does the data show regarding the impact of rising health care 

costs on wages and in general? 

Commissioner Hall. I think in general, and I’m talking back 

probably prior to the recession, because I haven’t looked at the data 

a lot during the recession, but there surely has been evidence that 

the faster growing health care costs are, the slower growing are the 

wages. As you say, there’s evidence of that. Rising health care costs 

can crowd out wage increases. This is primarily because health 

care is provided through work in this country. 

Senator Klobuchar. And as you know, we’re going to be working on health care reform this year, and if we’re able to bring some 

17 

costs down and make it more affordable and do it in a different 

way, do you think that would help people with their wages? 

Commissioner Hall. That is what the research suggests, since 

obviously if health care is crowding out wage growth, then reducing 

health care costs would have the opposite effect. 

Senator Klobuchar. Just to answer with a few questions about 

the indicators, which can show some change or some positive 

things. I know the unemployment rates have gone up this month, 

and there are still way too many people out of jobs. We talked 

about the consumer spending, the 2.2 percent on an annualized 

basis in the last quarter, the most in two years. Does that tend to 

be an indicator that there is some glimmer of hope here? 

Commissioner Hall. Absolutely. I think consumer spending is 

probably going to be the key to everything. If consumers continue 

to spend, if consumer spending picks up, then I think everything 

else follows. 

Senator Klobuchar. The other thing you identified when you 

looked at your three-legged stool, I guess, was that consumer 

spending—I’ll go back to that again—with the target numbers I 

gave you, which is for the four weeks which ended May 2, net retail 

sales for Target increased 4.5 percent when compared to the same 

four weeks ending May 3, 2008. On the same basis actually, April 

comparable store sales increased .3 percent. What is the usual correlation between increased sales and employment? 

Commissioner Hall. There is a positive relationship. If consumers start to spend and you start to get growth, once you start 

to get growth I think the job loss would start to moderate over 

time. If you get enough growth, then eventually the job loss will 

turn into job gain, and we’ll see the labor market stabilize. 

Senator Klobuchar. But as you said, the other parts of this 

three-legged stool are the housing market. Have you seen any 

changes in that market yet? 

Commissioner Hall. Just what everybody else has seen. Some 

small glimmers of hope perhaps in construction, but I don’t know 

that we have a real pattern yet. It’s kind of like consumer spending. If we see consumer spending pick up, what we really need to 

see is both those things continue to improve. 

Senator Klobuchar. Then the third part you identified is just 

the credit markets, and as you know, just recently, the Treasury 

Department and the Fed announced a stress test. So we’ll wait to 

see the effects of that. Some of our financial institutions didn’t need 

any more to go out and capitalize and get increased funds. Some 

of them did, with this also affecting, since we started to get a credit 

market going again and more stabilized. 

Commissioner Hall. Absolutely. I think the real meltdown in 

the credit markets has been the biggest single problem, I think, in 

this recession. And so that’s the thing that probably most needs to 

turn around. 

Senator Klobuchar. Very good. So you’ll tell our constituents 

that when they call and are angry, that we’re trying to stabilize the 

credit markets. I’m sure you will, Commissioner Hall. That’s a 

major part of this as well. I just wanted to conclude here, summarizing what we’ve heard today, sort of from a layman’s way of lookVerDate Nov 24 2008 13:57 Mar 16, 2010 Jkt 051800 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 C:\DOCS\53864.TXT SHAUN PsN: DPROCT
18 

ing at this. This past month, we have seen 563,000 more people 

that are basically unemployed. Is that right? 

Commissioner Hall. Correct. 

Senator Klobuchar. Since the start of the recession, how many 

people are now unemployed? 

Commissioner Hall. The number of unemployed is now 13.7 

million. 

Senator Klobuchar. 13.7 million. I would think these numbers 

are important. People have to realize across the country that it’s 

not just one person messing up here. There are a lot of people that 

have been affected by this recession, through no fault of their own. 

We’ve seen a rise in the unemployment rate from last month from 

8.5 percent. Now it’s 8.9 percent. 

Commissioner Hall. Yes. 

Senator Klobuchar. That group that is so hard for people to get 

their arms around, the group I was talking about like the Johnsons 

of Blaine, Minnesota, who would like to work more hours but are 

discouraged. What do you call them, marginal workers who are trying to increase those hours and just can’t find a job, and include 

them? We’re at 15.9 percent unemployment. 

Commissioner Hall. 15.8. 

Senator Klobuchar. 15.8 percent unemployment. We also 

talked about the fact that a certain group of workers—Senator 

Casey talked about those minority workers—and we were talking 

here about when Representative Brady focused on some of the different industries, where you see the difference in construction and 

things like that. 

But clearly, for those who do not have a high school degree, what 

was that unemployment again? 

Commissioner Hall. 14.8 percent. 

Senator Klobuchar. Then you go down to people that have a 

high school degree. You get—— 

Commissioner Hall. 9.3 percent. 

Senator Klobuchar [continuing]. People who have at least a 

year of college but haven’t finished, it’s—— 

Commissioner Hall. 7.4. 

Senator Klobuchar [continuing]. And people with a college degree is at? 

Commissioner Hall. 4.4 percent. 

Senator Klobuchar. We talked about the fact that we have 

some new policies in place, and Christina Romer pointed out this 

past week that while the stimulus package has made some difference, it’s going to take a while to see that in terms of the unemployment. Is that fair to say? 

Commissioner Hall. That is, although I will say that the job, 

the apparent job gains or losses are concurrent indicators. When 

the economy starts to improve, you should see the job loss start to 

decline. But it’s lagging in the sense that we need actually a job 

gain of a certain amount for the unemployment rate to stabilize. 

The unemployment rate is likely to continue to increase even after 

we start to get jobs. 

Senator Klobuchar. And I think the President and Congress 

were pretty clear about this, that we aren’t suddenly going to see 

this uptick. A lot of this economic recovery was actually replacing 

19 

jobs that were lost or have been lost. The other parts of the policies 

that we pursued are putting more money in the hands of taxpayers, with the middle class tax cut. 

Do you think that that could be contributing some to consumer 

confidence, or also the increase, that 2.2 percent increase we’ve 

seen in consumer spending? Or do you think it’s just a better feeling, that the economy has stabilized? 

Commissioner Hall. I can’t say. I do think the improvement in 

consumer confidence, for whatever reason, is certainly related to 

the pickup in consumer spending. I think that part’s very important. 

Senator Klobuchar. And as we go forward here, you do not predict any dramatic changes in the next month or two without the 

unemployment improving; correct? 

Commissioner Hall. I would say I wouldn’t predict. 

Senator Klobuchar. Thank you, Commissioner Hall. But I 

think you said that we’re in a longer-term recession, as opposed to 

just something that’s a blip for the month of April? 

Commissioner Hall. Yes. We’re having really significant job 

loss. Although things may improve, the job loss is not likely to end. 

Senator Klobuchar. And that is what led us in Congress to extend unemployment benefits, something that we always did in the 

past, when there’s a history of looking like it’s going to last longer 

than just a few months. 

Commissioner Hall. Remember I said the number of long-term 

unemployed is very high, and that number typically continues to 

rise until after the recession’s over. 

Senator Klobuchar. And as we look at these potential hopeful 

signs, we see when we talk about the increase in consumer spending. There are surveys that show an increase in consumer confidence. We have some industries that haven’t been hit as hard as 

others, like say health care and a few others. We have some evidence in some industries of some increased sales or stability. 

The other piece of it, just to summarize, housing market, we 

haven’t seen much change. But it appears that there’s some signs, 

as we heard last week, that it may have bottomed out. But we’re 

not certain. Then we also have the financial institutions again appearing to be, though we’re not certain, a little more stable than 

we saw in the fall. Are those fair assessments? 

Commissioner Hall. Those are fair. 

Senator Klobuchar. Good. I don’t want to get out on a limb 

with you, Commissioner Hall. So I would just summarize this by 

saying that these can be viewed as grim, especially for the people 

experiencing them. You can’t tell someone who has lost their job 

‘‘Hey, we’ve seen some good increases in consumer confidence.’’ 

That’s not going to help them. 

I think it’s a testament to the continuing involvement, in making 

sure that unemployment compensation is available, making sure 

that we are looking out for people who have lost their jobs, and 

also seeing this glimmer of hope, where we’re putting in place policies, a better infrastructure for our future, whether it is broadband, 

whether it’s the electricity grid, so that when the economy starts 

moving again, we are better equipped to handle this. 

20 

The last thing I would end with from my perspective is just the 

need to put in place some more sensible, pragmatic financial regulations that don’t go in any way to hurt our economy, but to stabilize it. Because some of the issues we saw that caused this credit 

crunch, whether it’s deals that people didn’t understand, or too 

highly-leveraged financial institutions, or agencies, in the case of 

the SEC, that didn’t do anything about it. 

We need to get our act together here in terms of these financial 

regulations. The last word I would say, and maybe Representative 

Brady would like to add something here, is just that as we talk 

about these numbers, we always have to remember the people behind these numbers. One of the most moving letters I got in the 

last year was a woman who wrote in and said that she and her 

husband had put their three kids to bed, and they kissed them 

good-night on the forehead and then they sat at their kitchen table 

and put their heads in their hands, and wondered how are we 

going to make it, how are we going to make it tomorrow? How are 

we going to pick up an extra job? 

I know you think about those people every day, Commissioner 

Hall. That’s your job. I want to thank you for that. Let us all remember that there are real people behind these statistics. Congressman Brady. 

[No response.] 

Senator Klobuchar. Thank you everyone. The hearing is adjourned. 

[Whereupon, at 10:45 a.m., the hearing was adjourned.] 

(21) 

SUBMISSIONS FOR THE RECORD 

22 

PREPARED STATEMENT OF KEVIN BRADY, SENIOR HOUSE REPUBLICAN

I am pleased to join in welcoming Commissioner Hall before the Committee this 

morning. 

The labor market data reported today reflect continued economic weakness. Payroll employment declined by 539,000, with losses widespread across many industries. Private sector payroll employment declined by 611,000, while government employment increased by 72,000. The unemployment rate rose to 8.9 percent. 

These data are not surprising given recent economic trends. Real GDP declined 

by 6.1 percent in the first quarter of this year, with business investment plunging 

by 38 percent. 

There are some preliminary signs in some other data that the rapid rate of economic decline may be slowing, but more evidence is needed before reaching any firm 

conclusions. The condition of the housing sector and the contraction of the auto industry are among many factors that make the economic outlook especially murky. 

Despite recent economic developments, including the rising unemployment rate, 

the Administration failed to update its unrealistic economic assumptions in its 

budget submission. For example, the Administration projects an 8.1 percent unemployment rate for 2009, even though it is clear the rate will unfortunately be much 

higher. The Administration projects that the economy will decline by 1.2 percent in 

2009, compared to the Blue Chip Consensus forecast decline of 2.6 percent. 

The Economist magazine called the economic assumptions in the Administration’s 

budget ‘‘deeply flawed’’ in an article entitled, ‘‘Wishful, and dangerous, thinking.’’ 

These faulty economic assumptions are dangerous because they produce an understatement of the real cost of the Administration’s expensive new spending proposals. 

The result will be huge budget deficits and a doubling of the national debt as a 

share of GDP by 2017, according to CBO. 

In the short-term, the steps the Fed has taken, including the huge expansion of 

its balance sheet, have helped to stabilize financial markets and will eventually provide a boost to the economy. However, the ongoing need for households and banks 

to reduce their outstanding debts does suggest that when the recovery comes it will 

probably be weak. 

Under Administration policies the excessive levels of deficits, debt, taxes, and inflation will undermine long-term economic growth. Unfortunately, increasing the 

burden of government on an already weak economy is only going to further undermine economic and job growth in the years ahead. The Administration’s proposed 

reduction of the incentives for work, saving, and investment is not the way to boost 

the productivity, innovation, and competitiveness of the U.S. economy in the years 

ahead. 

PREPARED 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 539,000 in April, and the unemployment 

rate rose from 8.5 to 8.9 percent. Since the start of the recession in December 2007, 

job losses have totaled 5.7 million, and the unemployment rate has increased by 4 

percentage points. 

In April, widespread job losses continued throughout the private sector. Private 

employment fell by 611,000, compared with average monthly declines of 700,000 in 

the prior 4 months. Over the month, federal government employment rose by 

66,000, mainly due to hiring of temporary workers in preparation for Census 2010. 

Manufacturing employment fell by 149,000 over the month, and job losses continued to be widespread. Since the recession began, this industry has shed 1.6 million 

jobs, representing more than a quarter of the total nonfarm job decline during the 

period. 

Construction employment decreased by 110,000 in April. Job losses have averaged 

120,000 per month in the last 6 months, compared with 46,000 per month from December 2007 to October 2008. 

Elsewhere in the goods-producing sector, mining employment fell by 10,000 in 

April. From the start of the recession through September 2008, this industry had 

continued to add jobs, mainly those related to oil and gas production. Since September, mining employment has declined by 44,000. 

In April, employment in professional and business services dropped by 122,000. 

Temporary help services accounted for about half of the job loss. Since the start of 

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the recession, temporary help employment has fallen by 825,000, nearly a third of 

its total. 

The health care industry added 17,000 jobs over the month, in line with its average monthly gain since January. In 2008, the average gain was 30,000 jobs per 

month. 

In April, average hourly earnings for production and nonsupervisory workers in 

the private sector were essentially unchanged. Over the past 12 months, average 

hourly earnings have risen by 3.2 percent. From March 2008 to March 2009, the 

Consumer Price Index for Urban Wage Earners and Clerical Workers declined by 

1.0 percent. 

Turning now to measures from the survey of households, the unemployment rate 

rose to 8.9 percent in April, an increase of four-tenths of a percentage point. The 

number of unemployed persons increased by 563,000 to 13.7 million. Since the start 

of the recession in December 2007, the number of unemployed has risen by 6.2 million, pushing the jobless rate up by 4 percentage points. 

Over the month, the number of long-term unemployed continued to grow, rising 

by 498,000 to 3.7 million. The long-term jobless represented 27.2 percent of all unemployed persons in April, the highest proportion on record. 

The employment-population ratio held at 59.9 percent in April. When the recession began in December 2007, it was 62.7 percent. Among the employed, the number 

of persons working part time who would prefer full-time work was little changed 

over the month at 8.9 million. 

In summary, nonfarm payroll employment fell by 539,000 in April. Private-sector 

employment dropped by 611,000. Job losses continued to be widespread across most 

major industries. Since the recession began, payroll employment has fallen by 5.7 

million. Over the month, the unemployment rate rose by four-tenths of a percentage 

point to 8.9 percent. 

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

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