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45–038 PDF 2008

S. HRG. 110–615

THE EMPLOYMENT SITUATION: SEPTEMBER 2008

HEARING

BEFORE THE

JOINT ECONOMIC COMMITTEE 

CONGRESS OF THE UNITED STATES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

OCTOBER 3, 2008

Printed for the use of the Joint Economic Committee

(

(II)

JOINT ECONOMIC COMMITTEE

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

SENATE 

CHARLES E. SCHUMER, New York, Chairman 

EDWARD M. KENNEDY, Massachusetts 

JEFF BINGAMAN, New Mexico 

AMY KLOBUCHAR, Minnesota 

ROBERT P. CASEY, JR., Pennsylvania 

JIM WEBB, Virginia 

SAM BROWNBACK, Kansas 

JOHN E. SUNUNU, New Hampshire 

JIM DEMINT, South Carolina 

ROBERT F. BENNETT, Utah 

HOUSE OF REPRESENTATIVES 

CAROLYN B. MALONEY, New York, Vice Chair 

MAURICE D. HINCHEY, New York 

BARON P. HILL, Indiana 

LORETTA SANCHEZ, California 

ELIJAH E. CUMMINGS, Maryland 

LLOYD DOGGETT, Texas 

JIM SAXTON, New Jersey, Ranking Republican 

KEVIN BRADY, Texas 

PHIL ENGLISH, Pennsylvania 

RON PAUL, Texas

MICHAEL LASKAWY, Executive Director 

CHRISTOPHER J. FRENZE, Republican Staff Director 

(III)

C O N T E N T S 

OPENING STATEMENT OF MEMBERS

Statement of Hon. Carolyn B. Maloney, Vice Chair, a U.S. Representative 

from New York ..................................................................................................... 1

Statement of Hon. Maurice D. Hinchey, a U.S. Representative from New 

York ....................................................................................................................... 5

WITNESSES

Statement of Dr. Keith Hall, Commissioner, Bureau of Labor Statistics, U.S. 

Department of Labor. Accompanied by: Dr. Michael W. Horrigan, Associate 

Commissioner for Prices and Living Conditions; and Mr. John Galvin, Associate Commissioner for Employment and Unemployment Statistics, Bureau 

of Labor Statistics, U.S. Department of Labor, Washington, D.C. .................. 3

SUBMISSIONS FOR THE RECORD

Prepared statement of Representative Carolyn B. Maloney, Vice Chair ............ 15

Chart entitled ‘‘State Unemployment Rates Soar’’ ............................................... 17

Chart entitled ‘‘Too Many Workers Can’t Find Jobs Before Their Benefits 

Run Out’’ ............................................................................................................... 18

Chart entitled ‘‘Congress Has Extended Benefits for Hard-Hit States in Every 

Other Recession of the Last 25 Years’’ ............................................................... 19

Prepared statement of Dr. Keith Hall, together with Press Release No. 08-

1367, Bureau of Labor Statistics, U.S. Department of Labor .......................... 20

Letter from Dr. Keith Hall to Representative Carolyn B. Maloney .................... 52

(1)

THE EMPLOYMENT SITUATION:

SEPTEMBER 2008

FRIDAY, OCTOBER 3, 2008

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

The Committee met at 9:30 a.m., in room 106 of the Dirksen 

Senate Office Building, the Honorable Carolyn B. Maloney (Vice 

Chair) presiding. 

Representatives present: Maloney and Hinchey. 

Majority staff members present: Heather Boushey, Tanya 

Doriss, Nan Gibson, Colleen Healy, Aaron Kabaker, Annabelle 

Tamerjan, and Justin Ungson. 

Ranking Republican staff (Saxon) present: Ted Boll, Chris 

Frenze, Bob Keleher, Tyler Kurtz, Dan Miller, and Gordon Brady. 

Senate Republican staff (Brownback) present: Jeff Wrase. 

OPENING STATEMENT OF HON. CAROLYN B. MALONEY, VICE 

CHAIR, A U.S. REPRESENTATIVE FROM NEW YORK 

Vice Chair Maloney. It is 9:30. The meeting will come to order. 

Chairman Schumer is unable to attend today’s hearing on the employment situation and has asked me to chair. 

Commissioner Hall, we thank you for testifying today. We also 

thank Mr. Galvin and Dr. Horrigan for joining us today. I understand that other Members may be coming, but we must proceed because I know your time is valuable. We hope that my colleague 

from the other side of the aisle will be able to join us at some point 

later on today, although it will be later, not at the opening. 

I want to thank Commissioner Hall and his staff for appearing 

before us today. This is an important time for Congress to be examining the employment situation of U.S. workers as we assess the 

broader impact of the financial crisis on the economy. 

Today the House will vote on the financial rescue plan that 

passed the Senate on Wednesday. If we do not pass the financial 

rescue plan today, credit markets will freeze and American families 

and businesses will suffer greatly. The risk of not acting is simply 

too great for Americans to bear. 

The troubles at our major financial institutions are already working their way down to Main Street. Today’s grim unemployment 

data show that the problems facing working families are mounting 

as job prospects dim. 

The economy has shed nearly a million private-sector jobs over 

the past 9 months, and 9.5 million workers are unemployed—2.2 

million more than a year ago. 

2

Indeed, the labor market has been deteriorating for nearly a 

year, as this chart shows. Job growth began to slow in 2005 and 

job losses appeared at the beginning of 2008. The last time the 

economy lost jobs for 9 months in a row it was in the midst of a 

recession. As of this month, the labor market is really suffering levels of job losses. 

Wages have not been keeping pace with the rising prices for 

basic necessities like fuel and food, as this chart shows. 

As a result, U.S. workers have lost all the ground that they 

gained over the 2000s recovery. The Census Bureau recently reported that by the end of last year inflation-adjusted household income had still not recovered from the last recession, and all indications are that household finances have only deteriorated since then. 

The credit crisis will likely make the employment situation even 

worse. The lack of access to credit, combined with the sharp drop 

in home prices, and the lack of growth in real incomes are putting 

unbearable financial pressure on families. 

Families have already begun curtailing their spending, so much 

so that for the first time since 1991 real personal consumption expenditures fell for 3 months in a row. 

Consumer spending makes up nearly three-quarters of our gross 

domestic product. As consumers cut back on their spending, this 

will drag down economic growth, jobs, and wages. 

Congress has already taken numerous steps to help buffer families from the effects of the downturn. More than 130 million American households received Recovery Rebates by July. Extended Unemployment Benefits for 3.5 million Americans looking for work 

were enacted. And a housing package aimed at stemming the tide 

of foreclosures was also enacted into law. 

In the wake of the financial crisis, clearly we must do even more. Last week the House approved a $60 billion economic stimulus 

package that would have provided an extension of Unemployment 

Benefits, an increase in Food Stamps, and aid to States to preserve 

health insurance for families and create jobs through investment in 

our Nation’s infrastructure. But efforts to provide this relief to families and boost our sagging economy have been blocked by Republicans in the Senate and received a veto threat from the White 

House. 

As the chart behind me shows, unemployment is particularly 

high in nearly half of all the States. 

[Chart entitled ‘‘State Unemployment Rates Soar’’ appears in the 

Submissions for the Record on page 17.] 

In high-unemployment States, over a third of workers who have 

lost their jobs through no fault of their own are exhausting even 

their extended Unemployment Benefits, as this chart shows. 

[Chart entitled ‘‘Too Many Workers Can’t Find Jobs Before Their 

Benefits Run Out’’ appears in the Submissions for the Record on 

page 18.] 

Starting next week, nearly 800,000 workers will be left without 

additional Federal jobless benefits when their extension is set to 

run out. Over half of these workers live in high unemployment 

States. Congress has extended benefits to the States hardest hit by 

unemployment in every other recession in the past 25 years, as this 

chart shows. 

3

[Chart entitled ‘‘Congress Has Extended Benefits for Hard-Hit 

States in Every Other Recession of the Last 25 Years’’ appears in 

the Submissions for the Record on page 19.] 

In light of today’s jobless numbers, I hope that the House will 

pass an extension of Unemployment Benefits. Congress and the 

President need to work together as never before to get Americans 

back to work as quickly as possible. 

I look forward to the continued focus on labor market conditions 

by this Committee. 

That concludes my testimony, and I would like to now introduce 

Commissioner Hall. 

Dr. Keith Hall is the Commissioner of the Bureau of Labor Statistics at the U.S. Department of Labor. Before becoming BLS’s 

Commissioner, Dr. Hall served as Chief Economist for the White 

House Council of Economic Advisers during the current Administration. 

Prior to that, he was Chief Economist for the United States Department of Commerce. Dr. Hall received his B.A. Degree from the 

University of Virginia, and his M.S. and Ph.D. Degrees in Economics from Purdue University. 

Thank you for your public service and for being here today, Commissioner Hall. 

[The prepared statement of Vice Chair Maloney appears in the 

Submissions for the Record on page 15.] 

STATEMENT OF DR. KEITH HALL, COMMISSIONER, BUREAU OF 

LABOR STATISTICS, U.S. DEPARTMENT OF LABOR, ACCOMPANIED BY DR. MICHAEL W. HORRIGAN, ASSOCIATE COMMISSIONER FOR PRICES AND LIVING CONDITIONS; AND MR. 

JOHN GALVIN, ASSOCIATE COMMISSIONER FOR EMPLOYMENT AND UNEMPLOYMENT STATISTICS, BUREAU OF 

LABOR STATISTICS, U.S. DEPARTMENT OF LABOR 

Commissioner Hall. Thank you, Madam Chairman. 

Thank you for the opportunity to discuss the employment and 

unemployment data that we released this morning. Nonfarm payroll employment declined by 159,000 in September. By comparison, 

from January through August payroll employment decreased by 

75,000 a month on average. 

In September, job losses continued in manufacturing, construction, and retail trade. Mining and health care employment continued to trend up. The unemployment rate was unchanged at 6.1 

percent following an increase of 0.4 percentage point in August. 

Manufacturing job losses continued in September with employment declines occurring throughout much of the sector. In particular, motor vehicle and parts manufacturers shed 18,000 jobs. 

And over the past 12 months, employment in this industry has fallen by 140,000. In September, manufacturing hours and overtime 

declined by 0.2 of an hour, and 0.1 of an hour respectively. 

Construction employment was down by 35,000 over the month. 

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

fallen by 607,000. Eighty-five percent of the job losses over this 2-

year period have occurred in residential building and residential 

specialty trades. 

4

Mining employment continued to expand with an increase of 

8,000 in September. Mining has added 241,000 jobs since April of 

2003, with most of the growth in oil and gas extraction and support 

activities. 

In the service-providing sector, retail employment fell by 40,000 

over the month with the largest job losses occurring among department stores and motor vehicle and parts dealers. Over the past 4 

months, auto and parts dealerships have shed an average of 12,000 

jobs per month, four times the average decline in the first 5 months 

of the year. 

Elsewhere in the service-providing sector, employment in financial activities declined by 17,000; securities and investment firms 

accounted for 8,000 of this loss. 

The employment services industry, which includes temporary 

help agencies, continued to contract in September and has lost 

303,000 jobs so far this year. 

Health care employment continued to trend up over the month. 

However, the September increase of 17,000 was only about half the 

average monthly gain for the prior 12 months. 

Average hourly earnings for production and nonsupervisory 

workers in the private sector edged up by three cents in September. Over the past 12 months, average hourly earnings have increased by 3.4 percent, while from August 2007 to August 2008 the 

Consumer Price Index for Urban Wage Earners and Clerical Workers rose by 5.9 percent. 

Although Hurricane Ike struck the east coast of Texas and portions of coastal Louisiana during the September reference period 

for the establishment survey, we believe the storm did not substantially impact the payroll estimates that we released today. For 

weather conditions to have affected payroll employment, people 

would have had to be off work for the entire pay period and not 

paid for the time missed. 

Turning to the labor market measures from the survey of households, the unemployment rate held at 6.1 percent in September; it 

is now 1.4 percentage points higher than a year earlier. 

Among the major worker groups, the jobless rate for adult men 

rose by 0.5 percentage point over the month to 6.1 percent, and the 

rate for blacks increased to 11.4 percent. The unemployment rate 

for adult women declined to 4.9 percent in September, partially offsetting a sharp increase in August. 

Approximately 9.5 million persons were unemployed in September, little changed from August. Two million of these individuals had been employed for 27 weeks or more, an increase of 

167,000 over the month, and 728,000 over the past 12 months. 

Both the labor force participation rate at 66.0 percent and the 

employment-to-population ratio at 62 percent were little changed 

over the month. Labor force participation has shown virtually no 

movement over the past 12 months, while the employment-to-population ratio has declined by 0.9 percentage point. 

The number of persons working part-time who would have preferred full-time work increased by 337,000 in September to nearly 

6.1 million. Over the past 12 months, the number of such workers 

has grown by 1.6 million. 

5

In keeping with standard practice, this month we are also providing a preliminary estimate of the next benchmark revision to 

nonfarm payroll employment. Each year the Bureau revises, or 

benchmarks, the payroll survey’s sample-based employment estimates to reflect a comprehensive employment count derived primarily from State unemployment insurance tax reports. 

Preliminary tabulations of employment from the State tax reports indicated that the March 2008 payroll employment will require a very small downward revision of 21,000. The final benchmark will be incorporated into the establishment survey data released on February 6 2009. 

In summary, nonfarm payroll employment declined by 159,000 in 

September, and the unemployment rate was unchanged at 6.1 percent. 

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

[The prepared statement of Dr. Hall, together with Press Release 

No. 08–1367, appear in the Submissions for the Record on page 20.] 

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

I would now like to recognize my colleague from the State of New 

York, Mr. Hinchey, for his opening statement. 

OPENING STATEMENT OF HON. MAURICE D. HINCHEY, A U.S. 

REPRESENTATIVE FROM NEW YORK 

Mr. Hinchey. Well thank you very much, Madam Chairwoman, 

and I appreciate being here. 

I thank you very much for being with us and providing this information. I think the information that you are providing is very interesting and also very important in terms of the responsibilities 

of this Congress, because I think the employment situation in our 

country is continuing to decline. 

The dramatic increase in the unemployment rate just makes that 

very clear. Even though the specific rate in unemployment, as I understand it, is still about the same, 6.1 percent. 

In any case, I thank you very much for being here and for giving 

us this information. I think it is particularly valuable as well in the 

context of this legislation which we have before the Congress at 

this time. 

One of the things that we have to do is to upgrade this economy, 

and that is going to require some significant investments in the appropriate way. So I thank you very, very much. 

Vice Chair Maloney. Thank you, and the Chair recognizes herself for 5 minutes of questions. 

First of all, Commissioner Hall, the labor market has been shedding jobs for 9 straight months, and I am concerned that we are 

in a recession. 

Can you tell us what the big picture is on employment this 

month? How many jobs were lost in the private sector last month? 

Commissioner Hall. Sure. This month’s Employment Report 

shows a continually weak and broadly weak labor market. The unemployment rate that we saw in August jumped from 5.7 percent 

to 6.1 percent unfortunately held in September. 

Now on a quarterly basis we have now seen the rise in the unemployment rate fairly steadily grow from 4.9 percent in the first 

6

quarter, to 5.3 percent in the second quarter, to 6 percent now in 

the third quarter. 

We have also had perhaps an acceleration in the payroll job loss. 

After losing about 75,000 jobs a month through this year, through 

August, we have now lost—we are now losing 159,000 in September. 

The labor market weakness has been broad. The only consistent 

job growth over the past few months has been in education and 

health services, mining, and government. Just about every other 

portion of the economy has been weak. And wage growth has hovered somewhere around 3.5 percent, but high energy costs continue 

to keep inflation well above this, somewhere around 5.5 percent 

right now. 

The private-sector job loss has been generally higher than the job 

loss overall. This month we lost 168,000 private-sector jobs. Prior 

to that we had been averaging about 100,000 jobs lost in 2008 in 

the private sector. 

Vice Chair Maloney. Do consecutive months of job losses mean 

that the economy is in a recession? 

Commissioner Hall. It is generally accepted that a recession is 

a significant decline in economic activities spread across the economy that last for more than a few months. It’s sort of three components. 

We have now had nine consecutive months of job loss for a total 

of 760,000 jobs. That job loss has been very widespread. We do not 

typically get nine consecutive months of job losses except for when 

we are going into a recession. So this would be unusual. 

However, the one bright spot, if it is a bright spot, is that the 

job loss has been 760,000 jobs. In the last two recessions, 9 months 

into job loss we had about twice as much job loss. So it has not 

been as severe as say the 2001 recession and the 1990 recession. 

Vice Chair Maloney. So how many months of job losses do we 

need to see before we say we are in a recession? 

Commissioner Hall. Well in the past the National Bureau of 

Economic Research, the group that actually makes the recession 

call, they have called the recession after around 9 or 10 months of 

job loss. 

I do think the big difference—and it is going to have to be their 

judgment—is whether we have had as deep a job loss as we have 

in the past and whether that constitutes a recession. 

Vice Chair Maloney. Some economists have argued that a recession began in late 2007 or early 2008. Is this conclusion consistent with the trends you see in the labor market? 

Commissioner Hall. That is when we started to see job loss 

happen, and consistent job loss happen. 

Vice Chair Maloney. Can the labor market be in a recession—

that is, can unemployment be at recession levels—even if an official 

recession has not yet been called? 

Commissioner Hall. I would say that is true. When an official 

recession is called, it is typically such a backward looking call that 

typically when it is made it is made several months down the road. 

Vice Chair Maloney. And typically in a recession how long does 

it take for employment to recover to its pre-recession peak? 

7

Commissioner Hall. Well, at least in my mind, this is one of 

the real serious costs of any recession. It takes the labor market 

a long time to recover from a recession. Since the end of the 2001 

recession in November 2001, the last recession it took months for 

the labor market to recover, which is obviously quite a long time. 

Vice Chair Maloney. So how long do wages and other compensation take to recover? The full 39 months, you would say? 

Commissioner Hall. Well the level never goes down that much, 

but the growth rate in wages in the past has typically never recovered from a recession. With every recession we have had, real wage 

growth has declined and never recovered to pre-recession levels. 

Vice Chair Maloney. So it appears that we are in a difficult 

time in our economy for the labor market in the months to come. 

My time has expired, and I recognize my colleague, Mr. Hinchey, 

for 5 minutes. 

Mr. Hinchey. Well thank you very much, Madam Chairman. 

Could you tell us a little bit more specifically what are some of 

the specific industries that are experiencing the most several drops 

in employment? 

Commissioner Hall. Sure. We have not had consistent job 

growth in any private-sector industry, with the exception of mining, and health care, and education. Health care and education 

seems to be sort of a counter-cyclical industry. So I have to say it 

has been a very broad loss. 

In September, we have seen job loss in construction, with a concentrated loss in residential building and specialty trades. We have 

seen job loss in credit intermediation, in real estate, and in automobile production and sales. 

Mr. Hinchey. We have also seen losses in manufacturing, 

haven’t we? I recall back in August the drop in employment was 

about 84,000 jobs lost. I think more than 60,000 of those were manufacturing jobs, and the September figures are something in the 

neighborhood of 59,000, isn’t it, manufacturing jobs that have been 

lost? 

Commissioner Hall. Yes, it was significant. It was 51,000 manufacturing jobs lost. 

Mr. Hinchey. 51,000? 

Commissioner Hall. 51,000. And it is very broad through manufacturing. Notably, though, a large loss has been in motor vehicles. 

Mr. Hinchey. What is the reason for the loss in manufacturing 

jobs, particularly? 

Commissioner Hall. Well the long-run trend in the United 

States has been that manufacturing has been losing jobs consistently on a long-run trend, but at a fairly slow rate since 2004. 

What we have seen is, with this economic downturn beginning 

sometime in the last year, a real acceleration in job loss in manufacturing. It has just sort of mirrored the general decline in the 

labor market throughout the whole economy. 

Mr. Hinchey. A significant number of these manufacturing jobs 

are being exported, aren’t they? I mean, we are sending specific 

kinds of jobs, particularly some of the highest-paying jobs, outside 

of the country? 

8

Commissioner Hall. Well I certainly think that that may be an 

issue in the long run picture of manufacturing job loss, and I am 

not sure how manufacturing is going to do during this downturn 

in terms of these jobs recovering. 

I will say that the manufacturing jobs lost in the 2001 recession 

generally did not return. 

Mr. Hinchey. Did not return? 

Commissioner Hall. No. 

Mr. Hinchey. They were gone, and they are not showing any indication of coming back? 

Commissioner Hall. That is correct. 

Mr. Hinchey. So while we are losing these jobs, we are also seeing a downturn in the economic circumstances of working people, 

and I think that that is very significant because we know that the 

Gross Domestic Product in America is driven for the most part, at 

least two-thirds or so, by middle-income working people, particularly blue- and white-collar working people. 

So the economic circumstances of working people is declining, 

while income has gone up slightly, something in the neighborhood 

of, what, three cents, or .02 percent in September. Over the past 

12 months, our average hourly earnings have increased by 3.4 percent, but the Price Index rose by almost 6 percent. 

So how do you evaluate that? It seems to me that the standard 

of living of the American worker is in some serious predicament at 

the moment because this situation that you have outlined for us is 

not unique in September. It is something that has been going on 

for some time, has it not? 

Commissioner Hall. Yes, that is correct. The Average Hourly 

Earnings Growth of roughly 3.5 percent is not particularly strong, 

but it is not terribly weak; but it has not kept up in particular with 

energy inflation and now food inflation for quite some time now. 

Mr. Hinchey. Yes. So we are seeing the cost of living going up, 

but the income of the workers who have to pay for the cost of living 

not going up, and so we are seeing essentially a decline in the 

standard of living of American workers. Is that true? 

Commissioner Hall. The Labor Market Data would seem to indicate that. 

Mr. Hinchey. Yes. It seems to me that that is just another example of what Mrs. Maloney was saying just a few moments ago. 

I think it is very clear that we are in a recession, and I think we 

have been in this recession for some time. A lot of us have been 

talking about that. I have been mentioning it to Chairman 

Bernanke on a number of occasions. 

But I think part of the problem that we are dealing—one of the 

issues that we are dealing with now has been not recognizing this 

issue in the right way, and then dealing with it in an effective way. 

It seems also that the unemployment rate, or the number of 

workers that are partly employed, temporarily employed, partly 

employed but looking for full-time employment, that number continues to go up. 

My estimation is that the unemployment rate now being 6.1 percent, if you included in that people who have been unemployed for 

more than 27 weeks, and people who are looking for full-time employment but can only find part-time employment, if you include 

9

them in the unemployment number, what would that number be? 

I suspect it will be something in the neighborhood of 10 percent, 

or even higher? 

Commissioner Hall. Yes, that is correct. It is currently actually 

11 percent. 

Mr. Hinchey. Eleven percent? 

Commissioner Hall. Yes. And that is up from 10.7 percent last 

month. 

Mr. Hinchey. Thank you very much. 

Vice Chair Maloney. Thank you. 

Commissioner Hall, later today the House is expected to vote on 

an extension of Jobless Benefits. An estimated 800,000 workers are 

expected to run out of their benefits beginning next week, and it 

is my understanding that some parts of the country are experiencing higher joblessness than others. Which regions are seeing the 

highest job losses? 

Commissioner Hall. Two regions, the Midwest and West, have 

had the highest unemployment rates: 6.7 percent and 6.6 percent, 

respectively. And three regions: the Northeast, West, and the South 

have seen statistically significant unemployment rate increases. 

But it is fairly widespread. All four regions have had significant increases in the unemployment rate over the past 12 months. 

Vice Chair Maloney. How many, and which States, have unemployment rates above 7 percent? Any? Is 6.7 the highest percentage? 

Commissioner Hall. No. There are a number of States. Eight 

States had unemployment rates above 7 percent. 

Vice Chair Maloney. Which ones are they? 

Commissioner Hall. Michigan had the highest rate at 8.9 percent and Rhode Island was second at 8.5 percent. California and 

Mississippi had 7.7 percent unemployment rates. South Carolina 

had 7.6. Ohio had 7.4. Illinois had 7.3. And Nevada had 7.1. 

Vice Chair Maloney. Well I worry that a lot more States may 

find themselves in the situation sooner rather than later. Do you 

think unemployment has risen at a surprisingly fast pace? 

Commissioner Hall. I think that unemployment has risen consistent with the overall picture of the labor market. We have had 

a weak labor market now for 9 months. Unfortunately we have 

seen a bit of an increase in the unemployment rate in the last 

month or two, which has signalled a slight worsening, at least a 

slight worsening in the conditions of the labor market. 

Vice Chair Maloney. New applications for Unemployment Benefits rose slightly last week to a 7-year high, hovering around 

500,000. Are these initial claim figures consistent with recessionary 

levels? 

Commissioner Hall. They are consistent with levels during 

past recessions. The only thing I would say about that is these are 

weekly numbers. 

Vice Chair Maloney. Could you define for me ‘‘long-term unemployment’’? And tell us what percentage of unemployed workers are 

among the long-term unemployed? 

Commissioner Hall. Sure. Long-term unemployment are people 

that are unemployed for basically 6 months. And at the moment, 

10

there are about 2 million people who are long-term unemployed, 

and that is about 21 percent of the total unemployed. 

Vice Chair Maloney. In my home State of New York more than 

one-third, 36 percent, of the unemployed have reached the end of 

their standard Unemployment Benefits. How many will make use 

of the Extended Unemployment Benefits this year in New York 

and around the Nation? 

Commissioner Hall. We do not actually forecast anything like 

that. We do not actually collect the Unemployment Benefits data. 

I have seen an estimate for the national number, if I can find it 

here, oh, good, I have seen an estimate of about 3.3 million workers 

nationally through June of 2009, but that is not one of our numbers so I do not know what is behind that forecast. 

Vice Chair Maloney. Getting back to regions and the impact on 

the economy, which regions are being most impacted by fall offs in 

housing or credit-related industries, and which are being hit hardest by manufacturing decline? 

Commissioner Hall. On housing related, 38 States had construction declines over the past 12 months, with the highest declines in percentage terms in Arizona, Utah, South Carolina, and 

Florida. And in financial activities, we have seen the biggest declines in Rhode Island, California, Oregon, Nevada, New Jersey, 

Arizona, and Georgia. 

And then with respect to manufacturing, the kinds of manufacturing have been pretty widespread. The most affected States are 

New Mexico, Michigan, Florida, Idaho, Rhode Island. 

Vice Chair Maloney. In my home State of New York, the employment-to-population ratio—that is the fraction of the working 

age population with a job—is falling. The information you reported 

on today shows that the percentage of the U.S. population with jobs 

is also quite low, wouldn’t you agree? 

Commissioner Hall. In September, 62 percent of the workingage population was employed. That has fallen since late 2006. This 

is lower than the second half of the 1990’s. It is still higher than 

it was say back in the late 1980’s, but it is still a lower level compared to the more recent time. 

Vice Chair Maloney. When was the last time the National Employment-To-Population Ratio was as low as it has been recently? 

Commissioner Hall. The last time was in September of 2003, 

immediately following the recession—following the recession, I 

should say. 

Vice Chair Maloney. Well when you put it all together, the employment situation looks rather grim in our country now, wouldn’t 

you agree? 

Commissioner Hall. This is not a strong employment report. 

Vice Chair Maloney. The Chair recognizes Mr. Hinchey for 5 

minutes. 

Mr. Hinchey. Thank you. 

As I understand it, there are nearly 5 million people who would 

like a job but who have dropped out of the labor force. What effect 

is that having on the circumstances that you are monitoring? And 

what effect do you think that is having on the general economic circumstances across the board? 

11

Commissioner Hall. The increase is similar to the overall picture with the job market. You know, we are seeing job loss. We are 

seeing the unemployment rate go up. And so we are also seeing 

people who are leaving the labor force. That is all consistent with 

a generally weak labor market. 

Mr. Hinchey. It is all consistent with the general decline in the 

labor market, and the general decline of the economic set of circumstances for working people? 

Commissioner Hall. Yes. 

Mr. Hinchey. So I think that that is the indicator of what we 

have to deal with. I think the focus of attention of this Congress 

has got to be on the economic circumstances of working Americans, 

and I do not think they are getting nearly enough attention. 

Some of the things that we have tried to do is investment in the 

basic infrastructure, in education, things that are going to promote 

jobs and raise the income of working people. Do you think that 

something like that makes sense? 

Commissioner Hall. Well I am going to try to steer clear of 

talking about policy issues——

Mr. Hinchey. OK. 

Commissioner Hall [continuing]. Because we collect the data. 

Mr. Hinchey. OK. I would like to hear a little bit more about 

unemployment, the effects on particular groups. Can you tell me, 

for example, what is the labor market looking like for people who 

have graduated from college? 

Commissioner Hall. We have seen, the unemployment rate for 

folks with bachelor’s degrees—now these are not necessarily people 

who are just out of college—has actually been fairly constant, 

somewhere around 2.5 percent unemployment rate the last few 

months, but it has ticked up over the past year. It is about a half 

a percentage point higher. It has gone from about 2 percent unemployment to about 2.5 percent unemployment for college graduates. 

Mr. Hinchey. What is the situation with people with high school 

diplomas? 

Commissioner Hall. With high school diplomas, their unemployment rate is above the national average, about 6.3 percent, and 

that has grown more significantly. That has grown from about 4.6 

percent to 6.3 percent over the past 12 months. So they have had 

a much harder time. 

Mr. Hinchey. So this is another indication that we should be 

providing more concentration on education, making education more 

available. And the reason for that being, obviously, that the better 

education you have, particularly if you have a graduate degree, you 

are going to more likely get a decent job. That appears to be the 

case in the statistics that you put together. Is that right? 

Commissioner Hall. Absolutely. The unemployment rate is consistently lower the higher the education level in this country, 

shockingly lower, actually. 

Mr. Hinchey. Yes. Just one more question about that. What 

about teens? What is the situation with teenagers? Do you have 

any information on that? 

Commissioner Hall. Yes. With teens we have actually a rather 

high unemployment rate. We always do. The unemployment rate 

12

for individuals between 16 to 19 years old is 19.1 percent, and that 

is up from about 16 percent a year ago. 

Mr. Hinchey. OK. Thanks. The productivity rate has gone up. 

I think it is something above 4 percent, 4.3 percent approximately. 

I am interested to know what you may have found out with regard 

to how wages are keeping pace with the productivity rates and the 

growth in productivity rates. 

Commissioner Hall. Sure. Over the past year through the second quarter, we have only got productivity through the second 

quarter at the moment, nonfarm business productivity grew about 

3.4 percent. 

Over the same period, real labor compensation—which is not just 

wages but all nonwage compensation—actually declined by .2 percent over that time period. 

So these two numbers are normally much closer. They do in the 

long run tend to follow much closer together. Over the past year 

they have not followed very well. 

Mr. Hinchey. Last year with the change in the majority of the 

Congress we were able to increase the Minimum Wage. The Minimum Wage now has gone up recently to $6.55 an hour, and it will 

increase next year to $7.25 an hour. 

But that still does not bring the Minimum Wage up to where it 

has been in recent history, and I think with regard to the situation 

with productivity, with regard to unemployment, do you have any 

view as to what the unemployment rate actually should be if we 

had been consistent with the economic needs that we are dealing 

with, and with the way in which Minimum Wage has been handled 

in the past? Does it make sense to have that Minimum Wage at 

$7.25? What would you think the best Minimum Wage ought to be? 

Commissioner Hall. I think I want to avoid policy opinions like 

that because we produce the data. 

Mr. Hinchey. It is not policy. It is just a number. 

[Laughter.] 

Commissioner Hall. Well, we have a reputation to uphold for 

providing objective, factual data and I don’t want to speculate or 

offer an opinion that’s mine. 

Mr. Hinchey. My view is that it should be up close to $10 an 

hour. Does that make any sense? 

Commissioner Hall. I don’t——

Mr. Hinchey. It’s still off the board, right? 

Commissioner Hall. I don’t have an opinion on that. 

Mr. Hinchey. All right, well thank you very much. 

Vice Chair Maloney. Thank you. 

Commissioner Hall, you testified that teen unemployed workers 

were 19 percent. So that more or less says that the unemployment 

rolls last month were mainly adults, would you say? 

Commissioner Hall. Yes. 

Vice Chair Maloney. OK, could you say, you know, workers 

over the age of 45, how many workers over the age of 55? Where 

was the most unemployment, and in what age group? 35? 30? In 

10-year separations? 

Commissioner Hall. Yes, let’s see, I don’t have that number 

handy. 

Vice Chair Maloney. You said teens were 19 percent. 

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Commissioner Hall. Right. In the monthly data we do not publish quite that much detail. 

Vice Chair Maloney. But roughly, it was adults that lost the 

jobs. Do you have a general—how do you define an ‘‘adult’’? 

Commissioner Hall. Well we do have individuals age 20 and 

over. 

Vice Chair Maloney. OK, 20 and over. What percentage of individuals of age 20 and over are unemployed now? 

Commissioner Hall. Oh, I’m sorry. I do have some numbers. 

Twenty years and over the unemployment rate is around 5.5 percent. And in terms of numbers, it is about 8.1 million people out 

of a total of 9.4 million, 9.5 million. 

Vice Chair Maloney. I want to understand how unemployment 

for particular demographics compares to the unemployment peaks 

during the last recession in 2001, and extended period of high job 

losses that followed it. 

For men, what is unemployment now and how does it compare 

to the highest unemployment rate reached in the early 2000s? 

I would like the number also for women, for white workers, black 

workers, Hispanic workers. You gave the number for teen workers. 

Workers over age 55. For less-educated workers. And for highereducated workers. 

I have been called for a vote, so I am going to have to leave, but 

I do want, if you could get me that, either testify it here or get it 

to me in writing. 

But I am also very interested in how this recession is impacting 

women in the employment situation. Earlier we did a study that 

showed that in this economic downturn, unlike other recessions 

where women held onto their jobs and were a buffer to the family, 

that women are losing their jobs at an even higher pace than men 

are. 

Are you still seeing that trend in your numbers? 

Commissioner Hall. I am not sure that we are. A lot of that 

is a matter of what industries men and women are concentrated in. 

I can follow up with more specific details if you like. 

Vice Chair Maloney. Well you did mention a series of industries that were losing jobs, and are women in those industries losing jobs at the same rate as men, or higher? That is one question. 

And I am interested in how women are faring in the job market, 

and have they been losing jobs in these industries at the same rate 

that men have, or higher? 

In any event, I have to run and vote. We have a very important 

economic vote before our Congress today to respond to a request 

from Secretary Paulson and Chairman Bernanke to put a backstop 

out to help our financial markets and restore access to credit for 

men and women working in America and their access to credit for 

their cars, their loans, their homes, their credit cards, their student 

loans. It is a very important vote. So I have to adjourn the meeting 

and go to that vote. 

I would like these questions, if you could answer in writing or 

to the Joint Economic staff on both the Republican and Democratic 

side. This of course is a bipartisan committee and we are working 

hard to get these numbers accurate. 

14

I want to thank you for all your hard work and dedication. 

Thank you for being here today, and let us hope the numbers improve next month. Thank you. 

[A letter to Vice Chair Maloney from Commissioner Hall (together with the information referenced above) appears in the Submissions for the Record on page 52.] 

Commissioner Hall. Thank you. 

Vice Chair Maloney. Adjourned. 

[Whereupon, at 10:10 a.m., Friday, October 3, 2008, the meeting 

was adjourned.] 

(15)

Submissions for the Record 

PREPARED STATEMENT OF CAROLYN MALONEY, JOINT ECONOMIC COMMITTEE

HEARING, OCTOBER 3, 2008

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

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

of U.S. workers, as we assess the broader impact of the financial crisis on the economy. 

Today, the House will vote on the financial rescue plan that passed the Senate 

on Wednesday. If we don’t pass the financial rescue plan today, credit markets will 

freeze and American families and businesses will suffer greatly. The risk of not acting is simply too great for Americans to bear. 

The troubles at our major financial institutions are already working their way 

down to Main Street. Today’s grim unemployment data show that the problems facing working families are mounting as jobs prospects dim. The economy has shed 

nearly a million private sector jobs over the past nine months and 9.5 million workers are unemployed, 2.2 million more than a year ago. 

Indeed, the labor market has been deteriorating for nearly a year. Job growth 

began to slow in 2005 and job losses appeared at the beginning of 2008. The last 

time the economy lost jobs for nine months in a row, it was in the midst of a recession. As of this month, the labor market is at recessionary levels of job losses. 

Wages have not been keeping pace with the rising prices for basic necessities, like 

fuel and food As a result, U.S. workers have lost all the ground that they gained 

over the 2000s recovery. The Census Bureau recently reported that by the end of 

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

recession and all indications are that household finances have only deteriorated 

since then. 

The credit crisis will likely make the employment situation even worse. The lack 

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

growth in real incomes are putting unbearable financial pressure on families. 

Families have already begun curtailing their spending, so much so that for the 

first time since 1991, real personal consumption expenditures fell for three months 

in a row. 

Consumer spending makes up nearly three-quarters of our gross domestic product. As consumers cut back on their spending, this will drag down economic growth, 

jobs and wages. 

Congress has already taken numerous steps to help buffer families from the effects of the downturn. More than 130 million American households received Recovery Rebates by July,extended Unemployment Benefits for 3.5 million Americans 

looking for work were enacted, and a housing package aimed at stemming the tide 

of foreclosures was also enacted into law. 

In the wake of the financial crisis, clearly, we must do even more. 

Last week, the House approved a $60 billion economic stimulus package that 

would have provided an extension of unemployment benefits, an increase in food 

stamps, and aid to states to preserve health insurance for families and create jobs 

through investment in our nation’s infrastructure. But efforts to provide this relief 

to families and boost our sagging economy stalled in the Senate and received a veto 

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As the chart behind me shows, unemployment is particularly high in nearly half 

of all states. In high-unemployment states, over a third of workers who have lost 

their jobs through no fault of their own are exhausting even their extended UI benefits. Starting next week, nearly 800,000 workers will be left without additional federal jobless benefits when their extension is set to run out. Over half of these workers live in high unemployment states. Congress has extended benefits to the states 

hardest hit by unemployment in every other recession in the past 25 years. In light 

of today’s jobless numbers, I hope that the House will pass an extension of unemployment benefits. 

Congress and the President need to work together as never before to get Americans back to work as quickly as possible. 

I look forward to the continued focus on labor market conditions by this committee.

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PREPARED STATEMENT OF KEITH HALL, COMMISSIONER, BUREAU OF LABOR STATISTICS BEFORE THE JOINT ECONOMIC COMMITTEE, UNITED STATES CONGRESS, FRIDAY, OCTOBER 3, 2008

Mr. Chairman 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 159,000 in September. By comparison, 

from January through August, payroll employment decreased by 75,000 a month on 

average. In September, job losses continued in manufacturing, construction, and retail trade. Mining and health care employment continued to trend up. The unemployment rate was unchanged at 6.1 percent, following an increase of 0.4 percentage 

point in August. 

Manufacturing job losses continued in September (-51,000), with employment declines occurring throughout much of the sector. In particular, motor vehicle and 

parts manufacturers shed 18,000 jobs; over the past 12 months, employment in this 

industry has fallen by 140,000. In September, manufacturing hours and overtime 

declined by 0.2 hour and 0.1 hour, respectively. 

Construction employment was down by 35,000 over the month. Since its peak in 

September 2006, employment in this industry has fallen by 607,000. Eighty-five percent of the job losses over this 2-year period have occurred in residential building 

and residential specialty trades.Mining employment continued to expand, with an 

increase of 8,000 in September. Mining has added 241,000 jobs since April 2003, 

with most of the growth in oil and gas extraction and support activities. 

In the service-providing sector, retail employment fell by 40,000 over the month, 

with the largest job losses occurring among department stores and motor vehicle 

and parts dealers. Over the past 4 months, auto and parts dealerships have shed 

an average of 12,000 jobs per month, four times the average decline in the first 5 

months of the year (-3,000). 

Elsewhere in the service-providing sector, employment in financial activities declined by 17,000 in September; securities and investment firms accounted for 8,000 

of the loss. The employment services industry, which includes temporary help agencies, continued to contract in September and has lost 303,000 jobs thus far this year. 

Health care employment continued to trend up over the month. However, the September increase of 17,000 was only about half the average monthly gain for the 

prior 12 months (30,000). 

Average hourly earnings for production and nonsupervisory workers in the private 

sector edged up by 3 cents, or 0.2 percent, in September. Over the past 12 months, 

average hourly earnings have increased by 3.4 percent. From August 2007 to August 

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

(CPI-W) rose by 5.9 percent. 

Although Hurricane Ike struck the east coast of Texas and portions of coastal 

Louisiana during the September reference period for the establishment survey, we 

believe the storm did not substantially impact the payroll employment estimates 

that we released today. For weather conditions to have affected payroll employment, 

people would have had to be off work for the entire pay period and not paid for the 

time missed. 

Turning to labor market measures from the survey of households, the unemployment rate held at 6.1 percent in September; it is 1.4 percentage points higher than 

a year earlier. Among the major worker groups, the jobless rate for adult men rose 

by 0.5 percentage point over the month to 6.1 percent, and the rate for blacks increased to 11.4 percent. The unemployment rate for adult women declined to 4.9 

percent in September, partially offsetting a sharp increase in August. 

Approximately 9.5 million persons were unemployed in September, little changed 

from August. Two million of these individuals had been unemployed for 27 weeks 

or more, an increase of 167,000 over the month and 728,000 over the past 12 

months. 

Both the labor force participation rate, at 66.0 percent, and the employment-population ratio, at 62.0 percent, were little changed over the month. Labor force participation has shown virtually no movement over the past 12 months, while the employment-population ratio has declined by 0.9 percentage point. 

The number of persons working part time who would have preferred full-time employment increased by 337,000 in September to nearly 6.1 million. Over the last 12 

months, the number of such workers has grown by 1.6 million. 

In keeping with standard practice, this month we are providing a preliminary estimate of the next benchmark revision to nonfarm payroll employment. Each year 

the Bureau revises, or benchmarks, the payroll survey’s sample-based employment 

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estimates to reflect comprehensive employment counts derived primarily from state 

unemployment insurance tax reports. 

Preliminary tabulations of employment from the state tax reports indicate the 

March 2008 payroll employment will require a small downward revision of 21,000. 

The final benchmark will be incorporated into the establishment survey data released on February 6, 2009.In summary, nonfarm payroll employment declined by 

159,000 in September, and the unemployment rate was unchanged at 6.1 percent. 

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

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From December 2007 to August 2008 (women worker data are not yet available 

for September), women workers have lost the most jobs in the following industries: 

Manufacturing (121,000), Professional and Business Services (119,000), Retail Trade 

(62,900), and Financial Services (60,000). 

During the same time period, men have lost the most jobs in the following industries: Construction (294,000), Manufacturing (220,000), Professional and Business 

Services (151,000), and Retail Trade (147,900). 

Women workers have lost jobs at a faster rate than men in several industries, 

including Manufacturing, Transportation and warehousing, and Utilities. 

Women have gained jobs at a faster rate than men in the following industries: 

Education and health services and Government.

Table 1.—Change in Payroll Employment among Women and Men, by Industry, December 2007 

to August 2008

[in thousands] 

Industry 

Change in 

women work- ers 

Change in 

male workers 

Change in all 

employees 

Percent 

change in 

women work- ers 

Percent 

change in 

male workers 

Percent change in all 

employees 

Total ............................................ 164 -765 -601 0.2 -1.1 -0.4

Total Private ............................... -60 -741 -801 -0.1 -1.2 -0.7

Natural Resources and Mining .. 5 45 50 5.1 7.0 6.8

Construction ............................... -11 -294 -305 -1.2 -4.5 -4.1

Manufacturing ............................ -121 -220 -341 -3.0 -2.2 -2.5

Wholesale Trade ......................... -12.8 -51.8 -64.6 -0.7 -1.2 -1.1

Retail Trade ................................ -62.9 -147.9 -210.8 -0.8 -1.9 -1.4

Transportation and Warehousing -23.6 -5.8 -29.4 -2.1 -0.2 -0.6

Utilities ....................................... -3.7 6.3 2.6 -2.4 1.6 0.5

Information ................................. -18 -17 -35 -1.4 -1.0 -1.2

Financial Activities ..................... -60 9 -51 -1.2 0.3 -0.6

Professional and Business Services ......................................... -119 -151 -270 -1.5 -1.5 -1.5

Education and Health Services .. 343 83 426 2.4 2.0 2.3

Leisure and Hospitality .............. 9 1 10 0.1 0.0 0.1

Other Services ............................ 15 2 17 0.5 0.1 0.3

Government ................................. 224 -24 200 1.8 -0.2 0.9

Source: Current Employment Statistics Survey, Bureau of Labor Statistics 

Table 2.—Unemployment Rates for Selected Demographic Groups 

[seasonally adjusted, except where noted] 

Characteristic 

Time Period 

September 2008

December 2007

(CES Employment 

Peak) 

June 2003

(Overall Unemployment Rate 

Peak) 

November 2001

(Official End of 

Recession) 

March 2001

(Official Start of 

Recession) 

Sex 

Total, 16 and over .................. 6.1 5.0 6.3 5.5 4.3

Men, 16 and over ................... 6.7 5.1 6.7 5.7 4.3

Adult Men, 20 and over ......... 6.1 4.4 6.0 5.0 3.8

Women, 16 and over .............. 5.5 4.9 5.9 5.4 4.2

Adult Women, 20 and over ..... 4.9 4.4 5.2 4.8 3.6

Age 

16-19 years ............................ 19.1 17.1 19.0 15.9 13.8

20-24 years ............................ 10.5 9.4 10.4 9.3 7.6

25-54 years ............................ 5.2 4.1 5.2 4.6 3.3

55 years and over .................. 4.1 3.2 4.4 3.5 2.7

Race and Ethnicity 

White ....................................... 5.4 4.4 5.5 4.9 3.7

Black ....................................... 11.4 9.0 11.5 9.8 8.3

Asian (not seasonally adjusted) ................................ 3.8 3.7 7.8 5.4 3.2

Hispanic or Latino .................. 7.8 6.3 8.4 7.3 6.2

55

Table 2.—Unemployment Rates for Selected Demographic Groups—Continued

[seasonally adjusted, except where noted] 

Characteristic 

Time Period 

September 2008

December 2007

(CES Employment 

Peak) 

June 2003

(Overall Unemployment Rate 

Peak) 

November 2001

(Official End of 

Recession) 

March 2001

(Official Start of 

Recession) 

Educational Attainment, 25 years 

and over 

Less than a high school diploma ................................. 9.6 7.6 9.4 8.0 6.8

High school graduates, no 

college ................................ 6.3 4.7 5.7 5.0 3.8

Some college or associate degree .................................... 5.0 3.7 4.9 4.2 2.7

Bachelor’s degree and higher 2.5 2.2 3.1 2.9 2.0

Source: Current Population Survey, Bureau of Labor Statistics 

Æ