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44–817 2008

S. HRG. 110–663 

THE EMPLOYMENT SITUATION: JULY 2008 

HEARING 

BEFORE THE

JOINT ECONOMIC COMMITTEE 

CONGRESS OF THE UNITED STATES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

AUGUST 1, 2008 

Printed for the use of the Joint Economic Committee 

( 

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(II) 

JOINT ECONOMIC COMMITTEE 

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

SENATE HOUSE OF REPRESENTATIVES 

CHARLES E. SCHUMER, New York, Chairman 

EDWARD M. KENNEDY, Massachusetts 

JEFF BINGAMAN, New Mexico 

AMY KLOBUCHAR, Minnesota 

ROBERT P. CASEY, JR., Pennslyvania 

JIM WEBB, Virginia 

SAM BROWNBACK, Kansas 

JOHN E. SUNUNU, New Hampshire 

JIM DEMINT, South Carolina 

ROBERT F. BENNETT, Utah 

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 Minority 

KEVIN BRADY, Texas 

PHIL ENGLISH, Pennsylvania 

RON PAUL, Texas 

MICHAEL LASKAWY, Executive Director 

NAN GIBSON, Deputy Director 

CHRISTOPHER J. FRENZE, Republican Staff Director 

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C O N T E N T S 

OPENING STATEMENT OF MEMBERS

Page 

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

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

WITNESS

Statement of Dr. Keith Hall, Commissioner, Bureau of Labor Statics; and 

Dr. John Greenlees, Research Economist, Office of Prices and Living Conditions, Bureau of Labor, Statistics, U.S. Department of Labor ......................... 3 

SUBMISSIONS FOR THE RECORD

Prepared statement of Senator Charles E. Schumer ............................................ 14 

Prepared statement of Representative Carolyn B. Maloney ................................ 16 

Chart entitled, ‘‘Monthly Change in Nonfarm Payrolls’’ ...................................... 18 

Chart entitled, ‘‘Annual Change in Real Earnings’’ .............................................. 19 

Prepared statement of Dr. Keith Hall, Commissioner, Bureau of Labor Statistics, together with Press Release No. 08–1049 .................................................. 20 

Report entitled, ‘‘Equality in Job Loss: Women Are Increasingly Vulnerable 

to Layoffs During Recessions’’ ............................................................................. 22 

Article from New York Times entitled, ‘‘More Arrows Seen Pointing to a 

Recession’’ ............................................................................................................. 33 

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THE EMPLOYMENT SITUATION: JULY 2008 

FRIDAY, AUGUST 1, 2008 

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

The committee met at 9:30 a.m. in Room 562 of the Dirksen Senate Office Building, the Honorable Vice Chair Carolyn B. Maloney, 

presiding. 

Senators present: Brownback and Saxton. 

Representatives present: Maloney. 

Staff present: Christina Baumgardner, Ted Boll, Heather 

Boushey, Tanya Doriss, Chris Frenze, Nan Gibson, Gretta Goodwin, Colleen Healy, Bob Keleher, Tyler Kurtz, Annabelle Tamerjan, 

and Jeff Wrase. 

OPENING STATEMENT OF HON. CAROLYN B. MALONEY, VICE 

CHAIR, A U.S. REPRESENTATIVE FROM NEW YORK 

Vice Chair Maloney. I would like to call the meeting to order 

and welcome all of the gentlemen who will be testifying today. We 

will be having a vote, so I will have to adhere to a very tight schedule. 

Good morning, and I would like to thank Commissioner Hall for 

testifying today on the July employment situation. In July the 

economy shed jobs for the seventh straight month for a total of 

463,000 jobs lost so far in 2008, and there we see it. 

The unemployment rate rose two-tenths of a percentage point in 

July to 5.7 percent, a full percentage point higher than a year ago. 

With these grim statistics, it would be hard not to conclude that 

the labor market is in a downturn. 

Congress is already at work on a second stimulus package which 

Speaker Pelosi has announced we will take up next month. 

We continue to see mounting evidence that a significant downturn in the economy may be underway. Yesterday we learned that 

the U.S. economy grew by a paltry 1.9 percent in the second quarter of 2008—well below expectations—and that the fourth quarter 

growth in 2007 was revised to show negative growth of 0.2 percent. 

American families are paring back their spending because their 

real wages are as low now as they were in October 2001, which 

was when we were in a recession. The chart shows this. 

[Chart entitled, ‘‘Monthly Change in Nonfarm Payrolls’’ appears 

in the Submissions for the Record on page 18.] 

[Chart entitled, ‘‘Annual Change in Real Earnings’’ appears in 

the Submissions for the Record on page 19.] 

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Gasoline and food prices are skyrocketing. They have severely 

weakened the buying power of the American consumer. The weak 

recovery of 2000 has left families especially vulnerable to an economic downturn. 

Real family income is about $1000 lower now than it was in 

2000, and families have accumulated little in the way of savings. 

Declining home prices means that many families will be unable to 

access home equity lines of credit to make ends meet as they did 

in prior recessions. 

For decades families could rely on women’s earnings to boost 

household income during a recession, but wives and mothers may 

not be able to shelter their families from the economic storm that 

is hitting now. 

Up until the 2000s, during recessions women typically lost very 

few jobs on net. However, all this changed with the recession of 

2001 when women lost jobs on par with men in the industries that 

were hardest hit. 

We for decades have worked for equal pay and equal wages and 

equal jobs, but where we have achieved equality is in job loss. 

The 2000s recovery was also unique as it was the first recovery 

in the post-World War II period during which women’s employment 

rates did not return to their pre-recession peak. 

This is a trend to watch because the only families that are getting ahead are those with a working wife. Families without a working wife have real incomes today that are nearly identical to what 

they were over 35 years ago. 

Congress has already taken numerous steps to help buffer families from the effects of this economic downturn. Most families have 

received their recovery rebates, and the President has just signed 

into law our Housing Package aimed at stemming the tide of foreclosures. 

But there is more to do to get the economy back on track. Over 

half of the states are projecting budget shortfalls for fiscal year 

2009, and this will lead not only to cutbacks in necessary services 

but likely higher unemployment for women who disproportionately 

work in social service agencies, in education, and in state government. 

So far this year private employers have shed 651,000 jobs while 

government has added 188,000 jobs, but government will not likely 

be able to continue to act as an engine of job growth once budgets 

are cut. 

We need a second stimulus package that includes fiscal aid to the 

states and funds for infrastructure investment to give our sagging 

economy a much-needed boost and to promote job creation. 

I hope the President will work with us in Congress to get Americans back to work as quickly as possible. Chairman Schumer and 

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

this Committee, along with our Ranking Members. 

[The prepared statement of Senator Charles E. Schumer appears 

in the Submissions for the Record on page 14.] 

[The prepared statement of Representative Maloney appears in 

the Submissions for the Record on page 16.] 

Vice Chair Maloney. I now will recognize Commissioner Hall. 

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STATEMENT OF DR. KEITH HALL, COMMISSIONER, BUREAU OF 

LABOR STATISTICS, U.S. DEPARTMENT OF LABOR, ACCOMPANIED BY: MR. PHIL RONES, DEPUTY COMMISSIONER, BUREAU OF LABOR STATISTICS; AND DR. JOHN GREENLEES, 

RESEARCH ECONOMIST, OFFICE OF PRICES AND LIVING 

CONDITIONS, BUREAU OF LABOR. STATISTICS, U.S. DEPARTMENT OF LABOR 

Commissioner Hall. Thank you, Madam Chair, Members of the 

Committee: 

I appreciate the opportunity to comment on the employment and 

unemployment data that we released this morning. 

In July, non-farm payroll employment continued to trend down, 

dropping 51,000. The unemployment rate rose from 5.5 to 5.7 percent. Thus far in 2008, payroll employment has fallen by 463,000, 

or an average of 66,000 per month. 

In July job losses continued in several industries, including construction, manufacturing, and employment services, particularly in 

temporary help. Health care and mining continued to add jobs. 

Average hourly earnings for production and nonsupervisory 

workers in the private sector rose by 6 cents, or 0.3 percent, in 

July. Over the past 12 months, average hourly earnings rose by 3.4 

percent. From June 2007 to June 2008, the Consumer Price Index 

for Urban Wage Earners and Clerical Workers rose by 5.4 percent. 

Turning now to some of our measures from the Household Survey, both the number of unemployed persons at 8.8 million and the 

unemployment rate at 5.7 percent, increased in July. 

Over the past 3 months there has been a notable increase in unemployment of youth aged 16 to 24. Each summer, millions of 

young people move into the labor market. This year the summertime influx of youth into the labor market was about the same as 

last year. However, fewer young people were able to find jobs. 

For the three-month period May through July, the unemployment rate for 16 to 19 year olds averaged 19 percent, compared 

with an average of 15.7 percent for those same three months last 

year. 

Similarly, the May through July average jobless rate for 20 to 24 

year olds was 10.2 percent this year compared with 8.0 percent 

over the same period last year. 

Not all of the increase in unemployment in the last 3 months 

was among youth since joblessness also rose also among those 25 

years and older. 

The employment-to-population ratio for all persons 16 years and 

older was unchanged in July at 62.4 percent, but has declined from 

63.0 percent a year earlier. 

Among the employed, the number of part-time workers who 

would prefer to work full time continued to rise in July. The number of such workers has increased by 1.4 million over the past 12 

months to 5.7 million. 

To summarize July’s labor market developments, payroll employment continued to trend down and the unemployment rate rose to 

5.7 percent. 

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

[The prepared statement of Commissioner Hall appears in the 

Submissions for the Record on page 20.] 

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Vice Chair Maloney. Thank you. 

Well first of all I would like to get your comment on an article 

today in The New York Times. The headline says, ‘‘More Arrows 

Seen Pointing To A Recession.’’ 

Would you agree with this headline? 

Commissioner Hall. I would say that it is generally accepted 

that a recession is a significant decline in economic activity spread 

across the economy that lasts for more than a few months. 

There is no established rule with respect to say the number of 

jobs lost, or the number of months of job lost, but it is true that 

in the last two recessions the National Bureau of Economic Research waited for 8 months of job loss before they declared a recession. 

I would like to add though that the severity of a labor market 

downturn is also an important determination in a recession, and in 

the last two recessions the job loss was around 1.5 million jobs; and 

over this last 7 months we have lost about a third of that. So it 

is not as severe. 

Vice Chair Maloney. Yet we have shed jobs for the seventh 

straight month. 

Commissioner Hall. That is correct. 

Vice Chair Maloney. And if we continue to shed jobs into the 

next month, would you then claim it is a recession as this headline 

says we are pointed towards? 

Commissioner Hall. You know, I don’t know what—obviously I 

don’t know what—the labor market is going to do in the future. It 

is important that we have had job loss for so many months in a 

row. It is important that it has not been as severe. It is still job 

loss, however. 

There is a good reason for sort of labeling something a recession 

as opposed to a downturn. The last two recessions, for example, 

lasted only about 8 months. The last recession in particular lasted 

about 8 months, but it took the labor market 3.5 years to recover. 

It is a pretty significant thing when you have a recession because 

it takes so long for the labor market to recover. 

Vice Chair Maloney. Can you tell us what the big picture is in 

employment this month? Did the economy create jobs? And how 

does this compare to trends in recent jobs? 

We saw from today’s report that since December 2007 private 

employers have shed 651,000 jobs, but government has added 

188,000 jobs. How many jobs were lost in the private sector last 

month, and did the government do any hiring last month? 

Commissioner Hall. Sure. The unemployment rate increased 

from 5.5 percent to 5.7 percent in July. To put that in a slightly 

broader perspective, over the last three months the unemployment 

rate has averaged 5.6 percent. In the prior three months it averaged 4.9 percent. So this is a significant trend. 

The job loss at 51,000 jobs this month brings the total decline 

this year so far to 463,000 jobs, or 66,000 jobs per year. 

The weakness remains in construction, manufacturing, and temporary help services. Wholesale and retail trades have posted 

steady losses. And after many months of declines, losses in financial activities have slowed a little bit. 

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5 

But we have had gains in education, health services, government, and mining thus far in 2008. 

Private payroll jobs this month declined by 76,000. That is compared to an average so far this year of a loss of 93,000. 

Vice Chair Maloney. Okay, did the government do any hiring 

last month that you’re aware of? 

Commissioner Hall. Yes. The government added about 25,000 

jobs, and that job gain was centered in local government and state 

government hiring. 

Vice Chair Maloney. Okay, given the growing constraints on 

state and local governments where we are getting reports that they 

will be facing deficits, what do you think will happen to government employment in the months to come? And what will this mean 

for the overall labor market? 

Commissioner Hall. Obviously if state governments continue to 

have financial troubles and they do start to shed jobs, this is going 

to add to the labor market difficulties. 

Vice Chair Maloney. I would like to go back to the statement 

earlier that this is the seventh month of consecutive job loss and 

ask you specifically: Do consecutive months of job losses mean that 

the economy is in a recession? 

Commissioner Hall. It certainly means that economic growth is 

not strong enough to support job growth. I hesitate to say just that 

alone means you are in a recession, because other things are important in that and I think it is sort of important—at least from 

my view—that sort of a declaration of a recession remains with the 

private sector at the National Bureau of Economic Research, since 

they are a private group. 

Vice Chair Maloney. Well how many months of job losses do 

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

Commissioner Hall. The best I can say is that the last two recessions we had eight months of job loss before the recession was 

declared. 

Vice Chair Maloney. And what are some of the other indicators 

that are part of determining a recession on top of eight consecutive 

months of job loss? 

Commissioner Hall. The NBER cites a number of things. I 

think the labor market performance is extremely important. It 

would be the job loss and the magnitude of job loss. They also cite 

things like industrial production as being important, real income 

growth as being important. 

Vice Chair Maloney. How much of a factor do you think is the 

housing crisis playing into the economy that we are confronting 

with seven months of consecutive job loss, and the loss of values 

in homes so that resident constituents cannot refinance equity lines 

now because of the loss of value of their homes? 

Commissioner Hall. Well it is true that a lot of the job loss is 

centered in construction and construction-related industries, but 

the weakness is fairly broad. So it may well be—— 

Vice Chair Maloney. So it is not particularly the housing market that is forcing this? 

Commissioner Hall. No. No, it is not. 

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6 

Vice Chair Maloney. So when we put all this together, it appears that the employment situation looks rather grim. Would you 

agree? 

Commissioner Hall. I would certainly agree that this is not a 

strong job market report. 

Vice Chair Maloney. And typically in an economic downturn or 

in a recession how long does it take for employment to recover to 

its pre-recession peak? 

Commissioner Hall. Over the last I think couple of decades the 

average recovery has been about 20 months, and this last recession 

it was 39 months. 

Vice Chair Maloney. And how long do wages and other compensation take to recover? 

Commissioner Hall. Well in terms of the level, typically compensation does not go down much more than a quarter or so before 

it starts to grow again, but the growth in compensation has gone 

down all the last few recessions and has never recovered. 

Vice Chair Maloney. So based on your analysis of today’s report, does it appear that we may be in for a difficult period for the 

last market in the months to come? 

Commissioner Hall. I do not want to speculate too much since 

we do have the data that’s coming out. 

Vice Chair Maloney. Well talking about data, one item that 

was very striking to me was the fact that American families are 

paring back their spending because their real wages are as low now 

as they were in October of 2001, which was our last recession correct. So that to me is shocking, that their wages are the same as 

2001. 

Could you elaborate, please? 

Commissioner Hall. Sure. Although there has been some nominal wage growth, the wage growth clearly has not kept up with inflation. In particular, energy and food inflation. 

Vice Chair Maloney. Okay. 

Commissioner Hall. And to some degree it is the issue of how 

much is the problem in the labor market, how much of the problem 

is energy and food inflation, but in a sense it does not matter because wages have not kept up with inflation. 

Vice Chair Maloney. I would like to ask some questions on 

women and the economy. I asked the Joint Economic Committee to 

do a report on the impact of the economic downturn on women. 

Women are usually the people who buffer families during a recession or an economic downturn. 

They also, regrettably, are usually very poor in older age. One of 

the strongest indicators of poverty at an older age is being a mother, particularly a single mother. 

So I would like to turn to asking you about women’s employment 

trends. Is it true that women’s employment rates are typically 

below men’s? 

Commissioner Hall. Yes, it is. 

Vice Chair Maloney. Are there any age groups in which women’s employment rates are above men’s, or nearly equal to men’s? 

Commissioner Hall. Among teenagers, the employment to population ratios are sometimes higher for women to men, but that’s 

it. 

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7 

Vice Chair Maloney. Since it is too soon to tell how the current 

labor market downturn will turn out, or the impact it will eventually have on women’s employment, I would like to turn to some 

question about women’s experiences in the 2001 recession, which is 

the numbers that we looked at in our report. 

The report—and actually I congratulate the Committee staff that 

are sitting right here for all of their hard work on this report—but 

the report showed that women lost more jobs in the 2001 recession 

than they had in prior recessions. 

So my question is: Why do you think that the 2001 recession was 

so hard on women workers compared to prior recessions? 

Commissioner Hall. Well during the labor market downturn 

during this last recession—which takes you from maybe March 

2001 to August 2003—women did lose about 670,000 jobs on net. 

That is compared to a job loss with men of just over 2 million jobs. 

The job loss for women had sort of a similar industry pattern as 

it did for men. Literally a million women lost jobs in manufacturing 

over that period. Six hundred thousand lost jobs in trade, transportation, utilities. And almost half a million lost jobs in professional 

and business services. 

So I do think women’s participation by industry had a big influence on the job loss. 

Vice Chair Maloney. So that they are in more different industries is why the job loss was there. So what is so troubling to me 

is that we cannot achieve equality in wages, but we are achieving 

equality in job loss. Why do you think that is? 

Why do you think women cannot achieve equality in wages? We 

have passed one bill after another in this area—equal pay for equal 

work. We just passed yesterday in the House of Representatives 

the Pay Fairness Protection Act to protect and encourage women 

to be able to find out what other employees are making, and compare their wages and seek fair treatment. Why do you think it has 

taken so long? 

We did another report that looked at 20 years of income between 

men and women and found a consistent 40 percent gap. And after 

you factored in reasons why it might occur—because of having a 

child, or taking care of a sick parent, or family responsibilities— 

there still was a 20 percent unexplained wage gap. This was a General Accounting Office, a nonpartisan accounting office, test and report that they did. 

I am wondering if you have any ideas of why this is so consistent? The report looked at 20 years of work life of men and 

women and found a persistent 40 percent gap after explaining reasons for it, an unexplained gap of 20 percent. Some would say that 

possibly that unexplained gap was discrimination. So can you comment on why is changing that wage gap so persistent, so strong, 

and does not seem to budge? 

Commissioner Hall. That is getting a bit outside my expertise. 

I can say that the basic data you described, I think that is generally our data. That sounds correct, the 40 percent wage gap. 

Vice Chair Maloney. Well let’s get back to the numbers. The 

2000s recovery was also different from prior recoveries as it was 

the first recovery in the post-World War II period during which 

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8 

women’s employment rates did not return to their pre-recession 

peak. 

Can you tell me, during the 2000s’ recovery did women’s employment rates return to where they were at their peak in the strong 

recovery of the 1990s? 

Commissioner Hall. No. The rate peaked at about 58 percent 

in April of 2000, and currently it is below that at the moment. 

Vice Chair Maloney. And was the lack of recovery of employment rates a sharp departure from prior trends? 

Commissioner Hall. Yes. The long-run trend for decades and 

up through the late 1990s was a steady growth in women’s employment rates, with the exception of recessions. And since the 2001 recession, this long-run trend for whatever reason has not returned, 

or is showing no signs of returning, and instead the ratio for 

women has been relatively flat over the past two years. 

Vice Chair Maloney. And how have women fared as the economy has shed this year in particular, and in what industries have 

they lost the most jobs? 

Commissioner Hall. Overall, women have actually gained 

about 200,000 jobs so far this year, but that masks a significant 

loss in a number of industries. In manufacturing women lost about 

97,000 jobs so far this year. Trade, transportation, utilities, there 

was a drop of about 70,000 jobs. Retail trade, a drop of about 

50,000 jobs. And professional business services was a drop in 

69,000 jobs. 

The gains for women have been centered in the industries that 

have been doing well still: education and health services. They 

have still had some gains, as have men, and government as well. 

Vice Chair Maloney. As a New Yorker, I would like you to get 

it back to me, if you could get me a picture, or a review of how jobs 

are faring in the Great State of New York City and New York 

State, which I have the honor of representing, but you can get that 

to me later, as this is a meeting for the entire country. 

I feel that we need proper data in order to make good policy decisions, so I want to be as supportive as I can for you to continue 

your work, Commissioner, to give us the information that we need. 

So I would like to ask you a few questions about your budget, 

if I could, please. 

Commissioner Hall. Sure. 

Vice Chair Maloney. Can you tell us what has been happening 

to your budget over the past two years? 

Commissioner Hall. Sure. In 2007 the BLS Appropriation was 

about $15 million below the President’s request. We took a number 

of temporary measures to deal with that, and we dealt with it well 

without cutting any programs. 

This year we were funded at about $30 million below the President’s request, and I think we have done a really good job of maintaining our programs up to now, but we have taken a number of 

temporary measures to get by. 

Vice Chair Maloney. So what are some of those temporary 

measures that you have had to take? 

Commissioner Hall. We have everything from a hiring freeze, 

to restrictions in travel and training. We’ve trimmed a number of 

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9 

duced some of the detail in some of our data. Unfortunately we had 

to trim some of the Metropolitan Area Employment Data, some 

things like that. And we have delayed some improvements to a couple of our core programs that are very important that are getting 

due. 

Vice Chair Maloney. What would happen to the Bureau of 

Labor Statistics Programs and Surveys if you have to operate 

under a Continuing Resolution in Fiscal Year ’09? And can you sustain another year of temporary reductions? 

Commissioner Hall. First, I do not think we can continue with 

a third year of temporary reductions. We run the risk of reducing 

the quality of our data across the board if we do not go ahead and 

restore some of the funding for a number of our programs. 

And we need to sort of protect two of our flagship programs. The 

Consumer Price Index in particular has an important part—the geographic and housing part of it is based right now on the 1990 Census. That has gotten quite old. 

We really need to spend some money to update that. And the 

current Population Survey, which is a lot of what we have been 

talking about right now, we have had a big jump in the cost of 

that. So we are going to really have to increase our spending on 

that. 

So as a result, if we take care of our major programs then it looks like we are going to have to trim as much as $50 million permanently from our programs, which means we are going to have 

to go and try to pick some of our lower priority programs and cut 

them out. 

Vice Chair Maloney. Can you tell us the ways in which the 

quality of our economic indicators might suffer if your budget request is not met? And is it wise to allow our economic statistics to 

deteriorate in the midst of an economic downturn? 

Commissioner Hall. Well of course if we don’t look to sort of 

trimming, permanently trimming some programs, then we’ve got a 

real problem, at least in my view, of continuing to maintain the 

quality of all of our data. 

Our data is extremely important not only for households and 

businesses making decisions, but government programs rely quite 

a bit on our data. 

For example, I mentioned the Consumer Price Index. That is 

used not only to adjust Income Tax rates, but it helps guide half 

a trillion dollars of Social Security Benefits that are based on the 

Consumer Price Index. 

So if we go ahead and take care of these programs, then we are 

going to have to look to some of these other smaller programs that 

have been around for years that are very valuable but we just— 

our priorities are just going to have to be to take care of the big 

things. 

Vice Chair Maloney. And how much of real wages have fallen 

over the past year? And how do real wages compare to the past few 

years for our workers? 

Commissioner Hall. Real wages have fallen. Over say the past 

12 months, real wages have declined by about 1.8 percent. 

Vice Chair Maloney. And how does that compare to the past 

few years? 

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10 

Commissioner Hall. Real wages have been either flat or falling 

the last few years. This is a bigger decline in large part because 

of food and energy prices. 

Vice Chair Maloney. I would like to look at the shift that we 

are seeing in many businesses as employers shift more of the burden of rising health care costs to their workers. Doesn’t that reduce 

the purchasing power of the take-home pay even more when their 

pay has been so stagnant? 

Commissioner Hall. Yes, it does. In fact, with rising health 

care costs two things can happen, and we have seen some trends 

to this. 

First, as employers may push more of the rising health care insurance costs onto workers, and as you say reducing the purchasing power of take-home pay; and the second, the rising costs 

of employer-provided health insurance may crowd out wage increases. There has been maybe some evidence of that, as well. 

Vice Chair Maloney. Let’s talk about the effects of food and gas 

prices on wages. Last month this Committee held a hearing on the 

rising costs of food and the effects on the pocketbooks of American 

families. 

Government forecasters predicted that for 2008 we will see a 5 

to 6 percent increase to the CPI for food consumed at home. Additionally, consumers are expected to experience higher gasoline 

prices. 

Given that wages are falling, prices for food and energy are rising, unemployment is high and lasting longer, and people are exhausting their unemployment benefits, it appears getting hard to 

make ends meet for a lot of Americans. Would you agree? 

Commissioner Hall. Yes. As we just discussed, the average 

wage growth has not kept up with inflation. I think it is particularly concerning that a lot of the inflation comes from food and energy, which means it is particularly hard for modest income families. 

Vice Chair Maloney. And what does this signal about the 

health of our economy? 

Commissioner Hall. Well besides the obvious direct effects of 

lower wages, rising food, energy, and gasoline prices may well be 

creating a drag on economic growth. It may have contributed to the 

weakening of the U.S. labor market. 

Vice Chair Maloney. We recently, as Congress, passed a housing bill to stabilize the housing markets. Federal Reserve Chairman Bernanke had testified that we needed to really solidify or 

bring stability to that market in order to move forward. But your 

testimony earlier indicated that the economic downturn was not 

just in housing, but around all of the different areas of our economy. Is that correct? Would you elaborate some more? 

Commissioner Hall. Sure. Yes, the weakness in the labor market is broader than just housing-related things. Obviously that can 

be for a lot of reasons. The real—certainly a concern with the 

downturn in housing is not just the direct effect but the indirect 

effect it has on people’s ability to spend, and their confidence in 

spending going forward. We have perhaps seen evidence of that because the labor market weakness is broad. 

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11 

Vice Chair Maloney. Well I want to thank you for your testimony. I have been called for votes, so I will have to rush over and 

vote. But I want to assure you that I will work very hard to make 

sure that your budget requests are in place, and certainly will be 

a strong advocate that you have the necessary resources in order 

to get the proper information so that we in Congress on both sides 

of the aisle can make proper decisions in ways that we can respond 

to the important information that you are putting before us. 

I just, before parting, would like to ask if you have any other 

items that you would like to share with us that you think are important. Many Members are on the Floor. This is closing days. It 

is a very difficult time. The Chairman is in another committee 

meeting voting, as are other Members on this Committee, but I will 

certainly get a transcript of your statements to them. 

Again, I thank you for your testimony. 

Commissioner Hall. Thank you. 

Vice Chair Maloney. The meeting is adjourned. 

(Whereupon, at 10 a.m., Friday, August 1, 2008, the hearing was 

adjourned.) 

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Submissions for the Record 

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STATEMENT OF KEITH HALL, COMMISSIONER, BUREAU OF LABOR STATISTICS

Madam Chair and Members of the Committee: 

I appreciate this opportunity to comment on the employment and unemployment 

data that we released this morning. 

Nonfarm payroll employment continued to trend down in July (¥51,000), and the 

unemployment rate rose from 5.5 to 5.7 percent. Thus far in 2008, payroll employment has fallen by 463,000, or an average of 66,000 per month. In July, job losses 

continued in several industries, including construction, manufacturing, and employment services. Health care and mining continued to add jobs. 

Employment in construction declined by 22,000 in July. Since its September 2006 

peak, construction employment has decreased by 557,000. Nearly three-fourths of 

the decline (¥402,000) has occurred since October 2007. 

Manufacturing employment fell by 35,000 in July. Job losses have averaged 

39,000 per month thus far in 2008 compared with an average loss of 22,000 per 

month during 2007. 

Employment services lost 34,000 jobs over the month, with nearly all of the decline in temporary help. Temporary help employment has declined by 268,000 since 

a peak in December 2006, with more than two-thirds of the loss (¥185,000) occurring since January. 

In July, employment in health care rose by 33,000, in line with the prior 12- 

month average. Mining added 10,000 jobs in July, the third consecutive gain of this 

magnitude. 

Average hourly earnings for production and nonsupervisory workers in the private 

sector rose by 6 cents, or 0.3 percent, in July. Over the past 12 months, average 

hourly earnings rose by 3.4 percent. From June 2007 to June 2008, the Consumer 

Price Index for Urban Wage Earners and Clerical Workers (CPI–W) rose by 5.4 percent. 

Turning now to some of our measures from the household survey, both the number of unemployed persons, at 8.8 million, and the unemployment rate, at 5.7 percent, increased in July. 

Over the last 3 months, there has been a notable increase in unemployment of 

youth (16 to 24 years). Each summer, millions of young people move into the labor 

market. This year, the summertime influx of youth into the labor market was about 

the same as last year; however, fewer young people were able to find jobs. For the 

3-month period, May through July, the unemployment rate for 16- to 19-year-olds 

averaged 19.0 percent, compared with an average of 15.7 percent for those same 3 

months in 2007. Similarly, the May-through-July average jobless rate for 20- to 24- 

year-olds was 10.2 percent this year, compared with 8.0 percent over the same period last year. Not all of the increase in unemployment in the last 3 months was 

among youth; joblessness also rose among those 25 years and older. 

The employment-population ratio for all persons 16 years and older was unchanged in July, at 62.4 percent, but has declined from 63.0 percent a year earlier. 

Among the employed, the number of part-time workers who would prefer to work 

full time continued to rise in July. The number of such workers has increased by 

1.4 million over the past 12 months to 5.7 million. 

To summarize July’s labor market developments, payroll employment continued 

to trend down, and the unemployment rate rose to 5.7 percent. 

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

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