FOR DELIVERY: 9:30 A.M., E.S.T.

FRIDAY, MARCH 7, 2003

Advance copies of this statement are made available to the 

press under lock-up conditions with the explicit 

understanding that the data are embargoed until 8:30 a.m. 

Eastern Standard Time.

Statement of

Kathleen P. Utgoff

Commissioner

Bureau of Labor Statistics

before the

Joint Economic Committee

UNITED STATES CONGRESS

Friday, March 7, 2003

Mr. Chairman and Members of the Committee:

I appreciate this opportunity to comment on the 

February employment and unemployment data that the BLS

released this morning. I look forward to working with you 

and the other Committee members during the next 2 years.

Since this is my first opportunity to testify before the 

Joint Economic Committee in this new Congress, I have tried 

to put this month’s labor market developments into the 

longer-term context of the recent economic downturn.
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Nonfarm payroll employment fell by 308,000 in 

February, after seasonal adjustment. Since the recent 

employment peak in March 2001, payroll employment has 

declined by 1.9 million. The vast majority of that loss 

(1.6 million) occurred in 2001. In 2002, payroll 

employment turned toward slow growth around midyear, but 

losses returned late in the year. 

The widespread declines in February reflected 

continued weakness in manufacturing and substantial job 

losses in construction, retail trade, services, and 

transportation. The unemployment rate, which is obtained 

from a separate survey, was 5.8 percent in February, little 

different than the January estimate and similar to the 

rates that prevailed throughout much of 2002. 

Looking at the details of the February data from our 

survey of employers, monthly employment declines continued 

in manufacturing (-53,000). Factory job losses have been 

nearly continuous since April 1998 and have totaled nearly 

2.5 million; most of the losses have occurred since the 

recession began in March 2001. Last month, job losses were 

widespread in manufacturing, with continued declines in 

industrial machinery, electronic equipment, fabricated 

metals, furniture and fixtures, and chemical products. 

Since November 2000, electronic equipment and industrial 
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machinery have accounted for about two in every five jobs 

lost in manufacturing. 

A sharp employment decline of 48,000 in construction 

followed a gain of half that magnitude in January. Since 

March 2001, the number of construction jobs has declined by 

3.8 percent, substantially less than the declines posted in 

most other labor market downturns. Over the month, the 

relatively small mining industry shed another 3,000 jobs; 

since September 2001, job losses have totaled 24,000.

Within the service-producing sector, retail trade 

employment declined by 92,000 in February. Eating and 

drinking places (-85,000) accounted for most of the 

decline. In retail trade overall, which has a holiday 

buildup and layoff pattern, it is probably best to compare 

the February figure with last July, before seasonal hiring 

began. From that perspective, retail employment is down by 

163,000, about half coming from losses in eating and 

drinking places.

Employment in services had grown throughout most of 

2002, but fell by 86,000 in February, the largest monthly 

job loss since the fall of 2001. Amusement and recreation 

services and hotels and lodging places each fell 

considerably short of their normal February hiring. 

Industries that showed modest job growth included 
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engineering and management services, legal services, and 

health services, although health services recorded its 

smallest increase since 1999. 

Over the month, transportation employment declined by 

29,000. Since January 2001, job losses in the industry 

have totaled nearly 300,000. The string of job losses in 

communications that began in May 2001 continued, with a 

decline of 7,000 in February. 

Mortgage banking, an industry that has bolstered 

employment in finance for the last few years, added 8,000 

jobs in February. Since January 2001, employment in this 

industry has risen by 122,000, reflecting high levels of 

refinancing activity and strength in the housing market. 

In February, average hourly earnings for production 

and nonsupervisory workers rose 11 cents to $15.08. When 

combined with an unusual decline in January, the 2-month 

average is fairly close to its recent pace, which has seen 

hourly earnings grow by 3.2 percent over the year.

Looking at some of our measures obtained from the 

survey of households, the February unemployment rate of 5.8 

percent was about the same as in January and within the 

5.6-to-6.0-percent range that prevailed throughout 2002. 

In February, 8.5 million persons were unemployed, a 

2.8 million increase since the fall of 2000. As 
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unemployment grew over this period, the number of long-term 

jobless tripled. In February, about 1.9 million persons 

had been jobless for 27 weeks or longer and comprised about 

22 percent of total unemployment.

In summary, the labor market experienced renewed 

weakness in February, as payroll employment declined 

sharply. Job losses were widely distributed across 

industries. The unemployment rate was 5.8 percent, similar 

to the rates that prevailed throughout much of 2002. 

My colleagues and I now would be glad to answer your 

questions. 
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Note on the impact of the call-up of military 

reservists on the employment data.

According to information released by the U. S. 

Department of Defense, about 150,000 reservists had been 

called into active duty as of mid-February. BLS is unable 

to quantify the impact of this call-up on its employment 

figures. With regard to the payroll survey:

• In concept, persons on active military duty for 

the entire survey reference period are not 

included on employer payrolls.

• Some reservists would have held jobs not covered 

by the payroll survey--such as the self employed 

or those in agriculture--and others may not have 

held jobs at all.

• Many of the reservists have been called up quite 

recently. Any who worked at all for their 

regular employer during the survey reference 

period would have been counted on the employer’s 

payroll.

• If reservists are replaced by new workers on an 

employer’s payroll, there would be no net change 

in the number of jobs counted. If reservists are 
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not replaced, a net decline in the employer’s job 

count would result.

With regard to the household survey, the Current 

Population Survey only measures the civilian 

noninstitutional population. Also, the population levels 

to which the labor force estimates are controlled are not 

adjusted to reflect the call-up of reservists. As a 

result, the survey will not register the impact of these 

call-ups.