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

FRIDAY, OCTOBER 7, 2005

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 Daylight Time.

Statement of

Philip L. Rones

Deputy Commissioner

Bureau of Labor Statistics

before the

Joint Economic Committee

UNITED STATES CONGRESS

Friday, October 7, 2005

Mr. Chairman and Members of the Committee:

Thank you for the opportunity to discuss the September 

employment and unemployment statistics that we released 

this morning.

Nonfarm payroll employment was little changed 

(-35,000) in September, and the unemployment rate increased 

from 4.9 to 5.1 percent. September labor market 

developments reflected both the impact of Hurricane Katrina 

and ongoing job market trends. Over the 12-month period 

prior to September, nonfarm employment increased by an 

average of 194,000 per month, and the unemployment rate 

trended down from 5.4 to 4.9 percent.
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Before looking at the data in greater detail, I’d like 

to briefly review the extraordinary efforts the Bureau of 

Labor Statistics, the Census Bureau, and our state partners 

undertook to obtain information from our sample 

establishments and households in the areas affected by 

Hurricane Katrina. 

The hurricane struck the Gulf Coast on August 29, 

prior to the reference periods for our September surveys. 

The severity and scope of the damage led us to carefully 

evaluate our data collection and estimation procedures. As 

a result, we modified some aspects of survey operations and 

we announced those changes about 2 weeks ago. We did not 

alter the concepts or definitions for either survey. In 

the payroll survey, employed persons are those who receive 

pay for any part of the pay period that includes the 12th 

day of the month. Therefore, people who were on payrolls 

in the aftermath of Hurricane Katrina were counted as 

employed even if they were absent from work. In the 

household survey, employed persons include those who are 

temporarily absent from their jobs, whether they are paid 

or not. To be classified as unemployed, persons must be 

actively seeking work and be available to take a job.

In the establishment survey, BLS and our state 

partners worked especially hard to contact respondents in 
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hurricane-affected areas in September. We also modified 

our estimation procedures so that businesses that were 

closed following the storm, as well as firms that were 

still operating, would be better represented in the 

estimates. In the household survey, Census Bureau 

interviewers worked under difficult conditions to interview 

sample households in the Gulf Coast. (Interviews were not 

conducted in two parishes in the New Orleans area that were 

under mandatory evacuation orders.) These extra steps

undoubtedly helped us get a better picture of the national 

labor market situation for September. 

Turning to the data from our payroll survey, one way 

to roughly gauge the impact of the hurricane on job growth 

in September is to compare the over-the-month employment 

change with the monthly average for the prior year. The 

change reported for September--a loss of 35,000 jobs--is 

about 230,000 less than the average monthly gain over the 

previous 12 months. Using this simple approach to gauge 

the hurricane impact assumes that, in the absence of the 

storm, employment growth would have followed its recent 

trend. To test that assumption, we constructed a rough 

estimate of the change in payroll employment from August to

September excluding all of the sample units in the disaster 

areas. This exercise showed that total nonfarm employment 
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would have increased by an amount in line with the prior 

year's average. We will know more about the hurricane’s 

impact when local employment estimates become available 

later this month.

As we look at the official September data for specific 

industries, I would note that job losses in the stormrelated areas may have been offset or exacerbated by 

developments in the rest of the country. In September, 

retail trade employment overall was down by 88,000. There 

was a particularly large employment decline in food and 

beverage stores (-30,000); much of this decline reflects 

industry restructuring and associated store closures 

unrelated to the hurricane. In leisure and hospitality, 

the job total fell by 80,000 in September, in part due to 

the hurricane. There were large losses in food services 

and drinking places (-54,000) and in amusement, gambling, 

and recreation establishments (-19,000). 

Employment in professional and business services 

increased by 52,000 over the month, with a large gain in 

temporary help services (32,000). The employment increase 

in temporary help services for September was more than 

twice as large as the average monthly gain for the prior 12 

months. It is possible that some of the September growth 
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was due to the hiring of workers to assist in posthurricane recovery efforts.

 Health care added 37,000 jobs over the month, 

continuing its long-term growth. Employment also continued 

to trend up in financial activities.

In the goods-producing sector of the economy, 

construction added 23,000 jobs in September, equal to the 

average monthly gain for the prior year. Manufacturing 

employment was down by 27,000 in September; much of the 

decline reflected a strike in the aerospace industry that 

took 18,000 workers off payrolls.

Turning to some of the major labor market indicators 

from our household survey, the number of unemployed persons 

rose by 270,000 over the month and the jobless rate 

increased from 4.9 to 5.1 percent. Most of the increase in 

unemployment occurred among job losers. The labor force 

participation rate held at 66.2 percent in September.

In summary, payroll employment was little changed in 

September, and the unemployment rate rose to 5.1 percent. 

It is clear that Hurricane Katrina adversely affected labor 

market conditions in September. However, we cannot 

quantify precisely the overall effects of the disaster and 

its aftermath on the September employment and unemployment 
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figures. We hope to get additional insight as more data 

become available.

My colleagues and I now would be glad to address your 

questions.