[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]

GROWTH, OPPORTUNITY, AND CHANGE IN
THE U.S. LABOR MARKET AND THE
AMERICAN WORKFORCE: A REVIEW OF
CURRENT DEVELOPMENTS, TRENDS,
AND STATISTICS

=======================================================================

HEARING

BEFORE THE

SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR, AND PENSIONS

COMMITTEE ON EDUCATION
AND THE WORKFORCE

U.S. House of Representatives

ONE HUNDRED FIFTEENTH CONGRESS

SECOND SESSION

__________

HEARING HELD IN WASHINGTON, DC, JUNE 21, 2018

__________

Serial No. 115-22

__________

Printed for the use of the Committee on Education and the Workforce

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Available via the World Wide Web: www.govinfo.gov
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__________

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COMMITTEE ON EDUCATION AND THE WORKFORCE

VIRGINIA FOXX, North Carolina, Chairwoman

Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Duncan Hunter, California Virginia
David P. Roe, Tennessee Ranking Member
Glenn ``GT'' Thompson, Pennsylvania Susan A. Davis, California
Tim Walberg, Michigan Raul M. Grijalva, Arizona
Brett Guthrie, Kentucky Joe Courtney, Connecticut
Todd Rokita, Indiana Marcia L. Fudge, Ohio
Lou Barletta, Pennsylvania Jared Polis, Colorado
Luke Messer, Indiana Gregorio Kilili Camacho Sablan,
Bradley Byrne, Alabama Northern Mariana Islands
David Brat, Virginia Frederica S. Wilson, Florida
Glenn Grothman, Wisconsin Suzanne Bonamici, Oregon
Elise Stefanik, New York Mark Takano, California
Rick W. Allen, Georgia Alma S. Adams, North Carolina
Jason Lewis, Minnesota Mark DeSaulnier, California
Francis Rooney, Florida Donald Norcross, New Jersey
Tom Garrett, Jr., Virginia Lisa Blunt Rochester, Delaware
Lloyd K. Smucker, Pennsylvania Raja Krishnamoorthi, Illinois
A. Drew Ferguson, IV, Georgia Carol Shea-Porter, New Hampshire
Ron Estes, Kansas Adriano Espaillat, New York
Karen Handel, Georgia
Jim Banks, Indiana

Brandon Renz, Staff Director
Denise Forte, Minority Staff Director

------

SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

TIM WALBERG, Michigan, Chairman

Joe Wilson, South Carolina Gregorio Kilili Camacho Sablan,
David P. Roe, Tennessee Northern Mariana Islands
Todd Rokita, Indiana Ranking Member
Lou Barletta, Pennsylvania Frederica S. Wilson, Florida
Rick W. Allen, Georgia Donald Norcross, New Jersey
Jason Lewis, Minnesota Lisa Blunt Rochester, Delaware
Francis Rooney, Florida Carol Shea-Porter, New Hampshire
Lloyd K. Smucker, Pennsylvania Adriano Espaillat, New York
A. Drew Ferguson, IV, Georgia Joe Courtney, Connecticut
Ron Estes, Kansas Marcia L. Fudge, Ohio
Jim Banks, Indiana Suzanne Bonamici, Oregon

C O N T E N T S

----------
Page

Hearing held on June 21, 2018.................................... 1

Statement of Members:
Walberg, Hon. Tim, Chairman, Subcommittee on Health,
Employment, Labor, and Pensions............................ 1
Prepared statement of.................................... 2
Wilson, Hon. Frederica S., a Representative in Congress from
the State of Florida:...................................... 3
Prepared statement of.................................... 5

Statement of Witnesses:
Farren, Dr. Michael, Research Fellow, Study of American
Capitalism, Mercatus Center at George Mason University..... 29
Prepared statement of.................................... 31
Meyer, Mr. Jared, Senior Fellow, Foundation for Government
Accountability............................................. 53
Prepared statement of.................................... 55
Moore, Mr. Stephen, Distinguished Visiting Fellow, Project
for Economic Growth, The Heritage Foundation............... 8
Prepared statement of.................................... 17
Spriggs, Dr. William, Professor of Economics, Howard
University................................................. 36
Prepared statement of.................................... 38

Additional Submissions:
Mr. Moore:
Charts................................................... 11
Chairman Walberg:
Prepared statement of Mercatus Center.................... 83
Article: Mercatus On Policy.............................. 88

GROWTH, OPPORTUNITY, AND CHANGE IN
THE U.S. LABOR MARKET AND THE
AMERICAN WORKFORCE: A REVIEW OF
CURRENT DEVELOPMENTS, TRENDS,
AND STATISTICS

----------

Thursday, June 21, 2018

House of Representatives

Committee on Education and the Workforce,

Subcommittee on Health, Employment, Labor, and Pensions

Washington, D.C.

----------

The Subcommittee met, pursuant to call, at 10:05 a.m., in
Room 2175, Rayburn House Office Building. Hon. Tim Walberg
[Chairman of the Subcommittee] presiding.
Present: Representatives Walberg, Allen, Lewis, Estes,
Banks, Wilson of Florida, Norcross, Blunt Rochester, Courtney,
and Fudge.
Also Present: Representatives Foxx and Scott.
Staff Present: Marty Boughton, Deputy Press Secretary;
Courtney Butcher, Director of Member Services and Coalitions;
Michael Comer, Deputy Press Secretary; Rob Green, Director of
Workforce Policy; Nancy Locke, Chief Clerk; John Martin,
Workforce Policy Counsel; Kelley McNabb, Communications
Director; James Mullen, Director of Information Technology;
Alexis Murray, Professional Staff Member; Krisann Pearce,
General Counsel; Benjamin Ridder, Legislative Assistant;
Meredith Schellin, Deputy Press Secretary; Olivia Voslow,
Legislative Assistant; Joseph Wheeler, Professional Staff
Member; Lauren Williams, Professional Staff Member; Tylease
Alli, Minority Clerk/Intern and Fellow Coordinator; Mishawn
Freeman, Minority Staff Assistant; Ron Hira, Minority Labor
Policy Fellow; Eunice Ikene, Minority Labor Policy Advisor;
Stephanie Lalle, Minority Deputy Communications Director; Andre
Lindsay, Minority Staff Assistant; Richard Miller, Director
Labor Policy; Udochi Onwubiko, Minority Labor Policy Counsel;
and Veronique Pluviose, Minority Staff Director.
Chairman Walberg. A quorum being present, the hearing will
come to order. Good morning and welcome to today's Subcommittee
hearing. I would like to thank the members of the Subcommittee
and our witnesses for being here today as we examine important
and timely topics. Current trends in the U.S. labor market,
their benefits for American workers, the Bureau of Labor
Statistics_BLS_labor market economic information and
methodologies.
On the 1st of June, BLS released its May 2018 Employment
Situation Report, which detailed the most recent data on U.S.
employment. The report found numerous encouraging developments
in the American economy and workforce, including improvements
to rates of unemployment, job growth, and wage growth.
According to the report, the unemployment is down to 3.8
percent, the lowest rate of unemployment in nearly two decades.
Since May 2017, the total number of unemployed workers has
dropped by 772,000, to 6.1 million people. And there has been a
28.6 percent drop in individuals experiencing long-term
unemployment.
As unemployment has fallen, the number of new jobs
available across the country has risen. Since February 2017, a
month after President Trump was sworn into office, the U.S.
economy has added nearly 3 million jobs nationwide. In
particular, health care, construction, manufacturing, retail
trade, and mining have all experienced particularly robust job
growth. This job upsurge has contributed to one of the most
outstanding and astounding developments yet.
For the very first time in BLS reporting history, the
number of job seekers, 6.3 million Americans, has been eclipsed
by the number of available jobs, 6.7 million job openings
nationwide. We know that in addition to a strong job market,
wage growth can help families achieve financial independence
and security. According to the report, the workforce has
experienced a rise in wages with average hourly earnings
increasing by 71 cents over the last 12-month period. Much of
this growth can be attributed to tax reform as well as efforts
by Congress and President Trump to rein in regulatory burdens.
The Tax Cuts and Jobs Act, which House Republicans
delivered last year and President Trump signed into law in
December, 2017, has lowered taxes for millions of Americans.
Ninety percent of workers are seeing more in their take-home
pay thanks to tax reform and the law has helped to spur
powerful economic growth across the country.
Strengthening the workforce and adding more jobs to the
U.S. economy have been top priorities for House Republicans and
the Trump administration. And tax reform has delivered bigger
paychecks and greater opportunities for more Americans.
Today's hearing presents an opportunity to delve into BLS's
most recent information on the U.S. labor market. It recently
published data on workers engaging in contingent and
alternative forms of work and to gain a better understanding of
BLS products and data to ensure we, as policy makers, and the
public at large can best utilize this information. I look
forward to hearing from our panel of witnesses and from other
members of the Subcommittee today as we talk about these
developments and ways to promote even greater growth for more
American employers and workers.
I now yield to today's--I yield to today's Subcommittee
Ranking Member, Representative Wilson, for her opening remarks.
[The statement of Chairman Walberg follows:]

Prepared Statement of Hon. Tim Walberg, Chairman, Subcommittee on
Health, Employment, Labor, and Pensions

Good morning, and welcome to today's subcommittee hearing. I would
like to thank members of the subcommittee and our witnesses for being
here today as we examine important and timely topics - current trends
in the U.S. labor market, their benefits for American workers, and a
review of the Bureau of Labor Statistics' (BLS) labor market economic
information and methodologies.
On the first of June, BLS released its May 2018 Employment
Situation Report, which detailed the most recent data on U.S.
employment. The report found numerous encouraging developments in the
American economy and workforce, including improvements to rates of
unemployment, job growth, and wage growth.
According to the report, unemployment is down to 3.8 percent--the
lowest rate of unemployment in nearly two decades. Since May 2017, the
total number of unemployed workers has dropped by 772,000 to 6.1
million people, and there has been a 28.6 percent drop in individuals
experiencing long-term unemployment.
As unemployment has fallen, the number of new jobs available across
the country has risen. Since February 2017, the month after President
Trump was sworn into office, the U.S. economy has added nearly 3
million jobs nationwide. In particular, health care, construction,
manufacturing, retail trade, and mining having all experienced
particularly robust job growth.
This job upsurge has contributed to one of the most astounding
developments yet: for the very first time in BLS reporting history, the
number of job seekers - 6.3 million Americans - has been eclipsed by
the number of available jobs - 6.7 million job openings nationwide.
We know that in addition to a strong job market, wage growth can
help families achieve financial independence and security. According to
the report, the workforce has experienced a rise in wages, with average
hourly earnings increasing by 71 cents over the last 12-month period.
Much of this
growth can be attributed to tax reform, as well as efforts by
Congress and President Trump to rein in regulatory burdens.
The Tax Cuts and Jobs Act, which House Republicans delivered last
year and President Trump signed into law in December 2017, has lowered
taxes for millions of Americans. Ninety percent of workers are seeing
more of their take-home pay thanks to tax reform, and the law has
helped to spur powerful economic growth across the country.
Strengthening the workforce and adding more jobs to the U.S. economy
have been top priorities for House Republicans and the Trump
administration, and tax reform has delivered bigger paychecks and
greater opportunities to more Americans.
Today's hearing presents an opportunity to delve into BLS's most
recent information on the U.S. labor market, its recently published
data on workers engaging in contingent and alternative forms of work,
and to gain a better a understanding of BLS products and data to ensure
we, as policymakers, and the public at-large can best utilize this
information.
I look forward to hearing from our panel of witnesses and from
other members of the subcommittee today as we talk about these
developments and ways to promote even greater growth for more American
employers and workers.
______

Ms. Wilson of Florida. I want to thank Chairman Walberg for
holding this hearing on current developments and trends in the
U.S. labor market and the American workforce.
Wage stagnation and inequality remain a burden on workers
and a drag on the American economy. The top-level labor market
indicators have all been moving in a positive direction since
the Obama administration rescued us from the depths of the
Great Recession.
The number of jobs has steadily increased over the past
seven years with more than 18 million jobs added. The national
unemployment rate has declined from 10 percent in 2009 to 3.8
percent now. However, those positive numbers have not
translated into higher wages. One key reason--for this is that
link between pay and rising productivity is broken. From 1973
to 2016, the typical worker saw an increase in wages of just 13
percent despite overall productivity rising almost 75 percent.
Between 1979 and 2016, the top 1 percent of earners saw nearly
150 percent cumulative gains and annual wages almost four times
faster than average wage growth.
Wage stagnation has become worse under this administration.
As you can see from this chart, President Trump inherited an
economy that was beginning to show signs of modest wage growth.
See the uptick between 2012 and 2017 on the left side.
However, since President Trump took office, wages have been
mostly flat. Over the last year, the average American has not
gotten ahead. You can see how the trend lines have flattened
out in the chart. Growth and average hourly earnings on an
inflation, inflation adjusted basis was zero. And in the case
of production and non-supervisory workers who represent four
fifths of private employed Americans, these groups actually
lost ground over the last year as their real average hourly
earnings have fallen.
These wage trends are more than just a line on the chart.
This is a real blow to workers across the country who have been
working hard and struggling to get by while healthcare and
other costs go up.
The tax cut has further exacerbated income inequality.
According to the Tax Policy Center, by 2027 the top 1 percent
of households will receive 83 percent of the benefits from
their $1.8 trillion tax scam. Proponents claim that this bill
would boost workers' wages but we can see that since the tax
bill was enacted, inflation adjusted wage growth has been zero.
Meanwhile, wealthy corporations are on track to spend a record
$1 trillion of this massive windfall from the Republican tax
scam on dividends, and stock buybacks that benefit shareholders
and executives.
We know some of the reasons why workers' wages are stagnant
and income inequality continues to grow. For example, Congress
and the administration have failed to update federal standards
for the minimum wage and overtime. In addition, Congress has
failed to strengthen workers' rights to collectively bargain
for better wages and the administration has appointed officials
who are aggressively undermining the limited protections that
do exist.
Next week marks the 80th anniversary of the Fair Labor
Standards Act. Landmark legislation that provided millions of
working people with protection from substandard wages. In the
absence of federal action, 18 states raised their minimum wage
at the beginning of this year. Earlier this week, voters in the
District of Columbia joined eight other states in phasing out
the minimum wage for tipped workers. Yet many states have
failed to act.
And in Miami, where I live, legislation that would have
provided many workers with a minimum wage of $13 an hour was
vetoed by the mayor. That's why we must act at the federal
level to boost the minimum wage. Committee Democrats stand
ready to pass policies that boost wages and combat income
inequality. We should pass the Raise the Wage Act, H.R. 15, a
bill to increase the minimum wage to $15 per hour by 2024
giving more than 41 million Americans a pay increase. We should
enact the Restoring Overtime Pay Act, H.R. 4505, which codifies
the Obama administration 2016 overtime rule. The Trump
Administration's abandonment of this rule cost low and middle
income salaried workers 1.2 billion per year in lost wages.
Committee Democrats also support the WAGE Act, H.R. 4548,
legislation to improve workers' ability to bargain for better
wages by strengthening workers' rights to join a union free
from retaliation, establish meaningful deterrents for
unscrupulous employers who interfere with their, with these
rights.
I hope that we can have a serious discussion about these
policies and how we can combat decades-long wage stagnation and
income inequality. I thank the witnesses for joining us here
today and I look forward to hearing their testimony. I yield
back the balance of my time.
[The statement of Ms. Wilson follows:]

Prepared Statement of Hon. Frederica S. Wilson, a Representative in
Congress from the state of Florida

I want to thank Chairman Walberg for holding this hearing on
current developments and trends in the U.S. labor market and the
American workforce.
Wage stagnation and inequality remain a burden on workers and a
drag on the American economy. The top-level labor market indicators
have all been moving in a positive direction since the Obama
administration rescued us from the depths of the Great Recession. The
number of jobs has steadily increased for over the past 7 years, with
more than 18 million jobs added. The national unemployment rate has
declined from 10 percent in 2009 to 3.8 percent now.
However, those positive numbers have not translated into higher
wages.
One key reason for this is that the link between pay and rising
productivity is broken. From 1973 to 2016, the typical worker saw an
increase in wages of just 13 percent, despite overall productivity
rising almost 75 percent. Between 1979 and 2016, the top one percent of
earners saw nearly 150 percent cumulative gains in annual wages--almost
four times faster than average wage growth.
Wage stagnation has become worse under this administration. As you
can see from this CHART, President Trump inherited an economy that was
beginning to show signs of modest wage growth - see the uptick between
2012 and 2017 on the left side. However, since President Trump took
office, wages have been mostly flat. Over the last year, the average
American has not gotten ahead. You can see how the trend lines have
flattened out in the CHART-- growth in average hourly earnings on an
inflation adjusted basis was zero! And in the case of production and
non-supervisory workers, who represent four-fifths of privately
employed Americans, these groups actually lost ground over the last
year, as their real average hourly earnings have fallen.
These wage trends are more than just a line on the chart. This is a
real blow to workers across the country, who have been working hard and
struggling to get by while health care and other costs go up.
The tax cut has further exacerbated income inequality. According to
the Tax Policy Center, by 2027, the top 1 percent of households will
receive 83 percent of the benefits from their $1.8 trillion tax scam.
The proponents claimed that this bill would boost workers' wages, but
we can see that since the tax bill was enacted, inflation adjusted wage
growth has been zero. Meanwhile, wealthy corporations are on track to
spend a record $1 trillion of this massive windfall from the Republican
tax scam on dividends and stock buybacks that benefits shareholders and
executives.
We know some of the reasons why workers' wages are stagnant and
income inequality continues to grow. For example, Congress and the
Administration have failed to update federal standards for the minimum
wage and overtime. In addition, Congress has failed to strengthen
workers' rights
to collectively bargain for better wages, and the Administration
has appointed officials who are aggressively undermining the limited
protections that do exist.
Next week marks the 80th anniversary of the Fair Labor Standards
Act, landmark legislation that provided millions of working people with
protection from substandard wages. In the absence of federal action,
eighteen states raised their minimum wage at the beginning of this
year. Earlier this week, voters in the District of Columbia joined 8
other states in phasing out the subminimum wage for tipped workers. Yet
many states have failed to act, and in Miami, legislation that would
have provided many workers with a minimum wage of $13 an hour was
vetoed. That's why we must act at the federal level to boost the
minimum wage.
Committee Democrats stand ready to pass polices that boost wages
and combat income inequality. We should pass the Raise the Wage Act
(H.R. 15), a bill to increase the minimum wage to $15.00 per hour by
2024, giving more than 41 million Americans a pay increase. We should
enact the Restoring Overtime Pay Act, H.R. 4505, which codifies the
Obama administration's 2016 overtime rule. The Trump administration's
abandonment of this rule costs low and middle income salaried workers
$1.2 billion per year in lost wages.
Committee Democrats also support the WAGE Act, H.R. 4548,
legislation to improve workers' ability to bargain for better wages by
strengthening workers' rights to join a union free from retaliation and
establish meaningful deterrents for unscrupulous employers who
interfere with these rights.
I hope that we can have a serious discussion about these policies
and how we can combat decades-long wage stagnation and income
inequality.
I thank the witnesses for joining us today and look forward to
hearing their testimony. I yield back the balance of my time.
______

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Chairman Walberg. I thank the gentlelady. Pursuant to
Committee rule 7(c), all members will be permitted to submit
written statements to be included in the permanent hearing
record and without objection, the hearing record will remain
open for 14 days to allow such statements and other extraneous
material referenced during the hearings to be submitted for the
official hearing record.
It is now my pleasure to introduce our distinguished
witnesses. Mr. Stephen Moore is a Distinguished Visiting Fellow
with the Project for Economic Growth at The Heritage Foundation
Institute for Economic Freedom and Opportunity. Welcome.
Mr. Michael Farren, is a Research Fellow with the Project
for the Study of American Capitalism at the Mercatus Center at
George Mason University. Welcome.
Dr. William Spriggs is a Professor of Economics at Howard
University and is testifying on behalf of the AFL-CIO. Welcome.
And finally, Mr. Jared Meyer is a Senior Fellow at the
Foundation for Government Accountability. Welcome to all of
you.
I will now ask our witnesses to raise your right hand.
[Witnesses sworn.]
Chairman Walberg. Thank you. Let the record reflect the
witnesses all answered in the affirmative. Before I recognize
you to provide your testimony let me just briefly remind you, I
think all of you know the lighting system there. Just like on
the highways, green, keep on going in your five-minute
testimony. When you see yellow be prepared to stop, you have a
minute left, and when red hits, conclude your remarks as
quickly as possible. We would appreciate that. And the same
will be true for our committee as we have the opportunity to
ask questions.
And so now I would recognize Mr. Farren first for--I am
just reading as this was put here. Let's look down there and
read directly. Mr. Moore, starting from the left here and
moving. We recognize you and thank you.

TESTIMONY OF STEPHEN MOORE, DISTINGUISHED VISITING FELLOW,
PROJECT FOR ECONOMIC GROWTH, THE HERITAGE FOUNDATION

Mr. Moore. Thank you, Mr. Chairman. I appreciate the
opportunity to do this. I was thinking as I was preparing this
testimony that I was in this room 10 years ago when things
weren't very good for the labor force and I have been doing
this for a long time. I have been in this business 30 years. I
am happy to report that the state of the American job market is
as healthy as it has been probably in at least 20 years and
maybe in 30 years. So it is good to report some really positive
news.
And we all know about the reduction in the unemployment
rate, that it has hit--by the way, full employment. Economists
have generally defined full employment as four to four and a
half percent so when you have a 3.8 percent unemployment rate
that means you have a labor shortage and that's a good problem
for a country to have. We--according to the latest labor
department report, there are about 5 million more jobs than
there are people to fill them.
And by the way, I think that Congresswoman Wilson really
raised the most important challenge we have right now is now
how do we get the wages up? Because boy, do we have the jobs.
And so that is the challenge.
But I thought I would just walk you through a few of the
trends that are going on. I don't know if we can put these up
on the screen. But I just thought I would show you just a
couple of quick things.
Number one, this relates to what Congresswoman Wilson was
talking about, about how do we get the wages up? I was one of
the architects of the Trump tax plan. I worked very closely
with my friend Larry Kudlow who is now the National Economic
Council Chairman as a senior economic advisor to Trump, and we,
I just wanted to make it very clear to all of you that the
intention of that bill from the very first day we started, was
not to help rich people. We love rich people. We want everybody
to get rich in this country but that was not our intention.
From the very first day we started working with Donald
Trump about this is how do we get middle class wages up because
Congresswoman Wilson is exactly right. We just have seen
stagnation in middle income for at least the last 10 years and
our goal was bring that number up.
We have created the jobs. I think there is no question that
the tax bill has been a job creator, but Ms. Wilson is right
that we haven't yet seen the wage growth and that is the big
challenge. And the reason I show this chart is we do believe
that the way you bring wages up is to increase the productivity
of American workers and to increase investment by business.
When businesses invest that's when you get higher wages.
You're right, we haven't seen. It's too early to tell whether
that effect is going to happen, but we are very hopeful that
because you can see there is a very high correlation between
the amount that businesses invest and the amount that wages go
up.
The next chart just shows you the unemployment data and I
think, you know, you are all familiar with this. I just thought
that one of the interesting things is that the U6 number which
includes people who are forced into part-time jobs because they
can't find a full-time job or people who are just discouraged
workers, that number has fallen a lot as well. And I think that
is one of the most important indicators of health of the labor
force.
The next chart is, this is one of the most important ones.
The big challenge that I see for your committee in terms of,
you know, continuing with the healthy economy but also making
sure that the gains are shared by everyone, is how do we get
more people into the workforce? This is a problem that started,
you know, with the recession and it still hasn't been cured,
which is too many people are sitting on the sidelines and are
not in the labor force. And what is disturbing about this is
that most people don't understand this. Yes, it is obviously
true that we have, you know, 10,000 people retiring every day.
baby boomers are retiring and that is a challenge. But the big
problem, if you look at this chart, is that actually older
people are working more. We have actually increased the number
of people or the percentage of people by age over 55 that are
working.
But look at the bottom, look at the young people. This is a
big, big problem right now that Americans between the age of 16
and 25 are working less. And I am a big believer, I think the
statistics are very clear on this that the--your future
earnings are very related to when you start working.
So someone who starts working at age 16 is a lot more
likely to be successful later in life than someone who starts
working at 20 or 22 or 24. We do a real disservice when we have
policies that discourage young people from working. And the
good news is for young people the jobs are out there, we just
have to get them into those jobs. So that's an important one
and I think there is one more chart I wanted to show. And this
has to do with the minimum wage issue.
And look, I'm not--I want the highest wages for American
workers. I completely share what Ms. Wilson was saying. We need
to raise wages. I just reject the idea that raising the minimum
wage is a very good way of doing that. And I would submit to
you if there were going to be more increases in the minimum
wage, lets at least think about a policy that creates a teenage
minimum wage that would be, you know, six or seven dollars an
hour so you can get those young people into the workforce. It
is one of the most important things we can do for future
earnings and future employment. Thank you.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Chairman Walberg. Thank you and now, Dr. Farren, I
recognize you for your five minutes.

TESTIMONY OF MICHAEL FARREN, RESEARCH FELLOW, STUDY OF AMERICAN
CAPITALISM, MERCATUS CENTER AT GEORGE MASON UNIVERSITY

Dr. Farren. Good morning, Chairman Walberg, Ranking Member
Wilson and distinguished members of the Subcommittee. I'm
grateful for the invitation to discuss how the work done by the
Bureau of Labor Statistics serves policymakers, researchers,
and ordinary people.
My name is Michael Farren. I am a research fellow in the
Mercatus Center at George Mason University and my previous
research has left me pretty well acquainted with a lot of the
data used and distributed by the BLS. In particular the Current
Population Survey, which provides a lot of the information that
is used in the BLS's monthly update on the state of the
economy.
The underlying goal of my testimony is to help members of
Congress better understand the BLS and the information that it
provides. The main takeaways from that are that the BLS, now
and throughout the past, represents some of the best economics
research available. Its data collection and analytical work are
generally seen as the gold standard that other economists
attempt to emulate.
The weak link in the chain however, is how the BLS
communicates the information it has developed. The BLS website
is the primary platform through which data users interact with
the BLS. But despite efforts to make it more user friendly,
attempting to access the BLS data and actually understand it
accurately can sometimes feel like wandering through a
labyrinth.
Thankfully though, the leaders at the BLS recognize the
agency's struggles in this area and are taking steps to
improve. But improvements should include additional expanded
outreach to non-economists in additional--in addition to the
outreach to researchers and policy wonks.
So how can the BLS better connect with John Q. Public? And
the unemployment rate is a good example of how it can do this
better. Many Americans know a family member or a friend who
once worked but grew discouraged and gave up looking for a job,
especially during the Great Recession. But because these
discouraged workers aren't actively looking for work, the BLS
doesn't actually include them in its headline unemployment
rate.
That fact that the official unemployment measures families
to account these people as jobless previously ignited some
suspicion and distrust in the official estimates. The problem
is that the definition used for unemployment by the BLS makes a
great deal of sense to economists. It's accurate for an
economist to understand unemployment to be but it seems
arbitrary to non-economist leading to a suspicion that policy
makers are influencing the official statistics in favor of one
political party or another.
A better approach would be to appeal to both economists and
to John Q. Public adding additional measures of unemployment
that make more intuitive sense to ordinary people, like the
comprehensive jobless rate. That way the BLS could engage with
non-economists and actually provide them with a starting point
to understand the national economy better.
The idea behind the comprehensive jobless rate is the
result of previous Mercatus Winship by Scott Winship of the
Joint Economic Committee and it represents the most holistic
measure of unemployment possible. It simply counts all adults
and adolescents who say they want a job as unemployed. And in
doing so it provides an upper bound on the job--upper bound on
the measure of joblessness. And therefore a comparison
benchmark for the official BLS unemployment measures and in
this way it is even useful to economists.
In short, the comprehensive jobless rate could be one way
for the BLS to more fully engage with the general public and
help them understand the overall economic situation better.
In conclusion, the BLS is rightfully regarded as an
objective, data focused organization whose efforts are
essential to a better understanding of the U.S. economy. Its
data collection and analysis set the professional standard for
many economists to follow. However, non-economists would have
great difficulty using the BLS's resources to actually answer
their own questions about the economy. Now this might be
unavoidable. We shouldn't necessarily expect that deep economic
understanding is commonplace and, in fact, some people might
argue that deep economic understanding isn't even commonplace
among economists. Regardless though, a worthwhile endeavor
would be to make the data curated by the BLS more useful and
more easily accessible to ordinary people as well as the
economists who use it on a regular basis. Thank you very much.
[The statement of Dr. Farren follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mrs. Foxx. [Presiding] Thank you, Dr. Farren. Dr. Spriggs,
you are recognized for five minutes.

TESTIMONY OF WILLIAM SPRIGGS, PROFESSOR OF ECONOMICS, HOWARD
UNIVERSITY

Dr. Spriggs. Thank you very much, Mrs. Foxx, and I want to
thank Chair Walberg and Ranking Member Wilson for inviting me
and thank you to the members of the subcommittee who are here.
As the Ranking Member mentioned, the great puzzle we have
is to raise the wages of the American workers not just for the
sake of the workers and for our families but for the sake of
our economy. We need to have a recovery that is led by wages,
not a recovery that is led by workers going into debt.
The trends that started in 2010 have continued. They have
not accelerated and so that's good news that nothing has
happened to slow down the rate at which we have been creating
jobs, at the rate at which job openings have been coming
relative to the number of unemployed persons, and the labor
force participation rate for African Americans has continued to
recover during this expansion, chasing the unemployment rate
and the unemployment population ratio down and up for those
communities. All that is good news.
The puzzle for labor economists and what we all as policy
makers have to answer is at this level of labor market
tightness why aren't wages going up? And labor economists have
begun to look and challenge themselves and their theories on
this point. What is becoming clear from that research is that
institutions, in fact, matter.
One reason economists are finding that institutions matter
is that we have increased concentration of firms both at the
local and at the national level. This creates an inordinate
power in the hands of employers, what economists call
monopsony, and it isn't always this sort of textbook, ``I'm the
only coal mill in town or whatever and so I'm the only
employer.'' This is a broader sense of which employers have
power over workers in their bargaining position.
So if you look at what labor economists are doing now to
look at that, Economist Benmelech, Bergman, and Kim have
bothered to look at the local level, what is the concentration
of firms and what does that mean for wages? And what they have
found is what we would predict, that the increasing
concentration of firms at the local level has lowered the wages
of workers.
What are the policies that can counterbalance that
phenomenon? What is clear in their data is that when workers
are unionized, they become that counterbalancing force. So they
don't observe the negative pressure on wages from monopsony
where they see higher unionization rates. This is melded
together with what we know over the broader horizon of U.S.
economic history and the post--war era that when we had higher
union density, wages did go up with productivity and we saw the
wages of nonunion members go up as well as union members.
In fact, when you decompose what has happened for nonunion
members, researchers have been able to document that nonunion
workers actually had more downward pressure on their wages from
the decline in union density than wages going down from
competition with Chinese imports. So this is an important
factor to consider.
Over the longer span, research has now been able to
document what happens to inequality broadly in our society and
what happens to the link between wages and productivity because
of our decline in union density. And it's quite clear that
having workers' voice matters a lot. Raising the minimum wage
is very important in this equation. That's the other way in
which we help low wage workers combat the type of monopsony
that takes place particularly among low-wage workers.
This October will be the second longest period we have
failed to raise the federal minimum wage since 1938. June will
be the longest. Since there is no pending law, we will probably
break those records. Congress has the ability to change the
institutions, put them back to where America had them, restore
to workers the voice and power that they had. That's in
Congress'Congress's power. Thank you.
[The statement of Dr. Spriggs follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mrs. Foxx. Thank you, Dr. Spriggs. Mr. Meyer, you are
recognized for five minutes.

TESTIMONY OF JARED MEYER, SENIOR FELLOW, FOUNDATION FOR
GOVERNMENT ACCOUNTABILITY

Mr. Meyer. Thank you very much, Mrs. Foxx, and I want to
thank Chair Walberg and Ranking Member Wilson and other members
of the Committee for the opportunity to testify today. My name
is Jared Meyer and I'm a senior fellow at the Foundation for
Government Accountability, which is a non-profit research
organization that promotes work at both the state and federal
levels.
The American economy is generating more jobs outside of the
traditional employee-employer relationship and implementing the
right policies to accommodate this change is impossible if all
of you don't have access to comprehensive, up-to-date data.
Imagine navigating an unfamiliar city when your smart phone is
out of battery or getting married before meeting your future
in-laws. Thankfully the Bureau of Labor Statistics recently
released the Contingent Workers Supplement, or what I will
refer to as the CWS, to survey the prevalence of these
alternative work arrangements like independent contracting.
While the Committee should applaud this release, here are three
improvements to ensure that the survey doesn't under estimate
the workforce and give an incomplete picture of how Americans
are working.
First, the CWS needs to capture work arrangements that are
used for supplemental income. Second, the survey needs a longer
look-back period given the nature of flexible work. And third,
the survey needs to be released regularly.
So all of us constantly hear about these online platforms
like Airbnb and Lyft. But the changes to the workforce, they
extend far beyond transportation and travel. Consider my mom's
story. When I was growing up, my mom would go to Goodwill and
buy old sweaters that she would then sew into mittens. I grew
up in Minnesota, so mittens were pretty necessary. But then,
during the holidays, she would go to local craft fairs and sell
them and on a good weekend, maybe she would sell a dozen pairs
to put towards Christmas gifts to the family.
But imagine what my mom could do today. With just a few
clicks of a mouse, and in a few minutes, she could have an
online store on Etsy that could reach people all over the
world, turning her hobby into a major source of income for our
family. This is what technology has done for the labor force,
opened more avenues for entrepreneurship.
So the new CWS comes after a 13-year break from conducting
the survey. During that time, there were many organizations
that attempted to measure the technology-fueled change in the
workforce. The consensus reached was that the number of people
working as independent contractors has increased over the
years. Most estimates place the share of workers who are
working as freelancers, as independent contractors between
about 15 percent and 30 percent of the workforce.
But according to the newly released CWS, independent
contractors represent just 6.9 percent of the workforce. This
is less than half the level of other estimates and less and
lower from the levels of the previous CWS which was released in
2005. Do any of us believe that there are fewer people
freelancing today than in 2005, two years before the iPhone was
first released?
I don't question the accuracy of the CWS but its design
leads to an incomplete picture of the labor force because it
doesn't count most independent contractors. Its main
shortcoming is that it only measures alternative work if these
jobs are a respondent's primary source of income.
See, I earn about 20 percent of my income from independent
contractor work, but I wouldn't be counted as participating in
an alternative work arrangement under the CWS because I earn
more as a full-time employee at FGA. So this decision likely
explains the dramatic difference between the CWS and other
reputable estimates. But something needs to change when
millions of Americans are working hard and to earn supplemental
income, but this isn't reflected in government data.
To count independent contractors, I suggest that the CWS
use an earnings threshold of $600 a year rather than a majority
of income. This is the same threshold that the IRS uses to
require firms to issue 1099 tax forms to workers. Many workers,
especially millennials, desire these types of nontraditional
jobs. Less than 10 percent of independent contractors
identified by the CWS would have preferred a traditional work
arrangement and the data show that independent contractors are
as educated as traditional workers. They earn just as much and
they're just as secure in their jobs.
Workers also value flexibility, but the CWS only considers
work done during the previous week. Given the nature of
freelancing work, the CWS should ask about independent
contractor jobs done over the previous year. For example, a
teacher may freelance as a math tutor over the summer or a
landscaper may work as a ski instructor over the winter. And
rather than just being a sporadic survey, BLS should release an
update to the CWS every two years as it did from 1995 to 2001
but with the additional updates to give a more broader and
accurate picture of the labor market.
When crafting policies to help your constituents, you need
access to comprehensive, up to date labor market data. This is
why, to summarize, the CWS should measure independent
contractors based on a $600 a year earning threshold. Second,
use a one year look back period instead of a one week and
third, be released every two years rather than us having to
wait another 13 years to see this data.
Thank you again for the opportunity to testify and I look
forward to your questions.
[The statement of Mr. Meyer follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mrs. Foxx. Thanks to all of our witnesses for your
excellent presentations. I will begin the questioning and yield
myself five minutes.
Mr. Moore, as you presented in your testimony, many
economic trends for American workers are moving in very
positive directions. Unemployment rate at the lowest rate we
have seen in two decades, the number of unemployed workers
dropped by nearly three quarters of a million people, wages are
beginning to rise. In fact, for the first time on record, the
number of job openings now 6.7 million actually exceeds job
seekers. Some have suggested President Trump was handed an
economy that was already creating jobs and was primed for the
sort of growth we are now experiencing.
However, in your testimony you pointing to an economic
forecast which suggests growth of more than 4 percent in the
second quarter of this year, exceeding the growth rate seen as
President Obama left office. Knowing of the positive impacts of
the tax law passed by Congress, is there another recent policy
change impacting the current economic boom which is significant
in terms of its positive financial impact on the typical
American household?
Mr. Moore. Well, first of all, I mean, I don't think there
is any question that the tax bill has had a very positive
effect, I mean, if you look at the growth rates in the economy
we have seen just unquestionably a bump up in growth and, you
know, we had a recovery over the last seven years but it was
the weakest recovery we had from a recession since the Great
Depression. So it was an anemic recovery. It was a long
recovery but it was very weak with very little wage growth and
not enough growth.
The average growth rate from 2009, June of 2009 when the
recovery began though June of 2016 was less than 2 percent per
year. We--the growth, you know, I have heard you all talking
about how do we, you know, reduce income inequality. How do we
reduce poverty? How do we get wages up? You have to have
growth. You have to have economic growth.
Now there is some really good news that just came out
literally yesterday from the Federal Reserve Bank of Atlanta
that the growth rate for the 2nd quarter is--looks like it's
going to come and 4 and a half to 5 percent. That's a
phenomenal number. Congratulations. I think that the--we are
going to see I think another four or five quarters of very high
growth rates.
So the big issue now is, you know, why did it happen? I
think the tax cut--why was the tax cut so related to growth? I
think the two most important things you did in the tax cut was
bringing down our business tax rates. You know, it has just
made America more competitive. America is a great place to
invest in. One of my favorite headlines of I think this was
from last week, from the Wall Street Journal, U.S. economy is
now the envy of the world. We are growing faster than virtually
any other country. Europe is growing at half a percent right
now, we are growing at four.
So I think you guys should take a lot of--you deserve a
congratulations for the tax cut but the work isn't done because
we are not--we still haven't seen the wages rise enough. And
we, I really am concerned about that we are not seeing enough
young people getting into the workforce and we need to have
that happen.
Mrs. Foxx. Thank you very much. I saw some very compelling
statistics about young people not working in the summer for
example, college students and high school students recently,
phenomenally low numbers, very, very telling.
Dr. Farren, as you state in your testimony, and I would
agree the Bureau of Labor Statistics collects and publishes
information that can be very helpful not only to policy makers
but to business owners, perspective employees, and students
choosing a future career.
However, given that most people do not access BLS's website
on a daily basis, how do they learn about current economic and
labor market conditions? And how can BLS make its products more
accessible and understandable to non-economists who have an
interest in this information?
Dr. Farren. Thank you very much for the question. The
easiest way for the BLS to make the data more accessible to
non-economists is to make it more accessible to economists in
the first place. The people in this panel, the people in the
media that actually use this data, the people in trade
associations and union associations that actually use this data
to communicate with their constituents and with the people that
read what they write is the first way.
The second way is there is some evidence of other websites
like the Fed websites from the St. Louis Federal Reserve Bank
and the IPUMS website that offer additional ideas of how to
make the website more accessible.
Mrs. Foxx. Thank you very much. I now recognize Ranking
Member Scott for five minutes.
Mr. Scott Thank you, Madam Chair. Mr. Moore, you indicated
that the purpose of the tax bill is not to help the top 1
percent. What portion, when it finally passed, what portion of
the tax benefits went to the top 1 percent and corporations?
Mr. Moore. So this is a key point, I'm so glad you asked
about this, Representative. The--we believe that when you cut
the corporate tax rate and the business tax rates that a big
percentage of the benefits of that go to working class
Americans. That's why I showed you that chart about increasing
productivity and increasing investment.
Mr. Scott So you don't disagree with the 80 percent went to
the top 1 percent and corporations?
Mr. Moore. No absolutely not. We actually think that if you
look at a Congressional Budget Office study that came out last,
I believe it was in 2016 or '17 and I can get you that data.
The Congressional Budget Office sets a 70 percent of the
benefit of cutting the business tax rate goes to workers. So
the--
Mr. Scott. Okay. So that is the trickledown effect.
Mr. Moore. Because you--the way you get wages to rise is to
have number--two things you need. A tighter labor force, right.
You need a tight labor force to have wages rise. And number
two, you need workers to be more productive and workers are
more productive when they have more computers and technology to
work--
Mr. Scott And how many jobs are projected to be created
with the $1.5 trillion tax cut?
Mr. Moore. I'm sorry, I had a--
Mr. Scott How many jobs did you--are you projecting will be
created?
Mr. Moore. From the tax bill or?
Mr. Scott Yes.
Mr. Moore. It's hard to say, I mean, I think we projected
that the tax bill over 10 years could create an extra 10
million jobs. I mean, so far so good. The tax cut has only been
in existence for less than six months.
Mr. Scott And you have seen projections in the 300,000
range?
Mr. Moore. Sorry, monthly or?
Mr. Scott No. No. Total.
Mr. Moore. I'm sorry, I'm not understanding your question.
Mr. Scott Well, you said 10 million. Most of the
projections have been in the 300 to 600,000 range.
Mr. Moore. The 300,000.
Mr. Scott Yes.
Mr. Moore. I'm sorry, I'm not understanding your question.
Mr. Scott Well, I guess not if you are guessing 10 million
but--
Mr. Moore. You know, the numbers that have come in just in
this last six months on the unemployment have been pretty
robust. I mean, we got over 200,000 in the last month. It's
going to take a little. Look. This isn't going to happen
overnight.
Mr. Scott That is right.
Mr. Moore. When you cut the business tax rates it is going
to take maybe a year or two for the full impact of the tax cut
to kick in.
Mr. Scott Dr. Spriggs, can you say how much the jobs have
been increasing since the passage of the tax bill?
Dr. Spriggs. The creation of jobs has not accelerated since
the passage of the tax bill. Wages have not accelerated. In
fact, real wages have remained flat since the tax bill. So so
far, the only thing that has happened is that the trend in
wages has flattened but the trend in the terms of job creation
haven't accelerated. So in order to get 10 million jobs which
would be 1 million jobs a year, we would have to see some
marked acceleration in job creation because that is a
projection above trend in order for this to have an effect. And
so far we are not above trend.
If you look from 2010 to today, we have been on the same
path for the last eight years. So nothing has changed either in
the last two years, nothing has changed since January in terms
of job creation.
Mr. Scott And can--we have heard about the effect of
minimum wage. Can you say how minimum wage affects positive or
negative job growth?
Dr. Spriggs. So the best research we have done and labor
economists have gotten far better at being able to identify the
precise effects of the minimum wage are that it essentially
doesn't do anything on job growth. It changes the nature of
jobs that will be created. They will tend to be higher wage
which is the intent. When you look at the period when Congress
made sure to keep the minimum wage going up with median wages,
you see that, broadly speaking, wages went up and we had higher
productivity. So the effect of raising the minimum wage isn't
so much on job growth as to the character of the jobs and the
wages that go up for everyone.
Mr. Scott What about youth employment?
Dr. Spriggs. Youth are the area that economists looked at
first because the, in the old days they were the ones who
predominately had those jobs. Today predominately people of the
minimum wage are immigrants. That's part of the reason why we
haven't found an effect on teenagers.
Teenagers' unemployment we have as many studies that say
there is positive growth as there is negative growth. The net
effect is zero when you look at all the studies, add them all
up together.
Mr. Scott Thank you, Mr. Chair.
Chairman Walberg. I thank the gentleman and I recognize
myself for five minutes of questioning. I had markup votes in
Energy and Commerce, I am sorry I had to leave. I wanted to
hear the testimonies, glad we had a chance to read those. This
is certainly an opportunity amongst many to see the difference
between a formula that says increase taxes, spending, and
regulation to grow the economy versus reduce taxes, spending,
and regulation to grow the economy. And time will bear it out.
I am betting on the last. It will work better because it has
worked throughout the course of history in our country.
Mr. Moore, as you highlighted in your testimony, the growth
in the U.S. economy and prospects for workers now better than
they have been in more than a decade. Much of this growth is
due to our work with the President to update and modernize U.S.
tax code. However, the tax code is not the only set of laws
that have grown outdated and stifled workforce opportunity.
Many federal labor and employment laws were written in the
1930s and 40s and have not been substantially updated in
decades.
In your view, what changes to our nations labor laws are
needed to continue the growth and opportunity to begun under
the Trump administration?
Mr. Moore. That's a good question. I think we have a
fundamental disagreement at this table about the effect of the
minimum wage. I think that, you know, the evidence is pretty
clear from the academic studies that when you raise the minimum
wage the people are mostly--who feel the brunt of that are
teenagers and especially minorities because they tend to have
the lower skills.
I mean, obviously, you know I have a 17 year old son,
Congressman. I love him to death, but even I wouldn't pay him
$8 an hour, right. I mean, he just doesn't know how to--he
doesn't have the skills. I mean, the importance of the starter
job is so critical to getting people, I mean, when you--
everyone remembers the first job they had. And I remember mine.
Will give you a, you know, an indication of my age. My first
job I was working for $2.10 an hour in a warehouse in Chicago,
Illinois.
Chairman Walberg. I was working for a buck 50 at a gas
station.
Mr. Moore. Okay, you're a little older than I am.
Chairman Walberg. In Chicago.
Mr. Moore. In Chicago. So but my point is, you know, you
learn a lot from your first job. You learn how to show up, work
skills, maybe work with a cash register or equipment and so on.
In fact, you know, and the evidence is very clear that people
who are on the minimum wage, most of them, not all of them but
most of the people on the minimum wage it's a starter job and
it's after six to nine months most of the employers pay them on
increase once they get the skills and learn how to do things.
You know, the interesting thing about this minimum wage
issue because I think it is important because, remember what
happened literally six weeks after you passed the tax cut. Two
of the biggest employers in the United States, Walmart and
Costco, what did they do?
Chairman Walberg. Raised the minimum wage.
Mr. Moore. They raised their minimum wage. And this is the
argument we, you know, it was the argument I was making
earlier. When you create a tighter labor market as we have
right now, it benefits workers because if you don't like your
one job, you can go down the street and get another job. And
that has helped and that is why Walmart and these companies are
increasing their wages because they have to retain their
workers.
Chairman Walberg. Right.
Mr. Moore. And that's a great way to get wages up.
Chairman Walberg. Competition, yes. Dr. Farren, it's clear
a lot has changed since 2005, which was the last time the BLS
completed the Contingent Worker Supplement. With the technology
available today, hailing a ride, job sharing, the economy, et
cetera, it is freelance work and flexibility is easier than
ever. We need to know the statistics on that. How can BLS
ensure this population of workers is captured in future studies
in a more realistic way?
Dr. Farren. Thank you. So one of the ways that the BLS can
do this is to make sure that they are targeting the right
people with their surveys.
Chairman Walberg. Excuse me, Dr. Farren. I meant Dr. Meyer
on that. We could get that on you but I think I probably Mr.
Meyer is better set for that one.
Mr. Meyer. Well, I'll just continue on what Dr. Farren was
responding to your question because you brought up that this is
important. We don't want people doing hard work, being left out
of government data do I will just reiterate that first we need
to measure independent contractors even if they're not getting
the majority of their income from this. And I just recommended
a $600 threshold because it seems to be based on how we
determine other tax law along independent contractors. But also
consider--you unfortunately missed the story of my mom selling
mittens in Minnesota at craft fairs.
Chairman Walberg. I heard about it yesterday.
Mr. Meyer. Oh. Well, with this surgery that was currently
done it was from May 2017 was when the respondents were asked.
My mom wouldn't be reflected in that because she wasn't working
the alternative work arrangement at that point. So I think
bumping it back to a year and looking at over a year, that $600
threshold that would give us a much more complete picture.
Though it should be noted that the BLS is releasing another
supplement to the CWS that focuses just on technology mediated
work so think of online platforms but I care about all
independent work. We want to capture the self-employed, the
entrepreneurial economy and I think by making those simple
changes it--additionally additions rather than changes to the
survey it would go a long way to providing you with better
information.
Chairman Walberg. It is an amazing growing economy with all
sorts of diversity to it. Thank you. My time is expired and I
now recognize the gentlelady from Florida, Ms. Wilson.
Ms. Wilson of Florida. I ask unanimous consent that the
chart I showed earlier--be entered into the record.
Chairman Walberg. Without objection. And hearing none it
will be entered.
Ms. Wilson of Florida. At this time I would also like to
note that the mention of increased wages by Chair Walberg did
not adjust for inflation. Real wages adjusted for inflation
have not grown from May of last year.
Dr. Spriggs, thank you so much for being here today. And I
have a few questions. Why is it that wages aren't rising even
though the unemployment rate is at historic lows? What does
this tell us about the state of our labor market institutions
and what are the top three actions Congress should take to
repair these institutions?
Dr. Spriggs. Thank you, Congresswoman, and briefly before I
answer your questions, Walmart raised wages at the same time
they announced they were letting go of thousands of workers. At
the same time they were announcing they were going to do a
massive stock buyback. So the net effect for workers really was
zero. The net effect for the Walton family was that they got a
whole lot richer.
So for labor economists, this is the exact market where our
elementary theory should make wages go up because there are
more job openings announced than there are people looking for
work. The young people are entering the labor market are far
better educated than the older workers who are retiring.
Companies have had several years of record profits, they have
just been given a tax cut that gives them billions of dollars.
This is exactly the environment in which our textbooks say
wages should go up if it was only the market. Wages aren't
going up.
So it's clearly that you have to look back at our economic
history, the time period that most people think we want to get
back to, meaning the period from 1946 to 1979, and when you
look at that period what stands out is we relied on labor
market institutions that Congress had established. Knowing the
history of the Great Depression, they understood that labor
markets on their own don't work. We gave workers the right to
bargain so we need to revisit and see what went wrong because
workers have been losing the right to bargain and Congress
could pass legislation as you mentioned that could restore
that.
We have not done the job to maintain the minimum wage. My
first minimum wage job, we must be the same age, Chair, was
$1.75 because Sears Roebuck told us we are going to pay you 25
cents over the minimum wage. That was their incentive to make
sure that we kept the job and didn't go walking off.
Today, that would be around $10 an hour. It would have been
illegal. It would have been illegal to pay someone $8 an hour.
Now I was a high school student. I don't think, I think I'm
pretty smart, but I don't think that I'm that much smarter than
today's high school student that we can justify paying them
less than I got paid for my starting job. And clearly they are
more productive.
The third thing that Congress can do is not only is it just
help with labor standards and organizing but when the balance
of power turns against workers through labor market standards,
that lowers the bargaining power of workers so when you roll
back safety standards like the beryllium rule and exposure to
beryllium, when you speed up hog slaughtering lines, when you
do other actions that diminish the relationship between workers
and management, you undermine the whole ability of workers to
bargain. And that's key to raising wages so Congress must watch
these rollbacks and labor standards.
Ms. Wilson of Florida. Quickly, how will the Tax Cuts and
Jobs Act affect income inequality?
Dr. Spriggs. Well, it's weighted heavily towards those at
the top. If the intent was that companies were going to use it
to actually invest in capital which would improve the
productivity of workers, so far we see no signs of that. The
Federal Reserve's forward looking orders for new equipment not
in defense show no signs that companies are spending any more
money on physical capital- the capital that increases the
productivity of workers. Instead, companies have announced over
a trillion dollars in stock buybacks.
Ms. Wilson of Florida. Thank you.
Chairman Walberg. Thanks, gentlelady, and then I recognize
the gentleman from Georgia, Mr. Allen.
Mr. Allen. Thank you, Mr. Chairman and thank you so much
for participating in this important hearing. You know I don't
know how it is in other districts, but in my district,
obviously we have--everybody needs workers. Right now I'm
meeting with companies and the wage issue is, I mean, you know,
truck drivers for example. $70,000 a year and all their medical
care paid for. Chemists or plant workers, $20 an hour, all
their medical paid for. But yet we still have these shortages.
The biggest restraint that we see, obviously that the tax
reforms and tax cuts and the jobs act has done exactly what we
had hoped it would do and that was grow the economy. We are
looking at tremendous job growth throughout this country.
But you cannot grow an economy without a workforce. And
there is going to be a lot of pressure on all of our
institutions to produce that workforce. We have got a lot of
people that still aren't in the workforce that need to be in
the workforce. In fact the New York Times reported that Social
Security disability benefits are plummeting which means we are
getting folks into the work place.
And so with that, Mr. Moore, you know, this article
attributed this reduction as the latest evidence that a
stronger economy is pulling people back into the workforce and
keeping people into the workforce. Does this report surprise
you given the strengthening in the labor market?
Mr. Moore. No, I saw that same report that you're
mentioning and it is such good news that because what happened
in the last, after the last recession was that disability
became a new form of welfare. So we saw a huge spike up in
disability payments. It wasn't because more people were injured
on the job, it was because this is the way you got paid because
you couldn't find a job.
As we have created, I mean, this is what I was just telling
Chairman Walberg, I think this relates to your point is that
there is so many benefits to creating a tight labor market
where, you know, there was a story in the New York Times a few
months ago about employers literally waiting outside of the
prisons so when people were released from prison they could get
them into the workforce. I mean, this is a wonderful thing to
see.
I'll mention one other quick thing that is related to this
whole discussion. Just yesterday, the manufacturing numbers
came out. As you know, manufacturing numbers did not grow
virtually at all during the first seven years of the recovery.
Manufacturing, over 90 percent of manufacturers are positive
and bullish and they expect to expand their operations. I mean,
that is a wonderful thing. So those are high paying, blue-
collar jobs in states like Michigan and Georgia and many of
those states we went to on the campaign were frankly, look, we
had a recovery but there were a lot of states like Michigan and
Wisconsin and Pennsylvania and Ohio and West Virginia where
people didn't feel the recovery. Now they are starting to feel
a recovery.
Mr. Allen. Yes. Yes and again to my district, we are seeing
that, we are seeing new businesses being created and I will
tell you this. You know, my folks in the 12th district are very
appreciative of the increase that they have gotten in their
paychecks. The increased benefits, I mean, nationwide we are
talking more than 4 million people, $6 billion, you know, that
companies are putting out there.
And again, you know, it's to number one is to keep their
folks because of the competiveness in the work place. How do
you use us solving this problem, Mr. Moore, as far as, you
know, we got 6.7 million jobs out there? We have got to get,
you know, we have lot of people that aren't in the workforce
back to work, give them the dignity and respect they deserve.
Mr. Moore. It's a skills problem. It's a skill problem. I
mean, there are a lot of workers out there that could be and
should be working but a lot of them just don't have the basic
skills that are necessary and I like what President Obama
proposed and I think President Trump has reiterated this. I
love the idea of apprenticeship programs. If you do--if you get
an apprenticeship program and you've, you know, you learn how
to be a plumber, or a, you know, an electrician or something
like that, why shouldn't we give those people the same
equivalent of a four-year college degree? If they are getting
the kind of skills they need.
I do think one of the things you all have to think about in
this committee, I think it's a really important issue for the
next 20 years is what is the real valuation of a four-year
college degree with somebody getting a sociology degree versus
somebody who is getting a real skill?
I mean, if you are a pipe fitter these days, my goodness, a
pipefitter or a welder, you can get a job for $60, $70,000 a
year, start your own business, you can be making $100,000.
There is nothing wrong, Congressman, with working with your
hands. And those are getting to be better jobs all the time.
Mr. Allen. Right. Well, thank you so much and I yield back.
Chairman Walberg. I thank the gentleman. Now I recognize my
friend from Connecticut, Mr. Courtney.
Mr. Courtney. Thank you, Chairman Walberg, and thank you to
all the witnesses for being here today. Again the timing given
the fact that it's six months since passage of the Trump tax
cuts is appropriate to begin the process of trying to
understand better the impact. And again, I think, you know, it
seems like pretty much everyone is pretty much unanimous about
the value of having the Department of Labor, you know, have the
tools to track data because otherwise we are just sort of
stumbling around in the dark.
So if you look historically at the Reagan tax cut, the Bush
tax cut, and now the Trump tax cut, what is interesting is that
in the first two cases, every single House Republican voted in
favor of those bills. The Trump tax cut however, was kind of
interesting is that there was a dozen House Republicans who
voted no. Eleven were concentrated in states, New Jersey,
California and New York. And the reason is because of one
aspect of the bill which has not gone into effect yet really,
which is the cap on state and local tax deduction which Mr.
Moore giddily described as death to Democrats in the lead up to
the vote which I'm sure those Republicans from those states
would sort of ask themselves what am I, chopped liver? And as
well as Governor Baker from Massachusetts.
So you know, Dr. Spriggs, you did actually focus on this on
page seven of your testimony about the fact that, you know,
this shoe is going to start dropping with the next tax filing
in 2018 where a lot of middle class families and frankly it
isn't just blue states, Mr. Moore, it's going to impact states
all across the country, are suddenly going to be in a totally,
you know, no win situation in terms of, you know, how you pay
for basic fundamental services like public schools, public
safety, transportation, infrastructure, et cetera. Which again
a large portion of that is paid for by state and local
governments.
So when we talk about the skills gap, the biggest vehicle
is still the public school system and the career and technical
schools which again I would say yes, apprenticeships. I can
take you up to Electric Boat in Connecticut and show how
successful that's going but frankly, we need to go deeper into
the tech schools and invest there but the bulk of that is going
to come from state governments and local governments. So, Dr.
Spriggs, could you talk about again that shoe which has still
not dropped yet in terms of capping and crippling and
handcuffing the ability of state and local governments to deal
with labor market issues with education and job training?
Dr. Spriggs. Thank you very much, Congressman Courtney,
because that is the big gap that we have experienced. We have
done the things to restore business dynamism, businesses have
been created because we took a more balanced approach in terms
of who benefitted from the recovery act--and you need balanced
income growth to generate the most number of customers and
that's what gets you business creation.
But we didn't do the job in restoring public investment.
And you're exactly right, it's not just the blue states. We saw
teachers in Oklahoma and West Virginia- These are very much red
states- walk out because they have had their school starved for
the necessary investment and they have seen their pupil-teacher
ratios go up and up and up and they can't do their jobs
effectively.
We are down 100 over 120,000 teachers just to get back to
where we were in 2008 and then you have to think about the
growth in the student population. We probably need close to
another 200,000 local school teachers and you're exactly right.
The states that have been squeezing on public education the
most are now going to find how do they catch up with the tax
bill that is going to force them to double tax their citizens.
And it's that double taxation that creates the bind for the
state and local governments and it will in many voters' eyes
appear to be unfair. Why am I paying taxes twice just to get
the necessary things for my child to get educated? And if I'm
an employer for the workforce I want to be educated.
We have never in the history of the United States had this
massive de-investment in K through 12. We are moving against
the trend globally where everyone else is increasing their
investment in education and this is just going to make it that
much more difficult.
Mr. Courtney. And again just to drive one last point again,
we have still not seen the true effect yet of the SALT
provision in the Trump bill which is going to really again
start landing hard on middle class families in 2019 and years
beyond. Isn't that correct?
Dr. Spriggs. That's correct because it's going to take a
lot more revenue to get back to where we were because we are
falling further behind.
Mr. Courtney. Thank you. I yield back.
Chairman Walberg. I thank the gentleman. And I recognize
the gentleman from Indiana, and glad to have you on our
Subcommittee and the Committee as the newest member, appreciate
that. Mr. Banks.
Mr. Banks. Thank you, Mr. Chairman. A pretty good first
committee. I appreciate each of the panelists who are here
today.
Mr. Moore, when we passed the Tax Cuts and Jobs Act six
months ago before the bill passed, all of the loudest voices in
your field said we'll never exceed 3 percent GDP. Why were they
so wrong and how good can it get moving forward?
Mr. Moore. That's a good question. You know, the economy
for the last four quarters has been growing at about 3 percent
so we are there now. And you're right, most economists
believe--who were skeptics of the tax and by the way, this
growth isn't just being driven by the tax cut. I mean, it's
being driven by pro-America energy policies, by the
deregulations, by just being, by a pro-business kind of
atmosphere.
I mean, you saw literally the day after the election
consumer and business confidence went through the roof. It
didn't happen by accident. This was a, the American had elected
a pro-business president.
It's a, we will see if this is, look. I don't want to read
too much in short term data. It's only been, you know, a year
and a half since Trump has been president. The tax cut is only
six months old so it's a little early to make a big, you know,
bold proclamations about the tax bill. All we can say so far,
so good. You know, almost every economic indicator right now,
almost every indicator is pointing straight north. And so this
is a positive thing.
One just quick thing on this SALT deduction because this is
a big issue and I was one of the biggest advocates of
eliminating the SALT deduction. And I just want to point out
this because it is really important. Ninety percent of
taxpayers around the country are not affected one iota by that
because there is a $10,000 deduction on their state and local
tax deduction. That means for the bottom 90 percent they are
completely unaffected.
The top 1 percent pay half of the cost of the cost of
getting--this is the--this was the most progressive if you want
to use that term, feature we had in the tax bill. Is half of
the cost of that was paid by the richest 1 percent. It is one
of the reasons that the tax bill is not regressive because the,
you know, it's paid for by millionaires and billionaires, the
very people that the people voted against the bill said they
wanted to tax more. That's what you did by getting rid of the
state and local tax, right.
You come from Indiana by the way. Indiana is a fairly
modest spending state. Your taxes are pretty modest, your
spending is pretty modest, it's one of the reason people are
coming to Indiana. Why should people in Indiana have to pay
higher taxes, federal taxes to pay for high cost services in
New York, New Jersey, Connecticut and California? It's just not
fair. People, if people in New York and California and New
jersey ant high cost government services, they're certainly
entitled to do it but that should be paid for the by the people
who live in those states, not a person who lives in Elkhart,
Indiana. In my opinion.
Mr. Banks. I appreciate that. I have a couple of more
questions for you. Dr. Spriggs has had me thinking a little bit
when he talked about income equality, wage equality. Yet in
your testimony you include a very compelling graph, a 99
percent correlation between business investment and wages.
Could you perhaps expand on that for a moment? I have a very
important question to ask you after that and have very little
time so.
Mr. Moore. So it's just a, you know, connecting the dots
that for higher wages you have to have more productive workers,
you know, why is an American worker paid more than a Mexican
worker in Mexico? Because American workers are more productive.
They produce more on the job. I don't think any economist
really disputes that.
So how do you get workers to be more productive? Better
education, better skills, certainly so that you have more human
capital but also so they have more computers, more technology
and things to work with. I mean, a worker works with a computer
makes twice as much as one who doesn't have the computer and,
you know, I just disagree with this analysis that investment
has an increase.
If you look at the cap ex numbers what we call cap ex which
is business capital expenditures, they have gone way up since
the tax cut. And, I mean, look, if you tax something, you get
less of it. If you tax something less, you get more of it. You
reduced the taxes on business capital investment. That is why
one of the most important things, Mr. Chairman, I think you did
in this bill was the immediate expensing provision so that
businesses could go out.
I remember talking to Fred Smith who is the, you know, the
chairman and CEO of FedEx, one of America's, you know, most
successful companies. And I think FedEx employs well over
100,000--a couple hundred thousand workers. And, you know, I
remember talking to him and he said, ``Look, you pass this
thing with the expensing and the lower corporate tax reduction,
we are going to start, you know, purchasing planes, trucks, all
of these things,'' and it is happening. It's a great story of
revival.
Mr. Banks. Yes, okay I have 10 seconds left. Either tonight
or tomorrow we will be passing the Farm Bill which includes
significant reforms for work requirements.
Mr. Moore. Absolutely.
Mr. Banks. Would you agree that is significant to fill our
workforce gap?
Mr. Moore. We need to do that, right. I mean, look. In this
day and age I think we all agree, anybody who wants a job and
has basic skills can find a job. Let's have, you know, for food
stamps and other welfare programs work requirements. And this
is a good way to get people into the workforce. You can't get
anybody out of poverty if they're on welfare. Right. The first
step to getting a person out of welfare is, I mean, out of
poverty is to get them into a job. So we did this by the way in
the mid-1990s, Congressman. Signed by Bill Clinton, a Democrat
and a Republican Congress. And the work for welfare
requirements were the most successful things we ever did. We
saw the income of those people who moved off of welfare over
the next five or six years rose. Get people into a job, it's
the most important thing you can do to help those families.
Mr. Banks. Thank you, my time has expired.
Chairman Walberg. I thank the gentleman and even as a
Wolverine it gives me pleasure to recognize the Buckeye, the
gentlelady from Ohio, Ms. Fudge.
Ms. Fudge. Thank you so very much, Mr. Chairman. Thank you
all for being here. And just, Mr. Moore, just to be accurate,
most people on food stamps who can work do work. So let's start
there.
You know, we all have heard the statements that all
politics is local. And I agree with that and so since my
unemployment rate is nowhere near 3.8 percent, I just consider
it fake news. It's just all fake news. Just like a 4 percent
GDP is also fake news.
Mr. Moore, if it was not your intent to make the rich
richer with the Trump tax scam, you absolutely failed miserably
because that is exactly what the bill did. And for those people
who have received a small reduction in their taxes, they are
paying three to four times that just trying to get healthcare
because my colleagues continue to try to do away with the
Affordable Care Act.
Mr. Spriggs, how much of the Republican tax cut has
actually gone to workers?
Dr. Spriggs. At the moment it's not clear to see what went
to workers. Again, if it was going to be in the form of
investment at their job that gave them more equipment that
would increase their productivity we haven't seen it.
Productivity hasn't gone up, the investment in the equipment
hasn't gone up and so it's not clear and their real wages
haven't gone up.
Ms. Fudge. So then since you don't know then whatever
numbers they keep telling us is just made up. Just more fake
news, right?
Dr. Spriggs. I--
Ms. Fudge. Tell me, who benefits from the billions in stock
buybacks that the companies announced after the tax scam was
passed?
Dr. Spriggs. So, we know that the ownership of stocks is
highly concentrated at the top 1 and 10 percent despite people
wanting to say it is in your 401(k) we have to remember that
lots of workers, the majority don't have 401(k)s. So the
reality is this goes to a very few. And in the case of the
Walmart example that I gave, this goes to one family,
essentially. So this has been a, the effect has been a massive
redistribution upward.
Ms. Fudge. Okay. Let me just ask because we were talking
earlier about the concern that young people not working
primarily because older people are working longer because they
can't afford to not work. This country knows that we are more
than a billion dollars in debt as it relates to funding
pensions. We compounded the problem when we passed the tax scam
and put the country $2 trillion in debt. So now we come back
and we say we are going to cut Social Security benefits and we
are going to cut Medicare and Medicaid to pay for a tax cut for
rich people. So if older people cannot afford to retire because
they can't, they don't have the savings and or they don't have
the pension, what do we do from here?
Dr. Spriggs. Well, we have a big problem for the generation
that entered the labor market during the Great Recession. They
didn't get the job to start with that was typical. They weren't
able to pay into a retirement plan. We have left them in a
very, very hard position. And employers have skipped over them
and now want to hire new graduates so we have that problem. We
have the--
Ms. Fudge. Mr. Spriggs, I don't want to--my time is really
running short so do you think it would be more effective if we
put money into summer jobs instead of taking care of children
at the border who we took their parents away from them. It
would probably be less expensive I would guess to just give
kids summer jobs or give them better training instead of
creating a problem that is costing this country billions of
dollars.
Let me just ask this question of all of you. You were
talking about vocational education. I think it's great. I think
there is absolutely nothing wrong with working with your hands.
How many of you steered your kids into vocational education
instead of college. Just raise your hand. Okay. I didn't think
so.
Mr. Chairman, I would like to yield the last 30 seconds I
have to the Ranking Member, Mr. Scott.
Mr. Scott Thank you. Dr. Spriggs, can you tell me some of
the challenges involved in the gig economy?
Dr. Spriggs. Well, the challenges are that many of the jobs
are an attempt to arbitrage labor market regulation. They
attempt to find areas where we don't do a good job of
regulating and they attempt to create the myth that these
aren't employees when in fact they are employees. So think of
Uber. Uber is really just Louis on Taxi. It's just a
dispatcher, except now it's the phone. And they want to pretend
that they don't have employees. They have employees. So the
biggest problem is it creates huge holes in our labor standards
and that's not good for workers or for the economy or for our
tax system.
Chairman Walberg. I thank the gentleman and the gentlelady.
I recognize the gentlelady from Delaware, Ms. Lisa Blunt
Rochester.
Ms. Blunt Rochester. Thank you, Mr. Chairman and thank you
Ranking Member Wilson and thank you also to the panel.
I had the opportunity to serve as Secretary of Labor in the
State of Delaware so the issue of labor market information is
vital. I believe it is vital. We, as we already mentioned it is
vital to policy makers, to economists, to students, to parents.
And as Secretary of Labor, we had a lot of good partnerships
and also products. Everything from working with schools to our
workforce investment boards to the media.
So one of my questions is about data itself and about the
integrity and confidence and validity of it and I will start
with Dr. Spriggs.
Before becoming president, I know Mr. Trump talked about
BLS unemployment data covered up massive unreported
unemployment levels and used words like fake and phony and so I
just want to get your impression. I know you worked for the
Department of Labor. If you could talk a little bit about the
data itself and the integrity of the data. Just share is it
fake, is it phony?
Dr. Spriggs. Well, like Dr. Farren, I sing high praises for
the BLS and for the integrity and for the way that they are
very careful to be as nonpartisan as possible in their work and
to be focused and to be professional and as he mentioned the
world recognizes them as the gold standard. They do provide
many products. One of the most important is their quarterly
census of employment in workers that allows local workforce
boards to see the flow of work and to be able to better predict
where are new jobs being created within both their WIB area and
within their county so they do marvelous jobs.
Ms. Blunt Rochester. Can I ask Dr. Farren and Dr. Meyer,
you both mentioned it also in your testimony. Dr. Farren, you
mentioned making it more useful and accessible to ordinary
people. Mr. Meyer, you talked about updating the CWS. I guess
my question is, do you support increased funding? Because I
think we are seeing a decline in staffing so how can we provide
great services and great products if we don't have the people
or the resources to do it? Oh, it's just a yes or no question.
Do you support increased funding?
Dr. Farren. I'm an economist, so I can't give a yes or no
question.
Ms. Blunt Rochester. Okay.
Dr. Farren. But the answer is what is efficient, what are
the tradeoffs for additional funding? What are the tradeoffs
for spending money more better?
Ms. Blunt Rochester. Okay, Mr. Farren, if you can't because
you're an economist I will go to Mr. Meyer.
Mr. Meyer. I would say yes if it would lead to better
measurements that policy makers can use to put in place the
best data--
Ms. Blunt Rochester. Excellent.
Mr. Meyer. If it's just spending for the sake of spending,
then no.
Ms. Blunt Rochester. We don't do that. Excellent. Okay. And
then my last comment or question. I am actually my other
committee is agriculture and so I get the opportunity to be a
part of the Farm Bill discussions. One of my concerns I think
all of us agree that we have these unfilled jobs and that we
have a skills mismatch and that we really want people to work
whether you're Democrat or Republican.
My question is on the Farm Bill, we are--the proposal is
basically to create a massive jobs program and I was around for
welfare reform as well. This appears to be untested and
underfunded. We are talking $30 per person per, you know, per
month. Good jobs training programs cost more than that.
Dr. Spriggs, can you talk a little bit about what you think
would be the impact of instituting something like this, where
people would be sanctioned off and not also have good job
training programs.
Dr. Spriggs. The work requirement changes the program into
a subsidy for employers who do not raise wages. And that would
be bad. So when you look at how much we subsidize Walmart and
McDonalds, the two largest employers in the United States and
in the world because they fail to pay their workers sufficient
wages that they do not need food assistance, it is the most
inefficient system of employment in the world.
No one subsidizes, no one in the world subsidizes people
going to fast food restaurants to make their nation fat but
that's exactly what this legislation would do because when you
force a worker to accept a low wage in order to get the benefit
that is what you are doing. And so no, this is a bad public
policy. The far better public policy is to address why in the
name of having shortages of workers these employers are not
raising their wages. You would lower the use of food assistance
if workers got paid a decent wage.
Ms. Blunt Rochester. Thank you.
Dr. Spriggs. Because already it is the case that workers
are needing food assistance.
Ms. Blunt Rochester. Thank you, Dr. Spriggs. I yield back.
Chairman Walberg. I thank the gentlelady and now I am
pleased to recognize the gentleman from Minnesota, Mr. Lewis,
for your five minutes of questioning.
Mr. Lewis. Thank you, Mr. Chairman, and thank you, panel,
for your testimony today. Dr. Farren, I want to start with you
if I may. In your testimony, you mentioned the research related
to the current population survey and as we have seen, even in
an economy with 3.8 percent unemployment, the lowest since 2000
I believe, even in an economy that may be growing at 4 percent,
4.2 percent GDP when in fact CBO predicted we would only grow
1.9 percent. Even in the economy this hot, we still have a
problem with the sticky labor force participation rate. And I
am just wondering your analysis of the March 2018 study by the
American Action Forum that found that there was some relation
to opioid dependency as a part of at least the absence of
nearly a million prime-age workers from the labor force and
with a reduction in that serious problem helped.
Dr. Farren. So looking at it from a purely economical
standpoint, certainly if the workers who were ill and addicted
and therefore not in the labor force were actually in the labor
force, economic growth would even be larger and you wouldn't
even necessarily have to have them in the labor force for that
to happen because addiction obviously hurts peoples performance
and their families and taking care of their loved ones and that
sort of thing as well. And also, obviously it would be much
better for the people engaged who are addicted to actually have
better lives as a result.
Mr. Lewis. And between 1999 and 2015, this decline, this
absence, results in about $700 billion loss in real GPD, real
output. And that is consistent with your analysis?
Dr. Farren. That's what I have seen other economists
reporting, yes.
Mr. Lewis. Mr. Moore, I want to drill down a little bit on
labor force participation rate. As someone who has studied
macroeconomics for some time, you are quite familiar with this.
The fact of the matter is we are still stuck back into the 70s
era of cardigan sweaters and malaise when it comes to some of
these labor force participation rate figures. Is it a matter,
as one panelist said, of just merely not having a high enough
livable wage or is it a matter of the wrong incentives from
some of our other public assistance programs where we have a
3.8 unemployment rate which of course as everyone knows doesn't
take into account a denominator that drops people off when they
no longer work, look for work. And so it doesn't pay to get out
from under some sort of dependency.
Mr. Moore. So there was a very good study that was done by
Casey Mulligan who is one of the top economists in the country
at the University of Chicago. And he is probably much more of
an expert on this than I am so I will quote some of his
research on this. He has shown that if you take someone who is
receiving welfare benefits, a package of welfare benefits, that
because of the various laws, the phaseouts of benefits, the
taxes that they would pay, that in visual might be a mother or
it might be an unemployed individual, they would lose about 50
cents of benefits for every dollar that they would earn. You
know, that's a high marginal tax, right. I mean, we don't even
charge wealthy people a 50 percent marginal tax rate. So--
Mr. Lewis. So we often talk about that marginal rate and
that is the key in all of this. The marginal rate, the rate on
the next dollar earned at the top end of the spectrum, but what
you are saying and what that study says is in fact every one
works for after-tax income.
Mr. Moore. Well, especially people who are on welfare and
now are trying to get off of welfare. You know, if you, let's
say you are on welfare. If you get a job that say pays you
$40,000 a year, but what Casey Mulligan is saying guess what,
you know, you are going to lose $20,000 in benefits so you're
actual increase in your take home pay is only going to be half
of that. That's a high--so we should really investigate the
phaseout of all of these benefits and also the work requirement
basically because you have to work.
Now look, if you had a situation right now like we had in
2008 and 2009 where the unemployment rate went up to 9 and 10
percent, a work requirement probably wouldn't work because, you
know, there weren't jobs for people. But now there are
plentiful jobs for people and we just have, I mean, I just
think you do a real service not just to the, it's not just
about reducing the cost of the programs. It is about getting,
improving people's lives by getting them into the workforce.
And that is so critical. You can't have a second and third and
fourth job, you know, Mr. Lewis, until you have the first job.
Mr. Lewis. And that is what this is all about and that is
what work requirements are all about and that is moving from
dependence to independence. We can subsidize dependence all day
long but that doesn't move people to a more productive job and
a more productive life and I thank you for your testimony and I
yield back.
Chairman Walberg. Thank you. I thank the gentleman for your
questions and appreciate the Committee attentive to the issue
today. As well as thank you so much for the witnesses for being
here. In fact, I wish we had more members here today so we
would have heard more from you on this important topic. We want
to get things right so thank you for being here.
Ms. Wilson, it is good to have you in the ranking member's
chair today. Doing an excellent job, and ask if you have any
closing remarks?
Ms. Wilson of Florida. Thank you, Chairman Walberg, for
holding today's hearing. I think it is vital that this
committee examine the U.S. labor market trends. While strong
job growth is important, we cannot neglect the fact that wage
stagnation and income inequality are decades long problems that
must be addressed.
When we talk about wage stagnation and income inequality,
we are talking about more than the line on a graph. Workers
across the country are not getting a fair share of the wealth
they helped create. This means some workers are struggling to
buy groceries every week to feed their families. Struggling to
pay rent, and to keep a roof over their heads and it means some
workers are finding it almost impossible to save for their
children's education so that they may have a better life.
I think we can all agree that we want workers to be able to
earn wages that allow them to support themselves and their
families. Unfortunately, despite what we have heard today,
workers' wages are not better off under this president.
In fact, since President Trump took office, wages have been
mostly flat and some workers lost ground over the last year.
Workers across the country are feeling the impact of these
trends in their daily lives and want us to step up and help fix
the problem but rather than pass legislation to help all
workers, President Trump and the Congressional Republicans
passed a tax scam that only makes historically high levels of
income inequality worse.
The tax giveaway to the top 1 percent of American earners
and corporations did not lift workers' wages. It just gave
wealthy corporations a massive windfall for stock buybacks that
benefit shareholders and executives. We know that this is not
the right approach. As we heard from Dr. Spriggs, when our
policies promote broad wage growth, we are better off. When we
strengthen wage protections and workers' rights to collectively
bargain for better wages, we combat wage stagnation and the
income inequality that leaves workers behind.
That is why Committee Democrats support bills to raise the
minimum wage, update overtime protections and strengthen
workers' rights to join a union free from retaliation.
I again want to thank our witnesses for joining us here
today and I yield back the remainder of my time.
Chairman Walberg. I thank the gentlelady. In the words of
the Northwest Ordinance and Article 8 Section 1 of the Michigan
Constitution, that copied from the Northwest Ordinance, it
says, ``Religion, morality, knowledge, being necessary to good
government and the happiness of mankind, schools in the means
of education shall forever be encouraged.''
And I am glad that in some of the conversation today, Mr.
Moore and Mr. Banks touched on it as well. The primacy of
preparing people for real world jobs through education
opportunities that expanded beyond just the status quo normal
of what we have done in the past and we are the Education and
Workforce Committee. And I think aptly named that because they
have to go together. We don't just educate to educate. We
educate to work.
And in order to work today, you have to be educated. I
don't care what you are going to do. And I think this committee
and this subcommittee it is important that we as we think of
health, employment, labor, and pensions, the whole scheme of
things that we take due diligence to prepare people to educate
them early for jobs in the real world that will provide a
certainty--to the best that we can humanly provide a
certainty--that they are going to have a background in training
experience or educational experience. Forgive me, Virginia, for
using that word. But educational experience that prepares them
to experience the happiness that we promote in this great
country.
So we need to talk more about the career options, the
education options to prepare people in apprentice programs in
short term educational certification programs, whatever it is
necessary to find more opportunity for people to be in that
sweet spot that is special to them becomes special to us
because it grows our economy. It grows our security. It grows
the desire of even other as we talk about immigration to look
at America as still the place where all the best happens in the
form of opportunity.
And I appreciate the fact that in this committee we are
able to pass a new CTE bill out of the House, even the PROSPER
Act that goes unique directions compared to what we have done
in the past by fostering the opportunity for educational
experience that meets needs as opposed to meets institutions.
And I am looking forward to see benefits of that come in a new
approach to post-secondary education that challenges everyone
to keep the needs of the future workers in mind.
I as well think that today we had the opportunity to at
least hear to some degree what needs to be done in keeping the
statistics, putting reports in place that makes sense out of
what is happening and what is available to be used in
educational opportunities in our workforce experience.
And I know we are going to disagree on approaches. I know
we are going to do that. We have two parties here that have
different points of view. I think that our approach will
ultimately win out. I would like to be proven wrong or at least
the opportunity for someone to prove that wrong but we need
good statistics. And we need good, good researchers to point
out this is what is happening in the workforce, this is where
we are at in reality. This is where we need to move toward.
These are the opportunities we have.
And so your testimony today along with things that are--
have actually happened by law and what the results will be has
been very helpful. So with that and seeing that there is no
further business to come before this subcommittee I will
declare it adjourned.
[Additional submissions by Chairman Walberg follow:]
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[Whereupon, at 11:40 a.m., the Subcommittee was adjourned.]

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