Hearing of House Committee on the Budget - The Economic Outlook and Current Fiscal Issues

HEARING OF HOUSE COMMITTEE ON THE BUDGET - THE ECONOMIC OUTLOOK AND CURRENT FISCAL ISSUES

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Ms. DeLauro. Thank you, Mr. Chairman, and thank you, Chairman Greenspan. I am the last person, so I am between you and lunch and anything else. So I promise to be brief and I will ask both of my questions at the same time and they both have to do with jobs and the economy.

First, even though we have seen GDP growth relatively strong in the past several quarters, we haven't seen the type of job growth that was typical in last economic recoveries. I want to know why you think that is the case. Do you think we will need higher levels of GDP growth in the future in order to be able to reach full employment?

Secondly, we have now seen the number of people with incomes below the poverty line increase by more than 4 million since 2000. In fact, this administration has seen the highest average annual increases in poverty levels of any administration, except the first Bush administration, since the official poverty statistics were calculated in the 1960s. The increases occurred in spite of the relatively low unemployment rates. It appears that low-wage workers are either already working or have become discouraged and dropped out of the labor force. But either way, they can't achieve more than a poverty-level standard of living. Should this be a concern for the future?

Mr. Greenspan. This is an extension directly of my answer to Congresswoman McKinney. The basic problem that we have in this country is that the children from the fourth grade are not moving forward in their educational progress sufficiently quickly, and the consequence of that is that you end up with too few highly skilled people coming out of schools relative to the demand that the increase in technology is requiring, which has induced a very rapid increase in the wage rates for the highly skilled people.

Concurrently, because people have not moved up enough in the higher skills, and they are left back in the lesser skills areas where the demand is actually falling--you find that their wages become stagnant, and you get the inevitable consequence of an increasing concentration of income. And what this says to me is that we have got to address this issue, find ways of improving the skills and moving children up through our educational system, so that when they come out into the labor market, we find that there are more than adequate numbers of skilled workers and that therefore their wages don't go up all that much and that the balance in the lesser skilled is such that their wages go up the same as the skilled.

And indeed, as Congresswoman McKinney mentioned, after World War II the GI bill and all the education that a lot of men got during the Armed Forces, created degrees of skills for decades, which essentially kept the spread between skilled and nonskilled workers relatively constant, and therefore the concentration of income didn't change. If anything, it actually went down.

Ms. DeLauro. Let me pursue that for a second. And I suspect you don't agree with me on this issue, but we are also watching a very large number, though we don't have a mechanism for tracking, where there is a range of jobs which require some skill, or maybe some of the information technology jobs which awhile ago we thought that that was a real future--and it can be a real future--but we are watching those jobs at $40, $50, $60, $75,000-a-year jobs that are going overseas. They were once blue-collar jobs and we thought, my God, there is no way they are going to make up that difference.

But we are watching white-collar jobs move overseas, leaving less of an opportunity and a lower standard of living for people in this country with nowhere to go, and watching the Federal Government cut back on education and training programs and once again, curtailing opportunity.

The question is, where do these people go when--jobs that require skill and training are now also a portion of what is happening; those jobs are leaving the country.

Mr. Greenspan. Congresswoman, the most rapidly increasing aspect of our educational system are the community colleges.

Ms. DeLauro. And vocational education, except we are cutting vocational education.

Mr. Greenspan. The big issue is the community college. When I was in high school, we used to call it vocational education, and I did electrical wiring, and there were significant jobs, once you got out of high school, high-paying manufacturing jobs.

The economies change because value preferences of people change. And what is critical here is that the demand for a community college is such because they are essentially trying to address precisely the type of skill gap that you are mentioning. Will they succeed in doing it fully? I don't know. I am chagrined by the fact that we have, as I said before, a significant shortfall in the educational advances of our children by the time they get to the 12th grade. And I find that unacceptable, and we have to find out what is it that they do abroad that we don't.

Ms. DeLauro. Thank you, Mr. Chairman.

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