[Senate Hearing 107-186]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-186

  EXAMINING MINNESOTA'S ECONOMY AFTER SEPTEMBER 11TH: STRATEGIES FOR 
                    WORKFORCE AND BUSINESS RECOVERY

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

                                HEARING

                               BEFORE THE

            SUBCOMMITTEE ON EMPLOYMENT, SAFETY, AND TRAINING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                                   ON

  EXAMINING MINNESOTA'S ECONOMY AFTER SEPTEMBER 11TH: STRATEGIES FOR 
                    WORKFORCE AND BUSINESS RECOVERY

                               __________

                   OCTOBER 8, 2001 (BLOOMINGTON, MN)

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions

                                _______

                  U.S. GOVERNMENT PRINTING OFFICE
76-255                     WASHINGTON : 2002

____________________________________________________________________________
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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                  JAMES M. JEFFORDS, Vermont, Chairman

JUDD GREGG, New Hampshire            EDWARD M. KENNEDY, Massachusetts
BILL FRIST, Tennessee                CHRISTOPHER J. DODD, Connecticut
MICHAEL B. ENZI, Wyoming             TOM HARKIN, Iowa
TIM HUTCHINSON, Arkansas             BARBARA A. MIKULSKI, Maryland
JOHN W. WARNER, Virginia             JEFF BINGAMAN, New Mexico
CHRISTOPHER S. BOND, Missouri        PAUL D. WELLSTONE, Minnesota
PAT ROBERTS, Kansas                  PATTY MURRAY, Washington
SUSAN M. COLLINS, Maine              JACK REED, Rhode Island
JEFF SESSIONS, Alabama               JOHN EDWARDS, North Carolina
                                     HILLARY RODHAM CLINTON, New York

                     Mark E. Powden, Staff Director

      J. Michael Myers, Minority Staff Director and Chief Counsel

                                 ______

            Subcommittee on Employment, Safety, and Training

                       MICHAEL B. ENZI, Chairman

JAMES M. JEFFORDS, Vermont           PAUL D. WELLSTONE, Minnesota
JUDD GREGG, New Hampshire            EDWARD M. KENNEDY, Massachusetts
JEFF SESSIONS, Alabama               CHRISTOPHER J. DODD, Connecticut
    (Ex Officio)                     TOM HARKIN, Iowa

                    Raissa H. Geary, Staff Director

               Margery F. Baker, Minority Staff Director

                                  (ii)

  




                            C O N T E N T S

                               __________

                               STATEMENTS

                        Monday, October 8, 2001

                                                                   Page
Doering, Kelly, President of E-Travel Experts, Eden Prairie, MN; 
  Roxanne Leake, former reservation agent, Northwest Airlines, 
  Minneapolis, MN; George Logan III, CEO/President of G. Logan & 
  Sons Hauling, Inc., St. Paul, MN; Cheryl Dusek, IT project 
  manager, Northwest Airlines, Minneapolis, MN; and Hydra Juhor, 
  food production worker, LSG SkyChefs, Minneapolis, MN..........     3
Rykunyk, Jaye, Hotel Employees and Restaurant Employees Local 
  Union No. 17; David Olson, President, Minnesota Chamber of 
  Commerce; Ray Waldron, President, Minnesota AFL-CIO; Brad 
  Anderson, Vice Chairman, President and Chief Operating Officer 
  of Best Buy Co., and Marilyn Carlson Nelson, Chair and Chief 
  Executive Officer of Carlson Companies, Inc., Minnetonka, MN...    17
Stinson, Thomas F., Minnesota's State Economist, and associate 
  professor, Department of Applied Economics, University of 
  Minnesota; and Sung Won Sohn, Executive Vice President and 
  Chief Economist, Wells Fargo Co., Minneapolis, MN..............    29

                          ADDITIONAL MATERIAL

Articles, publications, letters, etc.:
    Kelly Doering................................................    41
    Roxanne Leake................................................    42
    George A. Logan III..........................................    42
    Cheryl Dusek.................................................    43
    Hydra Juhor..................................................    45
    Jaye Rykunyk.................................................    45
    David C. Olson...............................................    47
    Ray Waldron..................................................    48
    Brad Anderson................................................    49
    Marilyn Carlson Nelson.......................................    51
    Thomas F. Stinson............................................    55
    Sung Won Sohn................................................    57
    Mark McClain.................................................    59
    Carlson Wagonlit Travel......................................    60
    Carlson Leisure Group........................................    60
    Jim Callaghan................................................    61
    Gordon Aanerud...............................................    61
    Thomas E. Parrow Jr..........................................    62
    Barbara J. Muesing...........................................    62
    Lara Prieve..................................................    63
    Joseph Wellcome..............................................    63

                                 (iii)

  

 
  EXAMINING MINNESOTA'S ECONOMY AFTER SEPTEMBER 11TH: STRATEGIES FOR 
                    WORKFORCE AND BUSINESS RECOVERY

                              ----------                              


                        MONDAY, OCTOBER 8, 2001

                               U.S. Senate,
  Subcommittee on Employment, Safety, and Training,
of the Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:07 a.m., at 
the Thunderbird Hotel, 2201 East 78th Street, Bloomington, MN, 
Hon. Paul Wellstone presiding.
    Present: Senator Wellstone and Dayton.
    Senator Wellstone. The hearing will come to order. This 
formal field hearing will come to order, and we will all stand 
for the presentation of the Color Guard by the VFW Post 1350 
from North St. Paul.
    Let me first of all welcome all to this Senate Subcommittee 
on Employment Safety and Training. I want to welcome my 
colleagues, Senator Dayton and Congressman Ramstad and 
Congressman Sabo and Congressman Oberstar.
    I would like to just do a little bit of housekeeping, and 
all of us are going to be very brief in our formal statements, 
because this is, I think for me, perhaps the most serious 
hearing I have ever had in our State of Minnesota, not only 
because of the challenges in Afghanistan and abroad, and not 
only because of some of the very important considerations of 
the security of our own country, but because of the whole 
question of economic security for Minnesotans and what we need 
to do for people in our State and our country to get this 
economy going.
    Let me first of all introduce some elected officials that 
are here. I am just going to read some people's names off. 
Senator Jane Krentz, Senator Don Betzold. Senator Sheila 
Kiscaden. Senator John Hottinger. Representative Mark Gleason. 
Representative Karen Clark. Representative Joe Mullery, 
Representative Morris Walrick, Representative Betty Folliard, 
Representative Tony Sertich. Representative Wes Skoglund, 
Former State Rep Todd Otis, Minneapolis Council Member Barret 
Lane. Minneapolis Council Member Sandy Colvin Roy, and we are 
also joined by Ed Daum, who is District Director of SBA.
    Now, I would say to colleagues, there may be other 
representatives and senators who are not here, and if you are, 
please make sure we get your name, so we can recognize you. 
Senator Twyla Ring is here, as well. I am trying to read my--
Senator Dayton's writing. [Laughter.]
    But could we please give a round of applause for all of the 
officials who have come a long way. [Applause.]
    As I said, we will be brief, and each of us have important 
roles in this hearing. This is a hearing of the Senate 
Subcommittee on Employment, Safety, and Training, and I want to 
welcome my colleagues, and I want to thank all Minnesotans for 
being here.
    I have to say this: It is with mixed emotions that I chair 
this hearing. On the one hand, the civic spirit and the sense 
of community that brings everybody here together--and I want to 
recognize that we have high school students from Burnsville 
Senior High, from Minneapolis South High, and from Bloomington 
Jefferson High, as well. It really moves me. This is the best 
of Minnesota. [Applause.] Why don't the students please stand 
up. Thank you for being here.
    On the other hand, this is beyond sad. This is really 
tragic to see the economic pain of so many working families, so 
many small business people in our State of Minnesota, and that 
is what brings us together, as well. I have said more than once 
that to me it is different now shaking hands with people. I 
find so often that the handshake now in Minnesota is people 
reaching out with their hand and saying, ``Please help me.'' 
That is why all of us are here, and I want to point out that we 
want to talk about recognition. We were talking among 
ourselves. This is a bipartisan hearing, we are committed to 
working together, and I think all of us as Democrats would like 
to give special acknowledgment to just an outstanding 
Congressman, Congressman Jim Ramstad. [Applause.]
    We know about the 4,500 workers that have been laid off 
from Northwest Airlines. Let me just simply say that there is a 
ripple effect throughout our economy. As we all well know, 
Minnesota is also an important destination for the entire 
world, and there is the tourism industry, and we are really 
being hard hit, and we are going to hear about that, as well.
    We cannot forget northern Minnesota, the timber industry 
and the taconite industry. We cannot forget the farm economy. 
We cannot forget Greater Minnesota, and there will be a strong 
emphasis on that, as well. We will focus on larger businesses, 
but we will focus on smaller businesses, and we cannot forget 
the smaller businesses that create a lot of the jobs. There 
will be testimony from business, and testimony from labor. We 
come together as Minnesotans very unified in our determination 
to find out all of the problems that we are faced with, and 
also to act. From Ada to Zumbrota, Minnesota is facing a huge 
economic challenge, and the whole focus of this hearing is to 
hear from Minnesota, a broad section of Minnesota, to do what 
is economically sound.
    For my own part, I think it is critically important to put 
purchasing power back in the pockets of working families. I 
mean, I have been pushing hard on an economic stimulus package 
in the Senate. Senator Dayton has, my colleagues have. I will 
not spend a lot of time on that now because people will 
testify. I want simply to say that it is time for all of us to 
roll up our sleeves, and clearly, before this Congress 
adjourns, we must pass an economic stimulus package that will 
provide the help to people who are flat on their back, and make 
sure that families are able to do all right, and make sure that 
working people are able to have the purchasing power, and make 
sure we give this economy the stimulus that it needs. That is 
the work that we must do, and that is what this hearing is 
about.
    Thank you, and now I hand this over to Senator Dayton. 
Rebecca Yanisch is also here, who is Commissioner of Trade and 
Economic Development, and I want to give her special 
recognition. She came to Washington, DC, last week, testified 
before our full committee, said that conceivably Minnesota 
could see as many as 20,000 men and women unemployed. It was 
powerful testimony. I would like to acknowledge Rebecca 
Yanisch. Thank you. [Applause.]
    Senator Dayton. Thank you, Mr. Chairman. I am used to 
referring to the committee conveners as--or Madam Chairman at 
the Senate. But being hundredth in seniority, I am not used to 
sitting next to the chairman of the committee. I am usually 
down in the next time zone, down at the other end of the table. 
[Laughter.] But welcome to everybody here. I want to get on to 
hear from the panelists. It will be my privilege to introduce 
this first panel. We have really outstanding testimony for the 
time here.
    I agree with everything Senator Wellstone said, and I want 
to especially thank him for convening this hearing and giving 
me a chance to participate. I look forward to the testimony.
    Well, I am going to do them here in order of their remarks. 
And our first panelist is Kelly Doering, who is the president 
of E-Travel Experts. Kelly is the president of this very 
profitable and privately held start-up company, founded in 
1997. E-Travel Experts provide a broad range of service and 
technical support functions to on-line airline web sites and 
on-line travel web sites, including NWA.Com and Orbitz.Com. The 
company has grown from five employees to over 200 in less than 
4 years. Since September 11, 2001, however, their revenues are 
down 50 percent.
    Ms. Doering, welcome.

  STATEMENTS OF KELLY DOERING, PRESIDENT OF E-TRAVEL EXPERTS, 
  EDEN PRAIRIE, MN; ROXANNE LEAKE, FORMER RESERVATION AGENT, 
  NORTHWEST AIRLINES, MINNEAPOLIS, MN; GEORGE LOGAN III, CEO/
   PRESIDENT OF G. LOGAN & SONS HAULING, INC., ST. PAUL, MN; 
     CHERYL DUSEK, IT PROJECT MANAGER, NORTHWEST AIRLINES, 
 MINNEAPOLIS, MN; AND HYDRA JUHOR, FOOD PRODUCTION WORKER, LSG 
                   SKYCHEFS, MINNEAPOLIS, MN.

    Ms. Doering. Thank you. Thank you for allowing me to 
present today. I appreciate the opportunity to come and speak 
today. There are three things that I would really like to 
emphasize.
    Senator Wellstone. Can you hear?
    Audience. No.
    Ms. Doering. OK. There are three things I would like to 
emphasize today since the tragedy of September 11th. Our on-
line sales, as the Senator has mentioned, have dropped 50 
percent. Our revenues are tied to airline ticket volumes. We 
support the Northwest Airlines web site from a technical 
standpoint, and Orbitz, as well. So as the airline industry is 
impacted, so are we. But one of the important things about the 
airline industry is that the on-line sales are a very cost-
effective way for them to sell, service, and distribute 
tickets, and it is a growing area, as people become more 
Internet-savvy. And as part of that, when that is impacted, 
then we are impacted as well.
    The other thing is that with our company having grown so 
much, we have brought jobs to Minnesota, and we intend to 
continue growing and creating jobs in Minnesota. For example, 
down in Mankato, southern Minnesota, we brought 130 jobs in 
just this year. And we intend to double or triple in size over 
the course of the next year.
    However, since September 11th, the uncertainty in the 
industry makes us not sure about that growth, about our ability 
to grow. So with that, in trying to bring in new jobs, we have 
opted to participate in some of the programs, training programs 
that Minnesota has, the Minnesota Jobs Skills Partnership, and 
possibly looking at Operation Green-Thumb. We wanted to be able 
to train our people. However, if we cannot hire people, we 
certainly cannot train them. So that is really part of the risk 
that we are experiencing right now.
     With that, our revenues, for example--I will give you an 
example of what is going on in the industry. In August, between 
Northwest and Orbitz, the on-line ticket sales were about half 
a million, and it has dropped dramatically since September. We 
have lost probably about half a million dollars in revenue. Our 
workload, however, is still high, and our costs are still at 
100 percent, so it is a direct impact to our company. 
Fortunately, we have not had to lay off any people. However, 
the workload is high for our existing staff, so hiring may be a 
little slower.
    So, in conclusion, I just want to say that we appreciate 
the support that you have given to the airline industry, and we 
hope that you can continue to provide some of the economic 
stimulus and support of the industry. And we need to get people 
back on the planes and flying again.
    Thank you.
    [The prepared statement of Ms. Doering may be found in 
additional material.]
    Senator Dayton. Thank you.
    Our next presenter is Roxanne Leake, former reservations 
agent from Northwest Airlines. Welcome. Roxanne is the mother 
of four young boys, and joined Northwest Airlines 5 months ago, 
and was on probationary status as a new employee. On September 
22nd, she was laid off. And then on September 24th, she, along 
with many other probationary reservations agents, was 
terminated as a result of the September 11th attacks. She was 
and still is very proud of working at Northwest Airlines. 
Roxanne just wants to go back to work.
    We are glad you are here. Thank you.
    Ms. Leake. Thank you. I am honored to be here today. I 
would like to tell the Burnsville students that I am very, very 
proud that they are here. I used to work at Burnsville High 
School and had other positions in the Burnsville School 
District, so I am really impressed and very proud that you are 
here.
    As I was introduced, my name is Roxanne Leake, and I am 
married to my husband, Don, for almost 11 years. We have four 
wonderful sons. The one thing I would like to share with you is 
that two of my four children are children with special needs, 
and so it is very important to us as a family to have a second 
income, which I don't consider a second income. I consider it a 
first with a first.
    I would like to express to you today the commitment 
required to be a Northwest Airlines employee, the enjoyment of 
my job, my role during the crisis, and how Northwest Airlines 
terminated my employment. I would like to say that I am here as 
one voice speaking on behalf of many Northwest Airlines 
employees on the effects of the September 11th attack on the 
United States of America.
    As with any company, qualifying for employment requires an 
interviewing, screening, and training process. Because of the 
unique employment position at Northwest, the process is more 
in-depth than for most other entry-level employees. Each 
individual must qualify for each level within the process.
    Having successfully completed the interview process, I was 
subject to a criminal background check and drug screening. At 
this point, I was offered a position, which I accepted, and 
began my training. The training was 4 weeks, very intense, that 
placed a significant strain on my family's financial stability. 
Our wages for training were only 60 percent of the entry-level 
wage. Thus I was earning $6.36 an hour. As a family, it was 
decided to commit our resources to support my training and the 
cost involved, because our family supports each person when an 
opportunity presents itself.
    Upon completion of my training, I began my probationary 
employment as a reservation sales agent. The probationary 
period is 4 to 6 months, depending upon your status, whether 
full time or part time. I loved going to work every day at 
Northwest, something most people cannot say about their job. 
The people I worked with directly tipped the scales in regards 
to their service, enthusiasm, dedication to the company, each 
other, and the public at large. The reservation agents took 
great pride in the service we gave to our customers. It is a 
wonderful feeling helping a family get the best possible fare 
for a vacation or helping someone schedule a flight to get 
across the country to attend a funeral of a loved one.
    The events of September 11th had a dramatic effect on the 
responsibilities of the probationary reservation agents at 
Northwest Airlines. Northwest declared an emergency and 
requested all reservation agents, including probationary 
agents, to report to work as soon as possible. I would like to 
say also that in this sort of emergency, the probation agents 
were requested to behave and act as if they were veteran 
agents, which is something that happens to a person after they 
have gone through probation. I reported for work 6 hours early 
that day and worked an 11-hour shift. I felt it was my 
responsibility as a citizen and employee to do everything that 
I could to help people through this crisis.
    On September 22nd, I received a call from Northwest 
Airlines informing me I was being laid off. On September 24th, 
I, along with many other probationary agents, was informed that 
my employment was being terminated due to my probationary 
status. Later that day, I received a letter confirming that I 
was terminated due to the effects on the airlines in regards to 
the events of September 11th.
    To say that I was shocked and disappointed is an 
understatement. The financial burden placed on my family and 
the stress of long hours I endured during training and 
probationary period only to be terminated through no fault of 
my own has left my family and me in a State of disarray. I am 
diligently working at maintaining a positive attitude through 
the chain of events. I came here to explain to you my 
commitment to my family, my job, and Northwest Airlines. It is 
my sincere hope that I have articulated this to you in this 
short time. All I want is the opportunity to return to 
Northwest Airlines as a reservation agent.
    In conclusion, it is my goal to return to Northwest 
Airlines, as stated, and I am asking that you help me and the 
thousands of other displaced airline workers to get back to our 
jobs. And this is my one voice.
    [The prepared statement of Ms. Leake may be found in 
additional material.]
    Senator Dayton. Very articulate and powerful voice. Thank 
you.
    Ms. Leake. Thank you.
    Senator Dayton. Our next witness is Mr. George Logan, who 
is the owner of G. Logan & Sons Hauling, Inc. Mr. Logan is a 
Minnesota native who runs this hauling business. He is 35 years 
old with a wife and three boys. Mr. Logan had recently secured 
a $99,000 contract with Penn Co Construction, is that correct?
    Mr. Logan. Penn Co.
    Senator Dayton. Penn Co. Who was working for the 
Metropolitan Airports Commission. The contract was canceled on 
September 15th as a direct result of the events on September 
11th. This has resulted in a loss of one-third of his company's 
revenue.
    Mr. Logan, welcome. Thank you.
    Mr. Logan. Mr. Chairman, and members of the committee, I am 
pleased to be here to discuss several important issues.
    Senator Wellstone. Do you want to try and get that mike 
closer to you?
    Mr. Logan. As I said, I am pleased to be here today to 
discuss with you several important issues, but first I would 
like to take the time to thank Senator Wellstone's staff for 
allowing me to testify before the committee today. I am George 
Logan III, as I was introduced, a small business owner here in 
Minnesota. I have a roll-off company of construction 
containers, and I have owned my business since 1994. I was able 
to purchase my first new roll-off with the assistance of an SBA 
loan in 1995. I have been very fortunate that my gross revenues 
in business have risen each and every year. My gross revenue 
last year was over $300,000. Unfortunately, this year will be 
much different.
    I started bidding on projects through the CERT program, and 
I was the successful bidder of the Penn Co construction bid at 
the airport. This contract would have generated almost 
$100,000. The Penn Co contract was canceled 1 week after the 
signing. I was told to pick up my construction containers, that 
the job was canceled. And I would like to stress to the 
committee that it was canceled, not postponed or delayed. This 
project may or may not resume. They are not sure yet. They will 
check and see if they are going to do any more expansions to 
the airlines. And this cancellation of the Penn Co contract is 
going to place great financial burden on my company, because in 
order to bid for this job, I had to get more equipment and make 
sure that I could handle the work that was set forth. And in 
doing that, it ran about a $150,000. So now I have the 
equipment and everything to do the work, but no contract.
    So while my business is struggling to meet increased 
expenses, I have less money for my family. This has directly 
affected my family's well-being. Recently, I won a trip to 
Jamaica from a school raffle at my youngest son's school, and I 
was planning on taking my family on a trip to Jamaica. Now, 
even if I had the money to go on a trip, I am not sure I would 
want to take my family on a vacation where I would have to fly 
to its destination.
    The President said we should get back to doing things that 
we normally do. This is hard in my case, since almost a third 
of my income has been lost due to the direct effect of the 
terrorist activity.
    I am not complaining about my losses. My losses have only 
been economic in nature. I have not lost family or friends to 
the terrorists, and my prayers and sympathy go out to those 
that have. I just have to work a little harder and make sure my 
business is successful, and any help the committee can give me 
is greatly appreciated.
    [The prepared statement of Mr. Logan may be found in 
additional material.]
    Senator Dayton. Thank you, Mr. Logan.
    Our next witness is Ms. Cheryl Dusek, former Northwest 
Airlines information technology project leader. Cheryl is 54 
years old, a mother, a wife, a cancer survivor, and a marathon 
survivor, too, I am told. At Minneapolis Marathon yesterday, 
and sitting here today. You are more than a survivor, you are a 
thriver.
    Ms. Dusek. Thank you. Better sitting than standing.
    Senator Dayton. Cheryl and her family have lived in Eagan 
for the last 20 years. As an IT project manager, Cheryl was 
making a good wage with good benefits and was notified last 
week that she was being laid off. She has one daughter in 
college and has been able to finance all of her children's 
education, as well as provide financial support for aging 
parents, all without loan assistance. Cheryl is understandably 
quite concerned about being able to pay off their family's 
mortgage, health insurance, and educational costs as a result 
of her being laid off. Welcome.
    Ms. Dusek. Thank you. As he did just explain, I think I 
have led a very comfortable life in the last--in my working 
career. And when I was called and asked to testify here, I had 
actually commented that I was having a hard time not looking at 
my own good fortune when I had spent the last several weeks 
seeing really heartwrenching stories about people who had lost 
family members in the tragedy, businesses who had lost nearly 
all of their employees on September 11th. And to say that--are 
we still on?
    Audience.  No.
    Ms. Dusek. OK. As I was saying, it was hard to look past 
the sadness in other people's lives when looking at my own 
situation. We had lived a very comfortable life. We had two 
kids, we were able to pay for their education and expenses, and 
my 80-year-old mother was fortunate enough to have additional 
support from us. She is an 80-year-old person who lives 
strictly on a $630-a-month Social Security check. She lived 
through the Depression and taught me some very important 
lessons about hard work and making sure that you survive, and 
that you get through things, and you have other people.
    As I thought about my own situation, though, I realized 
that among the people that I knew at Northwest, there were a 
lot of people who were not as fortunate as I am in the respect 
that I still had my family intact, I have another source of 
income, my husband is employed, I am not at risk of losing my 
health insurance. But there are people whose lives are much 
more impacted and much more disrupted than mine. So I set out 
to kind of interview a few of them to find out what exactly 
this meant to them. And lest I misstate anything, I am going to 
read the statements that they provided to me. One of the 
employees I talked to was in the aerospace engineering 
department. His only work experience since college has been 
with Northwest Airlines. He feels, he tells me, that in 
addition to losing all of his seniority, even if he were called 
back to Northwest, he has lost over a decade of seniority, he 
would be starting from scratch. He has lost his ability to have 
medical, dental, and life insurance. He has lost future pension 
contributions, all of his accrued sick pay. He is a sole 
provider for a family of five people. One of his children is in 
college, and his wife is a full-time student, as well. His 
degree is in a highly specialized field, which limits his 
opportunities for employment to basically airline industry-
related companies. And most of those companies have not faring 
well, so he is not holding out a lot of hope that he is going 
to find something in the area that he is trained for. And even 
if he were, most of the companies that are an option to him are 
not located here in Minnesota. Relocation is something he 
really doesn't want to consider, but he may have to, and 
selling his home at this time is going to be difficult.
    Another person that I spoke with is a 49-year-old project 
analyst with 6 years of employment with Northwest Airlines. He 
had told me that he had hoped to make Northwest his career home 
until his retirement. He also is a sole provider. His wife just 
enrolled this year in nursing school after many years as a 
stay-at-home mom. He has three children, including a child in 
college. And because of the education expenses that he was 
incurring, his budget was already stretched very thin. Now, 
unless he can find a job, a comparable position, he is faced 
with the possibility that either his wife will not be able to 
continue her college education or taking on a large amount of 
debt, which he doesn't want to do. He has lived very frugally 
in an effort to take care of his family and has done so very 
well.
    I also talked with a 53-year-old single woman who has been 
with Northwest Airlines for 16 years. Her circumstances and her 
concerns are very different. How to start over at age 53 when 
you are competing with young, attractive people for jobs in a 
very fast-paced society, it sort of puts a premium on beauty. 
She has pension issues, which as a single person are very much 
a concern. She is not expecting to find a position with 
comparable pay, but she definitely needs to find a position 
that she can support herself with. When you have a spouse, you 
are able to fall back on someone else, someone else's income, 
perhaps, to help you through a time like this. She is not in 
that position, and I feel very strongly that she is one of the 
many people that has been with Northwest for a long time for 
whom this has a really serious impact. And whatever help can be 
offered is going to be greatly appreciated by all of them.
    Thank you.
    [The prepared statement of Ms. Dusek may be found in 
additional material.]
    Senator Dayton. Thank you. We respect you taking the time 
to bring this to others, as well. Thank you.
    Our next expert witness is Mrs. Hydra Juhor, former food 
service worker at LSG SkyChefs. Hydra is an Ethiopian refugee, 
has lived here since June of 2000. As a food production worker, 
she made $8.70 an hour, plus medical and dental benefits. Her 
wages help support her husband and eight children. She lost her 
job shortly after September 11th.
    Ms. Juhor, welcome.
    Ms. Juhor. Thank you, Senator Wellstone, for inviting me to 
speak to you and the whole Minnesota Congressional delegation. 
I feel privileged to be able to speak on the behalf of the tens 
of thousands of hospitality workers in Minnesota and across the 
Nation who have lost their jobs as a result of the devastating 
bombing that took place September 11, 2001, at the World Trade 
Center.
    My name is Hydra Juhor. I emigrated to the U.S. in June of 
2000 with my husband and my children. I am a refugee from 
Ethiopia, and I am here with refugee status.
    I worked at LSG SkyChef at the Minneapolis-St. Paul 
International Airport as a food production worker. We supplied 
all of the in-flight food service for Northwest Airlines and 
KLM. After the attack on the World Trade Center, the in-flight 
food service was drastically cut back, and as a result, I was 
laid off from my job. Many co-workers have also been laid off.
    As a food production worker, I was receiving $8.70 per 
hour, plus medical and dental benefits, as well as life 
insurance. I have lost all my benefits that were provided to me 
through my union contract.
    I am married and have eight children ranging from 39 years 
old to 8 years old. Two of my children are still in Ethiopia. I 
do not know what to do. My industry, the hospitality industry, 
has been devastated. There are no jobs to go to, especially 
jobs that provide the level of benefits that I had at LSG 
SkyChefs. My husband works, but in order to feed and clothe my 
children, pay our rent and other bills, my husband and I both 
need to work to bring income into our home.
    Back home, I was an accountant, and I planned to go back to 
school to further my education and learn about computers. I am 
trying to better myself and attain a better job and lifestyle. 
Presently, my plans are on hold, as I do not know how I am 
going to go to school until I can get back on my feet.
     The bombing on September 11, 2001, killed 6,000 people and 
put a lot of others out of work, but I feel confident that this 
Nation will pull itself together. One way of doing that is to 
make sure that people like me and my co-workers are not left 
forgotten.
    Thank you again for the opportunity and privilege to speak 
to you this morning. Thank you.
    [The prepared statement of Ms. Juhor may be found in 
additional material.]
    Senator Dayton. Thank you very much. I would like to ask 
each of the panelists just briefly, we have a State program--
Commissioner Yanisch was in Washington last week asking the 
Federal Government for an additional $23 million to provide 
additional assistance. Congress is considering an employee 
assistance package this week. What are either yourself directly 
or your own employees and your experience as an owner or 
worker, what is available now? Has anything kicked in for your 
benefit at this point, and what is missing?
    Let me start at that end, Ms. Juhor, and moving back. Are 
there any benefits, State or Federal, that have been made 
available to you?
    Ms. Juhor. No, I do not know what will be next--I had all 
of these benefits: life insurance, medical and trust----
    Senator Dayton. So cut off entirely? Nothing is--no 
benefits, unemployment, or health or--nothing has come forward 
since you were----
    Ms. Juhor. I do not know about that.
    Senator Dayton. Thank you.
    Ms. Dusek. I think most of the management staff that I was 
part of--and that doesn't necessarily mean managers, but anyone 
who is noncontract or nonunion is considered management staff. 
Most of us got a certain level of severance package, which is 
going to tide us for just a very short time, for some of us. 
And obviously, we are eligible for unemployment benefits, but 
one of the things that I think everyone is concerned about is 
that it is not going to be as easy to find a job as it was a 
few years ago.
    I have been laid off three times from technology companies 
since 1997, and in each case I was able to bounce back pretty 
quickly. But I know that there are going to be a lot more 
people with the number of people who are out of jobs who are 
looking for work, and it is not going to be as easy, and I am 
not sure that the benefits are going to tide people over long 
enough to find comparable kinds of employment, employment that 
will help them support their families. And the reality is, 
until people have money in their pockets, as you said, to spend 
on the goods and services that our companies manufacture and 
sell, the economy is not going to get better.
    Senator Dayton. Thank you.
    Mr. Logan?
    Mr. Logan. Like I stated before, when I got my first work, 
I had an SBA loan, so it was through the Government back then. 
But now I am not laid off or anything; my business is just 
slowing. Hopefully, coming up in the near future, there will be 
more contracts, bigger contracts, where I can get the trust 
going and pay for a new truck and containers and that.
    Senator Dayton. Thank you.
    Ms. Leake?
    Ms. Leake. For myself, I am just learning what is out 
there. I have never, ever had to seek unemployment. I just went 
out right away and started applying for jobs, but a lot of them 
are at or below the wage that I was making as a probationary 
agent, and so I am learning a lot about the programs that are 
out there.
    If school is an option for me, I do have to look at the 
care for my kids and the schedules that will work and things 
like that, because my kids are going everywhere. They are 8, 6, 
5, and 3, and at one point in the day or not, they are in 
school, so I have to work with that. But I am considering 
everything that is out there for me. There seems to be a lot.
    Senator Dayton. Good.
    Ms. Doering?
    Ms. Doering. For us, our employees, we didn't have to lay 
off any because we were understaffed going into September 11th. 
But there really have not been programs or anything that we 
have been able to take advantage of, even though our revenues 
are down by 50 percent. We are hoping that things would start 
bouncing back relatively quickly, but our risk is more in the 
next several months as--if things do not bounce back, we could 
potentially have to lay people off, and we do not want to get 
to that point.
    Mr. Ramstad. First I would like to thank everyone for being 
here today, and particularly I want to thank the teachers and 
students who are here today, because this is very much about 
your future, as well as about the immediate future of the 
witnesses and the other people here assembled. These are tough 
times, tough times for every Minnesotan and every American. We 
are in a State of war, and our economy is in recession.
    And I want to also applaud my friend and colleague, Senator 
Wellstone, for convening this hearing, for reaching out in a 
bipartisan way, because certainly partisanship has no place 
with the--as far as the issues we are talking about today. We 
need to work in a bipartisan, common-sense, pragmatic way on 
these serious problems affecting people's lives, as we have 
just heard this very compelling testimony from these witnesses 
here.
    I want to thank all of the witnesses for coming, as well. I 
would like to ask a more narrowly focused question of the three 
of you who have lost your jobs, Ms. Leake, Ms. Dusek, and Ms. 
Juhor--is it Juhor?
    Ms. Juhor. Yes, Juhor.
    Mr. Ramstad. Juhor. I didn't know if the J was silent or 
not.
    Well, first of all, everyone in this room, every American, 
as we have said, has experienced trying times. And I cannot 
imagine--with the problems associated with the war, I cannot 
imagine those trying times being so exacerbated by losing your 
job on top of everything else that is happening right now in 
the world and in this country. And I would like to ask you, as 
I said, a more narrowly focused question. Because certainly all 
of us and everyone in this room commiserates with you and the 
195,000 other Americans who have lost their job in the last 
month. What form of relief--and again, I direct the question to 
the three ladies who have lost their jobs. What form of relief 
from the Federal Government would be most helpful to you or 
your family? Would it be for us to extend unemployment 
benefits, to extend health care benefits, tax relief, or 
something else? If you could just prioritize what form of 
relief from the Federal Government you see as being most 
helpful to you and your family.
    Ms. Juhor. I am a newcomer. I do not know what is.
    Mr. Ramstad. OK. Ms. Dusek?
    Ms. Dusek. I think I know what the question is. Actually, I 
think what I heard from a lot of people that I have spoken with 
is that, for example, the airline industry is a pretty specific 
industry, and people who lost their jobs in the airline 
industry do not really have another company to turn to. In the 
work that I do, I can certainly do that. I can go to another 
technology department and probably do the same kind of work I 
have done. But for a lot of the airline employees, retraining 
is going to be critical.
    But I have heard from many of them that you can give me 
money for retraining, but my first important job is to support 
my family. I cannot go back to school if I cannot support my 
family. And although the education expenses will be paid for, I 
still have to put food on the table and take care of those 
things. That is a really critical issue.
    The other thing that I think people are concerned about is, 
although we have access to COBRA, COBRA is very expensive. I 
have been there, I know. It is a very expensive way to get your 
health insurance, and so people are very concerned about those 
two things for sure.
    Mr. Ramstad. Thank you.
    And, Ms. Leake?
    Ms. Leake. Well, for myself, I agree with what Cheryl said 
in regards to the COBRA issues, things like that. For myself, I 
would like to say that we need the funding to be designated 
specifically for the employment of the airlines' employees, so 
that we can get back to our jobs, because we are the people 
that sell and reserve travel plans for people. We were the 
first contact that they were receiving in regards to flying. 
And convincing them that now is the safest time to fly. Things 
are just cooking out there in order to make things more safe. 
So for myself, I would like that funding for the people who are 
laid off or terminated, like myself, to be able to get back to 
work.
    Senator Wellstone. If you want to applaud, you can. 
[Applause.]
    Ms. Leake. What did I say?
    Mr. Ramstad. Finally, I would like to ask the two business 
people here the same question. What form of relief, either on 
the economic or the small business assistance side, or the tax 
side, would you prioritize as the most important thing the 
Federal Government could do right now?
    Mr. Logan. I would say, like, lowered interest rates on 
loans, or some type of Government loan relief would really help 
my situation.
    Senator Wellstone. Can you hear in the back? You can. OK.
    Mr. Ramstad. Thank you for that response.
    Mr. Logan. Did you want me to repeat myself? I would say 
lower interest rates on loans, like business loans, small 
business loans or something.
    Mr. Ramstad. Finally, same question of Ms. Doering, please.
    Ms. Doering. I would just like to echo what George said 
about the small business loans. I think that is something that 
is going to be critical for our growth over the course of the 
next year here in order for us to grow, and there is 
uncertainty about what our access to capital will be, and so 
some assistance that way. And I know there is some proposal 
toward leisure tax credits out there that I have heard about, 
and that is another thing that may support the industry.
    Mr. Ramstad. Thank you again to all of the witnesses.
    That is all I have, Mr. Chairman.
    Senator Wellstone. We are going to hand this over to 
Congressman Oberstar, and then our next panel. Just very 
quickly, I too want to thank the panelists. I want to thank 
each of you, and I want to mention just--I can do this, I 
think, in 2 minutes or less. When we were talking about the 
importance of the airline employees also getting the benefits, 
I want to point out that when Commissioner Yanisch was in DC 
doing such a superb job, she was joined by Berilyn Corcoran. 
Believe me, I want you people to know that she did one heck of 
a job of speaking up for Northwest employees. [Applause.]
    And I also, just by way of very quick introduction, because 
I just always do it, and it has been a long time we have 
working together. I want to mention that Sheila--my wife Sheila 
is here, as well. It does seem to me, and I won't even ask--I 
just want to get this for the record. I won't ask you all to 
speak on it now, but when Mr. Logan was speaking, it was 
interesting to me that the contract was canceled, not 
postponed. I would like to talk to you more about that. That is 
an important distinction.
    And then, Kelly, one of the things that you were saying, as 
I understood it, is that you are still functioning at 100 
percent of cost and 50 percent of revenue, and so you are doing 
a yeoman job, but there is a question of how long you can 
continue to function that way. I could go on and on.
    Obviously, we have got to extend the unemployment benefits 
and reform UI to make sure it works for people out of work. 
Obviously, COBRA came up. If there is one thing that we all 
hear from everybody, it is, please, Senators and Congressmen, 
Democrats and Republicans, the most terrifying thing next to 
losing your job is not having health care coverage. We are 
going to need the help to afford COBRA, we are going to need 
the help to afford health care coverage for our families.
    That looms as a huge challenge before us. We have got to 
meet that, and I know all of our legislators would agree, as 
well. And I could go on to a lot of other things from workforce 
development funding for dislocated workers, you name it. I just 
want to, though, mention on the small business piece, it has 
come up twice, I think above and beyond rebuilding our economy 
and having the demand--as I mentioned earlier, Ed Daum is here 
somewhere, and he is an incredible director. Between the 7A and 
504 programs, the SBA has leveraged about a billion and a half 
dollars in our State in the last 6 years or so, and I think, 
Ed, the Disaster Loan Program. Let me introduce Ed Daum. 
[Applause.] He is the best director in the country for the 
Disaster Loan Program. It doesn't need to be based on 
geography. I think we can help out in terms of Disaster Loan. I 
think we can get rid of fees on the 7A. I think there are ways 
to get more access to capital to small businesses, and more 
access to loan money just to keep you going, as well. And I 
think the small business--I have got to repeat it again. The 
small business sector is critical to our State. We cannot lose 
sight of it.
    Congressman Oberstar--and one thing about this man over 
here. He is the dean of our delegation. He also probably speaks 
with as much authority as any single person in the United 
States House of Representatives and the Senate when it comes to 
airline safety. We are very proud that he is our Congressman 
for the 8th Congressional District of the State of Minnesota. 
Congressman Jim Oberstar. [Applause.]
    Mr. Oberstar. Thank you very much, Senator. I appreciate 
your good words, and especially appreciate the hearing that you 
have called, and your deep sense of concern for our fellow 
citizens. I express also a great appreciation to our colleague, 
and my House colleague, Jim Ramstad, who serves on the very 
important House Ways and Means Committee, and who has already 
demonstrated his genuine concern and support not only by being 
here, but by comments he made at the news conference we had 
earlier.
    I am afraid, unfortunately, the bad news is only beginning. 
The ripple effect of the terrorist attack throughout our 
economy is reaching into sectors people never really fully 
appreciated before. Aviation is a 10 percent segment of our $10 
trillion national economy. There are 1.2 million airline 
workers, or were on September 11. There are another 4 to 6 
million people employed at the airports served by the U.S. 
airlines, the 530 commercial airports in the United States. 
They have experienced severe economic distress, layoffs, but 
cutbacks in sectors that we hadn't anticipated. The 
Metropolitan Airport Commission is a good example of it: $400 
million in construction work of improvements at the 
Metropolitan Airport Commission have been put on indefinite 
deferment. That means future jobs, future contracts for George 
Logan and others, are on the shelf, because they cannot look 
far enough into the future to see when and to what extent air 
travel will resume at the level that it enjoyed prior to 
September 11. Loss of that income and of that future growth 
potential hits in another way. Those are the good jobs. Those 
are the good-paying jobs: the construction workers, the 
electrical workers, cement finishers, the heavy equipment 
operators, to buy the homes, the cars, the household 
appliances, and keep our economy going. Those are not going to 
be fed into our economy, and as these projects are cut back, 
not just Minnesota, but elsewhere across the country, billions 
of dollars of investment will be pulled back, and that puts 
greater pressure on the commitment of the President and the 
Congress to address the needs of the people.
    The President has submitted a proposal for temporary 
extension of 13 weeks' unemployment compensation, $3 billion in 
emergency grants for training and to pay 75 percent of health 
care premiums, $11 billion to States for low-income workers 
displaced from their jobs to help them receive health 
insurance, but additional funding for job training and 
placement. But we have to go beyond. We have to create the 
jobs.
    This coming week, my colleagues and I on the House 
Transportation and Infrastructure Committee are going to be 
announcing comprehensive investment in infrastructure security 
for transportation--aviation, but also for rail, ports, inland 
waterways, highways, bridges, tunnels, all of which have 
security needs that have to be addressed.
    In the immediate aftermath of the September 11th strike, 
the air strikes, and in the midst of the airline financial 
rescue legislation, Northwest Airlines took the initiative to 
urge the association for airlines, the Air Transport 
Association, to weigh in with the Congress on behalf of a 
package of legislation to help furlough airline employees. The 
Board of Directors of Northwest Airlines unanimously passed a 
resolution at our meeting this morning, September 27th, in 
endorsing and supporting such legislation. As a result, the Air 
Transport Association has weighed in on support of the package 
that the administration has announced.
    But I would urge all airlines to go further. Northwest has 
announced it will extend health insurance to its workers, and 
other benefits through the end of this year. Delta Airlines has 
made similar announcements. I would urge the airlines not to 
contract out work that is being done in-house. And in exchange 
for the investment that we made and the financial health of the 
airlines to get them back on their feet, $5 billion in grants, 
$10 billion in guaranteed loans, that they should also make the 
highest priority to do all work in-house. Not contracting it 
out, not contracting it out overseas, either. [Applause.] And I 
look forward to their cooperation.
    Senator Wellstone. We are joined by Congresswoman Betty 
McCollum. [Applause.]
    Ms. McCollum. Thank you, Senator Wellstone. This is 
important that we all get together and speak as a community and 
family and State and that we hear from you. I apologize for not 
being able to be here for all of the first panel and having to 
leave shortly today, but I am out in the schools talking to 
school children and telling them that it is good to fly. And 
hopefully, that word gets back to their parents, and we can 
start bringing our economy together.
    I worked in the retail sector. Boy, do I know about 
volatility. It is very scary for those of you who are out there 
when you hear what is going on. I have worked through several 
mini-recessions where my paycheck in commission sales was 
dependent upon consumer confidence. So you can count on me to 
do whatever I can, including spending money, to restore 
consumer confidence.
    We have a strong country. We have plans put in place that 
we are working on, both in the House and Senate. Bipartisan. 
There will be some discussion, some different viewpoints, and 
some different tactics, but we need to hear from you for what 
you need to do.
    When I leave here shortly, I am going out to some college 
campuses. Our college students are very concerned about the 
economy, having a job when they graduate, what is going on with 
their loans. Their parents are very concerned about the economy 
and being able to help with that. So I will continue meeting 
with small businesses, as I have. I am meeting with St. Paul 
companies talking about insurance later on. But we are all kind 
of dividing up the tasks around here, so everyone is heard 
from.
    Thank you all very much for coming. And I notice a good 
friend of ours, Paul, in the back, Jerry Malpinski, and there 
is a person in the back with another hat on, I cannot tell if 
it is Legion or VFW here today. Our thoughts and prayers are 
with all of you for what you have done in our country, and I 
know you will be there to support our servicemen and women in 
the future.
    Thank you. [Applause.]
    Senator Wellstone. Keep that applause for the veterans. 
Thank you so much to the veterans. [Applause.]
    I would like to thank the panelists and hand this over to 
Congressman Ramstad, who will be introducing our next panel. 
Thank you so much for being here. [Applause.]
    Mr. Oberstar. Mr. Chairman, while the next panel is taking 
its place, may I just add one footnote that Northwest Airlines 
has already taken the initiative in modifying flight deck 
doors. It was the first airline in the United States to do so, 
and that modification was done at the Duluth maintenance base 
of Northwest Airlines, and we hope that the whole 
modification--the full replacement of all doors will also be 
done in Minnesota by Northwest Airlines.
    Mr. Ramstad. If we could have your attention again, please. 
Before I introduce this distinguished second panel, I would 
like to introduce a good friend; Hennepin County Commissioner 
Peter McLaughlin is here. Peter, thank you for being here. 
[Applause.]
    I also do not think it is possible to overemphasize the 
importance of working in a bipartisan way, and again, I want to 
thank Paul Wellstone for not only convening this hearing and 
inviting all of you to be here today, but for reaching out to 
those of us on the other side of the aisle. Because as far as I 
am concerned there are no Republicans, there are no Democrats 
at this time when we are dealing with national security and 
economic security issues. We are all Americans. In this room, 
we are all Minnesotans and all Americans, and I do not see 
political labels. [Applause.]
    In fact, I am very pleased that Speaker Denny Hastert and 
Democratic Leader Dick Gephart are meeting in New York with 
labor leaders and corporate executives. As we meet here today, 
they are holding a similar meeting. And I also want to say 
that, just as the President and the Congress are focused on 
national security, we must also work very diligently on 
economic security, because I think it is obvious to all that 
our economy needs a stimulus, and our laid-off workers need 
assistance.
    I am pleased that we worked in a bipartisan way in Congress 
to pass an airline stabilization and an emergency supplemental 
package to help New York City recover from the worst attack on 
United States in our history. Now we must pass an economic 
stimulus plan that puts people back to work and provides 
critical aid to laid-off workers, as well as tax relief.
    Also, when we go back, we will be working on an anti-
terrorism package and an airline security package, as Jim 
Oberstar mentioned. Here in Minnesota, believe me, we know all 
too well that Northwest Airlines was forced to eliminate 20 
percent of its workforce, or 4,500 jobs. And Northwest Airlines 
happens to be the largest single employer of residents in the 
3rd Congressional District, which I am privileged to represent. 
So these numbers, laying off 4,500 workers, 20 percent of the 
workforce, even those dramatic numbers do not tell the story as 
far as the layoffs and economic hardships that are placed on 
businesses that rely on the airlines, such as the hospitality 
industry, the travel agents across our State and country, food 
services, janitorial services, taxi services. So that is why I 
strongly supported the airline stabilization package, and I am 
also a sponsor of Hart-Hastings, the Hart-Hastings bill, which 
will provide extended assistance to workers who were laid of 
during the terrorist attacks and the subsequent stoppage of 
airline travel. And I am glad to also report that our Speaker 
of the House, Denny Hastert, is also supportive of including 
such relief for laid-off workers.
    Without further ado, let me introduce the first member of 
our second panel, Jaye Rykunyk--I hope I am pronouncing that 
right, Jaye--the principal officer of the Hotel Employees and 
Restaurant Employees Local Union 17. And Jane is also vice 
president of the international union. She represents 5,000 
workers in the hospitality and food service industries in the 
Twin Cities area, and Jane will tell us about the members of 
the hospitality industry who have been significantly impacted 
as a result of the slowdown in these industries. Jaye?

  STATEMENTS OF JAYE RYKUNYK, HOTEL EMPLOYEES AND RESTAURANT 
EMPLOYEES LOCAL UNION NO. 17; DAVID OLSON, PRESIDENT, MINNESOTA 
CHAMBER OF COMMERCE; RAY WALDRON, PRESIDENT, MINNESOTA AFL-CIO; 
  BRAD ANDERSON, VICE CHAIRMAN, PRESIDENT AND CHIEF OPERATING 
OFFICER OF BEST BUY CO.; AND MARILYN CARLSON NELSON, CHAIR AND 
CHIEF EXECUTIVE OFFICER OF CARLSON COMPANIES, INC., MINNETONKA, 
                               MN

    Ms. Rykunyk. Mr. Chairman, and members of the committee, 
thank you for inviting me to testify and to address you today. 
My international union represents 300,000 workers in United 
States, Canada, Guam, Saipan, and the Virgin Islands. We cook 
the food, serve the drinks, make the beds, we sell the beer and 
popcorn at the ball games, we make 95 percent of every meal 
served on every airline flight originating in the United States 
and Canada. The 300,000 members that we represented were prior 
to the 11th of September. Our best estimate is that more than 
one-third of our workforce has been laid off since then.
    The hospitality and food service industries are made up in 
large part of workers who are minorities, women, and 
immigrants. We have served as the gateway to the American 
workforce, and indeed to the American dream, with more 
immigrants than any other industry in the history of our 
Nation. Our workforce is the training ground for more welfare-
to-work employees than any other industry. In our union, we 
have accepted the challenge of uplifting the standard of our 
industry so we too may earn a liveable wage, have medical 
coverage, own our own homes, send our children to college, and 
look forward to a pension which will allow us to enjoy our 
retirement.
    As our society has changed from a manufacturing economy to 
a service-based economy, the hospitality and tourism business 
has been one of the fastest-growing segments of that new 
economy. More jobs have been created in the hospitality 
industry than any other single industry in our country in the 
last 10 years. Large public investment has been made in the 
building of hotels and convention centers. It has been done 
through TIF, through low-interest loans, and direct subsidy by 
brown field clean-up and other mechanisms. Taxes on hotel 
rooms, food and beverage sales, sports tickets and parking 
surcharges have become a mainstay of the budget of the majority 
of all cities who seek to attract visitors. Beyond these direct 
tax revenues, there are revenues collected by local and State 
governments for licensing, taxi cab fares, etc. The list is 
long and diverse.
    When a pebble falls in the pond, the hospitality industry 
is always in the first ripple. The attack of September 11th was 
not a pebble, it was a boulder, and the effect on our industry 
was not a ripple, it was a tidal wave. I have distributed to 
you an article from the New York Times. If a picture is a 
thousand words--and I have some extra copies of this 
available--then these pictures should let you clearly 
understand the devastation in the hospitality industry.
    The immediate impact here locally has involved the layoff 
of thousands of hospitality workers in our metropolitan area. 
Our union represents 1,100 workers at the Minneapolis and St. 
Paul Airport. The majority of those workers were sent home 
immediately following the attack. At the SkyChef facility where 
the airline meals are made, the majority of the workforce is 
made up of immigrant workers, one of whom testified before you 
today. Most of these workers are paid below $12 per hour, and 
most of them not only support their families, but they have an 
obligation to send money home to support their families 
overseas. HMS Host provides food and beverage and retail 
services inside the airport. Sales were down more than 50 
percent in the first weeks and now have been slowly rebounding. 
We have permanently lost 130 jobs at SkyChef. At HMS Host, we 
have lost 150 jobs. We believe that those losses are permanent.
    October is the catch-up month in our industry to recover 
from a slow summer. We generally expect to have close to full 
occupancy in our hotels in the Twin Cities. This occupancy has 
fallen to below 50 percent by the most current forecast. The 
Radisson Plaza Hotel has closed its white-tablecloth 
restaurant, as has the Minneapolis Hilton. These two restaurant 
closings alone will throw more than 50 workers out of their 
jobs.
    Prior to September 11th, the workers in these restaurants 
would not have given a second thought to reemployment. Now 
there is literally nowhere for them to go. High-end dining has 
been adversely effected throughout the city, as well as 
throughout the Nation. The prospect of securing a job that 
provides benefits is nonexistent to workers who were at the 
high end of the income scale in our industry. There are simply 
no jobs for them to have, and these are the most highly skilled 
workers in the industry. A quick review of the want ads in the 
Sunday paper confirms the dire statistic. The jobs are simply 
gone.
    By far, the large majority of the hospitality industry 
workers hold down two jobs to make ends meet. Even working more 
than 60 hours per week, they are barely able to make enough to 
cover their basic necessities. The main meal for most hotel and 
restaurant workers is the one that is provided by no charge to 
them by their employer as a benefit of working in that 
facility. In an area with one of the highest and most expensive 
and tightest housing markets in the country, many of our 
members are already making plans to move in with relatives, 
because they know they will be unable to pay their rent or to 
make their mortgage payment. If you rent, then you look for a 
room with a family member. If you have a mortgage, then you ask 
your family to come in and live with you. As much as we would 
like not to believe these grim statistics, it is not uncommon 
now for many of our members to already live two or three 
families in a two-bedroom apartment. We have a number of 
members who were full time who live in homeless shelters or in 
their automobiles.
    The most vital pieces of information that we put in our 
union newspaper following the attack was about programs for 
heat share, food share and emergency assistance. Our industry 
is in free fall, and our members, who are among the poorest 
workers in Minnesota, are without a parachute. The reality of 
living on unemployment for our members is a reality of not 
enough to eat and no place to call home.
    The waiting week for unemployment benefits represents 2 
weeks without enough money to buy groceries. It represents 
standing in line at food banks or going through garbage cans 
behind grocery stores and restaurants for what the wealthy can 
afford to throw away.
    While there are numerous mechanisms by which workers can be 
helped, I cannot stress to you enough the need for continuation 
of medical benefits for laid-off workers. Given the extremely 
low wage of many sectors of our industry, the large numbers of 
workers who would be eligible for public assistance for medical 
benefits, the loss of health insurance will be devastating not 
only to them but it will be devastating to the public health 
care system as well. Our public health care system is simply 
not equipped to handle the large number of workers and their 
children who will suddenly become eligible if immediate action 
is not taken to guarantee their benefits through COBRA 
supplements.
     I brought a number of the members of my union with me who 
are laid off from their jobs, and I would like to introduce 
them to you. If I could have them stand up, please. [Applause.]
    These workers represent the very best of our country. They 
are workers who have, many of them, immigrated here who have 
been willing to fill so many of our jobs which help make our 
cities and our country and our economy strong. They have worked 
long hours, and they have been willing to serve the public for 
very low wages. They cannot be overlooked in the discussion 
about how the recovery from this tragedy will help them. If you 
do not speak up for them, then no one else will. [Applause.]
    [The prepared statement of Ms. Rykunyk may be found in 
additional material.]
    Mr. Ramstad. I want to thank you, Jaye, for your very 
compelling testimony. And all of you members from Local 17, 
thank you for being here today and giving us your input, as 
well.
    The next witness is a long time friend, David Olson, who is 
president of the Minnesota Chamber of Commerce. He represents 
more than 3,200 Minnesota employers of all types and sizes. The 
Chamber is the voice for those members and their employees on 
State public policy, as well as regulatory issues. As 
president, David Olson also serves as co-chair of the Workers' 
Compensation Advisory Council, and vice chair of the Minnesota 
Chamber of Commerce executives. David is also on the National 
Board of the American Chamber of Commerce.
    Mr. Olson. Thank you, Congressman Ramstad, and thank you 
members of the committee. I appreciate your invitation to be 
here today, and I hope my comments will help you in developing 
some solution to the issues that Minnesota employers and their 
employees are facing. Solutions, in fact, focus on tax cuts and 
regulatory expense reductions in an effort to rebuild consumer 
confidence.
    When I received this invitation to participate in this 
hearing, we asked our members to provide input for my 
testimony. I have about 500 or almost 600 surveys that were 
received back within 24 hours, which is little unusual for us. 
We asked them basically three questions. First is related to 
workforce. Specifically we asked them how their workforce 
numbers have or will change over the next few months based on 
the events of September 11: 11 percent of the respondents think 
their workforce will grow; 36 percent think their workforce 
will shrink, and 53 percent believe their workforce numbers 
will remain the same. Actually, better news than we expected.
    Many manufacturing firms, unfortunately, were having a bad 
year before September 11th, so they had already trimmed their 
workforce. They are now hoping to hold their own. Other firms 
hope to reduce their workforce through attrition and 
retirements as opposed to layoffs, but some companies will not 
have that option.
    The second question focused on their company's 
profitability in the year ahead: 19 percent of respondents 
foresee higher profits; 21 percent are expecting about the 
same; and, unfortunately, 60 percent are projecting lower 
profits. That is a huge number, especially when you consider, 
again, that many manufacturing companies had already had one 
tough year and are not seeing any improvement. A manufacturer 
reported that raw material costs were up, as well as labor and 
energy costs, yet their customers are not willing to pay more, 
putting even greater pressure on already thin profit margins. 
Yet another manufacturing company said they were just starting 
to see an uptick in August, and the events of September 11th 
eliminated the momentum toward an improved outlook.
    Retailers are reporting slow or no sales of high-ticket 
items, but discount retailers believe they will hold their own.
    Finally, we asked our members how they were responding to 
the economy and what actions they are taking to survive. Across 
the board, companies are cutting expenses. Some of the cuts 
include personnel, layoffs when necessary, and cutting hours of 
remaining personnel; going without raises and bonuses; delaying 
capital expenditures; cutting overhead, including travel; and 
asking employees to consider lower-cost health care options, 
and pay more of their monthly premiums.
    A number of companies expressed frustration about costs 
they feel they cannot control, including energy, 
transportation, particularly rail for manufacturers, and 
insurance costs, namely, health care insurance. According to 
one business owner, ``We are being forced to look at dropping 
our coverage or just go to major medical only. We would allow 
employees to upgrade family coverage at their cost, but the 
cost is so high that I am sure that many cannot afford it.''
    While the overall outlook of business people is one of 
uncertainty and lower profits, some companies do have positive 
outlook for the year ahead. In addition, firms are doing 
whatever possible to boost their sales and marketing efforts. 
In typical Midwestern fashion, many companies are stating they 
are working harder, smarter, longer, and leaner. Our members 
make it clear that Minnesota businesses do not need further 
burdens and costs from any source and, for your purposes, their 
prospects and those of their workers would greatly improve if 
Government would continue to do its part to reduce both tax and 
regulatory expenses.
    Thank you. [Applause.]
    [The prepared statement of Mr. Olson may be found in 
additional material.]
    Mr. Ramstad. Thank you, David, for that excellent 
testimony.
    The next witness is also a friend, Ray Waldron. Ray Waldron 
is president of Minnesota AFL-CIO. In that capacity, he 
represents thousands of Minnesota workers. Ray will address the 
impact of the economic slowdown on workers in the airline, 
hotel, restaurant, and janitorial services industries.
    Ray, welcome.
    Mr. Waldron. Thank you and Chairman Wellstone and committee 
members. I thank you for the opportunity to speak on this issue 
this morning. You have my written testimony, and I would like 
to take some time to update that testimony that we provided for 
you earlier.
    As you know, the impact of September 11th is changing 
faster than we keep track of. But there is only one constant to 
that, and that is, people are hurting, both emotionally and 
economically, from the results of these attacks.
    Here in Minnesota, a lot of working people and family are 
hurting, and they are looking to you for help and relief. 
Congress responded well, very well, in fact, when the airlines 
corporations called for help. And we supported that. Working 
families now are calling for help, and we are here to ask for 
you to respond to them.
    How many working families are we talking about? As we know 
now--and I am sure these numbers are changing. Congressman 
Oberstar spoke very well when he said we believe that this may 
be only the tip of a problem.
    For Northwest Airlines, over 4,500 employees are being laid 
off alone, 400 airline employees at Mesaba Airlines just alone 
in Minnesota are being laid off. More than 20 percent of the 
workforce at our airport--that is, retail sales, parking 
attendants, restaurant employees and taxi cab drivers and 
cleaners who work in the seventh busiest airport in the United 
States--are being laid off. This does not include the 
construction workers. Our figures, last week we were told $291 
million in deferred construction will take place. We heard this 
morning from Congressman Oberstar that now over $400 million in 
deferred construction for the year of 2002 alone will be 
deferred. These numbers add up pretty quickly, and it is a lot 
of hurt for a lot of families.
    So we are appealing to you and asking you to extend the 
unemployment benefits for workers, to extend health care 
coverage for workers. We need the Government to insist that 
employers abide by their collective bargaining agreements and 
contracts. [Applause.]
    We need, when the economy rebounds and returns, provisions 
for hiring back these employees. We need job training 
allowances, and we know that the corporations have received 
public assistance, and we have supported that, but we also 
support the same accountability for businesses that these 
employees are required to have.
     Finally, I would like to thank you again for holding 
this--[Applause]--hearing here, and I would like to 
particularly acknowledge the students, the high school students 
that are here, and in particular South High of Minneapolis, the 
school that I graduated from earlier on. [Applause.]
    [The prepared statement of Mr. Waldron may be found in 
additional material.]
    Mr. Ramstad. Thank you, Ray, for your compelling testimony 
and your wonderful example of the greatness of South High. The 
other two schools here today are also very great, I know, in 
the 3rd District, both Burnsville and Bloomington Jefferson. We 
are glad the students are here.
    The next witness is president and chief operating officer 
of Best Buy Company, Best Buy, Incorporated, which is the 
Nation's largest volume specialty retailer of consumer 
electronics, personal computers, entertainment software and 
appliances. The company, Best Buy, Incorporated, is 
headquartered in Eden Prairie, I am happy to say, in the heart 
of the 3rd District. Best Buy currently operates retail stores 
in 41 of the 50 States and is on track to have more than 550 
stores nationwide by 2004.
    Brad Anderson will address consumer confidence, as well as 
how Best Buy is preparing to deal with the economic impact 
following the September 11th attacks. Brad has been with Best 
Buy since 1973 and has been president since 1991. It is a 
pleasure to welcome Brad Anderson.
    Mr. Anderson. Thank you. We were very, very honored to be 
invited here. When the terrorist attacks of September 11th 
occurred, our first and immediate concern was for the safety of 
our employees. Sam Goody, which is part of the Musicland chain, 
which is part of Best Buy, had a store in the World Trade 
Center, and thankfully, the employees of that store were able 
to get out safely. We also had 300 employees in the air at the 
time of the attack, and all of those people were also safe.
    But the tragedy has been personally visited to us because 
we have a lot of stores in the New York metropolitan area, and 
there are many employees of those stores who lost family 
members or friends, so it has been a very kind of personal 
tragedy that a number of people in Best Buy have felt very 
directly.
    From the company's--just to give you a brief backdrop in 
terms of Best Buy, we are the fifth largest company in 
Minnesota, with sales this year of $19 billion-plus. We also 
have 7,500 employees in the State of Minnesota. So, in addition 
to our headquarters, this is also our largest employee base. 
And the company has been going through a very rapid growth 
period over the course of the last several years. One of the 
things that I think is sort of an example of what happened here 
in terms of the travel industry is that immediately upon the 
attack, we basically removed the requirement for travel for our 
employees for the 2 weeks immediately after. And so in a little 
small way, that is part of, I think, the dominoes that are 
falling here in terms of revenue for the whole travel industry. 
We have tried to move that back to a normal--we have moved that 
back to a normal stage, and this past weekend had a large 
convention for hundreds of our employees from around the 
country in Florida, and so we are trying to get back on to a 
normal basis.
    In terms of our overall plans for the company, we are 
adding 45 new stores in the quarter that we are in, and we are 
continuing with that expansion plan, and we happen to be in an 
industry which has great good fortune of having a lot of--part 
of that growth is based on the amount of innovation that exists 
in the business. Lots of new kinds of product categories are 
continuing to come out in terms of digital products, etc, that 
have been growing very rapidly, while we have seen some offsets 
in terms of the slowdown of the computer business.
    Just to give you a picture in terms of what we see going 
forward, the company announced this past week the opening of a 
new distribution center which we are building in the New York 
area. We are also going to open 60 to 65 new Best Buy stores 
next year, which was the initial plan, plus another 75 or more 
Musicland stores. So our intent is to try to keep as robust an 
expansion plan as we had before, and to try to keep the kind of 
energy and growth that the company had before the attacks of 
September 11th
    Thank you. [Applause.]
    [The prepared statement of Mr. Anderson may be found in 
additional material.]
    Mr. Ramstad. Thank you very much, Brad.
    The final witness on this distinguished panel is Marilyn 
Carlson Nelson. Marilyn is chair and chief executive officer of 
Carlson Companies, Incorporated. Carlson Companies, as I think 
most Minnesotans know, is one of the world's largest global 
travel and hospitality companies, headquartered in Minnetonka. 
Carlson Companies touches every facet of the travel, lodging, 
and dining industries. Carlson Companies and their franchisees 
employ over 9,000 people in our State, 124,000 people 
throughout the United States, and 192,000 employees worldwide.
    Marilyn will address the recent loss of revenue in business 
as a direct result of the tragic terrorist attacks of September 
11th, as well as the need for a short-term stimulus package to 
keep people employed and help dislocated workers.
    Thank you very much, Marilyn, for being here today.
    Ms. Carlson Nelson. Thank you. Good morning, Mr. Chairman, 
and members of the Minnesota delegation and fellow Minnesotans. 
As was mentioned, I am Marilyn Carlson Nelson, chief executive 
officer of Carlson Companies. We do indeed employ nearly 10,000 
people in Minnesota, 125,000 people throughout the United 
States, and over 190,000 people worldwide, forming one of the 
world's largest travel and hospitality companies. We embrace 
just about every aspect of travel, lodging, and dining 
industries, with the exception of air transportation and ground 
transportation services. As such, we are very proud that our 
businesses also fuel so many related businesses and help to 
provide jobs outside of those that we create. We are very proud 
that we are located right here in Minnetonka, MN, and I think 
many of you know how seriously we take our corporate 
citizenship in this great State.
    We have always been especially proud of the fact that since 
our inception, we create jobs. Indeed, my father used to say 
that the greatest kind of philanthropy is the creation of jobs. 
You cannot imagine how we feel at this moment. Suddenly we 
realize as never before the inner dependence that we all feel--
the inner dependence with our employees and their lives, with 
our franchisees and their employees, and with the employees and 
owners of businesses that are dependent on us. Together we all 
sink or swim.
    I think, Jaye, the tidal wave was a very interesting 
analogy. Right now, we, all of us together, are at a tremendous 
risk of drowning because of a result of what occurred on 
September 11th and the subsequent shutdown of air travel and 
resultant consumer inertia. Entire travel-based businesses are 
off 35 percent. The entire service industry has suffered 
similar, if not greater, declines. This industry is number one, 
two, or three largest employer in 28 States across the Nation. 
Statewide, as you heard, there are 170,000 jobs directly 
related to travel and tourism. In short, our travel-based 
economy is not unlike our agricultural economy here. It 
constitutes the lifeblood of our State.
    We are confident that this disastrous 35 percent fallout is 
not going to continue. But unless some immediate stimulus is 
taken, and immediate action, travel and tourism businesses are 
projecting to suffer a decline of 20 percent, and if we do not 
act quickly, they will downsize now to accommodate that 
decline. That would put 34,000 Minnesotans and over 1.5 million 
Americans out of work. It would bankrupt up to half of 30,000 
travel agencies, who, by the way, right now ticket 80 percent 
of the air travel. So that is the sales force. That could put 
70,000 travel agents out of business, and, in fact, this has 
been estimated to potentially reduce the GDP by 3.6 percent. We 
have to all work together to avoid this.
    So what we and our franchisees and our employees are 
suggesting is a short-term stimulus package to keep people 
employed, to help the industries' displaced workers and 
liquidity. I am going to take one second, because it is time 
for me to finish, but I do want to reference the stimulus, 
because it is the only discussion that hasn't been held here 
today, so if I may have permission just for a moment.
    We are asking not for a bailout. It is not our company or 
Minnesota's style to ask for a bailout, but we are asking for a 
stimulus that will treat the problem, not just the symptoms. 
That will help us to anticipate a better time and to keep as 
many people employed as possible, to be a benefit to the 
consumers, to reduce costs for business, and enable travel 
agents, restaurants, hotels, resorts and all of the workers 
that we have referenced to survive.
    Fortunately, Senators Jon Kyl and Zell Miller and 
Representatives John Shadegg, Neil Abercrombie, and Heather 
Wilson have introduced bipartisan legislation which would 
include three important tax proposals that would provide 
travelers with incentive to travel and would help provide 
liquidity to this industry at this absolutely crucial time. We 
urge all of you to co-sponsor, to work with those bills, to 
work with your colleagues and have them included in the 
economic stimulus package being written in Washington.
    This legislation is interesting. It is unprecedented, but 
it provides a $500 tax credit to people who travel or book 
travel by the end of this year. Economists are debating tax 
reduction versus the stimulus of Government spending. We know 
that each has its advantages, and each has its protractors, but 
this accomplishes both objectives. In this proposal, there is 
no relief unless there is the desired consumer spending. It 
works within the existing infrastructure, so it doesn't disrupt 
the generation of tax that we all heard is so important for the 
States across this country. It will release enormous market 
forces. If everyone in private industry knows that there is 
$500 for every adult, $1,000 a family that is going to be spent 
on travel, we will advertise a market like crazy. It will 
stimulate the economy, it will release those forces. It can be 
immediately effective, and it is so easily communicated.
    Without this kind of legislation, I am convinced that a 
deep recession is a certainty, and that the Government costs 
will increase as tax revenues at Federal, State, and local 
levels decline by far more than the long-term or near-term 
costs of this stimulus.
    Thank you for giving me the opportunity to discuss with you 
something that is so important to all of us. One of the things 
that Carlson has always done is to incentivize people. It began 
with a simple gold bond stamp, and it has created literally 
hundreds of thousands of jobs since. We believe that a stimulus 
to the consumer, consumer demand, consumer poll, in a very 
short, controllable time frame, can actually turn the mentality 
of the consumer around, help us to have more optimism about 
next year and retain some of those jobs.
    At the same time, we couldn't support more strongly the 
extended COBRA and the unemployment benefits that are so 
critical to the people that inevitably have already had to be 
let go.
    Thank you so much. [Applause.]
    [The prepared statement of Ms. Carlson Nelson may be found 
in additional material.]
    Mr. Ramstad. Thank you, Marilyn, for that excellent 
testimony. I know in my lifetime there has not been a better 
corporate citizen than Carlson Companies, and we appreciate all 
you do for our communities and our State, as well.
    I am going to ask the first question, and Marilyn, you have 
already answered this. As I think everyone knows, the President 
has called on Congress to pass a $75 billion stimulus package 
to get this economy going, grow the economy, and create jobs at 
this time. Because I am on the Ways and Means Committee and we 
have jurisdiction, original jurisdiction, over tax legislation, 
I would like to ask each witness which one of the various tax 
proposals on the table would be your priority. Again, Marilyn, 
you have answered the question. Would it be to provide the most 
stimulus to the economy and help create the most jobs? Would it 
be accelerated depreciation, would it be expensing, would it be 
capital gains reductions, payroll tax deduction, or something 
else? Why don't we start with you--start at that end this time. 
Brad, do you want to go first?
    Mr. Anderson. No.
    Mr. Ramstad. OK. Jaye, are you ready?
    Ms. Rykunyk. No.
    Mr. Ramstad. Which tax equation, which would provide the 
most help for the people you represent, Jaye?
    Ms. Rykunyk. I think that a tax deduction or a 100 percent 
reduction for business travel is a stimulus for workers and for 
travelers in our industry. The largest amount of revenue spent 
in hotels is business travel. And when business travel was very 
soft prior to the 11th of September, and business travel has 
taken a very, very serious decline, and has been very, very 
damaging to the industry. Business supports our industry by 
travel during the week and also by high-end usage of hotels and 
convention facilities.
    Mr. Ramstad. David?
    Mr. Olson. Congressman Ramstad, whatever tax cut you pick--
I am not going to pick one, but we would look for the broadest 
tax cut. I think you have to keep in mind that prior to 
September 11th, as I mentioned, the manufacturers were hurting, 
the small businesses that support manufacturers were hurting, 
and so we would look to the broadest base tax cuts that would 
help all of these industries.
    Mr. Ramstad. Ray?
    Mr. Waldron. Mr. Chairman, this is a--earlier it was told 
me to me, in a crisis, Congress works the best. And in a 
crisis, it appears that the chamber on labor is working well on 
that. So I would support the efforts of a broad-base tax cut on 
that.
    Mr. Anderson. And I think--we do not have a formal plan as 
a company, but as an individual, I would also concur.
    Ms. Carlson Nelson. If I could just comment, please, do we 
have to choose? I know I heard--this is about choices.
    Mr. Ramstad. Well, let me just ask, Marilyn, in addition to 
the--and certainly we are not going to limit the tax relief 
side of the stimulus package to one revision or one element of 
tax relief, but in addition to what you mentioned--by the way, 
I am a co-sponsor of that important legislation.
    Ms. Carlson Nelson. Oh, I am thrilled.
    Mr. Ramstad. Which tax relief, one or several, would do the 
most to help your industry and your laid-off workers right now?
    Ms. Carlson Nelson. Well, I think it is really twofold, 
because in that package, there is both this sense of the 
corporate traveler--Jaye, I agree. We have to look for levers. 
How can we move the most people in the shortest amount of time? 
And getting corporations to move their business travelers is a 
huge piece of getting the economy going again. At the same 
time, I think that the employees are also citizens, and to the 
extent that in combination with an individualized tax credit 
would have all of us have the perception of moving again. And 
it has to do with freedom, it has to do with healing, as well 
as having to do with economics. So I think a broad-based 
package that said the Federal Government stepped in when 
necessary and did something that we never, ever contemplated, 
had to protect us all, stop business for some period of time, 
and now we just need to jump-start it, or prime the pump, 
however you want to describe it.
    Mr. Ramstad. Thank you, Marilyn, and thank you to all of 
the witnesses on this panel.
    Who has got the next question? I will yield back to our 
distinguished chairman.
    Senator Wellstone. Thanks, Jim. I wanted to--there are a 
couple of things I need to do. First of all, I do not think--
Mr. McLaughlin, who is here--Hennepin County Commissioner, we 
recognize you. I want to thank--you did already? Oh, okay.
    Mr. Ramstad. He got a standing ovation. [Laughter.]
    Senator Wellstone. And, others, we introduced you earlier, 
but thank you for being here. One thing that I was going to 
say, Mr. Anderson, is that--and I shared this note with 
Congressman Ramstad, that we are certainly absolutely impressed 
with your business decisions and what you are trying to do for 
the country. In some ways, your testimony makes it kind of 
clear how fluid the economy is. And actually,--there are a 
number of people here that represent workforce development--I 
think it also shows the importance of job training to enable 
people to move into those emerging sectors where there is going 
to be job creation. I think that has to be an important piece 
of what we do, and I may want to get your response. And then I 
guess I would ask--I am not going to ask all of you, but 
Marilyn, your testimony was very powerful.
    Maybe, David, I would ask you to speak briefly to your 
priority for the small business sector. I have tried to make 
sure that that is a key focus of our hearing today. And then 
Jaye and Ray, if you do not mind, would you be willing to lay 
out, based upon what you are hearing from so many of the 
workers, employees and panelists, the priority in terms of 
things that need to be done. That is, here are the two or three 
top priorities, ASAP. If we could go that direction. And, 
Marilyn, any way you want to chime in, go ahead.
    Let's start with Mr. Anderson.
    Mr. Anderson. The first comment is that I agree thoroughly 
that since we are creating thousands of new jobs every year, 
and we probably have this kind of skill set that was talked 
about here, we will need a balance of the kind of skills that 
are also used in the travel industry, etc, for our 
organizations to grow. But I think that one of the things we 
appreciate in terms of what you are doing from a short-term 
basis is that a likely displacement in our own travel that 
existed, hopefully on a very temporary basis. In some of those 
places, we hope to see that part of the economy recover, 
because we certainly use travel--I spend most of my time 
traveling, and we certainly need the direct communication that 
we get by moving from place to place. So we would hope to 
create as many jobs as we possibly can, but we would also look 
for recovery in this portion of the business.
    Ms. Carlson Nelson. I know that many of you think of us as 
a large corporation, and we are. But what we forget sometimes 
is that because we started on some borrowed money and were 
entrepreneurs at heart, we have a huge franchise network. We 
own about half our restaurants, and the other half are owned by 
individuals, and many cases family. We do not--we own a very 
small number of our country's Embassy Suites hotels. They are 
owned by families. The travel agencies tend to be very small 
businesses, and in many cases, they only employ three or four 
people. There are 30,000 of them, and about half of them are 
very close to going under. So, Paul, I could not sit here if I 
didn't help to advocate, Senator Wellstone, some help for small 
business. And I understand that there is discussion of 
extending the definition of the disaster loan in the Small 
Business Association to give some sort of very low-interest or 
no-interest loans to some of those small businesses for some 
short period of time. I think it is an extremely important 
piece of legislation, and Carlson also favors the concept of 
some kind of training incentive to retrain travel and 
hospitality workers. We think that that would be, again, very 
thoughtful and appreciated, and also have a lever in terms of 
both retraining them ourselves and helping to have others 
retrain them for other jobs that emerge in the economy.
    Mr. Ramstad. David?
    Mr. Olson. Senator, just two quick things. When we talk to 
small businesses, the number one issue they bring up is helping 
them reduce health care costs. So anything we could do on the 
health care front would be very important. And then overall, 
again, anything we can do to stimulate consumer confidence, we 
think that would help all different types and sizes in 
businesses.
    Mr. Waldron. Senator, that is a choice that a lot of 
families make between health care, which is unreachable in some 
cases to a lot of families in Minnesota. But I would have to 
say, in order to rank them, I would rank probably health care 
and then unemployment benefits very close to that, and then 
retraining, as in the Dislocated Worker Program.
    Ms. Rykunyk. Senator Wellstone, I would agree that I think 
that subsidizing COBRA payments for either unemployed or 
underemployed workers is a key piece. I think elimination of 
the waiting week for unemployment benefits, and I also think 
giving some consideration to looking at unemployment benefits, 
which are sort of a pass-through, using the Swedish model, so 
that employers can keep workers on the jobs, and allow a higher 
unemployment benefit if their wages are reduced below 50 
percent, so that unemployed workers or underemployed workers 
are allowed to have a full salary by increasing the amount of 
wages that they are allowed to make. That way, employers can 
have their workforce working on shorter hours, and people who 
are working on short hours then can have enough subsidy coming 
from their unemployment benefit to allow them to really 
maintain the lifestyle that they have.
    Senator Wellstone. Well, we are going to go to the final 
panel, and we are going to hear from two economists that the 
State of Minnesota has always relied on for their good 
judgment. I will tell you, along with the first panel, this was 
just powerful--Jim used the word ``compelling''--testimony, not 
just for us, but for our State in terms of what you had to say, 
and we really thank each and every one of you for being here 
with us. Thank you so much. [Applause.]
    Why don't we have everybody stand up for just a quick 
break. [Pause.]
    OK. I am going to call everybody, if I could. I know some 
of the students--thank you for being here, you guys. And thank 
you so much. I am going to call the hearing back to order, if 
we could get everybody to sit down. OK. We are going to--if we 
could get everybody's attention, we are going to bring the 
hearing back to order. For those of you who are in 
conversation, it is fine, but if could you move out into the 
hall, that would help, or just come back in and join us.
    Let me just say to all that are here, and I know that we 
have many Minnesota journalists, as well. I would like to thank 
the journalists for being here.
    This is the last panel, but this is one of our most 
important panels. So we want to be very serious in purpose as 
we listen to Tom Stinson, who is Minnesota's State economist 
and a University of Minnesota professor, Associate Professor of 
the Department of Applied Economics at the University of 
Minnesota, and he served as our State's economist since 1987. 
Tom is widely regarded as an expert on Minnesota's economy, and 
he will address Minnesota's economic status and outlook, as 
well as the need for additional stimuli to boost the economy.
    And Sung Won Sohn--who I will introduce now, but we will go 
to each one of you separately--is Wells Fargo Executive Vice 
President and Chief Economist. Dr. Sohn is a prominent 
economist from Minnesota, and he will address the corporate 
earnings growth in the coming quarters, investment spending, 
productivity and production growth. He will also highlight 
prospects for consumer spending, unemployment, as well as 
Minnesota's loosening labor market. Dr. Sohn will discuss the 
employment and consumer spending conditions he expects to see 
over the next 6 months, as well as the possibilities for 
recovery in the year 2002.
    And we start out with Dr. Stinson. Thank you so much for 
being here, Tom.

 STATEMENTS OF THOMAS F. STINSON, MINNESOTA'S STATE ECONOMIST, 
   AND ASSOCIATE PROFESSOR, DEPARTMENT OF APPLIED ECONOMICS, 
  UNIVERSITY OF MINNESOTA; AND SUNG WON SOHN, EXECUTIVE VICE 
PRESIDENT AND CHIEF ECONOMIST, WELLS FARGO CO., MINNEAPOLIS, MN

    Mr. Stinson. Mr. Chairman, members of the committee, thank 
you for allowing me this privilege to speak with you here 
today. My name is Tom Stinson, as the Senator said. I am a 
professor at the University of Minnesota and also the State 
economist. I want to make sure that you understand that my 
opinions today are those of an economist, and not the 
University of Minnesota or the Ventura administration.
    Economists face a problem when asked to submit remarks 
several days in advance. There is always the risk that 
intervening data releases will reshape their economic outlook. 
When that happens, our previously prepared remarks do not fully 
reflect our current perceptions of the economy's health. 
Friday's payroll employment numbers was such an event. U.S. 
jobs were shown to fall by 199,000 during September, and that 
measured only the decline in jobs prior to the attack on the 
Trade Center. The U.S. economy is now clearly weakening, was 
weakening in early September, and it was not stabilizing as 
some had projected. Looking forward, company announcements, 
some of which were reiterated for you today, make it likely 
that a further large decline in payroll employment can be 
expected in October. We may find that the U.S. has lost a total 
of more than a half a million in jobs on a seasonally adjusted 
basis in August, September, and October.
    This is a serious problem for an economy which needs to add 
an average of more than 125,000 jobs each month just to keep up 
with normal labor force growth. Any remaining doubt about the 
likelihood of a recession is gone. Now the only question is how 
deep and how long. The employment report didn't change my 
belief that the current recession is likely to extend beyond 
the first of the year, and that it could last a year or more, 
but it did strengthen my belief that substantial immediate 
fiscal stimulus is needed. Even though Minnesota's unemployment 
rate was a full 1.3 percent below the U.S. average in August, 
signs of softening were also visible in Minnesota prior to the 
attacks.
    In recent months, our unemployment rate has hovered around 
3.5 percent, but payroll employment has actually fallen about 
9,000 jobs since May on a seasonally adjusted basis in 
Minnesota. The State withholding tax collections are falling 
below forecast. In 1998, Minnesota's unemployment rate was 2.5 
percent, the lowest in the Nation, and in recent years, we have 
added an average of 10,000 jobs over the May-August period, and 
instead now we are declining. Since the start of the year, 
manufacturing employment in Minnesota has fallen by 12,000 
jobs. That is a particularly disturbing statistic, since 
Minnesota has had the propensity to increase manufacturing 
employment counter to the national trends.
    The problems facing certain sectors of the Minnesota 
economy, particularly the airline, transportation, and the 
tourism and hospitality sectors, have received considerable 
visibility and were demonstrated graphically for you this 
morning. There is no doubt that firms in those sectors and 
employees in those firms face difficult times in the weeks 
ahead. But this State's economic problems extend well beyond 
those sectors, important as they are. Increasing airport 
security, relieving cash flow problems of the airline industry, 
and increasing air travel and tourism will not be enough by 
themselves to turn the U.S. economy or the Minnesota economy 
around. This economic slowdown was already being widely felt 
across Minnesota prior to September 11th. The post-September 
11th impacts will be even more widely spread.
    Two forecasting services have attempted to forecast the 
State's economic impact of the terrorist attacks in recent 
weeks. One expects Minnesota's economy to be among the hardest 
hit, placing us in the bottom quartile of the States. The other 
ranks us just about average in growth after the shock, although 
they find that Minnesota's economy would be relatively less 
damaged by the reaction to September 11th than the U.S. 
average. It is really much too early to gauge the extent of the 
weakness brought on by September 11th attack in Minnesota, but 
my own preliminary analysis leads me to believe that the 
State's economy will perform at about the U.S. average over the 
next 12 to 18 months. Again, though, let me emphasize that this 
recession will be more severe in Minnesota than the last 
recession that we went through, and it is likely to be felt by 
all sectors of our economy.
    Now, people who have worked in and around government for as 
long as I have know that proponents for a wide variety of 
spending programs and advocates of an equally wide set of tax 
cuts often argue their proposal will be good for the economy. 
And in the long-term, many of those claims can be justified. 
But this is a time when a short-term focus is important. What 
is needed is immediate stimulus. That means we need additional 
money in consumers' pockets in January, February, and March. 
And if we are to limit the recession to two or three quarters, 
we need a significant amount of stimulus in 2002--in early 
2002; 50 billion or perhaps even more. That need for immediate 
stimulus eliminates the use of most spending programs. Those 
programs, while they may be worthy on their own merit, simply 
cannot tool up fast enough so additional funds reach the 
household level of the first quarter of 2002. Most tax 
proposals also fail to provide the consumer with a quick 
infusion of buying power; $50 billion in tax cuts spread over 
an entire year provides at best $12.5 billion in stimulus in 
the first quarter, an amount well below what I believe is 
important to be provided at that time. Corporate tax cuts, 
changes in depreciation rules, may be a good idea in their own 
right, but they also fail to meet the test of giving the 
economy a jump-start 3 months from now.
    Two tax changes which meet the immediate and substantial 
test are a cut in the payroll taxes effective only during the 
first quarter of 2002, or a second tax rebate, possibly one 
based on payroll taxes paid in the third quarter or the fourth 
quarter of 2001. Either of these actions would provide the 
needed fiscal stimulus on a timely basis. Congress will need to 
act quickly, though, for the administrative machinery needed to 
implement these changes will need to be up and ready by the end 
of the year if the stimulus is to arrive in time to affect the 
first quarter of 2002.
    Let me conclude by encouraging you as you evaluate 
potential stimulus alternatives to draw a sharp distinction 
between tax cuts and spending programs which may be worthy on 
their own merit and those which will quickly stimulate the 
economy. Tax cuts or spending programs which dribble out a 
little money each week for a year or for more than a year are 
unlikely to provide sufficient boost to economic activity next 
January when the jump-start is needed. And let me remind you 
that a spending program which authorizes new money which will 
not actually be spent until late in 2002 or 2003, or tax cuts 
which largely have their impact in late 2002 or beyond, even 
have the possibility of being counterproductive, creating 
inflationary pressures by adding stimulus after the economy has 
already begun to recover. What the economy needs now is a 
quick, controlled injection of additional spending power into 
the economy, not the long-term infusion promised by most tax 
spending initiatives that I hear.
    Thank you for the opportunity to appear here today. 
[Applause.]
    [The prepared statement of Mr. Stinson may be found in 
additional material.]
    Senator Wellstone. Tom, we are indebted to you for, I 
think, just extremely important testimony. Thank you.
    Mr. Sohn?
    Mr. Sohn. I am pleased to be here today to talk about the 
economic and financial conditions related to the economic 
stimulus program. Again, I am Sung Won Sohn, an Executive Vice 
President of Wells Fargo Banks. And as Tom pointed out, again, 
the opinion here is mine, not that of Wells Fargo & Company.
    Minnesota is not immune to the national manufacturing and 
economic downturn. After enjoying a decade of above-average 
employment growth, many of Minnesota's top industries face 
tough times ahead. As a result, employment has not grown in 
Minnesota compared to a year ago very much. The Iron Range of 
Northern Minnesota has seen a decline in demand for taconite 
pellets, as well as the auto parts industry sees a flat or 
weakening demand. Intense competition from foreign steel 
manufacturers is also behind much of the decline in demand for 
taconite. Employment in metal mining is down 24 percent, or 
1,300 jobs from a year ago. Manufacturers in industries such as 
computers and telecommunications equipment, printing, 
publishing, paper, lumber and wood products, rubber and 
plastics have all seen significant employment declines. We also 
know that many of Minnesota's largest employers have announced 
massive layoffs, including Honeywell, Qwest Communications, 
Northwest Airlines, and the list goes on. As a result, 
Minnesota's labor market is beginning to lose.
    Since the first of the year, Minnesota's employment rate 
has spiked 60 basis points to 3.6 percent, though still well 
under the national average. Unemployment is expected to become 
an even larger problem over the next two quarters, as Minnesota 
continues to enter the labor force, continues to--Minnesotans 
continue to enter the labor force, even as employment growth 
grinds to a halt. It is important to realize that the 
challenges facing the Minnesota economy over the next year are 
cyclical in nature and do not reflect any fundamental or 
structural defect in the State's economy. In fact, in the long 
run, Minnesota's economy is well positioned to continue to 
perform well. The State benefits from strong native migration 
from Wisconsin, California, North Dakota, Illinois, and Iowa in 
a notoriously slow-growth Midwest region. This positive 
migration drives State population growth and boosts demand for 
consumer goods, housing and services, while also allowing 
above-average employment growth. In addition, Minnesota has 
well-diversified industries that--industrial base that keeps 
economic employment volatility to a minimum.
    During the last national recession in 1991, Minnesota's 
economy never really contracted, allowing economic growth to 
rebound more--much more quickly, and even with more--bigger 
than other regions of the country. Minnesota did not experience 
the real estate boom and bust that hit the rest of the country 
or experience the dislocations that the real estate bubble 
caused.
    The current downturn is likely to hit closer to home, 
however. With many of Minnesota's major industries facing 
deteriorating business conditions, the economic decline is 
likely to be more abrupt and broadly based this time around. To 
date, the aggressive and rapid response of the Federal policy 
makers, including the Federal Reserve, provides a flow to 
Minnesota's economy, setting the stage for an economic rebound 
hopefully sometime around mid-year 2002.
    Congress's swift action to make enact stimulatory tax cuts 
aimed at boosting consumer spending, as well as recent 
initiatives to provide additional spending on airlines, defense 
security, and disaster relief, should go a long way toward 
getting the national and Minnesota's economy back on track.
    On balance, we believe that the next 6 months will entail 
worsening employment conditions and continued hesitance of 
consumers and businesses to commit to long-term purchases and 
investments. However, we expect an economic recovery sometime 
in the year 2002, returning the State of Minnesota to its pre-
slowdown expansion path.
    I agree with Tom that at this point, the Nation needs an 
economic stimulus program. We want to make sure that this does 
not become a prolonged, deep economic recession. Consumers, 
businesses, the rest of the economy in the Nation--in Minnesota 
do need help, and to some extent we have seen Congress and the 
Federal Reserve act to support the economy of the United 
States.
    But there also is a danger of overdoing it. The best place 
to see that is through the bond market. If you look at the bond 
yields, bond yields are today actually higher than it was on 
September 10th. We call the bond market a vigilante. They worry 
about inflation. They do not worry about overstimulation. They 
are saying that with all of the liquidity in the economy from 
the Federal Reserve and existing and additional economic 
stimulus coming from Congress, could we be setting the stage 
for more inflation later down the road? Of course, it has 
happened in the past, and that is one of the reasons why bond 
yields are higher. Not only have some of the long-term treasury 
bonds gone up, but if you are trying to borrow money in the 
corporate bond market, the yields are significantly higher, 
adversely affecting small, medium and large businesses. So I 
think that we need to again take into consideration as to what 
the market is saying. Not you, not me, but what the market 
tells you. The market is saying that we need a stimulus, but 
let's not overdo it.
    To some extent also, the economy depends importantly on not 
only consumer spending, what the government does, but also I 
say to some extent right now, the chief economic policy makers 
are Donald Rumsfeld and Colin Powell.
    Depending on how the war on terrorism unfolds, we may find 
that the economic contraction that we are probably experiencing 
is not as bad as we anticipated. In an optimistic scenario that 
I put together, let's say the war on terrorism goes pretty 
well, we can put some kind of a reasonable definitive end to 
that, and we can get our friends overseas to take care of their 
own terrorists, so we do not have to commit our ground troops. 
In that case, I could see the repetition of what happened 
during the Gulf War. Back on January 17th of 1991 when the U.S. 
entered Kuwait, consumer confidence jumped, the stock market 
went up. Why? Because uncertainties of the period, not knowing 
what to expect. That, to some extent, diminished and even 
ended. As a result, the economy performed quite well, and I 
think we should not rule out the possibility that something 
like that could happen again.
    Thank you, Mr. Chairman, and members of the committee.
    [The prepared statement of Mr. Sohn may be found in 
additional material.]
    Senator Wellstone. Thank you Dr. Sohn. [Applause.]
    We are going to start out questioning with Congressman 
Sabo. I want to recognize Jim Koppel, and the reason I want to 
do that is Jim is the director of the Children's Defense Fund 
in Minnesota. And frankly, I think this whole discussion today, 
which has been just incredible--all of the panelists, I think, 
have been very great. Some of the most important issues we face 
are those involving children. I would like to thank you for 
your fine work and the Children's Defense Fund for their fine 
work. Thank you, Jim. And I--and let's do--[Applause.]
    The truth of the matter is, if I mention names, so many 
people in our office have been working on this, and it would be 
about ten people, and so I won't do that. But I am really 
blessed to have a lot of good people to work with, and I want 
to thank everybody in our office for their work. Marge Baker 
came out from Washington, DC, and it is great that she is here. 
She is quite a pro, but we have just as good of pros at the 
Minnesota office, but they are ten people to recognize, with 
Connie Lewis directing the office, and I would like to thank 
you all for your help. Thanks so much. [Applause.]
    Mr. Sabo. Thank you, Paul, and thank you to the two 
panelists for their excellent testimony. I think you have good 
advice.
    To Dr. Sohn, I think there is danger that we may for--if 
the impact of what we do raises long-term rates, that can be a 
negative for us. And all of the political pressures in the 
Congress to do something of what everyone wants in the package, 
somehow we need to maintain some discipline.
    But I also agree very much with Mr. Stinson. We have to do 
something in a fashion that has immediate impact. And clearly, 
a rebate of some kind is a very appropriate response. My 
judgment has been that in our earlier action, we were probably 
too small in our immediate reaction, and too generous in the 
long-term tax cuts that would pass. So hopefully, we can find--
and it is a little complicated administratively, I understand, 
to get benefits to the people who simply pay payroll taxes, and 
maybe not income taxes, but they clearly should be a major 
benefactor of our next tax bill.
    But let me ask--but the other way we get money to people 
quickly is through the ongoing safety net. And from all I 
gather, we had more and more holes in it. And one of the things 
I am curious about as you look at Minnesota is the degree of 
the people who have moved from employed to unemployed are not 
eligible for unemployment compensation. Because nationally, 
there is a significant number of people today who, because they 
are in and out of the labor market, often are the first laid 
off. They become ineligible for benefits. And I am curious if 
that is our pattern in Minnesota.
    And let me go beyond the concern I have in how we structure 
whatever additional benefits we may be able to do on health 
benefits. Much of the focus here are people impacted by 
September 11th and related to the airline industry. I, frankly, 
have concern that the political impetus may be to deal simply 
with those people. And I do not know how in equity we do not 
also deal with people who were unemployed earlier because of 
the slowdown in the economy. And it just strikes me, to be 
fair, whatever we do must have impact not only for people 
directly impacted by the events of September 11th, but people 
who were laid off because of the economic slowdown earlier. 
And, again, I am curious to what degree people in Minnesota 
fall out of the traditional safety net of unemployment 
compensation and some of the other benefits we have.
    Mr. Sohn. Let me just--you can get into the details; you 
have got more data than I do, probably. But the labor 
participation rate in the State of Minnesota was and still is 
one of the highest in the Nation. It is not only because we 
like to work, good work ethic, but also during the booming 
economic times, we were able to attract mothers, retirees, 
students, and others to join the labor force.
    Now that the labor market is not as healthy as it used to 
be, many of those people work part-time. They were laid off, 
and they decided to just drop out of the labor force. They 
disappeared from the radar screen. And they are not probably 
eligible for the kind of benefits that we are talking about. 
And I believe in Minnesota, especially in Minnesota, because, 
again, so many people joined the labor force, given the very 
tight labor markets, the kind of people that you are talking 
about that were not eligible for benefits is probably pretty 
substantial. And so I will certainly, you know, support that 
argument. That is, we really need to look beyond what is on the 
radar screen and then see who has disappeared.
    Mr. Stinson. Mr. Chairman, Representative Sabo, expanding 
the coverage of unemployment benefits, adding an additional 13 
weeks, expanding into providing better health care subsidies 
and things like that, those all fall in the list of things to 
me that are important to do because they are good things to do. 
But in terms of having an actual impact at the time that we 
need to have an impact, which is January, February, March, I 
think an awful lot of the people that are affected by the 
current slowdown are not going to have exhausted their 
unemployment----
    Mr. Sabo. Excuse me. I guess my question does not relate to 
the persons who are initially eligible for benefits. It relates 
to the question of the people who, because of how we 
constructed unemployment comp, are ineligible for--not for 
extended, but for initial benefits. If we have any handle of 
that.
     Mr. Stinson. OK. In terms of the number of people that are 
denied claims or out of the labor market, I don't think we have 
a good handle on that at all. I will say, though, that 
Minnesota, as Dr. Sohn has pointed out, has a very high labor 
force participation rate, and this high labor force 
participation rate--in fact, we had a very tight job market, 
really, up until the first of the year, and maybe beyond that, 
has given us some protection against a deterioration of a kind 
that you are talking about. Now, there are certainly people 
that are going to be affected, but in terms of a widespread 
impact on Minnesota, I just don't think that is going to occur.
    Mr. Sabo. OK. Thank you.
    Mr. Ramstad. We are very fortunate. This is an excellent 
hearing, Senator Wellstone, and the staff deserves a great deal 
of credit. And also because we had three outstanding panels and 
we have two of our most distinguished economists here in 
Minnesota for many years before us, so I thank you both for 
your time.
    And I guess my question goes back--I read, Dr. Stinson, 
before and you repeated the prediction here today that 
Minnesota's recession this time would be greater than it was 
the last time. What are the reason or reasons for that? And, 
Dr. Sohn, you too. Maybe you could each comment.
    Mr. Stinson. Mr. Chairman, Senator Dayton, the 1990-91 
recession really pretty much overflew Minnesota. In the period 
1989, 1990 and 1991, Minnesota added 100,000 jobs over that 
period, and that is the period that spans the recession. We 
were the--Minnesota ranked third in the number of jobs created 
during that period. Texas created a couple hundred thousand, 
the State of Washington about a hundred thousand again, and 
then Minnesota. All of the rest of the States, the big States, 
California, New York, Pennsylvania, Ohio, something like that, 
all lost population during that time. They lost income during 
that time.
    Now, the reason for that is a couple of things. One is that 
Minnesota is a well-diversified economy. We have a wide spread 
of jobs across a number of different industries. We aren't 
particularly reliant on one particular industry for employment, 
like the State of Washington is right now, and some things like 
that.
    Two, we didn't have an overconcentration of defense 
industry in the State. Part of what contributed to the national 
economic slowdown was a coincident cutback in defense spending 
that was going on at the same time. And so we didn't have the 
problems of the defense cutbacks that California, for example, 
had, and some of the Southern States and so on like that.
    Three, while Minnesota is a regional financial center, we 
didn't have the same kind of employment impact and economic 
impact from cutbacks of the financial industry, which went on 
again in the 1990-91 period. And so those three things helped 
us go through a little bit better.
    The other thing that helped in Minnesota clearly is that 
Minnesota workers have a reputation as being a very productive 
group of workers. And so when you were going to cut back 
someplace, you did not choose to cut back the most productive 
plant that you had, you cut back a plant that was less 
productive. So that helped us.
    Mr. Sohn. Back in the 1990-91 recession--some people call 
that the banking recession or the real estate recession--we had 
the savings and loan crisis across the country, and 
unfortunately many of those institutions had shoveled out money 
to the construction industry. And therefore, we had a crash, 
basically, in Texas, Arizona, and other parts of the country.
    Well, fortunately, back in 1990 and 1991, that didn't 
happen in Minnesota, because we have much better banks here in 
Minnesota than they do in Texas and elsewhere. [Laughter.] And 
so that was one of the reasons.
    Senator Wellstone. Much better than Texas. [Laughter.]
    Mr. Sohn. And so that was one of the reasons. The other 
reason, as Tom pointed out, is we are a lot more diversified. 
In fact, you can measure diversity of a State. If 1 is most 
diversified and 0 is least diversified, our diversity quotient 
is a 0.75, which means we are much better than the average. 
And, in fact, our diversity has been improving.
    And, again, I am not going to go into industries that Tom 
has already mentioned, but we are a lot more diversified than 
we have been and that can actually be measured. In addition, 
agriculture has been a source of economic stability. We 
recognize that prices are lousy, they are not good. But 
unfortunately, farmers are able to get help from the Federal 
Government, and that has been a very good, important economic 
stabilizer.
    We also have increasing emphasis on health, not only to 
hospitals, but also obviously the medical technologies such as 
Medtronic, etc.
    Education has been another important growing source of our 
economic pie. And so I say, you know, these are some of the 
reasons why. I guess I am willing to say that we may actually 
end up being somewhat more stable than the U.S. economy. So I 
am probably a bit more optimistic than Tom is that I think if 
we do get into a recession--we could be in one already in the 
U.S.--Minnesota will probably come out a bit better because of 
the diversity that I have talked about.
    Senator Wellstone. For everyone, what we are going to do 
is, Congressman Ramstad will go with questions, and then I will 
ask each of my colleagues just for a final minute conclusion on 
your part, okay?
    Mr. Ramstad. Thank you, Mr. Chairman.
    Thank you, Dr. Stinson, Dr. Sohn, for sharing your comments 
with us here. I will be very brief.
    Chairman Greenspan has counseled us on the Ways and Means 
Committee that in order to provide a stimulative effect to a 
$10 trillion economy, that any package we craft must be at 
least $100 billion. Do you share that judgment? And he also 
said it should be compressed, which you testified to, to 
provide a true stimulus.
    The first question is: Do you agree it should be $100 
billion to stimulate a $10 trillion economy? And the second 
question is: What time frame would you recommend that we limit 
any tax relief to?
    Mr. Stinson. Mr. Chairman, Congressman Ramstad, I think 
Chairman Greenspan is right on, and former Secretary Rubin has 
also made that point as well. I think that the $100 billion 
amount that he is talking about includes some of the action 
that has already been passed by Congress.
    Mr. Ramstad. The $38 billion rebates. I think that is 
right.
    Mr. Stinson. Yes. And so I think somewhere on the order of 
$50 or $60 or $70 billion. It is, you know, just money, I guess 
is the way to put it. [Laughter.] But we do not really know. 
But $50, $60, $70 billion. And for it to be quick--January, 
February, March. That is when we need it. And in order to do 
that, we need to do something very quickly.
    One of the things that we learned in Minnesota, looking at 
changes in tax rates how it affects withholding, is that even 
though you change the withholding tax rate and publish new 
withholding tax schedules, all firms do not pick those up 
immediately. The big national accounting firms or big national 
payroll firms pick them up, but the smaller firms that buy 
their own accounting packages once a year wait until the start 
of the next year before they pick it up. Well, that limits the 
effectiveness of something if it is not in place so it is 
included in the accounting packages and the payroll packages at 
the start of the year. And so that is why I think we have a 
wonderful opportunity here to actually use the fiscal policy 
tool and in a quick and convenient manner.
    Mr. Ramstad. Just so I am clear, any stimulus package we 
come up with should be limited to--all of the elements should 
be limited to the 3-month duration?
    Mr. Stinson. Any additional stimulus should be limited to 3 
months, I think.
    Mr. Ramstad. Dr. Sohn?
    Mr. Sohn. Well, I think we probably need a more longer-term 
horizon. I was looking at the Wall Street Journal last week, 
and it had a wish list of all of the amount of money that we 
can spend, and I added it up, and it was $426 billion. And 
clearly, that is too much.
    I look at it this way. We have a $10 trillion economy, and 
let's assume that the economic decline will be about one full 
percentage point over the 1-year period. It could be one, it 
could be two, but to offset that, we do not need economic 
stimulus of $100 billion because of the multiplying effect.
    If we had about a $40 billion economic stimulus program, 
and then we multiplied that by the multiplier effect that the 
economists talk about of, let's say, 2.5, then we are talking 
about a $100 billion. That is assuming that economic decline is 
1 percent.
    When Chairman Greenspan talked about an economic stimulus 
program of at least $100 billion, I assume that he is thinking 
that economic declines could be more than one full percentage 
point.
    The point I am making, I guess, is that I think in these 
discussions, everyone wants to get help from, you know, 
airlines to bus drivers to probably banks. But we are 
approaching really to the outer limit of overdoing, what I 
talked about earlier. And so I think we really need to be much 
more cautious.
    I also recognize that we need economic stimulus now to make 
sure that our economy does not slide into a prolonged economic 
recession, but also to present an opportunity to provide some 
incentives to make sure that cash flow is improving in the long 
run. And so I would not necessarily limit it to what would 
affect the economy in the next 3 months. I think, you know, 
there was room to improve productivity and economic growth in 
the long run, as well.
    Mr. Ramstad. Let me pin you down. Would 1 year be adequate?
    Mr. Sohn. No, I would actually go beyond that. For 
instance, investment tax credits could go beyond 1 year. You 
know, some people have talked about, for instance, COBRA tax 
cuts. And some might say, why would you need COBRA tax cuts? 
Well, today 85 percent of all businesses in America, they are 
service-related businesses, and they do not necessarily benefit 
from capital equipment, such as machines. And so one of the 
ways to help them produce more jobs in the future is to improve 
their cash flows. And we can improve cash flows by giving them, 
let's say, a corporate income tax cut.
    You know, if I am going to hire people as a business 
person, it could be a small job share, it could be a computer 
software company, I have to have some understanding that, you 
know, cash flow will stay with me in the long run, not just the 
next 3 months. I am not going to hire people based on 
additional cash flow for the next 3 months.
    Mr. Ramstad. Well, I have never heard Congress agree on a 
solution, so today is no exception. Thank you both for being 
here. You are great Minnesotans and great economists. Thank you 
both. [Applause.]
    Senator Wellstone. We will just take 1 minute to conclude, 
and I also want to announce that the record is going to be kept 
open for an additional 10 days for additional testimony. 
Anybody here that has anything you want to put in writing to 
the committee, please do so.
    Congressman Sabo, we will start out with you.
    Mr. Sabo. Thank you, Mr. Chairman, for holding this 
hearing, and thank you to all of the panelists. I am sorry I 
missed some, but it was a good hearing. We have important work 
to do as we head back to Washington, and I hope we have some 
wisdom and some compassion in putting a package together in the 
next several weeks.
    Thank you.
    Senator Wellstone. Congressman Ramstad?
    Mr. Ramstad. Thank you for sharing, once again, and I just 
want to say that being here today makes me both proud and 
grateful to be a Minnesotan. To see labor and business 
employees, management, educators, economists, all Minnesotans 
assembled here to provide us with input is very, very important 
and very special. And all of you here today certainly represent 
not only the greatness of Minnesota people, but also the 
goodness of Minnesota people, so I want to thank you again, 
Paul, all of the colleagues here today, thank all of the 
witnesses, all of the people, the audience, those of you who 
are here, the high school students, the teachers, public 
officials, and even the media. Thanks for covering this so we 
can educate and let more Minnesotans know about this 
important----
    Senator Wellstone. Jim, and we are willing to give 
interviews to the media? [Laughter.] We will. Let's give a hand 
for the media. [Applause.]
    Mr. Ramstad. I believe they all know, whenever they are 
hard up for an interview, they have got my phone number. 
[Laughter.]
    But bottom line, I think Congress clearly needs to pass an 
economic stimulus package that not only provides tax relief, 
but also economic assistance for laid off workers. And believe 
me, I pledge to continue to work in a bipartisan, collaborative 
way with you, Paul and Marty all of the other colleagues, and 
with the Congress and with the President to do just that. So 
thank you very much. [Applause.]
    Senator Wellstone. I think I pretty much ditto what Jim 
just said. You know, it is odd, but in an ironic way, but not 
in a bitterly ironic way, given all of the uncertainty in our 
world, and all of the uncertainty in our country, this has been 
some of the best time that I have spent with Minnesotans. I 
think all of the testimony was very substantive. It was very 
important to have all of you here representing I think a good 
part of the diversity and richness of Minnesota. I really feel 
good about this gathering. Because I don't think anybody is 
doing this for symbolic reasons. I think everybody that is here 
is very serious in purpose, and I think we all know what this 
means.
    And just to summarize what I heard, which really went 
through all of the panelists, we are talking about an economic 
downturn, we are talking about a recession, we are talking 
about hard times. We do understand that this has cut across a 
broad section of the population. Whatever we do needs to be 
large enough to make a difference.
    There are some key principles we must adhere to. We have to 
be prudent about how we do this, but large enough to make a 
difference. It has to be short-term. We need to get the money 
in the hands of consumers who will spend it. And I think that 
we also agree that the focus on the private sector is 
critically important in terms of how we rebuild this economy, 
and where the growth is and where the jobs are, and people 
being able to work and being able to consume.
    And the other piece of it--and Congressman Oberstar did 
this earlier, but, you know, it is true that Mr. Anderson from 
Northwest Airlines, did come out with a strong statement saying 
the employees have to get the help, too. And we have to make 
sure that the working families in our State fit in and are a 
central part of this economic recovery package.
    I would like to thank everybody for being here, and this 
hearing is adjourned. [Applause.]
    [Additional material follows:]

                          ADDITIONAL MATERIAL

                  Prepared Statement of Kelly Doering

    Thank you for inviting me to present today. My name is Kelly 
Doering. I am the President of E-Travel Experts. We provide services to 
online Airline websites and online travel websites. We provide a board 
range of service and technical support functions to the travel 
industry. We are a profitable and privately held start-up company 
founded in late 1997. We focus on operational excellence and offer high 
quality and low cost services. We operate as strategic partners with 
our clients and we share the risks, Our clients include Northwest 
Airlines and Orbitz. Between these two clients they issued over 500,000 
Airline tickets in the month of August. This is a high growth area; we 
have grown from 5 employees to over 200 in less than four years. We 
have aggressive plans to grow our travel technology services to where 
we will double or triple in size over the next year.
    There are three things I would like to emphasize today: First 
online travel sales offers a cost effective way to sell, service and 
distribution Airlines tickets. Second is that we are bringing new jobs 
to both metro and out-state Minnesota. Third since September 11th we 
have both short-term financial risks, and long-term uncertainty that 
will affect our access to capital and therefore affects our growth.

                              DISTRIBUTION

    Why is E-Travel Expert's emergence important? Online sales offer 
the model for the Airlines to succeed. Distribution is usually the 
third highest cost of an Airline behind labor and fuel. Airline and 
travel websites are critical to the recovery and success of any Airline 
today because online sales offer a cost effective way to sell and 
service distribution channel. Travel websites and E-Tickets promote 
economies of scale that are critical to Airlines success. Internet 
ticket sales offer an ease of use and convenience for an increasingly 
technology savvy customer base. Travel websites also offer and promote 
many ancillary services such as Internet Check-in and Airport 
Electronic Services Centers.

                                  JOBS

    So what does E-Travel bring to the Minnesota economy? Through the 
services we provide we create the necessary bridge from service jobs to 
light technical and online functional expert positions that support the 
online sales process. We bring new jobs that provide alternative and 
expanded career options for new and experienced travel people and 
customer service representatives. These jobs offer experience in 
Internet technology and E-Commerce and what we call `technology with a 
touch' as with e-commerce customer service agents. We have been able to 
bring these jobs to both the Eden Prairie and Mankato, Minnesota.
    The Mankato community is very active in attracting and growing 
technical jobs. As part of bringing new jobs, training, has been and 
will continue to be a critical part of our growth. We are currently 
involved in a grant with MN Job Skills Partnership and Rasmussen 
Business College in Mankato to build our training program. We are also 
looking at the Operation Green-Thumb initiative along with the 
Technology Plus Center in Mankato. This program will promote technology 
training in Minnesota.

            FINANCIAL IMPLICATIONS OF THE SEPT. 11TH TRAGEDY

    The travel industry crisis creates both short and long-term 
implications for E-Travel Experts. We have a proven, profitable 
business model and we have not had to do layoffs. We take a strategic 
partner approach to our client relationship. However, our revenues are 
tied to Airline ticket volumes. In this way we share the risks with our 
clients so commensurate, with Airline revenues our revenues are down 
50% from pre-911 revenues. However, our workload remains at high levels 
so we are functioning at 100% costs.
    The long-term economic uncertainty puts us at risk in our ability 
to grow and meet the needs of our clients. In order for ETX to be 
competitive we need to be able to ramp up to accommodate our existing 
and potential clients. To date we funded our growth through retained 
earnings rather than through venture capital. While we realize that 
this would not always have been possible even without the September 
11th tragedy we believe that now funding will be more difficult to 
obtain.
    In conclusion, we have efficient and operationally excellent 
support to offer our clients as they expand their online sales as a 
cost effective distribution channel. We intend to continue to offer new 
Internet travel technology jobs to MN and we ask for your continued 
support of the travel industry, as well as support for retraining 
displaced workers in Minnesota right now so we can continue to be there 
for our clients and to help build on their sales technology and 
distribution strengths.

                  Prepared Statement of Roxanne Leake

    Mr. Chairman, and Members of the Committee:
    I am here as one voice speaking on behalf of many Northwest 
Airlines employees on the effects of the September 11th attack on the 
United States of America. My name is Roxanne Leake. I am married and 
have four wonderful sons, Jacob(8), Joshua(6), Jarrod(5) and Jordan(3). 
We live in Lakeville, Minnesota, which is about ten miles south of 
here. I would like to express to you today the commitment required to 
be a Northwest Airlines employee, the enjoyment of my job, my role 
during the crisis, and how Northwest Airlines terminated my employment. 
As with any company, qualifying for employment requires interviewing, 
screening, and a training process. Because of the unique employment 
positions at Northwest, this process is more in depth than for most 
other entry-level positions. Each individual must qualify for each 
level within the process. Having successfully completed the interview 
process, I was subject to a criminal background check and drug 
screening. At this point, I was offered a position, which I accepted, 
and began my training. The training was four intense weeks that placed 
a significant strain on my family's financial stability. Our wages for 
training were only sixty percent of the entry-level wage; thus I was 
earning $6.36 per hour. As a family, it was decided to commit our 
resources to support my training and the costs involved, because our 
family supports each person when an opportunity presents itself. Upon 
completion of my training, I began my probationary employment as a 
reservation/sales agent. The probationary period is four to six months, 
depending on the status as a full time or part time agent.
    I loved going to work at Northwest everyday, something most people 
cannot say about their job. The people I worked with directly tipped 
the scales in regards to their service, enthusiasm, and dedication to 
the company, each other, and the public at large. The reservation 
agents took great pride in the service we gave to our customers. It is 
a wonderful feeling to help families get the best possible fare for a 
vacation or help someone to get across the country to attend the 
funeral of a loved one.
    The events of September 11th had a dramatic effect on the 
responsibilities of the probationary reservation agents at Northwest 
Airlines. Northwest Airlines declared an emergency and requested all 
reservation agents, including probationary agents, to report to work as 
soon as possible. I reported for work six hours early that day and 
worked an eleven-hour shift. I felt it was my responsibility as a 
citizen and employee to do everything I could to help people through 
this crisis.
    On September 22nd I received a call from Northwest Airlines 
informing me that I was being laid-off. On September 24th, I, along 
with many other probationary agents, was informed that my employment 
was being terminated due to my probationary status. Later that day, I 
received a letter confirming that I was terminated due to the effects 
on the airline by the events of September 11th. To say that I was 
shocked and disappointed is an understatement. The financial burden 
placed on my family and the stress of long hours I endured during the 
training and probationary period only to be terminated through no fault 
of my own has left my family and me in a state of disarray.
    I am diligently working at maintaining a positive attitude through 
this chain of events. I came here to explain to you my commitment to my 
family, my job, and Northwest Airlines. It is my sincere hope that I 
have articulated this to you in this short time. All I want is the 
opportunity to return to Northwest Airlines as a reservation agent. 
Thank you for allowing me the time to share with you these words. In 
conclusion, it is my goal to return to Northwest Airlines and I am 
asking that you help me and.the thousands of other displaced airline 
workers get back to our jobs.

               Prepared Statement of George A. Logan III

    Mr. Chairman, and Members of the Committee:
    I am pleased to be here today to discuss with you several important 
issues, but first I would like to take the time to thank Senator 
Wellstone's staff for allowing me the opportunity to testify before 
this committee today. I am a small business owner and the terrorist 
attack on the United States on September 11, 2001, has greatly affected 
my business, and my family's well being.
    I have owned my own business since 1994. 1 was able to purchase my 
first new roll off truck with the assistance of the S.B.A. in 1995. 1 
have been very fortunate that my gross revenues for the business have 
risen each and every year. My gross revenues for last year were over 
$300,000.00 dollars. Unfortunately, this year will be much different.
    The economy was slowing down, and my construction roll off revenue 
was at it's lowest level in three years. I started bidding on projects 
through the CERT program, and I was the successful bidder on the Penn 
Co contract. This contract involved removing the construction waste 
from Minneapolis/St. Paul International Air Port. This contract would 
have generated almost $100,000.00 dollars of new revenue for my 
business. Not only would I have had the increased revenue, but I feel 
that if I was able to successfully complete the contract this would 
have led to other new contracts, and contacts in the business. This was 
my first big contract, and if successfully completed, I believe that I 
would have had the experience that I had been lacking and would have 
been able to successfully bid on larger and more lucrative contracts.
    The Penn Co contract was canceled one week after it was signed. I 
was told to come and pick up my roll off containers, and that the 
contract was canceled. I would like to stress to the committee that the 
contract was canceled, not just delayed or postponed. The project was 
placed on hold until the Airport Commission could figure out whether or 
not the new safety regulations would allow for the expansion project to 
continue. The project may or may not resume. It is my understanding 
that if and when the project ever resumes, that I would have to re-
submit my bid for the project. I would not be guaranteed that I would 
be the successful bidder for the project. This cancellation of the Penn 
Co contract is going to place a great financial burden on my company.
    In order to bid for the additional work that the contract would 
have generated I needed a second roll off truck. I had been saving up 
for the past three years so that I would be in a position to purchase a 
new truck if the business justified the second vehicle. I was finally 
able to add the second roll off truck, and purchased five new thirty 
yard containers. The cost for the new equipment was over $150,000.00 
dollars. I now have the equipment, but no contract to help defray the 
cost.
    While my business is struggling to meet the increased expenses, I 
have less money for my family. This has directly affected my family's 
well being. I recently won a trip to Jamaica in a raffle at my son's 
school. I was planning on taking the family on the first vacation we 
have had since I started my own business. Now, even if I had the money 
to go on the trip, I am not sure I would want to take my family on a 
vacation where we would have to fly to the destination.
    The President has said we should get back to doing things we would 
normally do. This is hard in my case since almost a third of my revenue 
for this year has been lost as a direct consequence of the terrorist 
activity. I am not complaining about my losses. My losses have only 
been economic in nature. I have not lost family or friends to the 
terrorists, and my prayers and sympathy go out to those that have 
suffered from the loss of family or friends. I just have to work a 
little harder to make sure my business is successful, and any help your 
committee can give, is greatly appreciated.

                    Prepared Statement Cheryl Dusek

    As one of the many people who lost their jobs with Northwest 
Airlines this past week, I became another statistic in an ever-growing 
population of people impacted by the terrorism of Sept. 11 and its 
affect on our nation's economy. I have counted myself fortunate as I 
watch the heartwrenching stories of people who lost family members and 
businesses that lost large numbers of their employees in this tragedy. 
I still have my family intact and a spouse who is employed. At first I 
did not think past the sadness I felt for those people to see the 
impact this would also have on my family and me. I have been through 
layoffs with three different technology companies since 1997 and 
thought I was doing the prudent thing by choosing a more traditional 
business when I last went through a job search. I had survived two 
bouts with cancer and with a child in college wanted stability in my 
life, so I took a position with NWA.
    We were fortunate to be in the position of paying for a college 
education for our daughter from my income--avoiding the need for either 
her or us to take on student loan debt. We have lived in a comfortable 
home in Eagan for over 20 years, have been able to provide for our 
children's education and help provide support to aging parents whose 
only income is Social Security. Suddenly I am concerned about my 
ability to meet mortgage payments, pay for health insurance and most 
importantly continue to meet our daughter's education expenses. I know 
that we will find a way to survive--I learned long ago that you make of 
your life what you are willing to work to accomplish. My experience 
with cancer taught me to keep going. I took up marathon running to 
celebrate my success over cancer at age 50 and know that the same 
determination that allows me to run 26.2 miles at my age, will also 
help me through this situation. But as a 54-year-old woman, I realize 
that while my age may not have been a limiting factor in recent 
employment searches, that is likely no longer true. My long working 
career will mean that I will be viewed differently in a market where 
companies will be looking to fill the positions they have available 
with the least expensive ``resources'' they can find.
    I realized that while I am feeling very uncomfortable personally 
about my situation, there are a large number of people for whom the 
impact is much more severe than what I am experiencing. When NWA 
announced a reduction in its management staff of 1,000 people, they 
were not speaking strictly of ``managers'' and executives. Management 
staff at NWA refers to all positions that are not union/contract 
positions. These are people in the finance, computer services, sales 
and marketing, and administrative services areas of the company. Many 
of these people have spent much or all of their working career with 
NWA--a look at the term of service of those affected finds a lot of 
people with over a decade of employment with NWA and some with more 
than 20 years with the company.
    I did a quick interview with a few of the people that I know who 
lost their jobs and found some stories that show just how this layoff 
will affect families (and futures).
    An employee in the NWA Aerospace Engineering whose only work 
experience has been with NWA told me the impact to him is devastating:
    Lost all seniority even if called back to NWA--over a decade of 
time with NWA
    Lost medical, dental, disability and life insurance
    Lost future pension contributions, 3 months accrued sick pay
    Sole provider for family of five--one child and wife are full-time 
college students
    Degree in highly specialized field limits his opportunities for 
employment to airline industry related companies most of which are not 
faring well with the current economic situation.
    Large numbers of people are already in the job market for positions 
that his experience and education prepare him for--and the number of 
jobs is very limited.
    Retraining for a new career takes a long time and with 2 family 
members in college even if he has funding to cover education costs, he 
still needs to support his family during that time.
    Relocation would interrupt the college education for his wife and 
daughter.
    Relocating means selling his home of 10 years--and the housing 
market and home sales prices are certain to be impacted by the talk of 
recession.
    A 49-year-old Project Analyst with 6 years of employment with NWA 
told me that he had planned (hoped) to make this his career home until 
retirement. His story is also one of a sole provider: Wife just 
enrolled in nursing school after many years as a stay-at-home mom. 
Three children--one in college, one a senior in high school and a 
student in junior high. Because of the education expenses, his budget 
was already stretched thin prior to the layoffs. Now he knows that 
unless he can find a comparable position within the time frame of his 
severance he will either face a large amount of debt for education or 
his wife will have to put off her plans for a nursing degree.
    A 53-year-old single woman with 16 years at NWA has a different set 
of concerns:
    How to start over at age 53--when you are competing with young, 
attractive people for jobs in a very fast-paced society that places a 
premium on ``beauty''.
    Pension issues--current information from NWA following the layoff 
conflicts with what she was told previously about her pension. She is 
looking at almost $200K that she had been told she could ``take with 
her if she left the company'' and now she may no longer be able to do 
so.
    Not expecting to find a position with comparable pay.... takes a 
lot of time to build up to the level she had achieved. This loss of 
earning power impacts her ability to save for retirement via 401K and 
Social Security.
    ``Singles'' have no one else's financial support to turn to in a 
lay-off situation. They are on their own for insurance, etc.
    Expresses concern about the number of long-time employees let go 
while many younger, newer (and less expensive) people are still 
employed.
    Wants retraining.
    Simply providing money to the airlines to strengthen their business 
position is not going to solve the problems facing these people. Their 
layoffs were permanent--they do not have the opportunity to be called 
back to work once the business position of NWA improves. All of the 
talk right now is about getting people back on planes with the thought 
that will improve things throughout the travel related business 
community. I think the reduction in travel has less to do with people's 
fear of flying than with the economic situation of individuals and 
businesses. Business travel is down--not because business travelers 
don't want to fly, but rather because when times get tough the first 
budget that gets ``whacked'' is travel. Leisure travel is very low at 
this time of year anyway, but is further suppressed this year because 
so many people are either fearing loss of their jobs or have already 
been the victim of layoffs. These individuals are not going to spend 
money to travel when they know their future is uncertain. Until 
individual consumers have money in their pockets to spend on the 
products and services that businesses sell, those businesses will not 
be putting people back in the air. Travel is a convenient, but not 
essential, means of meeting with customers, vendors, and co-workers in 
our global economy. Teleconferencing and video conferencing options are 
available either on-site for large companies and through business 
services such as Kinkos....and is a much less expensive way to have 
meetings. I understand the need to help out the airlines with the 
losses they sustained during the 4 days of no flying, but the hotels, 
restaurants, entertainment, and travel related services are feeling the 
same pinch....the trickle down effect has not yet been totally 
quantified. The real solution is getting people the help they need to 
weather the layoffs and find employment. Only then will the economic 
situation for all types of businesses improve.

                   Prepared Statement of Hydra Juhor

    Thank you Senator Wellstone for inviting me to speak to you and the 
whole Minnesota Congressional delegation. I feel privileged, to be able 
to speak on behalf of the tens of thousands of hospitality workers here 
in Minnesota and across the nation who have lost their jobs as a result 
of the devastating bombing that took place on September 11, 2001 at the 
World Trade Center.
    My name is Hydra Juhor. I emigrated to the U.S. in June of 2000 
with my husband and my children. I am a refugee from Ethiopia and am 
here with refugee status.
    I worked at LSG SkyChefs at MPLS/St. Paul International Airport as 
a Food Production Worker--we supplied all of the in-flight food service 
for NW Airlines and KLM. After the attack on the World Trade Center the 
in-flight food service was drastically cut back and as a result I was 
laid off from my job. Many of my coworkers have also been laid off.
    As a Food production worker I was receiving $8.70 per hour plus 
medical and dental benefits as well as life insurance. I have lost all 
of my benefits that were provided to me through my union contract.
    I am married and have eight children ranging from 30 years old to 8 
years old, two of my children are still in Ethiopia. I do not know what 
to do, my industry, the hospitality industry, has been devastated, 
there are no jobs to go to especially jobs that provide the level of 
benefits that I had at LSG SkyChefs. My husband works, but in order to 
feed and clothe my children, pay our rent and other bills my husband 
and I both need to work to bring income into our home.
    Back home I was an accountant, I planned to go back to school to 
further my education and learn about computers. I am trying to better 
myself and attain a better job and lifestyle. Presently my plans are on 
hold as I don't know how I am going to go to school until I can get 
back on my feet.
    The bombing on September 11, 2001 killed 6000 people and put a lot 
of others out of work, but I feel confident that this nation will pull 
itself together. One way of doing that is to make sure that people like 
me and my co-worker are not left forgotten. Thank you again for the 
opportunity and privilege to speak to you this morning.

                   Prepared Statement of Jaye Rykunyk

    Mr. Chairman, Members of the Committee:
    Thank you for inviting me to address you today. My name is Jaye 
Rykunyk. I am the principal officer of the Hotel Employees and 
Restaurant Employees Local Union No. 17. I am also a Vice President of 
my International Union based in Washington DC. My local union 
represents 5,000 workers here in the Metropolitan area. 
Internationally, my union represents 300,000 workers who are employed 
in hotels, casinos, restaurants, and airports and sports venues in the 
United States, Canada, Guam, Siapan and the Virgin Islands. We cook the 
food, we serve the drinks, we make the beds, we sell the beer and the 
peanuts at the ball games and we make 95% of the meals served on 
airplane flights originating in the United States and Canada.
    The hospitality and food service industries are made up in large 
part of workers who are minorities, women and immigrants. We have 
served as the gateway to the American workforce and indeed to the 
American dream for more immigrants than any other industry in the 
history of our nation. Our workforce is the training ground for more 
welfare to work employees than any other industry. In our union, we 
have accepted the challenge of uplifting the standard of our industry 
so we too may earn a livable wage, have medical coverage, own our own 
homes, send our children to college and look forward to a pension which 
will allow us to enjoy our retirement.
    As our society has changed from a manufacturing economy to a 
service based economy, the hospitality and tourism business has been 
one of the fastest growing segments of the new economy. More jobs have 
been created in hospitality than in any other single industry. Large 
public investment has been made in building hotels and convention 
centers through TIF, low interest loans or direct subsidy by brown 
field clean up, building of infrastructure and other mechanisms. Tax on 
hotel rooms, food and beverage sales, sports tickets and parking 
surcharges have become a mainstay of the budget of the majority of all 
cities who seek to attract visitors. Beyond these direct taxes are the 
revenues collected by local and state governments for licensing, 
taxicab fares, etc., etc. The list is long and diverse.
    When a pebble falls in the pond, the hospitality industry is always 
in the first ripple. The attack of September 11th was not a pebble, it 
was a boulder. The effect on our industry was not a ripple, it was a 
tidal wave.
    The immediate impact here locally has involved the lay off of 
thousands of hospitality workers in the metropolitan area. Our union 
represents 1,100 workers at the MSP Airport. The majority of these 
workers were sent home immediately following the attack. At the SkyChef 
facility where the airline meals are made, the majority of the 
workforce is made up of immigrant workers. Most of these workers are 
paid below $12.00 per hour and most of them not only support their 
families here but have an obligation to send money home to support 
their families overseas. HMS Host provides food and beverage and retail 
services inside the airport. Sales were down more than 50% in the first 
weeks, and now are slowly rebounding. We have permanently lost 130 jobs 
at SkyChef At HMS Host, we have lost 150 jobs.
    October is the catchup month in our industry to recover from a slow 
summer. We generally expect to have close to full occupancy in our 
hotels. That occupancy has fallen to below 50% by the most current 
forecast. The Radisson Plaza closed its white tablecloth restaurant, as 
has the Minneapolis Hilton. These two restaurant closings alone will 
throw close to 50 workers out of jobs. Prior to September 11th, the 
workers in these restaurants would not give a second thought to re-
employment. Now there is literally nowhere for them to go. High end 
dining has been adversely effected throughout the city. The prospect of 
securing a job that provides benefits is non-existent to workers who 
were at the high end of the income scale in our industry. There simply 
are no jobs available for workers who are the most highly skilled. A 
review of the want ads in the Sunday paper confirms this dire 
statistic. The jobs are simply gone.
    By far the large majority of workers in the hospitality industry 
hold down two jobs to make ends meet. Even working more than 60 hours 
per week, they are barely able to make enough to cover the basic 
necessities. The main meal for most hotel and restaurant workers is the 
one that is provided at no charge to them by their employer as a 
benefit of working at the facility. In an area with one of the tightest 
housing markets in the country, many of our members are already making 
plans to move in with relatives because they know they will be unable 
to pay rent or make a mortgage payment. If you own a home, invite 
someone to share your space. If you rent, look for a room with a family 
member. As much as we would like not to believe these grim statistics, 
it is not uncommon now for many of our members to already live two or 
three families in two-bedroom apartment. We have a number of members 
who work full time who live in homeless shelters or in their cars.
    The most vital pieces of information we put in our union newspaper 
following the attack was about programs for heat share, food share and 
emergency assistance. Our industry is in free fall and our members, who 
are among the poorest workers in Minnesota, are without a parachute. 
The reality of living on unemployment for our members is the reality of 
not enough to eat and no place to call home.
    The waiting week for unemployment benefits represents two weeks 
without enough money to buy groceries. It represents standing in line 
at a food bank or going through garbage cans behind grocery stores and 
restaurants for what the wealthy can afford to throw away.
    While there are numerous mechanisms by which workers can be helped, 
I cannot stress to you enough the need for continuation of medical 
benefits for laid off workers. Given the extremely low wages in many 
sectors of our industry, and the large number of workers who will be 
eligible for public assistance for medical benefits, the loss of health 
insurance will be devastating not only to those workers as individuals, 
but to the public health care system as well. Our public health care is 
simply not equipped to handle the large number of workers and their 
children who will suddenly become eligible if immediate action is not 
taken to guarantee benefits through COBRA supplements.
    I have brought a number of the laid off members of my union with 
me. Let me introduce you to them. These 10 workers represent the best 
of our industry and the best of our country. These are the workers who 
are willing to fill so many of the jobs, which have made our cities and 
our country and our economy strong. They work long hours serving the 
public for low wages. They cannot be overlooked in the discussion about 
recovery from the terrible tragedy that our country is now facing. If 
you do not speak up for them, who will.

                  Prepared Statement of David C. Olson

    My name is David Olson. I am president of the Minnesota Chamber of 
Commerce. The Minnesota Chamber represents more than 3,200 Minnesota 
companies of all types and sizes on state public policy and regulatory 
issues. We work closely with state legislators and state agencies. We 
do not focus on federal issues, and I am not here to offer specific 
suggestions on federal policy initiatives. However, we travel the state 
regularly to understand business conditions and our members' issues. I 
believe I am in a very good position to share with you what our 
members, and Minnesota businesses in general, are thinking, and quite 
frankly feeling, about today's economy. I appreciate your invitation to 
be here today and I hope my comments will help you in developing some 
solutions to the issues Minnesota employers and their employees are 
facing--solutions that focus on tax cuts and regulatory expense 
reductions.
    When I received the invitation to participate in this hearing, we 
asked our members to provide input for my testimony. We sent a 
broadcast fax and email to our members. We received an immediate and 
impressive response.
    While this is not a statistically valid survey, I believe it fairly 
represents the views of Minnesota Chamber members, and Minnesota 
businesses across the state.
    The first question we asked our members was related to workforce. 
Specifically, we asked them how their workforce numbers have, or will 
change over the next few months based on the events of September 11.
     11% of the respondents think their workforce will grow;
     36% believe that their workforce will shrink; and
     53% believe that their workforce numbers will remain the 
same.
    In terms of workforce, perhaps this is better news than expected.
    Many manufacturing firms were having a bad year before September 11 
so they already had trimmed their workforce. They are now hoping to 
hold their own.
    Other firms hope to reduce their workforce through attrition and 
retirements as opposed to layoffs, but some companies do not have this 
option.
    A large Twin Cities area hotel reported that by year end, it will 
have a 20% reduction in management staff and several layoffs of hourly 
positions. A greater Minnesota travel agency with offices around the 
state also reported a 20% layoff.
    The second question focused on their company's profitability in the 
year ahead.
     19% of respondents foresee higher profits;
     21 % are projecting about the same level; and 
unfortunately,
     60% of those responding are projecting lower profits.
    Sixty percent is a big number, especially when you consider that 
many companies, particularly manufacturing firms, already had one tough 
year and now are not seeing any improvement.
    A metro area footwear company said that in the two weeks after 
September 11, business was down 35%.
    One company stated that they had the worst September in 16 years 
and sales were double in September of this year than what they were 16 
years ago.
    A manufacturer reported that raw material costs are up, as well as 
labor and energy costs, yet customers are not willing to pay more, 
putting even greater pressure on already thin profit margins. Yet 
another manufacturing company said that they were just starting to see 
an uptick in August, and the events of September 11 eliminated the 
momentum towards an improved outlook.
    Retailers are reporting slow or no sales of high ticket items, but 
discount retailers think they will hold their own.
    A company that provides parts to the airline industry was forced to 
lay off 50 people since September 11. The owner commented that the 
business is 57 years old, and they will be lucky to survive and stay in 
business.
    Those companies that support the housing industry, including a 
lumber company and a window manufacturing company, say they continue to 
remain strong, but expect a downturn later this year.
    A florist actually reported that business is up since people are 
sending flowers to ease the pain.
    Finally, we asked our members how they are responding to the 
economy and what actions they are taking to survive.
    Across the board, companies are cutting expenses which include:
     Personnel--layoffs when necessary and cutting hours of 
remaining personnel.
     Going without raises and bonuses if necessary. One 
business owner reported that he is not taking a salary in order to 
cover his employee's salaries and other business costs.
     Delaying capital expenditures.
     Cutting overhead, including travel.
     Asking employees to consider lower cost health care. 
options and pay more of their monthly premiums.
    A number of companies expressed frustration about costs they feel 
they can not control including energy, transportation (particularly 
rail for manufacturers) and insurance costs, namely health care 
insurance. Just a couple of the comments on health care include:
     According to one business owner ``Currently, one of our 
big concerns is health insurance. We had 60 employees a year ago and 
now we are down to 42. Our health insurance went up 40% in March of 
this year, and they are raising rates again in October by 15%. We are 
being forced to look at dropping our coverage or just go to major 
medical only. We would allow employees to upgrade to family coverage at 
their cost, but the cost is so high I am sure many can not afford it.''
     ``The main reason our profits are lower is due to huge 
increases in health insurance...every year it is up 20 to 30%,'' 
another stated.
    And related to health care, several of our members took this 
opportunity to share their frustration with the state employee strike. 
While I know it is not a federal issue, it is like rubbing salt in the 
wound of business owners. As one business owner put it ``As I fax this, 
a major union is out on strike due to wages and health insurance costs. 
Our health insurance renewal went up 29%. What is a small business to 
do?"
    While the overall outlook of business people is one of uncertainty 
and lower profits, some companies do have a positive outlook for the 
year ahead. A company that sells office computers and copiers is 
projecting a 10 to 15% growth next year, for example.
    In addition, firms are also doing whatever possible to boost their 
sales and marketing efforts. In typical midwestern fashion, many 
companies are stating they are working harder, smarter, longer and 
leaner...a couple even mentioned they are praying a little harder.
    As I said in my opening remarks, I am not here to provide federal 
policy recommendations. I do hope that the commnents provided by our 
members make it clear that Minnesota businesses do not need further 
burdens and costs from any source and, for your purposes, their 
prospects and those of their workers, would greatly improve if 
government would continue to do its part to reduce both tax and 
regulatory expenses.

                   Prepared Statement of Ray Waldron

    Mr. Chairman and Members of the Committee,
    Thank you for this opportunity to help with the Committee's 
examination of Minnesota's economy in the aftermath of September 11. 
I'm here today to speak on behalf of the working people in our state.
    First let me say that we all recognize that the economic effects of 
those events cannot be compared to the unimaginable pain and suffering 
of the victims or the loss and sorrow of their families and friends.
    But the economic consequences are real, and many working families 
in Minnesota and around the country are feeling them.
    Airline employees and other workers in the air transportation 
industry h0ave been affected most immediately.
    By Oct. 1, District 143 of the Machinists Union (IAM) reports that 
1,327 union members who work for Northwest Airlines in the Twin Cities, 
Rochester and Chisolm had received layoff notices.
    The Airline Pilots Association (ALPA) has informed the Minnesota 
AFL-CIO that 30 Northwest pilots were laid off, and 850 pilot layoffs 
are expected in the next eleven months.
    Reports from Hotel Employees and Restaurant Employees (H.E.R.E.) 
Local 17, indicate that 20 percent (130) of Local 17 members who 
prepare airline meals at SkyChef are on layoff.
    Twenty cleaners at the Twin Cities Metropolitan Airport who belong 
to Service Employees International Union (SEIU) Local 26 have been laid 
off. That represents 20 percent of the airport cleaning contractor's 
workforce. Union leaders report that airport officials are estimating a 
possible 20 percent drop in airport employment overall.
    Cutbacks in air transportation are leading to layoffs in other 
industries also. State building and construction trades unions 
anticipate significant job losses due to the delay of dozens of 
airport-related construction projects necessitated by the sudden 
shortfall in Metropolitan Airport Commission revenues.
    Hotel Employees and Restaurant Employees are bracing for a possible 
downturn in Minnesota's hospitality industry. Even workers who are not 
laid off could lose health insurance benefits or have to pay higher 
premiums or co-pays, if their hours are reduced. Health benefits are 
tied to the number of hours worked.
    The sudden and unexpected job losses that have taken place since 
Sept. 11 magnify the effects of our state's economic slowdown. 
Minnesota workers have been hit hard by a surge of dislocations. To 
cite just a few examples, workers on the Iron Range are experiencing 
job loss at a pace not seen since the 1980's. Hundreds of workers in 
Albert Lea have been displaced by the terrible fire at a meat 
processing plant. And the technology hardware manufacturing industry is 
in a slump that began at least 6 months ago and could be extended by 
the contraction in air transportation.
    These are just a few examples of the situation of workers here in 
Minnesota. Judging from news accounts and communications from the AFL-
CIO, it is clear that working people and their families in our state 
and all around America are facing layoffs on a scale unprecedented in 
recent memory.
    Our government must respond to this growing human need with the 
same kind of urgency, energy and resources it has already devoted to 
aiding airline corporations.
    In September, when Congress was considering emergency funding for 
the airline industry, the Minnesota AFL-CIO urged our state's U.S. 
Senators and Representatives in Congress to include a benefits package 
for all affected workers. Senator Wellstone, Senator Dayton and a 
majority of Minnesota representatives advocated such measures and 
continue to do so. Minnesota's working families appreciate their 
support.
    We urge the Senate Subcommittee on Employment Safety and Training 
to do all in your power to speed enactment of legislation to assist 
airline employees and all workers who lose their jobs, in whole or in 
part, due to the terror attacks and their aftermath.
    This assistance should include income assistance and job re-
training allowances, extended health coverage, assistance with child-
care costs and hire-back provisions when employers return to a sound 
economic footing.
    In addition, Congress must provide for diligent public oversight of 
how airline corporations use the $15 billion of public assistance 
provided to them. Among other things, corporations that benefit from 
the bailout must be required to honor severance pay and other 
contractual obligations to laid off-workers.
    As our government mobilizes in response to the immediate needs of 
laid-off workers and their families, it must also develop policies and 
enact legislation to assure the long-term economic security of all 
Americans.
    The AFL-CIO is convening a Special Committee on Economic Security 
and drafting a comprehensive Economic Recovery Plan. I am sure that 
representatives of the national federation will be sharing that plan 
with the Committee in the near future. I urge the Members to give it 
your most serious consideration.
    Our nation is in a struggle against global terrorism to protect and 
defend our democratic way of life. We have prevailed in previous 
struggles because we have been united as a people. That unity has 
derived, in no small measure, from every American's sense that each of 
us has a personal stake in the future of this great nation.
    Mr. Chairman and Members of the Committee, Minnesota's working 
families have rolled up their sleeves and are pitching in to do our 
duty at this critical hour in history. We are all in this together, for 
as long as it takes. As we labor for liberty and justice, we count on 
your leadership to assure economic equity and security for all 
Americans.

                  Prepared Statement of Brad Anderson

    Thank you Senator Wellstone, Sen. Dayton, Rep. Sabo, Rep. Ramstad, 
Rep. Oberstar and Rep. McCollum for inviting Best Buy to speak.

                IMPACT OF SEPTEMBER 11 TERROIST ATTACKS

    During this time of national crisis, our top priority has been the 
safety and well-being of all Best Buy employees and their families. For 
that reason, we closed 100 Best Buy stores and 700 Musicland stores 
September 11th. We lost a Sam Goody store in the World Trade Center, 
but are grateful that all company employees are accounted for 
nationwide.
    The much more significant loss we have sustained is the missing 
family members and friends of many of our employees who live or work in 
the New York, Washington or Pittsburgh areas, or were on one of those 
ill-fated flights. All of our stores reopened, except for our World 
Trade Center location, and we are working to find jobs for those 
employees in our other stores in the area. Of utmost importance to me 
as we adjust to these events is that we continue to live our Company 
values, including respecting all employees and customers.
    Approximately 150 of our employees have been called up for military 
service, and we salute their bravery and dedication.
    Regarding travel, Best Buy told employees that no business travel 
would be required for the two weeks after the tragedy. Since that time 
we have resumed normal business travel. The majority of travel by Best 
Buy employees is related to store openings. Since we are on track to 
continue opening stores, this travel is expected to resume to near 
normal.
    While it is still to be determined what the final impact will be of 
Sept. 11th's tragedies, in the week after the attack, our sales 
declined modestly, resuming to near normal levels by the end of that 
week.
    As a public company, we only report our results quarterly, which we 
did on Sept. 18th. Our enthusiasm over our extraordinary 2nd quarter 
results was tempered by the tragic events of September 11.
    While we won't comment further on sales, our outlook remains 
cautiously optimistic with positive comparable store sales for the 
third and fourth quarters.

                             ABOUT BEST BUY

    Best Buy is the nation's number one specialty retailer of consumer 
electronics, personal computers, entertainment software and appliances. 
The Company operates retail stores and commercial Websites under the 
names: Best Buy, Magnolia Hi-Fi, Media Play, OnCue, Sam Goody, and 
Suncoast. The Company reaches consumers through more than 11,800 retail 
stores nationwide.
    Best Buy strives to improve people's lives by making technology and 
entertainment products affordable and easy to use.
    Best Buy achieved an overall rank of 156 on the Fortune 500 in 
2001, has 75,000 employees nationwide and operates more than 450 retail 
stores in 41 states throughout the U.S.
    Best Buy is Minnesota's 5th largest company. Today, there are 
approximately 7,500 employees at Best Buy corporate offices and stores 
in Minnesota.

                             MOVING FORWARD

    In spite of the economy and the tragic events of September 11, we 
remain cautiously optimistic about the third quarter.
    The principal drivers of our cautiously optimistic outlook are:
     Continued expansion of digital products, such as digital 
TVs, cameras and camcorders;
     New product introductions, including new game hardware and 
software such as Microsoft Xbox and Nintendo Gamecube, and new computer 
operating systems such as Microsoft XP;
     High caliber of employees;
     Experienced management team and a culture of excelling 
under adversity.
    Some analysts predict that people will stay closer to home, and 
therefore, sales of televisions, DVD hardware and software may be 
strong. They anticipate that consumers will rely more heavily on mobile 
communications and portable technology to stay in touch.
    Since Best Buy meets its customers at the intersection of 
technology and life, we are in the best position to provide the home 
entertainment products to make their time at home more enjoyable and 
more productive.
    We will continue with plans to open 45 new Best Buy stores in the 
third quarter. We expect to hire more than 5,000 employees for those 
locations as well as begin our hiring for the holiday season. We 
estimate that we will increase our staff levels by approximately 30% 
with occasional seasonal employees, which equates to about 14,000 jobs.
    Best Buy will continue its aggressive growth, opening more than 60 
new stores per year and is on track to have more than 650 stores 
nationwide by 2004. We will continue the acquisition of Canada's Future 
Shop.
    Best Buy will stick to our mission and our 75,000 employees will do 
it better than we've done it before. We will move forward, being 
prudent in managing our business given the economy and September 11th's 
events.
    Best Buy will do its part to help the state and nation's economy by 
continuing to open stores, hire employees and offering products that 
improve consumers' lives and take advantage of the newest technologies 
for home and work.
    Thank you. I will be happy to take any questions.

              Prepared Statement of Marilyn Carlson Nelson

    Mr. Chairman and Members of the Minnesota Delegation:
    I am Marilyn Carlson Nelson, Chair and Chief Executive Officer of 
Carlson Companies, Inc.
    I am proud to say that Carlson Companies, one of the world's 
largest global travel and hospitality companies, is headquartered right 
here in Minnetonka, Minnesota.
    I am pleased to be here today to discuss with you our people, our 
industry and our country and what can be done to minimize the harm to 
all, as a result of the September 11th tragedy.

                                SUMMARY

    Before the events of September 11, the US was already experiencing 
a 10 percent decline in the travel industry. By the end of September, 
Carlson businesses were off 35 percent. (If this were to continue and 
were to hold true across the nation's travel and tourism industry, it 
would represent a potential loss of 3.7Million jobs nationwide.)
    Under ordinary circumstances, only the efficient survive in these 
businesses affected by powerful market forces and fierce competition; 
however, these are far from ordinary circumstance--these are 
extraordinary times for all of us. The market simply cannot handle such 
a catastrophic, dislocating, externality.
    We at Carlson are private and fiercely independent. We have never 
sought government assistance, but our employees, our franchisees and 
even we now have suffered or will suffer tremendous harm from this 
totally unforeseen calamity, without the short term, immediate 
assistance of the Federal Government.
    Americans are not traveling. While safety was, initially, the 
primary reason, now it is concern about a possible recession, costs, 
their jobs and the perceived need to conserve.
    Unchecked, this crisis has the potential to put 163,000 Minnesotans 
out of work in the next 60-90 days. If the tourism industry decreases 
by 20 percent:
     The US economy will lose 2.2 million jobs
     There will be 3.6 percent decrease in gross domestic 
product (GDP)
    The pre-September 11 economic forecasts were predicting only a 1.6% 
increase in GDP. A 2% net decline would make consumers lack of 
confidence a self fulfilling prophesy.
    We are not asking for a bail out for business. Nor are we asking 
for measures which would only treat the symptoms and not the cause.
    We, our franchisees, our employees and Carlson desperately need 3 
things, immediately:
    1. A short term stimulus package that will keep people employed,
    2. Help for Displaced Workers, and
    3. Liquidity.
    However, the most crucial is the stimulus.
    We desperately need financial incentives to get Americans on 
planes, in hotels and dining and using our great entertainment 
facilities. This will keep people employed, be a benefit to consumers, 
reduce costs for business and enable travel agents, restaurants, hotels 
and resorts and entertainment providers to survive.
    Without this a recession is a certainty and government cost will 
increase as tax revenues at the Federal, State and local levels decline 
by far more, long term than the near term costs of the package.
    How do I know this?

                      CARLSON PEOPLE AND COMPANIES

    We and our franchisees employ approximately 9,717 people here in 
Minnesota, 124,244 people throughout the United States and 192,000 
people worldwide. We are a major employer in the state, supplying 
services that fuel hundreds of related businesses and provide many 
times the number of jobs we create, in our state and throughout the 
United States.
    We recognize that we sink or swim together. Our fates and theirs 
are intertwined.
    We operate and franchise travel agency businesses under the Carlson 
Wagonlit Travel, Results Travel and Cruise Holidays brands, here and 
throughout the United States and the World. Seventy agencies, with 90 
locations, are located in Minnesota and 1,205 throughout the United 
States.
    Our 506 owned, operated and franchised domestic Hotels include 
Radisson Hotels, Country Inns and Suites by Carlson, and the Regent, 
Park Plaza and Park Inn Hotels. Worldwide the total is 765, 50 of which 
are hotels located in Minnesota.
    Our Carlson Marketing Group is one of the worlds largest marketing 
companies, providing incentive travel for over 200,000 people a year. 
The vast majority of our Carlson Marketing Group employees are located 
right here.
    We own and franchise 15 restaurants here in Minnesota and a total 
of 749 restaurants in 47 states and 52 countries. These include 671 
T.G.I. FRIDAYS, 53 PICK UP STIX, and 25 other restaurant concepts.
    Our Radisson Seven Seas Cruise line, headquartered here in the U.S. 
is the worlds premiere cruise line operating 6, Five star cruise ships.
    In short, we embrace every aspect of the travel, lodging and dining 
industry other than air and ground transportation services.
    Notwithstanding the severity of what we have and are experiencing, 
I want to note with a great deal of pride that the owners and employees 
of our travel agencies worked night and day since the grounding of the 
airlines, assisting stranded travelers with lodging and rebooking 
travelers directly affected by this crisis. All of this was without 
charge to the traveler and in almost all cases, without any additional 
compensation, for this assistance over many weeks, while they were 
experiencing a 45% decline in business.
    The stories of the extraordinary efforts of people at the our 
Regent Hotel in downtown Manhattan, our Carlson Wagonlit people, in the 
Pentagon, supporting our government travel, our airport Fridays people 
serving hungry passengers and our Hotel people in Canada and Europe, as 
well as here accommodating passengers, literally bring tears to my 
eyes.

                    IMPACT ON OUR PEOPLE AND CARLSON

Travel
    Overall, our business travel in Minnesota and the U.S. is down an 
average of 35% since September 11.
    Before September 11, all of our travel agency businesses were 
severely impacted by the airline commission cutbacks.
    Most of our franchisees are small, family owned businesses, 
employing 3 to 4 people at each location. They rely heavily on small 
business travelers and leisure travelers. Due to the discretionary 
nature of leisure travel, that segment of the business, alone, is down 
more than 45%.
    All of these businesses operate in tremendously competitive 
markets, operating on razor thin margins of 1-2%. A sustained sales 
decline of only a few percent over a few months doesn't just represent 
an operating loss, it often means closing their doors.
    If nothing is done, quickly, I can predict with confidence that 
that many of our small Minnesota travel agent franchisees will be 
closing their doors, due to this unprecedented reduction in travel, 
stemming from this disaster.
Hotels
    Our hotels which are primarily dependent on business air travel 
have experienced a similar 35% decline. Those which service the driving 
public have returned to past levels.
    While the numbers of hotels are great, consider a single hotel and 
its value to people. Here is the break down at a typical 300 room 
Radisson hotel which employs on average 200 people:
    Management 15% (60% female)
    Food/Beverage 50% (50% women)
    Housekeeping 15 % (90% women)
    Front Office 10% (60% female)
    Maintenance 2% (1% female)
    Accounting/Purchasing/Store Room 7% (50% female)
    Sales (90% female)
    There is a large immigrant population in housekeeping in 
particular, many also in food and beverage.
    Most employees in those 2 groups (which represent 65% of total 
hotel workers) are female, at the lower end of the wage scale, some are 
sole wage earners, and some are single mothers. Many have had little 
opportunity to have prepared financially for a lay off situation.
    Furthermore, our ``Typical Hotel'' writes 500-600 checks per month 
to outside suppliers monthly for various products and services. Among 
these are:
    Transfer Suppliers (limo services/cab drivers)
    Food Suppliers
    Non and Alcoholic Beverage Suppliers
    Linen Suppliers
    Uniform Suppliers
    Laundry Suppliers
    Furniture Suppliers
    Carpets Suppliers
    Drapery Suppliers
    Fixture Suppliers (lamps/sinks/tubs/showers/toilets)
    Cable TV Supplier
    Movie Channel Supplier
    China/Glass/Silverware Suppliers
    Amenities Suppliers (soaps, lotions, shower caps, shoe shine mitts, 
ashtrays, matches, etc.)
    Office Supply Companies
    IT Suppliers
    Utility Companies (Electric/Gas/Water)
    Waste Removal Suppliers Chemical Suppliers
    Air Conditioning/Electrical/Plumbing Suppliers
    Pest Control Suppliers Gift Shops (and their suppliers--t-shirt 
vendors, candy bars, aspirin, magazines, books, souvenirs, etc.)
    And the list goes on....especially when you factor in surrounding 
area economic damage to local restaurants, tourist attractions, gas 
stations, convention centers, and so on.

Restaurants and Cruise
    If things do not rapidly change, our restaurants expect losses 
stemming directly from this crisis in excess of 10 million dollars by 
the end of the year and we estimate that our Cruise business will 
suffer in excess of 7 Million dollars in losses.
    If these losses continue, the economic fall out to our employees, 
small business franchisees and their employees will be staggering.
Overall Impact on Minnesota
    In Minnesota our travel based economy, like our agricultural 
economy, constitutes a life blood for our great state. The facts for 
Minnesota are--
     Travel Expenditures-$7 Billion \1\
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    \1\ State of Minnesota figures from the Travel Industry Association 
of America, Tourism Industries/international Trade Administration. 
``Travel Expenditures'' includes spending by U.S. resident and 
international travelers in the U.S. on travel related expenses (i.e., 
transportation, lodging, meals, entertainment & recreation, and 
incidental items), as well as international passenger fares on U.S. 
flag air carriers.
---------------------------------------------------------------------------
     Travel & Tourism-generated Sales Tax Receipts-$1.1 billion 
\1\
     170,000 jobs related to Travel & Tourism \1\
     2699 lodging properties in the state
Anecdotes
    The convention bureaus for the Twin Cities Metro area estimate 
that, since September 11, the greater metro area has lost over 25 
Million dollars in lodging and dining alone, as a direct result of this 
crisis. That is in excess of 1 Million dollars a day in lost lodging 
and dining sales, right here in the Twin Cities. (This does not include 
the impact on Northwest and Sun Country airlines nor the Minneapolis 
Saint Paul Airport, Mail of America and other retail outlets.)
Grandview Lodge on Gull Lake----Comments by General Manager Mark Ronnei
     Lodge usually employs 500 people during peak season; year-
round average is 300.
     20% of visitors are from out of state.
     Sept. decrease in revenue: 12%; October projection: 20%; 
November: ``virtually gone''.
     35% of business usually comes from conferences--this has 
been ``wiped out.''
     Many of the conferences are held by MN-based corporations, 
who bring in employees from all over the country and world. They're now 
not coming.
     Have made seasonal adjustments only at this point in their 
workforce, but if there is no bounce back in November, a 15% reduction 
in workforce is expected.
Bloomington Convention and Visitors Bureau----Comments by Shaun Corwin
     There are 20,000 workers in the Bloomington Hospitality 
industry.
     There are 35 hotels in Bloomington that are reporting an 
estimated $6 million lost in room revenue for September.
     She is seeing some creative ways to cut back on payroll 
expenses by hotels such as: part time employees giving up jobs so 
fulltime employees can keep their jobs; administrative staff is cutting 
back to 4 day work weeks; reduction in hours worked by hourly 
employees--the average goal is a 20% reduction in payroll.
    Unchecked, this crisis has the potential to put 163,000 Minnesotans 
out of work in the next 60-90 days. \2\
---------------------------------------------------------------------------
    \2\ Based on a 20% decline in Minnesota jobs; using statistic that 
6% of U.S. jobs are generated by T & T (Travel Industry Association of 
America research), the actual percentage of jobs in MN related to T & T 
could actually be higher.
---------------------------------------------------------------------------

    Nationwide
    In the United States Travel & Tourism is the number 2 industry. \3\
---------------------------------------------------------------------------
    \3\ ``Number two U. S. industry"per House Caucus on Travel and 
Tourism.
---------------------------------------------------------------------------
    The estimated financial impact of travel (includes U.S. resident 
and International Travel) is: \4\
---------------------------------------------------------------------------
    \4\ Travel Industry Association of America, Tourism Industries/
International Trade Administration. ``Travel Expenditures'' includes 
spending by U.S. resident and international travelers in the U.S. on 
travel related expenses (i.e., transportation, lodging, meals, 
entertainment & recreation, and incidental items), as well as 
international passenger fares on U.S. flag air carriers.
---------------------------------------------------------------------------
     Travel Expenditures--$578.8 Billion
     Travel-Generated Payroll--$171.5 Billion
     Travel-Generated Employment--7.8 Million Jobs (I in 17)
     Travel-Generated Tax Revenue--$99.5 Billion
     Trade Surplus with Other Countries--$14.1 Billion
    Before the events of September 11, the U.S. was already 
experiencing a 10 percent decline in the travel industry. In September, 
Carlson businesses were off 35 percent. (If this percentage were to 
hold true across the nation's travel and tourism industry, it would 
represent a loss of 3.7 Million jobs.) \5\
---------------------------------------------------------------------------
    \5\ Based on a 20% decline in U.S. jobs; using statistic that 6% of 
U.S. jobs are generated by T & T (Travel Industry Association of 
America research).
---------------------------------------------------------------------------
    If the tourism industry decreases by only 20 percent:
     The US economy will lose 2.2 million jobs.
     There will be a 3.6 percent decrease in gross domestic 
product (GDP) will result. \6\
---------------------------------------------------------------------------
    \6\ World Travel and Tourism Council estimates.
---------------------------------------------------------------------------
    And I understand that It costs the government five times as much to 
maintain an unemployed individual than it does to support one with a 
job.
    The Minnesota and the U.S. economy face an immediate crisis in its 
number two industry: Travel and Tourism. This crisis could easily:
     Put 2 million Americans out of work, many of them in the 
next 60-90 days. (Compared to the 100,000 airline workers who have 
already lost their jobs.) \5\
     Cause failure and foreclosure of many hotels, sending a 
shock wave through the banking sector. \7\
---------------------------------------------------------------------------
    \7\ Statements by Bill Marriott, Chairman & CEO Marriott Hotels, 
Marilyn Carlson Nelson, Chairman & CEO, Carlson Companies, Jonathan 
Tisch, Chairman & CEO, Loews Hotels; Barry Stemlicht, Chairman & CEO, 
Starwood Lodging in Travel & Tourism CEO Summit meeting with U.S. 
Commerce Secretary Donald L. Evans, September 25, 2001.
---------------------------------------------------------------------------
     Cause the loss of more than 100,000 U.S. travel agents 
(who write 80% of airline tickets) thus exacerbating the problem. \8\
---------------------------------------------------------------------------
    \8\ Estimates, American Society of Travel Agents.
---------------------------------------------------------------------------
     Compound the loss of U.S. restaurant worker jobs, already 
estimated to exceed 90,000 in September alone. \9\
---------------------------------------------------------------------------
    \9\ Estimates, National Restaurant Association.
---------------------------------------------------------------------------
     Cost Federal, state, and local governments more than $20 
billion in tax revenues: Minnesota could lose $420 million in taxes 
alone. \10\
---------------------------------------------------------------------------
    \10\  Based on a 20% decline of the $100 billion in tax revenues 
currently generated by T & T (Travel Industry Association of America 
research).
---------------------------------------------------------------------------
     Reduce the U.S. GDP by 3.6% (based on a 20% decline in 
Travel & Tourism business). \6\
          what are the industry and our employees asking for?
    A Stimulus package--Not a Bail out. A short term program that will 
keep people working and be good for all affected by this crisis. It has 
3 essential components:
    1. Stimulating Travel and Keeping People Employed,
    2. Helping Displaced Workers, and
    3. Liquidity
Stimulating Travel and Keeping People Employed
    1. Provide for a $500 tax credit ($1000 for taxpayers filing 
jointly) for enumerated personal travel expenses for travel originating 
within North America (airplane, cruise, train and bus tickets, hotel 
and motel accommodations, and rental cars, but not meals) for the 
period 9/12/01-12/31/02.
    2. Restore full deductibility for those business entertainment 
expenses, including meals, that are now subject to a 50% deduction for 
the period 9/12/01-12/31/02. (The average business meal is less than 
$20 and does not include any alcoholic beverages at lunchtime.)
    3. Restoration of the tax deduction for travel expenses of a spouse 
accompanying an employee on a business trip to 100%.
    4. Provide a workforce tax credit for training, retention, and 
hiring of travel and tourism industry workers.
    5. Provide substantial federal funding, with private-sector support 
and input, for advertising campaigns to encourage travel to and 
originating within the United States.
Helping Displaced Workers
    1. Direct assistance by the Federal government to those states that 
may be overwhelmed with worker compensation and unemployment claims 
resulting from the September 11th attacks.
    2. Assurance by the Federal government that health benefits will be 
continued for displaced workers.
Liquidity
    1. Payroll tax relief for employers and employees.
    2. Expand the SBA loan program to small businesses that would not 
otherwise qualify for the Economic Injury Disaster Loan Program, with 
loans to be available at the lowest possible loan rate; granting 
discretionary authority to the SBA Administrator to adjust size 
standards for eligibility to ensure that firms falling outside the 
SBA's definition of ``small'' are not inadvertently left behind.
    3. Expand the allowance of carry back of net operating losses for 
taxpayers in the travel and tourism industry beyond the current two-
year limit for losses attributable to the period 9/11/01-12/31/02.
    We recognize that this will mean expenditures. However without 
these the economy and government revenues will suffer even more.
    The most crucial is the stimulus. While significant, the remainder 
is a band aid for the wound.
    We desperately need short term financial incentives to get 
Americans on planes, in hotels and dining and using our great 
entertainment facilities. This will keep people employed, be a benefit 
to consumers, reduce costs for business and enable travel agents, 
restaurants, hotels and resorts and entertainment providers to survive.
    Without this we fear that a deep recession is a certainty and 
government cost will increase as tax revenues at the Federal, State and 
local levels decline by far more, long term than the near term costs of 
the package.

                Prepared Statement of Thomas F. Stinson

    Mr. Chairman and Members of the Committee:
    My name is Thomas Stinson. I am an associate professor in the 
Department of Applied Economics at the University of Minnesota. Since 
1987 1 have also served as Minnesota's State Economist.
    Thank you for the opportunity to discuss with you the impact of the 
September 11 terrorists' attacks on the outlook for Minnesota's 
economy.
    Economists will likely debate for some time whether an economic 
downturn would have occurred in the absence of those attacks. There is 
no denying though that at best the U.S. economy was in a very 
precarious position in August, teetering on the edge of recession. In 
that month, unemployment rose by 0.4 percent, payroll employment fell 
by 113,000 jobs, and manufacturing output fell for the 11th consecutive 
month. Help was on the way from the Federal Reserve's interest rate 
cuts and the federal tax rebate, but there was widespread concern that 
consumer spending, would turn down before that fiscal and monetary 
stimulus had time to take effect. Surveys of consumer confidence taken 
between September 1 and September 10 confirmed the legitimacy of those 
fears, showing an 8 point decline in consumer sentiment from August's 
readings.
    Now, nearly three weeks after the attacks, nearly all forecasters 
believe that the longest economic expansion in U.S. history has come to 
an end. While no one really knows what will occur over the next few 
months, there is general agreement that the cutbacks in economic 
activity following September's shocking events were sufficient to cause 
a decline in real GDP in the third quarter of 2001. Growth during July 
and August had been anemic and September's disruption so substantial 
that even though just 20 days of third quarter economic activity were 
directly affected, forecasts of a decline in real GDP at an annual rate 
of between 0.5 percent and 1.0 percent are now common. For the current 
quarter, forecasters are even more pessimistic, calling for real GDP to 
decline at an annual rate of between 1 percent and 2.5 percent. The 
majority of forecasters currently believe the economy will begin to 
rebound after the start of 2002, although a significant minority expect 
the recession to continue for one or two additional quarters. 
Differences in estimates of how quickly the consumer sector bounces 
back are the key to both the depth and duration of the recovery.
    While I hope that the current majority view is correct I currently 
assign a higher probability to a forecast in which the recession 
extends until at least late spring of 2002. I hasten to add, however, 
that because so much of the outlook for the next twelve months depends 
on consumer psychology, and because economists have no special 
expertise in anticipating a change in consumer sentiment, all 
forecasts--including my own--are little more than quasi-informed 
speculation. The econometric models we use to prepare our forecasts 
rely heavily on historical patterns and interactions in projecting the 
outlook for the U.S. economy, and the shocks to our economy which 
occurred on September 11 were without historical precedent.
    The terrorist attacks also weakened Minnesota's near-term economic 
outlook. Our state's productive capacity remains intact and there was 
no physical damage to our office towers, plants and equipment as there 
was in New York. But, the national and international demand for 
Minnesota produced goods and services has certainly diminished, and 
until that demand recovers output and employment in Minnesota will 
shrink. Minnesota is part of the national economy, our manufacturers 
and service providers market their products throughout the country, and 
the current national economic slowdown will be felt in Minnesota. Our 
state's economy is well diversified. We are not overly reliant on a 
single industry and that diversification helps us avoid some of the 
booms and busts which occur in states with less diversified economies. 
But, in a time when demand for most goods and services is expected to 
slip, Minnesota's economy will not escape relatively unscathed as we 
did in the 1990-91 recession.
    Even though Minnesota's unemployment rate was a full 1.3 percentage 
points below the U.S. average in August, signs of softening were 
already visible prior to the attacks. In recent months our state's 
unemployment rate has hovered around 3.5 percent, payroll employment 
has actually fallen by 9,000 jobs since May on a seasonally adjusted 
basis, and state withholding tax collections are failing below 
forecast. In 1998 Minnesota's unemployment rate was 2.5 percent, the 
lowest in the nation and in recent years we had added an average of 
10,000 jobs over the May-August period. Since the start of this year 
manufacturing employment has fallen by 12,000 jobs, a particularly 
disturbing statistic, since Minnesota has until recently been notable 
for increasing manufacturing employment even though nationally 
manufacturing employment was failing. The accompanying chart showing 
initial unemployment claims and active unemployment claims for the past 
three and one-half years provides further evidence of the weakening in 
the Minnesota economy which had occurred during the past twelve months.
    Two forecasting services have attempted to forecast state economic 
impacts of the terrorists' attacks in recent weeks. One expects 
Minnesota's economy to be among the hardest hit, placing us in the 
bottom quartile of states. The other, ranks us just about average in 
growth after the shock, although they find that Minnesota's economy 
would be relatively less damaged by reaction to September 11 than the 
U.S. average. While it truly is much too early to gauge the extent of 
the economic weakness brought on in Minnesota, my own preliminary 
analysis leads me to suspect that our state's economy will perform 
about as well as the national averages over the next twelve to eighteen 
months. Again though, let me emphasize that this recession will be more 
severe in Minnesota than the last recession, and it is likely to be 
felt by all sectors of the economy.
    The problems facing certain sectors of the Minnesota economy, 
particularly the airline transportation and the tourism and hospitality 
related sectors, have received considerable media attention during the 
last two weeks. There is no doubt that firms in those sectors and the 
employees of those firms face difficult times in the weeks ahead. But, 
this state's economic problems will extend well beyond those sectors, 
important as they are. Increasing airport security, relieving the cash 
flow problems of the airlines, and increasing air travel will not be 
enough to turn the U.S. economy or the Minnesota economy around. This 
economic slowdown was already being felt widely across the Minnesota 
economy prior to September 11. The post September 11 impacts will be 
even more widespread.
    I believe that additional stimulus is required to ensure that the 
current decline in the U.S. economy does not extend beyond early 2002. 
Lower interest rates will help stimulate increased business investment, 
but at a time when capacity utilization rates are already as low as 
they were during the twin recessions of the early 1980s and real, 
inflation adjusted interest rates are near zero, monetary policy by 
itself will not be enough. The fiscal stimulus provided by the federal 
rebate certainly helped economic activity in the last quarter, but now 
that stimulus has been exhausted and additional stimulus timed to hit 
the economy in the crucial first quarter of 2002 is required.
    Federal Reserve Chairman Greenspan and former Treasury Secretary 
Rubin have been reported to have advised Congress that a substantial 
and immediate stimulus package is needed. Their suggestion should be 
taken seriously. Immediate action by Congress is particularly important 
because to be effective the fiscal stimulus must be flowing to the 
economy by early January. A substantial cut in payroll taxes effective 
only during the first quarter of 2002, or a second tax rebate based on 
payroll taxes paid during the fourth quarter of 2001 are potential 
alternatives which would provide the fiscal stimulus needed on a timely 
basis. There are of course, a number of other potential options which 
also meet the immediate and substantial test.
    I encourage you to draw a sharp distinction between tax cuts or 
spending programs which may be worthy on their own merits and those 
that are needed to quickly stimulate the economy. Tax cuts or spending 
programs which dribble out a little money each week for a year or more 
are unlikely to provide a sufficient boost to economic activity next 
January and February when the jump-start is needed. A spending program 
which authorizes new money which will not actually be spent until later 
in 2002 or even 2003, even has the possibility of being counter-
productive, creating inflationary pressures by adding stimulus after 
the economy has already begun its recovery.

                  Prepared Statement of Sung Won Sohn

    Mr. Chairman, and Members of the Committee:
    I am pleased to be here today to discuss with you the important 
issue of the Minnesota economy in the wake of the terrorist attack of 
September 11th.
    All indications are that the state of the U.S. economy was 
precarious even before the terrorist attack of September 11th. Private 
investment was contracting at an 11 percent annual rate in the second 
quarter of this year. In the outset, corporations slashed investment 
spending following the Y2K scare and a tighter monetary policy 
environment from the Fed. Since then, profit margins have been squeezed 
by higher energy costs and dwindling corporate demand. A lack of 
corporate earnings growth in the coming quarters is likely to keep 
investment spending below recent norms, threatening productivity and 
production growth.
    The magnitude and duration of the economic malaise depends 
critically on consumer spending. Consumer spending, though moderating 
since last year, still remained at historically high levels in the 
second quarter. Leading to the widely held belief that consumption is 
the last pillar propping up the U.S. economy. Though a look at third 
quarter GDP and consumer spending will not occur until later this 
month, the deterioration of consumer sentiment surveys as well as lower 
retail sales reports, suggests significant weakening in consumption in 
the third quarter. This weakness in consumer spending is likely to 
carryover to at least the fourth quarter in our most optimistic 
scenario. The prospects for consumer spending clearly remain on the 
downside.
    The impact on the U.S. labor market is beginning to take shape. The 
unemployment rate in the U.S. currently stands at 4.9%. A level that 
many economists had previously predicted as being the peak of the 
jobless rate during the current economic downturn. But in the wake of 
the terrorist attacks, these relatively mild projections have been 
revised. Private sector economists now expect the unemployment rate to 
rise as high as 5.5%, with the possibility of it going to an even 
higher 6.0%. Employers have reported a widespread hesitancy to make 
future investment and employment plans in the now uncertain economic 
environment,
    Mass layoff announcements continue to mount from the airline, 
travel, hospitality, and financial services industries. The 
manufacturing industry, which comprises about 17% of employee 
compensation, remains squarely in recession for the fourteenth 
consecutive month according to the latest National Association of 
Purchasing Managers manufacturing survey. Industrial production growth 
has now been contracting for 14 consecutive months. Industrial 
machinery, auto and auto parts manufacturing, transportation equipment, 
electronics and electrical components, printing and publishing, and 
telecommunications equipment manufacturers have been hit the hardest by 
the slackening of corporate demand. Nationally, a net 940,000 jobs have 
disappeared in manufacturing in the past year.
    Minnesota is not immune to the national manufacturing and economic 
downturn. After enjoying a decade of above average employment growth, 
many of Minnesota's top industries face tough times ahead. As a result, 
employment has not appreciably grown in Minnesota compared to a year 
ago. The Iron Range of Northern Minnesota is seeing a decline in demand 
for taconite pellets as the auto and auto parts industry sees flat or 
weakening demand. Intense competition from foreign steel manufacturers 
is also behind much of the decline. Employment in metals mining is down 
24 percent or 1,300 jobs from a year ago. Manufacturers in industries 
such as computers and telecommunications equipment, printing and 
publishing, paper, lumber and wood products, rubber and plastics have 
all seen significant employment declines.
    Many of Minnesota's largest employers have announced mass layoffs, 
such as Honeywell, Qwest Communications, Northwest Airlines, 3M, Allina 
Health Systems and American Express. Minnesota has seen a total of 
23,128 mass layoffs through August 2001 versus 9,124 through the same 
period in 2000.
    Honeywell has cut 700 jobs at its Electronics Materials Division 
and is expected to cut another 150 jobs this year in Minneapolis. At 
the same time, Honeywell employment should be supported by an expansion 
of the $5 billion Home and Building Control Group into a new $8 billion 
Automation and Control Group.
    Qwest Communications is struggling with lack of demand and excess 
capacity in its fiber optics network. The Denver based company has 
announced it will cut 4,000 jobs nationwide or 6 percent of its total 
staff. It is unclear how many of those cuts will occur in Minnesota, 
but with 7,550 Qwest employees in the state, there are bound to be some 
job losses here.
    The Minnesota airline industry is also being hit with a large 
number of layoffs. Northwest Airlines has announced 4,600 job cuts due 
to the diminished demand for travel. Mesaba Airlines is cutting 400 
jobs, and Sun Country is eliminating 250 jobs. Also, 3M and Allina 
Health Systems have announced they will cut 1,000 jobs each in 
Minneapolis. In financial services, American Express Financial Advisors 
has announced it will cut 800 to 1,000 jobs in the state. In addition, 
the state's agricultural industry has seen limited growth due to 
subdued agricultural and commodity prices. Many of these industries, 
major exporters for the state, are engines of job growth and a driver 
of above-average Minnesota per capita incomes.
    As a result, Minnesota's labor market is beginning to loosen. Since 
the first of the year, Minnesota's unemployment rate has spiked 50 
basis points to 3.6%, though still well under the national average. 
Unemployment is expected to become an even larger problem over the next 
two quarters as Minnesotans continue to enter the labor force even as 
employment growth grinds to a halt.
    It is important to realize that the challenges facing the Minnesota 
economy over the next year are cyclical in nature, and do not reflect 
any fundamental or structural defect in the state's economy. In fact in 
the long-run Minnesota's economy is well positioned to continue to 
perform on par with the nation. The state benefits from strong net in-
migration from Wisconsin, California, North Dakota, Illinois, and Iowa, 
in a notoriously slow-growth Midwest region. This positive net 
immigration drives state population growth and boosts demand for 
consumer goods, housing, and services, while also allowing above-
average employment growth.
    In addition, Minnesota has a well-diversified industrial base that 
keeps economic and employment volatility to a minimum. During the last 
national recession in 1991, Minnesota's economy never really 
contracted, allowing economic growth to rebound much more quickly and 
with more vigor than other regions of the country. Minnesota did not 
experience the real estate boom and bust that hit the rest of the 
country, or experience the dislocations that the real estate bubble 
caused. The current downturn is likely to hit closer to home. With many 
of Minnesota's major industries facing deteriorating business 
conditions, the economic decline is likely to be more abrupt and 
broadly based this time around.
    To date, the aggressive and rapid response of Federal policy makers 
provides a floor for the Minnesota economy. Congress's swift action to 
enact stimulatory tax cuts aimed at boosting consumer spending, as well 
as recent initiatives to provide additional spending on airlines, 
defense, security, and disaster relief, should go a long way toward 
getting the national and Minnesota economies back on track.
    Additional stimulus has come from the rapid loosening of monetary 
policy. Nine interest rate cuts so far this year by the Federal Reserve 
has brought the Fed funds rate down to a near zero real interest rate 
environment. The benefits from the cuts are only now starting to be 
realized, since the lag on monetary policy can take anywhere from six 
months to a year before any impact is felt in the overall economy. The 
massive amount of liquidity injected into the financial system by the 
Federal Reserve will keep the Minnesota economy from totally derailing.
    On balance we believe that the next six months will entail modestly 
worsening employment conditions and continued hesitance of consumers 
and businesses to commit to long-term purchases and investments. 
However, we expect a robust economic recovery sometime in 2002, 
returning the State of Minnesota to its pre-slowdown expansion path.
    Thank you Mr. Chairman and Members of the Committee.

                       Statement of Mark McClain

    Mr. Chairman and Members of the Committee:
    My name is Mark McClain, Chairman of the Northwest Airlines Master 
Executive Council at the Air Line Pilots Association (ALPA). Thank you 
for affording me this opportunity, speaking on behalf of all Northwest 
pilots, to inform you of the negative economic impact to their careers 
following the September 11 attacks against the United States.
    As a result of these attacks, Northwest Airlines was forced to 
reduce its system capacity by 20 percent. This has resulted in the 
planned layoff of 850 pilots, approximately 15 percent of Northwest's 
pilot workforce. Additionally, 153 pilots who are scheduled to retire 
over the next six months will not be replaced, yielding another two 
percent in pilot workforce, for a total planned reduction of 17 
percent.
    The reduction in pilot jobs will be taking place over the next 
several months. Due to the stringent training requirements of pilots, 
layoffs were implemented immediately to allow employed pilots necessary 
training time on aircraft formerly held by the laid-off pilots. To 
date, 40 pilots have been laid off, 260 are scheduled to be laid off 
January 1, 2002, followed by 100 pilots per month until the planned 
total of 850 pilot layoffs is achieved.
    Obviously, the loss of these jobs is devastating to the affected 
individuals and their families. However, this present situation is 
unique and unprecedented as compared to other ``turbulent times'' in 
past years within the industry in that competing carriers are 
experiencing similar reductions in system capacity. Therefore, 
Northwest pilots will be unable to gain employment at other airlines as 
these carriers are implementing similar pilot layoff plans.
    While being highly skilled and educated, the scope of a pilot's 
specific training does not easily transfer to other career 
classifications. Many pilots who find themselves laid off will have to 
be retrained or will require further education in order to establish a 
career outside of the airline industry. In many cases, a new career 
will result in diminished earning potential as compared to average 
income capacity within the piloting profession.
    In addition to pilots who have been laid off or will be in the near 
future due to the September 11 attacks, the remaining employed pilots 
at Northwest and at other carriers will also suffer economic hardship. 
For example, pilots select their jobs on a strict seniority system and 
as junior members are laid off, more senior members are forced to fill 
the lower-paying positions that have been vacated. Furthermore, many 
employed pilots will also face a reduction in flying hours. As a 
response to a weakened demand for air travel due to the attacks against 
the United States, airlines were forced to reduce the frequencies of 
flights. Since pilots are paid per flight hour, the pilots who survive 
the implementation of layoffs and remain employed, will experience 
further wage losses due to a reduction in flying hours available for 
scheduling. Because of these two factors--displacements to lower-paying 
positions and fewer flying hours on pilot monthly schedules--many 
pilots will realize a 30 percent reduction in actual W2 earnings.
    Although this testimony is primarily about the negative economic 
impact to the pilots of Northwest Airlines, it is important to mention 
that pilot layoffs at Northwest and at other airlines have caused a 
negative impact to ALPA. The harsh economic reality faced by ALPA's 
members has had a ripple effect on the union both as an institution and 
an employer. With a reduction in membership caused by pilot layoffs and 
further reduced earnings of remaining members, a dramatic decrease in 
dues revenue has resulted.
    Very similar to the airlines, ALPA is forced by necessity to take 
significant cost-saving measures to deal with the huge loss in revenue. 
ALPA has already imposed a hiring freeze and will be forced to deal 
with reduced budgets at the very time representational demands of its 
membership are at historically high levels.
    In conclusion, the attacks on September 11 have had devastating 
effects to the pilots of Northwest Airlines, pilots at other airlines 
and to ALPA's membership and staff including many who reside in 
Minnesota.
    Thank you again for allowing me to share my views.

                  Statement of Carlson Wagonlit Travel

    The travel and tourism industry in our country is suffering as a 
result of the attacks on America last month. As one of your 
constituents who works in travel and tourism, I'm particularly 
concerned about the severe ripple effect that the federal government 
shutdown of last month continues to have on our state. We're not asking 
for a handout instead we're asking you to provide your support and 
sponsorship to S. 1500, H.R. 3011 and H.R. 3401 to help once again 
stimulate demand for and confidence in travel and provide necessary 
loans to keep the industry moving.
    Ours remains the only industry shut down by the federal government 
for the safety of citizens. The shutting down of airlines, and 
subsequent fear of travel, created a ripple effect which has resulted 
in an ongoing ``travel drought.'' In addition to the devastating impact 
we've felt in the travel agent segment of the industry, millions of 
jobs are in danger of disappearing in the next few months in hotels, 
restaurants, car rental firms, airlines and other related businesses.
    One in 17 American jobs is directly related to travel and tourism, 
and the industry creates $100 billion in tax revenues. With stakes so 
huge, it should come as no surprise that I'm just one of thousands of 
your constituents who are reeling from the long-term impact of the 
shutdown. I ask you to help give our industry tools that can help us to 
get back on track.
    The attack on September 11 was against our country's infrastructure 
AND economy. Therefore, it is right that swift action be taken at the 
federal level to prevent terrorists from seeing both elements of their 
plan come to fruition. I urge you to lend your voice to those you are 
trying to protect, American jobs and businesses, especially those of 
the significant numbers of constituents who are in danger of losing 
theirs. Please sign on as a cosponsor today.
    Thank you for your consideration.

                   Statement of Carlson Leisure Group

    The travel and tourism industry in our country is suffering as a 
result of the attacks on America last month. As one of your 
constituents who works in travel and tourism, I'm particularly 
concerned about the severe ripple effect that the Federal Government 
shutdown of last month continues to have on our state. We're not asking 
for a handout instead we're asking you to provide your support and 
sponsorship to S. 1500 and H.R. 3041 to help once again stimulate 
demand for and confidence in travel.
    Ours remains the only industry shut down by the Federal Government 
for the safety of citizens. The shutting down of the airlines, and 
subsequent fear of travel, created a ripple effect which has resulted 
in an ongoing ``travel drought.'' In addition to the devastating impact 
we've felt in the travel agent segment of the industry, millions of 
jobs are in danger of disappearing in the next few months in hotels, 
restaurants, car rental firms, airlines and other related businesses.
    One in 17 American jobs is directly related to travel and tourism, 
and the industry creates $100 billion in tax revenues. With stakes so 
huge, it should come as no surprise that I'm just one of thousands of 
your constituents who are reeling from the long-term impact of the 
shutdown. I ask you to help give our industry tools that can help us to 
get us back on track.
    The ``Travel America Now'' legislation introduced in the Senate by 
Senators Jon Kyl (R-AZ) and Zell Miller (D-GA) and in the House by 
Representatives John Shadegg (R-AZ) and Neil Abercrombie (D-HI) will go 
a long way toward doing just that. These bills offer a strong 
alternative to a bailout. Instead, they provide Americans with a tax 
credit that will encourage them to travel now, and in turn, immediately 
stimulate the economy.
    The attack on September 11 was against our country's infrastructure 
AND economy. Therefore, it is right that swift action be taken at the 
Federal level to prevent the terrorists from seeing both elements of 
their plan come to fruition. I urge you to lend your voice to those who 
are trying to protect American jobs and businesses, especially those of 
the significant numbers of constituents who are in danger of losing 
theirs. Please sign on as a cosponsor today.
    My wife and I are both in the Travel business and she has been laid 
off and my job is in jeopardy. We have two kids in college and this is 
a scary time for our whole family. We aren't going to get anything from 
the airline bailout. (They actually needed help before the disaster.) 
We don't want or need that kind of help. We just want Americans to get 
back on airplanes. You (the government) have done a great job of 
insuring the public's safety. People just need an offer they can't 
refuse to get them back in the air so they can see for themselves that 
things are safe. I have been on five flights since the disaster and see 
people a little, worried each time. This bill would be just the method 
to say the government will back up the safety issue with a tax break. 
Please help our industry and the traveling public.
    Thank you for your help and consideration.

                       Statement of Jim Callaghan

    The travel and tourism industry in our country is suffering, and 
because of that, our economy is too. Ours is the only industry shutdown 
by the Federal Government as result of the September 11 disasters and 
therefore, it is fair to ask for your help. Our industry creates $100 
billion in tax revenues. One in 17 American jobs (20 million!) is 
directly related to travel and tourism. Industry experts predict that, 
overall, hotels could lose $2 billion in room revenue and other 
associated income. Moreover, a projection by PricewaterhouseCoopers 
shows revenue per available room declining between 3.5 percent and 5 
percent this year--the largest decrease in room revenue in 33 years.
    Because I am involved in the lodging industry, it should come as no 
surprise that I'm just one of thousands of your constituents who is 
reeling from the long-term impact of September 11, 2001.
    Millions of jobs are in danger of disappearing in the next few 
months in hotels, restaurants, travel agencies, car-rental firms, 
airlines and other related businesses. I ask for your help to keep this 
from happening.
    Our industry isn't asking for a bailout, we're asking for a 
temporary Federal stimulus package to help the travel and tourism 
industry. We're asking you to provide your support and sponsorship of 
the ``Travel America Now'' act embodied in Senate file 1500 and House 
file 3041.
    A key element of this legislation is the personal tax credit for 
travel by Americans. Without this element, the stimulating effect of 
the legislation will be slowed--perhaps to the point that it is too 
late.
    The attack on September 11 was against our country's 
infrastructure, economy and way of life. Therefore, it is right that 
swift action be taken at the Federal level to prevent the terrorists 
from seeing their plan come to fruition. I urge you to lend your voice 
to those who are trying to protect the jobs and businesses of America. 
In doing so, you'll be protecting the jobs and businesses of your own 
constituents, like me.
    Please support the ``Travel America Now'' act with the personal tax 
credit included.
    Thank you for your consideration.

                      Statement of Gordon Aanerud

                RESPONSE OF THE WORKFORCE DEVELOP SYSTEM

    The long standing commitment of Congress in supporting employment 
and training has allowed state and local officials the ability to 
maintain a system that can step up and effectively respond during this 
time of turmoil. The mechanisms currently in place under Workforce 
Investment Act (WIA) provides a nationwide structure that can be 
utilized to respond quickly as layoffs occur.
    Congress can help by increasing the funding available through the 
Workforce Investment Act programs (specifically, WIA Title I adult and 
dislocated worker).
    In Minnesota, the One Stop WorkForce Center System is well 
positioned to respond to the layoffs resulting from the crisis in the 
airline and related industries as well as the overall economic 
slowdown. Under the Workforce Investment Act (WIA) Minnesota has 
established a network of 53 one stop WorkForce Centers that are 
strategically positioned across the state to deliver employment and 
training services wherever the need arises.
    Currently, the State is requesting an emergency grant of $24 
million to respond to the layoffs in the airline and related 
industries. If appropriated these funds will be used to serve laid off 
workers through a coordinate response that engages the entire 
employment and training system. In the Twin Cities Metro area all of 
the Workforce Service Areas (WSAs) and other non-profit service 
providers are uniting to provide services to the laid off worker in the 
airline and related industries. Also, beyond the Twin Cities Area other 
Workforce Service Areas are willing to lend staffing support to those 
areas experiencing a high demand for services. In addition, the 
response effort will be closely coordinated with efforts of the State's 
Higher Education Institutions (MnSCU).
    Through the active involvement of business leaders on the local 
Workforce Investment Boards and local Elected Officials, Minnesota's 
One Stop WorkForce Centers are able to effectively coordinate resources 
and services to meet the needs of both individual job seekers and 
employers. The Workforce Development System is actively responding to 
the sudden and dramatic change in the economic situation. Now is the 
time to invest in Minnesota Workers!
    During these extraordinary times, it seems that everybody has a job 
to do to react to the employment crisis. Congress must provide 
resources, states must administer programs and local partners must 
deliver services to meet the needs of unemployed workers.
    Representing the local partners, we are willing do our part.
    Thank you for your time and attention to these important matters.

                   Statement of Thomas E. Parrow Jr.

    Mr. Chairman, and Members of the Committee:
    I am pleased to share with you my views about the number of laid 
off employees at Northwest Airlines. I, a 25 year veteran of the 
airline industry, have for quite some time been concerned about the 
practice of farming out aircraft maintenance to foreign soils. First, 
it obviously takes good paying jobs from our shores. Second, it also 
provides a perfect opportunity for terrorist groups to do whatever 
mischief they please to American aircraft while in foreign maintenance 
facilities. FAR. 145, the governing structure that allows these 
practices.
    Maybe it is time to resend or greatly scrutinize these practices. 
The Airlines will of course howl about cost savings, but in reality if 
they would learn that we, their workforce are not an adversary but a 
highly skilled and if treated with respect, motivated entity would jump 
at the opportunity to come to their aid.
    I understand that in this situation layoffs have to occur, this is 
and always will be a reality of this business, but the methods and the 
personnel that Northwest has laid off are disturbing to me. I hope that 
the upper management of NWA would never stoop to the depths of taking 
advantage of a horrific national tragedy to circumvent contractual 
commitments and use it as an excuse to put more United States citizens, 
Minnesota working families out of work. I realize this may seem a rash 
statement but remember I am the 25 year veteran whom has worked for 
four different carriers. I have seen how these management structures 
will expend vast resources to accomplish ridiculous goals, when all 
they had to do was just be up front and honest with their workforce.
    Thank you for your time.

                    Statement of Barbara J. Muesing

    Mr. Chairman, and Members of the Committee:
    I am pleased to share with you my views about strategies for 
workforce and business recovery after the horrific events of September 
11. This I do as an advocate for training and development as an 
effective tool to complement other recovery initiatives.
    Certainly, there is urgent need to help people with urgent 
problems. Layoffs and the recession economy demand a swift response. 
But, there also is urgent need for resources to support workforce 
education, career and lifework planning, and employee retraining 
programs during this unusually challenging time in our nation's 
history.
    Minnesota's higher education community is well positioned as a 
potential partner with business and industry to design and deliver 
quality educational products to meet this need. At the University of 
Minnesota, the College of Continuing Education, just this month, has 
launched a new Career and LifeWork Center to help individuals in 
transition.
    Here's the point. Whether the laid-off individual is a professional 
in a high-tech company or a food service worker at the airport, the 
need is greater than ``finding a job.'' It's counseling and advising to 
connect the employee to better employment opportunity. At the October 8 
hearing, when Hydra Juhor was asked what she needed, she didn't 
respond, because she didn't know about the range of services and 
support that would easily move her along to a better paying job and a 
better life for her and her family. It's those connections that can 
help all the Hydras find and realize new aspirations during this time 
of trouble.
    Legislation to support LifeWork counseling, career advising, 
training and education, are all important to this agenda. Plus, it 
gives the term ``relief'' a more forward direction of hope.
    Thank you.

                        Statement of Lara Prieve

    At the end of January 19, 2001 1 was told by NWA (Information 
Systems Consulting Project Manager) that my services were no longer 
needed because the major project I was working on lost its funding. I 
went on unemployment until my consulting firm, Alternative Resources 
Corporation (ARC) found me project work at the end of April. I worked 
intermittently until the September 11, 2001. My wages were augmented 
with unemployment money. I was continuing to pursue full-time 
employment elsewhere.
    Before the attack my firm was negotiating with a company in Des 
Moines for additional work. After the attack all negotiations are on 
pause. The client is not returning our calls. My manager has told me 
that he will call me with any work, although he's encouraged me to look 
elsewhere because after the attack all projects in the pipeline are 
stalled.
    As of this date (October 12, 2001) 1 have $876.00 left in my 
unemployment account. I am interviewing for full-time work, but the 
least I need is an immediate extension of unemployment benefits along 
with extension of COBRA. Currently, my employer is paying my benefits.
    Also, a disciplined stimulus package from the Federal government is 
urgently needed. This should include, but not be limited to:
    Tax incentives for corporate spending
    Lowered rates for corporate income tax
    Lowered rates for personal income tax
    Lowering of capital gains tax
    I thank you in advance for your prompt attention to this matter.

                      Statement of Joseph Wellcome

    Mr. Chairman, and Members of the Committee:
    I am honored to share with you a brief timeline of events that lead 
up to my current economic situation. I have been employed--with a 2 
year degree in moldmaking--in the machine trades for over two decades. 
The first fifteen years I have been able to live the American dream. 
However, the last five years has been a struggle that is unimaginable, 
not only for myself but for most of the machine trades, with many 
machine shops going out of business.
    As the American economic system shifts from a manufacturing based 
economy to a more service oriented one--which I believe in part was due 
to the NAFTA agreement--I saw the need to return to school. I am a firm 
believer of the achievement ideology, therefore I have been returning 
to school for approximately the last four years to obtain a degree in 
manufacturing Management through the First College at Metropolitan 
State University in St. Paul Minnesota. I am optimistic that I will be 
able to bring to business new paradigms to level the playing field with 
our neighboring countries, and help bring the manufacturing sector in 
America back into competition in this global economy.
    Due to economic forces I have been unemployed as of July 24, 2001, 
furthermore my spouse has been unemployed since May 9, 2001, she was a 
travel consultant for Carlson Companies in Minnetonka, Minnesota. We 
are both members of the dislocated workers program and are returning 
students seeking lasting employment in this new economy. Due to the 
tragic events of September 11th, the economy appears to have gone from 
bad to worse, and has fallen into a recession. My family and I have 
been without employment and health insurance since July 29, 2001, and 
our unemployment benefits will soon be exhausted and we will be forced 
to return to a workforce that is crumbling.
    It is my understanding that the economic stimulus package that is 
currently proposed focuses primarily on the individuals and businesses 
that are immediately effected by the September 11th incident. In a 
crisis such as this, how can our elected officials forget anyone who 
builds this nation? Why do certain groups of individuals receive 
extended unemployment benefits under the stimulus package whereas 
others do not? Are we Americans not worthy of these tools to aid in our 
returning to the workforce? Is The President empathetic only to those 
that he can see grieving? Isn't this America, the united? I believe 
that the September 11th events exacerbated the effect on the economy as 
a whole, and there is a ripple effect for all businesses in this 
country, therefore all the unemployed should be treated as equals! 
Isn't that the basis of our constitution, equality?
    As the ethnographic study by Jay Macleod--``Ain't no Makin' it''--
clearly displays the inequalities in America today, Jay exposes the 
social barriers to success for two groups of individuals. I believe 
these barriers do not only affect people in low income projects (which 
his book focuses on) but are spread on a broader scale that attack all 
income classes below the wealthy. Furthermore, I believe the current 
economic stimulus package is introducing even more barriers to success 
by discriminating against people already in the unemployment line by 
not considering them as needy recipients of the extended benefits of 
unemployment compensation.
    Mr. Chairman and members of the committee, I ask that the 
``Congress of the United States'' include every American suffering in 
this lagging economy by extending a helping hand to all the unemployed 
across this great nation. How can we unite if policy makers are not 
including every American in the current economic stimulus package?

    [Whereupon, at 12:40 p.m., the committee was adjourned.]

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