[Joint House and Senate Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-168
 
                   IMPORTING SUCCESS: WHY WORK-FAMILY
                   POLICIES FROM ABROAD MAKE ECONOMIC
                      SENSE FOR THE UNITED STATES

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

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 14, 2007

                               __________

          Printed for the use of the Joint Economic Committee


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                        JOINT ECONOMIC COMMITTEE

    [Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]

SENATE                               HOUSE OF REPRESENTATIVES
Charles E. Schumer, Chairman         Carolyn B. Maloney, New York
Edward M. Kennedy, Massachusetts     Maurice D. Hinchey, New York
Jeff Bingaman, New Mexico            Baron P. Hill, Indiana
Amy Klobuchar, Minnesota             Loretta Sanchez,  California
Robert P. Casey, Jr., Pennsylvania   Elijah Cummings, Maryland
Jim Webb, Virginia                   Lloyd Doggett, Texas
Sam Brownback, Kansas                Jim Saxton, New Jersey, Ranking 
John Sununu, New Hampshire               Minority
Jim DeMint, South Carolina           Kevin Brady, Texas
Robert F. Bennett, Utah              Phil English, Pennsylvania
                                     Ron Paul, Texas

                      (Vacant) Executive Director
           Katherine Beirne, Deputy Staff Director for Policy
             Christopher J. Frenze, Minority Staff Director


                            C O N T E N T S

                              ----------                              

                      Opening Statement of Members

Hon. Carolyn B. Maloney, Vice Chair, a U.S. Representative from 
  New York.......................................................     1
Hon. Jim Saxton, Ranking Minority, a U.S. Representative from New 
  Jersey.........................................................     3

                               Witnesses

Statement of Kay E. Brown, Acting Director, Education, Workforce 
  and Income Security, Government Accountability Office, 
  Washington, DC.................................................     4
Statement of Dr. Janet Gornick, Professor, Baruch College, City 
  University of New York; Director of the Luxembourg Income 
  Study, and co-author of Families That Work, New York, NY.......     6
Statement of Ellen Bravo, Coordinator, Multi-State Working 
  Families Consortium, Former Director of 9to5, and author of 
  ``Taking on the Big Boys,'' Milwaukee, WI......................     9
Statement of Laura Kellison Wallace, Manager, SAS Work/Life and 
  EAP Programs, Cary, NC.........................................    12
Statement of Dr. Tim Kane, Director, Center for International 
  Trade and Economics, The Heritage Foundation, Washington, DC...    14

                       Submissions for the Record

Prepared statement of Representative Carolyn B. Maloney, Vice 
  Chair..........................................................    37
Prepared statement of Representative Jim Saxton, Ranking Minority    39
Prepared statement of Kay E. Brown, Acting Director, Education, 
  Workforce and Income Security, Government Accountability 
  Office, Washington, DC.........................................    40
Prepared statement of Dr. Janet Gornick, Professor, Baruch 
  College, City University of New York; Director of the 
  Luxembourg Income Study, and co-author of Families That Work, 
  New York, NY...................................................    63
Prepared statement of Ellen Bravo, Coordinator, Multi-State 
  Working Families Consortium, Former Director of 9to5, and 
  author of ``Taking on the Big Boys,'' Milwaukee, WI............    66
Prepared statement of Laura Kellison Wallace, Manager, SAS Work/
  Life and EAP Programs, Cary, NC................................    69
Prepared statement of Dr. Tim Kane, Director, Center for 
  International Trade and Economics, The Heritage Foundation, 
  Washington, DC.................................................    73


 IMPORTING SUCCESS: WHY WORK-FAMILY POLICIES FROM ABROAD MAKE ECONOMIC 
                      SENSE FOR THE UNITED STATES

                              ----------                              


                        THURSDAY, JUNE 14, 2007

             Congress of the United States,
                          Joint Economic Committee,
                                                    Washington, DC.
    The Committee met at 10 a.m., in room SH-216 of the Senate 
Hart Building, the Honorable Carolyn B. Maloney (Vice Chair of 
the Committee) presiding.
    Representatives present: Maloney and Saxton.
    Staff present: Christina Baumgardner, Christina 
FitzPatrick, Christopher J. Frenze, Nan Gibson, Colleen Healy, 
Almas Sayeed, and Adam Wilson.

  OPENING STATEMENT OF HON. CAROLYN B. MALONEY, VICE CHAIR, A 
               U.S. REPRESENTATIVE FROM NEW YORK

    Vice Chair Maloney. Good morning. I would like to thank 
Chairman Schumer, who could not be here today, for allowing us 
to hold this hearing on why work family policies from abroad 
make good economic sense for the United States.
    This is the first of many hearings that the Joint Economic 
Committee will hold as Democrats in Congress work to develop 
workplace standards for the 21st Century that help families 
balance the competing demands of work and family 
responsibilities.
    Today, we are releasing the findings of a Government 
Accountability Office report entitled ``Women and Low-Skilled 
Workers: Other Countries' Policies and Practices That May Help 
Them Enter and Remain in the Labor Force.''
    This report is the third in a series of reports that I and 
several of my colleagues, especially Representative John 
Dingell, have requested to examine women's contributions to the 
economy and the obstacles that they face in the workforce.
    This new report examines the policies that a number of 
other industrialized countries use to support working families 
and to foster greater labor force attachment for low-skilled 
workers, particularly women.
    The GAO report shows that the United States lags far behind 
other industrialized countries in providing paid leave for 
caregiving responsibilities, support for obtaining quality 
child care, or allowing flexible work schedules.
    The most astonishing, and perhaps the most shameful fact, 
is that the United States is the only industrialized country 
that does not offer paid leave for new parents.
    It's been more than a decade since the Family and Medical 
Leave Act was signed into law, granting most workers job 
protection for unpaid leave to care for a newborn child or a 
seriously ill family member, but the reality is that most U.S. 
workers cannot afford to forego pay for any length of time when 
caregiving needs arise.
    For most American families, it takes two incomes just to 
make ends meet in the face of stagnant wages and high costs for 
energy, child care, and health care.
    That's why I have reintroduced legislation in this 
Congress, that expands the Family and Medical Leave Act to 
smaller firms, provides paid leave, and permits leave to be 
used for parental involvement in their children's school life 
and for doctors' visits.
    I hope we can all agree that many of the work-family models 
that we see from abroad, would benefit U.S. workers, and that 
they are more important than ever.
    What we will explore today is how stronger work-family 
policies in the United States would benefit businesses and the 
economy.
    More and more businesses are finding that doing right by 
workers is good for the bottom line. SAS, a cutting-edge North 
Carolina-based software company, reports that their work-family 
policies result in low turnover in a volatile industry, high 
worker productivity, and an estimated $75 million in annual 
savings, as a result of making these investments in their 
employees.
    As Dr. Gornick's research shows, many of the countries with 
strong work-family policies, also have the highest GDP per hour 
worked and unemployment rates that are the same or lower than 
the United States.
    Some will argue that we can't afford these policies, but 
workplace changes that help families don't have to be costly. 
Perhaps the best example of this is the United Kingdom's policy 
granting workers the right to request a flexible schedule.
    Under this system, employers may refuse flexible schedule 
requests, but only a small percentage has been denied.
    I am working with Senator Kennedy on legislation that we 
hope to introduce this Summer that would allow this sort of 
flexibility in the United States.
    As Ms. Bravo will point out, we can hardly afford not to 
update our policies, in order to build a 21st Century 
workforce.
    Research also show that other industrialized countries are 
doing a far better job caring for young children. As a followup 
to Speaker Pelosi's National Summit on America's Children, last 
month, the Committee will be addressing the issue of early 
childhood care and education in the United States in greater 
depth at a Joint Economic Committee hearing on June 27th.
    If we as a country truly value families, then we need new 
policies, and we need to make the kind of investments that 
other countries have already recognized are necessary to 
support working families.
    I want to thank all of our witnesses for being here today, 
and I look forward to their testimony. I also would like to 
thank the staff of the Joint Economic Committee for their work 
in preparing for this hearing.
    [The prepared statement of Representative Carolyn Maloney 
appears in the Submissions for the Record on page 37.]
    Vice Chair Maloney. I would now like to recognize 
Representative Saxton, our Ranking Member, for an opening 
statement.

OPENING STATEMENT OF HON. JIM SAXTON, RANKING MINORITY, A U.S. 
                 REPRESENTATIVE FROM NEW JERSEY

    Representative Saxton. Thank you very much, Madam 
Chairlady, and thank you for holding this hearing today.
    The topic of labor market policies in other countries is 
extremely useful to examine. I believe very strongly that 
policies which benefit workers, either male or female, must 
also, by definition, benefit the country's economy that holds 
the policies.
    As we know, leave and training policies are usually part of 
a large set of labor market policies. In Europe, these 
policies, viewed as a whole, have significantly increased the 
cost of employment, with the result that unemployment is quite 
high in countries such as France and Germany.
    While officially lower in other countries such as Sweden, 
the largest Swedish trade union has said that it is true that 
the unemployment rate is significantly higher than the official 
rate.
    The unemployment disproportionately affects younger 
workers, as well as immigrants. The bottom line is that we have 
to look at the big picture in reviewing labor market policies 
in specific countries, including their programmatic costs, 
their economic effects, and the preferences of affected 
workers.
    That's because, as I said a few minutes ago, policies which 
benefit workers, male or female, must also, by definition, 
benefit that country's economy.
    The GAO review released today, contrary to what might be 
suggested, does not show that the United States lags behind. 
The GAO report states clearly that, quote, ``We did not conduct 
a comprehensive review of similar workplace flexibility and 
training strategies in the U.S., nor did we seek to determine 
whether other countries' strategies could be implemented in the 
U.S.,'' end quote.
    In staff-level discussions, the GAO has made clear that 
there are too many other factors involved to permit the GAO to 
make a judgment about whether these policies would work in the 
economy in the United States.
    Furthermore, in conducting its review, the GAO did not 
actually talk directly to affected workers. As the GAO also 
notes, quote, ``Our review of the laws and regulations, was 
limited by the extent that specific information was accessible 
and written in English.''
    In addition, the GAO did not examine or analyze the costs 
of the policies it mentions in its review, thereby making it 
difficult, if not impossible to conduct a comprehensive study.
    Obviously, without an accounting and examination of 
programmatic costs, it would be impossible to make an informed, 
impartial, balanced evaluation of any government program 
overseas or here at home. As GAO Comptroller General David 
Walker has emphasized many times in GAO's ``Fiscal Wake-Up 
Tour,'' one of the biggest economic threats facing the United 
States in coming years is an avalanche of additional 
entitlement spending, much of which is not adequately reflected 
in current budget accounting.
    The GAO review released today does not purport to examine a 
number of important budget costs or other budget issues. It 
does not reach any judgments about whether any of the policies 
reviewed would work in the United States, and it contains no 
policy endorsements or recommendations.
    In sum, the GAO does not attempt to add up the hundreds of 
billions of dollars such policies could cost, if implemented in 
the United States, even though they might have to be included 
in Comptroller Walker's future Fiscal Wake-Up Call 
presentations.
    So, thank you, Madam Chairlady. I look forward to hearing 
what the witnesses have to say this morning.
    [The prepared statement of Representative Saxton appears in 
the Submissions for the Record on page 39.]
    Vice Chair Maloney. Great. We have a very fine panel today, 
and I'd like to introduce our witnesses, but I would like to 
note with irony, that the Committee invited the principal 
leaders of Moms Rising, a group that supports working mothers, 
to be here today, but they could not attend due to the strains 
of trying to balance work and family.
    I would now like to introduce Kay Brown. Kay Brown is an 
Acting Director with GAO's Education Workforce and Income 
Security Team with more than 20 years of experience.
    She has also served on GAO's International Affairs Team, 
where she led assignments evaluating a variety of international 
programs.
    Ms. Brown has an MPA from the University of Pittsburgh 
Graduate School of Public and International Affairs.
    Ms. Brown.

    STATEMENT OF KAY E. BROWN, ACTING DIRECTOR, EDUCATION, 
    WORKFORCE, AND INCOME SECURITY ISSUES, U.S. GOVERNMENT 
             ACCOUNTABILITY OFFICE, WASHINGTON, DC

    Ms. Brown. Vice Chairwoman Maloney and Members of the 
Committee, I am pleased to be here today to discuss policies in 
other countries that may help workers, and women in particular, 
enter and remain in the labor force.
    This information is based on a study we are releasing today 
of policies in eight developed countries, six that are members 
of the European Union, as well as Canada and New Zealand.
    This morning, I will focus on two types of benefits 
intended to help workers balance the competing demands of 
employment and caregiving responsibilities. These are family 
leave policies and child care for working parents.
    First, family leave: Each of the countries we studied has 
adopted some form of paid leave to help mothers, and sometimes 
fathers, care for their newborns or newly adopted child. The 
benefits vary from country to country in the amount of time 
allowed off work, the amount of the payment, and the conditions 
for eligibility.
    For example, in Denmark women are allowed 18 weeks of paid 
maternity leave, and they receive about 60 to 70 percent of 
their previous earnings. But to be eligible for these benefits, 
they must have a demonstrated work history.
    In addition, many countries recognize that leave may be 
needed to care for children other than newborns. For example, 
some allow parents the use of parental leave until a child 
turns 8 or 9 years old. Some countries also allow workers to 
take paid leave to care for others, such as a seriously ill 
family member.
    It's important to consider what is known about the effects 
of these policies. A study that examined paid maternity leave 
of varying lengths in several western European countries found 
that this leave may increase women's employment rates by about 
3 to 4 percent.
    In addition, women who have a set leave period and a 
guaranteed job upon return, tend to return to work more quickly 
than women who had to quit their job and enter the labor market 
later.
    Turning now to child care, all of our study countries 
provide support for child care for some working parents. In 
some cases, the support is in the form of direct financial 
benefits, as in Canada, where the government provides eligible 
parents with $100 for each child under age 6, to support the 
family's child care choices.
    In other cases, the support is in the form of a tax credit, 
as in New Zealand. In some of these countries, early childhood 
care and education is viewed as a social right.
    In France, about 90 percent of children ages 3 to 6 attend 
public preschools provided free of charge. Other countries such 
as the Netherlands, view the support for child care as a shared 
responsibility.
    There, employers, employees, and the government, are each 
expected to pay about one-third of the child care costs.
    Regarding the effects of these child care policies, the 
availability of child care helps women return to work, but cost 
and quality also matter.
    Research from several cross-national studies has shown that 
readily available child care appears to increase women's 
participation in the labor force.
    This is especially true when the care is subsidized and 
regulated with quality standards such as high staff-to-child 
ratio. When child care is not subsidized and its costs are 
high, women tend to delay their return to work.
    Of course, these benefits come with a cost. The family 
leave policies in the countries we studied are generally funded 
through tax and general revenues.
    For example, several countries fund leave policies through 
national insurance programs, drawing on payroll taxes paid by 
employers and employees. One country finances its paid leave 
through income tax revenues.
    In conclusion, the countries we studied have in place a 
number of benefits and flexibilities that may help workers 
enter and remain in the workforce.
    They have been adopted through legislation negotiated by 
employee groups, and at times, independently initiated by 
private industry groups or individual employers.
    We did not assess whether the positive outcomes identified 
from the policies in our study would be realized in the United 
States, if similar policies were implemented here.
    However, aspects of these policies may provide useful 
information, as so many countries face similar issues today.
    This concludes my prepared statement. I would be happy to 
answer your questions or those of any other Member of the 
Committee at this time.
    [The prepared statement of Ms. Brown appears in the 
Submissions for the Record on page 40.]
    Vice Chair Maloney. Thank you. Please note that Senators 
Kennedy and Schumer have submitted statements and they will be 
part of the record.*
---------------------------------------------------------------------------
    * The information referred to was unavailable at press time.
---------------------------------------------------------------------------
    Vice Chair Maloney. I would now like to recognize Dr. Janet 
Gornick. She is a professor of political science and sociology 
at the City University of New York Graduate Center, and a 
professor of political science at Baruch College.
    She is also director of the Luxembourg Income Study, a 
cross-national research institute and data archive based in 
Luxembourg.
    Professor Gornick's core research is in public programs 
that affect parents' capacity to combine employment with 
caregiving. She is the co-author of `'Families that Work: 
Policies for Reconciling Work and Family.'' Thank you for being 
here.

STATEMENT OF DR. JANET GORNICK, PROFESSOR OF POLITICAL SCIENCE 
AND SOCIOLOGY, CITY UNIVERSITY OF NEW YORK GRADUATE CENTER, NEW 
                            YORK, NY

    Dr. Gornick. Thank you very much. Good morning, Vice Chair 
Maloney and Members of the Committee. I really appreciate the 
opportunity to testify at this timely and important hearing.
    I've spent nearly 20 years studying work-family policy in 
the United States, relative to those in place in other rich 
countries. When I say ``work-family policy,'' I'm referring to 
public policies that help parents, both mothers and fathers, to 
balance the competing demands of paid work and family care.
    In my brief comments today, I'll draw on findings from 
several collaborative projects. Most of the work that I will 
present comes from my 2003 book, ``Families That Work.''
    My co-author, Marcia Meyers, and I began the research for 
that book with a question: How well are American working 
parents and their children faring in comparison to other high-
income countries?
    We compared the United States to Canada and 10 countries in 
western and northern Europe. Our conclusion was not all that 
well.
    First, American working parents work exceptionally long 
hours; second, American parents report higher levels of work-
family conflict than do parents in many other countries; third, 
gender equality in employment is only fair to middling; and, 
fourth, our children are not doing especially well.
    An exceptionally large share of American children live in 
poverty. Our children also fare poorly in a number of other 
indicators, ranging from infant and child mortality, to school 
achievement, to adolescent pregnancy.
    Parents in all countries face competing demands on their 
time, but American families struggle more than families 
elsewhere, in part, because American public policy offers less 
help to them than what's available to parents in other 
countries.
    In my few minutes today, I'm going to give you some 
highlights from our research about three particularly 
consequential areas of public policy: work time regulations, 
paid family leave, and child care. Then I'll close with some 
brief comments that underscore the public provision of these 
programs is consistent with healthy macroeconomic outcomes.
    Let me preface my comments on policy by offering a brief 
snapshot of actual work hours across countries. This first 
figure reports average annual hours spent in paid work in the 
United States, Canada, Japan, and nine European countries.
    As shown here, American workers spend, on average, over 
1830 hours a year at work. That's about 200 hours more than the 
Swedes, 300 more than the Belgians, and nearly 500 more than 
our Dutch counterparts. We even outwork the famously long hour-
working Japanese.
    The second figure provides two clues to Americans' long 
work hours. This figure reports two policy indicators: Standard 
weekly work hours (the shorter bars)--that generally refers to 
the overtime threshold, as well as the minimum number of paid 
days off, as required by law (the taller bars).
    As the figure shows, the standard work week in these 
European countries, is now set in the range of 35 to 39 hours; 
the United States sets a 40-hour work week, as it has for over 
six decades.
    In addition, the European Union requires that member 
countries guarantee all workers at least 4 paid weeks off per 
year, and several require more.
    U.S. national law is entirely silent on paid days off.
    There are other types of public policies that matter as 
well. For example, a number of European countries provide 
workers with the right to request changes to their work 
schedules in order to reduce their hours or to alter the timing 
of their hours.
    So other countries provide shorter full-time hours, a 
shorter work year, and institutions that raise the quality and 
availability of both part-time work and work with flexible 
schedules.
    Together, these measures allow many European parents to 
choose various types of reduced-hour work, an option that's 
limited and economically infeasible for many American parents.
    In addition, as noted, all of our comparison countries 
offer mothers and fathers some period of paid leave in the wake 
of birth and adoption.
    U.S. national law is silent on paid leave, and access to 
private provisions is limited and uneven.
    My third figure reports the total number of weeks of leave 
available to new mothers, multiplied by the percentage of wages 
replaced. In the Nordic countries and in Canada--the 5 
countries shown on the left in the figure--new mothers are 
awarded in the range of 28 to 42 weeks of fully paid leave, 
whereas mothers in continental Europe are typically entitled to 
about 12 to 16 weeks.
    The lack of paid leave in the United States forces many 
parents to choose from among a restricted set of options. Many 
new parents have to choose between taking leave and losing 
their pay or remaining at work and placing their children in 
child care, essentially from birth.
    Finally, the great American time squeeze is worsened by our 
meager investments in early childhood education and care. This 
figure, the final figure, reports the percentage of young 
children aged 1 and 2--that's the shorter bars--and ages 3, 4, 
and 5--the taller bars--in publicly supported care.
    As the figure indicates, levels of publicly provided or 
subsidized care for 1- and 2-year-olds, vary widely across 
Europe, but in all of these countries, the majority of 3 to 5-
year-olds, are in public programs.
    In comparison, in the United States, 6 percent of under 3's 
are in public care and just over half of the 3 to 5's--and most 
of those are 5-year-olds in kindergarten, many of whom are in 
part-day programs.
    Most American working parents, instead, buy private care. 
They pay most of the cost out of pocket, and many children get 
care that's judged by experts to be mediocre in quality.
    To conclude, generous work-family policies are good for 
parents and children, and they especially benefit low-income 
workers who tend to have less bargaining power and can't afford 
to pay for help privately.
    Public systems equalize access and affordability across 
family types and throughout the income spectrum, leading to 
outcomes that are more equitable than the results we get when 
we leave the provision of these crucial programs to the 
marketplace.
    In addition, generous work-family policies are compatible 
with good economic outcomes. Consider GDP per hour worked, a 
powerful indicator of productivity, the six top-ranked 
countries in the world, are European countries with 
comprehensive work-family policies. The United States is ranked 
eighth. These figures come from the Organization for Economic 
Cooperation and Development of 2007.
    Furthermore, the World Economic Forum's Competitiveness 
Index includes among the top five countries in the world, 
Denmark, Sweden, and Finland--three countries with extensive 
work-family policies. The United States is ranked sixth.
    Finally, despite popular claims to the contrary, a large 
body of research demonstrates that generous work-family 
policies do not cause an increase in unemployment. Several 
countries with generous social benefits for families, have 
unemployment rates that are actually lower than in the United 
States.
    Today, for example, unemployment is below the United States 
rate in Norway, Denmark, the Netherlands, Switzerland, and 
Austria. These are, again, figures on unemployment rates from 
the Organization for Economic Cooperation and Development, as 
of 2007.
    In my view, American public policy is failing our working 
parents and their children. We have much to learn about 
institutional reform, and we would do well to draw some lessons 
from the collective experience of many of your neighbors across 
the Atlantic.
    [The prepared statement of Dr. Gornick appears in the 
Submissions for the Record on page 63.]
    Vice Chair Maloney. Thank you very much.
    Ellen Bravo, I want to thank her for coming. She's 
recovering from an automobile accident and so is in a cast.
    I really appreciate your being here, on many levels, but, 
physically getting here, was a challenge for you, so we thank 
you.
    Ellen Bravo teaches women's studies at the University of 
Wisconsin at Milwaukee, including Master's-level classes on 
family-friendly workplaces. She's a former director of 9to5, 
National Association of Working Women.
    As a consultant to 9to5, she coordinates the Multistate 
Working Families Consortium, a network of State coalitions 
working for paid leave. Her most recent book is ``Taking On the 
Big Boys: Or Why Feminism is Good for Families, Business, and 
the Nation.''
    Thank you for being here.

STATEMENT OF ELLEN BRAVO, PROFESSOR, UNIVERSITY OF WISCONSIN AT 
MILWAUKEE; COORDINATOR, MULT-STATE WORKING FAMILIES CONSORTIUM, 
                  AND FORMER DIRECTOR OF 9TO5

    Ms. Bravo. Thank you so much, Vice Chair Maloney and 
Members of the Committee. It's a pleasure to be here.
    So, I have just been on tour for this book, ``Taking On the 
Big Boys,'' and I want to share with you, some of the workers 
that I've met, and what their lives are like.
    These include a woman who is a manager at a bank that 
always winds up on the best places to work list, who was 
demoted for taking 5-minute breaks to express her breast milk. 
This is the same company that gives time for cigarette breaks.
    I met a supermarket worker who was fired for taking a phone 
call from her son who was home alone. I met nursing assistants 
who lost their job because they could not stay for an 
unscheduled mandatory second shift, because they didn't have 
child care that would continue; a TV anchor who gets very 
little sleep at night because she's trying to keep her job and 
have some time to spend with her baby; a factory worker who 
couldn't get family leave when his father had a heart attack 
because he hadn't been on the job for a full year; and a 
clerical worker who did qualify for family leave when her 
mother was dying, but couldn't afford to take unpaid time.
    We hear a lot of talk about family values and personal 
responsibility, but the truth is, in the United States, being a 
good family member can put your job or your health at risk; and 
being a responsible worker, can put your family or loved ones 
at risk. We can do a lot better than that.
    I'd say my most striking encounter was with a group of low-
wage workers, 9to5 members, at a Congressional briefing just a 
couple of months ago.
    I'm not surprised, I told them, when I hear teachers say 
that more kids are coming to school sick because they don't 
have a parent who can stay home. I'm not surprised when I hear 
women tell stories of how guilt-ridden they are because they 
sent a kid to school or daycare sick because they couldn't get 
flexibility at work. But I was stunned to find out how many 
kids send themselves to school sick because they don't want 
their parent to lose their job.
    And I had told this story, and on the panel with me that 
day, was an 18-year-old whose mom had lost her job because of 
lack of paid sick days. This young woman has a disability that 
affects her balance and her speech, Jeanetta Allen, and she 
said--as soon as I finished, she said--``I'm that kid. After my 
mom lost her job, I always sent myself to school, if I possibly 
could, because I didn't want that to happen again.''
    And then there was like a chain reaction in the audience, 
where, one after another, these women shared the moment when 
they learned that one of their kids was doing this, going to 
school with bruised ribs or flu or strep throat, because they 
didn't want their mom to lose her job.
    We know that the workforce has changed enormously in the 
last 30 years. The problem is that the workplace has just not 
kept pace.
    The good news is that some people do a terrific job. We're 
going to hear from SAS. They'll tell you that story. All my 
graduate H.R. students want to work there.
    And what it means, is that everything we want, already 
exists, sometimes in individual companies within the United 
States; sometimes in whole other countries in the world, but it 
works, and it works for businesses as well as for workers and 
their families.
    But the problem is that most workplace policies here are 
deficient, and they reflect outmoded public policies that set 
minimum standards for how workers are treated in the United 
States.
    I have a lot more on this in my written testimony. For 
example, the Family Medical Leave Act, we all worked very hard 
to pass it. It was an important first step, but it has a lot of 
limitations, including that it does not cover routine illness.
    I'm glad that most kids don't get leukemia, but they all 
get stomach flu and colds and all kinds of other things, and 
their parents don't have job protection if they need to take 
time off.
    Lobbyists against these bills will tell you, well, people 
can use their paid sick days, except that half the workforce 
and three-quarters of low-wage workers, just don't have paid 
sick days, which means that they risk not only losing pay, but 
also losing their job.
    And when they do have it, they often can't use it for a 
sick family member.
    We know that women bear the brunt of this, but there are a 
lot more men who would be better fathers--we should remember 
this Father's Day--if they did not get punished for it at work.
    The truth is, everybody needs time to care. Even people who 
aren't parents, have parents, or partners that they need to 
care for, and believe me, trust me, anybody can be hit by a 
drunk driver. We all need flexibility at work.
    The good news is, employers can do a lot without it costing 
a penny. I have a lot of examples in my written testimony.
    Research reminds us, though, that whatever cost there is is 
more than made up for by the savings, particularly because when 
you get treated as a whole person at work, workers repay that 
with loyalty and retention. And the biggest expense employers 
face is turnover.
    Deloitte & Touche figured it out. They figured that they 
saved $41.5 million a year by lower turnover because of their 
Family and Flexible Policies. Even where the workers are much 
lower paid, there is a cost per worker, particularly when you 
add up how many because the turnover is so high.
    Retention is not the only benefit. There was a study of 28 
leading corporations that have implemented flexible schedules. 
They find positive effects on employee commitment, employee 
satisfaction, productivity, cycle time, customer commitment, 
response time.
    Here is what we do not talk about: What it costs not to do 
these things, having these outdated workplace rules, and what 
it means that we need to change.
    The new rules we need include a guaranteed minimum number 
of paid sick days. Access and affordable family leave for 
everyone paid for by some kind of a shared pool, shared risk. 
Quality, affordable dependent care. It means a reasonable work 
week without mandatory overtime, and it means a meaningful wage 
floor. Because let's not forget that money is a work-life 
issue.
    So as you mentioned, I coordinate this network of State 
Coalitions. The good news is: There are great things happening 
in the States. We won paid leave in California. We won paid 
parental leave in Washington. New York and New Jersey are set 
to follow California's lead.
    San Francisco was the first municipality that passed paid 
sick days ordinance, and a number of others are considering 
them this year.
    All of these we hope will build action on the Federal level 
because what we need is a level playing field throughout the 
country.
    I want to just end by telling you that in Wisconsin when we 
won the State Family Leave Bill, we took a bunch of children 
with us to Madison. They represented the broad range of reasons 
that people need a loved one to take care of them.
    The Secretary of Employment Relations who met with them 
said, we're so used to hearing from lobbyists we forget about 
the people who are affected by these bills.
    You will hear from lobbyists that the sky will fall, 
business will flee, the world will end if we do this. I had 
this quote:

    ``This bill would create chaos in business never yet known to us. 
Let me make it very clear, I am not opposed to the social theory. What 
I do take exception to is any solution which is utterly impractical and 
would be much more destructive,'' et cetera.

    That was 70 years ago, and it was talking about abolishing 
child labor and establishing the minimum wage. Those minimum 
standards did not make the sky fall; neither will these. It is 
time we start listening to the children and stop listening to 
the lobbyists.
    Thank you very much.
    [The prepared statement of Ms. Bravo appears in the 
Submissions for the Record on page 66.]
    Vice Chair Maloney. Thank you, very much.
    Laura Kellison Wallace is the manager of Work Life and EAP 
Programs at SAS Institute. Before SAS, she was the Work Family 
Program manager at the University of North Carolina, Chapel 
Hill. She has over 15 years of experience working with families 
and children in many capacities, including working with the 
Head Start Programs both as a teacher and researcher, and 
directing an Early Childhood Education Americorps Program. She 
is a graduate of Smith College and received her Masters Degree 
in social work from UNC, Chapel Hill.
    I should disclose here that the Joint Economic Committee 
uses SAS software products for some of our economic analysis, 
but this is not the reason they were invited. In fact, the SAS 
representatives we contacted were not even aware that the 
Committee used their products when they were invited to 
testify.
    So thank you for being here, Ms. Wallace.

STATEMENT OF LAURA KELLISON WALLACE, MANAGER, SAS WORK/LIFE AND 
                     EAP PROGRAMS, CARY, NC

    Ms. Wallace. Thank you so much.
    Good morning, Vice Chair Maloney, Ranking Member Saxton, 
and Members of the Committee:
    My name is Laura Kellison Wallace, and I am the manager of 
Work/Life and Employee Assistance Programs for SAS, as 
mentioned.
    SAS is the leader in business intelligence and analytical 
software and services, and we are headquartered in Cary, North 
Carolina. I would also like to quickly introduce my colleague 
that is here with me today, Mark Hough. He provides senior 
corporate legal counsel for SAS, and he works with us on Work/
Life and H.R. issues.
    I understand my full statement will be part of the record, 
so I am just going to highlight a few points, if I can, this 
morning.
    I thought I might provide a little context with my 
background, although Vice Chair Maloney went over it pretty 
thoroughly. I do want to say, my values that I grew up with 
sharply shaped all of my choices for education and for my 
career.
    My parents instilled a strong sense of responsibility and 
community and regard for others as I was growing up, and I 
chose accordingly, as I went through my career.
    As I went into my thirties and started a family of my own, 
I had to choose something different, I thought, and start 
taking care of my family, my security, and my future. So I am 
pleased and proud to tell you that for the last 8 years I have 
been working for a major global multi-billion-dollar software 
corporation where the top-down leadership expectation is that 
we all live and work with the very values my parents instilled 
in me.
    Coming to SAS, I found, to my surprise, a decent, 
responsible community-minded profitable corporation is not an 
oxymoron, nor is it a utopian fantasy. It exists, and I work 
there.
    My hope this morning is that by discussing SAS and its 
philosophy, practices, and high trust culture it will become 
evident quickly that family friendly policies and programs are 
not just fluffy perks.
    Instead, they are the right choice for big and small 
companies, not only because they feel like the right thing to 
do, but they also make really good business sense.
    SAS was founded in 1976 by two North Carolina State 
University professors, Jim Goodnight and John Sall. That first 
year the company generated $138,000 in revenue with 5 
employees. Today, after 31 years in business, SAS is the 
largest privately held software company in the world with 
roughly $2 billion in revenue.
    We currently have approximately 40,000 customers and an 
annual software renewal rate of about 98 percent. We now have 
10,000 employees worldwide with offices in 112 countries.
    Our CEO, Jim Goodnight--Dr. Goodnight's philosophy at SAS 
has always been: If you treat employees as if they'll make a 
difference to the company, they will make a difference to the 
company.
    SAS has grown in size and profit, and Dr. Goodnight has 
never veered away from this creed. He has created a workplace 
where employees' innovative skills and ability to contribute 
could, and do, flourish.
    Dr. Goodnight's theory is clearly a winning practice. SAS 
has been profitable every single year since its founding.
    The employee turnover rate--which we were talking about 
earlier--for the last 3 years averaged 4.02 percent. That is 
compared to an industry average of over 20 percent.
    We received over 35,300 applications last year for 880 
jobs. It is not difficult to see that SAS employees are loyal, 
or that the word is out that it is a wonderful place to work. 
But make no mistake, these statistics are particularly telling 
about the direct relationship of employee satisfaction to 
profitability.
    Dr. Jeffrey Pfeffer, a business professor at Stanford 
University who studied SAS, estimated that the cost savings at 
SAS in reduced employee turnover, recruitment, and retention is 
on the magnitude of $60-$80 million annually. That is not too 
fluffy.
    Although I've described SAS's benefits in greater detail in 
my written statement, I would like to briefly mention a couple 
of the highlights about what is available to every employee 
regardless of job title or salary:
    Unlimited paid sick time to take care of yourself and your 
family and, if you need it, paid FMLA. That is leave available 
to mothers and fathers, birth and adopted. I can tell you a 
little bit more about that if you would like.
    Generous vacation time with an extra week given to all 
employees between Christmas and New Years. The ability to have 
a flexible work arrangement. A standard 35-hour work week. 
Heavily subsidized onsite health care and child care. Free 
onsite fitness and--my department, the Work/Life Center.
    But these benefits are only part of the equation that has 
allowed SAS to create a genuine employee loyalty. Equally 
important to SAS's success is a corporate culture rooted in 
mutual trust, mutual respect, and mutual regard. The idea of 
``regard'' is really paramount to my point today.
    The dictionary defines ``regard'' as a steady gaze and 
attention or care. Indeed, people do stay at SAS because of the 
benefits and the environment, but to dig a little bit deeper I 
would argue people stay at SAS because they feel the trust, the 
regard; they feel seen; they feel attended to and cared for.
    Let me give you a really quick example of how employee 
regard works in practice. A couple of years ago we explored the 
idea of providing a discount for an in-home sick care service 
for our employees. We understood that this was a big ``best 
practice'' trend and, of course, we always want to be able to 
demonstrate our commitment to best practice.
    But in the end, we wanted to avoid any perception that it 
was not OK for employees to stay home with their sick kids, so 
we chose not to go with that service. We do not want SAS 
employees to be put in the untenable position of having to 
choose between their sick child, their sick spouse, an ailing 
parent, and their work.
    We would not want to make that choice ourselves. We choose 
the best outcomes for our employees every time over best 
practice.
    I hope that SAS's 30 years of experience of successfully 
manifesting its regard for its employees drives home the point 
that family-friendly policies and programs make good business 
sense for companies of all sizes. Not only do they create 
employee loyalty, but they directly contribute to the bottom 
line.
    Thank you for this opportunity to appear today and to 
discuss SAS's philosophies and strategies. Please remember SAS 
is proof that regard is much less expensive than disregard. I 
am happy to answer any questions that anyone has.
    [The prepared statement of Ms. Wallace appears in the 
Submissions for the Record on page 69.]
    Vice Chair Maloney. Thank you.
    Dr. Tim Kane is the director of the Center for 
International Trade and Economics at the Heritage Foundation. 
He oversees the Annual Index of Economic Freedom, a series of 
economic indicators jointly published by the Heritage 
Foundation and The Wall Street Journal.
    Prior to his work with the Heritage Foundation, Dr. Kane 
served as senior Economist for the Joint Economic Committee. He 
has a Bachelor's Degree from the U.S. Air Force Academy, and a 
Ph.D. in economics from the University of California at San 
Diego, and we are thrilled to welcome him back.

 STATEMENT OF Dr. TIM KANE, DIRECTOR, CENTER FOR INTERNATIONAL 
  TRADE AND ECONOMICS, THE HERITAGE FOUNDATION, WASHINGTON, DC

    Dr. Kane. Thank you so much, Chairlady Maloney, Congressman 
Saxton, and other Members of the Committee:
    It is a real honor to be back here. It is also a bit of a 
homecoming, and I see many friends among the staff. I really 
appreciate this chance.
    I feel a little bit, looking at the panel, with very 
distinguished panelists, that one thing here is not like the 
other with the gender balance.
    [Laughter.]
    I know my three daughters at home are rooting for me to 
work with the Committee to think about how to make the 
workplace in America better for them in the future.
    In my testimony, I'd like to, one, describe the nature of 
the challenge facing Congress in the context of the booming 
U.S. economy in recent years; two, offer a set of principles 
for both enhancing our economy, generally, and labor economy, 
specifically, under the framework of economic freedom; and, 
three, suggest that Congress should not use the conventional 
European approach to labor markets, unless it also wishes to 
import European-level unemployment, which occurs at roughly 
twice the rate as in the United States.
    I think it's really important for us to set up the nature 
of prosperity in this decade. It's been a very contentious 
issue on the Hill, in the political sphere. I speak today as an 
economist, not as a partisan.
    As obvious as this may seem, every analysis of economic 
policy at the Federal level, whether it's immigration or 
whether it's trade, must begin with the recognition of the 
comprehensive record-setting strength of our national economy.
    By almost every indicator, the U.S. economy is prosperous, 
but especially so in comparison to other advanced economies.
    First point: There are more working Americans than ever 
before. In the latest BLS employment situation report, it's 
reported that there are 152.8 million people, Americans, 
specifically, in the labor force; 145.9 million employed.
    These are just shy of the all-time records in recent 
months. Eight million payroll jobs have been created in the 
last 4 years.
    I try to remind myself, given all the gloom in the media, 
that during this 4-year span, job growth has averaged 167,000 
jobs a month. That's 5,559 jobs added to payrolls every day; 
232 per hour; or a new job every 16 seconds, so quite a few 
jobs created just during my testimony, at least.
    There's extraordinarily low unemployment. A 4.5 percent 
unemployment rate out of the textbooks, is actually on the 
dangererous side of overheating the economy, so whatever has 
been done in economic policy for the last few years, has really 
delivered powerful results.
    And, last, growth in output and productivity: The postive 
growth rates in GDP, almost--every quarter since the attacks of 
9/11, is almost a miracle. Even in light of the Hurricane 
Katrina, the U.S. economy kept growing.
    The most recent quarter, Q-1's preliminary estimate looks 
low, but most economists tell you that a lot of that is due to 
inventories, inventories getting tighter, and that we expect 
GDP growth to continue.
    But a more important measure, as you know, is GDP per 
capita, and this, when you compare it to other economies--
Britain, France, Italy, Germany--they're about 20 percent 
behind in the income per person that they have.
    Measures that are often thrown out that are income per 
working hours, are not really the best measures. The best 
measure you want to look at, is income per person.
    That includes people like my wife, who doesn't work in the 
formal economy, so she's not even included in the GDP measures. 
But because of the institutional arrangements that we have and 
the family arrangements that we have, we do have the most 
productive workforce in the world.
    Now, I find that the most useful framework for approaching 
fiscal economic policy, is not really macroeconomics, but 
growth economics.
    The idea is captured well by Steven Parenti and Ed Prescott 
in their book, ``Barriers to Riches.'' It's also the approach 
we use in the Heritage Foundation-Wall Street Journal Index of 
Economic Freedom, and I point out that this is all free online 
at heritage.org/index.
    Now, specifically this last year, we incorporated labor 
freedom. We look at countries' labor freedoms, and how many 
regulations and protections a country puts on its workforce, 
turn out to backfire.
    Those countries with higher labor protections, all well 
intentioned, end up creating higher unemployment rates. And so 
it's with some irony that here we are in the United States 
talking about adopting European policies when France just had 
an election, in light of labor riots, because their workforce 
isn't working.
    Their youth can't get jobs because they protected the older 
workers to such an extent that the younger workers are 
frustrated.
    And you've seen the election of Mr. Sacrosi, particularly 
in light of promises to reform that and be more like America.
    In the 2007 edition of the index, one chapter is dedicated 
to this labor freedom idea, and it's written by a scholar from 
Sweden who particularly points out that in Sweden, much of the 
unemployment rate that's reported isn't actually accurate and 
that they, indeed, suffer from too much protection and higher 
unemployment rates there.
    I'd quote from him length, but I realize that's in the 
written commentary, so I probably should continue in respect of 
the time that you've given us for questions.
    Let me run then to my two concluding points: Academics have 
been studying labor protectionism and unemployment. One 
particular note is the 1997 summer issue of the ``Journal of 
Economic Perspectives'' where two distinguished economists were 
asked to comment on this situation.
    Horst Siebert emphasized that labor rigidities in Europe 
were clearly driving higher unemployment rates. On the other 
hand, Stephen Nichol took an econmetric view of comparing 
economies, and reported there's no evidence in our data that 
higher labor standards have any impact on unemployment 
whatsoever, I think, in support of the other four witnesses, or 
some of the witnesses here today.
    It's important, though, that Mr. Nichol changed his mind. 
He wrote in 2005--I believe it was in the QJE, the Quarterly 
Journal of Economics--that the data have caught up now and 
economists now are changing their minds.
    There's a consensus view that these rigidities are a 
problem, so, talking about instituting new rigidities and new 
requirements, not just on SAS--I mean, SAS is doing the right 
thing, I think, but to force every company to be like SAS takes 
away that sense of competition.
    The last point I want to make is, what would these new 
labor regulations do to the U.S. economy?
    The premise that the workforce is vulnerable is the first 
problem. Suggestions of anxiety are simply overblown, which is 
the point of the beginning of my testimony.
    A second and related problem, is that many policy solutions 
are defined by government intrusion into an otherwise optimally 
functioning private sector.
    I try to emphasize two rules: One, do no harm. If the 
economy is strong and the labor market is strong, don't intrude 
to try to fix something that isn't broken.
    Second, consider the incentives. Now, we can use a 
sledgehammer on the economy to try to do what we think is 
right, or we can use smart incentives.
    My concern is that we want to reward the good companies out 
there that are doing the right things by women and families, 
but if you institute mandates for paid leave, you might find a 
quiet discrimination against women, especially young women, by 
the bad companies who would then become more competitive and 
more profitable, and you'd force good companies to pay benefits 
and to become less competitive and maybe even drive them out of 
the workforce.
    This can have a negative consequence on the work 
opportunities facing women.
    I'm absolutely with you in spirit. Let's do the right 
thing, but let's think very carefully about the incentives that 
we use and the mandates that Congress places on businesses and 
on the private sector. Thank you very much.
    [The prepared statement of Dr. Kane appears in the 
Submissions for the Record on page 73.]
    Vice Chair Maloney. Thank you for your testimony. We've now 
heard all the opening statements, and we will now proceed with 
questions. We will have a 5-minute time limit, and I hope that 
my colleague, Mr. Saxton, can stay for a second line of 
questioning.
    Let's follow up on Dr. Kane's testimony. I'd like to ask 
Ellen Bravo and Laura Wallace, could you both please comment on 
why work-family policies are good for business?
    In your testimony, Ms. Wallace, I was really surprised by 
your testimony, that SAS saves--saves, not a hinderance, but 
saves $75 million annually, as a result of its Human Resources 
policies. And I would say that this figure is so striking, and 
it's something that other employers need to hear about.
    I'd like to hear your comments on it, and in what ways do 
busineses save money by implementing policies that are friendly 
to employees with children and other family care 
responsibilities. Let's be positive, not as a burden, but how 
does it help grow our economy, grow our jobs, grow our Nation?
    I was struck, Ms. Bravo, by your comment that there was a 
great deal that businesses could do that does not cost money. 
I'm sure that they would like to hear about it, and I would, 
too. So, your answers. Let's start with you, Ms. Wallace, and 
we'll give Ms. Bravo the last word.
    Ms. Wallace. Well, I can speak, even personally, for 
myself. About 5 years ago, my dear darling father had a heart 
attack, and it was unexpected. I live in North Carolina, in 
Chapel Hill, North Carolina; and he lives in Santa Fe, New 
Mexico.
    And there was no question that I was going to choose my 
father at that moment. I don't think anyone in this room would 
make a different choice if they had the opportunity to.
    SAS rallied around me in every possible way. They helped me 
figure out my workload, they helped even with plane 
arrangements, and I was on my way to Santa Fe that afternoon, 
and I was back again in 2 weeks.
    And I'll tell you, my work--I was more dedicated than ever, 
and I'm the Work/Life Manager. I can tell you, other than my 
experieince, that I have seen this happen over and over and 
over again.
    The adoptive family who, after you know, years of 
infertility treatments who adopts a child and gets to stay home 
with that child, when they first bring it home--not just 
mothers, but fathers too--they come back and they're dedicated, 
and guess what? That child is usually on our onsite child care.
    And we have a health care center onsite, where they can 
bring that child. We have an infrastrucure that supports these 
policies, but what we see is bright-faced employees coming back 
ready to work.
    The savings in turnover rate, we aleady went through. The 
recruitment, we just don't have a problem. In fact, we have to 
post our jobs for a shorter time because we get so inundated 
with applications.
    I really encourage people to think about this, and I also 
can talk about low-cost and no-cost work life initiatives all 
day long, because we actually don't spend a whole lot of money 
in our programmatic piece.
    People in the community are always happy to come and do 
presentations and meet with our employees. Our employees are 
completely dedicated to SAS because SAS seems so dedicated to 
them.
    I really encourage you to look at that, whether you're 
working at a 7-11 or you're working at a small law firm. What 
you want is employees who are excited to be there. Those are 
the people who are innovative and creative. They're the ones 
who are going to make----
    Vice Chair Maloney. But your statement that you save $75 
million annually, maybe you could submit it in writing, of how 
in the world did you save $75 million annually by giving leave, 
generous leave practices to people.
    Ms. Bravo.
    Ms. Bravo. Well, I wanted to add that I think we have lots 
of information about turnover costs. Here's another cost that 
we should talk about, and it's what has been called 
``presenteeism'' losses, when people come to work sick and they 
make other people sick and they stay sick longer.
    A Cornell study found that ``presenteeism'' costs 
businesses $180 billion a year in lost productivity. It's more 
expensive than absenteeism.
    There's also, you know, a lot of issues about customer 
satisfaction and customer retention. So I study a lot of these 
in this graduate class I teach.
    For example, FTN, a bank in Tennessee, they found that 
there was a direct correlation between customers returning to 
them and staff remaining on the job, and they could measure 
that the longer staff were there, the higher the retention of 
the customers, because they established relationships.
    This is one of the keys to SAS's retention, is the longer 
that people get to know each other, they trust that staff, and 
it makes them trust the business and want to come back.
    I have to say, though--we know smart employers know this. 
The problem is, we don't write public policy for smart 
employers. They don't need it.
    We write it to guarantee that those who aren't going to do 
it, will do it anyway. That's a proper role of government, to 
say, what are the standards, what's the floor?
    As values change in our country--we have allowed child 
labor for a long time and then at some point we said, we can't 
do this anymore. Race discrimination, gender discrimination, 
there were times when there was a conflict between those values 
and the public rules, the public policies, and we needed to 
change them.
    We're at that point again, where there's a conflict between 
what the workforce looks like and a workplace that was designed 
for men with wives at home full-time, when most workers don't 
have them, much as we may wish we did. Thank you.
    Vice Chair Maloney. Mr. Saxton.
    Representative Saxton. Thank you very much.
    Ms. Brown, I pointed out in my opening statement that your 
study was not intended to be a comparison of the these 
policies' economic effects in various countries.
    Your study, as is pointed out on the first page of your 
study, actually had three goals: One, to describe the policies 
and practices implemented in developed countries that may help 
women, low-wage, low-skilled workers, enter and remain in the 
workforce. That was number one.
    Two, to examine change in the targeted groups' employment 
following the implementation of policies and practices; and 
three, to identify the factors that affect employees' use of 
the workplace.
    So, those were the goals that you set out at the outset, 
and it was not your intent, quite clearly, to compare the 
effect of these policies on the overall economy. Is that a fair 
statement?
    Ms. Brown. That's correct. Our report provides what could 
be considered an inventory of the different types of practices 
and policies that these eight countries that we selected 
implemented in their efforts to try to help families balance 
their work and family commitments.
    It demonstrates the range between the many different 
choices they have, whether it be the percent of pay that 
countries provide for lost wages, or the amount of time that 
people would be able to take off from work, or the way that 
child care policies are implemented.
    But you are correct; it's not a macroeconomic study, and it 
is not an analysis of how these policies would play out, if 
they were implemented in this country.
    Representative Saxton. Thank you for that. I just wanted to 
make sure that we clarified that at the outset.
    I have to tell you about an experience just yesterday. I 
called somone, a male friend, to ask him a question. He happens 
to work in a financial institution, and I had a question about 
something that was going on in finance.
    I called his number and somebody else answered the phone, 
and I asked, where's Joe? He said, he's on maternity leave. I 
thought, how wonderful it is that families can take advantage 
of those kinds of policies that companies have, and in this 
case, it was very good for the family.
    As good as these things are, we still have to look at the 
effects on the economy, and perhaps we'll think about making a 
request that the GAO continue the study to see what the effects 
are.
    Dr. Kane, I have here a list of unemployment rates in 
various countries. In Canada, the data shows that the current 
unemployment rate is about 6.3 percent; in Demark, the study 
shows the unemployement rate is about 3.9 percent; in France, 
the data shows that the unemployment rate is about 9.8 percent; 
in Ireland, 4.3 percent; in the Netherlands, 4.3 percent; in 
New Zealand, 3.8 percent; in Sweden, 7 percent; in the United 
Kingdom, 5.3 percent; and in the United States, about 4.5 
percent.
    You said something in your testimony that I found quite 
interesting in that, at least I got the impression, that you 
were saying that these numbers don't always accurately reflect 
the rate of unemployment in various countries. Can you expand 
on that?
    Dr. Kane. Yes, sir, there are a couple of reasons that 
unemployment rates don't reflect the situation. One is that we 
try to make them comparable across countries, but also being 
unemployed, as everybody understands, can be a sense of shame; 
so a lot of folks will say, well, I'm not in the labor force 
right now, or they will actually get out of the labor force 
because the environment is not good. They'll go to school or 
they'll go abroad for awhile.
    So, it's important to look at countries on a case-by-case 
basis, which I emphasized when we had Johnny Munchammer write 
this chapter in the ``Index of Economic Freedom.'' He's from 
Sweden, and he'll give you that sense that Sweden does many 
things right, but their labor markets, they understand, are too 
rigid.
    The second perspective that I want to emphasize is, there 
is a correlation between unemployment and labor freedom. More 
labor freedom means more employment, lower unemployment rates, 
period, across a wide set of countries.
    But the bigger issue is income per person. When the average 
income per person in the United States is around, say, $35,000, 
and in a comparable European country it would be closer to 
$30,000, you're talking about a working family here; it's 
$70,000 per household and that would be $60,000, if European-
style rigidities were in place.
    And I don't think anybody in the Congress wants to ask 
Americans to take a $10,000-a-year pay cut. And that's part of 
the problem.
    Benefits come, especially mandatory benefits, come at the 
expense of take-home pay. So we can force companies to give 
benefits, but that will just continue to decrease wage growth 
in the United States, and that's not a smart direction for us 
to go in.
    Vice Chair Maloney. Thank you. I want to thank my colleague 
for his comments when he mentioned that this is very much a 
family issue, a male/female issue, and that he would support a 
GAO report that looks at American policies, and I think that 
would be a good followup. I'd love to join him in such a 
request, if you would like to, and move forward with that.
    I agree that they did not look at American policies. I 
wanted them to, but they felt that looking at the foreign ones 
was what should be in this report, so I would like to support 
the gentleman's suggestion and ask the GAO to go forward with 
American policies. I think that could be helpful.
    I'd really like to hear Dr. Gornick's response on the 
growth in the unemployment rate argument and the 
competitiveness, but I would really like to begin with Dr. 
Kane, further, and have Dr. Gornick comment on her third chart 
that she presented which places the United States at the bottom 
of countries offering paid leave, with zero days off of work 
for new mothers.
    I find that embarrassing, that the most properous country 
in the world doesn't do more to support our American families, 
although we make public statements all the time that we support 
them. But if you look at the policies, they're practically 
nonexistent.
    I don't think I've had the opportunity to vote for another 
pro-family bill since the Family and Medical Leave Act, which 
was one of the first bills that I voted for when I came to 
Congress. It was very important to me, as I was terrified of 
losing my job when my children were born and had difficulty 
balancing work and family my whole career.
    But as Dr. Kane has pointed out, there are other critics 
that have said that we can't afford to implement these 
policies, because they're expensive and would hamper U.S. 
growth and lead to unemployement; yet in Ms. Brown's report, 
other countries have managed to implement a variety work-family 
policies, including paid sick days, paid family leave, flexible 
work schedules, while remaining competitive.
    So my question, first to you, Dr. Kane--I'd like Dr. 
Gornick to have the last word--but why can't we do the same and 
remain competitive? Remaining competitive is very important to 
this country.
    We lead the world in so many areas, and we want to continue 
leading the world, but other countries are competitive too and 
provide more flexible family schedules. Quite frankly, now 
they're saying London is extremely competitive to our financial 
markets in certain areas, yet they have a flexible family leave 
schedule and they have many other work-family policies that are 
flexible, yet I would say they're a competitive country.
    Dr. Kane. Yes, ma'am.
    Vice Chair Maloney. In fact, they're beating us in a lot of 
areas. So, you know, your comments on that and then yours, Dr. 
Gornick.
    Dr. Kane. Yes, ma'am, I think that's a wonderful question 
in light of where other countries are competitive. It tends to 
be where they're freer. I mean, in our Index, the U.S. economy 
is 82 percent free, and even though it's a high score, we have 
weaknesses, and I think many people point to the new 
requirements on our financial markets under Sarbanes-Oxley, as 
being so onerous that a lot of the IPO market is, in fact, 
looking for other venues where there's not as much red tape and 
government mandates.
    I think the question of FMLA versus a new proposal is that 
FMLA didn't require the leave to be paid. If you require the 
leave to be paid, well, that's an unfunded mandate on a 
company, and if it were the Congress that were going to say, 
well, we'll pay for the leave, then you're talking about higher 
taxes.
    I think the relationship between----
    Vice Chair Maloney. I believe California paid for it with a 
social insurance program that was the responsibility of the 
employees.
    Dr. Kane. Yes, ma'am. So, I think you could do it with 
higher taxes. The main problem that I have with that would be 
that higher taxes are also correlated with lower 
competitiveness, and you end up driving capital and jobs 
overseas.
    And, instead, if you try to force companies to foot the 
bill, they'll pass that on either to consumers, or they'll pass 
it on to their workers, which is most likely.
    When we've seen benefits rise, total compensation is 
keeping pace with productivity, but take-home pay isn't because 
the benefits are just taking off, and we're talking about a new 
benefit of forcing a company to give a benefit, which, we all 
might agree, is a good one.
    I think the easiest way to think about this is, we could 
reqiure every company to give fresh-squeezed orange juice and 
vitamins to their workers, and they will; but that will cost 
them something, and it will come out of the workers' paycheck.
    I think that if Americans had the choice to have higher pay 
or higher benefits, they would take higher pay and make their 
own choices, and that's what we have traditionally done as a 
free society.
    Vice Chair Maloney. Dr. Gornick.
    Dr. Gornick. Thank you very much, Representative Maloney. 
There's a great deal to say, and Dr. Kane, with due respect, I 
really do disagree with quite a bit of what you've said, and I 
would look forward to an opportunity to sit down for a couple 
of hours with some other economists who would also disagree 
with you.
    This is, of course, a very complicated discussion, but let 
me say a few things: As Dr. Kane has pointed out, the United 
States does have high GDP per capita, and it has high GDP per 
worker.
    I would remind you of the first chart that I put up. I'll 
just hold it up. We're also working--on average, our employees 
are working 20 to 35 percent more hours per year than many of 
these workers in other countries, so I would hope that we would 
have more output per worker.
    He says this is not a good measure, that the output per 
worker hour is not a good measure, but I would argue that it 
is. When we shift to output per worker hour, the United States 
falls to eighth place.
    Why is that an important measure? Because that bears on the 
topic that we're discussing today, which is worker productivity 
and the efficiency of the workplace. I think we're on the 
diminishing returns portion of the hours distribution.
    I also think it's the case--you know, we could push these 
hours up. I can imagine a policy configuration that would push 
American hours up to 2,000 or 2,300 or 2,500. We would, indeed, 
get richer and richer. GDP per capita would rise, rise, rise; 
but God save America's families and our children.
    I don't think output per worker is the right measure. It 
takes no account of the value of time.
    I also disagree on a number of issues about unemployment. 
I'm holding the statistics in front of me, as well.
    There are very few countries in Europe that have 
unemployment rates that are twice the United States--at this 
moment, only the Slovak Repubic and Poland. There are several 
countries in Europe with unemployemnt rates that are lower.
    They vary enormously. Much more importantly, there is 
absolutely no evidence in the economic literature that ties any 
of the policies that we're discussing today to rates of 
unemployment, or to rising rates.
    There is, indeed, a policy story connected to unemployment, 
and it's not these policies. There are issue about wage floors, 
issues about the length of unemployment insurance, about 
disability and so forth. It is not these policies.
    Between 1985 and 2002, while the European economies 
recovered--they have had unemployment problems, there's no 
question, but while these economies recovered and the 
unemployment rates came down, these programs throughout Europe 
grew steadily during those years.
    During those years, new programs were put in place for 
maternity leave, for paternity leave, and child care, and 
expenditures rose in almost every European country.
    The flexible work laws are new. They were put in place in a 
wave in the early 1990s and late 1990s, and again in the early 
2000s, so there is absolutely no economic evidence that 
suggests that these programs that support working families, 
that allow people to combine work and care, there is no 
evidence that these programs are at all the culprit in any of 
the unemployment problems that we've seen in Europe.
    Ms. Bravo. Plus, let's be real about unemployment. My 
husband teaches in the center city of Milwaukee. Go tell his 
kids that the unemployment rate is 4.5 percent. It's 59 percent 
for African American males in the city of Milwaukee.
    You know, there are lots of people who are discouraged 
workers who have not been able to find work, who are not 
counted. It's way under-representative, and particularly for 
certain communities.
    It's a national crime that needs to be addressed.
    Vice Chair Maloney. Thank you. My time has expired.
    Representative Saxton.
    Representative Saxton. I think you're all correct. This is 
a fairly complicated subject when you try to determine what the 
potential impact on the economy, generally might be.
    I was reminded when our former colleague, Connie Morella, 
brought in the folks from the Organization of Economic 
Cooperation and Development. We were talking about 
international economic policies and how it's very difficult to 
get an accurate comparison of what goes in one economy by 
looking at certain segments of the economy, because there are 
so many different measurements that we use to try to get a 
handle on the impact of social programs or family programs.
    Just one example: I pointed out earlier that the 
unemployment rate, as reported in Denmark, is just under 4 
percent. But it's also interesting to point out that 4.5 
percent of the workforce in Denmark is engaged in what are 
sometimes referred to as goverment make-work jobs, subsidized 
jobs, or other government training.
    And so we've got a category of people, 4.5 percent of the 
people in Denmark, where we don't have those programs in the 
United States, or we don't have anywhere near the significant 
number for those programs that Denmark has in the United 
States.
    And so, I think it would be extremely important for any 
study to take all of those kinds of things into consideration.
    Dr. Kane, would you compare labor freedom, as calculated in 
the most recent Index of Economic Freedom, and actual labor 
market performance in terms of employment and real income 
growth in the United States and each of the countries the GAO 
studied over the recent years?
    Dr. Kane. Yes sir, thank you. I wish I had brought a copy 
of the Index with me so I could refer to it, because we go 
through all of this.
    Let me say specifically, to answer your question, the data 
that we've used on labor freedom, in defining this variable, 
comes from the World Bank; so it's not my opinion, it's not my 
staff's opinion at the Heritage Foundation, or the Wall Street 
Journal.
    This is the World Bank's Doing Business Report. It's been a 
runaway success. A lot of economists think it's a real 
breakthrough.
    What they've done is looked at a number of categories and 
labor markets. The easiest way to compare it, though, or to 
think about it, is what they've done also with business 
freedom.
    They ask, how many days does it take to start a new company 
in every country? And this is a real problem.
    For example, in India it's very difficult to start 
companies and to shut down companies. You have to wait months 
to get a license.
    Those same sorts of requirements they look at in labor 
markets, the minimum wage, and another is how difficult is it 
to lay people off.
    In the United States, a dominant feature of the labor 
market is at-will employment, so it's easy to break a contract 
if a company becomes unprofitable, to save the jobs, at least a 
few of the jobs.
    In Europe, it tends to be much more difficult. There are 
mandatory severance pay packages.
    So the principles are consistent across different types of 
labor freedom with what we would call mandated paid family 
leave versus unpaid family leave.
    And the relationship is clear. We found a 20-percent 
correlation between higher labor freedom and lower levels of 
unemployment, so it's not a perfect correlation. It's one of 
many variables, but you can't dismiss it. It's part of the 
literature.
    I think I pointed out that 2005 study by Stephen Nichol. 
Economists are changing their minds because the data is coming 
in and supporting this new view.
    And then again, to the central question, I think that what 
we've come up here to disagree about is the per-hour 
productivity and that the United States is not the leader in 
that. As I pointed out, the U.S. market is freer and it's open 
to new workers; whereas in a lot of European countries, they're 
not open to their new workers.
    Their new workers are going to be less productive, so, of 
course, we'll have a lower productive rate. We're also 
traditionally open in this country to immigrants.
    We all know right now--at least I think I've heard in the 
news, that there's an illegal immigration problem, that there 
are 12 million people here who are undocumented.
    Now, I would argue that those are good for the U.S. 
economy, that they help us specialize, in fact, which could 
increase productivity. But those 12 million immigration workers 
tend to be low-skilled and they tend to be less productive and 
they're going to productivity statistics.
    So if we want to ramp up our productivity, we could just 
keep all the low-skilled workers out of the country and we 
could keep all of the low-skilled workers unemployed and in 
government training programs, to your point.
    But I think, overall, we'd ask for higher wages, higher 
productivity for the people who are working, and higher take-
home pay.
    Representative Saxton. Thank you. Madam Chairlady, I'm 
afraid I'm going to have to leave here to go to another 
commitment. I want to thank each of the witnesses for being 
here with us today.
    I'm doing a personal study that has to do with birth rates 
in various countries. Low birth rates, particularly in Europe 
and Japan, are huge problems, and to the extent we can do 
things to encourage families to have children, a great thing.
    At the same time, as Dr. Kane points out and as I believe 
also, we have to do it within the context of what's good for 
the economy. Thank you.
    Vice Chair Maloney. I thank the gentleman, and I will 
continue questioning. I hope you won't object to my continuing 
to ask questions.
    Representative Saxton. You're the Chairlady.
    Vice Chair Maloney. OK. And I look forward to joining you 
on your idea of the future GAO report, so thank you.
    I'd like to ask Dr. Gornick, the first chart in your 
presentation points out that Americans work longer hours than 
their counterparts in other countries, yet by other indicators, 
we know that Americans are less productive than workers in many 
other industrialized countries.
    And my question is, would enhanced work-family policies 
enable U.S. workers to work less and become more productive, 
and if so, in your opinion, which policies would most directly 
contribute to worker productivity?
    And I'd like everyone to jump in on this second question: 
In your opinion, which are the most common work-family policies 
that exist in other countries, and which of these policies are 
more easily--which of them would be easily adapted to the 
United States, and which policies are the most cost-effective 
as we confront an $9 trillion debt, a record in our country?
    Vice Chair Maloney. So beginning with Dr. Gornick, and 
thank you for preparing these very, very helpful displays.
    Dr. Gornick. I think, to get back to the issue of 
productivity, that it is very complicated. I sort of apologize 
for continually saying that. I think we really need to all take 
a good look at this literature, and I would definitely welcome 
GAO to take this on as their next question--to look at the 
micro- and macroeconomic effects.
    As to productivity across countries, there is a lot of 
contention about the numbers and how this is best measured.
    The argument that Dr. Kane made that the United States is 
less productive than other countries per worker hour because of 
the composition of the labor force has actually been countered 
by a fair amount of empirical evidence that controls for worker 
characteristics.
    So I think I would just return to the point to say that we 
are not at our productivity peak. There are other countries 
that are certainly as productive, or seem to be more productive 
with this whole package of policies in place. These programs 
operate as a whole allowing people to choose between time at 
home and time at work, and so forth.
    Let me just say a few words about the second question that 
you asked. I think that clearly the political economies in 
these European countries are very different than in the United 
States.
    We would never make the case for importing the entire 
social welfare system in any European country to the United 
States. That would be nonsensical politically. But we can look 
at specific programs very fruitfully, and I think the ones we 
are discussing today are exactly the ones that we should be 
looking at because they are exactly relevant to what is on the 
horizon and what is underway at the State level in the United 
States today.
    Consider paid family leave. We have an infrastructure in 
place in five States, now six, for unpaid family leave. We have 
an excellent infrastructure in place already at the national 
level: the FMLA.
    We have a social insurance infrastructure which is FICA. We 
could easily add a social insurance financed wage replacement 
for paid family leave.
    We have the apparatus in place. It is just missing pieces 
like the wage piece which is huge. This is what I spend a lot 
of time doing, holding, you know, really nuts-and-bolts 
discussions to legislators and policy designers about, for 
example, how do you design the benefit level? How to design the 
eligibility? That is where the lessons are.
    I would say the same for child care and pre-K. We have 
rudimentary forms of all of these programs in place. What we 
can learn from Europe are very detailed lessons about 
financing, about quality control, about staffing.
    Likewise, we have the Fair Labor Standard Act. We do 
protect workers' hours. We could add part-time parity, or 
flexible rights to many, many State and national laws.
    So I do not think these comparisons are at all out in outer 
space, as it is often suggested. There are very concrete nuts 
and bolts lessons that we can take tomorrow from many of these 
examples that would apply specifically to the policy areas that 
we are talking about today.
    Vice Chair Maloney. Ms. Bravo. Others who would like to 
comment.
    Ms. Bravo. Sure. I mean, I agree with what Janet said, and 
I want to just add a couple of things. We should remember that 
low-wage workers are not all low-skilled. They are just all low 
paid.
    Take child care workers, for example. Many of these are 
very highly skilled, and yet they earn poverty wages. We can't 
talk about their pay or their productivity as if it is related 
to their skill. It is related to a market that undervalues 
women's work and caregiving.
    So that is one of the things we have to take into account.
    Likewise, the word ``average.'' Whenever I hear ``average'' 
I think: if Bill Gates came into the room, we would all be 
billionaires, if we talked average. But it would not really 
change any of our pocketbooks.
    So the income gap in this country between the very rich and 
everybody else skews that figure, and I think it is important 
to remember that when we are talking about ``per capita 
income.''
    Vice Chair Maloney. Why is the issue of work/family balance 
not a ``woman's issue,'' but a ``parents' issue''? And how can 
we better incorporate men into taking part in the care of 
children? And why is it important to think about this as a 
``parents' issue''?
    Any comment? Maybe Dr. Kane as the male on the panel should 
begin first, with Father's Day approaching. Fathers are very, 
very important. Your comments.
    Dr. Kane. I think there is definitely a distribution of 
parenting in the United States, and I definitely try to be one 
that is there as a soccer coach for my kids, I'm hoping one of 
the good soccer coaches, but I try to think of the government 
policy that made me this way, or that created the many flaws 
that I'm sure my wife would point out.
    I think it comes down to more family than government. But I 
will take you up on your challenge, ma'am if I may, with your 
previous question of what policies to adopt from other 
countries.
    We have not had nearly the conversation here about child 
care that we might have. I find myself in agreement that there 
does seem to be a public good aspect to child care. How we go 
about instituting that in the United States would seem to 
indicate it should definitely be a State prerogative, so maybe 
we should not even discuss it here.
    But I think it gives us an opportunity to listen to the 
children as one of the panelists said. I absolutely agree. What 
I find frustrating though is sometimes children in the United 
States--and I include mine here--get a teacher that maybe is 
not as good, and yet they have no choice to change their 
teacher. They have very little choice to change their school.
    If we do have a child care program--and recognizing the 
public good aspect--I hope it is one where it will emphasize 
vouchers where the children, and the mothers, and the fathers 
are empowered to pick whichever child care program they want, 
not have a one-size-fits-all government: We'll assign you your 
school; we'll assign you your teacher. Americans would reject 
that if it were cars, or T-shirts. It seems bizarre to me how 
we allow the government to give us our education without having 
childhood choice. So that is one.
    I would look for child care around the world of how other 
countries are doing it in a market-oriented way.
    And the second is, I have to say this, Hong Kong does not 
have a minimum wage, and yet they have seen their wages grow 
much faster than Mainland China's over the last 30, 40 years.
    So there is something to be learned from countries that 
have no minimum wage requirements and yet see wage growth that 
accelerates. It is a lesson I think that we still have not 
learned in this country, although I think we are about to have 
a negative experiment with raising it at the Federal level and 
we will see some States have to end up experiencing higher 
unemployment rates, whereas other States will not. So we will 
see a natural experiment play out over the next few years.
    Vice Chair Maloney. Other comments on encouraging fathers 
to be more of the work/family balance? Any comments by anyone?
    Ms. Wallace. I would like to just add, at SAS, maybe 
because we have been doing this for such a long time; our 
culture is such that it tacitly supports fathers as well as 
mothers to do what is needed for their families.
    We see--for example we had 188 Lunch 'N Learn seminars last 
year, a lot of which were parenting seminars. We also do a lot 
around elder care, an issue that certainly is coming up an 
awful lot in work/life balance these days.
    But we find that parents, when we talk about parenting 
programs, we're talking to fathers and mothers. And fathers 
come to our seminars because the culture supports it.
    I think that there is an antiquated idea of still it being 
disproportionately a mother's responsibility, and working 
mothers having the bigger struggle.
    When a child is sick at school--and I used to be a public 
school teacher--we called the mother first. And I really 
encourage everybody to just look, if you are not conscious of 
it, that you may also be contributing to that conversation by 
focusing too much on working mothers.
    If you want to support working mothers, support working 
fathers. Have parenting programs for fathers. Reach out to 
fathers specifically and give them the permission to come to 
these things.
    The very nature of--we have a bricks and mortar commitment 
to working families because we have child care centers onsite. 
We have fathers' activities. We have fathers come pick up their 
children and bring them to lunch. We have seminars that 
specifically focus on fathers and male caregivers, by the way.
    We just try and get that into the vocabulary actively all 
the time to give that overt and tacit permission that fathers 
are part of the equation instead of just focusing so much on 
mothers.
    Vice Chair Maloney. I would like to ask Kay Brown: the U.K. 
Department of Trade said that the right to request law was a 
cost-effective means to help women return to work, and that 
some employers have chosen to extend the right to all 
employees.
    In your report, do you know what percentage of employees is 
granted the request for a flexible schedule and how this 
impacts employers' operations? Is there any record of 
complaints of discrimination from employees regarding having 
made this request?
    Ms. Brown. Can I say one thing about fathers first?
    Vice Chair Maloney. Sure. Absolutely.
    Ms. Brown. I just wanted to mention that in the countries 
that we studied, in addition to providing maternity leave 
benefits, that is, paid maternity leave, ranges from 12 to 52 
weeks in the different countries that we looked at, there was 
also an element in a number of the countries where they had 
leave explicitly reserved for fathers, albeit a lower number, 2 
days in the Netherlands to 2 weeks in Denmark.
    To the extent that those countries have leave targeted to 
fathers, what they found was that in those cases fathers were 
more likely to take that leave.
    In other cases, there is parental leave where the mother or 
the father can make decisions together about what makes sense 
for the family as far as who would take the leave.
    Often in those cases, unless the wage replacement is very 
high, the mother ends up taking more of the leave. But these 
are some interesting little twists of the policies that they 
have implemented that do both allow and encourage the father to 
take a stronger role.
    Vice Chair Maloney. And as you know, the Family and Medical 
Leave Act applies to both men and women.
    Ms. Bravo. Could I just add something to that before you 
come back on the right to request flexibility? In 1995 I was 
able to go to the Fourth World Conference on Women in Beijing--
33,000 people from around the country--and I happened once to 
sit on a bus with a guy from Norway and a guy from Sweden who 
were about to go lead a workshop because that was the year that 
the law switched to what we call ``Use It Or Lose It,'' saying 
to men: Of the 11 or 12 months leave in this country, men must 
take at least 1 month or the family will lose the month.
    And they contended, and they have studied this, that when 
the leave was unpaid, very few men took it and there were not 
many role models. Then the leave was paid. More men took it, 
but still not enough. And now that it was going to be required 
to take at least that leave, they believed the majority, vast 
majority of men would take it, and that it would change their 
relationship to their children, not just in infancy, but 
throughout their lives. And this is what they have continued to 
study and absolutely support.
    Dr. Gornick. I would just like to add to that as well, just 
to clarify Ellen's comment. Of course the leave is not required 
of the fathers, it's just as you mentioned, if it is not taken 
it is lost to the family. That is exactly the way the Family 
and Medical Leave Act is structured, you know, his 12 weeks are 
his.
    Policy supports do matter. They are not the strongest 
determinant. Of course, culture and employer practices are very 
important. But there is a lot of research on this in Europe, 
and we do find that the more paid leave that is available, the 
more that it is targeted specifically to fathers and cannot be 
transferred to their partners, and the higher the pay, the much 
higher the usage.
    Mr. Saxton told the nice story about the father who was on 
``maternity leave;'' I would think he might have called it 
``paternity'' or ``parental,'' I don't know. But only 7 percent 
of fathers have paid leave in this country provided voluntarily 
by their employers.
    The States that provide temporary disability insurance, 
expect for California, including I am afraid, I am sad to say, 
New York, exclude fathers from the benefits. So we have 
policies that exclude fathers.
    In Europe, we do see in some countries a much more even 
division of labor in paid and unpaid work. It is partly because 
of benefits for fathers, and it is also because supports for 
maternal employment are strong. When moms go to work, dads 
pitch in at home. The less moms go to work, the more dads go to 
work.
    So strengthening womens employment also strengthens men's 
opportunity to care for their children.
    Vice Chair Maloney. And now, Ms. Brown, on the right-to-
request law.
    Ms. Brown. Yes. In the United Kingdom, employees were given 
the ability to request changes in either the hour or the 
location of their work. And the intent was to allow them to 
care for children under the age of 6 or for certain adults in 
certain cases. And the employers would have the right to refuse 
this, if this caused great harm to their business, in their 
views.
    What we heard when we were there was that this was 
initially something that concerned the employers, but over time 
it was seen as a cost-effective way to support workers and give 
them some flexibility.
    And that in fact we did hear that in addition to allowing 
employees to care for children under 6, they did expand it to, 
in many cases, allow any of their workers to make these 
requests. And that as far as we know, I have not seen data on 
the actual numbers, but we understand that employers have been 
able to accommodate most of the requests that have been made.
    Vice Chair Maloney. Were there any reports of 
discrimination against employees for making the request?
    Ms. Brown. I am not aware of any.
    Vice Chair Maloney. That is good to hear.
    I would like to ask Ellen Bravo, Dr. Kane suggests that 
mandating paid leave would result in employers discriminating 
against young women.
    First of all, do you think that is true? And could not that 
problem be solved by funding the paid leave through a social 
insurance mechanism such as the California model?
    And also, you mentioned in your comments this morning that 
employers have many options for implementing cost-effective 
policies that give workers more flexibility. Can you give me 
some of those examples of some of those policies?
    Ms. Bravo. Sure. I will start with that, actually. One of 
the most important and cost-free ways of providing flexibility 
is flexible scheduling--letting people vary when they start and 
end their day, what hours they work, letting them take off and 
make up the time if they have an appointment at school, letting 
them swap shifts. I mean, those nurses assistants, that problem 
could have been solved by letting people swap shifts.
    And of course even low-wage workers, as Barbara Ehrenreich 
reminded us, no one is ``unskilled.'' Everybody needs time to 
learn the specifics of the job and get up to speed. So keeping 
people on really does save money.
    On other things, the kind of programs that SAS offers of 
information and referral are often very low-cost and really 
helpful to people to find resources for, for example, elder 
care. Just knowing what community resources exist that can 
prevent a parent from having to go into a nursing home, and 
give, you know, the kind of help and support that so many 
families need when they are dealing with declining health in a 
parent. So there are a lot of those kind of programs.
    One of my favorite programs for dads is the L.A. Department 
of Water and Power. You know, it is like 78 percent male. They 
have a Daddy--they have various ways of supporting men. One of 
them is mentoring; supporting men to be good fathers by having 
other men mentor them.
    Doing what Laura Wallace was talking about, providing a 
culture where this is explicit, as well as tacit approval of 
men doing this. They give beepers to men in the field when 
their wives are expecting. These are often men out reading 
meters, so that they can quickly come back.
    And they give classes on breast feeding to men so that they 
will be most supportive of their wives. Why? Because they found 
that it cuts the health costs for babies when they are breast-
fed. They literally figured out for every dollar they spend 
that they save 2\1/2\ dollars from the combination of things 
that this provides. But they also think it is good to do it 
because they want strong families, and that is a good value to 
support.
    Vice Chair Maloney. Thank you.
    Ms. Bravo. Let me just say, on the discrimination against 
women, first of all, as we all know, there are men who are 
fathers, who are sons, who are husbands, who may very well use 
this time, or who may get hit by a drunk driver and need to 
take time off. So it would be foolhardy of employers to think 
they are saving money by not hiring women because only women 
would use these policies, because they wouldn't.
    Secondly, there is discrimination against young mothers--
let's be honest--and what we need to do is to make it not 
allowed. We need to enforce the laws that exist. And we also 
need to--you know, only Alaska and the District of Columbia 
prohibit discrimination on the basis of family responsibility. 
That is something that should be a nationwide new workplace 
standard.
    Vice Chair Maloney. Dr. Kane, if we were to leave the 
market and businesses to handle this issue, how would we 
address the problem of low-wage workers rarely receiving the 
same benefits received by highly paid workers, despite the fact 
that both kinds of workers have family obligations?
    I think this is a serious question. I have many 
accomplished friends, and I was telling one about a problem 
women confront, and she said,``Well, you know, I was offered 
time off and any arrangement that I wanted and treated 
nicely''--but she is a Pulitzer-winner author. So her company 
is going to let her do anything.
    So I mean the question of the imbalance between a highly 
educated award winning employee and a low-wage worker, both of 
whom have the same responsibilities, and the importance of 
being good parents. Everyone agrees men and women are 
incredibly important to the next generation and are really 
helping to grow the economy and the health of our Nation 
through their children.
    So, Dr. Kane, the discrepancy, the unevenness there?
    Dr. Kane. Yes, ma'am. I think about this all the time, 
actually. Travelling abroad is really--I think everyone who has 
travelled abroad knows when you see some of the poverty that 
still exists in the world, the fact that slavery still exists, 
and trafficking of humans, especially young women, is just 
terrible.
    How do we make a better world? You think, in this same 
context I used to ask my students as a professor: If you went 
back 300 years ago, you would see the difficulties in the 
economic situation then. And how do you fix that?
    After years of thinking about this, and scholars like Jared 
Diamond who wrote Guns, Germs & Steel, when you think about how 
societies change, it is by growing the economy.
    So I have become a bit of a growth purist: What are the 
policies we can get to ramp up productivity, and as you point 
out, for everyone? And the key is: Human capital.
    If there is a failing that we have as a society, it is that 
we have left a lot of our inner city kids behind. They do not 
have the human capital. They do not have the education. The 
fact that they is still an illiteracy problem in the United 
States.
    We have to attack those policies, those education policies 
I think, to really help even the playing field.
    Vice Chair Maloney. But having a fair work/family balance 
would help in all of these areas and help parents be there when 
their children are sick and help parents be there for the 
parent-teacher conferences to help pull up the grades of the 
kids.
    Yet, we have such inflexibility--if your child has a 
doctor's appointment, you cannot go with them and keep your job 
in America, in many cases. In many cases, until we passed laws, 
if you had a child you were fired.
    I remember when I had my child, I called up for what the 
family leave policies were and they said there were no family 
leave policies. People just leave.
    [Laughter.]
    Vice Chair Maloney. And then they said--I'm having a baby--
they told me that I should apply for disability. That is the 
only program out there. And I do not consider a child a 
disability. On principle, I would never apply for disability.
    But I am saying the policies are really not there. You 
speak eloquently about helping the disadvantaged, but we don't 
have a framework in our culture to help the families who want 
to help their children. You know, I was a middle class 
housewife. I could not go to the doctor with my child. I was 
told I would be fired when I had a baby originally.
    So it is very rigid out there. And it is very, very hard 
for most American families. And as a country that touts 
families all the time, we have very little structure there.
    So, you have been very strict about not having flexibility 
in these family structures, but then on the other hand, you 
talk about we've got to help all these people. Well how can you 
help them if the working people cannot go to a doctor's 
appointment? Can't go to a parent-teacher conference? Can't 
stay home if their kid is sick with whooping cough?
    Dr. Kane. I am very sympathetic to what you are saying, 
ma'am, but I just think that mandating the fix and forcing 
companies to adopt certain policies will backfire on us. That 
is my concern.
    I think the minimum wage is another way to think about 
this. I wish everybody in America could make $10 an hour, but I 
think if you force that minimum wage on people you will just 
drive the folks that do not have that value in their per hour 
capacity yet, you drive them out of the work force.
    So I am afraid that is what we do, is we actually hurt the 
people we are trying to help, and that is why I am advising 
against pursuing this.
    Dr. Gornick. Could I speak to this just for a moment?
    Vice Chair Maloney. Could I just have Ms. Wallace answer 
since you come from a company that is able to offer such 
generous family, work/family policies while remaining 
competitive in a truly difficult, tough industry.
    What were the primary obstacles that you faced when 
implementing these policies? And what advice would you give to 
other companies interested in being highly competitive, and 
growing the bottom line, but implementing these family 
policies?
    Ms. Wallace. Well, it is hard not to answer as a former 
Head Start teacher first, but I will answer as a SAS H.R. 
person.
    First of all, we offer our benefits to every single 
employee, including our grounds keepers, our cafeteria workers, 
and our child care workers. They do have the same support 
because we know that they have the same family issues, as you 
mentioned.
    In terms of obstacles, I know we are fortunate in that we 
are privately held, and that we have a CEO that started from 
the beginning walking the walk. I mean, he believed in it. He 
pursued it. And it became not just a nice thing to do; he 
believes that actually his employees are his best asset. And he 
wants us to come back every day.
    And so we didn't face a lot of obstacles, to be honest. I 
think that there are people who have turned their nose up in 
some ways, or said, oh, this utopian environment, you know, 
it's because SAS has such deep pockets, or it's very 
paternalistic.
    And our answer to that is: We have such a low turnover 
rate, no problem recruiting employees, and we have an 
incredibly wonderful product that gets a 98 percent renewal 
rate every year. So I can't----
    Vice Chair Maloney. Well, Dr. Kane raised the point of 
cost-effectiveness. That has got to go to the cost-
effectiveness of a company. We have to look at the bottom line 
of it. And so let me ask the question in a different way.
    If the government were to implement one of the policies 
that you have at SAS, which one would you say is the most cost-
effective for the company and substantially benefits employees?
    I mean, we have to take baby steps. We have not taken a 
step since Family and Medical Leave policies, quite frankly, 
that we passed in 1993. So if you were to recommend one cost 
effective policy that possibly government could hold up as a 
gold standard, as a goal or whatever, which one would you 
recommend that is cost effective that helps the employees and 
helps the company? Is there any one particular one?
    Ms. Wallace. Well, let me see if I can untease----
    Vice Chair Maloney. Then we will go to you, Dr. Gornick. I 
know you want to get into this discussion, and I know you have 
a lot to say.
    Ms. Wallace. If I were to start some place, before even 
policies go into place, I think I would start programmatically. 
I would start to really leverage what is available in the 
community and look at what your employees need and ask them 
what they want.
    In terms of our policies, I would have to say our health 
care benefits are very generous. And our leave policies are 
incredibly generous, as well. In fact, we do pay the FMLA. We 
just do not see it abused. We do not cap our sick time. We 
trust our employees. We look for patterns. If there is any 
abuse, which there is very little, we might have a conversation 
with them. But I would actually look at your sick care 
policies, expanding it to family members.
    Look at creating an infrastructure that really supports 
people. One of our big cost savings is actually people who say: 
If it weren't for our onsite elder care, they would have had to 
take FMLA. So we are saving the company money by having a 
social worker onsite who is a paid full-time employee to help 
people with elder care issues, or our child care, or our 
parenting program.
    So it is hard to kind of tease apart which it is. I think 
possibly our generous health care and our really generous sick 
care would probably be the most cost effective, but it is hard 
to pull it apart because it is so inculcated in our culture. I 
am sorry not to be more specific.
    Vice Chair Maloney. I know, Dr. Gornick, you had some 
comments to make.
    Dr. Gornick. I am glad that Dr. Kane raised the issue of 
poverty because I think it is something in the backdrop that we 
need to think about. So I do want to say a little bit about 
low-wage workers and low-income families.
    You know, when we travel abroad, of course in some 
countries we see a lot of poverty and inequality which is 
stunningly high. Of course, you know many Europeans say that 
when they come to the United States.
    One thing that really makes the United States stand out are 
our exceptionally high rates of child poverty compared to all 
of the countries in Europe. I am looking at a number of 
statistics that I am holding in my hand here that come from the 
Luxembourg Income Study.
    We have very high child poverty. The rates are 5 and 10 
times higher than in a number of countries in Europe. That is 
true if we control for family structure and for employment. I 
am looking at a graph here. If we just look at single-parent 
families headed by employed adults, the poverty rate in the 
United States is 45 percent. In other countries in Europe, it 
is in the 20's. And in half the countries it is in the single 
digits.
    Why is there so much child poverty? A lot of it is because 
we have a wage structure with a lot of low wages at the bottom, 
and we transfer little cash income to families, especially to 
those with children.
    So this is an important issue, and it needs to stay on the 
table. I do appreciate Dr. Kane's interest in other indicators 
like business starts and employment to population ratios and so 
forth, but we really do need to think about poverty and 
inequality which is stunningly high in this country.
    I say that just as a background to another comment----
    Vice Chair Maloney. And growing, the gap.
    Dr. Gornick. And growing, absolutely.
    So, coming back to the question you asked about, the low-
wage workers, much research in this country has shown us a 
stunning and I think embarrassing and really shameful fact, 
which is that the distribution of voluntarily provided employer 
benefits of all the things we are talking about is very, very 
regressive.
    High-skilled, highly educated women, as you have said, we 
get--``we''--get almost everything we want. Low-skilled, or 
less skilled, less-waged workers who tend to be in low-income 
households get much, much less. That has been established, 
whether we are talking about leave, child care benefits, 
flexible work, and so forth.
    I am not saying that is true within companies, but it is 
true across the income distribution. So low-income families get 
an absolute double whammy in this country, or actually a triple 
whammy: low wages, few income transfers, and this voluntary 
market-based system for work/family benefits which leaves them 
out. And it leads us to an extraordinary level of inequity.
    And think about America's children, because we are thinking 
about child care. I know Dr. Kane has mentioned child care, and 
I think I understand his perspective on that. I know Professor 
Heckman and other economists have really come to think more 
about the importance of public investments in children.
    In the market-based system that we have, many, many low-
income children when they are 3 and 4 years old have no 
schooling. Whereas, their high-income counterparts are in 
excellent private preschools.
    In a country like France, every single child is in school. 
Primary school starts at the age of 3, and increasingly 2\1/2\ 
now. So we are really leaving children behind, and low-income 
children are in a really tragic state in this country. And the 
lack of work/family benefits for their parents is a big part of 
the story.
    Ms. Bravo. May I just add one thing about that? One of the 
problems for low-wage families is how many women lose their 
jobs because they have a sick kid.
    So, in addition to the low wages, they have this lack of 
being able to establish tenure on a job and accrue any assets. 
And often those breaks in job retention may lead to eviction 
and all kinds of other disruptions and make it much harder to 
continue child care, et cetera. It really hurts the quality of 
the health, education, and learning abilities of their kids.
    The other thing is, what is really important, even high-
skilled and high-paid women often face the experience of having 
a culture that discourages them from using the things they may 
have.
    The more we create a new rule, the more we say, if we value 
families we cannot have family values end at the workplace 
door; the more we make visible these problems and, for example, 
create a new standard of paid sick days, the more we make it 
possible for those women to say: Wait a minute. Why can't I use 
this time? Why will that be used against me?
    Vice Chair Maloney. Well thank you very much.
    I would just like Ms. Brown to respond. Did you find that 
comprehensive work/family policies enhanced labor force 
participation of women, and in particular low-waged workers? 
What did your report find?
    Ms. Brown. Well, I can specifically address the issue of 
paid leave. Yes, we did find that in general overall paid leave 
does encourage and increase women's participation in the 
workforce.
    However, we did find some differences between low-wage 
workers and higher paid, higher skilled women. When leave is 
unpaid, often women are unable to take the leave, if they're 
low paid.
    If there is a combination of paid and unpaid leave, which 
happens in a number of these countries, it is often that the 
low-wage women would be returning to work at the end of the 
paid leave, whereas more affluent, more highly paid women would 
be able to stay out longer until both the paid and unpaid 
portions of their leave would be expired.
    Vice Chair Maloney. Well, I do want to respond to what Ms. 
Bravo and Dr. Gornick were talking about, investing in early 
childhood education. Just about 3 weeks ago, we had a forum led 
by Nancy Pelosi on investing in early childhood education, and 
it is an initiative that Representative Miller and others are 
working on putting forward in this Congress as a policy. So we 
are working in that area.
    I really want to thank all of you for coming. I think this 
is a tremendously important public policy issue to America.
    Nothing is more important than our children and our 
families, yet from your testimonies today, we hear we are not 
really providing the support and flexibility that American 
families need.
    I want to thank all of you. I have learned a great deal 
from you, and I look forward to working with you in the future 
to advance policies that are cost effective and competitive, 
but also invest in our families and help men and women handle 
and balance family and work. Thank you so much for coming and 
for your work in this area. Thank you very much.
    The meeting is adjourned.
    [Whereupon, at 11:46 a.m., Thursday, June 14, 2007, the 
hearing was adjourned.]
                       Submissions for the Record

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

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  Prepared Statement of Representative Carolyn B. Maloney, Vice Chair
    Good morning. I would like to thank Chairman Schumer, who couldn't 
be here today, for allowing us to hold this hearing on why work-family 
policies from abroad make good economic sense for the United States.
    This is the first of many hearings that the Joint Economic 
Committee will hold as Democrats in Congress work to develop workplace 
standards for the 21st Century that help families balance the competing 
demands of work and family responsibilities.
    Today, we are releasing the findings of a Government Accountability 
Office (GAO) report, entitled ``Women and Low-Skilled Workers: Other 
Countries' Policies and Practices that May Help Them Enter and Remain 
in the Labor Force.'' This report is the third in a series of reports 
that I and several of my colleagues, especially Rep. John Dingell, have 
requested to examine women's contributions to the economy and the 
obstacles that they face in the workplace.
    This new report examines the policies that a number of other 
industrialized countries use to support working families and to foster 
greater labor force attachment for low-skilled workers, particularly 
women.
    The GAO report shows that the United States lags far behind other 
industrialized countries in providing paid leave for care-giving 
responsibilities, support for obtaining quality child care, or allowing 
flexible work schedules.
    The most astonishing and perhaps the most shameful fact is that the 
U.S. is the only industrialized country that does not offer paid leave 
for new parents.
    It's been more than a decade since the Family Medical Leave Act was 
signed into law, granting most workers job protection for unpaid leave 
to care for a new child or seriously ill family member.
    But the reality is that most U.S. workers cannot afford to forgo 
pay for any length of time when care giving needs arise. For most 
American families, it takes two incomes just to make ends meet in the 
face of stagnant wages and high costs for energy, child care, and 
health care.
    That's why I have re-introduced legislation this Congress that 
expands FMLA to smaller firms, provides paid leave, and permits leave 
to be used for parental involvement in their children's school life.
    I hope we can all agree that many of the work-family models we see 
from abroad would benefit U.S. workers and that they are more important 
than ever. What we will explore today is how stronger work-family 
policies in the U.S. would benefit businesses and the economy.
    More and more, businesses are finding that doing right by workers 
is good for the bottom line. SAS, a cutting-edge North Carolina-based 
software company, reports that their work-family policies result in low 
turn-over in a volatile industry, high worker productivity, and an 
estimated $75 million in annual savings as result of making these 
investments in their employees.
    As Dr. Gornick's research shows, many of the countries with strong 
work-family policies also have the highest GDP per-hour-worked and 
unemployment rates that are the same or lower than in the U.S.
    Some will argue that we can't afford these policies. As Ms. Bravo 
will point out, we can hardly afford not to update our policies in 
order to build a 21st Century work force.
    And workplace changes that help families don't have to be costly.
    Perhaps the best example of this is the UK's policy granting 
workers the right to request a flexible schedule. Under this system, 
employers may refuse flexible schedule requests, but only a small 
percentage has been denied. I'm working with Sen. Kennedy on 
legislation that we hope to introduce this summer that would allow this 
sort of flexibility in the U.S.
    Research also shows that other industrialized countries are doing a 
far better job caring for young children. As a follow-up to Speaker 
Pelosi's National Summit on America's Children last month, the 
committee will be addressing the issue of early childhood care and 
education in the U.S. in greater depth at a Joint Economic Committee 
hearing on June 27th.
    If we as a country truly value families, then we need new policies 
and we need to make the kind of investments that other countries have 
already recognized are necessary to support working families.
    I want to thank all of our witnesses for being here today and look 
forward to their testimony.

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Prepared Statement of Dr. Janet Gornick, Professor of Political Science 
 and Sociology, City University of New York Graduate Center, New York, 
                                   NY

                              INTRODUCTION

    Good morning Chairman Schumer, Vice Chair Maloney and members of 
the Committee. I appreciate this opportunity to testify at this timely 
and important hearing to discuss work-family policies in the United 
States.
    I've spent several years studying work-family policies in the U.S., 
relative to those in place in other rich countries. When I say ``work-
family policy'', I'm referring to public policies that help parents--
both mothers and fathers--to balance the competing demands of paid work 
and family care.
    In my brief comments today, I'll draw on findings from several 
collaborative projects. Most of the work that I'll present was reported 
in my 2003 book, Families That Work: Policies for Reconciling 
Parenthood and Employment.
    My co-author--Marcia Meyers--and I began the research for our book 
with a question: ``How well are American working parents and their 
children faring, in comparison to those in other high-income 
countries?'' We compared the U.S. to Canada and 10 countries in western 
and northern Europe.
    Our conclusion was: ``Not all that well''.
    First, American working parents work exceptionally long hours. 
Second, American parents report higher levels of work-family conflict 
than do parents in many other countries. Third, gender equality in 
employment is only fair-to-middling. And, fourth, our children are not 
doing especially well. An exceptionally large share of American 
children lives in poverty. Our children also fare poorly on a number of 
other indicators--ranging from infant and child mortality, to school 
achievement, and adolescent pregnancy.
    Parents in all countries face competing demands on their time. But 
American families struggle more than families elsewhere--in part 
because American public policy offers less help to them than what's 
available for working families in many other countries.
    In my few minutes here today, I'm going to give you some highlights 
from our research about three particularly consequential areas of 
public policy: working time regulations, paid family leave, and child 
care. And I will close with some brief comments that underscore that 
public provision of these programs is consistent with healthy 
macroeconomic outcomes.

                               WORK HOURS

    Let me preface my comments about policy by offering brief a 
snapshot of actual work hours across countries.
    This figure reports average annual hours spent in paid work, in the 
U.S., Japan, Canada, and nine European countries.

[GRAPHIC] [TIFF OMITTED] T7694.026

    As shown here, American workers spend--on average--over 1830 hours 
a year at work. That's about 200 hours more than the Swedes, 300 more 
than the Belgians, and nearly 500 more than our Dutch counterparts. We 
even outwork the famously long-hour-working Japanese.
    And, parents are no exception in this story. While I won't take the 
time to show the numbers now, my research has found that American 
working parents work long hours as well, compared to their counterparts 
in these other countries.

                         WORKING TIME POLICIES

    This figure provides two clues to Americans' long work hours.
    The figure reports standard weekly work hours (the shorter bars)--
that generally refers to the overtime threshold--as well as the minimum 
number of paid days off per year, as required by law (the taller bars).

[GRAPHIC] [TIFF OMITTED] T7694.027

    As the figure shows, the standard work week in these European 
countries is now set in the range of 35 to 39 hours. The U.S. sets a 
40-hour week, as it has for over six decades. In Canada and Japan, the 
normal work-week is also typically 40 hours.
    In addition, the European Union requires that member countries 
guarantee all workers at least four paid weeks off per year--and 
several require more. U.S. national law is entirely silent on paid days 
off.
    Of course, there are other types of public policies that ``matter'' 
as well. For example, a number of European countries provide workers 
with the right to request changes to their work schedules--in order to 
reduce their hours, to alter the timing of those hours, or both.
    Thus, other countries provide shorter full-time hours, a shorter 
work-year, and institutions that raise the quality and availability of 
both part-time work and work with flexible schedules. Together, these 
measures allow many European parents to choose various types of 
reduced-hour work--an option that's limited and economically infeasible 
for a large share of American parents.

                           PAID FAMILY LEAVE

    In addition, all of our comparison countries offer mothers and 
fathers some period of paid leave, in the wake of birth and adoption. 
U.S. national law is silent on paid leave--and access to private 
provisions is limited and uneven.
    This figure reports the total number of weeks of leave available to 
new mothers, multiplied by the percentage of wages replaced.

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    In the Nordic countries and in Canada--the five countries shown on 
the left--new mothers are awarded in the range of 28 to 42 weeks of 
fully paid leave, whereas mothers in continental Europe are typically 
entitled to about 12 to 16 weeks.
    The lack of paid leave in the U.S. forces many parents to choose 
from among a restricted set of options. Many new parents have to choose 
between taking unpaid leave and losing their pay, or remaining at work 
and placing their newborns in child care, essentially from birth.

                   EARLY CHILDHOOD EDUCATION AND CARE

    And, finally, ``the great American time squeeze'' is worsened by 
our meager investments in early childhood education and care.
    This figure reports the percentage of young children--age 1 and 2 
(the shorter bars) and age 3, 4, and 5 (the taller bars)--in publicly 
supported child care.

[GRAPHIC] [TIFF OMITTED] T7694.029

    As the figure indicates, levels of publicly-provided or -subsidized 
care for 1 and 2 year-olds vary widely across Europe. But, in all of 
these countries, the majority of 3-to-5 year-olds are in public 
programs.
    In comparison, in the U.S., 6 percent of the ``under 3's'' are in 
public care and just over half of the ``3-to-5s''--and most of those 
are 5-year olds in kindergarten.
    Most American working parents, instead, buy private care. They pay 
most of the cost out-of-pocket and most children get care that's judged 
by experts to be mediocre in quality.

                               CONCLUSION

    To conclude, generous work-family policies are good for parents, 
children, and worker productivity, and especially benefit lower-income 
workers who tend to have less bargaining power and can't afford to pay 
for help privately. Public systems equalize access and affordability, 
across family types and throughout the income spectrum, leading to 
outcomes that are more equitable than the results we get when we leave 
the provision of these crucial supports to the marketplace.
    In addition, generous work-family policies are compatible with good 
economic outcomes. Consider GDP-per-hour-worked, a powerful indicator 
of productivity. The six top-ranked countries in the world are European 
countries with comprehensive work-family policies. The U.S. is ranked 
eighth.
    Furthermore, the World Economic Forum's Competitiveness Index 
includes, among the top five countries in the world, Denmark, Sweden, 
and Finland--three countries with extensive work-family policies. The 
U.S. is ranked sixth.
    In my view, American public policy is failing our working parents 
and their children. We have much to learn about institutional reform, 
and we'd do well to draw some lessons from the collective experience of 
many of our neighbors across the Atlantic.
                               __________

 Prepared Statement of Ellen Bravo, Professor, University of Wisconsin 
at Wilwaukee; Coordinator, Multi-State Working Families Consortium and 
                       Former Director of 9 to 5

    Thank you, Chairman Schumer, Vice Chair Maloney and members of the 
committee, for the opportunity to testify today.
    These past few months I've been on tour for my new book, Taking on 
the Big Boys, or Why Feminism is Good for Families, Business and the 
Nation. Here are just a few of the people who spoke up at a book event 
or called in to a radio show:
      A bank manager at a prestigious bank--one that always 
lands on best places to work lists--who was demoted for taking 5-minute 
breaks to pump breast milk; company practice does allow cigarette 
breaks.
      A supermarket employee fired for taking a phone call from 
her son who was home alone.
      Certified Nursing Assistants who lost their jobs when 
they could not stay for an unscheduled second shift because they had to 
get home to their kids.
      A TV anchor who sleeps just a few hours a night in order 
to keep her job and spend time with her baby.
      A factory worker who wasn't able to care for his father 
after a heart attack because the worker hadn't been on his job a full 
year and didn't qualify for FMLA.
      A clerical worker who did qualify for FMLA but couldn't 
afford unpaid time off when her mother was dying.
      Engineers who scaled back their hours after a new baby at 
great cost to their pay rate, benefits and career opportunities.
    We hear a lot of talk about family values and personal 
responsibility. And yet, in the United States today, being a good 
family member can cost you your job or career opportunity or health or 
security. Being a conscientious employee can jeopardize a loved one, 
add to the health or learning problems of a dependent child, force an 
aging parent into a nursing home, create a public health hazard.
    My most striking encounter during the tour was with a group of 9 to 
5 members at a briefing of Congressional staff on issues facing low-
wage women. I told them I'm not surprised when teachers say they've 
never seen so many kids coming to school sick because a parent can't 
stay home with them, or when mothers describe guilt for sending an ill 
child to school or day care because of lack of flexibility at work. But 
what had surprised me was learning of kids who drag themselves to 
school sick to keep a parent from losing pay or getting fired.
    With me on the panel that day was Jeannetta Allen, an energetic 18-
year-old with a disability that affects her balance and her speech. 
She'd just testified how lack of paid sick days had cost her mother a 
job.
    ``I'm that child,'' Jeannetta said when I'd finished. ``After my 
mother was fired, I always tried to go to school no matter how I felt. 
I didn't want her to be fired again.''
    A chain reaction started in the audience. One after another, women 
shared when they'd discovered a child going to school with bruised ribs 
or the flu or strep throat because staying home meant Mom could lose 
her job.
    The workforce has changed enormously in the last thirty years, but 
the workplace has not kept pace. Some employers do a terrific job--
you're going to hear from a representative of SAS in a moment, where 
all my graduate H.R. students want to work. That's the good news. 
Everything we need already exists somewhere and it works--for business 
as well as for workers and their families.
    Unfortunately, where workplace policies do exist, they're often at 
the margins and unrelated to how work is organized. One memo announces 
you can work part time, followed by another outlining the benefits 
you'll lose if you reduce your hours. Managers describe the leave 
policy, then scold you for not having more billable hours. Women can 
climb the corporate ladder, provided they're available to meet, move or 
travel at a moment's notice.
    Social class and rank may affect benefits as well. In some 
workplaces, managers have lactation rooms, while assembly line workers 
don't even have breaks. Only 5 percent of employers have onsite child 
care centers--and frontline workers can't always afford the fees. Or 
the center may co-exist with mandatory overtime. Professional women 
like Jane often lose benefits and opportunities when they reduce hours, 
but workers at Wal-Mart and many other places see their hours cut or 
capped without their consent and any health and pension benefits 
disappear altogether. For low-wage workers, ``personal days'' mean the 
ones you don't clock in.
    Deficient employer policies reflect the sorely outmoded public 
policies that set minimum standards for how workers are treated. 
Whenever I speak to groups of women looking for work, they tell stories 
of being asked by recruiters about their future family plans. ``Isn't 
that illegal?'' someone will ask. It is illegal to ask women and not 
men--but in most states, it's not illegal to ask both. Only Alaska and 
the District of Columbia prohibit discrimination based on family care 
responsibility.
    It's easy to forget that until 1978, it was perfectly legal in this 
country to fire someone for being pregnant. Temporary disability plans 
usually excluded pregnancy, which was often lumped with injuries that 
were ``willfully self-inflicted or incurred during the perpetration of 
a high misdemeanor.'' In 1976, the Supreme Court ruled that it was not 
discrimination to treat ``pregnant people'' differently because not all 
women are pregnant. You may not think Congress knows much, but even 
they understood that pregnancy does have something to do with sex. 
After much organizing by grassroots groups, Congress passed the 
Pregnancy Discrimination Act (PDA) that prohibited firing or refusing 
to hire someone for being pregnant.
    But the law has a big loophole: it doesn't require the employer to 
hold the woman's job open when she leaves to give birth. I've never 
understood how that's not tantamount to firing you, but lawyers say 
otherwise. The PDA also requires that employers with temporary 
disability programs include pregnancy along with other short-term 
disabilities. Before then, many did not. However, the majority of women 
didn't then and still don't work for firms which offer temporary 
disability benefits. And pregnant women weren't the only ones needing 
consideration at work.
    Groups then organized to pass the Family and Medical Leave Act, 
which did include a job guarantee and covered men as well as women and 
a broader range of care needs. Employer lobbyists proclaimed that any 
such bill was unnecessary because businesses were already providing 
leave. Turns out most of those employers were simply complying with the 
PDA. Two-thirds had to change their policy after passage of the law--
many to include men, or adoptive parents, or to allow for time to care 
for a seriously ill family member.
    Although it was a critical first step, the FMLA is fairly meager. 
It applies only to firms of 50 or more employees and covers only those 
who work at least 25 hours a week and have been on the job at least a 
year. That leaves out more than two in five private sector workers. The 
narrow definition of family means those who need time to care for 
domestic partners or siblings or in-laws or other relatives may be out 
of luck. And the fact that the FMLA is unpaid renders it moot for large 
numbers of workers.
    The FMLA has another enormous limitation: it applies only to 
serious illness. Fortunately, most kids don't get leukemia but they do 
all get stomach flus and colds and a host of other ailments not covered 
by this law. Not to worry, proclaim the business lobbyists--workers can 
use their sick days for that. But half the workforce--and three-fourths 
of low-wage workers, five-sixths of part-time workers--don't have any 
paid sick days to use. They face the loss not only of a day's pay, but 
of their job. Many who do have paid sick days aren't allowed to use it 
to care for a sick family member.
    Thanks to the lopsided share of family caregiving that falls to 
women, the biological demands of pregnancy, and the still-prevalent 
gender stereotyping in the workplace, women are disproportionately 
harmed by these outmoded systems. But males feel the fallout as well. 
Many more men would be better fathers, sons and husbands if they 
weren't punished for it at work. Low-wage men have little or no wiggle 
room. Men in managerial or professional jobs are expected to be fathers 
and patted on the back for leaving early occasionally to take in a 
kid's soccer game--unless they begin to act too much like mothers, in 
which case their pay and promotions begin to dip.
    In reality, everyone needs time to care. Even those who aren't 
parents have parents. Others have partners who may need care. And 
everyone faces the prospect of needing time themselves to heal from an 
illness or injury.
    Employers can do a lot by implementing effective practices, many of 
which cost little or nothing and all of which strengthen the bottom 
line. These include flexible scheduling--allowing employees to take a 
parent for a checkup or attend a child's school play and make up the 
time, to stagger start and end times to accommodate child care hours or 
commuter traffic, and to swap shifts with co-workers. Any overtime or 
shift changes should be voluntary. Employees should have paid time off 
for routine illness in addition to accommodation for more demanding 
events like a new child or a seriously ill family member. The 
guarantees and time period of the FMLA should be the minimum employers 
adopt. Employers should also offer quality part-time options--reduced 
hours with at least pro-rated benefits, equitable hourly rates, and 
equal access to training and promotional opportunities. That could mean 
employees working a shorter week, sharing a job with someone else, 
gradually increasing hours after returning from leave, or gradually 
cutting hours when phasing into retirement. Policies should be formal 
and open to all employees.
    What workers want is recognition that life doesn't begin and end at 
the work site. Even employers who can't afford to set up an onsite 
child care center can link employees with local referral agencies. 
Those with more resources can provide subsidies for dependent care, 
elders as well as young children, or help increase the supply of 
quality care. Innovative employers have also come up with short-term, 
no-interest loans to help employees stay employed when hit with 
unexpected expenses.
    How successful such policies are depends on corporate culture. As 
Barbara Wankoff from KPMG noted, employers can offer all kinds of 
programs and policies, ``but it's the message that leadership sends 
with those policies that really dictates how they're used.'' Above all, 
we need a sea change in how employers measure success, advancing people 
based on work quality rather than face time.
    As I said, successful policies exist in many places. Research 
reminds us over and over that workers who feel respected as whole 
people return the favor by improved loyalty and performance. Costs for 
family friendly benefits pale besides the price tag for employee 
turnover. Deloitte and Touche, for instance, claims to have saved $41.5 
million in turnover costs as a result of family flexible policies. 
Expenses per employee are less when low-wage workers leave the job, but 
the overall costs remain significant because of the high rate of 
turnover.
    Retention isn't the only benefit. In a study of 28 leading 
corporations that have implemented flexible schedules, employers find 
positive effects of these work arrangements on employee commitment, 
employee satisfaction, productivity, cycle time, customer commitment, 
and response time.
    What is seldom discussed are the costs of not acting to change our 
outdated workplace rules. Success stories like SAS do move other 
employers to action. But expecting all business owners to follow suit 
is like thinking 2-year-olds can decide when they need a time out. We 
need to guarantee a reasonable floor for all workers, and that means 
public policy changes. These include guarantees of paid sick days, 
accessible and affordable family leave paid for by the shared risk of a 
social insurance fund, equity for part-time workers, and quality, 
affordable dependent care. It also means a reasonable work week with no 
mandatory overtime. Such policies will work only with a meaningful wage 
floor: money is a work-life issue.
    I coordinate a network of state coalitions working to expand paid 
leave and other family flexible options. These groups are made up of 
diverse allies from the AARP to the ACLU--grassroots groups fighting 
for kids, economic justice, worker rights and aging populations, 
alongside progressive employers, teachers and school principals, 
interfaith councils and disability activists. The network, known as the 
Multi-States Working Families Consortium, is a new model of 
collaboration, where groups raise funds together and share them 
equally. They also share strategies, materials, and organizing tips.
    Each of these groups and many others are winning changes at the 
state and local level, as well as working together for new Federal 
policies. In 2004, a state coalition in California successfully won 
expansion of its Temporary Disability Insurance program to cover leave 
for other family care purposes. Groups in New York and New Jersey, two 
other states with TDI funds, are working to do the same. Washington 
just became the first state without TDI to grant wage replacement for 
new parents. Massachusetts and Illinois are looking for ways to do the 
same for all forms of family leave. A number of states have bills 
pending to expand access to FMLA or to allow its use for routine school 
and medical appointments. Last November San Francisco passed the first 
citywide ordinance to guarantee a minimum number of paid sick days to 
all employees. Groups from Maine to Montana are introducing similar 
measures in city councils and state legislatures.
    Together such coalitions are laying the basis for a family friendly 
future and building the power to make it happen. Their successes should 
spur action on the Federal level, badly needed to guarantee a level 
playing field throughout the country. The changes we seek aren't a 
favor for women, but a better way of doing business and valuing 
families.
    When we were trying to win a state FMLA bill in Wisconsin, we took 
a group of children to meet with the Secretary of Employment Relations. 
They represented the broad range of reasons why we need time to care--
childhood cancer, adoption, sick grandparent or sibling, disability, 
car accident. The Secretary was clearly moved by their stories. ``We're 
so used to hearing from lobbyists,'' he said, ``we forget about the 
people who are affected by the bills we pass.'' I urge you to listen 
instead to the children.
    Thank you very much.
                               __________

 Prepared Statement of Laura Kellison Wallace, Manager, SAS Work/Life 
                           Programs, Cary, NC

    Good morning Chairman Schumer, Vice Chair Maloney, and Members of 
the Committee. My name is Laura Kellison Wallace, Manager of the SAS 
Work/Life and EAP Programs. I send greetings and regrets on behalf of 
Jeff Chambers, our Vice President of Human Resources that he was unable 
to appear before you this morning.
    Before I get into my statement, I thought I might give you some 
context of my background. I am a New Yorker by birth and spent most of 
my childhood between Manhattan and Brattleboro, Vermont. I graduated 
from Smith College in 1987 with a major in children's Psychology. I 
received my Master's degree in Social Work from UNC-Chapel Hill in 
1995. I have almost 20 years of experience working with families and 
children in several capacities including as both a Head Start teacher 
and in-home research associate; as a Director of an Early Childhood 
Education AmeriCorps Program for 3 years, and with many years of direct 
practice experience with families with special needs; court mandates 
and high-risk behaviors.
    For the last 9 years, I have worked in the Work-Life/Work-Family 
field in a university and then corporate setting. Before SAS, I was the 
Work/Family Program Manager at UNC-Chapel Hill and, as I mentioned, I 
am now the Manager of Work/Life & EAP Programs at SAS Institute.
    I came to SAS almost 8 years ago and was immediately charged with 
responsibility for work/life programs. I found myself working for a 
company that provides its employees with a unique environment which 
fosters creativity and ingenuity. It was because of this environment 
that I was able to expand and enhance the scope of SAS Work/Life and, 
ultimately, Employee Assistance Program (EAP) resources and programs 
for employees and families. I am proud and pleased to work for a 
company that walks the walk of ``family friendly,'' and it is my hope 
that my remarks today will contribute to a much-needed paradigm shift 
from family friendly policies and programs as ``perks'' to the very 
concrete reality that said perks increase innovation and productivity, 
lower turn-over rates, directly and positively impact recruitment and 
retention. In other words, family friendly companies make good business 
sense.
    In order to understand how family friendly policies make good 
business sense at SAS, I think it is important to understand a little 
bit about its history. SAS was founded in 1976 by Dr. James Goodnight 
and John Sall, two statistics professors from North Carolina State 
University, from a grant from the US Department of Agriculture to 
analyze agriculture data. That first year, the company generated 
$138,000 in revenue, with 5 employees. The first office was a rented 
space across street from NC State. By 1997, the company had moved from 
downtown Raleigh, to Cary. It had 5,000 employees worldwide, and was 
fast approaching the $1 billion sales mark.
    Today, after 31 years in business, SAS is the largest, privately 
held software company in the world, with roughly $2 billion in 
revenues. We have approximately 40,000 customers and an annual software 
renewal rate of about 98 percent. SAS employs 10,000 people worldwide, 
with offices in 112 countries. Approximately 4,000 of our employees are 
located at our Cary, North Carolina global headquarters. Another 1,200 
are spread throughout the United States, with larger offices in 
Massachusetts, Texas, and Maryland, including one on Seventh Avenue in 
New York City. Each regional office provides employees with an 
environment designed to foster creativity and ingenuity, and to 
replicate as much as possible the environment and benefits provided in 
Cary. Employees enjoy break rooms stocked with crackers, assorted nuts 
and M&Ms, as well as coffee, tea, and soft drinks, at no charge. It is 
not uncommon to see children who are visiting their parents enjoying 
these goodies in the break room. In fact, SAS is the largest individual 
purchaser of M&Ms today, purchasing in excess of 23 tons annually.
    Before Dr. Goodnight founded SAS, he worked for a brief stint at 
NASA. The story is that before starting SAS, he worked for a time at 
NASA. He is fairly candid about not caring for the experience. 
Executives were treated differently than other employees--having their 
own break and dining areas and free coffee while ``rank and file'' 
employees had to pay a quarter for vending machine coffee. Executives 
had designated parking spaces; ``regular'' employees did not. In terms 
of workspace, NASA employees were lined up in impersonal cubicles with 
an absence of personality and privacy. That experience left a last and 
strong impression on Dr. Goodnight, who set about creating a very 
different environment for SAS--one that is both friendly to all 
employees regardless of position and that fosters innovation and 
effectiveness.
    Employee-friendly benefits are a hallmark of Dr. Goodnight's 
philosophy at SAS: ``If you treat employees as if they make a 
difference to the company, they will make a difference to the 
company.'' SAS' founders set out to create the kind of workplace where 
they and their employees would enjoy spending time. Even though the 
workforce continues to grow each year, it is still the kind of place 
where people enjoy working, whether at the Cary campus, or in the New 
York Office. The underlying theory, happy employees drive happy 
customers, seems to be a winning formula. SAS has been profitable every 
year; the company continues to enjoy healthy revenues, and its employee 
turnover rate hovers around 3-4 percent, compared to a national 
turnover average of around 20 percent. This statistic is particularly 
telling about how employee satisfaction at SAS drives profitability. 
The savings in reduced employee turnover, recruitment, and retention 
costs has been estimated to be on the magnitude of $60 to $80 million 
annually, according to Jeffrey Pfeffer, a business professor at 
Stanford University.
    Besides smart business, the benefits that have been developed are 
also the result of common sense. For example, SAS arranged for day care 
services in the basement of its original building because one of the 
employees needed day care for her young children. From the company's 
perspective, it could not afford to lose this employee and to expend 
time, energy and effort to replace her. The pragmatic solution was to 
offer the day care service.
    SAS' success as the industry leader in business intelligence 
software is the result of the marriage of two complimentary strategies: 
(1) hiring smart and creative people; coupled with (2) placing them in 
an environment that fosters creativity and loyalty. At SAS employees 
enjoy what could be considered ``soft'' and ``hard'' benefits.
    One way that the company fosters creativity and loyalty is by 
having a support team on place that can help SAS employees deal with 
common, every day problems. For example, we have specialists on staff 
that can do the leg work to research elder care or assisted living 
programs on behalf of employees. By offering these services, which I 
have described in more detail below, we help to eliminate some of the 
real-life distractions that can preoccupy employees and prevent them 
from being creative, innovative and productive.
    ``Soft'' benefits at SAS refers to those practices that we consider 
a best ``outcome'' for our employees. A flexible work environment is 
one such soft benefit. Employees are encouraged to balance their work 
life with their personal lives. We actively promote the concept of a 
35-hour work week for employees. And we actively promote the concept 
that we want our employees to work hard at work, but to devote equal 
amounts of energy to other parts of their lives. For example, it is not 
uncommon for employees to be told to leave to be able to experience 
important episodes with their children, such as school plays, 
tournaments, and graduations. They are not required to take special 
time off to do these things, if they happen to fall within the 
traditional 8-hour work day. All we ask is that employees work out 
their arrangements with their managers to ensure that we have the 
coverage and assistance in place when SAS is open and it is needed. SAS 
is open from 7 in the morning to 6 at night, but beyond that, we 
generally do not worry whether an employee works 9-5, 7-3, 10-6 or some 
other combination, as long as it has been worked out in advance with 
management.
    That philosophy, working it out with management, really underlies 
much of what happens at SAS. We do not have a large portfolio of formal 
written policies. We operate on the trust principle, and have tried 
over our history to build and develop a culture that inculcates trust 
in and for our workforce. To date, we have had very little reason to 
think that our policies have been abused, requiring the ``letter and 
the spirit'' of the law to be written out. Rather than a naive way of 
operating, what SAS has are strategies that are part of a deliberate, 
dynamic attraction and retention philosophy. Besides trust, SAS' 
philosophy is founded on:
      Informed and inclusive decisionmaking;
      Targeted services and policies that recognize employees' 
diverse needs and life stages; and
      That the best outcomes for SAS do not translate to ``one 
size fits all'' policies; popular and trendy are not drivers.
    As a company, SAS has been internationally recognized for its 
employment practices and beliefs. SAS has been in the Fortune top 50 
places to work for 10 years, since the list first came into existence. 
SAS was again awarded this distinction in 2006 and most important to 
us, our work/life practices came in at number 9 on the survey. Our 
European offices were ranked within the top 10 places to work.
    SAS compliments the ``soft benefits'' it provides to employees with 
other important ``brick and mortar'' innovations or ``hard benefits'' 
that are both intended to inspire employees, and to reduce distractions 
that may hurt morale and productivity. The Human Resources Division 
administers these hard benefits through three program areas: Employee 
Family Solutions, On-Site Health Care Centers and Recreation and 
Fitness.
    The Employee and Family Solutions program employs 125 regular full-
time employees and offers benefits ranging from child care, day camps, 
work life programs and employee assistance programs. Employee and 
Family Solutions provides day care to over 1,000 children of employees 
at a heavily subsidized cost. Additional benefits offered to SAS 
employees include programs addressing onsite Elder-Care, Teen/College, 
Special Needs, Adoption, Mature Workforce, Financial Planning, Divorce 
& Separation, and Prenatal Care.
    The Health Care Center employs 55 regular full time employees 
including 4 doctors and 10 nurse practitioners and provides medical 
care, prevention and screening, education and wellness and specialized 
care (e.g., physical therapy, nutrition and counseling). Employee 
health care benefits are provided at no cost and family coverage, no 
matter how large the family, are capped at $150.00 per month. Employees 
are not limited to the Health Care Center. SAS offers an additional 
coverage option that allows employees to use outside health care 
providers. Employees in regional offices can use the physician of their 
choice or participate in a health care network. Although it is not an 
option in the regional offices, when those employees do visit the SAS 
campus, they can use the Health Care Center. SAS estimates that a 
``typical'' visit to an outside physician or service would average 
about 2 hours. For employees visiting the SAS Health Care Center, the 
fact that this visit takes only 20 minutes represents significant 
savings to them in terms of reduced stress and hassle, and loss 
productivity. It also represents significant savings to SAS in terms of 
enhanced employee productivity, a savings that we estimate is in the 
millions of dollars annually, far outweighing the costs to offer and 
maintain the center and the employees.
    The Recreation and Fitness Center (``RFC''), the third program 
offered by SAS, encourages a healthy lifestyle by incenting employees 
to participate in physical activities. The Cary campus boasts a 77,000 
square-foot, onsite recreation and fitness facility, which includes a 
9,000 square foot natatorium. Twenty full-time staff are employed at 
the RFC. The RFC sponsors a variety of leagues and coordinated 
activities (including ultimate Frisbee!), classes (such as aerobics), 
running and biking groups, and wellness services (such as personal 
training, massage, and yoga), and certain onsite services (notably, the 
hair salon and UPS shipping). The RFC is available to all SAS employees 
and adult family members at no cost to the employee. For all SAS 
employees not in Cary, SAS will cover the reasonable costs of a health 
club membership, including the initiation fee.
    Other benefits offered to help employees with work/life balance 
that also contribute to SAS' formula for success include onsite 
subsidized cafeterias, car detailing, and a vendor discount center.
    SAS policies also play a key role in creating the work life 
environment for which it is know. SAS policies include:
      Paid sick leave, which we do not cap;
      Short term disability leave for up to 6 months;
      Long term disability coverage;
      Access to long-term care at discounted rates;
      Three weeks paid vacation for all employees, with an 
additional week for employees who have been with SAS for at least 10 
years;
      Paid holidays, with an additional week off between 
Christmas and New Year's day;
      Paid Family Medical Leave Act time--which includes 
absences for childbirth, absences for adoption, and paternity leave for 
fathers and domestic partners;
      Fully paid employee health insurance, also available for 
dependents and domestic partners with a cap of $150/month;
      A 401(k) program, with an employer match;
      Retiree health care; and
      Annual merit salary increases; and
      A profit-sharing retirement plan.
    The profit sharing plan is an interesting program in that it 
provides a bonus to employees' retirement plans. The plan itself is 
offered at the discretion of the company and is entirely dependent on 
the profitability of the company. However, the company has always 
declared a profit-sharing contribution, and it has typically been equal 
to 10 percent of the company's profits for that year. In practice, this 
works out to a contribution to each employee's retirement account equal 
to 10 percent of that employee's salary. The magic is that by investing 
it in the retirement account, the employee is not taxed on that money 
immediately, there is a corpus of funds that are allowed to grow tax 
free over time, and the employee is helped, encouraged, and enabled to 
think about and plan for retirement.
    For SAS, the reason to be proactive and concerned about benefits is 
because it is simply good business. Our bottom line savings from 
investing in our people has been estimated to be $75 million annually. 
In turn, those savings help improve our profitability as a company. 
Just as important, people represent the company's principal and 
certainly most important ``asset''. We simply cannot function in any 
respect without human resources. As Dr. Goodnight is fond of saying, 
``95 percent of the company's assets leave the campus at 5 and it's my 
job to make sure they come back in the morning.'' Benefits, practices, 
and policies play a critical role in not only the ability to make sure 
our people come back every day, but to enable us to compete in what 
regrettably has become a shrinking talent pool. Our policies are 
critical to our ability to retain our talent, and given that our 
schools are falling behind in their ability to graduate scientists, 
engineers, technologists, and mathematicians, it becomes increasingly 
important for us to hold on to our precious talent. For us, it is far 
costlier to replace our personnel than it is to simply provide good and 
relevant benefits in the first place.
    At the end of the day, treating employees well is not just about 
good business. It is about good common sense.
    We thank you for this opportunity to appear today and to discuss 
SAS' philosophies and strategies. I am happy to answer any questions 
you may have.
                               __________

Prepared Statement of Dr. Tim Kane, Director, Center for International 
      Trade and Economics, The Heritage Foundation, Washington, DC

    Chairman Schumer, Representative Maloney, Senator Bennett, and 
other distinguished members of the Committee, I appreciate the 
opportunity to testify before the Joint Economic Committee today on the 
subject of Importing Success: Why Work-Family Policies from Abroad Make 
Economic Sense for the U.S. As a former staff economist for the JEC, 
this homecoming is a special honor.
    In my testimony, I would like to: (1) describe the nature of the 
challenge facing Congress in the context of the booming U.S. economy in 
recent years; (2) offer a set of principles for both enhancing our 
economy generally and labor economy specifically under the framework of 
economic freedom and (3) suggest that Congress should not use the 
conventional European approach to labor markets unless it also wishes 
to invite European levels of unemployment which occur at roughly twice 
the rate as in the United States.
            the nature of american prosperity in this decade
    As obvious is this may seem, every analysis of economic policy at 
the Federal level in the United States must begin with recognition of 
the comprehensive, record-setting strength of the national economy. By 
almost every indicator, the American economy is prosperous, but 
especially so in comparison to other advanced economies.
      There are More Working Americans than Ever Before. In the 
latest Employment Situation report from the Labor Department, it is 
reported that there are 152.8 million Americans in the labor force, and 
145.9 million employed. These are just shy off all-time records set in 
the last few months.
      8 million payroll jobs in 4 years. I try to remind myself 
given all the gloom in the media that during a 4-year span, job growth 
in America has averaged 167,000 every month. That's 5559 jobs added to 
U.S. payrolls every day, or 232 jobs per hour, or a new job every 16 
seconds for 4 straight years.
      Extraordinarily Low Unemployment. The rate of 
unemployment is just 4.5 percent nationally. In most introductory 
economics courses, this is considered a rate that is below the natural 
rate of unemployment, and a sign of possible overheating. By any 
measure, it is a low rate, far below the average of the 1990s, which 
itself was a healthy decade economically.
      Growth in Output and Productivity. The positive growth 
rates in GDP every quarter since the attacks of 9/11 are a very 
powerful symbol of the resilience of the American economy. Despite the 
recent slowdown in Q1's preliminary growth estimate, the critical fact 
is that the economy is still expanding in a positive direction with 
many signals that this growth will continue and even accelerate. But a 
more important measure, as you know, is the high GDP per capita 
Americans enjoy. By comparison, U.S. GDP per capita is 20 percent 
higher than income levels in nearly every other country in the world, 
particularly the advanced industrial economies of Europe, as well as 
Japan.

            ECONOMIC FREEDOM AND THE INSTITUTIONS OF GROWTH

    I find that the most useful framework for approaching fiscal 
economic policy is not is traditionally known as macroeconomics, but 
instead growth economics, particularly the renewed consensus among 
economists that institutions are the key to overall performance. This 
idea is captured well by Stephen Parente and Ed Prescott's line of 
research ``Barriers to Riches'' which is also the title of their book. 
It is also the approach we use in the Heritage Foundation/Wall Street 
Journal Index of Economic Freedom--a systematic, empirical measurement 
of economic freedom in countries throughout the world. As the director 
of the team that assembles the Index, I should mention that we make all 
the material, country scores, and even raw data available for free on 
the Internet at www.heritage.org/Index.
    Economic theory dating back to the publication of Adam Smith's The 
Wealth of Nations in 1776 emphasizes the lesson that basic institutions 
that protect the liberty of individuals to pursue their own economic 
interests result in greater prosperity for the larger society. Modern 
scholars of political economy are rediscovering the centrality of 
``free institutions'' as fundamental ingredients for rapid long-term 
growth. The objective of the Index is to catalog those economic 
institutions in a quantitative and rigorous manner.
    The 2007 Index of Economic Freedom measures 157 countries across 10 
specific factors of economic freedom, which include:
      Business Freedom
      Trade Freedom
      Fiscal Freedom
      Freedom from Government
      Monetary Freedom
      Investment Freedom
      Financial Freedom
      Property Rights
      Freedom from Corruption
      Labor Freedom
    The methodology for measuring economic freedom is significantly 
upgraded. The new methodology uses a scale of 0-100 rather than the 1-5 
brackets of previous years when assessing the 10 component economic 
freedoms, which means that the new overall scores are more refined and 
therefore more accurate. Second, a new labor freedom factor has been 
added, and entrepreneurship is being emphasized in the business freedom 
factor. Both of these new categories are based on data that became 
available from the World Bank only after 2004.
    The methodology has been vetted and endorsed by a new academic 
advisory board and should better reflect the details of each country's 
economic policies. In order to compare country performances from past 
years accurately, scores and rankings for all previous years dating 
back to 1995 have been adjusted to reflect the new methodology.
    Economic freedom is strongly related to good economic performance. 
The world's freest countries have twice the average income of the 
second quintile of countries and over five times the average income of 
the fifth quintile of countries. The freest economies also have lower 
rates of unemployment and lower inflation. These relationships hold 
across each quintile, meaning that every quintile of less free 
economies has worse average rates of inflation and unemployment than 
the preceding quintile has.
    Of the 157 countries graded numerically in the 2007 Index, only 
seven have very high freedom scores of 80 percent or more, making them 
what we categorize as ``free'' economies. Another 23 are in the 70 
percent range, placing them in the ``mostly free'' category. This means 
that less than one-fifth of all countries have economic freedom scores 
higher than 70 percent. The bulk of countries--107 economies--have 
freedom scores of 50 percent-70 percent. Half are ``somewhat free'' 
(scores of 60 percent-70 percent), and half are ``mostly unfree'' 
(scores of 50 percent-60 percent). Only 20 countries have ``repressed 
economies'' with scores below 50 percent.
    The typical country has an economy that is 60.6 percent free, down 
slightly from 60.9 percent in 2006. These are the highest scores ever 
recorded in the Index, so the overall trend continues to be positive. 
Among specific economies during the past year, the scores of 65 
countries are now higher, and the scores of 92 countries are worse.
    The variation in freedom among all of these countries declined 
again for the sixth year in a row, and the standard deviation among 
scores now stands at 11.4, down one-tenth of a percentage point from 
last year and down two full points since 1996.
    There is a clear relationship between economic freedom and numerous 
other cross-country variables, the most prominent being the strong 
relationship between the level of freedom and the level of prosperity 
in a given country. Previous editions of the Index have confirmed the 
tangible benefits of living in freer societies. Not only is a higher 
level of economic freedom clearly associated with a higher level of per 
capita gross domestic product, but those higher GDP growth rates seem 
to create a virtuous cycle, triggering further improvements in economic 
freedom. This can most clearly be understood with the observation that 
a ten point increase in economic freedom corresponds to a doubling of 
income per capita.
    The reason that I am devoting so much of my testimony to the topic 
of economic freedom is because I hope to impress the centrality of 
internally generated policy change as the key to development. To be 
blunt, countries control their own fate, including the U.S.
    In the 2007 edition of the Index, one chapter is dedicated to a 
cross-country study of labor regulations, which is the issue of 
interest in this hearing today. It was written by Johnny Munkhammer, an 
economist from Sweden who has a unique and invaluable perspective. Here 
is an extended quote from Munkhammer's chapter, ``The Urgent Need for 
Labor Freedom in Europe and the World,''

          For several weeks during the autumn of 2005, riots raged in 
        the streets of Paris. Every night, hundreds of cars were 
        burned, shops were vandalized, and violence ruled. French 
        President Jacques Chirac concluded that his nation was 
        suffering from a profound ``malaise,'' a word that indeed 
        captures the reality of economic and social problems in many 
        European countries. After centuries of economic leadership, 
        Europe must now face the truth that its governing 
        institutions--especially its labor markets--are deeply flawed. 
        Those who finally took to the streets, native and immigrant 
        citizens alike, were severely affected by unemployment.
          France may be the most stubborn defender of the so-called 
        European social model, characterized by vast government 
        intervention in the economy, but many other governments in 
        Western Europe are committed to the same philosophy. Presidents 
        and prime ministers devote speeches to nostalgic messages and 
        promise to maintain and protect the existing social model. 
        Their rhetoric translates into policies that are a new kind of 
        protectionism for traditional jobs, a protectionism that is 
        reflected in the widespread official resistance to a single 
        European Union (EU) market in services, disapprovals of 
        business mergers, and an anxious debate about the ``Polish 
        plumber'' representing free flows of labor within the EU.
          We Europeans are clearly at a crossroads. Either we look to 
        the future and learn from successful market-oriented reforms, 
        or we look back to the past and continue trying to shield old 
        occupations from international economics. It is a choice 
        between openness and protectionism, between modernization and 
        nostalgia--indeed, between government intervention and freedom 
        itself. The problems of Europe are not born overseas, but are 
        innate to the process of internal economic development and 
        change. That is why a tighter adherence to a failing model will 
        only exacerbate current problems and lead to more unrest in 
        European cities. Rioting and decline is a destiny that no 
        European wants to face.
          Yet there is reason for optimism. Never before have so many 
        countries been so deeply involved in the global economy, and 
        the benefits of globalization--economic growth, employment, and 
        competition--are ever clearer. Never before have so many 
        countries made successful free-market reforms, which is an 
        inspiration for others. Almost all European countries can point 
        to at least one successful reform, and as we copy each other's 
        successes, the future should rapidly become much brighter.
          In my view, of all the areas that are still in need of 
        substantial reform, the most important is the labor market. 
        People--especially the young--want jobs and freedom, not 
        dependence on government.
          Consider that between 1970 and 2003, employment in the U.S. 
        increased by 75 percent. In France, Germany, and Italy, it 
        increased by 26 percent. In 2004, only 13 percent of unemployed 
        workers in the U.S. were unable to find a new job within 12 
        months; in the EU, the figure was 44 percent. In the EU, 
        average youth unemployment is 17 percent. In the U.S., it is 10 
        percent.
          But the best comparisons can be made within Europe itself. 
        Denmark has an employment rate of 76 percent, but Poland is far 
        lower at 53 percent. Youth unemployment is above 20 percent in 
        Greece, Italy, Sweden, France, Belgium, and Finland and below 8 
        percent in Ireland, the Netherlands, and Denmark. In the EU's 
        15 member states, between 1995 and 2004, the development of 
        employment was also very different between the countries. In 
        Ireland, the Netherlands, and Spain, the increase in employment 
        was the highest; in Germany and Austria, it was almost zero.
          What were the differences between the successful countries 
        and the others? First of all, the labor market was 
        substantially freer in the countries that succeeded in creating 
        new jobs. Second, payroll and income taxes were more than 10 
        percentage points lower in the five best economies (in terms of 
        job creation) compared to the five worst. Third, the levels of 
        contribution from the state for unemployment and sick leave 
        were lower in the best economies.\15\ What the successful 
        countries have in common are freer labor markets, lower taxes, 
        and lower contributions.
          A look at the results for various countries in the labor 
        freedom category in the Index provides further proof of the 
        connection between labor freedom and employment. Table 1 (in 
        the Index, chapter 2) shows all of the nations of Europe, 
        including their EU affiliations, ranked according to their 
        labor freedom scores in the 2007 Index.
          Countries like Georgia, the U.K., Switzerland, and Denmark 
        enjoy higher scores in labor freedom and have experienced 
        better employment outcomes generally. Countries with low scores 
        like Germany, Italy, Portugal, and Sweden have suffered weak 
        employment and outright stagnation.
          Comparing the 15 countries that were members of the EU in 
        1995-2004 to EU-25 and non-EU countries is illustrative. In 
        Britain, the labor market is relatively free and earns a score 
        of 82.7 percent, whereas in Sweden, it is highly regulated and 
        earns a score of 52 percent, compared to the EU-15 average of 
        59.7 percent. The 10 countries that recently joined the EU have 
        raised their average labor freedom by nearly a full point, but 
        the scores of non-EU economies average nearly five full 
        percentage points higher. Yet the average income between 1995 
        and 2004 grew by 29 percent in Sweden, 37 percent in EU-15 
        countries, and 72 percent in Britain. The income of the poorest 
        10 percent of the population grew by only 10 percent in Sweden, 
        compared to 59 percent in Britain. The worst off were better 
        off where the labor market was freer.
          The larger lesson is that Europe's more ``advanced'' 
        economies have generally created more complex restrictions on 
        labor freedom in the name of protecting workers. This relative 
        wealth has been a convenient excuse for stagnant growth and 
        higher unemployment, but the apology is losing its validity as 
        many Eastern and Middle European countries experiment 
        successfully with freedom.

                  LABOR PROTECTIONISM AND UNEMPLOYMENT

    The Summer 1997 issue of the Journal of Economic Perspectives 
published two articles discussing labor rigidity in Europe. Horst 
Siebert emphasized that the concert of rigid labor institutions in 
Europe was clearly driving higher unemployment rates there, emphasizing 
the tightening of policies during 1960s and 1970s. While he observed 
differences among European states, he concluded by focusing on one 
common feature: ``Job protection rules can be considered to be at the 
core of continental Europe's policy toward the unemployment problem: 
protecting those who have a job is reducing the incentives to create 
new jobs.'' A contrasting opinion was provided in Stephen Nickell's 
econometric overview, which reported, ``there is no evidence in our 
data that high labor standards overall have any impact on unemployment 
whatever.''
    Table 1 presents unemployment rate averages by decade for 10 
countries reported by BLS.

                Table 1.--Unemployment Rates on the Rise
------------------------------------------------------------------------
                                    1960-1979    1980-2004      Change
------------------------------------------------------------------------
USA..............................          5.5          6.2          0.8
Japan............................          1.5          3.3          1.7
Netherlands......................          4.6          6.5          1.9
Canada...........................          5.7          8.5          2.8
Sweden...........................          1.9          5.1          3.2
UK...............................          3.6          8.3          4.7
Australia........................          2.9          7.7          4.8
Italy............................          3.5          8.3          4.8
Germany..........................          1.4          7.2          5.9
France...........................          2.8          9.8          7.0
------------------------------------------------------------------------
Source: Author calculations using U.S. BLS data.

    After 1980 it is clear that America has continued its productivity 
leadership (with higher income distribution generally), while European 
countries suffer high unemployment rates. The ``humane'' policies of 
labor protectionism appear to have backfired, creating a less humane 
social arrangement.
    Nickell (1997) emphasized the diversity of European unemployment 
rate experiences (``from 1.8 percent in Switzerland to 19.7 percent in 
Spain'') and policies. Nickell's approach is a good one--he assembles 
macroeconomic performance data for 20 OECD countries, measured over two 
periods (1983-88 and 1989-94), and assembles an impressive array of 
labor policy measures, which he uses as explanatory variables. Nickell 
says at one point that ``roughly speaking, labor market institutions 
were the same'' in the 1960s and 1990s. He concludes that unemployment 
rates are dependent on some policies (e.g., generous unemployment 
benefits, high taxes, high minimum wages, and weak universal 
education), but not the conventional culprit: labor market rigidity.
    However, Nickell in 1997 has been updated by Nickell in 2005. His 
assessment has changed in less than 10 years because the empirical 
evidence has changed, as he expressed in his recent paper with Luca 
Nonziata and Wolfgang Ochel (2005). The authors find that ``changes in 
labor market institutions'' and rigidities since 1960 have indeed 
occurred, and these are the root causes, with employment protection 
accounting for 19 percent of the rise of unemployment. I think it is 
fair to say that the consensus view of economists today has evolved 
along the same lines.
    A deep new data set published by the World Bank in 2003 and 
published in the Quarterly Journal of Economics (Djankov et al. 2004) 
makes a definitive case that the ``Regulation of Labor'' (the title of 
the paper) can be harmful to macroeconomic outcomes. The Djankov labor 
data cover 85 countries over dozens of labor categories, including the 
size of the minimum wage, strike laws, protections from dismissal, 
generosity of social benefits, and so on. The data are coded so that a 
maximum score of 1 represents the most rigid labor rule, while zero 
represents perfect flexibility. Importantly, this very deep data set 
represents laws during a single year, 1997, which precludes some uses 
that would be available with a time series.
    Nevertheless, Djankov et al. (2004) find that an increase in the 
employment laws index is associated with an increase in black market 
activity, a reduction in labor force participation, and an increase in 
unemployment rates (averaged over the decade). The econometric tests 
are not robust and report an R\2\ of 0.13, with the labor regulation 
variable significant at the 5 percent level.
    I am hopeful that the excellent new data sets in place will be 
improved in years ahead and that, with greater knowledge of how 
institutions and outcomes relate to one another, countries will be even 
better armed to lower the barriers to riches.

       WHAT WOULD A NEW LABOR REGULATION DO TO THE U.S. ECONOMY?

    Many voices are calling for new policies to address a vulnerable 
U.S. workforce, including ideas such as wage insurance, flex-time, and 
mandatory paid leave. There may be merit to all of these ideas, and yet 
they all remain problematic. The premise that the U.S. workforce is 
vulnerable is the first problem--suggestions of anxiety are simply 
overblown. Indeed, many of the statistics used to emphasize new 
pressures on the workforce are actually evidence of new flexibility, 
such as the rising number of temporary jobs. A second and related 
problem is that many policy solutions are defined by government 
intrusion into an otherwise optimally functioning private sector.
      Rule 1 of economic policy should be: Do no harm. The 
economy is strong, so an airtight case must be made for any new rules 
aimed at fixing a labor market that is not broken.
      Rule 2 of economic policy is: Consider the incentives.
    The idea of mandatory paid leave is especially problematic. My 
colleague, James Sherk, recently published a Heritage study (web memo 
#1450, http://www.heritage.org/Research/Labor/wm1450.cfm), which I 
quote:

          Few oppose allowing workers to take time off work to recover 
        from illness or allowing parents to tend to sick children. 
        Today, the vast majority of businesses provide their workers 
        with some form of paid sick leave: 74 percent of companies 
        provide paid sick leave, while 82 percent provide other paid 
        vacation days that workers can use to care for a sick relative.
          [The Healthy Families Act as considered in the Senate (HFA, 
        S. 910)] would make this widespread and voluntary practice 
        mandatory. The legislation would require businesses employing 
        15 or more workers to provide at least 7 days of paid sick 
        leave per year and would prevent companies from disciplining 
        employees who abuse this leave. This would radically change the 
        current system of voluntarily provided sick leave by 
        encouraging widespread misuse.
          Like the FMLA, the HFA would make it difficult for employers 
        to verify that workers taking sick leave are actually sick. The 
        act would allow workers to take up to 3 days of leave without 
        any medical certification that the leave is necessary.
          For absences exceeding three consecutive work days, workers 
        would need a doctor's certification. However, the HFA does not 
        allow employers to challenge a doctor's certification, even 
        when they strongly suspect that it is fraudulent. Under the 
        FMLA, employers have found that workers who are not injured can 
        usually find a doctor who will certify that they have a chronic 
        condition, such as back pain, that requires time off work.
          Abuse is rampant in countries that require mandatory paid 
        sick leave. In Sweden, for example, the government pays sick 
        workers 80 percent their salary while on leave for an 
        indefinite period of time. At any given moment, 10 percent of 
        Sweden's workers are on sick leave, and over three-fifths tell 
        pollsters that they take the leave when they have no health 
        problems.

So one core incentive problem is that a new mandatory leave requirement 
is subject to abuse by some workers, which is essentially a penalty on 
the honest workers.
    A larger concern is that any Congressional mandate on employers 
amounts to a mandatory benefit, which will come at the expense of take-
home pay. It is widely known that earnings have not kept up with 
productivity growth in the U.S. It is also widely known that the reason 
is that the cost of employee benefits are rising and soaking up almost 
all of the compensation growth. Bottom line: total compensation for 
workers is growing at the same pace as productivity, but there is a 
divergence between take-home pay versus benefits. By mandating more 
benefits in new labor regulation, Congress will be basically giving 
American workers a pay cut.
    Third, there will be a new incentive for employers to discriminate. 
The good employers will make blind hiring decisions, but unscrupulous 
employers will have a powerful incentive to avoid employees that are 
most likely to qualify for the newly mandated benefits. For example, 
young women who are most likely to take paid maternity leave will face 
quiet discrimination. Good employers will face higher costs, whereas 
bad employers will get a competitive advantage. And it all makes 
economic sense--perhaps why they call mine the dismal science. 
Nonetheless, the reality of bad incentives means that mandated labor 
regulations rewards bad behavior and so should be avoided.
    Those are three strikes against new labor regulations, or at least 
three cautions to consider in designing new rules carefully.
                                 ______
                                 
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