[Joint House and Senate Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-591
 
                   AVOIDING A LOST GENERATION: HOW TO
      MINIMIZE THE IMPACT OF THE GREAT RECESSION ON YOUNG WORKERS

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

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 26, 2010

                               __________

          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]

HOUSE OF REPRESENTATIVES             SENATE
Carolyn B. Maloney, New York, Chair  Charles E. Schumer, New York, Vice 
Maurice D. Hinchey, New York             Chairman
Baron P. Hill, Indiana               Jeff Bingaman, New Mexico
Loretta Sanchez, California          Amy Klobuchar, Minnesota
Elijah E. Cummings, Maryland         Robert P. Casey, Jr., Pennsylvania
Vic Snyder, Arkansas                 Jim Webb, Virginia
Kevin Brady, Texas                   Mark R. Warner, Virginia
Ron Paul, Texas                      Sam Brownback, Kansas, Ranking 
Michael C. Burgess, M.D., Texas          Minority
John Campbell, California            Jim DeMint, South Carolina
                                     James E. Risch, Idaho
                                     Robert F. Bennett, Utah

                    Andrea Camp, Executive Director
               Jeff Schlagenhauf, Minority Staff Director


                            C O N T E N T S

                              ----------                              

                                Members

Hon. Carolyn B. Maloney, Chair, a U.S. Representative from New 
  York...........................................................     1
Hon. Kevin Brady, a U.S. Representative from Texas...............     2

                               Witnesses

Statement of Dr. Till M. von Wachter, Associate Professor of 
  Economics, Department of Economics, Columbia University........     4
Statement of Dr. Harry Holzer, Professor, Georgetown Public 
  Policy Institute, Georgetown University........................     7
Statement of Mr. David Jones, President and Chief Executive 
  Officer, Community Service Society.............................     9
Statement of Mr. Stephen M. Wing, Director, Workforce 
  Initiatives, CVS Caremark Corporation..........................    11
Statement of Mr. James Sherk, Senior Policy Analyst in Labor 
  Economics, The Heritage Foundation.............................    13

                       Submissions for the Record

Prepared statement of Representative Carolyn B. Maloney, Chair...    36
Prepared statement of Representative Kevin Brady.................    36
Prepared statement of Dr. Till M. von Wachter....................    38
Prepared statement of Dr. Harry Holzer...........................    45
Prepared statement of Mr. David Jones............................    50
Prepared statement of Mr. Stephen M. Wing........................    61
Chart titled ``Young Workers Face High Levels of Unemployment''..    77
Prepared statement of Mr. James Sherk............................    78


  AVOIDING A LOST GENERATION: HOW TO MINIMIZE THE IMPACT OF THE GREAT
                       RECESSION ON YOUNG WORKERS

                              ----------                              


                        WEDNESDAY, MAY 26, 2010

             Congress of the United States,
                          Joint Economic Committee,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:00 a.m., in Room 
210, Cannon House Office Building, The Honorable Carolyn B. 
Maloney (Chair) presiding.
    Representatives present: Maloney, Sanchez, Snyder, 
Cummings, Brady, and Burgess.
    Senators present: Klobuchar.
    Staff present: Andrea Camp, Gail Cohen, Colleen Healy, 
Jessica Knowles, Justin Ungson, Lydia Mashburn, Jeff 
Schlagenhauf, and Robert O'Quinn.

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

    Chair Maloney. Good morning. The meeting will come to 
order, and I will recognize myself for an opening statement and 
will be followed by the other members of the Committee with 
their opening statements. I welcome our panelists today. Thank 
you for coming.
    Just over 1 year ago, the current Administration took 
office while the country was suffering from the worst economic 
crisis since the Great Depression. In fact, Council of Economic 
Advisers Chair, Christina Romer, testified to the Committee 
that the shocks we endured in the Great Recession were actually 
worse than those in the Great Depression. But today, it is 
clear that America is on a path toward economic recovery.
    The most recent employment report showed that the economy 
has gained jobs for 4 straight months. In April, 290,000 jobs 
were created, bringing the total of jobs created since the 
start of 2010 to 573,000. After 4 straight quarters of negative 
growth, the economy has grown for 3 quarters. These 
improvements in our economy are proof that actions taken by 
this Congress and the Administration have put our economy back 
on track.
    While we are making progress, the road to recovery will not 
be without bumps. Although we saw significant job creation in 
the past 2 months, we need stronger job creation to reduce 
unemployment. Some groups are suffering more than others. 
Today's hearing focuses on younger workers who are facing 
extremely high rates of unemployment.
    The JEC released a report today showing that one in five 
workers between the ages of 16 and 24 is unemployed, the 
highest rate of unemployment ever recorded for this age group. 
While 16- to 24-year-olds comprise 13 percent of the labor 
force, they make up 26 percent of the unemployed. The youngest 
workers, those aged from 16 to 17, experience the highest rates 
of unemployment. The unemployment rate for 16- to 17-year-olds 
was 29 percent in April 2010.
    While education reduces the likelihood of being unemployed, 
the benefits of a college degree are not uniform among 16- to 
24-year-olds. The unemployment rate for young black college 
graduates was 15.8 percent of April in 2010, nearly double the 
8 percent unemployment rate for all young college graduates. 
These numbers will take on a stark reality as millions of new 
college graduates start knocking on doors looking for a job. 
And for teens looking for their first job, it will be even 
worse.
    The scarring effect of unemployment among younger workers 
has lasting consequences for their attachment to the labor 
force, their productivity, and their future earnings. Dr. von 
Wachter testified before this Committee last month that these 
younger workers face reduced earnings even 10 to 15 years 
later. The cost to the economy in terms of lost output of these 
workers is great, which will have an impact on our debt and our 
deficit.
    Today, the House began debate on H.R. 4213, the American 
Jobs and Closing Tax Loopholes Act, a bill to create jobs, 
support those without jobs, and lay the groundwork for new 
employment opportunities in the future. H.R. 4213 makes many 
key investments in our people and in our future. In addition to 
extending unemployment benefits and COBRA premium support 
through the end of the year, the bill finds summer jobs for 
more than 300,000 of our young people.
    Job creation is critical, of course, but so are job 
training skills. We need to identify training and placement 
programs that are getting strong results and figure out how to 
scale them so that they reach more workers across the country. 
I look forward to hearing more creative solutions from today's 
panel on how to solve the unemployment problem for America's 
younger workers. And I thank everyone for coming, and recognize 
Mr. Brady.
    [The prepared statement of Representative Maloney appears 
in the Submissions for the Record on page 36.]

    OPENING STATEMENT OF THE HONORABLE KEVIN BRADY, A U.S. 
                   REPRESENTATIVE FROM TEXAS

    Representative Brady. Madam Chairman, I am pleased to join 
in welcoming today's witnesses before the committee. I would 
like to thank you for holding the hearing this morning on this 
important topic.
    The success in one's working life is largely path 
dependent; therefore, getting off to a good start is important 
to young people. That is one reason why a high level of youth 
unemployment is so troubling.
    In January of last year, top Obama Administration 
economists Christina Romer and Jared Bernstein assured the 
country that if Congress just passed the President's stimulus 
bill, the unemployment rate would remain below 8 percent, and 
payroll employment would increase to $137.6 million by the 
fourth quarter of this year.
    Congress enacted President Obama's $1 trillion stimulus 
plan in February of 2009, but the results have been 
disappointing at best. Since then, the unemployment rate for 
all workers has never been below 8 percent. Today, it is 9.9 
percent. So far, the Obama Administration is 7.4 million 
payroll jobs short of its fourth quarter promises. However, 
young American workers age 16 to 24 have fared even worse than 
their older counterparts. Since the stimulus passed, the number 
of unemployed workers ages 16 to 24 has increased by 707,000 to 
a total of 4.2 million in April of this year.
    Moreover, the youth unemployment rates soared from 15.8 
percent when the stimulus passed to 19.6 percent in April of 
this year, an all-time high for this data series. For many of 
our young people, hope from the stimulus has turned to despair.
    Given the severity of this problem, I am very interested in 
what today's witnesses have to say about the high level of 
unemployment among young American workers. Like one of today's 
witnesses, Dr. Holzer, I want to find out what government job-
related programs and private-sector initiatives actually help 
young Americans find and keep that important first job and what 
programs are wasteful and ineffective.
    The cost of paying for inefficient and misdirected 
government programs through deficit spending will remain a debt 
burden on our children and grandchildren. For example, one of 
today's witnesses, James Sherk, observes the 2008 and 2009 
bailout and stimulus packages will cost the average 22-year-old 
$145,900 during their working life, $280 a month. He goes on to 
say: That is the equivalent of requiring college graduates to 
buy and throw out a high-end I-pod each and every month of 
their life.
    In conclusion, today's panelists offer different solutions 
to the problem of youth unemployment. Some advocate more 
government spending, while others emphasize the private sector 
where most jobs are created. Like Presidents Kennedy and 
Reagan, I believe that a rising tide lifts all boats. Instead 
of more wasteful government spending on ineffective job-related 
programs, we should promote entrepreneurship and business 
investment to increase job creation and reduce youth 
unemployment.
    Madam Chair, I yield back.
    [The prepared statement of Representative Brady appears in 
the Submissions for the Record on page 36.]
    Chair Maloney. Thank you very much. Mr. Snyder, would you 
like an opening statement?
    Representative Snyder. I will defer to the witnesses.
    Chair Maloney. I then would like to introduce our 
witnesses, and we have a very distinguished panel.
    First, we would like to welcome back Dr. Till M. von 
Wachter, who is a professor of economics at Columbia 
University, as well as a faculty research fellow of the Aging 
and Labor Groups at the National Bureau of Economic Research. 
His research focuses on the long-term impact of job loss on 
earnings, health, and retirement. He has also studied the 
effect of business cycles on career outcomes of younger and 
older workers.
    I would also like to welcome back Dr. Harry Holzer, who is 
a professor of public policy at Georgetown University and a 
founding director of the new Georgetown Center on Poverty and 
Equality and Public Policy. He is currently a senior fellow at 
the Urban Institute and a senior affiliate of the National 
Poverty Center at the University of Michigan, among his many 
other affiliations. Prior to coming to Georgetown, Professor 
Holzer served as Chief Economist for the U.S. Department of 
Labor in 1999.
    David Jones is from the District that I am very honored to 
represent, and we have had a long career of working together on 
programs that are important to the nation's youth. David Jones 
is the president and CEO of the Community Service Society of 
New York, or CSS, a nonpartisan, nonprofit organization that 
promotes economic advancement and full civic participation for 
low income New Yorkers. Mr. Jones was also a special adviser to 
Mayor Koch with responsibilities in race relations, urban 
development, immigration reform, and education.
    Mr. Stephen Wing is director of workforce initiatives for 
CVS Caremark, the largest provider of prescriptions and related 
health care services in our Nation. In his position at CVS, Mr. 
Wing partners with government agencies, nontraditional 
employment organizations, and corporate colleagues, among 
others, to provide opportunities for employment and training. 
Since 1996, CVS Caremark has hired over 80,000 former welfare 
recipients. Congratulations. Mr. Wing has helped CVS Caremark 
develop cutting-edge programs that have earned the company many 
outstanding awards.
    Finally, I would like to welcome Mr. James Sherk, whose 
previous appearance before this Committee was snowed out in 
February; so we are very pleased you were able to make it this 
time. He is a senior policy analyst in labor economics at the 
Heritage Foundation. He was previously the Bradley Fellow in 
labor policy at The Heritage Foundation. Mr. Sherk has written 
on the dynamics of rising unemployment and the recession, the 
economic consequences of extending unemployment benefits, card-
check, and other labor policy issues.
    I would like to welcome all of you, and begin with Dr. von 
Wachter and then go down the line. Thank you.

 STATEMENT OF DR. TILL M. von WACHTER, ASSOCIATE PROFESSOR OF 
    ECONOMICS, DEPARTMENT OF ECONOMICS, COLUMBIA UNIVERSITY

    Dr. von Wachter. Thank you, Chairwoman Maloney. Chairwoman 
Maloney, and members of the committee, it is an honor to be 
with you today.
    The labor market of the United States is recovering from 
the most severe recession since World War II. In my testimony, 
I will summarize the available evidence on the short- and long-
term effects of entering the labor market in a recession on 
young workers' employment and earnings. I will also indicate 
which labor market entrants are most affected by such initial 
bad luck, and will summarize potential explanations of these 
effects. Finally, I would briefly offer some suggestions for 
policies from these findings.
    The available evidence suggests that the consequences from 
entering the labor market in a recession are severe in both the 
short and the long run. In the short run, labor market entrants 
and young workers suffer from larger increases in unemployment 
and layoffs than the average worker. Yet, even in the long run, 
young workers who enter with no prior employment history and 
are presumably the most flexible workers in the economy, can 
suffer from initial bad luck for a long period of time.
    For example, entering the labor market in a recession such 
as the current one can lead to reduced earnings up to 10 to 15 
years. During this period, younger workers are also exposed to 
higher incidents of nonemployment and job and earnings 
instability. The evidence suggests that these adverse effects 
are driven by labor market conditions in years immediately 
following entry into the labor market. As a result, a quick 
improvement in labor market conditions can speed up the 
recovery process, but it cannot eliminate significant long-term 
effects from entering the labor market in a recession.
    Existing evidence suggests that part of the decline in 
earnings arises because young workers entering the labor market 
in a recess take jobs with worse employers than they otherwise 
would have had. This process is often termed cyclical 
downgrading. For the average labor market entrant, this initial 
fades over time, partly as workers search for better jobs, 
partly as they manage to move up the career ladder of this 
existing employer.
    However, our findings suggest that the recovery process can 
take a long time, and that it involves mobility in occupations, 
industries, regions. As a result, some workers never recover 
from the initial shock as they settle down, buy a house, and 
start a family life. Not everybody can keep moving across the 
labor force for 10 to 15 years.
    These effects differ by education groups. In the short run, 
lower educated workers experience larger increases in 
unemployment than more educated labor market entrants. However, 
in the long run, less educated individuals tend to recover 
faster. In fact, these workers in the middle of the education 
distribution who can suffer close to permanent earnings 
consequences from entering the labor market in a recession; on 
the other hand, those individuals at the bottom and at the very 
top of the education distribution recover more quickly from a 
bad initial start. Thus, more education, per se, does not yield 
full insulation against shocks occurring in the aggregate labor 
market. Yet, of course, more education is certainly beneficial 
as it raises the overall mean earnings and employment 
stability.
    Entering the labor market in a recession also has impact on 
an individual's beliefs. The evidence suggests unlucky cohorts 
of labor market entrants tend to believe in a higher degree of 
income redistribution; at the same time, such unlucky 
generations tend to distrust public institutions. Similarly, 
available evidence suggests prolonged unemployment affects the 
age of marriage and family formation. Thus, a bad start can 
have significant and lasting effects on many aspects of both 
career prospects and lifetime outlook of affected individuals.
    Some government policies may help to prevent long-term 
earnings losses from entry into the labor market in a recession 
and help unlucky young workers recover. Generally, the evidence 
suggests that a faster macro-economic recovery will help 
improve the speed of the recovery from a bad initial start. 
However, the adjustment of individual workers lasts well into 
and beyond the recovery of the overall labor market.
    So, a rising tide lifts some boats but definitely not all 
boats. Thus, it is worth considering cost-effective policies 
that directly aid recovery from starting to work in a 
recession. For example, to recover from beginning to work in a 
recession, younger workers have to reorient their career goals. 
The message here is: Something has got to give. As the economy 
improves, changes in occupation, industry, or region will speed 
the recovery of earnings. So raising awareness that the 
recovery process can take a long time and may involve continued 
mobility is important. This could be done with existing 
infrastructure providing job search help for the unemployed.
    In addition, there, young workers could be given 
information that is routinely provided by the Bureau of Labor 
Statistics or the Census Bureau and that indicates which of the 
growing industries, occupations, or regions that will be 
providing more jobs.
    To aid the reorientation of careers, retraining can also 
help to provide new skills appropriate for a changed labor 
market situation. Support for such retraining could take 
several forms. Subsidies for programs furthering on-the-job 
training could help these programs for provide work experience 
and direct contact with employers. Subsidies could also be 
given for enrollment in community college courses. 
Alternatively, vouchers could be provided that allow workers to 
choose ways themselves to upgrade their skills in the private 
market. In general spirit, not unlike personal reemployment 
accounts.
    Finally, an important concern is that many young workers 
quit education in progress because they lack funds to continue 
to finance their training. Either their parents are laid off, 
or they themselves cannot find a job to support themselves 
during their studies. Such a recession-induced decline in 
completion of education could substantially raise the cost of 
recessions for young labor market entrants and the economy as a 
whole. As a result, providing subsidies or facilitate borrowing 
to allowing young individuals to continue their education would 
be worth considering.
    An advantage of these policies or some of these policies is 
that they can be implemented or built on the existing 
infrastructure of existing programs. And this has the benefit 
that some of them have already been evaluated and shown to be 
cost effective. Moreover, they could be implemented relatively 
quickly.
    Finally, the evidence that I have discussed reveals that 
there is a high degree of persistence of the effect of shocks 
in the U.S. labor market, and this persistence is likely to 
arise from the intrinsic working of the U.S. labor market. 
Thus, it is likely to be quite difficult to help unlucky labor 
market entrants after the fact. The best help might be 
prevention. This includes efforts to prevent shocks that can 
cost such large recessions. It also includes policies that help 
to prevent concentrated layoffs or continuing layoffs in the 
future, such as job sharing.
    To conclude, our best evidence suggests that a strong 
recession, such as the current one, can lead to persistent 
scars for young labor market entrants. And the available 
research shows that entering the labor market in a recession 
lowers earnings, raises career instability, affects 
individuals' beliefs and their family formation. And these 
scars, as I said, persist for over 10 years and are only 
partially mitigated by recovery of the aggregate labor market. 
The available evidence suggests that the recovery process 
involves increased mobility among employers, industry, or 
region, and thus any program directly aiding this long 
adjustment process is likely to lessen the effects of 
recessions for unlucky generations of younger workers. Thank 
you.
    [The prepared statement of Dr. Till M. von Wachter appears 
in the Submissions for the Record on page 38.]
    Chair Maloney. Thank you.
    Dr. Holzer.

  STATEMENT OF DR. HARRY HOLZER, PROFESSOR, GEORGETOWN PUBLIC 
            POLICY INSTITUTE, GEORGETOWN UNIVERSITY

    Dr. Holzer. Thank you. Good morning, Chairman Maloney, Mr. 
Brady, and other committee members. I would like to make four 
points today about the status of young people in the labor 
market, both in the Great Recession and beyond that.
    My first point is that, even in the best of times, 
disadvantaged young people suffer from low levels of education, 
low rates of employment and earnings, and many disconnect 
altogether from the school and the labor markets. American 
youth drop out of high school at very high rates, on average 25 
percent for the whole population. Many fail to get any 
postsecondary education. Of those who attend college, whether 
it is a 2-year or 4-year, a majority fail to obtain any 
credential, even an occupational certificate, within 6 years.
    And outcomes for some groups, like young African American 
men, are worst of all. Their high school dropout rates remain 
well over 30 percent. When they do drop out, their employment 
and earnings rates are very low, unwed fatherhood is very high, 
and most become incarcerated before the age of 30. And this is 
all in the best of times.
    My second point. Employment outcomes for youth have 
substantially worsened in this recession and will likely remain 
very weak for another 3 to 5 years. As previously indicated, 
employment and unemployment among teens in 2009 and 2010 are 
among the worst ever recorded by the Bureau of Labor 
Statistics.
    For instance, right now teenagers overall only participate 
in the labor market at a rate of about 35 percent in any given 
month; and out of those participating, we have unemployment 
rates of 25 percent for those people. If we look at black 
teenagers, the numbers are much worse. Only 25 percent 
participate in the labor market at any time, and in that group 
the unemployment rate is about 40 percent. And these 
unemployment rates will likely remain elevated for some time as 
economists project high unemployment for several years to come. 
Long-term unemployment of 6 months or longer is already very 
high. Nearly half of the unemployed have been out of work for 6 
months or longer, and that percentage will likely rise as well.
    My third point. The high unemployment of youth over the 
next several years will cause not only short-term losses of 
income, but also some long-term scarring. And Professor von 
Wachter has just addressed this issue. We know, for instance, 
that among unemployed workers, long-term unemployment tends to 
erode their skills, especially if their old jobs have been 
permanently lost and they need to transition to new sectors of 
the economy.
    But we also know, for young people transitioning out of 
school and into the labor market, there is evidence of scarring 
as well. We have very strong evidence for young people 
graduating from college in the early 1980s recession that they 
suffered long-term declines. And there is evidence of other 
groups of noncollege youth as well that we have just heard 
about.
    Now, some young people take advantage of a recession and 
actually increase their school enrollment rates. And we 
certainly see this in evidence of graduate school applications 
and enrollments. But primarily, that is not where our 
disadvantaged young people end up, and we really have very 
little evidence that a downturn like this one will raise high 
school graduation rates or postsecondary enrollments among 
disadvantaged youth.
    And then we have the issues of crime and poverty. So far, 
we have seen no evidence of rising crime in this downturn. In 
fact, the FBI released numbers yesterday suggesting that crime 
fell a bit in the year 2009. But there is some tendency for 
crime to rise during downturns. And if that occurs, both crime 
and incarceration will have scarring effects, major scarring 
effects both on the victims of crime and on the young people 
who will become even more incarcerated. Poverty rates are 
certain to keep rising over the next several years, and 
neighborhoods of concentrated poverty will become increasingly 
difficult places for young people trying to transition to 
adulthood.
    My fourth point concerns policy. I think policy efforts 
should focus on some short-term job creation, but also on 
enhancing education and training efforts with some work 
experience components to improve the labor market status of 
young people over the long term.
    I strongly support enhanced efforts to spur job creation 
right now both in the private sector and in the public sector, 
with the public sector jobs heavily targeted to low-income 
youth. I support extending summer youth employment programs, 
but actually, I much prefer year-round programs linked to 
schooling or other skill-building activities. High quality 
education and training options for young people also need to be 
enhanced at a range of levels. These options should be designed 
to address long-term problems, but they should be ramped up 
right now while unemployment for young people is so high. And, 
wherever possible, these efforts should include opportunities 
for them to gain some paid work experience, if necessary, 
subsidized by government.
    A few examples. For young people in high school, we should 
be working not only on dropout prevention efforts, but on 
bolstering high quality career and technical education and 
subsidized internships and apprenticeships. For young people in 
college, a range of curriculum improvements, and support 
services could improve completion rates in certificate as well 
as degree programs. And, in general, the States need to better 
integrate their education and their workforce development 
systems to generate a whole range of career pathways beyond 
what young people see today.
    Special efforts need to be made for out-of-school youth who 
have already dropped out of high school or those who are 
floundering since graduation. Efforts here include service 
employment, sectoral training efforts like Gear Up and other 
programs that have been recently evaluated, high school dropout 
recovery and reconnection programs like the National Guard 
Challenge program and the Gateways Opportunity program, and 
efforts to build local youth employment systems like the Youth 
Opportunities program.
    And I am happy to discuss the available evidence on their 
cost effectiveness during the Q and A period.
    Now, all of these efforts will cost some Federal and State 
funds over time, but we know that the social and economic costs 
of not investing in our young people are very severe, and those 
will be much greater than the costs of making effective 
investments. Given the state of the economy right now and for 
the next several years, I think these efforts are quite 
urgently needed. Thank you.
    [The prepared statement of Dr. Harry Holzer appears in the 
Submissions for the Record on page 45.]
    Chair Maloney. Thank you. Mr. Jones.

  STATEMENT OF MR. DAVID JONES, PRESIDENT AND CHIEF EXECUTIVE 
               OFFICER, COMMUNITY SERVICE SOCIETY

    Mr. Jones. Good morning, Madam Chair. My name is David 
Jones. I am president of the Community Service Society. We have 
focused on poverty in the city of New York for 160 years, 
founded the Columbia School of Social Work and the Hospital of 
Special Surgery. We have been at this a long time, focused on 
some of the unique problems of poverty in the City of New York. 
I welcome this opportunity to talk to the panel.
    We started work in this area focused on New York City 
almost 5 years ago. We looked at the problem of young people 
who were not in school or at work. We produced a report in 
2005, Out of School, Out of Work, that showed that New York at 
that time was facing an unprecedented number of 16- to 24-year-
olds who were neither enrolled in school nor working. The 
numbers then were approximately 200,000, almost a whole city of 
young people in this condition.
    This represented nearly 20 percent of the New York City 
youth and young adult population. And although our rates were 
high compared to other areas, this wasn't unique to New York 
City. I welcome testifying here, because what we see New York 
as, regretfully, is sort of a canary in a mine. We see all 
across the Nation similar problems of disconnect. When we were 
looking then, there were nearly 5 million young people in this 
condition of all races across the country who were facing this 
thing.
    Five years later in New York City, there is a little good 
news. More young people are returning to school in New York 
City than ever before. This is clearly a step forward. School 
reform efforts have kept young people from leaving school as 
well as created a new series of school environments to keep 
young people at risk of dropping out.
    The bad news is, of course, the labor participation has 
gotten much worse for young people. We first reported on this 
trend as far back as 2006, when one of our regular labor market 
reports noted that the booming economy was helping everyone 
except young people who were of working age. So even though New 
York City and the country was adding jobs, young people were 
just not rising with those boats.
    Our recent recession has exacerbated this whole dynamic. 
Since 2007, young adults have attained the highest unemployment 
rates on record, as has been mentioned before, 19 percent. The 
situation is much worse for young men, at nearly 23 percent, 
and for African Americans, 33 percent, and Latinos, 24 percent.
    We think jobs are critical for young people. I think, as 
Dr. von Wachter mentioned, it has an enormous impact if young 
people do not participate in work and particularly going 
forward if they haven't had regular work by the time they are 
25. We think this has enormous impacts on the likelihood of 
these young people ever participating actively in the economy.
    I come out of Crown Heights in Bedford Stuyvesant, one of 
the poorest neighborhoods in New York, and the notion of large 
numbers of young people concentrated in very poor neighborhoods 
who never have association with work is going to cut right 
through the fabric of these communities and endanger everyone 
there, both in terms of their earning power and their ability 
to really construct stable communities. We think this is a real 
danger that we have to recognize.
    This is not going to be cost free. This is not something 
that has happened before, at least in my lifetime. When I was 
growing up in the 1950s and 1960s in Bedford Stuyvesant, 
virtually everyone was employed. The jobs weren't good; we were 
facing racial discrimination, but it was very rare not to find 
somebody who was working. The Bowery of New York really had 
very few African Americans or Latinos; it was all people who 
were having substance abuse problems, and it basically was not 
coming from these communities.
    Now I can walk through blocks of my old neighborhood and 
see literally dozens, if not hundreds, of young people who are 
just not connected to the job market, and it is going to 
endanger my relatives, my young people, and my elderly, as well 
as being damaging to the entire city of New York.
    I think it has been talked about. The remedy issue is, I 
think, the most critical one that we have to talk about. I 
think we have talked about summer jobs as a vital effort I need 
to stabilize, while we find longer-term solutions. We issued a 
report a couple of months ago showing that the passage rate for 
young people getting high school diplomas was appalling. We 
have about 1.3 million people in the City of New York of 
working age with no high school degree, and we have the worst 
GED, which is high school equivalency, passage rate in the 
Nation, worse than any other locality. We have issues here that 
are going to make it very difficult to get young people back on 
track.
    We think reauthorization and increased funding for WIA is 
obviously another thing that is necessary.
    We at CSS have been working on three other initiatives. 
One, a new tax credit for private business to incentivize them 
to essentially hire young people who fall into this category of 
being out of work and out of school for more than 6 months. The 
other is a focus on the bill with Congressman Nadler, looking 
at the new infrastructure transportation bill to add to it a 
specific focused WPA-like program that could actually have 
teams of young people working on infrastructure projects as at 
least a pilot in areas of high impact and high need.
    The final thing is work with Congresswomen Nydia Velazquez 
and Maxine Waters and others to look at something called 
section 3, something I had no knowledge of before I started 
getting desperate for jobs for young people. But in the 1968 
Act for public housing and other subsidized housing, there was 
a provision that best efforts be made to hire young people and 
others within housing authorities and in other subsidized 
developments. It was never enforced through Democrat and 
Republican administrations, so there is no ideological center 
here.
    Now, we are seeing such high concentrations in public 
housing of young people without jobs and without skills that I 
am looking for strict enforcement of section 3. We spent $1.3 
billion last year in capital and maintenance efforts in public 
housing in the city of New York. Virtually none of that went to 
hire people from those neighborhoods, far less young people 
from that neighborhood.
    I am looking at recognizing the strict restrictions you are 
under in terms of money to start focusing resources that are 
already there and coming up with programs that can get people 
to work immediately. I have a crisis that is ballooning much 
faster than I think anyone recognized, certainly 3 or 4 years 
ago, for the young in the city of New York and, I think, the 
young across the Nation. Thank you very much.
    [The prepared statement of Mr. David Jones appears in the 
Submissions for the Record on page 50.]
    Chair Maloney. Thank you very much.
    Mr. Wing.

     STATEMENT OF MR. STEPHEN M. WING, DIRECTOR, WORKFORCE 
             INITIATIVES, CVS CAREMARK CORPORATION

    Mr. Wing. Good morning, Congresswoman Maloney, and the 
members of the Joint Economic Committee. Thank you for inviting 
me to speak to you today about CVS Caremarks' experiences 
developing programs to train disadvantaged youth for careers at 
our company.
    But first, I would like to tell you about CVS Caremark. We 
are the leading pharmacy health care company in the United 
States and have more than 7,000 CVS/pharmacy stores and 211,000 
employees across 44 States, the District of Columbia, and 
Puerto Rico.
    CVS Caremark has built a track record not only as a great 
place to work, but as a company that has developed true 
specialties in the area of job creation and workforce 
development.
    Partnering with Federal, State, and local officials, with 
local nonprofit groups focused on job training and with the 
deans of pharmacy schools, we have developed programs that are 
recognized nationally as models for recruiting and training 
colleagues from all walks of life.
    CVS Caremark is facing high demand for supervisory and 
management staff and pharmacists. But within our current 
national workforce an absence of key basic academic and 
workforce skills make it difficult for many entry-level 
employees to advance into a management position. With the 
training for advancement, we are creating ``on ramps'' to 
employment and helping employees develop essential workforce 
skills they need for promotion within the organization.
    Through our Pathways to Pharmacy program, founded in 
partnership with the America's Promise Alliance of community 
groups and schools in 2000, Pathways to Pharmacy has surpassed 
its goal of introducing 1 million children to pharmacy as a 
potential career. We have also reached our goal of generating 
$4 million in summer internship wages for high school students.
    Our summer internship serves more than 1,800 teenagers in 
more than 40 cities each year. The summer programs run 6 to 8 
weeks, where high school students spend the first weeks 
learning about customer service and the field of pharmacy in 
classroom settings at colleges of pharmacy, and then the last 
weeks gaining hands-on experience while interning at CVS/
pharmacy stores.
    One example is 20-year-old Veronica Vergara, who 
participated in our Chicago Pathways to Pharmacy program 4 
years ago. She fell in love with the profession and is 
currently a junior at the University of Illinois, Chicago, with 
definitive plans to enroll in a four-year pharmacy school after 
she graduates. She also continues to work at the same CVS/
pharmacy since her internship. She started out as a pharmacy 
sales associate, and then studied to become a certified 
pharmacy technician. She now works 20 hours a week in between 
classes.
    CVS Caremark has also recently piloted a Pathways to Retail 
Careers program in Boston and Detroit, focusing on high school 
dropouts, working with several partners including WorkSource 
Partners as well as our own CVS Regional Learning Centers. We 
provide 6 weeks of intensive training in classroom settings. 
The training was designed so that it incorporates critical 
workplace skills as well as CVS specific training. In addition, 
the young people have a mentor and social support to help 
ensure their success. Following the classroom training period, 
the young people apprentice at a CVS/pharmacy store.
    In the second phase of the pilot, once the young person is 
an employee, we have designed a set of tools that can help them 
to continue their skill development with online training and 
on-the-job training. In Boston, the retention rate far exceeds 
the company's average. We developed this pilot with the support 
from the Kellogg Foundation's New Options Initiative. CVS 
Caremark plans to replicate this program nationally.
    When scaling up our various workforce programs to other 
markets, CVS Caremark has found that the most difficult task is 
identifying key players. Given that they are not the same in 
each market, we have learned that it is critical to develop 
partnerships with a range of local government agencies, faith-
based groups, community colleges, and other interested parties, 
and it is important to develop a detailed corporate plan first 
and then share the plan with the potential partners so that 
they fully understand the program's details, what is expected 
and how the program may further their own objectives.
    Lastly, I am on the board of directors of Corporate Voices 
for Working Families. Corporate Voices is a key player in 
working with businesses, and they have dedicated themselves to 
youth employment opportunities. They have compiled a case study 
on CVS's role in helping out-of-school-youth through our 
Pathways to Retail Careers pilot, and have also worked with us 
in Year Up, as Dr. Holzer talked about, to develop a pharmacy 
tech model. I would be happy to share this case study and the 
other Year Up work with anyone who is interested.
    Thank you, Madam Chairman and the committee, for allowing 
me to testify today on our CVS story.
    [The prepared statement of Mr. Stephen M. Wing appears in 
the Submissions for the Record on page 61.]
    Chair Maloney. Thank you.
    Mr. Sherk.

 STATEMENT OF MR. JAMES SHERK, SENIOR POLICY ANALYST IN LABOR 
               ECONOMICS, THE HERITAGE FOUNDATION

    Mr. Sherk. Chairwoman Maloney, Congressman Brady, and 
members of the Joint Economic Committee, thank you for inviting 
me to testify this morning. My name is James Sherk. I am a 
Senior Policy analyst in Labor Economics at The Heritage 
Foundation. The views I express in this testimony are my own 
and they should not be construed as representing an official 
position at the Heritage Foundation.
    As the other panelists have mentioned, today's youth face 
serious challenges. Congress should ensure that it addresses 
these challenges effectively. To do so, Congress should keep in 
mind several lessons from recent history about what does and 
does not work.
    The first lesson that Congress should keep in mind is that 
most youth employment programs have been shown not to work. 
Congress has created several youth job training and work 
experience programs: the National Supported Work Demonstration, 
Youth Programs in the Job Training and Partnership Act, 
JOBSTART, and, of course, Job Corps. These programs were and 
are well intentioned. Unfortunately, evaluations show that they 
have accomplished little. Youth who have used these programs 
are not statistically more likely to have a job or to have 
higher earnings later in life.
    To quote Nobel laureate James Heckman, the man who 
literally wrote the book on how to evaluate these programs, 
``Neither the experimental nor the nonexperimental literatures 
provide much evidence that employment and training programs 
improve U.S. youths' labor market prospects.''
    European nations have created far more extensive youth job 
programs than America has because they have much higher youth 
unemployment. Evaluations of these programs come to similar 
conclusions: Public training, wage subsidies, and direct 
government job creation have generally not worked.
    The Swedish experience of the 1990s should provide a 
particularly important warning. The Swedish government 
responded to a large rise in youth unemployment by creating 
large-scale youth job training and employment subsidies. 
Hundreds of thousands of Swedish youth went through these 
programs.
    Swedish youth who used these programs had no higher 
earnings and were no more likely to hold a job two years later 
than those who did not. Swedish taxpayers' large investment did 
little good for the Swedish youth.
    Congress should carefully evaluate proposed expansions of 
youth job programs to ensure that the same does not happen to 
either American youth or American taxpayers.
    The second lesson that Congress should remember is that a 
stronger overall labor market is the best way to help young and 
low-skilled workers. Employment among younger workers is 
procyclical. As you can see from the chart against the wall 
there, in recessions youth unemployment increases more, but 
also in good times it falls more, than unemployment among older 
and more skilled workers does. During the economic boom of the 
late 1990s, the employment prospects of low-skilled workers, 
including the young, improved substantially.
    [The chart titled ``Young Workers Face High Levels of 
Unemployment'' appears in the Submissions for the Record on 
page 77.]
    Now, Congress has no silver bullet policies to get us back 
to the strong job markets of the late 1990s. However, Congress 
can take steps in that direction by removing barriers to 
entrepreneurship, investment, and wealth creation. This will 
spur employers to hire as they take advantage of these new 
opportunities, increasing the demand for labor, including the 
labor of young workers.
    Concrete measures towards this goal include eliminating 
regulations that do more economic harm than good, removing 
barriers to domestic energy production, and suspending the 
Davis-Bacon Act.
    If Congress wants to take measures that would particularly 
target hiring of young workers, Congress could suspend the 
recent increase in the minimum wage. Half of minimum wage 
workers are between the ages of 16 and 24, and economic studies 
show that a 10 percent increase in the minimum wage decreases 
teenage unemployment by roughly 2 percent.
    This suggests that the increase in the minimum wage from 
$5.15 an hour to $7.25 an hour has cost roughly 480,000 
teenagers their jobs, with additional job losses among 20- to 
24-year-olds. As the other panelists have discussed, these job 
losses mean lasting pain for these teens because the main value 
of a minimum wage job is not the rather low wage it pays today, 
but the training and the experience it provides for the future. 
Congress could put these youth back to work by returning the 
minimum wage to $5.15 an hour until youth unemployment falls 
back to pre-recession levels. This would create hundreds of 
thousands of youth jobs and provide them with valuable 
experience without costing taxpayers a dime.
    The third lesson that Congress should keep in mind is that 
of the Greek crisis. Unsustainable government spending 
eventually means severe economic hardship. Today's youth face a 
far more serious challenge than even this painful recession. 
They face the burden of paying for the baby boomers' retirement 
and the debts being accumulated today.
    By 2050, Social Security, Medicare, and Medicaid will 
collectively consume one-sixth of the American economy, and 
paying for these entitlements will place a very heavy burden on 
America's workers--today's youth. To balance the budget without 
cutting spending, Federal taxes would have to nearly double.
    Today's bailouts and stimulus packages are adding to this 
burden. Dr. Edward Stringham of Trinity College estimates that 
the 2008-2009 bailouts and stimulus packages will cost the 
average 22-year-old graduating from college today $145,900 
during his working life. That is the equivalent of making him 
buy a high-end iPod and throw it in the trash every month for 
the rest of his working life.
    Today's youth are set to become a debt-paying generation, 
working to pay off the debts of their parents and their 
grandparents, and this threatens their future far more than 
this painful recession. Congress should hesitate before adding 
to this burden. Thank you. I appreciate the opportunity to talk 
with you about how to avoid ineffective policies and pursue 
successful policies to help America's youth.
    [The prepared statement of Mr. James Sherk appears in the 
Submissions for the Record on page 78.]
    Chair Maloney. I want to thank all of the panelists for 
their insight and their testimony.
    Dr. Holzer and Mr. Jones and Dr. von Wachter, you all 
mentioned the scarring effect that our young people experience 
when they are not able to get a job when they graduate from 
college or high school. And Dr. von Wachter, I found your 
testimony and research particularly riveting when you pointed 
out that the scarring effect lasts for 15 years in reduced 
earnings. I would like to point to this very troubling report 
that we just did that has the unemployment for our young people 
going through the roof, particularly the 16- through 24-year-
old age group. Certainly with the seniors and mid-age 
employment, it is far less. And I would like to ask all of the 
panelists, what action can policymakers take to mitigate this 
effect of so-called ``scarring'' that affects not only the 
individual but their ability to contribute to the overall 
society and economy? Are there any initiatives or anything that 
we can take to mitigate this scarring effect? Dr. von Wachter, 
and then just go down the line if you have comments on it.
    Dr. von Wachter. I am going to pick up one of the 
suggestions made in my testimony. It is important to raise 
awareness of what young workers can do to recover from a bad 
initial start. For example, in high school or in community 
college or in college, it is important to explain that the 
recovery process can take a long time; that it will involve 
hard choices; it will involve compromises; it is likely to 
involve continued investment and continued mobility. I think 
many young graduates don't realize that they have to 
fundamentally change their career plans. I think it is also 
important to point out where such information can be gotten, 
where information on jobs and growth in the occupation industry 
can be obtained. Such counseling and information, in addition 
with potentially a voucher for retraining or career building 
could be of significant help.
    Chair Maloney. Where do you find the information on the 
sectors or areas that would be employing young people? Is there 
some central place that young people can go to see where jobs 
are for their age group?
    Dr. von Wachter. Currently a lot of this information can be 
found on the Web site of the Bureau of Labor Statistics or the 
Census Bureau, but it is scattered and it could be much more 
effective if perhaps concentrated in one place. But in addition 
to this information, it is also important to teach young 
workers on how to use this information and to keep using it for 
a longer period of time. So this information could be provided 
in one-stop shopping centers that are used to help job search 
for unemployment workers. But then the awareness has to be 
raised that that is where the information is. Or it could be 
that a central Web site is provided that gives the various 
links to the various pieces of information. So the teaching 
aspect is important, because not everybody knows from the start 
how to read government statistics on unemployment trends. But 
they can be very useful.
    Chair Maloney. Dr. Holzer and Mr. Jones, would you comment 
on the scarring effect and what we can do to alleviate it? And 
is the scarring effect on young workers more or less the same 
than on older workers? Or is it more severe with younger 
workers?
    Dr. Holzer. Well, I think we know that the scarring effect 
is more severe because this is a more critical time for young 
workers when they pick up really key labor market experience 
that affects their long-term earnings. So when we talk about 
policies to remediate this, I think it important that anything 
we undertake and anything we spend public resources on target 
this group and have some track record for cost effectiveness.
    Now, as I mentioned earlier, I think we could engage in 
well targeted job creation efforts, either through tax cuts for 
new hires and tax credits for hiring and on-the-job training 
much more robust than the recent payroll tax cut that Congress 
passed. And also, some public service employment that would be 
heavily targeted towards disadvantaged adults and especially 
disadvantaged youth. And I think we have evidence on those, and 
we know that those can be done in ways that are well targeted 
and relatively cost effective, and you can get quite 
substantial job creation, good bang for the buck.
    But I also think another way to offset whatever scarring 
occurs is to have more robust education and training that is 
closely linked to labor market opportunities. And in different 
areas we know how to do that and we have evidence. We have 
evidence for young people still in high school on the power of 
a high quality career education, like career academies and tech 
prep that again combine strong academics with good workforce 
experience.
    We have some evidence at community colleges on what works 
to not only improve completion rates, but make sure that what 
people learn is tied to labor market opportunities. And even 
for young people who have dropped out of high school--and I 
think this is the most challenging group--we do have evidence 
from programs that not only create employment but tie that 
employment creation to skill-building efforts, training 
targeted at key sectors of the economy. And there are several 
efforts there that we could discuss. But all of these offer 
opportunities I think not only to create more jobs, but also to 
improve education and training.
    Chair Maloney. My time has expired. Mr. Brady.
    Representative Brady. Thank you, Madam Chair. We have had a 
lot of thoughtful testimony today. Thank you all for being 
here. How many separate Federal jobs training programs does the 
Federal Government have? Does anyone on the panel know? The 
reason I asked, I had served on job training programs at the 
local level for many years, 20 years ago, and it was a 
staggering number then. As you were talking, I just Googled 
that question myself, and in one city, Washington, D.C., if you 
go to the simply hired Site, it says here you can access at one 
point all 241 separate youth programs in Washington, D.C. They 
have training employment, youth experience training, youth 
exchange training, teen bridge, homeless youth jobs program, 
Latino jobs youth program, disadvantaged youth program, Job 
Corp, JOBSTART.
    How do we know what works when we don't even know what the 
Federal Government offers? And, is anyone really examining the 
effectiveness of decades of programs layered on top of decades 
of youth programs? And how do we find out what has the best 
bang for the buck?
    That is not your fault. My point is, I am not sure we know 
what is working because we don't know everything that we are 
pouring billions of dollars into. And I still am convinced that 
that first job a young person gets is a key turning point in 
their life. And getting them into that first job, whether it is 
through internships, that first minimum wage job makes a huge 
difference in creating a stronger economy and making it easier 
for small businesses to hire young people, as I think is 
probably the key, whether you are in New York City or Texas or 
rural America.
    So my question is, how we make it easier for small 
businesses to bring on young people for that first training 
job, where they don't have experience but it puts them on the 
right path?
    So Mr. Sherk, you sort of addressed this. And I will start 
with you. You talked about reducing the minimum wage for youth 
to, again, make it easier for small business to hire. In real 
life, increasing from $5.15 to more than $7, what that meant is 
small business has to come up with an extra $5,000 a year to 
bring that young person on the job.
    What kind of impact has that had? You talked about it, but 
addressing that issue to bring on more youth, removing other 
barriers, how do we start making it easier for small businesses 
to hire?
    Mr. Sherk. I think that reducing the minimum wage back to 
its previous level would be one of the most effective measures 
that we could take. Studies done in better economic times when 
businesses didn't have to be as conscious suggest that this 
increase in the minimum wage costs about half a million 
teenagers their jobs, and probably closer to 900,000 youth when 
you include young adults.
    Now that we are in a recession, businesses and consumers 
have become extremely cost conscious. They are trying to save 
pennies. Businesses have very little room to pass those costs 
on to consumers. So the minimum wage has an even greater 
employment effect than those studies indicate.
    Representative Brady. No one ever wants to lower wages for 
people. It is just counterintuitive for the country. But what I 
see are small businesses that normally see that as on-the-job-
training, you know, plus the ability to assess the skills and 
the work ethic of that person, often with the opportunity to 
move them off it. The goal isn't to increase the minimum wage. 
It is to move people off of it. It is to get them trained and 
move them on to a path that is much more economically stronger 
for them.
    So if you lower the minimum wage, does it set people back, 
or does it give more people an opportunity to move forward?
    Mr. Sherk. Well, most people on the minimum wage are part-
time workers, 64 percent. And it is exactly as you suggested, 
it is a training wage. It is a training job. Two-thirds of all 
workers who earn the minimum wage are earning more than the 
minimum wage a year later.
    Representative Brady. Run that by me again.
    Mr. Sherk. Two-thirds of workers who today earn a minimum 
wage, come back and look at them a year later; and if they are 
still working, they are earning above the minimum wage. They 
have earned a raise. What it does is allows workers who have 
very few skills to come in, get trained in very practical 
things like the discipline of showing up on time for work every 
day, skills that make you more productive and earn you a raise. 
It is not a lifetime job for very many workers at all.
    Representative Brady. You talked about the domestic energy 
supply. Energy in America employs 2.2 million people directly. 
Many of them are high school graduates who earn, I know, from 
Texas, looking at some of our energy jobs, $60,000 to $80,000, 
many of them minority, many Hispanic, to be honest, and an 
opportunity to make--to raise a family to have that job.
    You know, if we make it harder to produce, explore, energy 
in the United States, does that cut off or reduce the 
opportunity for well-paying jobs for people without necessarily 
a college degree?
    Mr. Sherk. Absolutely. And it does it in two ways: First, 
we at Heritage have estimated that expanding domestic 
production of oil by 2 million barrels a day would create 
270,000 new jobs. You have got the direct jobs in the energy 
sector itself, but then you have second, the overall effect on 
the economy. What happens when we have more oil being produced? 
Well, energy is less expensive. You gas up your car, and it is 
that much cheaper, which means you have that much more money to 
spend somewhere else in the economy.
    So even if you do not have a job that has anything to do 
with energy, it means more money in your pocket, and it is 
better for the economy when energy is less expensive.
    Representative Brady. Madam Chairman, at some point, too--
Mr. Sherk, you talked about it. At some point, I would love to 
hear more about what other barriers there are for small 
businesses to hire young people.
    Chair Maloney. The gentleman's time has expired. Senator 
Klobuchar.
    Senator Klobuchar. Thank you very much. I appreciate it 
that the other members are letting me go ahead here, because I 
have got something to get back to in the Senate. Thank you very 
much.
    And I really, listening to you this morning, it made me 
realize that the statistics support what I have been hearing at 
home. When I get back, I hear from so many young people who are 
having trouble getting work, either some summer jobs, but a lot 
of them are college graduates or high school graduates who, in 
other better times, would be able to get a job.
    So this isn't my life growing up in the suburbs in the 
1970s when it was simple to get the car hop job at the A&W or 
the Baker's Square Pie Shop, where I would tell you, Madam 
Chair, my career came to an abrupt end when I spilled 12 iced 
teas on one customer. That is when I decided to go to law 
school.
    So my questions are, first of all, about how we get those 
that are in college right now, and even in high school to focus 
on some of these skills that were just being discussed in the 
energy area, or perhaps in the science in the area of health 
care, which I think there will still be more needs as our 
population ages. How should we target that skill development 
toward sectors of our economy that will generate demand in the 
coming years? Anyone can take it.
    Mr. Wing. Thank you, Senator, for the question. I think one 
of the things that we are doing at CVS Caremark is in our 
Pathways to Pharmacy program, we go back into elementary 
schools and we start to talk to kids about pharmacy. Our 
pharmacists volunteer to go to career days and talk to kids 
about pharmacy and what a pharmacist does.
    And then in middle school they actually, they come and 
shadow us at the store. They spend time with the pharmacist and 
the manager just to see if this is really something that they 
want to do. And then in high school, then they do an internship 
and then they really see. And just like I was talking about, 
Veronica, I mean there are hundreds or thousands of kids that 
we have around the country that are participating in that 
program. And they get excited about the opportunities and then 
they start to take the right courses that are going to get them 
into pharmacy so that they are getting prepared at an early 
age.
    Really in middle school is where I think they, where we are 
seeing where it is really important that they start to take the 
right courses to get themselves prepared.
    Senator Klobuchar. That is pretty early, having a 14-year-
old myself. Dr. Holzer.
    Dr. Holzer. Senator, I think there are--we have strong 
evidence of areas and programmatic efforts both for in school 
use and out of school that can successfully target growing 
sectors of the economy. I think this general statement that Mr. 
Sherk made before that nothing works for this population is 
simply incorrect when you read this evidence closely. There are 
a lot of programs that haven't worked. We have developed a 
better sense over several decades of research what does work, 
what gets people not only secondary and post secondary degrees, 
but targets towards growing sectors of the economy that good 
jobs.
    For instance, the career academy's program for high school 
students has been rigorously evaluated and shown as much as 8 
years later to have strong effects on earnings, especially for 
at-risk young men for whom other programs have more trouble 
working. Also programs like tech prep that build pathways from 
high schools into community colleges.
    Senator Klobuchar. And are these, like, one class that the 
kids take?
    Dr. Holzer. No. For instance, the career academy is a high 
school within a broader high school that targets a sector of 
the economy. So there is a health services career academy or a 
financial services or an IT career academy, and people take a 
combination of academic courses to keep open their post 
secondary options as well as career oriented and occupational 
training.
    And I think at the community college level, which is so 
important right now, we have strong evidence that getting 
certificates, even for a young person who didn't do that well 
in high school, if they get certificates in some of these key 
areas, health technology and some other areas, it has quite 
dramatic effects on their earnings.
    Senator Klobuchar. Do you think there should be a bigger 
emphasis on trying to have targeted community colleges or even 
regular colleges having two-year degrees in certain areas?
    Dr. Holzer. Two year degrees, certificate programs, I think 
the whole range, the labor market rewards the whole range. I 
think what we need is better coordination. It is not just 
necessarily throwing money at these sectors, but it is better 
coordination between our educational institutions and our 
workforce development efforts. I think the Workforce Investment 
Act needs to be advised in a way that improves this tie to the 
education system, and you can do things also through Perkins, 
through ESEA, I think to improve the coordination of those two 
sets of institutions and make them more responsive to the labor 
market.
    Mr. Jones. One thing, Senator, you have to recognize, we 
have an extraordinarily low graduation rate out of our 
community colleges. I think it is 2.3 percent in 2 years in New 
York. And when you look at that and deconstruct it, it is 
basically about money. There is no money. We do surveys and 
find that most poor households have less than $100 in total 
reserves. When someone reaches that age of going to community 
college with no supports, it is very difficult to make it. It 
has nothing to do with intellectual capacity. It is the 
question of how can you survive. You have to be working two 
jobs and trying to do college level work at the same time.
    So I think we have to look at subsidies if we want to have 
young people be able to succeed in community college technical 
programs.
    Senator Klobuchar. Thank you. I note that The New York 
Times recent article, Plan B: Skip College, also talked about 
even with the bachelor's, only 50 percent of students get their 
degree within 6 years, so thank you very much.
    Chair Maloney. Thank you. Mr. Cummings.
    Representative Cummings. Thank you very much, Madam Chair. 
Mr. Jones, I was just listening to your testimony, and towards 
the end of your testimony you seemed to get very passionate, 
and I think it is because you had just gone through and talked 
about what you saw as a youngster and what you see now. And the 
point you just made is so significant. I sit on the board of a 
historically black college, Morgan State University, and sadly, 
we have to let a lot of our kids go. Why? Because they don't 
have any money. It is not that they are not bright. They don't 
have the money.
    I have another school where the graduation rate is 18 
percent. Again, money. Then when I hear comments from people 
like Mr. Sherk, sometimes I wonder whether or not there is a 
disconnect with reality. Because when one of these young people 
can get $1,000, I mean in a job working, that $1,000 may very 
well be the link between them staying in school and leaving 
school. And what we have seen is that if they leave school the 
likelihood is they will never return. And so I don't know what 
you say to kids. And these kids want to work. A lot of times 
they cannot find the jobs. And so I was just wondering what you 
have to say. I will go to you Mr. Sherk in a minute, but what 
are your comments on that, Mr. Jones?
    Mr. Jones. I want to echo the problem of dropping out and 
then trying to reconnect. We did a report on GED, which is your 
second chance if you drop out basically, across the country set 
up just after World War II for returning veterans who didn't 
have a high school diploma to come back into the system. Really 
a building block much to my shock for virtually any career now. 
You can't get into pre-apprenticeship programs in plumbing, 
electricians, carpenter, any more in the city of New York 
unless you have a high school diploma.
    So this is almost a necessary requirement. The difficulty 
is once you drop out, the GED is considered sort of a second 
rate degree. We presented some of the GED math problems to the 
regions of the State of New York and 50 percent of the regions 
couldn't do the math problems because it has been too long. As 
the time goes on after you are in the rigor of school, trying 
to reconnect, it has nothing to do with your intellectual 
capacity, you lose those skills.
    And that is why it is so important to hold young people in 
as best you can, because that is the best shot to get their 
high school diploma. But it is becoming money. When you turn 15 
or 16 in the middle of the South Bronx or Brownsville, or I 
assume across America, and there is no money in the household, 
how can you sit around if there is no indication that there is 
going to be a job out there for you even if you get through the 
high school diploma and get into a community college with the 
family struggling with no resources?
    I think we are sort of having this image of a middle class 
America and we are imposing that on working poor people across 
the country, and it is not fair. And I guess I do get emotional 
about this because I see deterioration from the time I was 
coming through. It was supposed to be progress forward, not 
backwards. And now when I visit my community it is backwards.
    Representative Cummings. Mr. Sherk, I am going to get to 
you in a minute, but I am running out of time, and I wanted to 
ask Dr. von Wachter a question. You know, there was a recent 
article talking about the importance of childcare subsidies for 
the unemployed and lower income workers. Can you discuss the 
issue whereby it seems that younger workers are more reliant on 
these programs and exactly how do they affect the employment 
rates of these young people?
    Dr. von Wachter. Just a question for clarification. These 
are subsidies for getting a job?
    Representative Cummings. Yeah. If you can't answer it, can 
anyone else on the panel? Subsidies for childcare, very 
significant, because we have a lot of young women in particular 
who don't have childcare and they have gotten subsidies, now 
those subsidies, because of the economy, are being cut back or 
cut down substantially.
    Dr. von Wachter. I think any subsidy that can keep young 
workers in a job or help them to obtain a job are crucial. So 
even paying a young worker, giving a bonus, a reemployment 
bonus, or paying the employer to hire young workers is 
worthwhile for the reasons we discussed, because getting a 
first job and keeping it is so important.
    In fact, the point I wanted to make in the discussion of 
the minimum wage and of community colleges, it that it is 
important to bring employers back onto the table and discuss 
with employers what employers need, which type of training in 
young workers they want. This way the information of where 
young workers would be most needed, where the growth jobs might 
be will be provided automatically. And I just want to point out 
the most successful job training program in the world is the 
German apprenticeship program. These firms can effectively pay 
subminimum wages by giving a training guarantee. What that 
means is that successful firms choose to provide training. 
There is an active market where firms compete for high school 
graduates, providing direct information on where the most 
promising jobs are.
    It could be happening right out of high school or again 
community college, that could be linked as effectively as 
another way of having a job subsidy, so allowing minimum wages 
for firms who guarantee training.
    Representative Cummings. Thank you Madam Chair.
    Chair Maloney. Thank you. Mr. Snyder.
    Representative Snyder. Thank you, Madam Chair, and thank 
you for having this hearing. I want to continue a bit the 
discussion of Mr. Cummings. And he and I were talking back and 
forth about this issue of high school dropout rates. I mean, it 
really is a discouraging thing, I mean, when you look at the 
last several decades. I think 20 years ago, none of us would 
have predicted, I don't think, that in 2010 we would still be 
talking about 25 percent high school dropout rates in some 
populations. So I would like each of you to spend a little bit 
more time on that about what is it that we need to do. Where 
are we missing the boat? I mean, I think it is probably a 
combination of things. There is not one answer. You have got 
subsets of kids. But what do we need to do. Mr. Sherk, let's 
start with you.
    Mr. Sherk. The problem with high school dropouts involves 
education reform much more than labor issues. One of the 
interesting things you saw in the economy of the late 1990s, a 
very good economy, but unfortunately you had a number of youth 
dropping out of high school to take jobs. At the time it was a 
very strong youth job market and they did not enjoy school so 
they were dropping out to take these jobs. Of course they were 
hurting themselves for the rest of their working lives because 
of a very shortsighted decision. I think it is much more a 
problem of how do we fix the school system and reform education 
than it is an issue of what do we do about the labor market. 
But once you have these dropouts, it has very severe labor 
market consequences for them going forward.
    Dr. Holzer. If I could address that, Mr. Snyder.
    Representative Snyder. Why don't we just march down.
    Mr. Wing. Do you know something, that is a great question. 
Because as I go around the country, I am appalled by that to 
see in the intercities that we see 60--50, 60, 70 percent 
dropout rates. It is unacceptable to see that in this country. 
And I think one of the things that we are trying to do through 
our Pathways program is really get those, and the pathways 
program is really designed for intercity rural kids, those are 
the ones we are trying to go after, and to find the minority 
candidates.
    Because there, I think it was said earlier that there are 
some really bright kids, they just need some guidance there. 
And so that is what we do with our Pathways program is we get 
into the middle schools and start to encourage those kids. Not 
that they are going to become pharmacists, but to encourage 
them to take the math and science courses that are going to 
enable them then to get into high school and get excited.
    And that has been working for us, and we have been--like I 
said, Veronica is one example, but we are seeing thousands of 
those kind of kids that are getting turned on to see that there 
is a career path. And then you have mentors, the pharmacists 
and the managers and folks become and people in the circuit 
become the mentors to help them.
    Mr. Jones. I will be very brief. Obviously, as Mr. Sherk 
has said, there is a major educational reform problem here. We 
have this debate in New York City all at once. Many in the 
Department of Education feel that if children have not acquired 
basic reading and numeracy skills by the fourth grade, it is 
basically a long slide. I don't believe that. I couldn't read 
in the third grade. I managed to recover. But I think the issue 
becomes that--we have a couple of things. We have been 
spending, even in the city of New York much less on young 
people in very poor communities than we do not.
    Examples of that are the Stuyvesant High School, one of the 
best in the country, the $13 million just spent on the bridge 
across the highway, I have no operating labs in many of my high 
schools in poor communities, so there is disproportion going 
there. But I also think there is something else which I think 
is more--actually I never thought I would be there. That we 
have to have a serious discussion on career and technical 
education. New York City has one of the poorest systems of that 
sort in the country, despite our enormous dropout rate. And 
this is, when we poll people at 200 percent of poverty or less, 
which we do every year, after they talk about better teachers, 
better paid teachers, smaller class size, the third thing they 
talk about is a focus on career and technical education for 
their kids, because they recognize to come out with a general 
diploma in this environment, in this global economy without 
real skills that can allow you to become independent is not the 
way to go.
    That then education could build on that, but the finances 
have become so critically important for working families that 
this notion of a long childhood where you can sort of lope 
along finding yourself just isn't available. And I think we 
have to start taking this seriously as early as junior high 
school. Summer employment should not be a generalized thing, it 
should start to link up with actual job skills and taking 
things along in an exciting way, but something that can 
actually give you a career when you are out of it and let you 
then decide how your educational progress will go from there.
    Dr. Holzer. I want to echo the points about a career in 
technical education. I think when people start dropping out of 
high school, again in these low-income communities, 25 percent 
is the average nationwide and in some communities it is much, 
much higher, as Mr. Wing said. Some young people drop out 
because they are very far behind, but many drop out because 
they don't see the point. And they don't see any pathway to 
success in their schools, in their families and in their 
neighborhoods for people who look like themselves. And we have 
let those pathways erode.
    Now historically, we had something called vocational 
education that was disliked in low-income and minority 
communities because it was viewed as a form of tracking; oh, 
you middle class kids get to go to college, but the low-income 
and minority kids get trapped into voc-ed.
    And in many cases it was an academic backwater. That no 
longer has to be the case. And we have good examples of high 
quality career and technical education like the career 
academies, like tech prep, where the academic component is very 
strong and young people are still encouraged not just to get a 
high school diploma but to go beyond that and get good post 
secondary training, but at the same time, they get occupational 
training and good labor market experience and growing in high 
rate sectors, and the evaluation evidence on all those is very 
positive.
    So we have to rebuild not old-fashioned voc-eds but high 
quality career technical education linked to strong sectors of 
the economy. There is other evidence of things like mentoring 
programs, certain kinds of case management that also tend to 
reduce dropout rates. But I think there are two ways to attack 
this. You can try to prevent dropping out early on, which we 
certainly do, and then you can try to reconnect the people that 
have dropped out.
    Now, earlier, Mr. Brady counted up hundreds of employment 
programs of disadvantaged young people. And he is right, we 
have had this scattershot approach of a lot of tiny programs. 
If you add them all up, the resources in those programs are 
very, very small. As a percentage of GDP, this country actually 
spends very little compared to other industrialized countries 
on active job training and labor market programs. But we have 
efforts to reconnect high school dropouts that have proven to 
be successful. I will mention a couple.
    The National Guard runs a program called the challenge 
program funded from the Department of Defense that has had 
remarkably strong effects in random assignment evaluations on 
getting young people not only their GEDs and their high school 
diplomas and then getting them into further education. So 
programs like that certainly need to be in hand. We also had a 
program started in the Clinton Administration called the Youth 
Opportunities program which targeted money to low-income 
neighborhoods both for schooling and employment with a lot of 
the money going to high school dropouts. That program was very 
quickly killed off in the Bush Administration, and, in fact, an 
evaluation report that was quite positive was embargoed for 
many years, perhaps because the results were quite positive in 
that evaluation. But we know ways to improve both enrollment 
and graduation rates and reconnection rates for these young 
people who have already dropped out as well as improving their 
labor market success.
    Chair Maloney. Thank you.
    Dr. von Wachter. Currently in most States, the compulsory 
schooling age is 16. There was a time where at 16 you could get 
a decent job in a factory in manufacturing. Those jobs are 
mostly gone because of the way the economy has changed and 
focused on more technical, more highly skilled jobs. One way of 
addressing the problem of youth unemployment is to force people 
to take some form of training until age 18. This is done for 
example in Germany, which has the highest youth labor force 
participant rate in the world. In this way, individuals would 
enter the labor market with more skills and have more 
opportunities. It is not surprising that people age 16 who are 
low skilled and think of dropping out of high school don't see 
many labor market opportunities, since there aren't that many 
opportunities for these people. So letting them enter the labor 
market later with a better skill set may allow them to better 
compete in the labor market.
    Chair Maloney. Thank you. I would like to ask Mr. Wing and 
Mr. Jones: In April, the unemployment rate for our young people 
reached an all-time high of 19.6 percent in that age range of 
16 to 24, which is truly a crisis number. Mr. Wing, you have 
run a successful job training program, and Mr. Jones, in your 
testimony, you talked about using HUD money in public housing 
projects as job training. There is one specific program that is 
moving through Congress now. It is $300 million for youth 
summer employment. Can you offer ideas of how we might target 
that program in a way that would give the career education 
opportunities that Dr. Holzer and Dr. von Wachter have been 
talking about? Is there a way we could tie it to successful 
programs and pharmacies, such as you have done, Mr. Wing, that 
at the end of the summer, there is an opportunity like the 
young woman you described who is now in college and has become 
very inspired with her experience in working in a pharmacy?
    Is there a way we could use the program's funds in a more 
productive way to employ not only for the summer, but to 
inspire and give a vision for our young people in the future? 
And Mr. Jones, you have been running these programs or involved 
with them in many ways, and you might have some insight that 
might help us in directing these funds in a more productive 
way.
    Mr. Wing. Well, I agree with what you are saying there. And 
I think one of the things that was mentioned earlier was 
talking about year round. I think that it is great to have a 
summer program, but I think these are things that need to be 
year round so that the kids really can learn all the 
different--there are different times and there are different 
things that happen during different times of the year. And I 
think one of the things that we have noticed with these kids, 
that they are resilient, they really are dedicated. And when 
they get the opportunity to come to work they are going to stay 
to work. And even through going through school, several of 
these folks that we have examples of, that they are working two 
or three different jobs because they are helping to pay for 
their education, but they are also helping their parents 
because they are struggling.
    So I think it is important that we look at not just summer 
programs, but that we make these and expand these into year 
round programs so that while they are in school, they can be 
taking the things that they are learning in school and then 
applying them at work and vice versa. And I think one of the 
things that we are seeing is that at the community colleges we 
are having our pharmacists and our managers, they are becoming 
volunteers to do teaching, do some of the classes. And even in 
the high schools too, we are doing that. So that the kids are 
really learning from and the managers and pharmacists are 
becoming mentors to them.
    Mr. Jones. Just very briefly. I would tend to agree year 
round programs work much better. There is a problem with not 
having sort of rigor in summer youth employment jobs. It is an 
opportunity to start having certain skills provided so young 
people start to understand what the work life is. I mean, this 
is the first approach. And we never--I used to be head of youth 
services for the city of New York, and we never had the rigor 
back then. That was a long time ago, but it is still lacking. 
And if this is going to be the opportunity, a rare opportunity 
to connect young people to the world of work, we should you 
know require that they come to work on time, do they get 
evaluated at the end, no matter how you do this to make this a 
real work experience that can give people the structure of what 
the world of work is like.
    And I think just the notion of here is your check, come 
here, but at the end of it there is no connection to another 
employer, whether private or public, there is no real 
definition of whether you did a good job or a bad job. I think 
it is a wasted opportunity with scarce money. So I do think we 
have to seek rigor. It may not be immediate. But as these jobs 
go on, it should be year round, it should hit out of school 
youth as well as in school youth and it should really start to 
look more like a real job so that young people can get a taste 
of what this is about.
    Chair Maloney. Thank you very much. Mr. Brady.
    Representative Brady. And I think this is a healthy 
discussion. I appreciate Mr. Snyder commenting about dropout 
rates that impact, how we address it. You know, I do think 
there is, and I don't know if Dr. Holzer made the point or Mr. 
Jones, but there are some real opportunities for kids who 
aren't going to college or choose not to. There seems to be, as 
a layman not in the education community, but there seems to be 
a disconnect between what the parents and I think students want 
and what the educational leaders want, in that technical 
vocational training is frowned upon as tracking, Dr. Holzer, I 
think used that word, almost giving up on kids if you do that.
    Yet in southeast Texas, for example, you always know your 
own area better, but up until last year, our biggest labor 
problem is that we couldn't find 10,000 welders to work on the 
refinery expansions, the new natural gas projects, everything 
that was going on. Now, obviously that has cooled down because 
of the economy.
    But even this year we lost the Eastman project, $1.6 
billion, 1,500 construction jobs, due both to the global 
economy and the fear of cap and trade. But the point was that 
we were having trouble finding those workers because education 
sort of frowns upon that. And that our curriculums at the State 
level, not necessarily the Federal, are really geared toward 
that college degree. You know, a welder in southeast Texas 
starts at $35,000 a year, not much in New York, but it is a 
start in Texas. You know, skilled welders are up to $80,000 to 
$90,000. You can raise a family on that. So my question is a 
general one. How do we reinstate, not for everyone, but for 
those who choose to, which require a lot of training in 
themselves, the vocational and technical job paths where 
dropout rates can be addressed, where there is an alternative? 
You know, this path is usable, it is workable, it creates real 
revenue for you and your family so you don't have to drop out. 
Let me just open it up, Madam Chairman, with your permission.
    Dr. Holzer. Congressman, I agree with you very strongly. 
And I fear that some of the discussions of education reform 
that are occurring right now place too much of the emphasis is 
on academic--you know, academic skills are very important. The 
achievement gaps between middle class kids and low-income are 
very important issues. But sometimes the conversation becomes 
too narrow and we talk about an academics-only set of standards 
that I think is inappropriate and ignores these parts of the 
labor market that I think you accurately describe where there 
are good opportunities for noncollege graduates, but they need 
to have something beyond usually just a high school diploma.
    They need to have some significant on-the-job training or 
some significant career education. I think the way to counter 
this is to make the career technical education high quality, 
number one, to make sure that it combines strong enough 
academics so that people who want to go on to post secondary 
and should go on have the background to do that.
    This should not be viewed as a dead end in and of itself. 
It needs to be one of many pathways that people can see when 
they are in high school. Some pathways lead into the labor 
market but they go back afterwards for post secondary. But 
there are good job opportunities that can be accessed right now 
with those skills. And I think young people need to see those. 
I think young people, even people in community college, often 
don't have a clue about what the labor markets are like in 
their areas and what I think information is. First of all, it 
is very important and very lacking. And I think young people 
need a sense of the range of careers out there. Good paying 
jobs for kids with no skills are disappearing. But, in fact, 
good paying jobs for folks with strong academic plus 
occupational skills and some post secondary certificates remain 
strong, and I think we have to rebuild the quality of those 
programs, the links to the labor market and the perceptions 
that they can matter that can be a viable alternative.
    Mr. Wing. I would like to add to that too. I think that is 
a great question. Because I think it is not just looking at 
getting kids prepared for college. We also have to look at the 
kids that are going to go to the community colleges or that 
they are going to go to technical schools, and I think really 
the program we have, the Pathways to--that is in Boston is a 
great example of getting kids that are dropouts. They get 
excited. They want to come to work.
    And we really have seen a great increase in retention with 
those kids because they know that this is their chance to get 
ahead and have a career opportunity, and so they are really 
digging into it. And then at that point, they are going on to 
get additional education. So we see, you know, working 
together, and I think the important thing that I would want to 
say about all of this is that you have to have the 
partnerships, you have to develop those relationships with 
government agencies and the foundations and different 
organizations that are going to help you to bring all of the 
things that Dr. Holzer is talking about together. And that is 
what has helped us to be successful, especially in some of 
these tests that we have done.
    Mr. Jones. Just a New York example, and I will be brief. 
The aviation high school which is one of the most successful of 
our voc-ed or technical education, even with the vagaries of 
the airline industry, those graduates are immediately picked up 
with really great paying jobs. And I think what has relieved me 
somewhat, because I come out of a generation where the notion 
of voc-ed was anathema, a no black child. My father wasn't even 
allowed to touch tools for fear he would not become a 
professional. But when I started--when we started polling and 
started talking directly to the constituencies we are trying to 
help, they got it, they don't want their young person to have 
to live with them or not be able to support themselves, they 
want good paying jobs with skills. And they recognize that the 
path we are going on, which is this generic education that is 
supposed to be leading to theoretically to a four-year college 
is not leading their kids to independence.
    So I think you have to rest back on the base now of working 
people and the struggles they are up against and their hopes 
for their kids to be able to make it into the economy.
    Representative Brady. Thank you all very much.
    Chair Maloney. Thank you very, very much. Mr. Cummings.
    Representative Cummings. Thank you. This has been a very 
interesting discussion. Let me ask you. First of all, a lot of 
this seems to be about vision, young people seeing their 
future. Several of you have mentioned that. And Mr. Wing, if 
you can answer me quickly, what caused CVS to do what you did.
    Because I agree with Mr. Brady in one of our rare moments 
of agreement that this has to be not only do we spend dollars 
in the public, but the private folks like you all have to make 
a contribution too. So I am trying to figure out what is it 
that caused you all to say, wait a minute, was this a board 
decision, did somebody just come up and say, the government 
says can you do this, how did that come about?
    Mr. Wing. It is very simple. It is a business decision, we 
need good people. And so it is hard to find people. And so this 
was one of, this is one of our main sources of getting people, 
is to be actively recruiting people and developing those 
partnerships. So we put money into it and the agencies put 
money into it. It is a partnership.
    Representative Cummings. When I listened to the discussion, 
I couldn't help but think about a program that I, along with 
the University of Maryland in Baltimore, our professional 
school, put together about 5 years ago where they joined in 
with our career medical, allied medical high school. They 
brought in 25 every summer and spend about $1,600 for eight 
weeks. And what they do is they put them alongside scientists. 
I mean literally for a whole summer. It is a wonderful program. 
And these are intercity kids. And what we discovered, I always 
go to the graduation and it always sort of makes me feel so 
emotional, Mr. Jones, because I find that these kids say, for 
example, one will be working with a scientist that is dealing 
with breast cancer, and then they will get up and they will 
talk at the graduation and say, do you know what, I was so 
interested in this because my aunt had breast cancer or my 
cousin, and now I think I can do something about it, and AIDS 
and all kinds of things.
    It is just amazing. And to hear them, the vocabulary that 
they then acquire. I mean, I have to go back and get a 
dictionary. But they don't realize that they are getting really 
excited about this. Then the other piece that we did was that 
we went in the community college so that those kids would have 
a pathway to come out of high school and go to a community 
college. Another program--and then we hooked them up with the 
University of Maryland again so they could go on for a 4-year 
degree.
    I think that you all are right, not every kid needs to go 
to college, but I also believe that kids need a vision. And I 
think that, and when I think about my own experiences growing 
up, a lot of my vision came from my various jobs. But there is 
one other thing Dr. von Wachter, that you did not talk about.
    What a job also does is it gives kids another family. You 
know another group of adults looking over their shoulder. I 
tell my own kids, I say, look, if you go out there and you do 
the best you can at what you are doing, I promise you an adult 
will come by, some adults will come by and help you. And I find 
that to be very key. Is that a factor, Dr. von Wachter?
    Dr. von Wachter. It is a very important point, so I agree 
with the things that you and Mr. Brady said. Kids need a 
perspective, so it is important to create pathways for 
partnerships between community colleges and four-year colleges, 
or high schools and community colleges, to show that if 
somebody takes a vocational degree, he knows he can then move 
on to community college and possibly a 4-year college. The way 
other countries do that is they have specialized degrees that 
allow people to improve their specialized training at 
increasing levels. For example, if you are a welder then you 
can do certain types of technical community college degrees, 
but you can't major in English.
    To create an environment fostering skills at all levels, in 
some sense a family, the important thing is to get business on 
board. Yet, many small businesses probably can't afford a 
training program of their own. And so it is important to forge 
partnerships with community colleges or high schools, where the 
high school or the community college provides some of the 
formal training and then the smaller business complements that 
training. This represents again to small businesses, it gives 
the individual sort of a family, as you are saying, and then it 
creates possibly a lasting partnership.
    Dr. Holzer. If I can also say, so this is the key question. 
Mr. Wing said CVS does it because it is in their best interest, 
so the question is why then don't more companies see it as 
being in their best interest. And I think Mr. von Wachter is 
correct that for small companies the costs are very high. But I 
think there is a couple of other things we know. Number one, a 
lot of businesses are simply distrustful of the quality of 
young people in the basic skills. Nobody wants to invest in 
folks who don't have the basic skills to build on that 
investment to make the investment successful.
    And, of course, their other concern is that they will make 
the investment and then the young person will disappear and go 
to their competitor or go somewhere else. I think it is an 
important role for these partnerships, but also for, number 
one, making sure that the quality of these kids coming out of 
these CTE programs in high schools and community colleges, make 
sure that the quality of their training is strong and then the 
businesses will be more comfortable with it.
    Then I think number two is there has to be some government 
resources and technical assistance to make this happen because 
otherwise firms don't want to invest their own resources even 
in successful kids that might want to disappear on them. So I 
think it has got to be an effort where government makes some 
investments, does some coordinating, brings along industry 
partnerships, connects them with the schools, and all those 
pieces I think have to work for businesses to want to invest 
their very scarce resources in these young people.
    Mr. Wing. I just have one other thing to add to, Mr. 
Cummings, what you were saying. I think when you described that 
experience, that summer experience, I mean, I want to echo 
that. We see that same thing. That these kids--I mean, the 
parents come to a dinner at the end of the--when they graduate 
or when they finish up they come to a dinner and the parents 
are saying to us, oh my gosh, I didn't know my kids would know 
all these things, and they are so proud and they can't imagine 
what they went through.
    And I think the child doesn't realize what they went 
through. And the things that they have studied, they are 
looking at cancer research and things that are really turning 
them on. And I think that is important. I think we have got to 
continue to encourage that. And I think that is one of the 
things that I would say from Dr. Holzer's comments is that I 
mean we are committed to that and we would help to get other 
companies to get involved.
    Chair Maloney. Mr. Snyder.
    Representative Snyder. Thank you, Madam Chair, and thank 
you all for being here today. Madam Chairman, my guess is that 
this hearing has taken a little bit different attack than maybe 
I thought it was going to because you rightfully have called a 
hearing to talk about where we are with this sky high number in 
youth employment. And yet, what we are all now discussing is 
the chronic challenges that we all have. I think, Mr. Wing, you 
talked about the black, the high school dropout rate for 
minorities as being unacceptable. The reality is we have all 
accepted this for several decades. We are outraged by it, but 
we haven't figured out how do deal with it. We as a society 
have accepted it.
    And that number is going to go back down once we go through 
this recession, but the reality is we are still going to be 
grappling with what Mr. Sherk is talking about, education 
reform, we are still going to figure out how to get Mr. Brady 
his welders and the same in Arkansas with our natural gas 
plague that is going on. We are still going to be grappling 
with the problems of parenting skills and addiction and the 
terrible things that young kids can get tempted.
    And we are grappling, I think, with the very real issues of 
the chronic challenges in America, the greatest opportunity 
society in the world, and yet we still have these chronic 
challenges that are really exacerbated when we have the 
recession like we have had.
    Mr. Cummings is one of my heroes. And I have a picture of 
him on a big poster board back home. And I talk about him 
during my speeches. I have got 3\1/2\ minutes left, Mr. 
Cummings. I suspect these folks would be interested in hearing 
your story about being a child of sharecropper parents. Do you 
want to take a few minutes to tell your story?
    Representative Cummings. Very briefly, back in the 1940s my 
parents moved from South Carolina to Baltimore before six of 
their seven children were born and they moved for one reason, 
to get them a decent education. Mom and dad only had a second 
grade education, but they knew that they wanted their kids to 
do better. And so when I got in school, they put me in the 
third group, which was basically our special ed group, told me 
I would never be able to read much over fifth grade level or 
sixth grade level.
    Representative Snyder. How old were you then?
    Representative Cummings. I was about 10 or 11. I went to 
the counselor and told him I wanted to be a lawyer and he said 
you must be kidding. And he said some words that have echoed in 
my mind ever since. He asked me this question. He said, ``Who 
do you think you are?'' And that question has haunted me all my 
life.
    So anyway, I was determined that I was going to get out of 
there. And so there was a gentleman, a fellow named Mr. Posey, 
my sixth grade teacher that worked with me and sent me to the 
library every day, and eventually I got out of special ed, went 
on to become phi beta kappa to go onto law school, passed the 
bar the first time, and become a member of the Maryland 
legislature and now a Member of Congress of the United States 
of America.
    And I say only in America. But when we talk about these, 
for example, these teenage jobs, one of the first jobs I had 
was a pot washer in the Baltimore Country Club. I washed pots, 
I scrubbed them with Brillo, and I got a lot out of that job. I 
was happy to get it. I mean, I was getting about a dollar an 
hour. But I met a lot of very interesting people who influenced 
my life, members of the club.
    So when I look at our young people, and I watched you, Mr. 
Jones, I could understand your frustration. We begin to ask 
ourselves what is going to happen to all these kids? We have 
got about 50 in Baltimore, but I imagine the black male dropout 
rate is probably around 60 percent. That is a lot of folks. And 
then the question becomes what happens to them? And I want to 
yield back.
    Mr. Jones. May I just say this isn't business as usual, 
that is what I am afraid of. And I want to impress upon people, 
this is not what it has been. To drop out in my childhood 
wasn't the end of the road if you were willing to work. 
Actually, I think a former head of Con Edison in New York never 
got his high school diploma. The trouble is things have moved 
on. And we had a panel that Mayor Bloomberg put together that I 
participated in and did some of the research for looking at the 
construction trades. That was construction trades with a point 
in. Okay, you drop out, Joe, or whatever, and you will go work 
construction and move yourself up through that rank.
    When they told me don't bother to apply to 
preapprenticeship unless you have a high school diploma, and 
the fact that Starbucks now is looking for a couple of years of 
college, because they can get it with six people applying for 
every one low wage job, this is not going to revert to where we 
were. And that is why I think this is much more dangerous than 
anything I have ever seen, and that is why I am getting a 
little crazed here, because I don't think we are going to have 
the same kind of opportunities, as the economy begins to 
improve, we have already seen signs that young people without 
credential were not riding the last wave up.
    Now I am worried that we are going to have steady State 
rates of higher unemployment and literally no place in the 
economy whatsoever for this kind of young person.
    Representative Cummings. Thank you.
    Dr. Holzer. Can I also just say something about that. We 
have one very, very large and very expensive program in America 
for young high school dropouts. It is called incarceration. And 
we incarcerate more young people than any other country in the 
industrial world. If you are a young black male who drops out 
of high school, your odds of becoming incarcerated are 70 
percent nationwide by the time you are 30. And that 
incarceration is not only enormously expensive in a budgetary 
sense, tens and tens of billions of state--mostly state dollars 
spent every year. Then these young men come out and they are 
essentially unemployable because this marker of having a 
criminal record makes other employers not want to touch them.
    There is a whole range besides the education and training 
programs we talked about, there is a whole range of other 
policies. Extending the earned income tax credit to young men 
who don't have custody of children, for instance, that would 
make even low wage jobs more attractive. Trying to convince 
States not to pass laws that bar these people from so many 
areas of employment. Child support reforms that would not drive 
these young men out of the labor market if they were in 
arrears.
    There is a whole range of other things that make it almost 
impossible for these young men to find even low wage jobs. And 
all of those, I think, need to be rethought if we want to 
reduce those terrible costs that incarceration imposes on us.
    Chair Maloney. Thank you. I have been informed that we will 
be having votes shortly, so all good things must come to an 
end. I do want to thank my colleagues, and all the witnesses 
for your enlightened testimony and your ideas on a really huge 
challenge facing unemployed young people in our country. The 
truth is, it is going to be a slow, long climb to get us where 
we need to be in terms of creating jobs in the economy. This is 
the fourth hearing the Committee has had on long-term 
unemployment in different sectors of our economy, and you have 
all given us wonderful insights and wonderful ideas to work on 
and follow up on and I want to thank all of you for your 
testimony today. It is truly appreciated and insightful. Thank 
you. The Committee is adjourned.
    [Whereupon, at 11:54 a.m., the Committee was adjourned.]

                       SUBMISSIONS FOR THE RECORD

 Prepared Statement of Carolyn Maloney, Chair, Joint Economic Committee

    Just over one year ago, the current Administration took office 
while the country was suffering from the worst economic crisis since 
the Great Depression.
    In fact, Council of Economic Advisers Chair Christina Romer 
testified to this committee that the shocks we endured in the ``Great 
Recession'' were actually worse than those of the Great Depression.
    But today, it is clear that America is on a path toward economic 
recovery:

      The most recent employment report showed that the economy 
has gained jobs for 4 months in a row. In April, 290,000 jobs were 
created--with a total of 573,000 jobs created since the start of 2010.
      After 4 straight quarters of negative growth, the economy 
has grown for three quarters.

    These improvements in our economy are proof that actions taken by 
this Congress and the Administration have put our economy back on 
track.
    While we are making progress, the road to recovery will not be 
without bumps.
    Although we saw significant job creation in the past two months, we 
need stronger job creation to reduce unemployment.
    Some groups are suffering more than others. Today's hearing focuses 
on younger workers who are facing extremely high rates of unemployment.
    The JEC released a report today showing that one-in-five workers 
between 16 and 24 is unemployed--the highest rate of unemployment ever 
recorded for this age group.
    While 16-24 year olds comprise 13 percent of the labor force, they 
make up 26 percent of the unemployed.
    The youngest workers, those ages 16-17, experience the highest 
rates of unemployment.
    The unemployment rate for 16-17 year olds was 29 percent in April 
2010.
    While education reduces the likelihood of being unemployed, the 
benefits of a college degree are not uniform among 16-24 year olds.
    The unemployment rate for young black college graduates was 15.8 
percent in April 2010, nearly double the 8.0 percent unemployment rate 
for all young college graduates.
    These numbers will take on a stark reality as millions of new 
college graduates start knocking on doors looking for a job. And for 
teens looking for their first job, it will be even worse.
    The scarring effect of unemployment among younger workers has 
lasting consequences for their attachment to the labor force, their 
productivity and their future earnings.
    As Dr. von Wachter testified before this Committee last month, 
these younger workers face reduced earnings even 10 to 15 years later.
    The costs to the economy in terms of lost output for these workers 
are great, which will have an impact on our debt and deficit.
    Today, the House began debate on H.R. 4213, the American Jobs and 
Closing Tax Loopholes Act, a bill to create jobs, support those without 
jobs, and lay the groundwork for new employment opportunities in the 
future.
    H.R. 4213 makes many key investments in our people and in our 
future.
    In addition to extending unemployment benefits and COBRA premium 
support through the end of the year, the bill funds summer jobs for 
more than 300,000 young people.
    Job creation is critical, of course, but so are job training and 
skill building. We need to identify training and placement programs 
that are getting strong results and figure out how to scale them so 
they reach more workers across the country.
    I look forward to hearing more creative solutions from today's 
panel on how to solve the unemployment problem for America's younger 
workers.
                               __________

            Prepared Statement of Representative Kevin Brady

    I am pleased to join in welcoming today's witnesses before the 
Committee, and I would like to thank the Chair for holding a hearing 
this morning on this important topic.
    The success in one's working life is largely path-dependent. 
Therefore, getting off to a good start is important for young people. 
That is one reason why a high level of youth unemployment is so 
troubling.
    In January 2009, top Obama Administration economists, Christina 
Romer and Jared Bernstein, forecast that if Congress passed the 
President's stimulus plan, the unemployment rate would remain below 8.0 
percent, and payroll employment would increase to 137.6 million by the 
fourth quarter of 2010.
    Congress enacted Obama's stimulus plan in February 2009, but the 
results have been disappointing. Since then, the unemployment for all 
workers has never been below 8.0 percent, and today it is 9.9 percent. 
So far, the Obama Administration is 7.4 million payroll jobs short of 
its fourth quarter forecast.
    However, young American workers age 16 to 24 have fared worse than 
their older counterparts. Since February 2009, the number of unemployed 
workers ages 16 to 24 has increased by 707,000 to a total of 4.2 
million in April 2010. Moreover, the youth unemployment rate soared 
from 15.8 percent in February 2009 to 19.6 percent in April 2010, an 
all-time high for this data series.
    Given the severity of this problem, I am very interested in what 
today's witnesses have to say about the high level of unemployment 
among young American workers. Like one of today's witnesses, Harry 
Holzer, I want to find what government job-related programs and private 
sector initiatives actually help young Americans find and keep that 
important first job and what programs are wasteful and ineffective.
    The cost of paying for inefficient and misdirected government 
programs through deficit spending will remain a debt burden on our 
children and grandchildren. For example, one of today's witnesses, 
James Sherk, observes:

        [T]he 2008-2009 bailouts and stimulus packages will cost the 
        average 22 year old $145,900 during his working life--$280 a 
        month. That is the equivalent of requiring college graduates to 
        buy and throw out a high end iPod every month.

    In conclusion, today's panelists offer different solutions to the 
problem of youth unemployment. Some advocate more government spending, 
while others emphasize the private sector. Like Presidents Kennedy and 
Reagan, I believe that a rising tide lifts all boats. Instead of more 
wasteful government spending on ineffective job-related programs, we 
should promote entrepreneurship and business investment to increase job 
creation and reduce youth unemployment.

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