[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
                        EXPANDING OPPORTUNITIES
                            FOR JOB CREATION

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


                                HEARING

                               before the

                         COMMITTEE ON EDUCATION

                           AND THE WORKFORCE

                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

            HEARING HELD IN WASHINGTON, DC, FEBRUARY 1, 2012

                               __________

                           Serial No. 112-49

                               __________

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


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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Dale E. Kildee, Michigan
Judy Biggert, Illinois               Donald M. Payne, New Jersey
Todd Russell Platts, Pennsylvania    Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Bob Goodlatte, Virginia              Lynn C. Woolsey, California
Duncan Hunter, California            Ruben Hinojosa, Texas
David P. Roe, Tennessee              Carolyn McCarthy, New York
Glenn Thompson, Pennsylvania         John F. Tierney, Massachusetts
Tim Walberg, Michigan                Dennis J. Kucinich, Ohio
Scott DesJarlais, Tennessee          Rush D. Holt, New Jersey
Richard L. Hanna, New York           Susan A. Davis, California
Todd Rokita, Indiana                 Raul M. Grijalva, Arizona
Larry Bucshon, Indiana               Timothy H. Bishop, New York
Trey Gowdy, South Carolina           David Loebsack, Iowa
Lou Barletta, Pennsylvania           Mazie K. Hirono, Hawaii
Kristi L. Noem, South Dakota         Jason Altmire, Pennsylvania
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania

                      Barrett Karr, Staff Director
                 Jody Calemine, Minority Staff Director



                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on February 1, 2012.................................     1

Statement of Members:
    Kline, Hon. John, Chairman, Committee on Education and the 
      Workforce..................................................     1
        Prepared statement of....................................     3
    Miller, Hon. George, senior Democratic member, Committee on 
      Education and the Workforce, prepared statement of.........     7
    Payne, Hon. Donald M., a Representative in Congress from the 
      State of New Jersey........................................     4

Statement of Witnesses:
    Bernstein, Jared, senior fellow, Center on Budget and Policy 
      Priorities.................................................    56
        Prepared statement of....................................    58
    Johnson, Kellie, president, Ace Clearwater Enterprises.......    50
        Prepared statement of....................................    52
    Malloy, Hon. Dannel P., Governor, State of Connecticut.......    17
        Prepared statement of....................................    19
    Mitchell, Dr. Matthew, senior research fellow for economics, 
      the Mercatus Center at George Mason University.............    66
        Prepared statement of....................................    68
    Snyder, Hon. Rick, Governor, State of Michigan...............     9
        Prepared statement of....................................    11

Additional Submissions:
    Mr. Kline, letter, dated February 1, 2012, from Associated 
      Builders and Contractors, Inc..............................     6
    Governor Malloy, response to question submitted for the 
      record.....................................................    88
    Ross, Hon. Dennis A., a Representative in Congress from the 
      State of Florida, questions submitted for the record.......    87
    Governor Snyder, response to question submitted for the 
      record.....................................................    90
    Tierney, Hon. John F., a Representative in Congress from the 
      State of Massachusetts:
        Hon. Deval L. Patrick, Governor, State of Massachusetts, 
          prepared statement of..................................    40
    Woolsey, Hon. Lynn C., a Representative in Congress from the 
      State of California:
        Press release, ``California Workplace Safety Program Can 
          Reduce Injuries When Inspectors Enforce It,'' January 
          26, 2012, the RAND Corp................................    84
        Study, ``An Evaluation of the California Injury and 
          Illness Prevention Program,'' the RAND Corp., Internet 
          address to.............................................    85


                        EXPANDING OPPORTUNITIES
                            FOR JOB CREATION

                              ----------                              


                      Wednesday, February 1, 2012

                     U.S. House of Representatives

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The committee met, pursuant to call, at 10:05 a.m., in room 
2175, Rayburn House Office Building, Hon. John Kline [chairman 
of the committee] presiding.
    Present: Representatives Kline, Biggert, Foxx, Goodlatte, 
Walberg, DesJarlais, Bucshon, Gowdy, Roby, Heck, Ross, Kelly, 
Payne, Scott, Woolsey, Hinojosa, McCarthy, Tierney, Kucinich, 
Davis, Bishop, and Altmire.
    Staff present: Katherine Bathgate, Press Assistant/New 
Media Coordinator; James Bergeron, Director of Education and 
Human Services Policy; Casey Buboltz, Coalitions and Member 
Services Coordinator; Ed Gilroy, Director of Workforce Policy; 
Benjamin Hoog, Legislative Assistant; Marvin Kaplan, Workforce 
Policy Counsel; Barrett Karr, Staff Director; Ryan Kearney, 
Legislative Assistant; Rosemary Lahasky, Professional Staff 
Member; Brian Newell, Deputy Communications Director; Krisann 
Pearce, General Counsel; Molly McLaughlin Salmi, Deputy 
Director of Workforce Policy; Linda Stevens, Chief Clerk/
Assistant to the General Counsel; Alissa Strawcutter, Deputy 
Clerk; Loren Sweatt, Senior Policy Advisor; Joseph Wheeler, 
Professional Staff Member; Aaron Albright, Minority 
Communications Director for Labor; Tylease Alli, Minority 
Clerk; Kelly Broughan, Minority Staff Assistant; John D'Elia, 
Minority Staff Assistant; Livia Lam, Minority Senior Labor 
Policy Advisor; Brian Levin, Minority New Media Press 
Assistant; Celine McNicholas, Minority Labor Counsel; Richard 
Miller, Minority Senior Labor Policy Advisor; Megan O'Reilly, 
Minority General Counsel; Julie Peller, Minority Deputy Staff 
Director; Michele Varnhagen, Minority Chief Policy Advisor/
Labor Policy Director; and Michael Zola, Minority Senior 
Counsel.
    Chairman Kline. A quorum being present, the committee will 
come to order.
    Well, good morning, and welcome to the first Education and 
Workforce Committee hearing of the new year. I would like to 
thank Governors Snyder and Malloy for participating in today's 
hearing. Your experiences at the state level offer some really 
important insight to this committee in Congress, and we 
appreciate having you here with us.
    And I talked to both of you before the hearing, and thank 
you. I want to thank you again. It is always very special for 
us when we have leaders here who can bring their experiences to 
us.
    A year ago, the committee met to examine the state of the 
workforce. It was our first hearing of the 112th Congress and 
reflected our commitment to make job creation and American 
competitiveness top priorities.
    Much has happened since we met in January of 2011. 
Unemployment was 9.1 percent. Today, it stands at 8.5 percent. 
Nearly 14 million workers were unemployed. Now 1 million fewer 
workers are unemployed. The number of long-term unemployed--
those out of work for 27 weeks or more--has also declined from 
6.2 million to 5.6 million.
    These facts may demonstrate modest progress, but far too 
many Americans continue to face significant hardship in this 
tough economy. The number of Americans participating in the 
labor force is at its lowest level in 28 years. More than 8 
million individuals are working part-time because full-time 
jobs are unavailable, and 1 million ``discouraged'' workers 
have abandoned their job search entirely.
    Simply put, we are experiencing the weakest recovery since 
the Great Depression. As the Wall Street Journal recently 
noted, the recovery of the 1980s led to 18 straight months of 
growth greater than 5 percent. Yet our own recovery over the 
last 2.5 years has averaged just 2.5 percent. The nation should 
be firing on all cylinders; yet our economy remains stuck in 
neutral.
    In many ways, the current administration has made matters 
worse by promoting the politics of fear and uncertainty. Costly 
regulations that fail to enhance the welfare of workers, 
bureaucratic actions that favor powerful special interests at 
the expense of employers and employees, and politically 
motivated decisions that destroy tens of thousands of good-
paying jobs are part of what Governor Mitch Daniels described 
as a ``pro-poverty agenda.''
    To help restore certainty and confidence, the House of 
Representatives has approved more than 30 bipartisan jobs 
proposals in the last 12 months. The bills touch upon virtually 
every part of the economy, from labor relations and energy 
security to tax relief and fiscal responsibility. No single 
proposal represents a silver bullet but each helps remove 
government barriers to economic growth and job creation.
    While more than 25 House-passed jobs bills face obstruction 
in the Democrat-led Senate, a number of our legislative efforts 
have reached the president's desk. In January, I had the 
privilege of joining Speaker Boehner on a trip across Latin 
America, including a stop in Colombia to visit with its 
business leaders and elected officials. Thanks to the 
bipartisan effort of this Congress, working with the president, 
Colombia will soon import--duty free--goods and products built 
by American workers.
    Speaking of our trade agreements with Colombia, Panama, and 
South Korea, the president stated, ``American automakers, 
farmers, ranchers, and manufacturers, including many small 
businesses, will be able to compete and win in new markets.'' 
We need to build on this success and explore new opportunities 
to help workers thrive in the global economy.
    I am hopeful job training reform is an area in which we can 
work together to strengthen the competitiveness of the 
workforce. For the nation's long-term unemployed, 7 months 
without work can feel like a lifetime. Effective job training 
support can help workers get back on their feet and back to 
work. The need for a leaner, more efficient workforce 
investment system has never been more urgent. I was pleased to 
hear the president call for reform in his State of the Union 
address, and we stand ready to take action.
    Already, my colleagues have introduced three proposals that 
lay the foundation for a 21st-century job training system. A 
key component of our effort is the consolidation of dozens of 
federal workforce programs into four flexible funding streams. 
Streamlining these programs will enhance support for workers, 
offer a better trained workforce for employers, and promote 
better use of taxpayer dollars. The president suggested the 
need for even greater consolidation, and we are happy to 
consider a responsible plan to do that.
    In fact, I sent a letter to Labor Secretary Solis this 
morning that asks for more details about the president's new 
job training proposal. I look forward to receiving a timely 
response so we can improve the nation's workforce investment 
system without delay.
    Over the last several years, we have seen a lot of failed 
policies and broken promises, starting with a so-called 
stimulus plan that created debt, not jobs. And I know there are 
sharp differences in this Congress, in this House, and on this 
committee. However, it is not enough to shout from the stands 
and criticize the plays being called on the field. I encourage 
all members, on both sides of the aisle, to stay engaged, offer 
positive solutions, and work to find common ground.
    Again, I would like to thank our witnesses for joining us, 
and I will now recognize my distinguished colleague, Mr. Payne, 
for his opening remarks.
    [The statement of Chairman Kline follows:]

            Prepared Statement of Hon. John Kline, Chairman,
                Committee on Education and the Workforce

    Good morning and welcome to the first Education and the Workforce 
Committee hearing of the new year. I'd like to thank Governors Snyder 
and Malloy for participating in today's hearing. Your experiences at 
the state level offer important insight to this committee and Congress, 
and we appreciate having you here with us.
    One year ago, the committee met to examine the state of the 
workforce. It was our first hearing of the 112th Congress, and 
reflected our commitment to make job creation and American 
competitiveness top priorities.
    Much has happened since we met in January of 2011. Unemployment was 
9.1 percent; today it stands at 8.5 percent. Nearly 14 million workers 
were unemployed; now one million fewer workers are unemployed. The 
number of long-term unemployed--those out of work for 27 weeks or 
more--has also declined from 6.2 million to 5.6 million.
    These facts may demonstrate modest progress, but far too many 
Americans continue to face significant hardship in this tough economy. 
The number of Americans participating in the labor force is at its 
lowest level in 18 years. More than 8 million individuals are working 
part time because full time jobs are unavailable and one million 
``discouraged'' workers have abandoned their job search entirely.
    Simply put, we are experiencing the weakest recovery since the 
Great Depression. As the Wall Street Journal recently noted, the 
recovery of the 1980's led to 18 straight months of growth greater than 
5 percent. Yet our own recovery over the last two and a half years has 
averaged just 2.5 percent. The nation should be firing on all 
cylinders, yet our economy remains stuck in neutral.
    In many ways, the current administration has made matters worse by 
promoting the politics of fear and uncertainty. Costly regulations that 
fail to enhance the welfare of workers, bureaucratic actions that favor 
powerful special interests at the expense of employers and employees, 
and politically motivated decisions that destroy tens of thousands of 
good paying jobs are part of what Governor Mitch Daniels described as a 
``pro-poverty agenda.''
    To help restore certainty and confidence, the House of 
Representatives has approved more than 30 bipartisan jobs proposals in 
the last 12 months. The bills touch upon virtually every part of the 
economy, from labor relations and energy security to tax relief and 
fiscal responsibility. No single proposal represents a silver bullet, 
but each helps remove government barriers to economic growth and job 
creation.
    While more than 25 House-passed jobs bill face obstruction in the 
Democrat-led Senate, a number of our legislative efforts have reached 
the president's desk. In January, I had the privilege of joining 
Speaker Boehner on a trip across Latin America, including a stop in 
Colombia to visit with its business leaders and elected officials. 
Thanks to the bipartisan effort of this Congress, working with the 
president, Colombia will soon import--duty free--goods and products 
built by American workers.
    Speaking of our trade agreements with Colombia, Panama, and South 
Korea, the president stated, ``American automakers, farmers, ranchers 
and manufacturers, including many small businesses, will be able to 
compete and win in new markets.'' We need to build on this success and 
explore new opportunities to help workers thrive in the global economy.
    I am hopeful job training reform is an area in which we can work 
together to strengthen the competiveness of the workforce. For the 
nation's long-term unemployed, seven months without work can feel like 
a lifetime. Effective job training support can help workers get back on 
their feet and back to work. The need for a leaner, more efficient 
workforce investment system has never been more urgent. I was pleased 
to hear the president call for reform in his State of the Union 
address, and we stand ready to take action.
    Already, my Republican colleagues have introduced three proposals 
that lay the foundation for a 21st century job training system. A key 
component of our effort is the consolidation of dozens of federal 
workforce programs into four flexible funding streams. Streamlining 
these programs will enhance support for workers, offer a better trained 
workforce for employers, and promote better use of taxpayer dollars. 
The president suggested the need for even greater consolidation, and we 
are happy to consider a responsible plan to do that.
    In fact, I sent a letter to Labor Secretary Hilda Solis this 
morning that asks for more details about the president's new job 
training proposal. I look forward to receiving a timely response so we 
can improve the nation's workforce investment system without delay.
    Over the last several years, we've seen a lot of failed policies 
and broken promises, starting with a so-called stimulus plan that 
created debt, not jobs. And I know there are sharp differences on this 
committee. However, it is not enough to shout from the stands and 
criticize the plays being called on the field. I encourage all members, 
on both sides of the aisle, to stay engaged, offer positive solutions, 
and work to find common ground.
    Again, I'd like to thank our witnesses for joining us, and I will 
now recognize my distinguished colleague George Miller, the senior 
Democratic member of the committee, for his opening remarks.
                                 ______
                                 
    Mr. Payne. Good morning.
    Mr. Chairman, thank you for calling this very important 
hearing on job creation. And welcome to Governor Malloy and 
Governor Snyder. I am pleased we will be hearing from two state 
executives about their efforts to expand job opportunities. You 
are right there where the rubber meets the road.
    And I am pleased we will have an additional panel of 
experts to advise this committee on how best to move forward on 
this very important issue of creating jobs.
    Last week in his State of the Union, President Obama 
challenged us to work together to move the economy forward. I 
couldn't agree more. Job creation is the most urgent issue for 
millions of families and businesses across the country.
    In 2008, our economy went over the cliff. The recession, 
brought on by Wall Street greed, was long and deep. Almost 
immediately, 4 million jobs were lost. Another 4 million were 
lost before things started to turn around.
    It took strong and decisive action by the last Congress, 
working with the Obama administration, to pull our country back 
from the abyss. The action made a real difference. The private 
sector has created more than 3 million jobs in the last 22 
months. Consumer confidence is edging up and signaling 
continued economic growth. Manufacturing employment has grown 
for the first time since the late 1990s.
    Despite calls from some to let the domestic auto industry 
fail, we took bold action and actually saved millions of 
American jobs. Our auto industry is back on the upswing, making 
great cars, investing in new factories, creating thousands of 
new jobs, all because we intervened.
    And while rising health costs have been a drag on our 
economy, we did take action. We passed the Affordable Care Act. 
Not only does the law give businesses and health care providers 
new tools to bring costs under control, it will expand health 
care coverage to 32 million Americans. This is an amazing feat.
    And health care reform is no job-destroyer. On the 
contrary, since the Affordable Care Act was signed into law, we 
have seen half-a-million new jobs created in the health care 
sector. This is a much different story than what our country 
was facing just a few years ago, when our economy was 
hemorrhaging 750,000 jobs a month.
    And so our nation's economy is headed in the right 
direction. But of course, we all know that there is more action 
that needs to be taken. Now is not the time to put on the 
brakes. We need to work together for a fair and sustainable 
recovery and to rebuild those ladders of opportunity for every 
American.
    While today's hearing is timely and appropriate, I fear 
another year of wasted opportunities is before us. I say this 
because a little more than a year ago, this committee held a 
similar hearing on the economy and job creation. During that 
hearing, a governor and economists across the political 
spectrum agreed that rebuilding roads, schools, and bridges 
have significant benefits for jobs and for building the 
economy.
    But in the years that followed, the House failed to act on 
jobs. Instead of a jobs agenda last year, all we saw was 
political brinksmanship. The kind of politics that hurts 
building jobs, that shuts down the FAA, putting thousands of 
workers out of work, jeopardizing thousands of construction 
workers' jobs in the process. It resulted in our nation's 
credit being downgraded for the first time in our history.
    It has jeopardized Americans' unemployment insurance. It 
has threatened the extension of payroll tax cuts. And now we 
are seeing a highway bill from House Republicans that falls 
substantially short of what our nation needs. Our roads and our 
bridges are crumbling. It does not even contain a buy America 
provision so that jobs created are jobs that can be created 
here in the United States.
    Again, Mr. Chairman, this hearing comes at an opportune 
time. I hope it will help us turn the corner. I urge my 
colleagues on the other side of the aisle not to allow another 
year to go by without action.
    I have read the comments that Speaker Boehner wants to use 
this year to put the Obama administration on trial. I hope 
Speaker Boehner's comments are a commitment, rather, to 
oversight and that we will be able to work together in an 
effort to grow our economy and to create new jobs.
    The American people aren't interested in another year of 
politics and political infighting and congressional inaction on 
jobs. There is nothing wrong with political differences and 
policy differences. Sometimes we agree with these and we agree 
on the other side of the aisle in cases. But sometimes we don't 
agree. That is the nature of democracy. That is why we have 
different political parties.
    But during tough times, we should at least try to work 
together to develop consensus, not roadblocks, and that is the 
case at all levels of government.
    Thank you, Mr. Chairman. I will yield back.
    Chairman Kline. I thank the gentleman.
    Pursuant to committee rule 7(c), all committee members will 
be permitted to submit written statements to be included in the 
permanent hearing record. Without objection, the hearing record 
will remain open for 14 days to allow statements, questions for 
the record, and other extraneous material referenced during the 
hearing to be submitted in the official hearing record.
    [An additional submission of Chairman Kline follows:]

                 Associated Builders and Contractors, Inc.,
                                   Arlington, VA, February 1, 2012.
Hon. John Kline, Chairman; Hon. George Miller, Ranking Member,
Education and Workforce Committee, U.S. House of Representatives, 
        Washington, DC 20515.
    Dear Chairman Kline and Ranking Member Miller: On behalf of 
Associated Builders and Contractors (ABC), a national association with 
74 chapters representing more than 22,000 merit shop construction and 
construction-related firms, I am writing in regard to the full 
committee hearing titled, ``Expanding Opportunities for Job Creation.''
    ABC members appreciate the committee's interest in improving 
America's business environment to foster job growth. The construction 
industry is still struggling to combat a staggeringly high unemployment 
rate of 16 percent.
    One significant way for government entities to create opportunities 
for employers in the construction industry to expand and hire is to 
eliminate government-mandated project labor agreements (PLAs) on 
taxpayer funded construction. These special interest schemes discourage 
competition from qualified nonunion contractors and their workers. When 
a government entity requires a PLA on a construction project, they are 
essentially tilting the playing field in favor of contractors that 
agree to use organized labor. On government-funded or assisted 
projects, this means that the 86 percent of the private construction 
workforce that chooses not to join a labor union cannot compete on an 
equal basis for projects funded by their own tax dollars.
    Governor Rick Snyder and Governor Dannel Malloy have contrasting 
records with regard to government-mandated PLAs. ABC believes that 
these policies will have significant impacts on the construction 
industry in their states in the future.
Michigan
    Although less than 22 percent of the construction workforce in 
Michigan has decided to join a labor organization, numerous public 
entities were choosing to require contractors to sign a PLA with a 
labor union as a condition of performing public work. In July 2011, 
Governor Snyder signed legislation barring the state and other public 
entities from requiring contractors to sign an agreement with a union 
in order to perform public construction. Michigan is one of 11 states 
to ban government-mandated PLAs, with seven doing so in 2011 alone.
    This law is already improving the business climate for construction 
firms in Michigan. PLA requirements on several projects were lifted 
almost immediately, giving employers in the construction industry a 
much needed opportunity to compete for projects and grow their 
workforces. This law also ensures that taxpayer funds are used as 
efficiently as possible. PLA requirements have been found to increase 
construction costs by as much as 18 percent. By eliminating PLA 
mandates, public entities can use these savings to fund other 
priorities.
Connecticut
    The Malloy administration has supported job killing PLA mandates 
and recently signaled its intention to implement a PLA requirement for 
future expansion and renovation of the University of Connecticut 
hospital system. Additionally, the Malloy administration is under 
significant pressure from organized labor to require or encourage the 
use of PLAs on future construction. ABC believes that requiring 
contractors to sign a PLA in order to perform public construction 
reduces job opportunities for the vast majority of the construction 
workforce that chooses not to join a labor organization. We hope that 
Governor Malloy will choose to allow fair and open competition to 
dictate how taxpayer funded projects are awarded in the future.
    At the federal level, ABC believes that President Barack Obama 
should considering following Governor Snyder's lead and reverse his 
Executive Order 13502, which encourages federal agencies to require 
PLAs on projects costing more than $25 million. When mandated on 
federal construction projects, PLAs limit the ability of merit shop 
construction firms to compete and deprives them of the opportunity to 
create new jobs.
    We appreciate you taking the time to address this vital issue and 
believe Governors Snyder and Malloy, along with the other witnesses, 
have important insights to share with this committee. We look forward 
to working with you on future job growth initiatives.
            Sincerely,
                                        Corinne M. Stevens,
                              Senior Director, Legislative Affairs.
                                 ______
                                 
    [The statement of Mr. Miller follows:]

  Prepared Statement of Hon. George Miller, Senior Democratic Member, 
                Committee on Education and the Workforce

    Good morning, Mr. Chairman.
    Last week, this committee held a rare hearing on creating job 
opportunities for the American people.
    The first panel consisted of two governors: One Democrat and one 
Republican. Despite party and regional differences, the governors 
delivered a positive message about cooperation and economic progress in 
their respective states.
    They both unequivocally rejected the path of divisive politics. 
When it comes to seeking solutions for a stronger, faster economic 
recovery, they did not recommend inaction.
    Instead, they both made a compelling case that past efforts here in 
Washington, like the Recovery Act and the auto rescue, saved this 
country from an even deeper crisis.
    Michigan's Republican governor specifically highlighted legislation 
authored by Congressman Frank that helps to provide capital to small 
businesses.
    Governor Snyder said that in Michigan, this one piece of 
legislation allowed the state to use $30 million in public funds to 
leverage nearly $86 million in private capital for small businesses. 
These loan enhancements were spread across three programs. All 
together, they supported the creation of nearly one thousand new jobs.
    In addition, despite calls from some to let the domestic auto 
industry fail, both governors agreed that the federal rescue of the 
American auto industry was essential. Governor Snyder noted that 
inaction would have brought down the entire industry. Because of the 
federal government's role, the American auto industry is back on top of 
its game and creating thousands of jobs.
    Their message to Congress was ``work together.'' Put aside divisive 
issues.
    Our nation's future economic growth is dependent on productive 
partnerships and shared responsibility between federal, state, and 
local governments and the private sector.
    I couldn't agree more.
    Last week's hearing showed us that there are real opportunities 
where we can work together to rebuild our economy and reignite the 
American Dream.
    This committee should be exploring ways we can assist governors to 
improve their states' infrastructure and to modernize and repair our 
nation's schools. Targeting resources to fix crumbling schools not only 
helps student learning, but also saves struggling small contractors 
from bankruptcy and creates private-sector construction jobs.
    We could be exploring ways we can work together to modernize our 
nation's job-training programs or find a bipartisan solution to ESEA 
reauthorization.
    We could be helping local governments save the jobs of teachers, 
police, and firefighters.
    We could be exploring ways to help small businesses with their two 
most important challenges: getting access to credit and creating more 
consumer demand.
    But that's not what this hearing is about.
    Today is just another legislative day dedicated to divisive issues. 
It's not about working together to find solutions to real problems.
    Today, the President's efforts to keep a vital government agency 
fully functional will surely be criticized. The rights of workers will 
be attacked. Labor unions will be attacked. An agency's efforts to 
enforce the law or modernize the law will be attacked.
    By now, we all know the drill. And so does a very frustrated 
American public.
    So, instead of working together to find solutions to real problems, 
let's proceed with the majority's sixth hearing on the National Labor 
Relations Board.
    I yield back.
                                 ______
                                 
    Chairman Kline. For introductions of our first 
distinguished panel of witnesses, I yield to Mr. Walberg of 
Michigan to introduce our first witness.
    Mr. Walberg. Thank you, Mr. Chairman.
    On November 2, 2010, Michiganians elected Rick Snyder, a 
successful businessman with no experience in politics--I think 
that has changed--to lead the state as governor. Through his 
relentless positive action and focus on accomplishing what he 
pledged to do, Governor Snyder has delivered.
    During his first year in office, he worked with lawmakers 
on both sides of the aisle to eliminate the state's $1.5 
billion budget deficit and create a $460 million surplus, and 
climbing.
    As a true believer in the power of the private sector, 
uniting, not dividing all sectors, he has proven his commitment 
to Michigan's future through his support of education and real-
world training for job-seekers and removing unnecessary 
government-made hurdles. These types of bold actions were 
direly needed in Michigan, and Governor Snyder, doing what he 
promised--an unusual tact--has acted quickly to put our state 
back on the path to prosperity.
    And for that, I say thank you.
    On a more personal level, by the age of 23, this 
businessman-turned-politician earned his undergraduate degree, 
MBA, and law degree from the University of Michigan. Go blue.
    After spending time teaching and working as a tax 
accountant, Governor Snyder led a struggling company called 
Gateway, led them to grow from just over 700 employees 
struggling with great challenges to a Fortune 500 company with 
more than 10,000 employees.
    As a fellow Michiganian, I look forward to working with 
Governor Snyder in 2012 as we help to grow Michigan's economy. 
And may I add, it has been a pleasure to watch a governor who 
doesn't believe that it can't be done and when it is the right 
thing to do. And through relentless effort, relentless positive 
action, he has been able to make unbelievers believers in the 
possibility, as well as the ultimate opportunity of Michigan 
regaining its primacy as a manufacturing state, as a technology 
state, as an education state, and the best state in the world 
to live and do business.
    We welcome you, Governor Snyder.
    Chairman Kline. Thank you, Mr. Walberg.
    You notice we do a lot of that ``Go Blue,'' ``Go Red.'' I 
don't know. Maybe it is the Education Committee, we can't stop 
ourselves.
    It is my pleasure now to introduce our second witness, co-
panelist, Governor Rick Snyder. He was sworn into office as the 
48th governor--I am sorry. We just introduced that guy. 
[Laughter.]
    Mr. Walberg. I think I did that well, didn't I, Chairman?
    Chairman Kline. Actually, you did it extremely well. I am 
not sure about the ``Go Blue'' thing, but very, very well.
    Governor Dan Malloy--let's get the right guy here--took 
office as the 88th governor of Connecticut on January 5, 2011. 
Prior to his election, Governor Malloy worked as a prosecutor 
in Brooklyn, New York, serving 4 years as assistant district 
attorney. In 1995, Governor Malloy was elected and served 14 
years as mayor of Stamford, Connecticut. Now, that was a real 
job, no question about it. Governor Malloy, received his 
undergraduate and law degrees from Boston College.
    Welcome to you both.
    Before I recognize each of you to provide your testimony, 
let me, once again, briefly explain our lighting system. You 
will each have 5 minutes to present your testimony. If you go 
over, I will not be gaveling you down. If I start to get 
nervous up here, you will hear a gentle tapping.
    When you begin, the light in front of you will turn green. 
When 1 minute is left, the light will turn yellow. When your 
time is expired, the light will turn red. After everyone has 
testified, we here members will each have 5 minutes to ask 
questions and have them answered from the panel.
    So, at this time, we will start with Governor Snyder.
    Governor, you are recognized.

            STATEMENT OF HON. RICK SNYDER, GOVERNOR,
                       STATE OF MICHIGAN

    Governor Snyder. Thank you, Mr. Chairman. And it is an 
honor to be here. Thank you for the invitation, and I want to 
thank Representative Walberg for his fine representation of our 
state, along with Representative Kildee.
    I am here to really talk about the topic that is most 
important in our state, and I appreciate the opportunity to 
share that with you, which is more and better jobs.
    If you look at where Michigan has come from, we led the 
nation in unemployment. If you go back to September 2009, our 
unemployment rate was over 14 percent. I am proud to say that, 
in December this last year, it was 9.3 percent, but as already 
been commented, that is not good enough. The goal is more and 
better jobs.
    And the opportunity today, the way I view it is, is not to 
come and criticize the federal government and talk about how 
great Michigan is, but to come in the interest of partnership. 
We have a philosophy in Michigan, as Representative Walberg 
said, of relentless positive action, which means no blame, no 
credit, find common ground, solve a problem, and do it in a 
relentless fashion. And that has been successful.
    So I want to compliment the federal government on a couple 
of programs we have partnered to together on, including the 
state small-business credit initiative. It has been a very 
successful program. And also good work going on with the 
Export-Import Bank to do credit for small business.
    In terms of things in Michigan that we have move forward 
with, because the way I view more and better jobs, the role of 
government is not to create jobs, but to create an environment 
where the private sector can be successful and employ people, 
and so we have worked hard to create the best environment, and 
that began with having a balanced budget, where we actually 
start paying down long-term liabilities in our balance sheet 
requirements. And I clearly encourage Congress and the federal 
government to look at ways to deal with the deficit and the 
debt elimination that is required. That would be one of the 
greatest things that we could do for our employers in Michigan 
and the country.
    We did tax reform. We eliminated tax credits. We made a 
simple, fair and efficient tax system. We are doing regulatory 
reform. We have done unemployment insurance reform, workers 
comp reform. We are doing infrastructure reform as we speak. 
And the topic of specific nature I would like to cover is 
talent.
    And the reason I use the word talent instead of workforce 
is, while I believe workforce development is very important, it 
is inadequate as a solution to deal with unemployment. 
Workforce tends to deal with creating opportunities and giving 
people skills. That is simply not good enough.
    The talent topic is what really matters, and there are 
three C's, in my view. There is, first, creating; second, there 
is collaboration; and, third, there is connecting. And we need 
to do well on all three of those if we are to do our jobs 
effectively.
    In terms of creating talent, that is the topic of, again, 
traditional workforce development, giving people skills, and 
our education system, which we don't call K-12. We call it P-
20, which goes prenatal through lifelong learning. And it is 
about creating an integrated environment to give the best 
skills possible to the most talented people in the world, 
Michiganders and Americans.
    With respect to that, though, as I said, we need to do 
more. So we have created a number of programs on collaborating. 
We have created programs such as Pure Michigan Talent Connect 
and Pure Michigan Business Connect. Pure Michigan Talent 
Connect is really a program where we created a portal for our 
employers to post the jobs they have now and for the future, 
what skills they need, and how to partner together. It is also 
about skilled trades. We have had union involvement of both the 
carpenters and the operating engineer partner with us on these 
programs. So those are all very good.
    So if you go down the list, the one of critical nature that 
is overlooked too often is connecting. And I encourage you to 
go to mitalent.org, a portal we launched last fall, which is 
literally to say it is not about jobs being open. It is about 
career planning.
    We have 70,000 open jobs in Michigan today. We could drop 
our unemployment rate by almost 2 percent by filling those 
jobs, and that was not something readily available to our 
citizens in helping them plan a career. So connecting is 
critically important.
    There are two specific items I would mention to the 
committee for your consideration, one on the Workforce 
Investment Act, about potentially looking at new ways to do 
that. Too often you hear governors saying, ``Give us a block 
grant,'' or you get the traditional model of federal government 
of prescriptive programs.
    I recommend a middle ground. We want to be held 
accountable. We want metrics and measures to say we are 
succeeding, but I ask that be done in a portfolio-based 
approach of metrics and measures, not prescriptive programs nor 
just block grants.
    The last thing I would mention is a critical issue that 
would help immediately, which is on the immigration front. 
Immigration is a very difficult issue, but I would encourage 
consideration of a very narrow opportunity, which is to create 
a STEM green card for advanced-degree people with doctorates 
and such in engineering and other fields. If we could have 
those people available, what a difference that would make.
    I have personal experience with this, given that I did 
startup companies. We are educating these people and telling 
them to leave our country. They are job-creators, and there are 
broad-based opportunities for success there.
    So with those two specific ideas in mind, I hope you look 
at them very seriously. I appreciate the opportunity to share 
what we are doing in Michigan. We are helping reinvent our 
state. It is about more and better jobs, and we want to be good 
partners with you in success.
    [The statement of Governor Snyder follows:]

  Prepared Statement of Hon. Rick Snyder, Governor, State of Michigan

    Good afternoon, Mr. Chairman and Members of the committee. I 
appreciate the invitation to join you this morning and discuss the 
critical issue of expanding opportunities for job creation. Thank you 
for the invitation. Also, I would like to thank you all for your public 
service and the work that you do. I would especially like to thank 
Congressman Tim Walberg and Congressman Dale Kildee for their work on 
behalf of our home state of Michigan. I look forward to your continued 
cooperation in reinventing Michigan.
    I am excited for the opportunity to be here today to strengthen 
what I believe is a critical partnership for Michigan in expanding 
opportunities for job creation--the partnership between states and the 
federal government. The Constitution of the United States establishes a 
system in which the states are unequivocally the laboratories of 
democracy, and powers not granted to the federal government are 
reserved to the States and the people. In order for us to optimize that 
system, it is important that the federal government allow states the 
flexibility needed to innovate. However, it is also important that 
states reciprocate by sharing their lab results from time to time. So I 
am here today in partnership, and I would like to briefly highlight a 
few areas where the state and federal government have positively 
impacted our economic development and contributed to our recovery.
    I would also like to outline several of the successful steps we 
have taken in Michigan to create a stable environment where businesses 
can grow and create jobs. As many of you are aware, Michigan has 
endured some significant challenges in the past decade--accounting for 
nearly half of the nation's job loss during that span. Therefore, I 
hope our foundational work in meeting those challenges, such as tax and 
regulatory reforms, addressing our budget deficit, and paying down our 
long-term debt, can be informative to other states and the federal 
government. Moreover, I believe our focus on talent in Michigan will 
make for a useful discussion that is particularly relevant to the 
committee's jurisdiction.
    It is my belief that our greatest resource in Michigan is our 
people. We have great confidence that if we empower the talented 
citizens of Michigan through what I refer to as the ``Three Cs,'' they 
will unleash an Era of Innovation. By Connecting, Collaborating and 
Creating, we believe Michigan will be a leader in efficiently 
integrating the goals of talent and economic development in the 21st 
Century.
    Finally, as a series of next steps, I would like to offer up 
Michigan to serve as a pilot for state innovation. We take great pride 
in our heritage of innovation and entrepreneurship, and there are 
several areas within this committee's jurisdiction--such as the 
Workforce Investment Act--and beyond, where we would relish the 
flexibility to serve as a laboratory for innovative solutions.
    There are a few specific examples of positive outcomes that I hope 
will provide a path forward illustrating the types of partnerships 
between state and federal governments worth pursuing. One such example 
is the State Small Business Credit Initiative (SSBCI). In September 
2010, Congress enacted the Small Business Banking and Jobs Act of 2010. 
The law included the $1.5 billion SSBCI to fund individual states loan 
enhancement efforts. Michigan, and particularly the Michigan Economic 
Development Corporation (MEDC), was the driving force behind the 
creation and passage of the federal program which allocates funds to 
states to support small business loans.
    Michigan was allocated approximately $80 million to operate its 
loan enhancement initiatives including the Collateral Support Program 
(CSP), Loan Participation Program (LPP), and the Capital Access Program 
(CAP). Since receiving its initial tranche of funding in July 2011, 
those programs have led to significant results for companies in 
Michigan. Specifically, in seventeen CSP deals, an initial $14,657,074 
investment resulted in unleashing $44,084,000 in private funds and the 
creation of 628 jobs. The LPP resulted in eleven deals using 
$15,068,520 in public funds to garnering $33,680,937 in private 
investments and created 435 jobs. Finally, through CAP, 109 deals have 
been brokered, leveraging $255,894 in public funds to raise $7,907,663 
in private dollars, creating 118 jobs. The MEDC has since shared that 
success nationally by assisting approximately 20 states, including the 
US Virgin Islands, to establish loan enhancement programs.
    Additional examples where we have seen early signs of positive 
outcomes include an Export Financing Incentive Program to assist 
Michigan companies in growing their export business. The program works 
with companies alongside the Export-Import Bank of the United States, 
and uses a small amount of public resources to defray the incremental 
cost difference between domestic and foreign working capital loans. The 
program also increases business profit by lowering costs and induces 
entry and expansion into foreign markets.
    Finally, the U.S. Small Business Administration (SBA) State Trade 
and Export Promotion (STEP) program has also become a part of Michigan 
Economic Development Corporation's continued economic gardening 
strategy to support existing Michigan companies' efforts to create new 
jobs. As members of the committee are aware, export sales help 
diversify a company's customer base, provide long-term stability, and 
support higher paying jobs.
    Besides looking abroad at export opportunities, however, there is 
plenty that we have already done in Michigan during the past year to 
lay a foundation for economic recovery. In fact, we are hopeful that 
our efforts can serve as a model for the federal government. Taking 
responsible steps toward putting the nation's fiscal house in order 
would amplify the efforts being made in the states.
    Specifically, in Michigan we approved a structurally balanced 
budget that eliminated the state's $1.5 billion deficit without using 
one-time accounting gimmicks. We are paying down our long-term debt and 
saving for the future for the first time since 2004. Additionally, we 
eliminated the job-killing Michigan Business Tax and replaced it with a 
flat rate that is simple, fair and efficient--ending unfair double 
taxation of small businesses.
    The impact of small businesses on job creation cannot be 
overstated. Small businesses in Michigan account for ninety-eight 
percent of jobs created as recently as 2009. With that in mind, we have 
also embarked upon an aggressive initiative to reinvent our state's 
regulatory system. Excessive and burdensome regulations have long 
served as an impediment to job creation and economic growth. By 
launching an Office of Regulatory Reinvention to review and streamline 
regulations, we are establishing a culture in state government that 
emphasizes customer service above all, and is more conducive to 
business growth and job creation.
    Our efforts over the past year have contributed to the creation of 
80,000 private sector jobs, and our unemployment rate which was as high 
as 14.1% in September of 2009 has dropped to the current 9.3%. As a 
result, at a time when sovereigns are facing downgrades across the 
globe, Fitch Ratings improved Michigan's credit outlook to positive, 
and Bloomberg recently reported Michigan's economic health second best 
in the nation. We fully recognize our challenge remains steep, and we 
will not rest knowing many Michiganders are still struggling. However, 
we continue to relentlessly move forward having established a stable 
environment where businesses can plan long-term, invest and grow. 
Ultimately, we are working to create a future where our young people 
can raise families of their own and our talented people are well-
aligned with the job opportunities of the 21st century's economy.
    At the core of Michigan's reinvention is a commitment to ensuring 
that our talented future generations have career opportunities in our 
state. I believe an honest assessment of our nation's current economic 
condition reveals that we have failed to think strategically about the 
relationship between economic development and talent. Job creators are 
finding it challenging to grow and develop without the right talent, 
and job seekers are struggling to connect with the right opportunities 
that leverage their skills. While the struggle to connect talent with 
employers is multifaceted, the primary reason employers are struggling 
to fill jobs is a mismatch between skill attainment and skill demand. 
We must commit to addressing these challenges, and the good news is we 
can do so through the Three Cs: Connecting, Collaborating, and 
Creating.
    With technology today, connecting people with opportunity is more 
achievable than ever before. Addressing the current talent mismatch 
demands new tools that ensure economic development and talent 
enhancement are occurring in tandem. In Michigan we have launched a new 
tool that will better connect and develop Michigan's talent: Pure 
Michigan Talent Connect.
    Pure Michigan Talent Connect is a web-based talent marketplace 
found at www.MiTalent.org. It features tools that job creators and job 
seekers need to make better-informed decisions. Market analysis and 
input from economists have been used to identify labor trends and high-
demand career paths for dislocated workers, college students, high 
school students, and those entering the workforce after a long 
separation. Ultimately, the new site creates a central hub linking 
private and public stakeholders. It will help connect Michigan's talent 
with opportunities for education, training, and employment. And it will 
allow employers to discover and retain Michigan talent that can help 
their companies grow and flourish.
    Today, job seekers must think strategically about career paths. 
Pure Michigan Talent Connect allows Michiganders to create an 
electronic talent portfolio early in their educational career, driving 
everything from curriculum choices to career paths. I have asked the 
Michigan Department of Education, the MEDC, and the Workforce 
Development Agency to work together to encourage students, parents, and 
educators to use MiTalent.org. For those who do not have web access at 
home, MiTalent.org will be accessible at local libraries and Michigan 
Works! offices. We recognize, however, that the need to better align 
talent with opportunity is not simply for students.
    For decades, our talent has excelled in managing and meeting the 
needs of manufacturers and large firms. With the downsizing of 
Michigan's largest businesses, some of our talent has found it 
difficult to transition into a new position, smaller firms, or a 
different industry altogether. We know that to fuel our economic 
reinvention we must provide small businesses the talent needed to grow, 
and we must provide our citizens the opportunity to continue developing 
their skills.
    Last year I asked the Michigan Economic Development Corporation to 
create ``Michigan Shifting Gears,'' a career-transition program for 
professionals who want to leverage their experience to pursue exciting 
small-business opportunities. Michigan Shifting Gears is a three month 
career-transition program that involves an executive education, 
mentorship, and internship. It gives individuals the tools, networks, 
and training to repurpose their skills and rapidly re-enter the new 
economy.
    Thus far, Shifting Gears has had great success, with approximately 
fifty percent of participants gaining employment within three months. 
With experienced leadership in the small business pipeline, we are 
building a solid base for job creation. As such, I have also asked MEDC 
to apply this model to address the critical need for computer 
programming talent by creating Shifting Code. Currently, Michigan's 
shortage of programmers stifles the growth of high-tech companies and 
our ability to expand our portfolio of high-tech job creators. To 
address this problem, Shifting Code will create a supply of high-demand 
programmers while simultaneously giving small businesses the technology 
assistance they need. Innovative programs and technological tools 
alone, however, will not solve the challenge we face.
    Developing a comprehensive strategy that coordinates Michigan's 
economic and talent development also requires broad collaboration. 
Stakeholders, coalescing around the mutual interests of job creation 
and economic growth, will enable our businesses to compete, grow, and 
create more opportunity. I am grateful to our businesses and labor 
organizations for embracing the collaborative spirit. For example, in a 
state where we reject the thought that manufacturing is history, and 
instead recognize it is a critical part of our future, I have committed 
to partnering with the International Union of Operating Engineers 
(Local 324) and the Michigan Regional Council of Carpenters and 
Millwrights to increase attainment in the critical skills necessary to 
maintain our status as a leader in vocational talent. Through such 
collaboration we continue to develop some of the best skilled-trade 
talent in the country in Michigan.
    Another proud illustration of the collaborative spirit in our state 
has been the launch of Pure Michigan Business Connect (PMBC). The 
program is a public-private initiative that provides Michigan 
businesses with new ways to buy and sell, raise capital, and connect 
with each other through an alliance of the Michigan Economic 
Development Corp., state agencies, and major Michigan companies and 
organizations. There are four primary components to PMBC: New market 
development--programs and services to expand market opportunities for 
Michigan companies; Business Support Services--providing services to 
companies through various programs and initiatives including legal and 
accounting, website consultation, marketing, PR and communication 
support; Financial services--information and access to a continuum of 
capital resources (i.e. private sector lenders, MEDC programs); and 
Talent--uniting workers and companies with talent needs and 
opportunities. Approximately 894 companies have requested services 
through PMBC, and we have received commitments from banks to provide 
business opportunities totaling $7 billion for expansion and hiring. 
The fact that the program more than doubled in less than six months has 
underscored just how important collaboration is to spurring innovation, 
entrepreneurship, and job creation.
    In Michigan, we have recognized that not only is our history rooted 
in entrepreneurship, but our future and many of the solutions to the 
challenges we face are tied to entrepreneurship as well. Along those 
lines, we know we cannot continue to insist that the only option for 
the unemployed is to simply seek work somewhere else. Frankly, it is 
not a viable option for those that lost their job in a field that will 
not return. Because I so strongly believe in this, I have urged our 
state legislature to support giving the Unemployment Insurance Agency 
the ability to allow self-employment assistance to be utilized for 
entrepreneurship. For displaced Michiganders facing the most serious 
challenges returning to the labor force, we must aggressively seek more 
creative solutions to providing opportunity. Oregon has been a leader 
in implementing self-employment assistance and has already seen great 
success. Survey data from 2004--2009 showed that 77% of self-employment 
assistance participants who started a business remained in business. 
This program is an investment in individuals and another tool to spur 
innovation and support states' reinvention. Congress should consider 
allowing states further flexibility to pursue such reforms and empower 
the unemployed by fostering a culture of entrepreneurship.
    With all the benefits of collaboration we have seen over a 
relatively short period of time, there are still areas where we have 
not measured up. One such area where local, state, and the federal 
government, along with the business community, should work better 
together is solving the unacceptably high unemployment rate of our 
veterans. Veterans bring a unique set of skills which benefit our 
communities and our economy. They have real-world work experience and 
transferrable technical expertise. Moreover, veterans possess 
leadership skills and a work ethic that have been tested at an early 
age under extreme circumstances. The fact is we have not properly 
connected veterans returning from Iraq and Afghanistan with the 
opportunities available to them.
    In Michigan I have directed the Veterans' Services Division of the 
Workforce Development Agency to partner with Department of Military and 
Veterans Affairs to create a seamless delivery system for veteran 
benefits and employment services. This initiative will include co-
locating veteran employment representatives and veteran service 
officers who help access VA benefits, including the Post 9-11 GI Bill. 
We will better coordinate with federal and local partners to connect 
veterans with the education and employment opportunities that their 
sacrifices have earned.
    Additionally, I encourage Members of Congress to follow Michigan's 
example by promoting the benefits of hiring veterans and challenging 
your constituent businesses to reach out to veterans. I have asked 
employers of veterans to also commit to helping those they employ more 
fully access their benefits. While our skilled trades are already doing 
a great job through programs like Helmets to Hardhats, we can do more. 
Our veterans would be assets to any employer. We must not squander 
veteran talent, but instead develop and retain it.
    Connecting and collaborating are two definitive steps toward 
expanding opportunities for job creation. The equally important third 
step is creating a talent pool prepared to meet the demands of the 21st 
Century by more efficiently integrating the goals of talent and 
economic development. Today's young employee will have multiple careers 
in his or her lifetime. This makes it more crucial than ever that the 
skills they attain in their post-secondary education are both 
marketable and transferable. Maintaining a skill set that is 
transferable among industries will help talent better prepare for our 
changing economy and more quickly connect with employment.
    I am committed to partnering with Michigan's public colleges and 
universities to provide a post-secondary education that is marketable 
and transferable. A recent report by the Center for Michigan concluded 
that Michigan graduated 20% too few computer and math professionals, 
14% too few health care professionals, and 3% too few engineers in 
2009-2010. Among our shortage, there is a common message. Addressing 
these deficits will require Michigan to invest in the development of 
science, technology, engineering, and math (STEM) as well as health 
industry talent. Otherwise, these shortfalls hold the potential to 
stunt Michigan's projected economic growth.
    Just as talent must think strategically about a career path, 
government must think strategically about its investment in our talent 
pipeline. Support of post-secondary education should be concentrated in 
areas that enhance our economic development strategy and provide our 
students with the opportunity to thrive. We need to stop overproducing 
in areas where there is little or no occupational demand and encourage 
students and educational institutions to invest in programs where the 
market is demanding a greater investment in talent.
    The current imbalance creates a population of young talent that 
cannot find work, is saddled with debt, and many instances are forced 
to leave their state and search for work elsewhere. This is an outcome 
we cannot afford. I have also reached out to the Workforce Development 
Agency, local Workforce Development Boards, and Michigan Works to shift 
their efforts to a demand-driven employment strategy. Today, they are 
reorganizing around our major industries, including manufacturing, 
energy, healthcare, information technology, and agriculture, to better 
collaborate with businesses, our colleges and universities, and our 
public school system. Business and community leaders, driven by data, 
are working to create a skilled workforce that meets the needs of job 
providers. In partnering with local community colleges, non-profits, 
and business leaders to address talent development from early childhood 
through post-secondary education, we can achieve the goal of having 
more citizens credentialed in these critically important industries.
    To grow our economy businesses will need the right talent. To build 
a bright future for our young people, we must arm them with the right 
skill sets to succeed today and tomorrow. We can do more at the 
earliest stages to help students achieve academic success. We have been 
spending money without delivering the results that are essential to 
giving our young people a bright future. It is time that we viewed our 
educational system as P-20 instead of just K-12. We have begun to take 
the steps necessary to fully integrate Michigan's public education and 
create a P-20 system that prepares our students to compete for the best 
jobs available today and tomorrow. We need to establish a system that 
focuses on real achievement for all of our children. We cannot leave 
children without the tools for success in their adult lives, and we 
also need to encourage better and faster opportunities for children 
that can go farther and faster in our system.
    My final request for Members of the Committee today is to consider 
a few next steps concerning two specific issues within the jurisdiction 
of Congress. First, it is my understanding that this committee will 
soon be considering a reauthorization of the Workforce Investment Act 
(WIA). I strongly encourage Members of the Committee to reach out to 
your state's Governors and engage in a dialogue concerning the 
importance of the fifteen percent for statewide activities in Workforce 
Investment Act Title I formula funding. Bipartisan support exists 
amongst Governors that redirecting funds away from statewide activities 
is detrimental to efforts to advance innovative workforce development 
initiatives. Thus, I encourage continued conversation between Members 
of the Committee, Governors, and state Workforce Development Agencies.
    Rather than focus solely on funding levels, however, I would like 
to suggest further that the reauthorization of WIA provides an 
important opportunity for partnership with states to aggressively 
address the realities of the 21st Century economy and job training. 
Specifically, the WIA reauthorization presents an opportunity to create 
a demand-driven workforce system that cultivates a labor force 
possessing the necessary skills employers require. Burdensome and 
bureaucratic performance measures should be replaced by meaningful key 
indicators of performance focused on desired outcomes and 
accountability. Such indicators should support innovation and allow 
states the flexibility to implement programming to meet local and 
regional economic demands.
    It is my understanding that a package of bills recently introduced 
by Mr. McKeon, Ms. Foxx and Mr. Heck include several promising 
proposals, and I will look on with great anticipation at how the 
committee proceeds on those proposals. However, I would also encourage 
the committee to consider some of the following examples of demand-
driven, meaningful measures for the workforce system:
     Number of Training Modules Created for Specific Employers 
or Groups of Employers: The purpose of this measure is to capture the 
level of partnerships occurring between workforce development, economic 
development, educational, and employer partners resulting in the 
creation of demand-driven training.
     Number of Industry-Recognized Credentials Issued: The 
purpose of this measure is to quantify how many employer valued 
diplomas, licenses, certificates, or degrees are issued through the 
workforce system.
     Percentage of Jobs Filled: The purpose of this measure is 
to track the percentage of jobs that the system is able to fill for 
employers who request assistance with finding qualified workers.
     Number of New Business Start-Ups: The purpose of this 
measure is to capture the level of activity occurring in terms of new 
businesses opening their doors and creating jobs.
     Employment Rate of Individuals Receiving Training: The 
purpose of this measure is to quantify the percentage of individuals 
who receive demand-driven training and are able to obtain a family-
sustaining job upon completion of training.
     Average Wages of Those Receiving Services: The purpose of 
this measure is to track the resulting wages of individuals who 
received services from the system.
    Success, as measured by key indicators such as these, will result 
in a demand-driven system where existing employers have access to the 
talent they need to meet their employment needs, where workers have the 
right skills to enable them to obtain family-sustaining employment, and 
where new entrepreneurs have the confidence to invest their capital to 
create new jobs.
    A final, purely federal issue that I strongly believe falls within 
the purview of expanding opportunity for job creation is attracting 
global talent and investment. Immigration laws are established at the 
federal level, so it is important that Michigan partner with the 
federal government to better attract highly educated foreign talent and 
investors. I realize immigration can be a divisive issue, but common 
ground already exists across party lines about the need for investment 
and job growth. That mutual interest should not cease at the simple 
mention of immigrant talent.
    Highly educated and skilled immigrants are a key component to 
filling skill gaps and helping our American businesses flourish. Many 
Michigan businesses are growing, but finding the right talent can be an 
obstacle. Retaining and attracting the best possible talent from around 
the world will fuel faster growth, help secure and create jobs for 
Americans, and strengthens us against our global competitors.
    Early last year I announced the Global Michigan Initiative which is 
a collaborative statewide effort--spearheaded by the MEDC and the 
Michigan Department of Civil Rights--to retain and attract 
international, advanced degree and entrepreneurial talent to our state. 
I did so, in part, because one-third of high-tech businesses created in 
Michigan over the past decade were started by immigrants. Major 
Michigan-based companies like Dow Chemical, Meijer and Masco were 
founded by immigrants and have a long, established track record of 
innovation and significant job creation. Of course, these statistics 
are not unique to Michigan. A recent report by the Partnership for a 
New American Economy in June 2011 indicated that 40% of the 2010 
Fortune 500 companies were founded by immigrants or their children. The 
data is conclusive: advanced-degree immigrants and foreign investors 
spark job creation.
    Unfortunately, inflexible immigration laws increasingly delay 
foreign investors and impair job growth. We need to remove those 
barriers, and need action from the federal government to do so. 
Specifically, the EB-5 foreign investor program provides international 
investors the chance to live here as they invest in our economy and 
create jobs. However, the program is set to expire in September 2012. I 
urge you to work together with your fellow Members of Congress and the 
Department of Homeland Security to renew and make permanent the EB-5 
Immigrant Investor Regional Center program. I would also recommend 
modifying the requirements so that an investor may qualify by creating 
at least five jobs and investing $500,000. We should not deter 
attracting eligible, willing investors to our states.
    In addition to investment, foreign talent contributes to Michigan's 
economy by meeting employer demand in career fields where we currently 
lack critical skills. According to the National Science Foundation and 
the Congressional Research Service, the foreign student population 
earned approximately 36.2% of U.S. doctorate degrees in the sciences 
and approximately 63.6% of the doctorate degrees in engineering in the 
U.S. in 2006. Much of this talent is cultivated in our universities.
    Michigan excels at attracting and educating global talent for high-
demand careers, and international students make a significant 
contribution to our state's economy. In 2010, Michigan ranked 9th 
highest among states hosting foreign students at public universities. 
Moreover, the net contribution to the state's economy by foreign 
students during 2010-2011 was more than $705 million, according to the 
Institute of International Education. We cannot afford to lose these 
valuable members of our talent base to overseas competitors after years 
of development here.
    While foreign talent can readily obtain a student visa, remaining a 
member of the Michigan community is made extremely difficult for those 
desiring to do so under current immigration laws. The difficulty also 
significantly disrupts businesses that rely on these skilled and 
talented individuals. The federal government sets a cap of 65,000 on 
new H1-B temporary work visas, and there are only an additional 20,000 
new H1-B visas available to individuals with U.S. advanced degrees. 
These caps are arbitrary and fail to recognize the harm done to local 
economies when states are forced to send away talent they have spent 
years developing. Today, I am asking Members of Congress to work to 
permanently raise the cap on immigrant professionals and eliminate the 
cap for those holding a master's degree or higher from U.S. 
universities.
    Lastly, and perhaps most urgently, I encourage Congress to focus 
directly on addressing our critical skills gap, and pass proposed 
legislation to create a STEM education ``green card.'' Creating an 
avenue for permanent residency status, through green cards, for 
foreign-born students who have earned graduate degrees in science, 
technology, engineering and mathematics (STEM) fields will allow us to 
retain the best and brightest foreign students. In doing this we can 
slow the practice of STEM professionals being educated in our schools 
and going back to their home countries to compete against U.S. firms.
    A recent study sponsored by the American Enterprise Institute and 
the Partnership for a New American Economy found that for every 100 
Science Technology Engineering and Math (STEM) foreign workers added to 
the workforce, an additional 262 jobs were created for U.S. natives 
during 2000-2007. It is time to enact this legislation and allow these 
valuable members of our higher-education communities to become 
permanent, contributing members of our companies and communities.
    The simple truth is that tomorrow's opportunities cannot be 
realized with yesterday's skills.
    Michigan's greatest assets are the adaptability, ingenuity, and 
intellect of its people. These qualities, coupled with our abundant 
natural resources, industrial might, and technological leadership, will 
make Michigan a formidable force in this century's global economy. The 
challenge we face is to align the aptitudes and career passions of job 
seekers with the current and evolving needs of employers. The solution 
is to reinvent the way in which we prepare our children for successful, 
fulfilling careers, reshape the manner in which our citizens look for 
work, and redesign the way in which employers obtain the skills they 
need.
    Attacking this challenge demands the unyielding commitment of 
stakeholders across the board. The Administration, Congress, states, 
businesses, communities, nonprofits, schools, parents, and universities 
must embrace the shared responsibility of helping young people build 
connections to the world that let them--and our state--flourish. Based 
on their history of selfless contributions to the betterment of our 
state, there is no doubt that they will step up to the plate.
                                 ______
                                 
    Chairman Kline. Thank you very much, Governor.
    Governor Malloy?

           STATEMENT OF HON. DANNEL MALLOY, GOVERNOR,
                      STATE OF CONNECTICUT

    Governor Malloy. Chairman Kline, Representative Payne, and 
members of the committee, thank you for inviting me to testify 
today and to speak about what Connecticut is doing to get our 
economy going.
    When I took office last January, Connecticut had the 
largest per capita deficit of any state in the nation, and we 
had had no job growth for 22 years, a distinction we shared 
only with Michigan. This is an unwanted distinction, I might 
add. [Laughter.]
    Over the last 13 months, we have made tough decisions to 
get our fiscal house in order. We passed a budget that bridged 
a $3.5 billion deficit. We implemented Generally Accepted 
Accounting Principles, GAAP. We negotiated an agreement with 
our state's public employees that will save taxpayers $21.5 
billion over the next 20 years. And we cut spending by $1.7 
billion, and we raised revenue.
    Just last week, we announced a commitment to increase the 
size of our pension payments, a move that will avoid a balloon 
payment of $4.5 billion in just 20 years, and one that will 
save taxpayers nearly $6 billion over the next 20 years.
    We have set our state on a road to recovery. And while I 
know we still have a long way to go, we are seeing signs of 
improvement. Our unemployment rate has fallen to 8.2 percent, 
the lowest point in 2.5 years, and by over 1 percent during the 
last year. During the last year, we also experienced job 
growth--9,000 new jobs--for the first time since 2008.
    In Connecticut, as is the case across the nation, the issue 
obviously remains job creation. One of the first actions we 
took on the jobs front was an initiative called First Five. 
First Five is designed to attract large-scale business 
development projects by augmenting and combining the state's 
best incentive and tax credit programs for the first five 
companies to create 200 jobs within 2 years or invest $25 
million and create 200 jobs over the next 5 years.
    We convened a special session on jobs. We passed a 
bipartisan bill, with only one negative vote in each of the 
chambers,that will move Connecticut forward.
    Our jobs bill includes a Small Business Express Program, 
where we are investing $50 million per year to help 
Connecticut's small businesses access much-needed capital. The 
investment is already paying off. The first company to access 
the credit is planning to double its workforce as a result of 
the funding.
    We enacted a Job Expansion Tax Credit program, providing a 
$500 tax credit to employers for each new employee, or a $900 
credit for new hires if that employee is disabled, unemployed, 
or a veteran. And I must say, I am particularly concerned about 
helping our returning veterans, and especially our disabled 
veterans, find jobs upon their return from service.
    We expanded the capacity of our Manufacturing Reinvestment 
Account program, allowing small manufacturing companies to 
deposit domestic gross receipts into interest-bearing accounts 
to use for business expenses.
    But when it comes to job creation, we didn't stop there. 
Early on, I announced a plan to develop Connecticut's version 
of a research triangle, focused on bioscience. This research 
triangle is coming to life more quickly than any of us thought 
possible.
    Shortly after my Bioscience Connecticut initiative was 
announced, we began to have conversations with Jackson 
Laboratories, a world-renowned, Maine-based research institute 
that does pioneering work in the field of personalized 
medicine. Just 2 days ago, in fact, our Bond Commission 
authorized $291 million in state funding for Jackson 
Laboratory's new $1.1 billion personalized medicine project on 
the campus of the University of Connecticut Health Center in 
Farmington. The Jackson Laboratory for Genomic Medicine will 
accelerate the development of new medical treatments tailored 
to each patient's unique genetic make-up. Permanent jobs 
associated with the facility are projected to total more than 
6,800 over 20 years, including thousands of new construction 
jobs.
    During the coming 2012 legislative session, we will tackle 
the next component of our economic development strategy: 
education reform.
    In the next few days, I will announce a set of proposals 
that will put my state in the forefront of this debate. From 
reforming tenure to addressing how we help students in low-
performing districts, everything is on the table. If our kids 
are going to compete in the 21st-century marketplace, we can't 
put these reforms off any longer.
    I am encouraged and optimistic about the progress we have 
made in Connecticut and the prospects for future growth. We 
still have much work to do, and I will be tireless in pursuing 
pro-growth economic strategies while being a responsible 
manager of the state's budget.
    Chairman Kline, thank you very much, to the committee 
members and yourselves, for allowing me to testify, and I look 
forward to your questions.
    [The statement of Governor Malloy follows:]

         Prepared Statement of Hon. Dannel P. Malloy, Governor,
                          State of Connecticut

    Chairman Kline, Ranking Member Miller, and Members of the 
Committee, thank you for inviting me to testify about what we in 
Connecticut are doing to accelerate economic recovery and foster job 
creation.
    When I took office last January, Connecticut had the largest per 
capita deficit of any state in the nation and we'd had no net job 
growth over the last 22 years, an unwanted distinction that my state 
shares only with Gov. Snyder's state of Michigan. Over the last 
thirteen months, we've made tough decisions to get our fiscal house in 
order. We passed a budget that bridged a $3.5 billion deficit, 
implemented Generally Accepted Accounting Principles, and reached an 
agreement with our state's public employees that will save taxpayers 
twenty one and a half billion dollars over the next 20 years. We cut 
spending by $1.7 billion dollars and raised revenue. Just last week, we 
announced a commitment to increase the size of our pension payments, a 
move that will avoid a balloon payment of $4.5 billion dollars in just 
20 years, and one that will save taxpayers nearly six billion dollars 
over the next twenty years.
    We've set our state on the road to recovery, and while I know we 
still have a long way to go, we are seeing signs of improvement. Our 
unemployment rate has fallen to 8.2%--the lowest point in two and a 
half years--and last year we experienced job growth--9,000 new jobs--
for the first time since 2008.
    In Connecticut, as is the case across our nation, the issue of the 
day is and remains job creation.
    One of the first actions we took on the jobs front was an 
initiative called ``First Five,'' a package of tax incentives intended 
to spur job creation. First Five is designed to attract large-scale 
business development projects by augmenting and combining the state's 
best incentive and tax credit programs for the first five companies 
that create 200 new jobs within two years, or invest $25 million and 
create 200 new jobs within five years.
    But First Five was just one part of what needed to be a wholesale 
change in the way we approached job creation. Working with our partners 
in the legislature, we took the extraordinary step of convening a 
special session on jobs, the result of which was a bipartisan bill that 
we believe will make Connecticut more competitive in the global 
marketplace. That bill passed in one day legislative session, with just 
one no vote in each chamber of our General Assembly.
    Our jobs bill includes the Small Business Express Program. We're 
investing $50 million per year to help Connecticut's small businesses 
access much-needed capital. The investment is already paying dividends, 
with the first company to access the credit planning to double its 
workforce as a result of the funding.
    We enacted a Job Expansion Tax Credit program, which provides a 
$500 tax credit to employers for each new employee, or a $900 credit 
for new hires if that employee is disabled, unemployed, or a veteran. 
I'm particularly focused on helping our returning veterans, 
particularly our disabled veterans, find good jobs upon their return. 
For their service, we are all in their debt, and we should do 
everything we can to help their transition to civilian life.
    And we expanded the capacity of the Manufacturing Reinvestment 
Account program, which allows small manufacturing companies to deposit 
domestic gross receipts into interest-bearing accounts to use for 
business expenses.
    These initiatives encourage the private sector to create jobs and 
make Connecticut a more attractive place to grow or start a business.
    But when it comes to job creation, we didn't stop there.
    Early on, I announced a plan to develop Connecticut's version of a 
research triangle. By utilizing the world-class resources we have in 
two of our state's most iconic institutions--the University of 
Connecticut and Yale University--that research triangle is coming to 
life more quickly than any of us thought possible.
    Shortly after my Bioscience Connecticut initiative was announced, 
we began to have conversations with Jackson Laboratories, a world-
renowned, Maine-based research institute that does pioneering work in 
the field of personalized medicine. Just two days ago, in fact, our 
Bond Commission authorized $291 million in state funding for Jackson 
Laboratory's new billion dollar personalized medicine project on the 
campus of the University of Connecticut Health Center. A collaborative 
effort between Jackson Laboratory, the State of Connecticut, the 
University of Connecticut and Yale University, the Jackson Laboratory 
for Genomic Medicine will accelerate the development of new medical 
treatments tailored to each patient's unique genetic makeup. Permanent 
jobs associated with the facility are projected to total more than 
6,800 over 20 years, including thousands of new construction jobs.
    During the 2012 legislative session, we'll tackle the next 
component of our economic development strategy--education reform. In 
the next few days, I will announce a set of proposals that will put my 
state at the forefront of this debate. From reforming tenure to 
addressing how we help students in low performing districts, everything 
is on the table. If our kids are going to compete in the 21st Century 
marketplace, we can't put these reforms off for another day.
    I am encouraged and optimistic about the progress we've made in 
Connecticut and the prospects for future growth. We still have much 
work to do and I will be tireless in pursuing pro-growth economic 
strategies while responsibly managing the State's budget.
    The federal government is and should continue to be a partner with 
States in this effort.
    As your committee considers legislation to reauthorize the 
Workforce Investment Act and the Elementary & Secondary Education Act, 
I encourage Members of both parties to work together and with your 
counterparts in the Senate to reach consensus so that legislation can 
be signed into law this year.
    Regarding WIA, don't consolidate programs or cut funding for 
programs simply to meet a deficit reduction target. Consolidation of 
programs may allow states more flexibility to deploy resources to meet 
the needs of our workforce, but not if you cut overall funding. For the 
long-term unemployed, in particular, the need for current job skills is 
paramount. And as I said before, I'm particularly concerned that we do 
everything we can to assist our returning veterans. The unemployment 
rate among these heroes is unacceptably high. We should not scrimp on 
retraining our unemployed and underemployed workers to fill jobs in 
high-growth industries. And those jobs are out there waiting to be 
filled. I hear that all the time from Connecticut employers. But they 
need a highly-trained workforce. Only then will we achieve sustainable 
economic growth that benefits all Americans.
    In his most recent State of the Union address, President Obama 
outlined sensible, pro-growth policies that dovetail with what we're 
striving to achieve in Connecticut: Returning our primary and secondary 
education system to preeminence; Ensuring that our community colleges, 
technical schools, and job training programs work hand-in-hand with 
business and industry to train workers for the jobs that our employers 
need to fill right now; Encouraging businesses, particularly 
manufacturers, to continue their operations in the United States or 
return their operations to our shores; Addressing the high cost of 
energy by diversifying our portfolio and investing in new, alternative 
energy technologies; and strategically Investing in research and 
development.
    As a nation, our economy is growing and jobs are being created. 
Congress can help accelerate this process. Business profits are back to 
their highest point since the Great Recession started. But national 
unemployment remains high and is depressing domestic demand for the 
goods and services our nation's businesses are producing. Stimulate 
that demand. Congress can extend the Payroll Tax cut and federal 
Unemployment Insurance benefits through the end of this year and keep 
money in the hands of people who will spend it now. In addition, I urge 
Congress to pass legislation that incentivizes companies sheltering 
profits overseas to repatriate those profits if they translate into 
more jobs. Given the economic and fiscal turmoil in Europe, and the 
lingering effects of the tsunami in Japan, the United States is a safe 
haven economy among the developed nations of the world and we should 
take advantage of that. In addition, to accelerate job growth in 
construction trades and to help clear the stock of homes on the market, 
the first time homeowner tax credit should be restored and extended.
    Finally, I recognize that the overarching debate in the Halls of 
Congress is the budget deficit. This problem wasn't created overnight, 
and fixing it will be a long-term process. This must be a bipartisan 
process that recognizes that neither side can get everything it wants; 
else deficit reduction and long-term economic growth will not be 
sustainable. That is the course I pursued when I set out to close the 
largest per-capita state budget deficit in the nation. But the 
political fights over the past year that have driven the federal 
government both to the brink of shutdown and default do not serve our 
country well. The uncertainty stemming from those tumultuous fights 
reverberated among State and local governments, in financial markets, 
and around the kitchen tables of our citizens. It is not too late to 
proceed in a sensible, strategic, and bipartisan fashion. I urge both 
sides to do so.
    Chairman Kline, Ranking Member Miller, members of the Committee, 
thank you for the opportunity to testify. I look forward to addressing 
your questions.
                                 ______
                                 
    Chairman Kline. Thank you very much, Governor, both 
governors. We really do appreciate your time and your insight. 
It is fascinating that you share a distinction that maybe a lot 
of people wouldn't want to share, but it looks like you are 
addressing it in exciting ways.
    Because we have people coming and going, I am going to 
defer my question period. I understand Mrs. Foxx has agreed to 
defer hers for a few minutes. And so I will recognize Mr. 
Walberg for questioning.
    Mr. Walberg. Thank you, Mr. Chairman. And had I been given 
the opportunity to defer, I might have, but I appreciate the 
opportunity to go.
    Governor Snyder, again, thank you for being here. 
Appreciated your opening comments, as you talked about 
developing employment talent, the three C's, having a B-12 
education system, so forth and so on, that we are certainly 
concerned with and, from my perspective, would much rather see 
states embodying all these concepts and moving the knowledge 
and talent and workforce P forward as opposed to the federal 
government so involved.
    And so let me ask you if you could develop even further 
your ideas, as well as concerns, along the line of what federal 
education regulations are making it harder for you to 
accomplish your goals in Michigan, and in what ways on the 
positive side can we be of greater support, encouragement, aid 
and comfort to you as a state executive and with the state 
legislature, moving that whole idea of developing a workforce 
that is trained and ready and expanding.
    Governor Snyder. Well, I appreciate your question, 
Representative Walberg, because it is a real challenge that 
there are many federal programs--there are dozens of federal 
programs. And we actually spend a lot of time on 
administration, overhead, a lot of additional costs, rather 
than actually helping people. And in too many cases, we are 
giving people skills and training where there may not even be 
employment opportunities.
    And so this is where the connecting part comes in, as I 
mentioned. We have 70,000 open jobs in Michigan. We have a lot 
of people that want to find a job. But, one, that mechanism 
didn't previously exist in terms of a role the government can 
play, in terms of a clearinghouse coordinator, not a money 
spender. And then, secondly, the piece of that is, is we should 
never tell people what they have to study, but shouldn't we 
create a path where they can find success by having good 
information?
    So on this Web site, for example, we have a career skill 
matchmaker, and we have a career investment calculator, so 
people can literally look at different careers to say what they 
should go into, because there are opportunities and jobs.
    So, again, if you were to redo programs instead of making 
them prescriptive, but to have programs that say we are going 
to hold you accountable for connecting with jobs, if you were 
going to hold us accountable to see how many employers are we 
working with and developing joint programs with, those are all 
great metrics, and then just give us the flexibility to deliver 
on that and partner with you on doing that.
    Mr. Walberg. In my role as the chairman of the Workforce 
Protection Subcommittee, we provide oversight to various 
aspects of the Department of Labor. One of those primary 
programs within the Department of Labor is OSHA.
    In the course of some of our hearings, we have found out 
that many states have, like Michigan, MIOSHA, Michigan OSHA, 
that is given the primary responsibility for regulating the 
onsite workforce protections program, working with job 
providers, employers.
    In my travels around the district, I have talked with many 
employers who are finding great benefit, great help, great 
partnership with MIOSHA, as the inspectors work with them, as--
and in the past have been much more partnering with them, as 
opposed to citing them and fining them.
    In recent days, we have been hearing an uptick specifically 
coming from OSHA encouraging MIOSHA to be more involved with 
citing and finding and hearing the concept of regulation 
through shaming, as it were. If that has been noticed by you, 
how are you continuing to focus the real partnership that a 
state regulator can be in helping employers and employees in 
making sure that, while we have a safe workplace, we have a 
workplace to come back to the second day?
    Governor Snyder. No, excellent question. And what I would 
say is this is something that I found even at the state 
government, because MIOSHA is performed over OSHA in Michigan 
by far, in terms of that, but that was not good enough, that 
there is too much of a culture even out of Lansing--because 
most employers don't want to have someone show up and say, ``I 
am from Washington,'' or, ``I am from Lansing, and I am here to 
help.''
    As a practical matter, what we are trying to do now is 
create an environment where the goal of our people is to 
perform their fiduciary duty and to do that very responsibly, 
but it is not to punish people. It is to have people succeed.
    And so the philosophy that we are doing training with all 
of our workforce people, all our MIOSHA and all state 
employees, is to empower them more, where actually they feel 
that they are a value-added contributor in partnership with 
their employers and helping most employers to succeed.
    The average businessperson is a good, honest person. There 
are some bad people out there, and we should really go after 
them. But instead of trying to create barriers, let's help them 
solve their problem.
    And in one program I would recommend people might want to 
look at is something we did in Michigan in the agricultural 
sector. It is called MAEAP. It is the Michigan Agricultural 
Environmental Assurance Program, which was to help farmers 
actually get pre-certified. They go through a certification 
program and they get a credential to say, this means you are 
doing essentially best practice. And if you have an issue, 
before we can penalize you, we are going to review your records 
on how we can help you be successful before they even have to 
worry about being punished, because they have made a good 
investment, and being smart and thoughtful.
    Chairman Kline. The gentleman's time has expired.
    Mr. Payne?
    Mr. Payne. Let me thank you for your very interesting 
testimony.
    Let me ask both of you this question. We all know too well 
that many public schools and community colleges across the 
country are in desperate need of repairs, and the folks who can 
make those repairs are ready, willing, and able to work, very 
anxious. Every governor knows the challenges--and we do, too, 
in Congress--is paying for it.
    The Americans' job act directly addressed this need with a 
commonsense approach to both fix schools and put folks back to 
work. It is a win-win across the board. Specifically under the 
AJA, the president seeks to invest $25 billion in school 
infrastructure that will modernize at least 35,000 schools, 
putting thousands of unemployed Americans back to work.
    Both Michigan and Connecticut stand to benefit from this 
proposal, and I am confident that both of you support it, and 
that is going to be my question. Under AJA, Governor Snyder, 
Michigan will receive nearly $1 billion for school repairs and 
would support as many as 12,000 new jobs in your state.
    And, Governor Malloy, under the AJA, Connecticut stands to 
receive nearly $200 million in funding for school 
infrastructure and will support as many as 2,400 jobs in 
Connecticut.
    I just wonder if--starting with you, Governor Snyder--doyou 
support this act? And Governor Malloy? And perhaps why?
    Governor Snyder. Thank you for that question. What I would 
say is a couple things. One is, is there are infrastructure 
requirements where we do need to invest. Our schools, our 
colleges, we have many other places with our communities where 
they need to invest.
    A couple things, though, that are typically missing are the 
right metrics and, again, measures. You have to forgive me. I 
am an old accountant, so I like to measure things in terms of 
knowing what we are doing. But one of the challenges is, is we 
have had numerous cases in the past where people would build 
capital facilities without having the operating sources to 
actually use those facilities or apply them.
    So in many respects, we need to be much more thoughtful 
about making sure, what are the highest and best asset 
allocations, as opposed to simply making sure we are doing 
projects, and that they are going to the jurisdictions that can 
need them most? We have certain school district that would take 
part potentially in these programs that really don't need those 
resources, that have great facilities, and others that are 
crumbling.
    How can we make sure they are there? And how do we make 
sure those follow-up funds for maintenance, for all those 
things are in place? Because one of the great things I have 
found in our budget that has been overlooked is proper 
maintenance for even state facilities from prior years. And we 
are getting caught up on that.
    Governor Malloy. Let me be clear. I would be more than 
happy to take $200 million. And I will take part of the 
governor's billion dollars if he doesn't want to use it.
    I constantly hear from the businessmen in my state, when 
they travel around the rest of the world, how great other 
countries' infrastructure is, and specific reference many times 
made to China, as well as certain European countries. There is 
a reality about the United States that we have failed to invest 
properly in the maintenance of our infrastructure, but also 
building new infrastructure.
    We are suffering from a 25 percent unemployment rate in 
some of the building trades. Any program that would allow us to 
put contractors and construction workers back to work would be 
a good program on its face. But the idea of tying that to 
improving our educational system is an exemplary idea.
    Mr. Payne. Thank you. Similar question. The American 
Society of Civil Engineers awarded the United States a D in the 
condition of our infrastructure, as you have been mentioning. 
The--in 2009, ASCE estimated that the U.S. must spend $2.5 
trillion over 5 years to meet the country's most basic 
infrastructure needs, not to catch up, just the basic needs.
    By conservative estimates, every $1 billion in public 
infrastructure investment creates 23,000 well-paying jobs. The 
Congressional Budget Office estimates that every dollar of 
infrastructure spending generates on average a $1.60 increase 
in our overall GDP. Critical transportation and energy projects 
have even larger multiplier effects.
    Giving this, I would like to ask you both, how are you 
partnering with the federal government and leveraging existing 
public investment in transportation to upgrade roads, rail, 
ports, and reinvest in the overall infrastructure in your 
state?
    Governor Snyder. Yes, we do need to invest more in 
infrastructure. And I did a special message in October of last 
year on that topic to our state. In roads and bridges, for 
example, I said we needed $1.4 billion more a year in 
investment in our state, and that is an important component.
    Again, the issue is, how do we partner on doing that? And I 
would like to compliment Secretary LaHood for his efforts in 
the state of Michigan. He has been very proactive and good, 
talking about helping develop a regional transit authority in 
southeastern Michigan that we are now asking for state 
legislation to move forward on that, because Detroit and metro 
Detroit has been lacking in that for decades. So there is an 
opportunity to partner on that.
    What I would also say is, again, I would make the approach 
that there are better ways to do things than we currently do 
things, with the prescription measures that you can find in 
some of the highway bills, though, compared to giving us more 
flexibility. We still have multiple situations where we may be 
making a great investment in a rest stop that we don't really 
need as opposed to a bridge. And the ability to have 
flexibility in making those decisions would be helpful to our 
state.
    Governor Malloy. Let me comment--recently, a community in 
our state--Stamford happens to be my hometown--received the 
TIGER grant in an approximate amount of $10 million. That 
federal government support will be matched 5 to 1 by the 
private sector.
    I will also tell you that Connecticut is spending more of 
its own dollars in rebuilding its train system on a matching 
basis than any other state in the nation. I am quite certain 
that if you send infrastructure investment dollars to the 
states, we are capable of putting thousands of construction 
workers and private contractors back to work.
    Chairman Kline. The gentleman's time has expired.
    Dr. Bucshon?
    Mr. Bucshon. Thank you, Mr. Chairman.
    Governor Snyder, thanks for being here, and the same to 
Governor Malloy.
    The state legislature in Indiana has recently--and this is 
a state issue--taken up right-to-work, which is a controversial 
subject, as you know. Governor Snyder, are there any 
discussions in your state, which neighbors me, concerning this 
type of action at the state level?
    Governor Snyder. It is under discussion. There are a number 
of legislators that are promoting that. In my perspective, as I 
have made it clear, it is not on my agenda.
    Right-to-work is an issue that is a very divisive issue 
people feel very strongly about. And as Mr. Walberg mentioned, 
I am the relentless positive action person, so we have many 
problems in Michigan that are much more pressing that I want to 
find common-ground issues we can work together on before we get 
into divisive issues. And we are showing great success.
    We balanced the budget. We did tax reform. We went through 
a whole list. Important items this year that I would prioritize 
include the transportation package I mentioned about 
infrastructure, and we have a package on public safety. We need 
to do a better job on that area in our state.
    So right-to-work is an issue that may have its time and 
place, but I don't believe it is appropriate in Michigan during 
2012.
    Mr. Bucshon. Well, because we have had to deal with that 
issue, as you probably know, on this committee as it relates to 
South Carolina. And do you think that--and I don't want to put 
you on the hot seat--but do you think there is evidence out 
there to show that it creates--that it helps states compete not 
only with--with other states within the United States, but 
compete globally for--for businesses? Do you think a right-to-
work-type situation is helpful?
    Governor Snyder. I think there is a lot of information out 
there. And one of the things I am interested in is trying to 
understand what is factual information and what is kind of 
perception, because in many respects, I would use some of the 
success in Michigan as an example. The auto industry is a very 
competitive industry now, in terms of their labor agreements 
and such. So on the face of it, I don't automatically have an 
answer, but I believe it is something that we should all take 
the time to understand before simply people kind of revert to 
their traditional positions on it.
    Mr. Bucshon. Thank you. I just want to make a final closing 
comment, and then--thanks for your answer.
    You know, we hear a lot about the United States comparing 
ourselves with other parts of the world. And I would just--at 
this point, comparing what we do here to--to Europe's probably 
not something I would recommend, because even though I do have 
business leaders also telling me that infrastructure is better 
in other parts of the world, their financial situation is dire, 
as you know.
    And in China, comparing ourselves to China in a lot of 
areas, realize that they are rebuilding their country on the 
American taxpayers. Right now, we are paying tremendous amounts 
of interest on our debt to China, and they are using that money 
to rebuild their infrastructure.
    So I think, until we can honestly address our mandatory 
spending programs in this country and to have an honest 
discussion about what the direction this needs to--country 
needs to go in financially, we are going to continue to find 
that we struggle to find money for things that all of us agree 
that we need to spend money on, including our infrastructure.
    I yield back.
    Chairman Kline. Thank the gentleman.
    Mr. Scott?
    Mr. Scott. Thank you, Mr. Chairman.
    I thank both of our governors for being with us today. 
Governor Snyder, you mentioned 70,000 job openings in Michigan. 
Have you reviewed these openings to ascertain whether your 
workforce has the education or the qualifications for those 
jobs or whether investments need to be made in education so 
that people--so there will be a match between the workforce and 
the job openings?
    Governor Snyder. Yes, of the 70,000 opening jobs, I would 
emphasize to you--and I encourage you to go look--these are--
most of these are good jobs. You are talking like nurses, 
computer programming, accountants. These are well-paying jobs, 
and the skilled trades--one I always talk about is welder. If 
you are a welder in Michigan, you can get a job in about 20 
minutes in any corner of Michigan.
    So there are a couple of aspects. One is, is this is the 
missing element from workforce development. That is why I call 
it talent and connecting, is we launched mitalent.org to make 
that connection, because there is a mismatch of where people 
might be and where those jobs are that people simply didn't--
weren't aware of them.
    The second thing is, is the site is just not about 
transactions, which is just finding a job. It is about career 
planning. And to go to your point about saying, if we have 
employers signing up to participate in this program that they 
see, there is a lot of demand and we are not seeing those 
filled, we should be working with our community colleges, in 
particular, our skilled trade unions, other programs to say, 
how can we get in alignment to get those people the proper 
training so they can succeed?
    Mr. Scott. Governor?
    Governor Malloy. I just would like to comment on that. It 
clearly--for a long period of time in our country, we have 
failed to properly train a replacement workforce, particularly 
as some of our states are rapidly aging. And anything we can do 
to support our community colleges, in particular, which have 
the fastest turnaround, as well as the ability to offer 
certification programs, would be greatly appreciated.
    Mr. Scott. Well, are we finding that employers can't find 
people qualified for the job openings?
    Governor Malloy. I think, in precision manufacturing--and I 
think the governor would agree--that that is a particular 
problem. And, unfortunately, too few of our schools became 
invested in training that replacement workforce.
    Mr. Scott. And so investments--what I am hearing is 
investments in community colleges to make sure that our 
workforce can qualify for the job openings would be an 
important aspect of this committee's work.
    Governor Malloy. I believe that is true, as well as support 
of vocational programs in our high school level, as well.
    Governor Snyder. You know, one thing I would add is I would 
also encourage you to look at two programs we have in Michigan. 
One is called Shifting Gears, and the new version is called 
Shifting Code. So these are for very experienced workers that 
were in large companies, for example.
    Shifting Gears was geared for people that were middle-level 
and higher in terms of professional, managerial technical, and 
large companies. And our goal is to encourage entrepreneurship. 
And so we created this program, and it has been very successful 
to say, you can't ask someone from a large company to go join a 
start-up overnight and have a chance to succeed.
    So it is almost cultural adjustment training, because they 
have all the skills they need to be successful in being 
entrepreneurs or being parts of start-up companies. So we have 
done that with Shifting Gears, and it has gone so well, we are 
now creating one called Shifting Code, because there are 
computer programmer jobs readily available. And this would work 
well for people that are my age, very experienced people, and 
to get them successful in a new career.
    Mr. Scott. A couple of years ago, we had the Recovery Act 
that gave a lot of money to states. The only way the state can 
balance its budget is essentially to fire people or stop 
funding projects so somebody else can fire people. Can you say 
a word about how much money each of your states got and what 
would have happened to your state budget had you not gotten aid 
under the Recovery Act?
    Governor Malloy. Well, in my case, the monies that flowed 
to the state did, in fact, replace state funds. Obviously--and 
I would argue that my government in the state of Connecticut 
did too little to respond beyond using those funds.
    Having said that, there is no doubt that we would have 
fewer teachers in our school system today if we had not 
received those funds and that we would have continued a process 
long underway in Connecticut of shifting the burden to local 
communities, who rely almost exclusively in our state on 
property taxes to survive.
    It is one of the reasons that in balancing a $3.5 billion 
deficit, which was structural in nature, because all of the 
surplus funds from past years were being used, as well as the 
ARRA money was being used, to displace state expenditures,that 
I had to take a different kind of approach to balancing that 
budget.
    Governor Snyder. Yes, what I would say is, unfortunately, 
in my view, too much of those dollars were used for replacement 
dollars for operating government. As a practical matter, we 
faced $1.5 billion deficit when I came because they weren't 
there, and we cut the deficit.
    What I would have preferred to have seen is actually those 
dollars could have gone to infrastructure or other investments 
that were more treated as one-time funds that could have made a 
difference in the long term.
    Mr. Scott. But you would have had to cut your budget even 
more than you cut your budget had you not had those funds. Is 
that right?
    Governor Snyder. Again, if you look back at the prior few 
years, though, I view it as a foregone opportunity.
    Chairman Kline. Gentleman's time has expired.
    Mrs. Roby?
    Mrs. Roby. Thank you so much, Mr. Chairman, and thank you 
to both of the governors for being here today. We appreciate 
your time. We know it is valuable.
    So, Governor Snyder, I just want to talk to you a little 
bit about Medicaid, kind of switching gears to health care, and 
as we know that, the new health care law significantly expands 
Medicaid, and it is going to put a real financial burden, not 
just on the federal government, but of course, on the states, 
as well. And it is significantly underfunded. And many of us 
are concerned that states cannot afford to devote these scarce 
resources to their Medicare programs.
    So I am just curious if you can comment on any particular 
consequences that you see this current health care law having 
in Michigan from your perspective in state government. And how 
are we going to pay for these increased costs, not just on the 
federal level, but how are the states going to be able to 
handle this? And have you talked to your other colleagues, 
governors, other governors, as well, about Medicaid expansion 
and the impact that that is not just going to have on your 
state, but all across the country?
    And with that, I will listen to your answer.
    Governor Snyder. No, I appreciate that question. And two 
dimensions in particular. I did a special message on health and 
wellness last September, because it is critically important. 
One, it is critically important to the quality of life of our 
citizens, but it is a huge societal cost and what it is doing 
to our budget situation, in terms of the growth of health care 
costs.
    There are things that I don't believe have been addressed 
enough why it has been a focus on other issues in Medicare and 
Medicaid, in particular the dual-eligible situation is one 
where if people were working better together, there is an 
opportunity to hopefully provide better care at a much lower 
cost, if we had more flexibility or partnered better with the 
federal government.
    The simplest thing I say on health and wellness, though, 
that people often overlook is just personal responsibility and 
wellness. I launched a program called Four-by-Four. And to be 
blunt, I signed up to lose 10 pounds. I gave all of my 
statistics out that they wanted on blood pressure and 
cholesterol. And if you ever want to see your blood pressure 
during the middle of a press conference, it does go up. 
[Laughter.]
    And the point was, really, if you looked at in the state of 
Michigan, we have a dashboard where we show 32 percent of our 
population is obese. If we brought that down, if we dealt with 
obesity and overweight and did basic things on health and 
wellness that we have personal responsibility for, we could 
probably cut our health care costs in this country by half. So 
a lot of this should be us focusing on doing things that we can 
all do together and playing a coordinating clearinghouse role, 
leadership role, and not a spending role.
    Mrs. Roby. And from the state budgetary process of where 
you are, knowing that this is the current law of the land, what 
direction are you heading in preparing for the impact that 
these increased costs are going to have, despite the, you know, 
broad brush strokes of what we know, personal responsibility, 
but there are specifics that can be done, as well?
    And I am just curious. I am from the state of Alabama. And 
this is a huge concern for us, for our governor and our state 
legislatures. They move into this next session about the 
negative impact that this is going to have on our state 
budgets.
    Governor Snyder. Yes, it is a major question, because, 
again, it gets back to the concept of unfunded mandates. And I 
hear that from our local governments all the time. So it is 
that food chain question.
    And we are struggling with that, because it is like you 
have to make choices, and we have to be fiscally responsible 
for the long term, because that is really the question now. And 
to help deal with that, we have done a lot of reforms to 
essentially deal with our long-term liabilities, like post-
retiree medical and other costs.
    But, again, this will just make it more difficult for us to 
operate.
    Mrs. Roby. Mr. Chairman, I yield back.
    Chairman Kline. The gentlelady yields back.
    Mrs. McCarthy?
    Mrs. McCarthy. Thank you, Mr. Chairman. And thank you for 
having this hearing. I think it has been very interesting 
hearing from both governors. You certainly agree on an awful 
lot of things, and the way that you both have been working 
toward your state to get your people back to work and looking 
at the different initiatives is--to be very honest with you, 
that is the initiative that we need to see here. And I hope 
that, as we go into this New Year, that Congress can work 
together to get things done for the country, not for political 
parties. And I think both of you are perfect examples of that.
    Governor Snyder, I think one of the things you brought on 
constantly was to have the flexibility to work between your 
state and the federal government, which is important. And I 
know that, you know, we have been hearing an awful lot on some 
of the resources that we gave out to try to bring this 
recession back has been working.
    So I guess my first question to you is on the flexibility 
point. Do you believe that the federal government, the 
intervention in the auto sector infringed on this principle, 
the principle meaning about the flexibility and working 
together in the partnerships? The decision is widely recognized 
as a success and one that did save thousands of jobs. Would you 
characterize this particular program as a success?
    Governor Snyder. Yes, with respect to the auto question, 
which is critically important to Michigan, because we are--I am 
proud to say, we are the auto capital of the world--if you 
looked at it in terms of perspective, what I have said and what 
I believe is, if it would involved one individual company, it 
wouldn't have been appropriate, because that is what bankruptcy 
processes are for.
    This was a situation that merited additional involvement 
and attention, because it wasn't about two companies. Those two 
companies would have brought down the entire industry, that I 
am not sure Ford would have survived if the supply base would 
have collapsed. So it was a broader issue.
    Then you get into the specifics of how it was done. And 
what I would say is, is one choice was taken. There are other 
choices that were viable. And I don't see any value from my 
perspective of trying to second-guess or quarterback after the 
fact on those.
    It was important something was done and that our industry's 
viable now. And so that was a success in that regard.
    Mrs. McCarthy. And I agree. Listen, you know, this 
particular recession I think caught everybody way off-guard. 
And, you know, some were looking at solutions that were done in 
the 1930s. That is not the world we live in today. There is a 
global economy out there, so we have to work together.
    The other thing that both of you have stressed is 
education. That is why many of us sit on this particular 
committee, the future. And you talked about the different 
initiatives that--the educational needs, and especially for 
those that are out of work.
    I spend a lot of time with my schools in BOCES, which, 
unfortunately, an awful lot of parents think it is not good to 
send their child to a vocational school. And yet when I went 
and visited them and saw the jobs that they were training for, 
mainly because they have partnerships with the businesses in 
the area, where are the jobs going to be in 3 years, 4 years, 5 
years? That is something that I think that we need to see a lot 
more done with that.
    But I also--reading the testimony, Governor, I saw that you 
had said that consolidating programs or cut funding for 
programs simply to meet a deficit reduction target, 
consolidation of programs, allow more states more flexibility 
to deploy resources to meet the needs of our workforce, but not 
if you cut overall funding.
    And I think that is important, especially as we are seeing 
the states right now cutting back on education, making 
decisions on whether they are even going to cut back on school 
time, which this is not the time to do it. If you could address 
that, I would appreciate it.
    Governor Malloy. Well, as someone who has served in 
different governmental capacities for a number of years--and 
frequently had to interface with the federal government--I came 
to understand that the combining of programs normally was 
attached to the reduction of funds flowing for the stated 
purpose.
    If you are combining programs to create synergies and there 
is a desire to maintain the funding, I am sure we can spend the 
money very effectively in our states to put people back to 
work. But if we are combining programs simply to cut money out 
of those programs, I can assure you, we need that money.
    I would also like to tell you that in Connecticut, we call 
the president's effort around the auto industry ``Obama-car.'' 
And I want to comment that I think it was a strategic 
investment--that it had implications even in our own state. The 
support of manufacturing in the United States is terribly 
important. And I absolutely agree with the governor that the 
assistance given to that industry reverberates in all of the 
states where there is precision manufacturing currently taking 
place.
    Chairman Kline. The gentlelady's time has expired.
    Mrs. McCarthy. Thank you.
    Chairman Kline. Mrs. Foxx?
    Mrs. Foxx. Thank you, Mr. Chairman.
    And I want to thank both of the governors for being here 
today, also, and I want to pick up on something that my 
colleague, Mrs. McCarthy, brought up a minute ago. I would also 
highlight that comment in Governor Malloy's presentation where 
he said, 'don't consolidate programs or cut funding for the 
program simply to meet a deficit.'
    If you or someone on your staff will read carefully the WIA 
bill which we have prepared, it shows very clearly that we 
don't intend to cut any funding. However, we intend to get a 
lot more value for what is being spent. And I think it is 
really important that we point that out, because there is no 
intention to cut the funding there.
    I will, though, also point out that federal dollars are not 
manna from Heaven. They are taxpayer dollars which are simply 
brought to the federal government, a lot of them wasted, and 
then some of them sent back to the states. I believe that in 
most cases the money could be spent much more effectively if 
they were simply going to the states to begin with.
    But, anyway, let me, again, thank you all for being here. 
And I want to say, particularly to Governor Snyder, I 
appreciate the very positive comments you made about the new 
WIA bill, which has been introduced, and which we hope will 
move forward in this session.
    I want to point out in the summary that I have about the 
bill that it mentions--allows governors, empowers governors, 
all throughout that bill, we do a lot to give much more 
authority to the states. We allow competitive grants, 
consultation with the governors. Throughout, again, we have 
changed, I think, the entire perspective of how we would 
operate these programs.
    And I appreciate the fact that you have talked about talent 
development or creating talent, because I rail against using 
the term ``job training'' and training individuals, because as 
my colleagues have heard me say often, you train dogs and you 
educate people. And I like the idea of talent. And I think that 
is a good word we need to try to put into the bill somewhere, 
if we can, along with the term ``workforce development.'' And I 
like that perspective. And I would say to you, we need a lot 
more accountants and more people who want accountability and 
results and bring a fresh perspective to this issue.
    I would like to ask each of you--and I know you are not 
prepared to answer this question today--but I was in the State 
Senate in North Carolina for 10 years. And one of the things 
that the Republicans proposed over and over was the 
consolidation of all of these workforce programs so that we 
could save money at the state level in administrative costs.
    And particularly, Governor Malloy, I would like to get some 
feedback from you, when you go back to Connecticut, and from 
Governor Snyder, also, on how much money could you save at the 
state level with this consolidation? And what efforts would you 
see the state being able to promote that you are not able to 
promote now under the existing structure?
    Because I want us to start this consultation with the 
governors right now. Please give us your feedback. The state of 
North Carolina would have saved a lot of money even 10 years 
ago when we talked about this. And so I would like to ask you, 
would you, Governor Malloy, send that information back?
    Governor Malloy. Sure.
    Mrs. Foxx. Governor Snyder?
    Governor Malloy. Sure. I am sure my staff behind me has 
already made a note of your request, and we certainly will 
attempt to do that.
    Let me be very clear: I believe in consolidation. As 
governor of the state of Connecticut, in my first budget, I 
proposed a consolidation of 30 separate state agencies, 
actually doing that by over a third. And in this budget that I 
am presenting on February 8th, we do it again.
    And I want to be very clear: Consolidation for the purposes 
of identifying funds to attack problems that exist and to do 
away with duplicate requirements is something that I absolutely 
support.
    Having said that, with respect to the WIA program, we have 
used that program very effectively in a number of different 
ways around job funneling, job training, and talent 
acquisition. So I look forward to working with the Congress of 
the United States on that very point. I think we can, in fact, 
do that.
    I am not against flexibility, but I have to share my 
experiences garnered over a 25-year period of time. Frequently 
when I have seen the federal government combine programs, it 
has led to reductions in the monies available to apply to local 
issues, where I served for 14 years as the mayor of Stamford, 
and now I fear on a statewide basis in state government.
    Mrs. Foxx. Mr. Chairman, I would just like to say to 
Governor Snyder, thank you for highlighting the fact that there 
are 70,000 open jobs, because I think that is the case all over 
this country. And more needs to be said about that to show that 
we need to match talent. We need to educate people as to where 
the jobs are. And I think--I hope you will continue to do that.
    Chairman Kline. The gentlelady's time has expired. I know 
that Governor Snyder was itching to comment, and I am sure you 
will get a chance coming up here.
    Ms. Woolsey, you are recognized.
    Ms. Woolsey. Thank you, Mr. Chairman. And thank you to both 
of our governors. I am sorry I left. The Science Committee has 
just--the Republicans have just disallowed ABC, HBO, and an 
independent news network from covering the fracking hearing. So 
as a member of that subcommittee, it was important to go up and 
try to turn that around. We did not prevail. So I am sorry I 
missed your testimony.
    So, Governor Snyder, Michigan, thank you for having a 
successful independent state OSHA, and because--so does 
California. And I think our OSHA program is steps ahead of the 
federal program, and the feds continue to learn from these 
state programs.
    I understand that, while I was gone--that is why I told you 
why I was gone--Chairman Walberg--I am the ranking member on 
his Subcommittee of Workforce Protection--mentioned that there 
is an overlay of federal regulations over state regulations. 
And I don't know if he specifically referred to OSHA.
    But just recently, he has said that he was in his district, 
he visited one of his companies who had just been visited by 
the state OSHA program, and right behind that, the feds' OSHA 
came. Well, we have done an investigation. I mean, we have 
tried to find out what company that was and why they were 
there, because that would not be appropriate.
    Have you looked into that at the state level? I mean, why 
would that happen? Why would we be wasting money in that 
regard? And do you know any more about it than I do sitting 
right here today?
    Governor Snyder. No, not that particular situation.
    Ms. Woolsey. Well, okay, I think it is worth looking into. 
We have asked over and over for the chairman to tell us what 
the company was and--so we can figure out how that all 
happened. So I think that would be an example of great waste of 
funds and the wrong use of federal regulators. But thank you 
for responding.
    Governor Malloy, you in Connecticut are on the cutting-edge 
in so many ways. And you have a progressive--you have 
progressive work-life policies and a new law that requires 
businesses to pay sick leave when employees can't work due to 
illness. I would like to hear straight from you if the state 
economy has been compromised or if the state economy and health 
care system have benefited in regard to this sick leave policy? 
I mean, have you lost jobs?
    Governor Malloy. No. Since the passage--and ultimately, the 
enactment--of that law, we have actually gained jobs and 
lowered our unemployment rate in the state of Connecticut. It 
is a special program. It takes a period of time for employees 
to earn the right to paid sick time.
    But let me be very clear: We did it not as a matter of 
convenience, but we made the ultimate decision that having 
people who prepare your food come to work sick doesn't make any 
sense. People who care for your parents or grandparents in a 
nursing home coming to work sick doesn't make any sense. And 
people caring for our children in daycare programs coming to 
work sick does not make any sense.
    Ultimately, we decided that we would be a healthier state, 
a safer state if we moved in that direction with respect to 
service employees. And that is exactly what we did.
    Ms. Woolsey. And the cost to the state?
    Governor Malloy. I don't believe there ultimately is a cost 
to the state. The idea that people are going to abuse a program 
simply because it exists really is not supported by the data.
    Ms. Woolsey. Thank you. Thank you very much.
    And just quickly, Governor Snyder, do you agree that the 
federal government plays a major role in helping improve the 
economy? Did the feds not help the auto industry in Michigan?
    Governor Snyder. Well, the auto industry was a unique 
circumstance, and that was successful, and I was asked that 
earlier, so I appreciate the question.
    What I would say is that one of the things holding back our 
economy very clearly, talking to any Michigan employer, is the 
challenge of dealing with the federal deficit here. And that is 
an issue that needs to be resolved, because as a former 
businessperson myself, the number-one thing you want from 
government is certainty and confidence that you know what you 
are dealing with. And if you don't know what the rules are, you 
are not going to take undue risk.
    And this is a risk sitting out there for all our employers. 
So I really encourage Washington to address that issue, because 
that is holding back job creation in our state.
    Ms. Woolsey. Absolutely, and the lack of customers is also 
holding back.
    Chairman Kline. The gentlelady's time has expired.
    Dr. Heck?
    Mr. Heck. Thank you, Mr. Chairman, and thanks to both of 
you being here today. And I appreciate your testimony.
    Governor Snyder, I was really interested in your comments 
on workforce investment and your job connection program. Being 
one of the--having the companion WIA bill along with Mrs. Foxx, 
my bill deals with governance and policy over WIA.
    And the question I have is, how were you able--or what kind 
of response did you get to the idea that you were going to have 
to move people from the jobs they might have been in to jobs 
that were going to exist?
    And I ask that because I represent southern Nevada. We have 
the dubious distinction of having the highest unemployment rate 
in the nation, driven largely in part by the 70,000 
construction jobs that we have lost over the last several 
years.
    But we had a field hearing on workforce investment out in 
Las Vegas. And I asked one of the local analysts, economists 
what they thought about those 70,000 jobs, and would they ever 
come back? His answer was, no, we will never be back to that 
level of construction in Nevada where we will have those jobs.
    Next to him on the panel was a representative of one of the 
buildings and trades unions. And I asked that gentleman, what 
was he doing to prepare his members for the jobs that will 
exist, since it is apparent the jobs that did exist aren't all 
coming back? And the answer was, well, we just need you to 
spend more money on infrastructure so we can put them back into 
jobs that did exist.
    So what did you do differently in Michigan to get the buy-
in of moving people from what did exist to what will exist?
    Governor Snyder. Well, I appreciate the question, 
Representative. And I appreciate your sponsorship, along with 
several other members here, of the ideas about putting metrics 
in workforce investment. And I clearly support that.
    It is an ongoing process. It is not done yet. But a lot of 
it is, is getting the facts out to people. And I will go back 
to an illustration that I mentioned earlier about a welder 
being a job that anyone--if you are a welder, you can get a job 
in 20 minutes in Michigan. And how many people knew that?
    But the other part is, is if you go to the average parent 
or the average student or someone even out in the workforce, do 
they actually know what a welder does? Do they actually know 
how much a welder makes? Do they actually know where a welding 
program is? The answer is no.
    And so that is why this portal concept of this Web portal 
that--mitalent.org is so powerful, because we are putting those 
career skill tools on there and then we are going to try to 
encourage people to get the facts.
    And I will give you one question that is really 
interesting, if you go back to the auto industry illustration, 
that the auto industry is hiring, and they are actually 
concerned about having enough workforce for the future, but now 
they have to get over the perception that you don't want to be 
in the auto industry because it goes through difficult 
financial times.
    And if you want a job in an auto plant nowadays, you can't 
simply just say, ``I am coming out of high school, and I am 
going to work.'' Quite often, you need to go to a community 
college and get a couple of years of technical training to work 
on the floor of an auto plant today.
    So those are all kinds of things that is an ongoing 
process, but I am proud to say I think we are helping lead the 
country in being proactive. And that is why I encourage--
workforce development is great, but it is not enough. Talent, 
the three C's, connecting, collaborating, and creating.
    Mr. Heck. Again, and, Governor Malloy, any similar efforts 
in Connecticut? Or how are you moving, getting people from jobs 
that may have existed in Connecticut to the jobs that you 
foresee in the future in Connecticut?
    Governor Malloy. We attacked this issue--by the way, I 
agree with the governor on this point, as I have on many of the 
points that he has made. In our bipartisan jobs bill, we 
actually allocated funds to take an award-winning program at 
one of our community colleges, Asnuntuck, which has been in 
existence this program for 12 years, training in precision 
manufacturing and re-training folks who may have lost their 
jobs in lower-lever manufacturing to be in precision 
manufacturing, with a 98 percent to 100 percent placement rate 
upon completion of that program.
    But what I found when I became governor is that that 
program had not been replicated in any of the other community 
colleges in the state. In our bipartisan job program that we 
passed and I referenced in my prior testimony, we are going to 
replicate that program in three additional community colleges, 
with operating dollars, and we are going to replicate it in 
three of our vo-tech schools in the state, so that we will 
actually graduate people from high school or from community 
colleges who will be prepared to take those precision 
manufacturing jobs. Why that connection was never made, I don't 
understand.
    But I want to make one quick point on that. One of the 
reasons I consolidated our community colleges, of which we have 
12, with our four regional universities within the state and 
our online university is to make sure that our higher 
educational program in the state of Connecticut is more 
responsive to the needs of the companies, start-ups, and long-
term companies that are finding it difficult to get the right 
talent-matched set.
    And so I think both the governor and I are working on that 
program, having identified it as a tremendous need. We have 
thousands of precision manufacturing jobs going unfilled in 
Connecticut right now as we speak. I hope that that will not be 
the case in a relatively short period of time, and that is why 
we are putting so much emphasis on rebuilding and redirecting 
our community college programs.
    Mr. Heck. Thank you. And thank you both. I congratulate you 
on your innovative programs.
    Thank you, Mr. Chair. I yield back.
    Chairman Kline. The gentleman's time has expired.
    Mr. Hinojosa?
    Mr. Hinojosa. Thank you, Chairman Kline and Congressman Don 
Payne.
    I am pleased to see such a distinguished first panel of 
governors here for our committee discussion on job creation. 
Today, I want to urge my colleagues to work in a bipartisan 
manner on a jobs agenda that creates jobs at home, educates our 
young adults, and reignites the American dream. I certainly 
support that last discussion that you had on supporting the 
federal investment made in community colleges.
    As you know, U.S. Congress has not reauthorized WIA, which 
we passed in 1998. I think that is shameful. Governor Malloy, 
in your testimony, you urge us to reauthorize it. What are your 
top--and this question is to Governor Malloy--what are your top 
three priorities that we in Congress should look at to reform 
WIA and improve the job training program for the next 5 years?
    Governor Malloy. Well, let me say that WIA is an important 
program, which I think Connecticut has used quite effectively. 
And so I am not here to criticize the program. What I am saying 
is,we have done the right thing. We have used the dollars to 
train and continue to train folks to take positions that they 
were formerly unqualified for.
    We have an award-winning program around the employment of 
veterans, which is of special concern, given how many veterans 
are returning from the two wars that we have been engaged in.
    I am sure that this committee is capable of making that a 
stronger and better law, but I, again, will reiterate that it 
needs to be sustained. Flexibility is okay as long as 
flexibility is not coupled with a reduction in the funds that 
are made available.
    I think both--the governor of Michigan and myself are 
capable of directing those funds to be properly spent in our 
states. We both identified a common problem that we recognize. 
And so I just would really urge the committee to get its job 
done. And let's get a law renewed and let's make sure that 
those dollars are flowing to our states so that we can put 
people back to work and train them properly.
    Mr. Hinojosa. Well, you need to know that, in the 13 years 
that we have operated with that 1998 WIA act, we saw lack of 
accountability and we saw that in some areas, some regions of 
the country, the WIA money they got, used 60 percent of it for 
fixed costs, administration, all sorts of fixed expenses, and 
only 40 percent or less was used for training of the adults.
    And so I think that that needs to certainly be reformed and 
that we could put a cap at, say, 40 percent or less for the 
fixed expenses and have 60 percent for actual training.
    But you mentioned returning veterans. And I am pleased, 
because I agree with you that we must do everything possible to 
assist these veterans in acquiring good jobs and careers, with 
so many of them already coming--have come back from Iraq and 
then a few will start coming back from Afghanistan. We really 
need your thoughts on how you plan to reduce the unemployment 
rates for veterans in your state.
    Governor Malloy. Well, I am sure the governor and I both 
agree that this is an important societal issue. People are 
returning from the two wars and deployment, in many cases with 
very good skill sets, but, again, those skill sets may not 
match what is needed. So we need to make it affordable and easy 
for our returning service personnel to access programs in our 
community colleges, certificate programs or programs that will 
qualify for degrees, and we actually just need to make a 
special effort.
    Our Labor Department in our state is doing that. I have 
asked all my commissioners to be mindful of that. We are 
talking to all of our private and public universities to make 
sure that they understand that this is a special obligation 
that we owe to the people who have served us.
    Mr. Hinojosa. I agree with you.
    Let me ask a question of Governor Snyder. You know that we 
are very concerned about our young teenagers and young adults, 
particularly Latinos and African-American. Their unemployment 
rate is so very, very high. What are you doing in your state to 
address that problem and that group so that they can get jobs?
    Governor Snyder. That is a very timely question, because we 
are doing our budget message next week, and one element of that 
that will be included is something geared at the structurally 
unemployed. Because you are right on, in terms of saying, 
particularly our young people in our urban areas, we need to do 
something.
    And so part of our view is, is let's put a very focused 
effort on that. One area in particular that I think is worth 
drilling down on is the concept of supply chain analysis. And 
that is an illustration of asking our current larger employers 
to say, who do you buy from? Who do you do work with? And there 
are opportunities to make things work.
    One illustration that we use was as simple as laundry. We 
have a very large health care community in metro Detroit that 
does tons of laundry. We actually found that some of them 
actually have their laundry done out of state. And why aren't 
there opportunities for entrepreneurs that create organizations 
that would be very good at employing entry-level-type positions 
to create jobs right in some of these communities?
    So in one of those ways, again, it is not about the 
government, but us playing that coordinating resource to say, 
can we work with companies and their supply chain analysis? And 
we have created a program statewide called Pure Michigan 
Business Connect, but can we put that in particularly 
challenged areas?
    Mr. Hinojosa. Your suggestions are good, but I want to be 
sure that you all are on the same page with us, that the 
African-American young teenagers and young adults and the 
Hispanic are the two that have the highest unemployment rates, 
and we have got to focus those efforts that you just gave us on 
being able to address them.
    Chairman Kline. The gentleman's time has expired.
    Mr. Ross?
    Mr. Ross. Thank you, Mr. Chairman.
    Speaking of economic development, I want to thank Governor 
Snyder, because my hometown is Lakeland, Florida, the spring 
training home of the Detroit Tigers for the last 75 years, and 
we are at that time of year now where your constituency is 
migrating to my area for economic development purposes, and I 
thank you for that. [Laughter.]
    To both governors, the NLRB decision in specialty health 
care case allows for the creation of many unions. Like-kind 
vocations can now unionize, as well as the NLRB's promulgation 
of rules that expedite the voting for unions from 90 days to 14 
days. These are significant impacts for organized labor. And I 
think it would have significant impacts on job creators.
    And my question to both governors--and I will start off 
with you, Dr. Snyder--is, do you support these efforts by NLRB? 
And how will they, if they happen, impact your efforts as a job 
creator?
    Governor Snyder. Yes, one of the challenges--it would be 
much like some of the other issues--is I view that as just 
creating divisiveness, because all you are going to do is 
create environments where people are at conflict. And we 
shouldn't be wasting time on things where we are going to get 
into conflict. We have too many important issues to solve. We 
waste way too much time on arguing about things rather than 
finding common ground and solving problems.
    Mr. Ross. Would you see any reason to change the status 
quo, then?
    Governor Snyder. No. My view is, is let's find areas where 
we agree on. I mean, if you listen to the testimony here, you 
can hear about infrastructure issues, so many things, workforce 
development, on showing results. Let's find--again, relentless 
positive action is my motto. Let's find common-ground solutions 
where we agree, solve our problems, show results, and we will 
find we are closer together. And we have got a lot of things to 
work on before we get into fights.
    Mr. Ross. Governor Malloy?
    Governor Malloy. You know, I just want to say that I 
believe the right to unionize is actually guaranteed by our 
Constitution. And taking steps to allow individuals to come 
together for the purposes of collective bargaining should not 
be seen as an evil, just as I would not argue----
    Mr. Ross. No, I agree. But in terms of changing the status 
quo, I think--would that not negatively impact your efforts as 
a job-creator?
    Governor Malloy. Well, you know, if you look at the history 
of this discussion, there was a movement around card-check, 
which was not successful. Card-check came about because of the 
frustration of folks who would want to become organized, that 
once they got to the point where an election was to be held, 
there was no timeliness in the holding of that election or of 
that vote. So anything that would speed the vote taking place I 
think actually works to the favor of the work environment. You 
get a yes or a no. People----
    Mr. Ross. So you have no problem with expediting it to 14 
days for union elections?
    Governor Malloy. No, I think an expedited process--the 
exact time of which, I think, could be open for----
    Mr. Ross. And you don't feel that would impact your efforts 
as a job-creator?
    Governor Malloy. I don't. Actually, the gentleman from 
South Carolina talked about the right-to-work state or 
movement. Quite frankly, Connecticut's unemployment rate--as I 
sit here today--is lower than South Carolina's. And we have a 
more unionized workforce. So I think that people will make an 
argument around their belief, but they are not always 
substantiated by the facts.
    Mr. Ross. Let me ask both governors. You have the 
requirement for a balanced budget, don't you, in Michigan and 
in Connecticut?
    Governor Malloy. All states do.
    Mr. Ross. You--okay.
    Governor Snyder. Yes--not good enough, though, if you look 
at what----
    Mr. Ross. I agree with you. And something else that we 
have, on the federal level, state level, and local levels, of 
course, is our pensions. And my question--and you addressed, 
Governor Malloy, in your opening statement, and I appreciate 
that, with making reforms. Is your pension plan in Connecticut 
a defined benefits plan or defined contribution plan for state 
employees?
    Governor Malloy. It is a defined benefits plan.
    Mr. Ross. And is that something that you think needs to be 
changed to a defined contribution plan so that there is an 
opportunity to make sure that it is fully funded?
    Governor Malloy. No, I would--my approach is different. If 
state government had honored its commitment and properly funded 
the program over a period of time, I would not have inherited a 
program that was 41 percent, 42 percent funded.
    Mr. Ross. But the fact that they cannot fund it, is that 
not indicative of the fact that it was not an appropriate 
measure that the state should have taken and now should 
renegotiate, because how else are you going to fund these?
    Governor Malloy. No, I fundamentally disagree that defined 
benefit programs are, by definition, an evil. They do----
    Mr. Ross. Well, I have not said it was an evil. I am just 
saying that it is a burden on your state, in terms of funding.
    Governor Malloy. They do require discipline. And in the 
absence of that discipline--for instance, one of my 
predecessors had negotiated language that did not require the 
pension plan to be funded on a true actuarial basis. In fact, 
in my opening remarks and in my testimony, I point out that we 
would have had a $4.4 billion balloon payment on that pension 
obligation negotiated by one of my predecessors. Obviously, 
that is wrong.
    Mr. Ross. One quick question before I go, because I see my 
time is running out.
    I firmly believe in states' rights, and I think that that 
is very important. There is a measure recommended by the 
president's debt commission, the Simpson-Bowles commission, 
which eliminates all corporate tax loopholes and would reduce 
the corporate tax rate flat to 28 percent.
    Now, I believe that something like that would not only be 
an incentive for economic development within our country, but 
it would allow states to leverage to use tax policy to compete 
with other states for economic development. How do you both 
feel about that?
    Chairman Kline. The gentleman's time has expired. I am 
sorry.
    Mr. Tierney?
    Mr. Tierney. Thank you, Mr. Chairman.
    Mr. Chairman, as you know, Governor Deval Patrick of 
Massachusetts was invited today to testify but was unable to 
make it. I would ask unanimous consent that his written 
testimony be allowed onto the record.
    [The information follows:]

         Prepared Statement of Hon. Deval L. Patrick, Governor,
                         State of Massachusetts

    To the members of the Committee on Education and the Workforce: I 
regret that I am unable to join you today in person to discuss this 
critical subject of expanding opportunities for job creation. Job 
creation is the single greatest challenge facing our Commonwealth and 
our Nation. Thank you for accepting written testimony in my absence.
    Like every state coping with the Great Recession, we cut spending 
and headcount, and slimmed down or eliminated programs. But we also 
chose to invest in education, in health care and in job creation--
because we all know that educating our kids, having health care you can 
depend on, and a good job is the path to a better future. Indeed, 
having spent most of my career in private business, I understand that 
growth comes from investment, not cuts, and that government must do its 
part to help people and businesses help themselves.
    As a result of that strategy, we moved from 47th in job creation in 
2006 to 5th in the nation in the last two years. Our state's economy is 
growing faster than the national rate. Our students lead the nation in 
overall achievement and the world in math and science. We lead the 
nation in health care coverage with over 98% of our residents insured. 
And we have not only closed our budget gaps, eliminated our structural 
deficit, and achieved the highest bond rating in our history, but 
also--with labor at the table--made the kinds of meaningful reforms in 
the public pension system, in municipal health benefits, in our 
schools, and in our transportation bureaucracy that had eluded my 
predecessors for decades.
    I would like to explain briefly why this strategy of public and 
private investment and collaboration is working in Massachusetts, has 
worked under President Obama, and could do even more with closer 
collaboration between the Congress and the administration.
    Under President Obama, our country is growing jobs again and 
steadily recovering from the global economic recession. We have added a 
total of 3.2 million private sector jobs over the last 22 months. 
American manufacturing is creating jobs for the first time since the 
1990s and our American auto industry is stronger than ever. Today, 
American oil and gas production is the highest it's been in eight 
years.
    Thanks in large part to the good news on the national level, 
Massachusetts is making gains in our economic recovery. In the past 
year, Massachusetts has added 45,600 private sector jobs and our 
unemployment rate dropped to 6.8%, well below the national rate of 8.5% 
and the lowest monthly rate since December 2008.\1\ A recent Business 
Journal analysis ranked Boston first in the nation and Worcester third 
in the nation for job growth for the second quarter of 2011.\2\ Of the 
top 20 cities in America for economic recovery, according to the 
Brookings Institution, three are located in Massachusetts: Boston, 
Worcester and Springfield.\3\
    None of that is by accident. It's because we have a strategy built 
on making both investments and reforms for the future.
    We invest in education because it is the single best investment 
government can make. In each of our state budgets since I took office 
in 2007, we have set new records for support for our public schools. 
The ARRA funding enabled us to keep this commitment through the worst 
of the Great Recession. In addition, as a top scorer in the National 
Race to the Top Competition, Massachusetts was awarded $250 million and 
an additional $50 million through the President's Early Learning 
Challenge. We use these funds to bolster our efforts to increase 
educator effectiveness, turn around underperforming schools and provide 
educators with the tools they need to ensure that all students are 
prepared for success in the classroom and beyond. We will continue to 
invest in our education because we believe it is an investment in our 
collective future.
    One of the most pressing challenges facing our Commonwealth and 
this country is a skills gap. Jobs (especially middle skills jobs) go 
unfilled because many of those seeking work lack the skills to join the 
new, knowledge-based economy. I share President Obama's belief that 
community colleges are uniquely qualified to fill that gap. I am proud 
to partner with the President on his initiative to utilize the talent 
and resources of our community colleges to develop programs that fit 
the needs of the modern workplace and help people get back to work.
    Our Commonwealth chooses to invest in innovation because we know it 
is how we will compete and win in the global economy. For example, 
through our $1 billion, 10-year Life Sciences initiative, we have 
already invested over $200 million in public resources and generated 
more than $700 million in private investment and thousands of new 
jobs.\4\ Our clean energy sector has seen a near 7% growth rate over 
the course of a year,\5\ thanks in part to the near quarter of a 
billion dollars in clean energy and weatherization investments through 
the American Recovery and Reinvestment Act (ARRA).\6\ In these and 
other innovation sectors, state and federal government support for 
basic and applied research has been critical. Continuing these efforts, 
the President outlined a series of energy proposals in his State of the 
Union last week and I look forward to working with him and the Congress 
to move these forward.
    Finally, we invest in infrastructure because it is the foundation 
upon which everything is built. Through $1 billion in ARRA funding for 
transportation related projects,\7\ and a robust state capital program, 
we have invested in critical infrastructure: road, rail, bridge, 
broadband and other projects in every corner of our Commonwealth. These 
have created jobs for thousands, and also a platform for private sector 
growth into the future. Like every other state, the list of neglected 
maintenance and modernization is long. The Congress could help the 
economy now and beyond by substantially increasing investment in public 
infrastructure.
    ARRA has undoubtedly helped. Since the beginning of the program, 
over 93,300 individuals have received an ARRA-funded paycheck in 
Massachusetts.\8\ Even as the ARRA winds down, we were able to report 
to the President just this week that during the last quarter, nearly 
9,900 individuals received an ARRA-funded paycheck. On a national 
scale, ARRA is responsible for producing or saving as many as 4.7 
million jobs in 2010.\9\ These were meaningful jobs as teachers, public 
safety officers and construction workers, doing meaningful work. Rarely 
in neither my business life nor my public one have I met serious 
business persons and entrepreneurs who believe that the government has 
no role to play in economic development in good times, let alone 
economic recovery in tough times like these.
    At the same time, we have seized the moment to make significant 
reforms in state government, to deliver services more efficiently and 
effectively.
    Three years ago we streamlined our sprawling transportation 
bureaucracy saving the state millions while improving customer service 
and accountability.\10\ Though our transportation system is still 
underfunded, we are better positioned to make the case for new funding 
because we can show that chronic and conspicuous waste and duplication 
has been eliminated.
    In 2010, we passed the next chapter in education reform to set new 
standards for teachers, encourage a greater level of classroom 
innovation, and close persistent achievement gaps. We are seeing the 
results all around the Commonwealth in higher test scores and better 
performing schools.
    Last year, I signed the third phase of pension reform legislation 
that raised the retirement age and ended the ability for state 
employees to ``double dip.'' This reform will generate over $5 billion 
in pension fund savings over 30 years, including an estimated $2 
billion for cities and towns,\11\ and make the system sustainable into 
the future.
    Last summer, we passed municipal health care reform to deliver 
meaningful savings to cities and towns to help them better maintain 
services for their residents while preserving quality and affordable 
health care for municipal employees. The reform allows cities and towns 
to redesign employee health care plans to get the same or better 
coverage and more advantageous cost. We are on track to far exceed the 
initial estimate of $100 million in savings for local governments 
statewide, a portion of which is shared with employees through health 
reimbursement accounts, wellness programs and other similar 
initiatives.\12\
    These reforms have or will deliver meaningful cost savings. Many 
have been proposed in the past, but we have been able to get them done. 
Collective bargaining is not an obstacle to reform. Indeed, labor has 
been at the table as true partners to help achieve these results.
    In no case is that more evident than the story of Massachusetts 
health care reform. In 2006 then-Governor Mitt Romney, working together 
with a Democratic state legislature, a Democratic United States 
Senator, and a broad coalition of business, labor and health care 
leaders and advocates came together to invent our health reform bill--
and the coalition stuck together to adjust it as we implemented and 
refined it. That bill was an expression of shared values, our belief 
that health care is a public good and that everyone in Massachusetts 
deserves access to it.
    Today, thanks to effective implementation, more than 98% of 
Massachusetts residents have health care coverage, including 99.8% of 
our children.\13\ Many more private companies offer their employees 
insurance now than before the bill was passed. More than 90% of our 
residents have a primary care physician.\14\ People no longer have to 
fear having their insurance cancelled when they get very sick and need 
it most, or that a serious illness will leave them bankrupt.
    Health care reform is good for economic growth. Before health care 
reform, and before the recession, Massachusetts was 47th in the nation 
for job creation.\15\ Five years later, with expanded coverage and in 
the midst of the recession, we rank 5th.\16\ Matt McGinity, the CEO of 
a small technology company in Natick, outside of Boston, bought health 
insurance through a program created by the Commonwealth Connector, our 
version of the Health Exchange. The program, called Business Express, 
is an online service to help small businesses easily shop for private 
health care and find the best possible value. Using Business Express, 
Matt was able to compare health plans side-by-side and avoid a 23% 
premium increase his current insurer was proposing. He and his 
employees saved $9,300.
    I met a young entrepreneur last year who moved his business up to 
Massachusetts from Florida because, with a young family, he wanted to 
be able to start his venture without worrying that his children would 
not have health insurance. Universal coverage helps our competitiveness 
and attracts new people to Massachusetts.
    As the cost of health care rises nationwide, we have taken 
aggressive steps in government and in collaboration with the industry. 
To rein in sharp increases proposed two years ago, I directed the 
state's Commissioner of Insurance to reject excessive premium hikes. 
Insurers sharpened their pencils and rethought their approach. Two 
years ago, average premium increases were 16.3%. Today, they are 
1.8%.\17\ Hospitals and insurance carriers have reopened their 
contracts and cut rate increases, in some cases by more than half. We 
created limited network plans to give consumers opportunities to get 
great care in neighborhood settings at lower cost.
    The rising cost of health care is not unique to Massachusetts and 
we have more to do to address it. We need to put an end to the ``fee-
for-service'' model. We need to stop paying for the amount of care and 
start paying instead for the quality of care. Working with the 
legislature, we expect to pass health care cost containment legislation 
later in the year to give us more tools and flexibility to manage 
consumer costs without returning to rate regulation. Just as we lead 
the nation in health care reform, I believe Massachusetts will crack 
the code on health care cost containment.
    We have a lot of good news to share, but there is more we can do. 
But the point is that our successes in Massachusetts are a direct 
product of our ability to work together--my administration and the 
Legislature, state government and federal government, government and 
business, labor and business. That's because we have decided to turn to 
each other, rather than on each other. On the whole, our state 
Legislature has given me the tools I have asked for. I can only imagine 
how much further we'd be if the Congress had given the President the 
tools he asked for, when he asked for them. According to at least one 
source, the U.S. economy would have received a two percent boost under 
the President's jobs plan this fall and the unemployment rate would be 
one percentage point lower than it is now.\18\ We would be out of this 
recession sooner rather than later.
    Nationally there are actions we must take:
    We need prompt extension of the payroll tax cut, the Temporary 
Assistance for Needy Families (TANF) program, and federal funding for 
extended unemployment insurance benefits. These provisions provide high 
levels of economic benefit for millions of Massachusetts residents and 
are critical to our continued progress.
    I ask Congress to work together in a bipartisan way to reauthorize 
the Elementary and Secondary Education Act and the Workforce Investment 
Act so that we can prepare our country for the jobs of today and 
tomorrow. Investing in education and skills training is how we will win 
the future.
    I ask Congress to reconsider the proposed Infrastructure Bank, and 
other means to make significant re-investments in our public 
infrastructure.
    We need to take a closer look at our tax code and use it to reward 
companies that create jobs in America, rather than punish those that 
do. We need to take action to encourage more businesses large and 
small, to invest or reinvest in the American workforce. We each need to 
invest in our people again.
    I support proposals to reform our tax code, so that it is simpler 
and fairer. I believe that should also include a reasonable increase in 
the share that the highest-income Americans currently pay. Like the 
President, I celebrate the good fortune of others and am blessed to 
have had some of my own. The answer to good fortune is not guilt--it is 
responsibility. We all have a responsibility to ourselves, our 
communities and our country. Once we all accept that responsibility, we 
can better make the kinds of investments that will grow jobs and 
strengthen our economy, for now and for the future.
    Why is all this important? Because I believe, as does the 
President, that government is not about solving every problem in 
everybody's life, but rather about helping people help themselves. I 
ask Congress to give the President the tools he needs to finish the 
job. In the midst of economic challenge, we can build a stronger 
country than we started with--not just for ourselves but for 
generations to come.
    I look forward to hearing the committee's findings and I hope that 
together we can work together to grow jobs for our future.
                                endnotes
    \1\ Executive Office of Labor and Workforce Development. 
Massachusetts Unemployment Rate Drops to 6.8%. 19 January 2012.
    \2\ Boston Business Journal. Boston is No. 1 in quarterly job 
ranking of major metros. 8 August 2011.
    \3\ Brookings Institute. MetroMonitor. September 2011.
    \4\ Massachusetts Life Sciences Center. Massachusetts: A Healthy 
Choice for Innovative Life Sciences Companies. Sept. 2011.
    \5\ Massachusetts Clean Energy Center. 2011 Massachusetts Clean 
Energy Center Industry Report. October 2011.
    \6\ Massachusetts Recovery and Reinvestment Office. Recovery Act 
Spending in Massachusetts. 31 Dec. 2011
    \7\ Massachusetts Recovery and Reinvestment Office. Massachusetts 
Funding Overview. 31 Dec. 2011
    \8\ Massachusetts Recovery and Reinvestment Office. Recovery Act 
Jobs in Massachusetts. 31 Dec. 2011.
    \9\ See, http://www.cbo.gov/ftpdocs/119xx/doc11975/11-24-ARRA.pdf
    \10\ Office of Governor Patrick. ``Governor Patrick Signs Bill to 
Dramatically Reform Transportation System.'' 26 June 2009.
    \11\ Office of Governor Patrick. ``Governor Patrick Signs Pension 
Reform Legislation.'' 18 November 2011.
    \12\ Office of Governor Patrick. ``Governor Patrick Signs Municipal 
Health Care Reform to Save Millions for Massachusetts Communities.'' 12 
July 2011.
    \13\ Commonwealth Health Insurance Connector Authority.
    \14\ Massachusetts Health Care Reform 2011 Progress Report. 2011.
    \15\ MassTaxpayer's Association. US States Job Growth:2002-2006. 
2011.
    \16\ ``We are fifth in job growth (as a percentage of total 
employment) for 8/09 to 11/11.'' Data compiled from the Bureau of Labor 
Statistics.
    \17\ Weisman, Robert. ``Harvard Pilgrim Cuts Health Premium Rate 
Increase.'' Boston Globe. 31 Jan. 2012.
    \18\ Goldman Sachs Group Inc., Moody's Analytics Inc. and JPMorgan 
Chase & Co. 10 Sept. 2011.
                                 ______
                                 
    Chairman Kline. Without objection.
    Mr. Tierney. Thank you very much.
    Governor Snyder, Governor Snyder in particular, I note in 
Governor Patrick's written testimony here, he is quite proud of 
the fact that Massachusetts made certain gains, as you are with 
the work that has been done in Michigan. He has a quote in 
there, that growth comes from investment, not cuts, and 
government must do its part to help people and businesses help 
themselves. And he goes on to talk about Massachusetts was 47th 
in job creation in 2006. Now even during the last couple of 
years of recession, it has got to fifth on that. And he is 
proud that students lead the nation in overall achievement in 
both math and science and that we lead the nation in 
Massachusetts in health care coverage, covering over 98 percent 
of our people on that basis, that he has closed his budget gap, 
eliminated structural problems on deficit on that, and has a 
higher bond rating than they have ever had in Massachusetts on 
their own.
    He talks about adding 45,600 private-sector jobs in 
Massachusetts and that the unemployment rate dropped from 8.5 
percent to 6.8 percent, all on what he says is his strategy, 
building on investments and reforms, whether it is pension or 
health care, in those areas.
    He talked about the Recovery Act, being helpful in allowing 
him to maintain his commitment to education, his commitment to 
innovation, where he put $1 billion over 10 years into life 
sciences and $250 million into clean energy, was able to work 
with basic and applied research issues and infrastructure on 
that.
    But I noted in looking at michigan.gov, that you don't take 
a backseat to much of that, and you have done well on that with 
your recovery funds. Your governor--previous governor said that 
54,000 jobs were created. And I noted that you had actually, 
back in May of last year, made note of the fact that there was 
a serious investment in your rail in Michigan.
    And your quote was that accelerated rail service has the 
ability to enhance our economy, environment, and overall 
quality of life, and that an investment of that magnitude 
spurred economic development in your communities, in that you 
are able to say that it was critical to Michigan's recovery. Do 
you agree with that still?
    Governor Snyder. Yes, I have said--actually, I gave a 
message saying--calling for $1.4 billion of additional 
investment in transportation infrastructure in our state. The 
one thing that goes with that, because one of the challenges 
is, it is a difficult economic environment is--a lot of our 
citizens don't believe we have demonstrated best practice and 
how we are deploying those dollars.
    So one of the things that goes along with that is us being 
more prudent about showing that we have metrics, we have 
measures, we are being held accountable, and we are being 
transparent in those features, but they go together.
    Mr. Tierney. That is good. And I also noted that, on the 
Recovery Act, you had $1.35 billion in advanced battery grants, 
and now Michigan claims to be the leader in automotive 
batteries on that. Does that still hold true?
    Governor Snyder. What I would say on the battery credit is, 
it was done when I got there. One thing is, I am not a believer 
in picking winners and losers or using tax credits at the state 
level, in particular.
    To go to the earlier representative's comments, we re-did 
our tax system to make it simple, fair, and efficient, so we 
have wiped out almost all tax credits that we offered to 
corporations and eliminated a tax that was on unincorporated 
entities and put in a flat 6 percent corporate income tax. And 
my belief is that it will be a better job greater than having 
the Michigan business tax, which was the dumbest tax in the 
United States.
    Mr. Tierney. Well, the Recovery Act monies that you put 
towards the advanced battery grants, does that still remain in 
use?
    Governor Snyder. That is in use. Again, they are there. I 
hope they succeed. It is great to have them in Michigan. But 
one thing, when I looked at the budget this year and I have a 
budget for the next several years, I start at minus $500 
million in the hole to cover the cost of those credits.
    Mr. Tierney. How many teachers do you think you were able 
to retain on the payroll and your various cities and towns in 
Michigan as a result of the Recovery Act money that was 
allocated to education?
    Governor Snyder. I view that as just speculation, because 
the question--and, again, this is the way I felt about the 
dollars, in many respects, is too often we use those for 
operating costs as opposed to good capital investments that 
were one-time dollars that we could have put in the long term, 
while at the same time we adjusted our cost structures, because 
we now shown we can adjust those cost structures, be more 
efficient, and give better service to our customers, and 
actually hopefully provide better education.
    Mr. Tierney. And, Governor, do you agree with that?
    Governor Malloy. Well, what I would say, specifically, in a 
budget that I inherited, a prior administration had used $270 
million of ARRA money to cover a cut to local governments in 
support of local education--or education, pre-K through 12, in 
the state of Connecticut.
    That $270 million, if I had not covered that in reworking 
the budget and addressing the $3.5 billion deficit, would have 
led to a loss of thousands and thousands of jobs for teachers, 
administrators, and paraprofessionals in our school system, our 
school systems. So let me assure you that it was one of my 
highest priorities to make sure that we bridged that gap that 
had occurred, which is another way of saying they used the ARRA 
money to keep teachers employed.
    Mr. Tierney. Thank you.
    Chairman Kline. The gentleman's time has expired.
    Mrs. Biggert?
    Mrs. Biggert. Thank you, Mr. Chairman. Thank you for 
holding this hearing. And thank you both for being here.
    Governor Snyder, I certainly share your frustration with 
the highly skilled international students who have gone through 
our graduate schools and then--I call it the brain drain, 
reverse brain drain, and they are having to go home and do the 
creativity and the innovation that we need in those foreign 
countries, rather than remain here. And I hope that we will be 
able to--Congress will put aside the partisanship and really 
work out a way to keep them here.
    But I am also very concerned about our students and why 
they aren't meeting the requirements that we think they should, 
and particularly I think we all--most of my colleagues and I 
really think that the STEM education is really important. And 
we need to find a way to get more students interested in that.
    And I was--one of the studies that--the gathering storm, 
the National Academy has put out, was saying that we need to 
have the creativity and that innovation if we are going to be 
competitive in the global economy.
    And I don't think we are when we see Finland as the number-
one school in that area. And I think the United States ranks 
24th or 28th, I forget which, but it is very low, that we need 
to do something about that. And you talked about the 
significant lack of college students in Michigan in the STEM 
type of program. Why do you think that that has happened?
    Governor Snyder. Well, one, it comes back to the concept of 
accountability and measurement and student growth. What I have 
said clearly in Michigan--and we did education reform this last 
year on a significant basis--because it needed to be done as--
we spend a lot of money there, but we are not getting outcomes 
that are acceptable. Only 17 percent of our kids were college-
ready. If you go to our community colleges, about 60 percent of 
the kids have to take a remedial class before they are 
qualified to take an entry-level class. That is a travesty.
    And a lot of it, if you look at it, there is not enough 
emphasis on student growth, and it is not just about 
standardized tests. My view is, is students should have a 
portfolio of work that travels with them that they can really 
be assessed.
    And our goal is, is not to create competition between 
districts, but the measure we want to have in Michigan is to 
say, what do we need to do to create an environment where we 
can measure to see that each and every student is getting at 
least 1 year's worth of education each and every year, and then 
giving them some of these other tools with connecting, about 
showing them where careers actually are?
    Because, to be blunt, most parents and kids think of 
doctor, lawyer, teacher, nurse, all the standard things, and 
how many people ever thought about being a marketing person or 
accountant or a computer programmer, where the jobs are? So 
that is where we need collaboration to work together, so that 
is where I talk about talent and the three C's.
    Mrs. Biggert. Do you think that we--when do you start that? 
I mean, would you start in preschool, kindergarten, to really--
--
    Governor Snyder. Yes, I re-characterize it. I don't use the 
term early childhood, K-12, community college. I call it P-20. 
Our goal is literally prenatal through lifelong learning. And 
we have erected barriers and silos to make it difficult for 
these kids to go through our system that are mainly artificial 
constructs of either money or old institutions and lack of 
innovation.
    And so we are working hard on creating a fairly seamless 
system for people to move through it. We call it anywhere, 
anyplace, anytime, any way that you get your education, and it 
is a great opportunity. Cyber schooling, cyber learning in 
particular, married with traditional education, done right is a 
huge opportunity.
    Governor Malloy. I would agree with the governor. And that 
is exactly what we are doing in Connecticut, as I appear before 
you. We need a seamless system. We need to make it easy for 
people to acquire the skill sets necessary for our 
corporations, our employers to succeed.
    I do want to join your comments with respect to the ability 
to retain talent that we are training in this country. It 
really is a travesty that we are not retaining that talent once 
we have educated it here and have people who express a desire 
to remain here and to be part of our filling a void that 
currently exists.
    I do want to also say that I think we need to speak to our 
young people differently about what it takes to be successful 
in the world. We have precision manufacturing jobs in both of 
our states that pay in excess of $100,000, and yet we are 
unable to pay those. We have children who say they want to be a 
pilot someday, but we don't explain to them that that is going 
to require STEM skills.
    We need to have a different conversation from our earliest 
moments, but certainly from the time a child arrives in our 
school system, and we need to help direct those young people to 
areas that are going to lead to full employment. We have not 
done that. And that is why we have a structural deficit with 
respect to the skill set or the talent set necessary to match 
the employment needs that our country currently has.
    We can't do that rapidly enough to fill that void. It is 
one of the reasons that we are, in fact, giving a credit to new 
hires or for new hires, because we as a state understand that 
not having done a good job in training a replacement workforce, 
it is not--it is in our best interest to subsidize an employer 
being engaged in that training.
    Mrs. Biggert. I thank you both.
    Chairman Kline. The gentlelady's time has expired.
    Mr. Altmire?
    Mr. Altmire. Governor Malloy and Governor Snyder, thank you 
both for being here. I realize--we all realize this is a 
difficult time for you, budget season coming up. You are going 
to be called upon to make very difficult decisions, as we are 
here in this committee and in this Congress.
    I wanted to revisit a difficult decision that we had to 
make, Governor Snyder, which you have addressed a couple of 
times now, and you mentioned in response to Mr. Tierney's 
question about the need for best practices in deploying 
taxpayer dollars and how critically important that is, to make 
sure that it is a wise use of taxpayer dollars.
    And in answering the question earlier, you emphasized your 
support for paying attention to the deficit, making sure that 
we are reducing the deficit. I supported the balanced budget. I 
voted for it when it was on the House floor, and I think that 
was the right decision.
    But we do occasionally have to make extraordinarily 
difficult decisions on allocating federal resources, one of 
which was the auto recovery plan. And you have talked about it 
a couple of times, but I just wanted to get your sense in 
thinking about whether or not, was that an appropriate use of 
taxpayer resources? Did this Congress do the right thing in 
promoting the auto recovery plan?
    Governor Snyder. Yes. As I had mentioned, Representative, 
already, that in many respects, it wasn't about one individual 
company. It was actually the entire auto industry that was in 
jeopardy, and that would have been a major catastrophe for our 
country.
    The solution was successful. It is great to see the success 
of the auto industry.
    In hindsight, you can go back to say there could have been 
other ways to do it that probably would have been more 
efficient. I don't waste time on that analysis. It is done. And 
the exciting part we should be proud about is the auto industry 
is moving ahead.
    And we need to be supportive of that, but that is the point 
about making sure they have the right skill trades to succeed. 
So that is why I am excited to testify here today is, is they 
have a major talent question. And to be open, workforce 
development on its own is not a good enough answer. We need to 
do a better job of collaborating and connecting with them.
    Mr. Altmire. I appreciate that. And I asked that question 
once again to ask this question to both of you. A couple of 
decisions we are going to have to make in short order deal with 
the extension of unemployment insurance and transportation and 
infrastructure on a federal highway bill.
    Starting with unemployment insurance, could I ask Governor 
Malloy and then Governor Snyder, how important is that to your 
individual states that that gets done? What is your opinion of 
what we should do? And if it does not get extended, what would 
be the impact to the citizens of your state?
    Governor Malloy. Well, let me begin with the quick answer. 
If it is not extended, 51,000 people will be without benefits 
in the state of Connecticut at the end of February. That number 
will grow to 71,000 by August. It would have an extremely 
detrimental effect on our state's economy, and it might be a 
destroyer of relationships, of homes, cause apartments and 
houses to be lost. I urge you to address this issue as rapidly 
as you can.
    I can't imagine being one of those 51,000 people in my 
state who is on the verge, potentially, of losing that benefit, 
the sole benefit that keeps family and home together. And 
obviously, the lost purchasing power of 51,000 people in my 
state would be reflected in all aspects of commerce in our 
state.
    You know, we have an extraordinarily--for our state--high 
unemployment number, even at 8.2 percent, and even having 
fallen by over 1 percent in the past year. But we are making 
progress. There is a better day ahead of us, but to suddenly 
cut 51,000 people, or 71,000 by August off, I think would 
actually slow the recovery very substantially.
    Mr. Altmire. Governor Snyder?
    Governor Snyder. Yes, what I would say is, is I don't 
believe it is really appropriate for me to make that call, in 
many respects, on unemployment, on transportation, because 
there are so many good things. You can go individually and take 
one of these things and make a good argument.
    But the challenge is to prioritize, because we need to be 
like a family, where we don't have unlimited resources, and so 
the challenge isn't to say they are all good things, but what 
has to be done and what do we have to give on? And that is 
where I encourage Congress to work together with the 
administration to come up with a solution.
    That is what I had to deal with last year, when I had $1.5 
billion deficit. We partnered with the legislature on making 
tough calls. We made tough cuts to some programs that in many 
respects ask for sacrifice from people. At the same time, I am 
proud to say we stood firm on Medicaid reimbursement and 
actually adding dollars to child services.
    Were the other things we cut also good things? They were 
probably good things, but we had to do our job in a difficult 
circumstance, and I encourage everyone to work collectively to 
make that happen.
    Mr. Altmire. Thank you, Mr. Chairman.
    Chairman Kline. I thank the gentleman.
    I thank you both governors for your time, and your 
testimony, and answering our questions, and sometimes re-
answering the question. I applaud your efforts in trying to 
connect education and job training to the jobs that are out 
there.
    And, Governor Snyder, you used the word ``talent.'' I think 
that word, ``talent,'' is going to start bubbling up here all 
over the place and three C's and so forth, but both of you 
trying to make that connection, which we have seen broken, 
frankly, all across the country.
    We have held field hearings in Pennsylvania and in New York 
and Nevada, as Dr. Heck said. And so often what we hear is that 
the community colleges, the for-profit colleges, the 
universities are not connecting with where the jobs are and 
what businesses need. You have both addressed that issue. And 
we are going to continue to look at that.
    Again, I thank you both very, very much. And we look 
forward to talking to you again. And we will ask the second 
panel to come forward.
    It is now my pleasure to introduce our second distinguished 
panel of witnesses.
    Ms. Kellie Johnson is president of ACE Clearwater 
Industries, a company of 210 employees that builds complex, 
formed and welded assemblies for the aerospace and power 
generation industries. Ms. Johnson serves on the board of the 
National Association of Manufacturers and as the chair of 
National Association of Manufacturers' Small and Medium 
Manufacturers Group. She also serves as a member of the U.S. 
Department of Commerce's Manufacturing Council.
    Welcome.
    Dr. Jared Bernstein is a senior fellow at the Center on 
Budget and Policy Priorities. Prior to this position, he served 
as chief economist and economic adviser to Vice President Biden 
and was a member of President Obama's economic team. Before 
joining the Obama administration, Dr. Bernstein was a senior 
economist and the director of the Living Standards program at 
the Economic Policy Institute in Washington, DC.
    Between 1995 and 1996, he held the post of deputy chief 
economist at the U.S. Department of Labor. Dr. Bernstein holds 
a PhD in social welfare from Columbia University.
    Dr. Matthew Mitchell is senior research fellow for 
economics at the Mercatus Center at George Mason University. 
His primary research interest include economic freedom and 
economic growth, government spending, state and local fiscal 
policy, public choice, and institutional economics. That is 
fairy broad.
    Dr. Mitchell currently serves on the Joint Advisory Board 
of Economists for the Commonwealth of Virginia. Dr. Mitchell 
received his PhD and his master of arts in economics from 
George Mason University. He received his undergraduate degrees 
in political science and economics from Arizona State 
University. And I have no idea what those school colors are, so 
we will move on.
    Before I recognize each of you to provide your testimony, 
let me again explain our lighting system. I think most of you 
were here before. It is a green, yellow, red system, green when 
you start, yellow when you have got a minute left, and red when 
your 5 minutes are up. Please try to wrap up your testimony 
when you see that red light, to sort of finish your thought, 
and then we will go, as we did before, through members and have 
a chance to ask questions.
    So we will start--we will go in the same direction. Ms. 
Johnson, you are recognized.

          STATEMENT OF MS. KELLIE JOHNSON, PRESIDENT,
                   ACE CLEARWATER INDUSTRIES

    Ms. Johnson. Thank you, Chairman Kline, and distinguished 
members of the committee. I greatly appreciate the invitation 
to participate in the hearing today.
    As Chairman Kline mentioned, I am Kellie Johnson, president 
of ACE Clearwater Enterprises. We manufacture complex 
components for the aerospace and power generation industries at 
three locations in Southern California. The company was started 
by my grandfather more than 60 years ago, and we employ over 
200 of the best men and women in our industry.
    Today, I would like to discuss the issues that are facing 
the small and medium manufacturers in the United States. And as 
a manufacturer, I was heartened by the considerable emphasis 
President Obama put on manufacturing and competitiveness in his 
State of the Union address. And if we are to make good on 
President Obama's pledge to make America the best place on 
Earth to do business and the premier location for manufacturing 
investment, we must take immediate action to reclaim 
manufacturing as the foundation of the American economy.
    When jobs are the number-one issue on everyone's mind, we 
know that manufacturing is a known and proven solution. It is a 
catalyst that generates American jobs across many industry 
sectors. We know it is what has helped create and sustain the 
middle class. And it is a hard-working engine that drives our 
economy.
    But manufacturers in America faced a competitive crisis. It 
is 20 percent more expensive to do business in the United 
States than it is compared to our nine major trading partners. 
It is 20 percent more expensive, and that excludes labor.
    And this cost gap is not the work of our competitors, but 
it has been self-inflicted by Washington. It has been self-
imposed, this cost gap. We have added to our cost burdens. We 
have erected new regulatory barriers and done little to spur 
the innovation that has for so long been America's greatest 
advantage in the global economy.
    There is an enormous and growing set of threats to 
manufacturing competitive, and our success will depend on the 
method and extent to which we work together to address these 
issues. Many of the problems are not new, but what has been 
missing is a shared strategy for decisive action. Now is a time 
for urgent attention and action if we are going to prevent more 
American manufacturers from closing their doors.
    There is a perception from manufacturers that we are 
operating in a hostile work environment with the overreach of 
the NLRB and the EPA. As manufacturers, we need a positive 
message from Washington. Manufacturing is at a pivotal point in 
our country's history, especially for the small and medium 
manufacturers that make up the supply chain.
    As an aerospace supplier, we operate in an environment 
where tightly integrated supply chains need to be the reality. 
We have become integral partners, not just suppliers in the 
value chain. But increasingly, my customers will migrate to 
places that care about manufacturing and where the most robust 
infrastructure and supply chain exists to conduct their 
business.
    The uncertainty of our regulatory and economic environments 
makes it almost impossible for short-or long-term growth, 
especially for capital-intensive industries like manufacturing. 
As manufacturers, we know firsthand our regulations are 
challenging, time-consuming, complex, redundant, and change a 
lot. Taxes, fees, mandates, and regulations are currently 
enacted without considering their cumulative and dynamic 
impact. The more unpredictable the business environment, the 
less likely it will be a competitive place to do business. We 
need stable and predictable pro-growth policies to create jobs 
and remain competitive.
    ACE Clearwater last year spent $250,000 on compliance 
costs, environmental compliance costs, in addition to over 
$40,000 in consulting fees. We have more than 42 labor laws 
that we comply with that have their own set of sub-tier 
compliance standards, as well, which requires us to use third-
party administrators on many of our programs and to retain 
legal services that amount to more than $52,000 annually.
    And I mention all of this because the compliance costs for 
small business is about 125 percent more than it is for large 
companies. We do not have the advantages of the economies of 
scale, and so therefore our costs are disproportionately 
higher. And the reality of these costs are driving innovation 
out of the supply chain, because we are doing all we can just 
to stay in business.
    And innovation, as we know, in this global economy is a 
strategic must. If we lose our ability to innovate, we lose the 
ability to manufacture. And without manufacturing, innovation 
is just a good idea.
    As manufacturers, we have been running hard for the past 
decade to stay competitive. We have cut our costs from our 
supplies to our energy usage. We have leaned out our processes, 
and we have made huge investments in people and technologies.
    Over the last 8 years, ACE Clearwater has invested more 
than $1 million each year in people, facilities, and equipment. 
And during that time, many states, like California, my home 
state, lost a large percentage of their industrial base and 
earned anti-business reputations.
    My concern is, as California goes, so goes the rest of the 
country. Our utility costs are 50 percent higher. We have lost 
33 percent of our industrial base over the last decade. And 
once the home of aerospace for the United States, we no longer 
has an OEM headquartered there.
    But I believe government can play an extremely important 
role along with business in shaping the competitiveness of 
manufacturing. The NAM recently released a manufacturing 
renaissance, four goals for economic growth, and I believe we 
could find common ground on how to achieve these goals in order 
to lower the cost of doing business in the United States and 
make us more competitive.
    I see that my red light is almost on, so I will make it 
really short. I just want to end by saying that, in my written 
testimony, I have many ideas and suggestions for improvements 
going forward, and I would just ask you please to take a look 
at those, and that we need to bring rationalization and balance 
to manufacturing, because our competition is global, relentless 
and unforgiving. But we are resilient, tough, innovative, and 
driven to succeed.
    If we act with a common purpose to fuel innovation and 
rebuild our industrial base, we will ensure American 
manufacturing remains the best in the world.
    Chairman Kline. Thank you, Ms. Johnson.
    Ms. Johnson. Thank you.
    Chairman Kline. And all of your written testimony will be 
included in its entirety in the record.
    Ms. Johnson. Thank you.
    [The statement of Ms. Johnson follows:]

            Prepared Statement of Kellie Johnson, President,
                       Ace Clearwater Enterprises

    Good morning Chairman Kline, Ranking Member Miller and 
distinguished members of the Committee. Thank you holding this hearing 
today.
    I am Kellie Johnson, president of Ace Clearwater Enterprises based 
in Torrance, California. Established in 1949, Ace Clearwater employs 
205 people who manufacture, in three facilities located in Southern 
California, complex formed and welded assemblies for the aerospace and 
power generation industries. I have been leading Ace Clearwater since 
1985 and am proud of the fact that it has become the manufacturer of 
choice for some of the United States' largest aerospace companies.
    I also serve as a member of the National Association of 
Manufacturers' (NAM) Executive Committee and Chair of NAM's Small and 
Medium Manufacturers Group. In addition, I am the Co-Chair of the 
Manufacturing Council's Subcommittee on Competitiveness. On behalf of 
small and medium-sized manufacturers, thank you for the opportunity to 
discuss the current concerns and struggles facing manufacturers today. 
The United States is the world's largest manufacturing economy, 
producing 21 percent of global manufactured products. Manufacturing 
supports an estimated 17.0 million jobs in the U.S.--about one in six 
private-sector jobs. Nearly 12 million Americans (or 9 percent of the 
workforce) are employed directly in manufacturing--this is roughly the 
equivalent of the entire populations of Pennsylvania, Illinois or Ohio.
    Based on these numbers, the NAM developed a ``Manufacturing 
Renaissance,'' setting forth a four-point plan for economic growth and 
jobs, which will enable the U.S. to compete and succeed in the global 
economy. The plan focuses on ``investment, trade, the workforce and 
innovation. It sets a path for sustained global competitiveness.'' The 
goals are as follows:
     Goal 1: The United States will be the best place in the 
world to manufacture and attract foreign direct investment.
     Goal 2: The United States will expand access to global 
markets to enable manufacturers to reach the 95 percent of consumers 
who live outside our borders.
     Goal 3: Manufacturers in the United States will have the 
workforce that the 21st-century economy requires.
     Goal 4: Manufacturers in the United States will be the 
world's leading innovators.
    I would like to focus my testimony today, however, on the issues 
facing small and medium-sized manufacturers. There are several 
structural cost disadvantages that our largest trading partners do not 
face. These costs and disadvantages stem from the imposed costs from 
Washington through constantly changing regulations. As an example of 
the disadvantage, according to the Small Business Administration the 
costs for small business to comply with these regulations are 110 
percent higher than those of medium-sized companies and 125 percent 
higher than large companies.
    We need a positive message from Washington and our success will 
depend on the method and the extent to which we can cooperatively 
address the concerns and consequences of these regulations affecting 
manufacturers like Ace Clearwater. The uncertainty of our regulatory 
and economic environments makes it almost impossible for short or long-
term business growth, especially for a capital intensive industry like 
manufacturing. As a result, my customers may make the decision to 
migrate to places they believe care more about manufacturing.
    The regulations coming out of Washington are challenging, time 
consuming, complex, sometimes redundant, constantly changing and 
uncertain. For example, take the health care law passed two years ago. 
There is so much uncertainty about how this law will be implemented it 
makes future planning for businesses and employees nearly impossible.
    As manufacturers, we need stable and predictable pro-growth 
policies to create jobs and remain globally competitive. We find 
ourselves, however, stuck between the rock of crushing economic 
circumstances and the hard place of inflexible and proliferating 
regulations. The result and consequence of the current environment is 
that innovation is being driven out. If we, as manufacturers, lose our 
ability to innovate, we lose the ability to manufacture.
    Particularly troublesome, the National Labor Relations Board (NLRB) 
has issued a number of decisions and new rules, which alter the 
landscape of employer-employee relations. In some cases, the Board 
overturns decades-old precedent of labor law. This is creating friction 
in employer-employee relations where it need not exist and adds 
confusion and uncertainty into the workplace.
    The National Labor Relations Board has issued two rules in the last 
year that bring into question whether it is acting within its authority 
and following the charge given to it by Congress. First, the posting 
notice rule was issued despite the Board having no notice posting 
authority authorization. In a further overreach, the Board fabricated 
an entirely new unfair labor practice and extended the statute of 
limitations on all unfair labor practices if there is non-compliance on 
the posting notice. The National Association of Manufacturers filed 
suit against the Board for this overreach and was later joined by the 
Coalition for a Democratic Workplace, The National Federation of 
Independent Business and the National Right to Work.
    The second rule employers have serious concerns about, compresses 
the time from which a petition for representation is filed and the 
actual election is held. Commonly referred to as ``quick-snap'' or 
``ambush'' elections, the effect of this new rule is to stifle open 
dialogue between employers and employees and restrict or outright strip 
rights employers currently have to ensure fair elections are held. Most 
importantly, it denies employees a reasonable amount of time to 
consider all the information they need to make a fully-informed 
decision about whether they want to join a union. The U.S. Chamber of 
Commerce and the Coalition for a Democratic Workplace, of which the NAM 
is a leading member, have filed suit against the NLRB implementing this 
rule.
    Other actions of the Board, including its decision to file a 
complaint against Boeing Company for building a new facility in South 
Carolina, are also of great concern to manufacturers. Many have 
indicated they are considering them when making decisions about hiring 
new employees and investing in new facilities here in the U.S. Indeed, 
the NAM surveyed its members and found nearly 70 percent said these 
actions would make it more difficult to expand and hire new workers.
    Actions of the Occupational Safety and Health Administration, 
(OSHA) are also on the minds of manufacturers. OSHA is not only 
proposing to make reporting requirements more cumbersome, duplicative 
and costly, but their methods of enforcement have become more 
adversarial rather than trying to form cooperative relationships with 
business owners. This approach only frustrates and confuses employers 
and lends itself to an environment of skepticism.
    To be compliant with the newest regulations and rules takes time 
away from running the day-to-day operations of a business. Resources 
are constantly rerouted away from customers, resulting in lower 
productivity and lower customer satisfaction. As a result, customers 
will go to other places that will be able to fully devote attention to 
their customers.
    Manufacturers are also confronting an avalanche of additional rules 
and regulations from the Environmental Protection Agency (EPA) which 
are further preventing manufacturers from creating jobs and spurring 
economic growth. Many of the EPA's regulations impact electric 
utilities thus increasing the costs of energy for manufacturers and 
consumers. As an energy-intensive sector, even slight energy cost 
increases can have a big impact on our members' global competitiveness 
and ability to create jobs. Furthermore, manufacturers are dealing with 
a host of regulations directly impacting their own facilities. These 
regulations increase the cost of doing business by requiring 
manufacturers to install expensive pollution control technology or cut 
back on production.
    I would like to highlight the following EPA regulations as key 
examples of the agency's overreaching regulatory agenda and its impact 
on manufacturers:
     Utility MACT and Cross State Air Pollution Rules--
Manufacturers are extremely concerned about the EPA's recently-
finalized Utility MACT rule, which put strict limits on emissions from 
power plants. Some plants have already announced they will have to shut 
down as a result of the new rule, and there also may be grid 
reliability problems as utilities work to comply with the rule. Even 
the EPA admits there will be a significant negative impact: according 
to its own analysis, the regulations could cost on average $10.9 
billion a year and could result in the loss of hundreds of thousands of 
jobs.
    In today's tough economy and competitive global marketplace, not 
all manufacturers will be able to absorb the increase in electricity 
costs that result from this expensive regulation. Some plants may shut 
their doors while others will sharply decrease production or abandon 
plans to expand the facilities.
     Recently, manufacturers were pleased that a federal court 
recently stayed implementation of the Cross-State Air Pollution Rule 
(CSAPR) which would require power plants in 28 states--including states 
in the South, Midwest and Mid-Atlantic--to reduce emissions that 
contribute to ozone and fine particle pollution. Had the court not 
granted the stay, the rule would have gone into effect on January 1, an 
extraordinarily short period of time between the finalization of the 
rule and its implementation.
    CSAPR, coupled with the Utility MACT rule, will have significant 
impacts on the economy. The National Economic Research Associates 
(NERA) recently modeled the combined economic impacts of both the 
rules. Costs for the electric sector to comply with the two rules are 
projected to be a staggering $18 billion per year. The study estimates 
that nationwide average retail electricity prices rise by 11.5 percent, 
and heavy manufacturing states such as Ohio can expect prices to rise 
by approximately 23%. Manufacturers find it extremely difficult to plan 
for future investments when utility sector regulations threaten to 
increase the price of the electricity.
     Boiler MACT Regulations--Manufacturers must also deal with 
a MACT regulation that imposes stricter emission standards on 
industrial and commercial boilers and process heaters. An industrial 
boiler--a closed vessel found in a factory, refinery, or large 
institution that is fired to generate steam--is critical to the 
manufacturing process. As a result, these regulations will cut across 
many sectors of the NAM membership, including the forest and paper, 
chemical, agri-business, steel, and petroleum refining sectors.
    The development of these regulations has created significant 
uncertainty for manufacturers. In December of last year, the EPA issued 
reconsidered rules, but they still need significant work to be 
achievable by business sectors across America. In fact, the overall 
capital cost of the Boiler MACT rule remains over $14 billion for 
manufacturers, and, as a result, over 200,000 jobs will put at risk. 
Many manufacturers will have trouble retrofitting their existing 
boilers to meet the tight three-year compliance time frame.
    Serious legal uncertainty also exists because of a January 9th 
court decision which overturned the EPA's stay of the March 2011 rules. 
This decision has resulted in confusion about the regulations and will 
force companies to comply with rules that the EPA is already working to 
change through the reconsideration process.
    Manufacturers believe that legislation is really the only way out 
of this confusing regulatory morass. The NAM applauds the House for 
passing The EPA Regulatory Relief Act of 2011 (H.R. 2250), and we 
strongly urge the Senate to pass the companion bill, S. 1392. These 
bills would stay the March 2011 rules, extend the compliance timeframe 
from three to five years and provide the agency with an additional 
fifteen months to reissue achievable and affordable rules. We believe 
this legislation will provide manufacturers with the certainty they 
need to do what they do best--make things and create jobs.
     Regulating Greenhouse Gas Emissions Under the Clean Air 
Act--If the traditional challenges with air quality regulations were 
not enough to discourage manufacturers from hiring new employees or 
investing in new equipment, then the decision to regulate greenhouse 
gas emissions as a pollutant under the Clean Air Act certainly will. 
This is unlike any regulation manufacturers have ever experienced. In 
the past, technology has helped to develop cheaper methods to ``scrub'' 
pollutants from our smokestacks. But greenhouse gases cannot be 
scrubbed from emissions; it can only be reduced through reductions in 
output or fuel switching.
    The easiest way to reduce greenhouse gas emissions from stationary 
sources is to reduce economic output. That is a recipe for job losses. 
And although these regulations start with the largest new and modified 
facilities including energy intensive manufacturers and utilities, the 
stage has been set to regulate even the smallest manufacturers and 
possibly existing facilities through the New Source Performance 
Standards--or NSPS--program. The possibility creates an overhang of 
uncertainty that casts a dark shadow on the future of manufacturing in 
this country. We thank the House of Representatives for passing the 
Energy Tax Prevention Act of 2011 (H.R. 910) to prevent the EPA from 
regulating greenhouse gas emissions under the Clean Air Act.
    Manufacturers face tremendous uncertainty during this period of 
unprecedented regulatory overreach from the Environmental Protection 
Agency (EPA). Regulations that raise electricity costs and production 
costs will prevent the manufacturing sector--the nation's job 
creators--from leading us through these tough economic times. The 
Agency must use its discretion to pull-back on these job-killing 
regulatory proposals.
    Government can support manufacturers and play an extremely 
important role in shaping our competitiveness. For this to happen, I 
believe there needs to be a real transparency to the regulatory 
process, as well as an independent economic analysis for the potential 
impact and unintended consequences for newly proposed regulations. 
Additionally, Congress should provide a predictable review process for 
out-of-date, duplicative, redundant, and ineffective regulations.
    Education and job training is another area where effective 
government policies could assist employers, but often miss the mark. We 
have created an education system that is almost completely separate 
from the economy at large. Traditionally, it was the job of schools to 
educate children and assist in creating responsible citizens, and it 
was the job of companies to train employees.
    Today, companies, especially smaller businesses with fewer training 
and HR resources, cannot afford the luxury of time-intensive training 
programs for their workers. They need employees who have the knowledge 
and skills to contribute right away. We need to look at federal 
workforce training opportunities that often do not address the skills 
that are in demand by employers. Programs such as the Workforce 
Investment Act need to train workers to credentials that are in-demand 
by the private sector.
    The only way to address this challenge is to align education, 
economic development, workforce and business agendas so they work in 
concert to develop the talent necessary for business success in the 
global economy. To address this need we should focus workforce funding 
towards industry-recognized credentials that empower companies to know 
they are hiring someone with the skills to succeed.
    The NAM, through its Manufacturing Institute, is working with 
community colleges, vocational institutes and other post-secondary 
institutions across the country by organizing, aligning and translating 
those credentials into corresponding educational courses that can be 
integrated into high school and community college degree programs of 
study. So, an individual can see that if he or she takes the following 
classes, they will have the skills to earn a nationally-portable, 
industry-recognized certification and be qualified to work in the 
following jobs at the following salaries.
    As the world's largest manufacturing economy, the United States 
requires long-term investments in transportation and a comprehensive 
21st infrastructure strategy to help ensure our future competitiveness 
in international markets. Competitors in Asia, Europe, and South 
America continue to ramp up investments in all types of infrastructure 
while we struggle to maintain crumbling highways, obsolete bridges, 
aging public transit, overstressed water and wastewater systems and 
outdated air traffic control technology.
    While our nation faces many fiscal challenges, making key 
investments in infrastructure should not be delayed. Manufacturers rely 
on a productive system of roads, rails, ports, inland waterways and 
airports for receiving raw materials and shipping finished products to 
customers throughout the United States and the world. The nation loses 
4.8 billion hours of extra time a year due to traffic tie-ups and 
traffic congestion costs Americans $115 billion a year in wasted time 
and fuel.
    The needs of the system are enormous and require innovations that 
include capital budgeting and planning, prioritizing and funding 
transportation projects of regional and national significance, a 
welcoming climate for private infrastructure investment, new federal 
bonding approaches, environmental permit streamlining and elimination 
of redundant state and federal regulations that promote greater 
flexibility to the states.
    Thank you for the opportunity to testify before the Committee today 
and to provide manufacturing's perspective of the concerns with the 
current environment and processes facing manufacturers today and also 
to provide you with insight on how we can move forward in the right 
direction to ensure American manufacturing remains the best in the 
world.
                                 ______
                                 
    Chairman Kline. Dr. Bernstein?

        STATEMENT OF DR. JARED BERNSTEIN, SENIOR FELLOW,
             CENTER ON BUDGET AND POLICY PRIORITIES

    Mr. Bernstein. Chairman Kline, Ranking Member Miller, 
members of the committee, I thank you for the opportunity to 
testify today and applaud you for holding this hearing on the 
issue that matters to most Americans right now, opportunity, 
jobs, and the living standards of the broad middle class.
    The current economy continues to expand in real GDP terms, 
as has been the case since the second half of 2009. Employment 
growth turned positive in March of 2010, and since then, the 
private sector's added 3.2 million jobs on net.
    As my submitted testimony shows, the rate of GDP 
contraction and job losses diminished shortly after the 
interventions of both the federal government, through the 
Recovery Act, and the Federal Reserve, through monetary 
stimulus. Moreover, nonpartisan research has shown that 
government and Federal Reserve policies have played an integral 
role in this reversal.
    Yet, while the economy is moving in the right direction--
and has even developed some momentum in recent months--the 
unemployment rate fell by--and the unemployment rate did fall 
by almost 1 percentage point over the past year from 9.4 
percent to 8.5 percent, the underlying growth rate of the 
expansion is still too slow to deliver middle-class families 
the economic opportunities they need to meet their family 
budgets, much less to get ahead.
    Moreover, given the importance of restoring middle-class 
economic prosperity, we must recognize that growth itself is 
necessary, yet not sufficient. GDP or productivity growth alone 
has not sufficiently lifted the incomes and living standards of 
the middle class.
    In the business cycle expansion of the 2000s, productivity 
grew 19 percent, real GDP grew 18 percent, but the real income 
of middle-class working-age households actually fell in real 
terms. Middle-class income trends were much more favorable in 
the 1990s, as median incomes of working-age households 
increased 10 percent, an addition of about $5,600 in today's 
dollars. Employers added about 23 million jobs over the 1990s 
cycle, compared to 5.5 million over the 2000 cycle.
    I raise this comparison here for a few reasons. In the 
2000s, policymakers aggressively adapted supply-side, trickle-
down measures characterized by large tax cuts favoring the 
wealthy, deregulation, under the assumption that financial 
markets would self-monitor and persistent budget deficits even 
during an expansion.
    Today, such supply-side trickle-down arguments are 
resurgent, despite the evidence noted above. One is tempted to 
recall the admonition that those who forget the past are doomed 
to repeat it.
    Fiscal and tax policies were especially different in the 
1990s, as taxes were raised on the wealthiest and cut for the 
poorest among us, and the fiscal budget achieved multi-year 
surpluses for the first time since the 1950s.
    The trickle-down regulatory agenda--what I have called YOYO 
economics--``you are on your own''--presumes that the growth 
chain starts at the top of the wealth scale and trickles down 
to those at the middle and the bottom of the scale.
    But there is a much better theory suggesting that to 
generate robust, lasting, and broadly shared growth, an 
economically strengthened middle class is essential.
    In my written testimony, I present evidence to this effect. 
Let me use the rest of my time, however, to talk about policies 
that I think help in this regard.
    Every one of the policy areas I am about to mention--some 
of which complement my colleague, Ms. Johnson's, ideas--are 
arguments that members of the committee can use to help reduce 
income security, push back on income inequality, and improve 
the mobility of the middle class.
    Extend the payroll tax holiday and unemployment insurance. 
Policymakers of both parties have widely agreed upon the need 
for this relief through the end of the year. Failure to provide 
it would add to the underlying fragility of the nascent 
expansion.
    Invest in infrastructure investment. It is my understanding 
that a bill to repair and modernize the nation's public schools 
and community colleges will soon come to the floors of both 
chambers.
    This plan is called FAST, Fix America's Schools Today. It 
addresses three big problems: the backlog of maintenance 
repairs in strapped school districts across the nation; the 
high unemployment among construction workers and other laborers 
who do this type of work; the energy efficiency in many public 
schools, where billions of taxpayer dollars are wasted through 
bad roofing, aging boilers, and poorly insulated windows. I 
urge legislators to give this idea a close look.
    Manufacturing policy, as my colleague has mentioned, skills 
enhancement, which was a large part of the earlier 
conversation, improving workers' bargaining power. As with 
international trade and taxation, the union organizing playing 
field is badly tilted against those who would like to exercise 
their right to collectively bargain.
    A recent rule change by the National Labor Relations Board 
will help workers who have petitioned to form a union to have a 
more timely election. In a climate where employers who oppose 
unions can and do block them--block such elections with 
impunity, this rule removes some of the above noted tilt.
    I thus urge the committee to take the policy steps to re-
link the economic prosperity of the American middle class with 
the productivity and growth they themselves are helping to 
generate.
    Thank you.
    [The statement of Mr. Bernstein follows:]

         Prepared Statement of Jared Bernstein, Senior Fellow,
                 Center on Budget and Policy Priorities

    Chairman Kline, Ranking Member Miller, and members of the 
Committee, I thank you for the opportunity to testify today and applaud 
you for holding this hearing on the issue that matters most to most 
Americans right now: opportunity, jobs, and the living standards of the 
broad middle class.
Introduction: Current Conditions and the American Middle Class
    The current economy continues to expand in real GDP terms, as has 
been the case since the second half of 2009. Employment growth turned 
positive in March of 2010, and since then the private sector has added 
3.2 million jobs on net; including the public sector, net job growth is 
2.7 million. As the two figures below show, the rate of GDP contraction 
and job losses diminished shortly after the interventions of both the 
federal government through the Recovery Act, and the Federal Reserve, 
through monetary stimulus.


    Moreover, nonpartisan research like that of the Congressional 
Budget Office has shown that government and Federal Reserve policies 
have played an integral role in this reversal.
    Yet, while the economy is moving in the right direction, and has 
even developed some momentum in recent months--the unemployment rate 
fell by almost one percentage point last year, from 9.4 percent to 8.5 
percent; the more comprehensive underemployment rate fell by 1.4 
points, from 16.6 percent to 15.2 percent--the underlying growth rate 
of the expansion is still too slow to deliver middle-class families the 
economic opportunities they need to meet their family budgets, much 
less to get ahead.


    As the President stressed in his State of the Union address, 
private sector employers have been adding net new jobs every month for 
close to two years, over three million so far. Of course, many more 
jobs were lost in the great recession, and I suspect that every policy 
maker in this room wants to see that growth rate accelerate.
Growth and the Middle Class: Necessary But Not Sufficient
    Yet, if we're talking about middle-class economic prosperity, we 
must recognize that the growth is necessary yet not sufficient. GDP or 
productivity growth alone has not sufficiently lifted the incomes and 
living standards of the middle class (the next section explore the 
feedback loop between middle-class prosperity and a stronger economy). 
This is a long term problem, though it was especially evident in the 
business cycle expansion of the 2000s. Measuring from annual peak-to-
peak years of the cycle--2000-2007--productivity grew 2.5 percent per 
year on average (19% overall) in those years and real GDP grew 2.4 
percent per year (18% overall) but the real income of middle-class, 
working-age households fell half-a-percent per year, or 3.4 percent 
(see figure).
    Middle-class income trends were much more favorable in the 1990s. 
Though the real income of working-aged households fell in the recession 
of 1990-91, it soon reversed course and grew 10 percent--an addition of 
about $5,600 dollars in today's dollars--over the full cycle. Employers 
added 22.7 million jobs over the 1990s cycle, compared to 5.5 million 
over the 2000s cycle.\1\
---------------------------------------------------------------------------
    \1\ Since income data from the Census is an annual measure, those 
comparisons use annual data. These job growth comparisons are from 
monthly cyclical peaks, as defined by the National Bureau of Economic 
Research.
---------------------------------------------------------------------------
    I raise this comparison here to a few reasons. First, the national 
economic policy backdrop was very different over these two decades. In 
the 2000s, policy makers aggressively adapted supply-side, trickle-down 
measures, characterized by large tax cuts favoring the wealthy, 
deregulation under the assumption that financial markets would self-
monitor, and persistent budget deficits even during an expansion.


    Fiscal and tax policies were especially different in the 1990s, as 
taxes were raised on the wealthiest and cut for the poorest among us, 
and the fiscal budget achieved multi-year surpluses for the first time 
since the 1950s.
    Second, these observations are highly germane to the current 
national debates over jobs, oversight of financial markets, and tax 
policy. Supply-side, trickle down arguments are particularly resurgent, 
despite the evidence noted above. One is tempted to recall the 
admonition that those who forget the past are doomed to repeat it.
    Third, these comparisons raise the critical question of what 
measures would be most advantageous for this committee to pursue in 
terms of reconnecting growth, productivity, and middle class 
prosperity. I will speak to this question in the last part of my 
testimony, but first, let us examine the other side of that question.
Middle Class Prosperity and the Health of the Economy
    The trickle-down, deregulatory agenda--what I have called YOYO, or 
``you're on your own'' economics--presumes that the growth chain starts 
at the top of the wealth scale and ``trickles down'' to those at the 
middle and the bottom of that scale. But there is another theory, 
supported by evidence like that above, suggesting that a much better 
way to generate robust, lasting, and broadly shared growth is through 
an economically strengthened middle class.
    At the most basic level, this growth model is a function of 
customers interacting with employers, business owners, and producers. A 
recent article by highly successful venture capitalist Nick Hanauer 
described this interaction as follows:
    I've never been a ``job creator.'' I can start a business based on 
a great idea, and initially hire dozens or hundreds of people. But if 
no one can afford to buy what I have to sell, my business will soon 
fail and all those jobs will evaporate.
    That's why I can say with confidence that rich people don't create 
jobs, nor do businesses, large or small. What does lead to more 
employment is the feedback loop between customers and businesses. And 
only consumers can set in motion a virtuous cycle that allows companies 
to survive and thrive and business owners to hire. An ordinary middle-
class consumer is far more of a job creator than I ever have been or 
ever will be.
    How does this dynamic interaction show up in the macroeconomy? 
Economist Alan Krueger, currently serving as Chair of the President's 
Council of Economic Advisers summarized these findings in a recent 
speech, in a section on the consequences of economic inequality.
     Less robust (or debt-financed) consumption. Seventy 
percent of the US economy is accounted for by consumer spending, so if 
that part of GDP lags, economic growth slows. It is also the case that 
the propensity to consume out of current income is higher among lower-
income households (i.e., compared to wealthier households, they're more 
likely to spend than save their income).
    Based on an estimate of these relative propensities and the large 
shift in the share of national income that accrued to the top 1 percent 
over the past few decades, Krueger calculates that aggregate 
consumption could be 5 percent higher in the absence of such large 
income shifts. Applying rules of thumb on the relationship between 
aggregate growth and jobs, and assuming both economic slack and that 
this income was not simply replacing demand elsewhere in the economy, 
this extra consumption growth could reduce unemployment by 1.75 
percentage points, implying about 2.6 million more people with jobs.\2\
---------------------------------------------------------------------------
    \2\ As consumption is 70% of GDP, and each point of GDP above trend 
reduces unemployment by half a point, this calculation is .7*.5*5%, or 
1.75%.
---------------------------------------------------------------------------
    Krueger cites an important caveat about this type of calculation. 
In the face of stagnant earnings in the 2000s, many in the middle class 
borrowed to make up--or more than make up--the difference, in which 
case middle-class consumption did not fall as much as it would have 
absent this leverage. To point out that this method of improving middle 
class living standards is both unsustainable and extremely risky is an 
obvious understatement.
     Inequality and longer term growth. Krueger also points to 
recent research showing that ``in a society where income inequality is 
greater, political decisions are likely to result in policies that lead 
to less growth.'' Nobelist Mancur Olsen also hypothesized about this 
relationship decades ago.
    As more income, wealth, and power is concentrated at the top of the 
income scale, narrow coalitions will form to influence policy decisions 
in ways less likely to promote overall, or middle-class, well-being, 
and more likely to favor those with disproportionate power and 
resources. In the current economics debate, we clearly see these 
dynamics in a tax code that bestows preferential treatment on those 
with large amounts of assets, like capital gains and stock dividends, 
relative to wage earners.
     Trickle-down economics, inequality, and incomes. Another 
piece of evidence with implications for rebuilding a strong middle 
class comes from new work by economists Emmanuel Saez et al. As shown 
in the figures from their paper (see Appendix), they use international 
evidence from a wide variety of advanced economies to examine two key 
links in the logic of the supply-side chain.
    First, they look at the relationship between the top marginal 
income tax rate in these countries and the change in income inequality. 
They find a strong negative correlation: in countries like ours that 
cut the top marginal tax rate, income is a lot more skewed (and note 
that this refers to pretax income, so the result is not a direct 
function of the tax policy changes).
    But the critical question for supply-side is whether these high-end 
marginal tax rate reductions lead to faster income growth (we've 
already seen that they lead to more income inequality). The bottom 
figure shows that they do not. Real per capita income growth across 
these countries is unrelated to the changes in tax rates.\3\
---------------------------------------------------------------------------
    \3\ Note that the income measure in their research is a broad 
average (real per-capita GDP growth); given that this measure is itself 
driven upwards by the growth of inequality, a median measure 
(insensitive to large accumulations at the top of the scale) would 
likely be even less correlated to tax changes, if not negatively 
correlated.
---------------------------------------------------------------------------
    The above points emphasize an economic rationale for a growth model 
more favorable to the middle class. More broadly shared growth would 
not only score higher on a fairness criterion; it would provide a more 
reliable and durable structure for overall growth itself. It is no 
accident, in this regard, that the era of heightened inequality 
coincides with the arrival and persistence of what I've called ``the 
shampoo economy:'' bubble, bust, repeat.
    But our emphasis on growth should not crowd out that of fairness, 
and in this regard, some of the most important recent work in this area 
has stressed the relationship between inequality and mobility, the 
latter being the extent to which individuals' and families' economic 
positions change over the life cycles. Again, I will briefly summarize 
the relevant findings.
     Economic mobility. Some policy makers, often in seeking to 
dismiss the inequality problem, argue that the US has enough income 
mobility to offset increased inequality. We may start out further 
apart, they argue, but we change places enough that it doesn't matter. 
This argument fails, however, both in terms of logic and evidence. The 
existence of mobility cannot offset increased inequality; for that to 
occur, mobility itself must be accelerating. There is no evidence to 
support such acceleration and some new, high-quality work suggests a 
slight decline in the rate of mobility.
    The US has considerably less income mobility than almost every 
other advanced economy. In particular, as stressed in a recent New York 
Times article, parental income is a stronger predictor of the success 
of grown children in the U.S. relative to other advanced nations--i.e., 
we have less intergenerational mobility than other nations.
    Putting some of these themes together, I have hypothesized that 
there are causal linkages between inequality and immobility. To the 
extent that those who have lost income share in recent years suffer 
diminished access to the goods, services, and general living conditions 
that would enhance their mobility, we would expect to see economic 
results like those cited above.
    Here, I'm thinking about everything from access to quality 
education, starting with pre-school (such early educational 
interventions have been shown to have lasting positive impacts), to 
public services, like decent libraries and parks, to health care, 
housing, and even the physical environment. The new research linking 
mobility and inequality may well find that as society grows ever more 
unequal, those falling behind are losing access to the ladders that 
used to help them climb over the mobility barriers they faced.
Policies Designed to Rebuild the Middle Class
    It is widely maintained by some policy makers that it is up to the 
private sector to provide the middle class with the opportunities they 
need to get ahead. Given that most economic activity and jobs are not 
directly associated with government, this is of course true. But the 
idea that this implies no role for government is both wrong and 
dangerous, in the sense of ceding the playing field to our competitors 
who are not bound by such firm ideology. This insight is particularly 
germane given the trends presented above regarding job and income 
growth, inequality, and mobility.
    In fact, government must enforce fair rules of the road, whether it 
comes to the selling of financial products or the rights of workers to 
collectively bargain with their employers. There is a role for 
government to ensure that basic needs, such as access to affordable 
health care and a secure retirement, are most efficiently met. 
Government must also offset market failures, including recessions, 
insufficient supply of skills in the workforce, and barriers to entry 
for potentially expanding industries. Finally, the system of funding 
government must be fair in the sense that middle class families do not 
face a proportionally larger tax federal tax burden--higher effective 
tax rates--than those with many more financial resources.
    Every one of these policy areas provides policy makers like the 
members of this committee with the opportunity to help reconnect growth 
and middle class prosperity, restore some degree of income security, 
and push back on the inequality and immobility trends documented above.
    The massive market failure of the great recession provides 
important lessons to policy makers, both regarding the lack of 
financial oversight that helped to inflate the housing bubble and the 
stimulus measures, most notably the Recovery Act, that helped to 
generate the historically large swings from negatives to positives in 
growth and jobs as shown in the first table above.
    But more such measures are needed. While the economy is improving 
and unemployment is slowly coming down, at current growth rates, it 
will take many years to reach full employment. The following measures 
can help build on the momentum we have and accelerate the recovery:
     Extend the payroll tax holiday and unemployment insurance. 
Policy makers of both parties have widely agreed on the need to payroll 
relief through the end of the year ; failure to do so would add to the 
underlying fragility of the nascent expansion.
     Invest in infrastructure investment. As part of the 
American Jobs Act, the President proposed a national program to repair 
and modernize the nation's public schools and community colleges. This 
plan is now a legislative initiative called FAST--Fix America's Schools 
Today--soon to be introduced in both chambers. FAST addresses three big 
problems: 1) the backlog of maintenance repairs in strapped school 
districts across the nation, 2) the high unemployment among 
construction workers and other laborers who do this type of work, and 
3) the energy inefficiency in many public schools where billions of 
taxpayer dollars are wasted through bad roofing, aging boilers, and 
poorly insulated windows. I urge legislators will give this idea a 
close look.
     Manufacturing policy: In his State of the Union address, 
the President presented some ideas, including tax incentives and trade 
enforcement measures, to help incentivize the insourcing of 
manufacturing work in America. In fact, manufacturers have added over 
300,000 jobs over the past 21 months, and anecdotally, some producers 
say that perhaps they have overplayed the outsourcing idea and are 
interested in producing closer to where they sell (rising 
transportation costs and narrower international wage differentials may 
also be in play here).
    In this regard, policy makers could help tap this development by 
closing international tax loopholes that incentivize multinationals to 
build factories abroad. The President's most recent budget recommended 
to the so-called super committee in September, proposes $110 billion in 
loophole closures that would both level the playing field for domestic 
manufacturers and help relieve our fiscal situation.
    Trade enforcement, including actions against countries that manage 
their currencies to artificially support their exports and block our 
imports, is another essential piece of this puzzle.
    Note that these measures simply level the playing field and are in 
no sense protectionist--they do not provide unfair advantages to 
American firms nor do they block imports.
     Skills enhancement. This committee has a long history of 
interest in policies to ensure that the skills of American workers 
match those demanded by today's employers. Ranking Member Miller's 
Pathways Back to Work bill supports a subsidized employment program 
targeted at unemployed adults, modeled on a successful Recovery Act 
program that employed over 250,000 workers in 2009-10 (TANF Emergency 
Fund). This bill also provides work-based job-training for the long-
term unemployed and summer jobs for younger workers.
    President Obama also stressed the importance of workforce 
investment through what is typically called ``sectoral employment 
strategies.'' As opposed to generalized training that too often leaves 
participants unprepared for actual jobs, sectoral strategies link 
trainers, often through partnerships with community colleges, with 
local employers who provide granular information about future demand 
needs. Research by Georgetown University professor Harry Holzer shows 
these programs to be far more effective than traditional training 
programs that are too often detached from what's happening in local 
labor markets.
     Improving workers' bargaining power: As with international 
trade and taxation, the union organizing playing field is badly tilted 
against those who would like to exercise their right to collectively 
bargain. A recent rule change by the National Labor Relations Board 
will help workers who've petitioned to form a union to have a more 
timely election. In a climate where some employers who oppose unions 
can and do block elections with impunity, this new rule removes some of 
the above-noted-tilt.
    Finally, it is important to note one area of public policy that has 
incorrectly been singled out in recent years as a factor holding back 
job growth and hurting the middle class: the regulatory climate. While 
onerous regulations should always be rigorously reviewed for proof of 
their net positive benefits, it is clear from the evidence that it is 
weak demand, not regulation, that's preventing faster job creation.
    Data from the BLS Survey of Layoff Events show low and declining 
shares of layoffs attributable to government regulations. A year ago 
(2010q3) less than half of one percent (0.44%) of layoffs were related 
to government regulations, according to employers. In the most recent 
quarter for which data are available, the share of layoff events 
attributable to government regulations fell to zero (technically, the 
number reported was too small to meet BLS sampling criteria), as did 
the shares of unemployment insurance claims and all other 
separations.\4\
---------------------------------------------------------------------------
    \4\ A layoff is an event involving the filing of 50 or more initial 
UI claims by an employer during a 5-week period, with at least 50 
workers separated from a job for more than 30 days. Separations include 
job losses from such an event, whether or not the worker claimed UI.
---------------------------------------------------------------------------
    Employers themselves, particularly small businesses, report in 
various surveys that poor sales (aka, weak demand) has been a much more 
important constraint then regulations. Recent analysis by the Treasury 
Department provides this summary:
     ``In the September survey of small business owners by the 
National Federation of Independent Businesses, more than twice as many 
respondents cited poor sales (29.6 percent) as their largest problem 
than cite regulation (13.9 percent).
     In an August survey of economists by the National 
Association for Business Economics, 80 percent of respondents described 
the current regulatory environment as ``good'' for American businesses 
and the overall economy.
     [I]n a recent Wall Street Journal survey of economists, 65 
percent of respondents concluded that a lack demand, not government 
policy, was the main impediment to increased hiring.''
Conclusion
    This testimony has stressed that, even as the economy is improving 
and the American people are digging their way out of the Great 
Recession, unemployment is still high and economic growth still 
relatively slow. Compared to the massive losses in early 2009, we're 
much improved. But compared to an economy that's providing what I 
believe members of this Committee would recognize as gainful 
opportunities for middle class workers and their families, we've got a 
ways to go.
    Importantly, that view does not suggest that GDP growth alone is 
sufficient, though it is of course necessary. As recently as the 
business cycle of the 2000s, we saw middle-class, working-age 
households lose ground in terms of their real income, even while 
productivity growth was relatively strong. My testimony amplifies a 
number of policy ideas currently under discussion that I believe will 
help to reconnect growth and middle class prosperity.
    But arguments and evidence above also point to the importance of a 
strong middle class for growth itself, positing a feedback loop. 
Businesses cannot create jobs without customers, and in a climate of 
high levels of income concentration, the customer base becomes too 
narrow. In this regard, I present above a set of arguments connecting 
higher levels of income inequality with less satisfactory growth 
outcomes. Similarly, there is reason to believe that high levels of 
inequality negatively affect mobility, by both lengthening the distance 
disadvantaged families have to climb and shortening their ladders.
    While more research clearly is needed to get a better handle on 
these interactions between broadly shared prosperity and better growth 
and mobility outcomes, the circumstantial evidence is quite strong. I 
urge the committee to take the policy steps to re-link the economic 
prosperity of the American middle class with the productivity and 
growth they themselves our helping to generate.
                                appendix


                                 ______
                                 
    Chairman Kline. Thank you.
    Dr. Mitchell, you are recognized.

 STATEMENT OF DR. MATTHEW MITCHELL, SENIOR RESEARCH FELLOW FOR 
   ECONOMICS, THE MERCATUS CENTER AT GEORGE MASON UNIVERSITY

    Mr. Mitchell. Great. Good morning, Chairman Kline, 
Representative Payne, and members of the committee. It is an 
honor to speak with you today.
    The economy is sick, and the natural question for both the 
economists and the well-intentioned policymaker is, what 
economic medicine will help? Unfortunately, economic 
understanding of how government can revive an ailing economy is 
limited. It is not unlike our knowledge of surgery in past 
centuries. The instruments are blunt, we are not very adept at 
using them, and there is a good chance that the intervention 
will cause more harm than good.
    While we may not know how to instantly breathe life back 
into a sick economy, we do know a great deal, however, about 
how government can create the sort of environment which is 
conducive to growth. That is, we know the sorts of habits that 
make for a healthy economy.
    Let me begin with what we can and can't do in the short 
run. You might not know it listening to some, but the truth is 
that there is a lot that we economists do not know about fiscal 
stimulus. While there is a general agreement that the increased 
debt associated with stimulus is costly and unproductive over 
the long run, there is less agreement about whether stimulus 
spending--the stimulus spending that it finances is helpful or 
harmful in the short run.
    Reasonable economists using reasonable techniques have 
found that stimulus spending enhances private-sector growth, 
but reasonable economists using reasonable techniques have 
found that stimulus destroys or crowds out private-sector 
activity.
    I cannot tell you what level of risk is acceptable to take 
with the American economy, but there is risk in further 
stimulus. One reason for caution is that the optimistic 
estimates seem not to apply to the current situation.
    For example, economists find that stimulus is ineffective, 
one, when a nation is operating under a flexible exchange rate; 
two, when it is open to trade with other nations; and, three, 
when it is highly indebted. All three conditions apply or soon 
will apply to the United States.
    Economists also find that multipliers are large only when 
stimulus is temporary. They also find that it is large only 
when stimulus measures are modest, that is, there are 
diminishing marginal returns to stimulus.
    This is especially relevant in today's context, when 
government has already undertaken multiple massive stimulus 
projects. There are real risks associated with too much 
stimulus. A recent study of 91 countries found that, ``those 
governments that use fiscal policy aggressively induce 
significant macroeconomic instability, and that instability in 
turn diminishes economic growth.''
    One problem is that there is a wide gulf in the way that 
stimulus advocates say stimulus ought to be implemented and the 
way that it actually is implemented. Lawrence Summers has noted 
that stimulus ``can be counterproductive if it is not timely, 
targeted and temporary.'' In reality, however, it is very 
difficult to simultaneously meet all three criteria.
    On timeliness, we know that 18 months after the 2009 
stimulus passed, more than half of the money slated for 
investment had yet to be spent. As far as targeting goes, 
numerous studies have now found that the distribution of 
stimulus funds had no statistical relationship to local area 
unemployment rates. The funding simply didn't go to those areas 
most in need.
    And as far as temporary goes, studies suggest that most 
stimulus spending boosts last far longer than intended.
    Instead of implementing a quick fix, we should be creating 
the conditions that are necessary for long-run economic health. 
One of the most effective ways to do this is to permit our 
citizens a generous degree of what economists call economic 
freedom, that is, permit them choice, free and voluntary 
interaction, open-market competition, and the rule of law. 
These ideas may sound vague, but thankfully in the past several 
decades, economists have made them more concrete by developing 
and testing objective measures of freedom.
    Could we please bring up my first slide?
    One widely cited measure is that developed by Gwartney, 
Lawson and Hall. Their index rates 141 countries on factors 
such as the size of government, the extent of regulation, the 
stability of monetary policy, the degree of openness to trade, 
and the protection of property rights. This shows the positive 
and statistically significant relationship between freedom and 
per capita GDP.
    Per capita income of the average person in the freest 
countries is more than seven times that of the average person 
in the least free. The per capita income of the poorest 10 
percent in the freest countries is more than eight times that 
of the poorest 10 percent in the least free. In other words, 
economic freedom is valuable for the average person, but it is 
particularly valuable for those who are least well-off among 
us.
    In contrast with the literature on stimulus, there is a 
remarkable consensus in the studies of economic freedom. One 
recent review of 45 studies concluded that, ``Regardless of the 
sample of countries, the measure of economic freedom, and the 
level of aggregation, there is a solid finding of a direct 
positive association between economic freedom and economic 
growth.''
    Could we please bring up the next slide?
    The literature demonstrates that the prosperity of the 
United States is neither accidental, nor inevitable. It is the 
result of decades of robust and expanding economic freedom. 
Unfortunately, that freedom has been in precipitous decline for 
about a decade.
    It can be restored by making the tax code more efficient, 
equitable, and easy to comprehend, by bringing spending in line 
with taxation to make policy sustainable, by eliminating 
regulations that detract from or divert human capitol into 
unproductive activities, by lifting restrictions to 
international trade, and by reaffirming our commitment to 
equitable treatment of businesses. No bailouts, no handouts, no 
special treatment, and no special punishment.
    In conclusion, millions of Americans are unemployed or 
underemployed. Millions more have given up looking for work 
altogether. It is only natural to want to perform emergency 
surgery on our sick economy, but we know from experience that 
intervention can sometimes cause more harm than good.
    Thank you for the opportunity to testify today. I look 
forward to your questions.
    [The statement of Mr. Mitchell follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    Chairman Kline. Thank you all for your testimony.
    Listening to the testimony, particularly of Dr. Bernstein 
and Dr. Mitchell, I was thinking back to many, many, many years 
ago--in fact, decades ago--when I was in school down in 
Houston, Texas, at Rice, and I was studying economics, was 
majoring in biology, and I took economics, because I thought it 
was an easy course. And you had to take some electives, and I 
enjoyed it. It was interesting to me. And then I got to be a 
senior and found out that I had to employ calculus to really 
make this work, and it got a whole lot more complicated.
    And listening to both of you, it is clear what I knew even 
then, but has been underscored over the years, there can 
sometimes be very, very large differences in how economists 
look at sometimes exactly the same data to come up with very, 
very different conclusions. And we have some of that here.
    And it causes me to have great sympathy for Ms. Johnson, 
who is trying to make a business work, while the economists and 
politicians are battling.
    So my thanks to you for the great job that you are doing in 
keeping over 200 people employed and trying to struggle your 
way through this and struggling with all the issues of getting 
legal advice, and trying to decipher rules, and watching those 
rules and regulations change, and trying to keep up with it, 
and trying to have your business not only survive, but to grow.
    But I am going to let the economists have a little bit of a 
discussion here. I want to go to Dr. Mitchell, because Dr. 
Bernstein introduced the concept of YOYO economics, ``you are 
on your own.'' How would you characterize that, in comparison 
to the sort of free-market principles which I understand that 
you are advocating?
    Mr. Mitchell. Well, you know, it is interesting. On the 
topic, say, of trickle-down economics, I have to admit that 
there is no respectable economist that I know of, actually, who 
advocates anything close to trickle-down economic policies. So 
perhaps we are in agreement here.
    There really isn't a school or an academic journal that 
publishes regularly or teaches its students that what we ought 
to be doing is, from the top down, directing resources to the 
wealthy somehow in the hopes that they will turn around and 
spend that.
    There is a well-respected school of economics which says 
that we ought to treat all people equally and that we shouldn't 
single out some for particular special treatment one way or the 
other.
    And so what I would actually say is, while there isn't any 
economic school that teaches some sort of top-down, trickle-
down economics, unfortunately, governments do quite often 
practice top-down economics. And by that, I mean, you know, you 
studied biology, as you said. In some ways, I think a free-
market perspective views the economy as an ecosystem. It is a 
bottom-up process that is largely driven by consumers.
    Where that process--the signals get lost is when central 
planners attempt to direct capital and labor so that people 
don't--it is not consumers who are saying where the jobs of 
tomorrow are, but rather it is people in government trying to 
say where the jobs of tomorrow should be.
    Chairman Kline. Thank you. I have got another quick 
question for you. I am sure there will be a number of questions 
for Dr. Bernstein, and he can re-defend YOYO, if you would like 
to.
    In your testimony, again, Dr. Mitchell, you expressed some 
skepticism that the president's call for another $105 billion--
I have got that by adding several of his proposals together--
adding another $105 billion in federal spending bill will 
result in real benefits for the American economy. In fact, he 
said it may be risky.
    Would you like to expand on that?
    Mr. Mitchell. Sure. And, actually, this might be a good 
opportunity. I have an additional slide; we might bring that 
up. So I am going to try to make this as non-wonky as possible. 
Forgive----
    Chairman Kline. There is no calculus.
    Mr. Mitchell. There is no calculus, I promise. So one of 
the things that is important when you are trying to evaluate 
stimulus measures is what economists call the multiplier. 
Simply put, this just says it is--you can think of it as your 
return for government spending. So we are going to go into a 
deficit, we are going to borrow, and we want to know, what is 
the impact on the economy?
    So what this chart shows--each one of these bars represents 
a separate study. And the important thing to keep in mind is, 
if the results suggest that the multiplier is larger than one, 
then that means government spending actually multiplies or adds 
private-sector economic activity. If it is less than one, 
however, it detracts from, crowds out, diminishes private-
sector economic activity.
    So the horizontal bar there is the one mark. Each one of 
these vertical bars represents the high and low estimate of the 
different study. This is just a sample of recent studies over 
the last several years.
    Now, that does not at all to me look like a slam-dunk, we 
know that stimulus definitely always works and crowds in the 
private sector and makes--multiplies the private sector. To me, 
I look at that and I see an enormous amount of disagreement. I 
see even within studies there are estimates that suggest--that 
have a very wide range.
    So if you look at that, you can see--by the way, I would 
note that the median estimate is below one, that stimulus 
actually crowds out private-sector economic activity, but in 
some of the worst examples, it can destroy--$1 of government 
spending can destroy as much as $2.80.
    So that is what I mean when I say this is risky. I am not 
saying that there aren't well-respected economists who 
sometimes think stimulus is helpful. But it is a risk. It is 
not something that economists agree on.
    And I would say one other quick point. There are many 
things on which economists do agree, benefits of free trade, 
the fiscal problems with the U.S. and over the long run. You 
are going to find widespread agreement. There are frequently 
polls of members of the American Economic Association on these 
matters, and you find lots of things on which economists agree. 
Fiscal stimulus just isn't one of them.
    Chairman Kline. Thank you. My time has expired.
    Mr. Payne?
    Mr. Payne. Thank you very much. And I commend you for your 
knowledge on this calculus business. I am going to stay away 
from it. It wasn't one of my strong suits in college.
    But I would like to ask Ms. Johnson, I commend you for 
bringing forth the family business for 60 years and being 
successful. But looking at your testimony, you do bring up, of 
course, all these impediments, talk about how the OSHA, of 
course, is troublesome and bothersome and frustrating and 
confusing and many issues you have to keep up with. Of course, 
you certainly feel that we could do without the EPA and their 
programs of slowing down job creation, and on and on.
    But let me--and I could ask a lot of questions about both 
of those--but let me just focus on your testimony regarding the 
National Labor Relations Board. You testified in your 
testimony, you contend that the NLRB unlawfully issued a rule 
regarding the posting of notices on employee rights. First, 
does your company post notices of employee rights regarding the 
minimum wage, OSHA, workers' compensation, and laws prohibiting 
discrimination?
    Ms. Johnson. Yes, we absolutely do. As a federal 
contractor, it has been a requirement of ours.
    Mr. Payne. Do you consider these postings to be burdensome?
    Ms. Johnson. Burdensome in the sense that there are 
inspectors that would come through and verify that our posters 
are displayed, that they are the right size, that they are not 
hidden away in a dark corner somewhere, the fact that there 
doesn't seem to be trust.
    Mr. Payne. And, you know, the good companies do suffer from 
the bad companies, because they are not all as great as your 
company seems to be. In some places, they do put them in the 
dark places or in a room where no one can get in, they tell me.
    Let me just ask you this, that is posting one additional 
notice regarding employee rights under labor law burdensome?
    Ms. Johnson. We have been doing it for many, many years, so 
it has become a practice of ours. I think that, for those 
companies that have not been required to, it could be a burden, 
yes.
    Mr. Payne. Your testimony says that the NLRB acted without 
legal authority to require this notice posting regulation. And 
I just wanted to know--and you probably are aware--that the 
National Labor Relations Act states that the board shall have 
the authority from time to time to make, amend, and rescind 
such rules and regulations as may be necessary to carry out the 
provisions of the act.
    What about the--what prohibits the NLRB from issuing a 
notice advising employees of their rights, even if it is 
another one, whether they are rights of the labor people or the 
employer?
    Ms. Johnson. Well, I just think that it is just adding 
another burden to businesses and that it is an example of 
overreaching when there have been laws in place that companies 
have been complying with and then they decide that they are 
going to change it. It is a perception that businesses have 
that independent agencies are overreaching in their authority 
at times.
    Mr. Payne. But wouldn't you agree that if all workers are--
know the rules and feel that everything is posted, that really 
develops harmony? We ran a small business of about 50 people 
and had to put up all of those regulations and had to let the 
OSHA people come in, and they used to do tests on decibels of 
sound. It was a problem because we had rotating actions in a 
large printing operation, and the workers didn't want to wear 
the pieces, but it couldn't be over 80 decibels, so it was a 
problem, but it was to protect the worker----
    Ms. Johnson. Absolutely.
    Mr. Payne [continuing]. And we enforced that for the 
worker, even though it was a nuisance. But I think that, 
overall--and just the last thing, before my time expires--you 
also mention that you--in your testimony, that the NLRB issued 
regulations that compress time between the--when a petition for 
representation is filed and the actual elections are held. And 
you called this ambush elections. And I just wonder if you 
could elaborate on that.
    Ms. Johnson. I would be happy to, because I first would 
like to go on record saying that, as a small business--and I 
know that this is a term that is overused--but people are our 
biggest asset. Our number-one priority is our workforce. That 
makes our company great. If companies have access to capital 
and can invest in technology, that is not going to make them a 
world-class company. It all comes down to people.
    I am not aware of any attempts of organization, my company 
over the last 60 years--when people are our number-one 
priority, as is their safety. And in fact, on a weekly basis, 
our director of operations in his report, the number-one metric 
that he reports out on are any kind of safety occurrences or 
accidents. And in fact, last year, one of our key metrics was 
to improve our safety record by 50 percent so that it is less 
than two incidents per year. And that is a goal that we were 
able to achieve at one of our divisions last year, and we are 
going forward.
    But without a doubt, people are our greatest asset. Their 
safety is number one.
    Chairman Kline. The gentleman's time has expired.
    Mr. Walberg?
    Mr. Walberg. Thank you, Mr. Chairman. And thank you to the 
panelists for being here today. And appreciate your insights.
    Ms. Johnson, it is a pleasure to hear from you again. I 
think you were here back in 2007. I sat and listened to you 
extol the wonderful opportunities and the passion of 
manufacturing. And I have used the illustration many times 
without asking your permission of you, going into middle 
schools and telling students what they could get experience in 
manufacturing and the opportunities that were there, and even 
seeing some of the parts that they produce go to the moon, or 
go into space.
    And so I would like to foster that passion, as opposed to 
just dealing with excessive government regulation, impingements 
upon you doing those things. And I will inform you that I am 
going to use with manufacturers your quote, without innovation, 
manufacturing is just a good idea. So thank you for being here.
    Let me ask you some questions, and in my district in 
Michigan, a manufacturing state that has gone through some 
tough times, and now just hearing from our governor how we are 
turning that around and seeing the value of manufacturing 
again.
    I hear so often from my manufacturers and businesspeople, 
small-businesspeople, of the challenges they face with 
uncertainty and the ever-increasing burdensome regulations, not 
just simply regulations that are necessary, but the advancing 
and increasing and more and more regulations.
    It was a little more than a year ago that our president 
announced his intentions to review and repeal a number of 
regulations. Have you seen any tangible evidences of this 
review? And is it the fact that it is working? Or has the 
review caused less uncertainty in your field?
    Ms. Johnson. Thank you for that question. And I very much 
appreciate the compliments and the fact that you can remember 
me from 2007----
    Mr. Walberg. A guy my age, that is a very important thing.
    Ms. Johnson. Same for my age. You know, no, I have not seen 
any of these rules being retracted. In fact, you know, I would 
just recommend to the committee that at this point in time we 
just, you know, stop, look and listen, you know, and take it 
all in, as we have been trying to climb out of this recession.
    What we hear constantly in the news is more and more 
regulations coming our way. And we take the health care law, 
for example. The only thing that we know at this time is that 
our costs have gone up, when, in fact, you know, the 
regulations have not even been written yet.
    And I was reading in the Wall Street Journal just last week 
that it says that President Obama's regulators are currently 
have some 149 major rules underway which are those that cost 
more than $100 million. So my experience is, no, I have not yet 
seen that.
    Mr. Walberg. Okay, let me continue on with that. You noted 
in your testimony that Washington regulations are time-
consuming, complex, uncertain, changing. I guess from that, can 
you estimate how much it costs a business to hire experts or 
counsel to navigate your business through the maze of 
regulations?
    Ms. Johnson. Well, currently we have two different 
consulting firms that we work with in regards to environmental 
compliance. And we have a labor attorney that is on a retainer. 
And between those three, it is well over $150,000.
    Mr. Walberg. Just for those areas?
    Ms. Johnson. Yes. Yes.
    Mr. Walberg. Do you receive any positive help from the 
federal agencies in assisting you with compliance and 
understanding?
    Ms. Johnson. Well, you know, and that is a great question 
to ask, because the times that I am in Washington and the 
opportunities I have to meet with different representatives of 
these agencies, there is so much work that is being done to 
inform employers what is going on in Washington and how they 
are there to help.
    And I know, for example, at the manufacturing council 
meeting a couple of weeks ago, we met with representatives from 
the EPA, and they said that they are redesigning their website 
so that we could have real-time status of projects that are 
going on.
    And I think that there needs to be some way to get this 
information outside of the beltway to the employer so that we 
understand it, but at this point in time, we have not sought 
out any help from the federal level.
    Mr. Walberg. Or found it available yet?
    Ms. Johnson. Or finding that is available.
    Mr. Walberg. Okay. What percentage of your business is 
overseas?
    Ms. Johnson. Very little of it. We are somewhat fortunate 
in the fact that, you know, we are split about 50/50 in terms 
of commercial and military and aerospace. And a lot of that has 
remained here.
    However, you know, our fear is, as some of our customers 
are helping companies overseas develop their aerospace 
industry, that the supply chains are going to exist there, as 
well, and we have no intentions of moving our business 
overseas.
    Mr. Walberg. Thank you.
    Chairman Kline. Mr. Scott?
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Bernstein, we heard earlier today about investments in 
education needed to fill the 70,000 vacancies in Michigan. Can 
you tell me the economic benefits of investments in education?
    Mr. Bernstein. Sure. It is probably one of the best 
understood and most widely agreed upon relations in labor 
economics. For every extra year that a person has of formal 
schooling, their earnings are typically 7 percent or 8 percent 
higher. And the idea that education complements higher skills, 
higher earnings, has become all that more important in recent 
years as technology and employer skill demands have increased 
pace. So the fact that we are helping workers improve their 
levels of education is very closely linked to their 
employability and earnings.
    Now, I will just say--let me just add one point--if you 
just have the education without the jobs, you are all dressed 
up with nowhere to go, so there is a supply side. We want 
workers with good skills. There is also a very important demand 
side. Right now, we have too many people chasing too few jobs.
    Mr. Scott. Well, they indicated that the 70,000 jobs in 
Michigan--you know, it wasn't that clear, but it sounded like a 
lot of them were going unfilled because the employers couldn't 
find people properly qualified.
    Mr. Bernstein. Certainly heard that recently. I think there 
are definitely pockets throughout the country where there is a 
mismatch between the skills that the workforce on the ground 
has and the skills an employer demands, employers demand.
    But speaking more broadly, we definitely have a demand-side 
problem, as well. I mean, historically there are one or two job 
openings per--or one or two unemployed people per job openings 
in recent months. That ratio was as high as six. Now it is down 
to four, for unemployed people per job opening. So it is a very 
tough game of musical chairs, broadly speaking. But, yes, sure 
there could be----
    Mr. Scott. And it is also even worse when there is a 
mismatch.
    Mr. Bernstein. Exactly.
    Mr. Scott. Now, if you invest in education,that has 
economic stimulative effect, too. If you gave money to a 
community college, for example, to improve educational 
opportunities, could you say a word about what that would do to 
employment? I mean, they would have to hire people.
    Mr. Bernstein. Well, for years--and this committee has been 
in the thick of it--the federal government has played a role in 
helping support training programs. What we now know--
summarizing research that I reference in my submitted 
testimony--is that the type of program you describe, 
Congressman, are among the most effective.
    We have found--it is called sectoral employment and 
training strategies. And Ranking Member Miller's Pathway to 
Opportunity bill also speaks to this, I think, sweet spot in 
education and training policy.
    The idea is to link up employers at the most local level 
with community colleges so that the employers themselves can 
identify in the most granular terms the kinds of jobs they are 
going to be fielding in coming months and years. It is a very 
different approach to training than a kind of blanket, soft 
skills, basic, you know, here you go, some training, good luck 
out there. It is a much more granular look at the occupational 
demands of future labor opportunities. That kind of sectoral 
employment strategy, linking employment and community colleges, 
I think is the way forward.
    Mr. Scott. And the community college, when it receives 
money to provide the training, has to hire adjunct professors, 
people have to buy books, and even that expenditure has short-
term positive effects on the economy.
    Mr. Bernstein. I think that is right. I mean, clearly there 
is very much a demand for precisely this kind of training. And, 
in fact, if you look at one of the constraints that--we talk a 
lot about community colleges in this town. If you look at one 
of the real constraints community colleges face right now is 
that they are actually way overcapacity in many places 
throughout the country. Part of that is a function of the 
downturn, lots of people going back and getting more schooling, 
but part of it is very much the emphasis groups and committees 
like----
    Mr. Scott. Let me see if I can get another question very 
quickly. The state and local governments have been laying off 
people because of their balanced budget requirements. Can you 
say a word about the importance of the federal government 
providing revenue-sharing so that they would stop laying people 
off?
    Mr. Bernstein. Absolutely. We have seen this almost every 
month for the past few years. We have added private-sector 
jobs, while the public sector has shed literally hundreds of 
thousands of jobs over the past few years, and it is because 
they are facing budget constraints.
    One of the most successful programs in the Recovery Act was 
state relief for towns and cities, preventing layoffs, 
teachers, police, sanitation workers, firefighters, key workers 
in the community. And in the American Jobs Act, the president 
provided--introduced an extension of exactly that type of help, 
and it is very much in the interest of providing some boost for 
what is still a fragile recovery.
    Chairman Kline. The gentleman's time has expired.
    Ms. Woolsey?
    Ms. Woolsey. Thank you, Mr. Chairman.
    You know, we are going to be hearing a lot more, as we have 
today, about burdensome regulations and how the federal 
regulations impact negatively on business. And I think one that 
we are going to hear about over and over is OSHA's proposal to 
develop an injury and illness prevention program, a rule that 
would require employers to implement a plan to routinely find 
and fix hazards before workers are hurt, instead of waiting for 
OSHA to find violations. And the opposition--the opponents will 
claim that this is simply going to pile up paperwork and it be 
a new regulation that we don't need.
    Well, to justify the opposition, some have mischaracterized 
the study by RAND Corporation on California's injury and 
illness prevention program and stated that it had little impact 
on worker safety, because, indeed, it is preventative.
    But what the RAND Corporation found, as noted in a memo 
that--a press release, actually, that they sent is that 
California's program can help prevent injuries to workers, but 
only if it is adequately enforced. Their press release said 
that when inspectors found failures to comply with provisions 
to train workers, identify and abate hazards, indeed, there is 
a 20 percent decline in accidents and injuries.
    So, Mr. Chairman, 20 percent is not a minor impact. It is 
not a burdensome regulation. It saves $74 billion every year in 
workers' compensation-related costs. And, in fact, if employers 
could cut 20 percent off this cost, which--it would be about 
$15 million per year that would improve their competitiveness.
    So I don't want to trivialize the value of injury and 
illness prevention programs. I want us to step up to the fact 
that there are regulations that help and will make a 
difference.
    With that, Mr. Chairman, I respectfully request leave to 
place the January 26, 2012, RAND press release into the record.
    [The information follows:]

             California Workplace Safety Program Can Reduce
                  Injuries When Inspectors Enforce It

                 For release Thursday, January 26, 2012

    A longstanding California occupational safety program requiring all 
businesses to eliminate workplace hazards can help prevent injuries to 
workers, but only if it is adequately enforced, according to a new 
study by the RAND Corporation.
    The first-ever evaluation of the California Injury and Illness 
Prevention Program found evidence that the program reduces workplace 
injuries, but only at businesses that had been cited for not addressing 
the regulation's more-specific safety mandates.
    ``We found the safety effects to be real, but not very large,'' 
said John Mendeloff, lead author of the study and a senior public 
policy researcher for RAND, a nonprofit research organization. ``We 
think that the most important reason for the limited impact of this 
program is that inspectors often did not go beyond a review of the 
employer's written document.''
    When California Division of Occupational Safety and Health 
inspectors did investigate further and found failures to comply with 
provisions to train workers, identify and abate hazards, and 
investigate injury causes, the average injury rates at targeted 
businesses declined more than 20 percent in the following two years, 
Mendeloff said.
    However, these provisions were cited in only about 5 percent of 
Cal-OSHA inspections, RAND researchers found. In the other 20 percent 
of inspections where a violation of the rule was cited, it was only for 
the section requiring the employer have a written program. Such a 
violation carries an average penalty of $150.
    The California Injury and Illness Prevention Program, which became 
effective in 1991, requires all employers to adopt certain procedures. 
These include communicating to employees about risks, carrying out 
regular workplace surveys and abating the hazards that are found, 
training employees about how to work safely, and investigating the 
causes of the injuries that occur. In contrast, almost all other safety 
standards address specific hazards--for example, those dealing with 
protection against falls.
    The program has been the most frequently violated Cal-OSHA standard 
in every year since 1991, being cited in about 25 percent of all 
inspections. The California program is also one possible model for 
federal OSHA's current rule-making effort to develop a safety and 
health program rule.
    The RAND study notes that higher penalties for noncompliance with 
the program and more extensive activities to make employers aware of 
their obligations could enhance compliance. However, two other 
approaches could have a greater impact: having inspectors conduct more 
in-depth assessments of employer programs and having inspectors link 
the violations they find and the injuries that have occurred to the 
program by asking ``Why weren't these prevented by your Injury and 
Illness Prevention Program?''
    The study found that employers who were cited for violations of the 
Injury and Illness Prevention Program in one inspection usually came 
into compliance in future inspections. However, the overall percentage 
of inspections finding program violations did not change over time.
    Moreover, the percentage of first-time inspections finding 
violations was the same in 2007 as it was in 1993. These findings 
indicate that information about the program requirements failed to 
reach many employers, they failed to be convinced to comply by the 
threat of penalties, or both.
    The 20 percent reduction in injuries following citations for the 
specific requirements of the California Injury and Illness Prevention 
Program translates to about 1 injury per year at a workplace with 100 
employees. Most estimates of the value of preventing a work injury are 
in the range of $15,000 to $50,000. The RAND study did not find 
evidence that the statewide workplace fatality rate had decreased after 
the introduction of the program standard.
    The study of injury effects was carried out using several different 
injury data sets. In all cases, inspections were included in the data 
if ``before and after'' injury rates could be obtained for the 
inspected business. The study was limited to workplaces in the 
manufacturing, transportation, utilities, wholesale trade and health 
care sectors. It included inspections through 2006.
    The study, ``An Evaluation of the California Injury and Illness 
Prevention Program,'' can be found at www.rand.org. Other authors of 
the study include Amelia Haviland and Regan Main of RAND, Wayne B. Gray 
of Clark University and the National Bureau of Economic Research, and 
Jing Xia formerly of RAND.
    The study was sponsored by the California Commission for Health, 
Safety and Workers' Compensation, a public body with management, labor 
and public representatives located in the state's Department of 
Industrial Relations.
    The study was conducted within the RAND Center for Health and 
Safety in the Workplace, a research center within RAND Law, Business 
and Regulation. RAND Law, Business and Regulation, a division of the 
RAND Corporation, is dedicated to improving policy and decision making 
in civil justice, corporate ethics and governance and business 
regulation.
                       about the rand corporation
    The RAND Corporation is a nonprofit institution that helps improve 
policy and decisionmaking through research and analysis.
                                 ______
                                 
    [The summary, as well as the complete document, ``An 
Evaluation of the California Injury and Illness Prevention 
Program,'' may be accessed at the following Internet address:]

         http://www.rand.org/pubs/technical_reports/TR1190.html

                                 ______
                                 
    Chairman Kline. Without objection.
    Ms. Woolsey. Thank you very much.
    Ms. Johnson, are you the beneficiary, as a small woman-
owned business, of the women-owned small business federal 
contract program?
    Ms. Johnson. Yes.
    Ms. Woolsey. And has that worked for you, or has it been an 
undue burden? Is it difficult to comply with?
    Ms. Johnson. Not necessarily. And I think that, in fact, it 
probably works more in favor for our customers, who have some 
offset programs where they have to divert or contract with 
their minority-owned or women-owned businesses.
    Ms. Woolsey. So they contract with you----
    Ms. Johnson. Correct.
    Ms. Woolsey. So there are programs that actually work in 
favor of those like yourself and others?
    Ms. Johnson. You bet there are. And I would agree with your 
injury and illness and preventative program, as well. There is 
no doubt that there are regulations that are necessary. We are 
not disputing that by any means.
    But just we are talking about the difficult and uncertain 
economic times that we are in right now and that just with so 
much that we hear in the news and the media and the noise. It 
is just--we need to just stop for a second and figure it out.
    Ms. Woolsey. All right, I appreciate you.
    So, Dr. Mitchell, in figuring out, can you list the 
regulations that you would eliminate from the most to least 
important?
    Mr. Mitchell. Sure. And thank you for asking, because I 
think this gives us an opportunity to highlight, I think, 
something that is important to understand about regulations. 
Both on the left and the right, there is a tendency to think 
about the cost of a regulation is the burden of filling out the 
paperwork, right?
    Ms. Woolsey. Yes, or----
    Mr. Mitchell. And I am sorry?
    Ms. Woolsey. Or the savings is----
    Mr. Mitchell. Yes, and people will weigh that against the 
savings. So conservatives will go and count up, you know, the 
costs of compliance.
    Ms. Woolsey. We are in yellow light. Will you list the 
regulations you would eliminate from most to least important?
    Mr. Mitchell. Okay. Well, I would say that the regulations 
that are most important to eliminate are those that favor 
entrenched interests, because that is the hidden cost of 
regulation.
    Ms. Woolsey. So, example. What is the----
    Mr. Mitchell. Regulations almost always--and this is 
important that has won Nobel Prizes----
    Ms. Woolsey. Okay, give me an example of that regulation.
    Mr. Mitchell. Sure. I mean, I think that there is a lot of 
opportunity in the health care law, for example, to look at 
ways in which regulations that were passed very quickly--and 
apparently subject to not particularly good analysis----
    Ms. Woolsey. Well, an example. An exact example.
    Mr. Mitchell [continuing]. And privilege--they privilege 
favored industries.
    Ms. Woolsey. Okay, like the insurance industry.
    Thank you, Mr. Chairman.
    Mr. Mitchell. Yes, exactly.
    Chairman Kline. The gentlelady's time has expired.
    We are wrapped up with our questions here. Before I thank 
and excuse the panel, I would like to recognize Mr. Payne for 
any closing remarks he might have.
    Mr. Payne. Well, thank you very much.
    I think that you have all added to the hearing today. I 
appreciate your coming and spending time.
    I would also like to commend the governors. I thought that 
they had a very balanced approach. And I think that we really 
need to see how we can get America back on the job track. I 
think that a lot of the bickering that goes on is really 
discouraging to American people. And there are things that we 
can do together to help our nation in this time, and I just 
hope that at some point in time, the Congress will come 
together and try to put American people first.
    Also, I would like to agree with one of the governors that 
mentioned Secretary LaHood was doing an outstanding job, and I 
have to agree that he is one of the more accessible and 
energetic and forward-thinking members of the cabinet. I just 
wanted that to be on the record.
    Thank you. I yield back.
    Chairman Kline. I thank the gentleman. And, of course, Ray 
LaHood has been a friend of many of ours for a long time. It 
shows the value of the education you get here in Congress when 
you move to the cabinet.
    I want to thank the witnesses. I think that it underscored 
some of the differences that we have and some places where we 
might come together. As I mentioned in my opening remarks, I 
think there may be an opportunity where we can come to 
agreement in streamlining and consolidating programs, as the 
president suggested, to make them work better, to match up the 
needs of employers with the output, if you will, of schools.
    The testimony also underscored some fundamental 
differences. Sometimes it is bickering that we engaged in here. 
And that, I think, is really unfortunate. Sometimes it is 
fundamental differences and how we--what we think is best for 
the American people and best for the economy and the best way 
to get Americans back to work. That debate will continue. And 
you have been very helpful in our consideration of those 
things. Again, I want to thank the witnesses.
    And there being no further business, the committee stands 
adjourned.
    [Questions submitted for the record and their responses 
follow:]

                                             U.S. Congress,
                                    Washington, DC, March 28, 2012.
Governor Dannel P. Malloy, State of Connecticut,
210 Capitol Avenue, Hartford, Connecticut 06106.
    Dear Governor Malloy: Thank you for testifying at the Committee on 
Education and the Workforce's February 1, hearing on ``Expanding 
Opportunities for Job Creation.'' I appreciate your participation.
    Enclosed are additional questions submitted by Committee members 
following the hearing. Please provide written responses that answer the 
questions posed no later than April 16, 2012, for inclusion in the 
official hearing record. Responses should be sent to Benjamin Hoog of 
the Committee staff, who can be contacted at (202) 225-4527.
    Thank you again for your contribution to the work of the Committee.
            Sincerely,
                                      John Kline, Chairman.

  Question Submitted for the Record by Congressman Dennis A. Ross, a 
          Representative in Congress From the State of Florida

    Question: Governor Malloy, President Obama's bi-partisan fiscal 
commission, Simpson-Bowles, recommended in December of 2010 that 
corporate tax loopholes be eliminated and that the corporate tax rate 
be reduced from thirty-five percent to twenty-six percent. This 
proposal would allow states leverage in incentivizing economic 
development by allowing them more opportunities to attract corporations 
to do business. Do you support these recommendations made by the 
Simpson-Bowles Commission and why, or why not?






                                             U.S. Congress,
                                    Washington, DC, March 28, 2012.
Governor Rick Snyder, State of Michigan,
P.O. Box 30013, Lansing, Michigan 48909.
    Dear Governor Snyder: Thank you for testifying at the Committee on 
Education and the Workforce's February 1, hearing on ``Expanding 
Opportunities for Job Creation.'' I appreciate your participation.
    Enclosed are additional questions submitted by Committee members 
following the hearing. Please provide written responses that answer the 
questions posed no later than April 16, 2012, for inclusion in the 
official hearing record. Responses should be sent to Benjamin Hoog of 
the Committee staff, who can be contacted at (202) 225-4527.
    Thank you again for your contribution to the work of the Committee.
            Sincerely,
                                      John Kline, Chairman.

  Question Submitted for the Record by Congressman Dennis A. Ross, a 
          Representative in Congress From the State of Florida

    Question: Governor Snyder, President Obama's bi-partisan fiscal 
commission, Simpson-Bowles, recommended in December of 2010 that 
corporate tax loopholes be eliminated and that the corporate tax rate 
be reduced from thirty-five percent to twenty-six percent. This 
proposal would allow states leverage in incentivizing economic 
development by allowing them more opportunities to attract corporations 
to do business. Do you support these recommendations made by the 
Simpson-Bowles Commission and why, or why not?




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

                                 
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