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



 
           WHERE THE JOBS ARE: EMPLOYMENT TRENDS AND ANALYSIS

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

                                HEARING

                               BEFORE THE

           SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 15, 2012

                               __________

                           Serial No. 112-115



      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov




                  U.S. GOVERNMENT PRINTING OFFICE
80-106                    WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001



                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chairman                      DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana              Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 7_____

           Subcommittee on Commerce, Manufacturing, and Trade

                       MARY BONO MACK, California
                                 Chairman
MARSHA BLACKBURN, Tennessee          G.K. BUTTERFIELD, North Carolina
  Vice Chairman                        Ranking Member
CLIFF STEARNS, Florida               CHARLES A. GONZALEZ, Texas
CHARLES F. BASS, New Hampshire       JIM MATHESON, Utah
GREGG HARPER, Mississippi            JOHN D. DINGELL, Michigan
LEONARD LANCE, New Jersey            EDOLPHUS TOWNS, New York
BILL CASSIDY, Louisiana              BOBBY L. RUSH, Illinois
BRETT GUTHRIE, Kentucky              JANICE D. SCHAKOWSKY, Illinois
PETE OLSON, Texas                    MIKE ROSS, Arkansas
DAVID B. McKINLEY, West Virginia     HENRY A. WAXMAN, California (ex 
MIKE POMPEO, Kansas                      officio)
ADAM KINZINGER, Illinois
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Mary Bono Mack, a Representative in Congress from the State 
  of California, opening statement...............................     1
    Prepared statement...........................................     4
Hon. G.K. Butterfield, a Representative in Congress from the 
  State of North Carolina, opening statement.....................     6
    Prepared statement...........................................     8
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................    14
Hon. Charles F. Bass, a Representative in Congress from the State 
  of New Hampshire, opening statement............................    14
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................    15
Hon. Edolphus Towns, a Representative in Congress from the State 
  of New York, prepared statement................................    80

                               Witnesses

Harold L. Sirkin, Senior Partner and Managing Director, Boston 
  Consulting Group, Inc..........................................    16
    Prepared statement...........................................    19
John Berlau, Director, Center for Investors and Entrepreneurs, 
  Competitive Enterprise Institute...............................    23
    Prepared statement...........................................    25
John M. Abowd, Edmund Ezra Day Professor of Economics, Director 
  of Labor Dynamics Institute, School of Industrial and Labor 
  Relations, Cornell University..................................    31
    Prepared statement...........................................    33
John Schmitt, Senior Economist, Center for Economic and Policy 
  Research.......................................................    51
    Prepared statement...........................................    53


           WHERE THE JOBS ARE: EMPLOYMENT TRENDS AND ANALYSIS

                              ----------                              


                      WEDNESDAY, FEBRUARY 15, 2012

                  House of Representatives,
 Subcommittee on Commerce, Manufacturing, and Trade
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:08 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Mary Bono 
Mack (chairman of the subcommittee) presiding.
    Members present: Representative Bono Mack, Blackburn, Bass, 
Harper, Lance, Cassidy, Guthrie, Olson, McKinley, Kinzinger, 
Butterfield, Gonzalez, Towns, and Waxman (ex officio).
    Staff present: Charlotte Baker, Press Secretary; Kirby 
Howard, Legislative Clerk; Brian McCullough, Senior 
Professional Staff Member, Commerce, Manufacturing, and Trade; 
Gib Mullan, Chief Counsel, Commerce, Manufacturing, and Trade; 
Shannon Weinberg, Counsel, Commerce, Manufacturing, and Trade; 
Michelle Ash, Democratic Chief Counsel, Commerce, 
Manufacturing, and Trade; and Will Wallace, Democratic Policy 
Analyst.
    Mrs. Bono Mack. Good morning. As the economy--as the 
American economy struggles to regain its footing, we are going 
to spend a great deal of time this year as a subcommittee 
exploring both the obstacles and opportunities for job 
creation. Today we will hear from a respected panel of experts 
who will join us in a wide range of discussion about employment 
trends in America and what factors are driving and shaping 
these trends.
    I also want to thank everyone here for your ongoing 
commitment and efforts aimed at creating new economic 
opportunities and new jobs for Americans.
    And now the Chair recognizes herself for an opening 
statement.

 OPENING STATEMENT OF HON. MARY BONO MACK, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Last year when I began chairman of the subcommittee, I 
encouraged all of my colleagues to join me in an effort to make 
``Made in America'' matter again.
    Well, today we are actually starting to see a renaissance 
of sorts in manufacturing with companies like Caterpillar, 
General Motors, Master Lock, Sauder Furniture, General 
Electric, Ford, and many other companies all bringing jobs back 
to the U.S. But is this trend sustainable, or will jobs return 
to America in dribs and drabs instead of droves? This is the 
first in a series of hearings we will hold this year looking 
closely at ways to stimulate job creation and economic 
opportunities.
    I believe we have a window of opportunity, but it could 
close on us quickly if we don't take action. China's 
overwhelming manufacturing cost advantage over the U.S. is 
shrinking fast. Within 5 years a Boston Consulting Group 
analysis concludes that rising Chinese wages, higher U.S. 
productivity, and weaker dollar increase Trans-Pacific shipping 
costs and a variety of other factors will virtually close the 
cost gap between the U.S. and China for many goods consumed in 
North America.
    This is our chance, in fact, the best chance we have had in 
decades to make ``Made in America'' matter again. But to be 
successful we must remove the roadblocks and barriers 
businesses are facing today when it comes to job creation. 
Embracing tax reform, regulatory reform, and tort reform are 
just some of the things that Washington can do to help jump 
start real job growth in America.
    But here is the good news. The data issued by the Bureau of 
Labor Statistics shows a recent uptick in monthly job creation 
with the jobless rate declining to 8.3 percent. Now, here is 
the bad news. To date we have had 36 straight months of 
unemployment above 8 percent, the longest such streak since the 
great depression. Today too many people are still suffering. 
That is why we need to work closely together to create forward-
looking policies which will create economic growth in America, 
not stifle it.
    Clearly the lack of job opportunities remains a dark, 
ominous cloud over Main Street, USA, with the average duration 
of unemployment for job seekers lasting more than 40 weeks.
    The bottom line: unemployment today remains stubbornly and 
unacceptably high with nearly six million more unemployed 
workers right now than there were just prior to the beginning 
the recession in 2007.
    Additionally, many economists suggest this number does not, 
in fact, represent the true unemployment rate. After factoring 
in a number of people who are under-employed, such as part-time 
workers in search of full-time employment, and those who have 
completely given up hope and exited the job market altogether, 
the Bureau of Labor Statistics reports the effective 
unemployment rate stands at a staggering 15.1 percent.
    What is more, in comparison to recent recessions the rate 
of our job recovery this time is much weaker, too. For 
instance, at a comparable point in the recovery from the 1981, 
to 1982, recession, the U.S. economy had added 6.2 million jobs 
above pre-recession levels, a growth of 6.8 percent. Yet while 
the U.S. economy added nearly two million jobs over the past 
year, the employment level today reflects a net loss with 
America's non-farm workforce approximately 4 percent below pre-
recession levels.
    Today industry experts are divided and see things 
differently when gazing into their crystal balls. The Boston 
Consulting Group, which is testifying before us today, projects 
the U.S. has the potential to add up to three million new jobs 
in the manufacturing sector alone over the next decade. The 
chief factor in support of his upbeat forecast is the 
decreasing cost advantage of manufacturing in China due to the 
rapid rise in Chinese wages.
    On the other hand, a study recently conducted by the 
Harvard Business School involving nearly 10,000 graduates 
reveals a more pessimistic view, a sense that America has a 
deepening, competitiveness problem. At the heart of this 
viewpoint is a sense that our Nation is falling behind in 
fostering an environment conductive to job creation.
    The U.S. tax code, uncertain political environment, and 
burdensome and sometimes unpredictable regulatory regime, a 
decline in education system, and the lack of a skilled 
workforce were cited as contributed factors to this dreary 
assessment.
    So as we examine the data and analyze the trends, is the 
glass half full or half empty when it comes to our future? 
While I am a big Clint Eastwood fan, I don't buy the idea that 
it is halftime in America. I think we are in the fourth 
quarter, we are still trailing in the game, and we need to 
drive the length of the field to win. That will take great 
teamwork and a smart game plan, but working together and for 
the good of all Americans I know that we can do just that.
    [The prepared statement of Mrs. Bono Mack follows:]

    [GRAPHIC] [TIFF OMITTED] 80106.001
    
    [GRAPHIC] [TIFF OMITTED] 80106.002
    
    Mrs. Bono Mack. And with that I now am handing the ball off 
to the ranking member of our subcommittee, Mr. Butterfield of 
North Carolina. Mr. Butterfield, you are recognized for 5 
minutes.

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. Butterfield. Thank you, Madam Chairman, for holding 
today's hearing, which I understand is going to be the first of 
several job-related hearings the subcommittee will hold this 
year.
    There is no more important issue to working Americans than 
the ability to get and keep a job, provide for their families, 
and ensure that when their children grow up, they can succeed, 
too.
    The causes of the most recent economic recession are many, 
and they are certainly complex. While the solutions can also be 
complex, one thing is certain; the creation of jobs benefits 
the entire American economy, and in recent monthly employment 
reports, we have begun to see the fruits of that labor, but 
there is still much work to be done, and I agree with the chair 
on that.
    On day 1 of his administration, President Barack Obama 
inherited an economy in the worst shape since the Great 
Depression, a tremendous national debt was inherited, a 
crippled manufacturing sector and auto industry, and he became 
the Commander in Chief of not one but two wars in the Middle 
East. Just 3 years ago, 3.6 million jobs had been lost and 
businesses were eliminating more than 700,000 jobs each month. 
By March of 2010 we reversed that course, and by the end of 
2010 American businesses would go on to create more than one 
million net jobs.
    But with the national unemployment rate at 8.3, much more 
still needs to be done to return us to full employment. One of 
the keys to returning America to lasting prosperity is 
education. However, the cost of college remains a major barrier 
to those wanting to attend, and those barriers are particularly 
acute for minority citizens. In a June, 2011 report by the 
College Board, the cost of college was cited as one of the 
biggest roadblocks to gaining an education. The report find 
that in order to regain the Nation's once preeminent 
international position in educational attainment, we must begin 
to matriculate and graduate populations of American students 
who traditionally have been underrepresented at the post-
secondary level. Only 26 percent of African-American men hold 
at least an Associate's Degree, compared with almost 50 percent 
for while males. Those numbers are reflected in current 
employment statistics with 13.6 percent of African-Americans 
unemployed compared to 7.4 percent of white citizens 
unemployed.
    I am encouraged by the President's 2013 budget proposal 
which includes $8 billion, $8 billion for community colleges to 
help train workers in high-growth industries. The President 
proposed the creation of a new community college to career 
fund. That would be administered by the Department of Labor and 
Education. This effort could lead to over two million 
unemployed Americans finding good-paying jobs, paying into the 
system, and help to reduce the debt.
    The Bureau of Labor Statistics report on employment for 
2010 through 2020 projects that 20.5 million jobs will be 
created over the course of the decade, many in industries 
requiring significant education or training. It is, therefore, 
imperative, Madam Chairman, that we invest significantly in 
these areas in order to build the strong workforce necessary to 
succeed in an increasing competitive global economy.
    And so I say in--I look forward to hearing from today's 
witnesses and thank each of you, each of the four of you, for 
so graciously coming today and giving us your time. Thank you 
very much. I look forward to the testimony.
    [The prepared statement of Mr. Butterfield follows:]
    [GRAPHIC] [TIFF OMITTED] 80106.003
    
    [GRAPHIC] [TIFF OMITTED] 80106.004
    
    [GRAPHIC] [TIFF OMITTED] 80106.005
    
    [GRAPHIC] [TIFF OMITTED] 80106.006
    
    [GRAPHIC] [TIFF OMITTED] 80106.007
    
    [GRAPHIC] [TIFF OMITTED] 80106.008
    
    Mrs. Bono Mack. Thank the gentleman, and in accordance with 
committee rules, Chairman Upton has yielded his 5 minutes to 
me, and I will yield the first 2 minutes to Ms. Blackburn of 
Tennessee.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Madam Chairman. Welcome to our 
guests, and I think we all welcome the series of hearings that 
we are going to focus on jobs and job creation in the country, 
and I want to start by talking about a time-tested formula that 
always works.
    Less regulation plus less taxation plus less ligation 
equals more innovation and more job creation. It is a formula 
that we need to grow this economy to give American businesses 
and manufacturers the certainty that they need to expand and to 
allow the U.S. to be successful when they compete 
internationally.
    If you go back and listen to some of the testimony that we 
had in Mr. Guthrie's manufacturing briefing last week, you see 
from these manufacturers how difficult it is to be globally 
competitive and create jobs when the Obama administration 
basically has their boot on the neck of innovation. We have 
seen nothing but regulatory explosion from this administration.
    Let me give you an example of this. Just last year the 
Obama administration issued close to 4,000 burdensome and 
restrictive new regulations. In 2011, the Federal Register 
printed nearly 80,000 pages of new and additional regulations. 
The Federal Government has over 291,000 regulatory agency 
employees. Total cost to Federal regulations is estimated to be 
at $1.75 trillion annually. Now, keep in mind that is about 
twice the amount that the IRS collects in Federal income taxes.
    Just this morning Gallop released a poll where an 
overwhelming majority of small business owners were surveyed. 
Eighty-five percent indicated that they are not looking, not 
looking for new workers. Asked why, 48 percent of those that 
were surveyed said they are not hiring due to concerns about 
possible rising healthcare costs, the uncertainty of Obama 
Care. Forty-six percent said they were worried about new 
government regulations. With what we saw last year, is there 
any wonder that they are worried about that?
    I think this is one of the reasons that we also are seeing 
our labor force participation rate at the lowest level that 
they have been in recent memory. It is more than just 
healthcare and regulations, and I am looking forward to our 
witnesses and hearing what you have to say today.
    I yield back.
    Mrs. Bono Mack. I thank the gentlelady. The Chair now 
recognizes Mr. Bass for 1 minute.

OPENING STATEMENT OF HON. CHARLES F. BASS, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF NEW HAMPSHIRE

    Mr. Bass. Thank you, Madam Chairman, and thank you for 
having this important hearing.
    I think it is important over and above the very cogent 
remarks of my friend from Tennessee to remember that it is 
important for, in addition to low regulation, low taxes, it is 
important to promote firstly the creation and growth of small 
businesses in this country, and I know we will be dealing with 
these issues on the floor of the House in the next couple of 
weeks.
    It is also very important not to close our borders to free 
trade. In my State one out of every four jobs in New Hampshire 
is directly related to our State's ability to export its 
products beyond the borders of the United States. It is 
important also not to fall prey to the idea that we can tax 
companies into staying in the United States. What we can do is 
hold business in the United States by making them competitive 
and giving them the ability to trade their products across our 
national borders.
    And with that, Madam Chairman, I thank you for the hearing 
and yield back.
    Mrs. Bono Mack. Thank you, Mr. Bass.
    The Chair is pleased to recognize Mr. Waxman for 5 minutes.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you, Madam Chair. Thank you for holding 
this hearing, and focusing attention on job creation and 
economic growth, which should be our immediate priorities, and 
I hope this hearing will contribute to this effort.
    At last we are starting to see promising news on the jobs 
front. The number of unemployed Americans has declined by more 
than a million in the past 6 months. Yet too many Americans are 
still out of work, and we must do everything we can to ensure 
that the job numbers continue to improve.
    The financial crisis that ripped through our economy in 
2008 was the worst our country has faced since 1929. These two 
events have much in common. Both were brought about by excesses 
at Wall Street, both resulted from asset bubbles, both followed 
periods of reckless deregulation.
    My colleagues, Mr. Butterfield, indicated when President 
Obama took office, he inherited an economy that had already 
shed 3.6 million jobs and was losing 800,000 more each month. 
In addition he faced paying for two wars that added billions to 
our national debt.
    No one action turned the economy around or can turn the 
economy around, but efforts including the Recovery Act, the 
rescue of General Motors and Chrysler, and billions of tax 
dollars in tax relief to working Americans have helped. 
Although factors such as what might go on in the European debt 
crisis could change our trajectory, the U.S. economy is on the 
right path. But we won't have a full recovery until unemployed 
people can find work, and we know the economy is growing, and 
that in economist terms the recession is over, but while this 
may be lagging indicator, our focus has to be on getting people 
to work.
    I know some Republican members think we need severe cuts in 
the Federal budget that put gapping holes in our safety net 
while giving tax breaks to the wealthiest Americans. That is 
the American equivalent of medieval bloodletting, a cure that 
makes the disease worse. In the aftermath of a recession like 
the one we have just experienced with 12.8 million Americans 
still unemployed, more than 42 percent of them unemployed for 
27 weeks or more, just leaving the economy alone and cutting 
Federal spending is not an option.
    I am pleased that we are going to have a conference 
agreement on extending the payroll tax cut, paying for some 
more unemployment benefits, and keeping the promise to the 
seniors under Medicare that their doctors will be paid so they 
can still--people can still get access to those physicians.
    But the Congress needs to work with this administration on 
long-term adjustments that must be made to ensure that the U.S. 
economy is one that rewards fair play and hard work. The recent 
budget by this administration for fiscal year 2013 shows its 
commitment to restoring middle class security by attacking 
wasteful spending and instead investing in education, 
innovation, and infrastructure, the building blocks for an 
economy that works for all Americans.
    I appreciate this opportunity to make this statement, and I 
yield whatever--I yield back my time. Thank you.
    Mrs. Bono Mack. Thank you, Mr. Waxman.
    Today we turn our attention to four very knowledgeable 
witnesses joining us. Each of our witnesses has prepared an 
opening statement that will be placed in the record. Each of 
you will have 5 minutes to summarize that statement in your 
remarks. Our panel today includes Harold Sirkin, Managing 
Director of Boston Consulting Group; John Berlau, Director, 
Center for Investors and Entrepreneurs at the Competitive 
Enterprise Institute; John Abowd, Edmund Erza Day Professor of 
Economics at Cornell University; and John Schmitt, Senior 
Economist, Center for Economic and Policy Research.
    Good morning, gentlemen, and thank you all for coming. You 
will, again, be recognized for 5 minutes. To help you keep 
tract of time there are the lights on the table in front of 
you. When the light turns yellow, you will have 1 minute to 
finish your remarks. Please remember to turn the microphone on 
when you are ready to speak, and Mr. Sirkin, we are pleased to 
recognize you for 5 minutes.

  STATEMENTS OF HAROLD L. SIRKIN, SENIOR PARTNER AND MANAGING 
DIRECTOR, BOSTON CONSULTING GROUP, INC.; JOHN BERLAU, DIRECTOR, 
CENTER FOR INVESTORS AND ENTREPRENEURS, COMPETITIVE ENTERPRISE 
INSTITUTE; JOHN ABOWD, EDMUND EZRA DAY PROFESSOR OF ECONOMICS, 
DIRECTOR OF LABOR DYNAMICS INSTITUTE, SCHOOL OF INDUSTRIAL AND 
 LABOR RELATIONS, CORNELL UNIVERSITY; AND JOHN SCHMITT, SENIOR 
       ECONOMIST, CENTER FOR ECONOMIC AND POLICY RESEARCH

                 STATEMENT OF HAROLD L. SIRKIN

    Mr. Sirkin. Chairman Bono Mack, Ranking Member Butterfield, 
and other distinguished members of the subcommittee, good 
morning, and thank you for the opportunity to testify on 
``where the jobs are''.
    While many negative comments have been made about the state 
of U.S. manufacturing, I would like to paraphrase, Mark Twain 
and say ``The death of U.S. manufacturing has been greatly 
exaggerated.''
    We have heard the pronouncements of the death of U.S. 
manufacturing before. In the 1970s conventional wisdom said, 
Japan, Inc., with its low cost cars, televisions, and other 
manufactured goods was going to wipe out U.S. manufacturing. 
Americans were going to be farmers and bankers. Children were 
sent to schools to learn Japanese, the language of their new 
masters.
    But that didn't happen.
    In the 1990s, conventional wisdom also said that the Asian 
Tigers from Hong Kong, Singapore, South Korea, and Taiwan were 
going to wipe out U.S. manufacturing. But that didn't happen 
either.
    And in the past decade, conventional wisdom has said the 
China was going to wipe out U.S. manufacturing.
    And that is not going to happen either.
    Why? Our economy is designed to respond quickly to threats, 
unlike any other economy in the world. We are not a country 
that protects, we compete. Our internal competition is fierce. 
Companies are forced to be competitive or die.
    And the results of all this competition are breath taking. 
The U.S. produces 2.5 times as much manufacturing value added 
then we did in 1972, and we do this with 30 percent less labor. 
We are among the most productive economies in the world, far 
more productive than Germany and Japan.
    Each time we are attacked, we don't give up. We respond, we 
adapt, and we thrive. It is what we are as a Nation.
    The threat from China is large, a nation of 1.3 billion 
people with a non-democratically elected government that can 
move fast and subsidize industries. And when China entered the 
WTO in 2001, wages in China were only 58 cents per hour on 
average. At that rate, outsourcing to China was a no-brainer 
decision for companies in many industries.
    But the economics of China are rapidly changing. Wages are 
rising at about 15 to 20 percent a year. The Yuan, a controlled 
currency has been rising at 4 percent per year and most 
economists believe would be rising even faster if it wasn't 
controlled. And while productivity in China is rising at 7 
percent a year, an incredible pace for any economy, it is 
swamped by wage and Yuan increases. And today the average U.S. 
worker is 3.4 times as productive as the average Chinese 
worker.
    The tide is turning in favor of the U.S. China is just 
getting more expensive. Companies that went to China for ultra-
cheap wages are finding it not so cheap, and they are beginning 
to rethink their decisions.
    We project that at sometime around 2015, we will reach a 
tipping point for seven key categories of goods where the cost 
to produce in China will be just 10 percent lower than in the 
U.S.
    While 10 percent is a very important difference to 
companies, when you include all the costs associated with 
producing in China to serve the U.S. market like the 
transportation to ship goods, the inventory costs for the 2 to 
3 months of shipping, the risk of obsolescence, and the 
intellectual property capital theft and country risk, and just 
being five to 7,000 miles away from the customer and not 
understanding their needs, the 10 percent differential 
disappears.
    These seven categories include computers and electronics, 
appliances and electrical equipment, transportation goods, 
plastics and rubber, machinery, furniture and fabricated 
metals. These account for two-thirds of the $300 billion we 
import each year from China.
    In June we estimated that the impact, including the 
manufacturing multiplier, would be about two to three million 
jobs over the decade.
    Given what we have seen since June, we believe that our 
estimate is conservative because we have seen far more re-
shoring from China already than our models predicted. Companies 
like NCR, Ford, Coleman, Nat Labs, and many others have re-
shored. We are also seeing companies from Japan and Europe 
recognizing that they can produce much more economically in the 
U.S. for consumption in the U.S., coming to the U.S., and many 
of them are using or are considering using the U.S. as an 
export base; companies like Siemens for power turbines now 
exporting to Saudi Arabia, Rolls-Royce for Jet engines that 
will appear around the world, and Toyota are seeing the U.S. as 
a low cost manufacturing location.
    Once again our amazing economy is responding. Once again 
manufacturing is growing in the U.S. because of our underlying 
advantages. While this is just taking hold now, government 
policy can help accelerate the trend. Whether it is providing 
funds to train American workers, reforming our tax system, or 
finding ways to level the playing field with our competitors, 
our government can make a difference.
    Creating more good paying jobs is something that all 
Americans, whether they are Democrats, Republicans, or 
Independents can agree on. We all need to work together to 
create good jobs for our children and their children and ensure 
that our economy remains strong for generations to come.
    Thank you.
    [The prepared statement of Mr. Sirkin follows:]
    [GRAPHIC] [TIFF OMITTED] 80106.009
    
    [GRAPHIC] [TIFF OMITTED] 80106.010
    
    [GRAPHIC] [TIFF OMITTED] 80106.011
    
    [GRAPHIC] [TIFF OMITTED] 80106.012
    
    Mrs. Bono Mack. Thank you, Mr. Sirkin.
    Mr. Berlau, you are recognized for 5 minutes.

                    STATEMENT OF JOHN BERLAU

    Mr. Berlau. Chairman Bono Mack, Ranking Member Butterfield, 
and distinguished members of this subcommittee, thank you so 
much for inviting me to testify on behalf of my organization, 
the Competitive Enterprise Institute in this hearing asking the 
important question of where the jobs are.
    In answering this question I will focus not on particular 
locations or industries but rather on the characteristics of 
the firms that for the past few decades have been most 
responsible for job creation. The respected Kauffman Foundation 
in Kansas City, Missouri, has done some convincing research on 
this question, and its findings have been embraced by many in 
public policy, including President Obama's Council on Jobs and 
Competitiveness.
    And on a net basis the bulk of where the jobs are or have 
been created is at young firms of all sizes as noted by the 
President's Jobs Council report. Over the last 3 decades young 
firms less than 5 years old have created 40 million new jobs. 
Especially important among these companies are innovative, 
high-growth firms referred to as gazelles that are found to 
both double their revenues and employment every few years and 
are found in every sector and every region.
    Unfortunately, a series of adverse financial regulations 
have stunted these young firms' growth by making it much more 
difficult for them to access capital through means such as 
launching an initial public offering.
    Now, some of these rules like Dodd-Frank have been enacted 
in the past couple of years, but others like the Sarbanes-Oxley 
Act of 2002, were promulgated ironically in the supposedly 
deregulatory era of the last decade.
    As the President's Jobs Council notes of Sarbanes-Oxley and 
other rules enacted in the aftermath of the Enron implosion, 
well-intentioned regulations aimed at protecting the public 
from the misrepresentations of a small number of large 
companies have unintentionally placed significant burdens on 
the large number of smaller companies.
    This regulatory overhang explains part of the slower-than-
expected recovery. According to the Treasury Department's IPO 
Task Force, the long-term decline in the number of IPOs, a 
decline that began more than 5 years before the financial 
crisis hits, may have cost the economy as many as 22 million 
jobs not created over the past decade.
    Now, the good news is there is an emerging bipartisan 
consensus on scaling back some regulations that specifically 
burden these firms. In fact, in one week in November this House 
passed four bills with more than 400 votes for each measure to 
ease regulatory barriers to accessing capital through online 
social networking and general advertising to venture 
capitalists and angel investors. But despite the near unanimous 
support for these measures in this body, they still linger in 
the U.S. Senate some 3 months later.
    Now, also tomorrow your colleagues in the House Financial 
Services Committee are slated to mark up H.R. 3606, the 
Reopening American Capital Markets to Emerging Growth Companies 
Act. This is a bill with widespread bipartisan support that is 
designed to smooth the IPO process for these young firms by a 
5-year exemption from some of the most onerous provisions of 
Sarbanes-Oxley, Dodd-Frank, and other burdensome rules.
    Given the ingenuity of American entrepreneurs and the 
broad-mindedness of investors who fund them, clearing away 
irrational regulations might very well lead to a future hearing 
entitled, Where the Jobs Aren't. This House has passed an 
essential access to capital bills, and the Senate needs to be 
told to, in the phrasing of the President, pass these bills 
now.
    Thank you again for inviting me to testify, and I look 
forward to answering your questions.
    [The prepared statement of Mr. Berlau follows:]
    [GRAPHIC] [TIFF OMITTED] 80106.013
    
    [GRAPHIC] [TIFF OMITTED] 80106.014
    
    [GRAPHIC] [TIFF OMITTED] 80106.015
    
    [GRAPHIC] [TIFF OMITTED] 80106.016
    
    [GRAPHIC] [TIFF OMITTED] 80106.017
    
    [GRAPHIC] [TIFF OMITTED] 80106.018
    
    Mrs. Bono Mack. Thank you very much.
    Dr. Abowd, you are recognized for 5 minutes.

                   STATEMENT OF JOHN M. ABOWD

    Mr. Abowd. Chairman Bono Mack, Ranking Member Butterfield, 
and members of the committee, thank you very much for this 
opportunity.
    I am an economist but I am also a teacher, and we don't do 
our talks without pictures, so I brought some pictures, and we 
are going to play them, and I am going to hope that--my goal is 
to show you the dynamics of the American labor market work 
through both the way in which people are hired and fired and 
the way in which jobs are created and destroyed, and there are 
some surprising patterns in these creations and destructions 
and hiring and separations.
    And I think the first chart that I want you to look at just 
shows how the recession spread its way across the economy, 
starting in 2004, quarter four. As the graph gets green, that 
is good outcomes. As it gets brown, those are bad outcomes, and 
this is the growth rate of jobs spread across the country.
    So, as you can see, the growth rate of jobs basically went 
south after the recession started. A more telling measure is 
what we call stable jobs, which are jobs that last for a full 
calendar quarter. This one shows that those also went south, 
not when the recession started, but after the recession had 
been underway for awhile. So there is 2005, mostly green, 2006 
and 2007, there is the start of the recession. There is 2008, 
the fourth quarter, when it really kicked in, 2009, 2010, it 
hasn't come back very much.
    What is happening? Well, what is happening is that 
employers have basically stopped hiring into these stable jobs, 
so I am going to skip figure three and go straight to figure 
four here. This is the rate at which employers hire into these 
long-term stable jobs, and as the economy progresses from 2004 
through to 2010, you can see that here is the start of the 
recession in 2007, and right here in 2009, that is--the 
recession has already ended, and the hiring rate is at the 
lowest level of any of these graphs that I have shown you, and 
then in 2010, it has basically not come back very much. The 
latest data that you can do for jobs that last 6 months is 
basically 2010, quarter four. When the Census Bureau releases 
the quarterly workforce indicators in a few months--in a few 
more weeks, rather--for the current quarter, we will have 2011, 
quarter one.
    So it is important that employers have stopped hiring into 
these stable jobs. In addition, the creation rate of these 
stable jobs, which is the next figure, figure five, slowed 
early on in the recession. That is the separation. I need 
creations. Number five. That was right. Yes.
    What the creations show is that the creation rate didn't 
slow nearly as much as the accession rate. So jobs were being 
created. They are being created pretty much continuously, but 
they slow down during the recession, and they show down a lot 
right after the recession and then come back up in 2010 a bit.
    All right. So we have both that there is less hiring and 
that there are fewer creations. On the flipside, there are also 
more separations and more destructions, but not nearly as many 
as you think. Most of the downturn in the economy wasn't 
accomplished by massive amounts of job destruction and massive 
amounts of separation. Basically the separation picture--green 
is now good still, so it is the negative of the separation 
rate.
    The separation rate didn't tank as you can see from these 
figures. Green is good, and the next figure seven, the 
destruction rate didn't tank. Tank is the technical term for 
head south. As you can see, it stays mostly green in the 
economy, indicating that the jobs weren't being destroyed at 
massive rates, these stable jobs, compared to the rates at 
which the hiring went down.
    So what went wrong? If you will skip straight to figure 10, 
what has gone wrong is, the rate of movement in the economy, 
the ability of workers to move around and to get to new jobs 
where they are created, that has seriously gone south. It is at 
very low rates, and generally that churning rate isn't 
cyclical. So the fact that it has been so low in this recession 
is a serious issue for the labor market to recover. As you can 
see, it went very brown in 2009, quarter four, and it is still 
very brown in 2010, quarter four. If the workers can't move 
around to find the new jobs, and if the businesses can't adjust 
to find the new jobs, this excess separation, this excess 
reallocation, won't occur, and the biggest benefit of the 
recession, to move high-valued labor into high-valued jobs, 
doesn't happen.
    So what I urge you to do is to promote policies that will 
put the fluidity back into the labor market and to get this 
churning rate going again.
    Thank you very much for your time.
    [The prepared statement of Mr. Abowd follows:]
    [GRAPHIC] [TIFF OMITTED] 80106.019
    
    [GRAPHIC] [TIFF OMITTED] 80106.020
    
    [GRAPHIC] [TIFF OMITTED] 80106.021
    
    [GRAPHIC] [TIFF OMITTED] 80106.022
    
    [GRAPHIC] [TIFF OMITTED] 80106.023
    
    [GRAPHIC] [TIFF OMITTED] 80106.024
    
    [GRAPHIC] [TIFF OMITTED] 80106.025
    
    [GRAPHIC] [TIFF OMITTED] 80106.026
    
    [GRAPHIC] [TIFF OMITTED] 80106.027
    
    [GRAPHIC] [TIFF OMITTED] 80106.028
    
    [GRAPHIC] [TIFF OMITTED] 80106.029
    
    [GRAPHIC] [TIFF OMITTED] 80106.030
    
    [GRAPHIC] [TIFF OMITTED] 80106.031
    
    [GRAPHIC] [TIFF OMITTED] 80106.032
    
    [GRAPHIC] [TIFF OMITTED] 80106.033
    
    [GRAPHIC] [TIFF OMITTED] 80106.034
    
    [GRAPHIC] [TIFF OMITTED] 80106.035
    
    [GRAPHIC] [TIFF OMITTED] 80106.036
    
    Mrs. Bono Mack. Thank you, and Dr. Schmitt, you are 
recognized for 5 minutes.

                   STATEMENT OF JOHN SCHMITT

    Mr. Schmitt. Good morning, Chairman Bono Mack, Ranking 
Member Butterfield, and distinguished members of the 
subcommittee, thank you for inviting me to testify this 
morning. My name is John Schmitt, and I am a Senior Economist 
at the Center for Economic and Policy Research, where I 
specialize in labor market issues.
    The labor market is in a stronger position today than at 
any time in years. The unemployment rate is down to 8.3 percent 
from a peak of 10 percent, and the private sector has created 
3.5 million jobs since March, 2010. The American Recovery and 
Reinvestment Act has played an important role in this 
turnaround. According to the Congressional Budget Office, the 
Recovery Act is responsible for saving or creating one to three 
million jobs in 2010, 900,000 to 2.7 million jobs in 2011, and 
400,000 to 1.1 million jobs this year.
    As many economists said at the time, the biggest problem 
with the Recovery Act was simply that it was not big enough to 
address the size of the jobs crisis was face.
    But despite some encouraging recent data, the labor market 
is not out of the woods. There are 5.5 million fewer jobs today 
than there were in 2007. After factoring in natural growth in 
the labor force which increases about 900,000 potential workers 
each month, the total jobs deficit stands at almost 10 million 
today.
    At the current pace of job growth about 200,000 jobs per 
month, we won't close this gap and return to 2000, levels of 
unemployment until 2019, 7 years from now. Even though 
unemployment has been falling, it remains very high by 
historical standards. Rates are particularly high for African-
American workers, almost 14 percent, and Latino workers, over 
10 percent.
    Meanwhile, measures of long-term unemployment, under 
employment, and what my colleague Janelle Jones and I refer to 
as long-term hardship, have barely improved at all in the 
recovery. Sustained high unemployment has led some to suggest 
that structural problems are the biggest barrier to reigniting 
job growth. I believe this view is mistaken. The two most 
commonly cited versions focus on extended unemployment benefits 
or an alleged mismatch between skills workers have and the 
skills employers need.
    On unemployment benefits, the best evidence, however, 
suggest that the unemployment insurance system increases the 
average duration of unemployment by only a few weeks and 
increases the overall unemployment rate by only a few tenths of 
a percentage point. At the same time unemployment benefits also 
inject income into communities, sustained consumer spending as 
well as private sector employment.
    One recent estimate, for example, suggested a $45 billion 
extension in unemployment benefits for 2012 could create a half 
a million jobs this year.
    Nor is skills mismatch a serious structural barrier to 
growth. Media counts sometimes feature employers who want to 
expand but just can't find the right workers. The data, 
however, provide little evidence that these anecdotal 
experiences are widespread. If skilled workers were in short 
supply, we would expect to see two things.
    The first is an increase in the hours worked by current 
workers, as employers use their existing workforce to meet 
rising demand. In fact, average hours remain below their pre-
recession levels.
    If skills were in short supply, we would also expect 
employers to raise wages in order to attract the kinds of 
workers they need. This is basic economics. When something is 
in short supply, its price goes up. In fact, again, we see no 
signs of rising wages in the economy.
    The real barrier to faster job creation at the moment is a 
lack of demand. The economy is currently operating 
substantially below the limits set by the existing capital 
stock and the available supply of labor. The binding constraint 
is not the productive capacity of the economy but rather a lack 
of demand in the economy for the goods and services that we are 
already capable of producing.
    What the economy needs are continued efforts to sustain and 
restore demand. In the short and medium term government 
deficits are an important tool for getting the economy back on 
course. A large-scale jobs program built around repairing our 
physical and social infrastructure would be ideal.
    Short of that, however, three immediate measures would 
help. First, an extension of the unemployment benefits, second, 
an extension of the payroll tax cut, and third, increased 
Federal support for State and local governments.
    The labor market is looking brighter now than at any point 
in years, but enormous challenges remain. The way forward 
requires measures that will sustain and spur private sector 
demand.
    Thank you very much.
    [The prepared statement of Mr. Schmitt follows:]
    [GRAPHIC] [TIFF OMITTED] 80106.037
    
    [GRAPHIC] [TIFF OMITTED] 80106.038
    
    [GRAPHIC] [TIFF OMITTED] 80106.039
    
    [GRAPHIC] [TIFF OMITTED] 80106.040
    
    [GRAPHIC] [TIFF OMITTED] 80106.041
    
    [GRAPHIC] [TIFF OMITTED] 80106.042
    
    [GRAPHIC] [TIFF OMITTED] 80106.043
    
    [GRAPHIC] [TIFF OMITTED] 80106.044
    
    [GRAPHIC] [TIFF OMITTED] 80106.045
    
    [GRAPHIC] [TIFF OMITTED] 80106.046
    
    [GRAPHIC] [TIFF OMITTED] 80106.047
    
    [GRAPHIC] [TIFF OMITTED] 80106.048
    
    [GRAPHIC] [TIFF OMITTED] 80106.049
    
    Mrs. Bono Mack. Thank you, Dr. Schmitt. I thank you all 
very much for your testimony and your expertise in these areas 
that are interesting to us all, and I recognize myself now for 
5 minutes of questioning.
    And my first question is to Mr. Sirkin. You mentioned in 
your written testimony seven categories of goods that will see 
only a 10 percent pure cost advantage to manufacture in China. 
Why aren't other categories such as apparel and footwear 
subject to the same narrowing of the cost gap and therefore, 
candidates to be manufactured in America?
    Mr. Sirkin. Well, the goods that we are talking about 
generally have a moderate amount of labor, so about 25 percent 
labor involved. If you go to shoes and apparel and categories 
like that, you are looking at more like 60, 70 percent labor. 
So it may in the long term come back to the U.S. but over the 
next decade it is unlikely for many of those to come back to 
the U.S.
    Mrs. Bono Mack. And would it surprise you that a 
constituent in my district, Ms. Liat Talla, moved her 
manufacturing from China to California to produce her brand of 
apparel and blue jeans, even as she faces downward pricing 
pressure? And is this atypical for what we might expect for the 
apparel industry, or does it validate your analysis of the 
improving costs and quality differential to make products in 
the U.S.?
    Mr. Sirkin. Well, we are going to see examples of many 
different things happening, and on the premium side we are 
going to see apparel companies potentially coming back to the 
U.S. for reasons other than the exact costs but because of the 
need to have a very short supply chain.
    I am very pleased that she is trying this. I think it is a 
wonderful thing for our country, and we need to have more 
entrepreneurs doing this, and if she is producing at a premium 
price, it will probably work quite well.
    Mrs. Bono Mack. Thank you. I will pass along your words to 
her.
    Mr. Sirkin. Thank you.
    Mrs. Bono Mack. Your report concludes the cost gap of 
manufacturing some goods in China will continue to narrow 
significantly enough so that U.S. companies may be able to 
manufacture their products in the U.S. again without loss of 
comparative advantage.
    I understand that this is based on rapidly increasing costs 
in China including labor, land, and energy. What are the costs 
affecting decision to manufacture in the U.S. that are prone to 
increasing, and therefore, disrupting your analysis? For 
example, additional regulatory costs or higher energy costs, 
higher taxes.
    Mr. Sirkin. Well, a lot of those costs are obviously going 
to be decided on government policies, so it is hard to know 
exactly what will the rising costs and what won't. We are 
certainly in a time of uncertainty, but the ones that you 
mentioned are clearly things that could affect it.
    I think the biggest driver, though, is the Chinese wage 
rate increases. The reality is they have over-stimulated their 
economy, they have controlled their currency, and what they are 
seeing is 15 to 20 percent wages growing a year, and that is 
the real thing that is going to help us in many ways.
    Mrs. Bono Mack. All right. Thank you, and moving now to Mr. 
Berlau, it sounds like the President's Job Council report has 
some good, bipartisan ideas. Has the President or even Congress 
for that matter followed any of them?
    Mr. Berlau. Well, yes and no. One of the council reports 
recommends approval of the Keystone Pipeline, for instance, the 
President recently delayed that, but I would say on access to 
capital, the President has endorsed the concept and the House 
bills that has passed such as crowd funding which is making it 
easier to raise funds on--through online social networks and 
exempting from some of the SEC red tape and other things. I 
think the specifically, the administration specifically 
endorsed one of the bills and the concepts in some of the 
others to make public offerings easier and similar items.
    The issue is that is somewhat puzzling because these bills, 
these four bills in November passed by more than 400 votes, one 
of them literally had one vote against it, but they have been 
lingering in the Senate for the past 3 months.
    So, yes, we have seen progress in the House, we have seen 
the President embrace some of the bills. You have got 
Republicans and Democrats endorsing H.R. 3606 as far as the 
onramp for public firms, exempting them from some of the 
regulations from Sarbanes-Oxley and Dodd-Frank their first 5 
years after being public, but just the Senate, these have just 
been lingering and with no sign that they are going to be 
brought to the floor.
    Mrs. Bono Mack. All right. Let me jump ahead because I have 
only--less than 1 minute left. Several critics, including your 
co-panelist, Dr. Schmitt, argue that the stimulus was not big 
enough and that the government should consider a second round.
    Would you like to speak to that? What is the opportunity 
and costs associated with such an action?
    Mr. Berlau. Yes. I think you are right that opportunity 
cost is always an important economic concept. What could have 
been done instead of the stimulus to bring back the economy 
very rarely is the choice between the--taking one action and 
doing nothing. The stimulus, the cost of the stimulus means 
there is less money to do things that would be truly--bring 
back a vibrant economy like cutting the, some of the highest 
corporate tax rates in the world, and also there has been 
interesting new data from the Mercatus Center of George Mason 
University that 42 percent of the jobs in the Recovery Act were 
actually for those already employed. So there are some doubts 
on the stimulus effect.
    Mrs. Bono Mack. All right. Thank you. My time has expired, 
and I am pleased to recognize Mr. Butterfield for his 5 minutes 
of questioning.
    Mr. Butterfield. Thank you very much. I want to spend just 
a couple of minutes talking about regulatory uncertainty. Ms. 
Blackburn in her opening remarks a few minutes ago opined that 
employers aren't hiring because of regulatory uncertainty, and 
certainly we on this side of the aisle agree that regulations 
should be reviewed and streamlined where possible.
    However, it is misleading to suggest that regulatory 
uncertainty has anywhere near the same importance in explaining 
unemployment as the massive affect of this recession an 
aggregate demands. The Bureau of Labor Statistics data tracking 
mass layouts from '07, to the present support this conclusion. 
These data showed that among employers forced to undertake 
massive layoffs less than one-half of 1 percent cited 
government regulation or government intervention as the reason 
for the layoffs.
    By comparison, a plurality of anywhere between 29 and 39 
percent of employers cited lack of demand, and there was no 
statistical difference between employer responses during the 
Bush administration and the present Obama administration.
    Let m go to you, Dr. Schmitt. Could you please discuss the 
extent to which you believe regulatory uncertainty has slowed 
the recovery?
    Mr. Schmitt. I think that regulatory uncertainty has 
probably played a very little if any role at all in the current 
situation we are facing. We can look at the historical 
experience of the United States at the end of the 1990s, which 
in some people's mind was a period of higher, greater levels of 
regulation, regulatory uncertainty say than the 2000s, even up 
until 2007. And that was a period of extremely rapid economic 
growth and extremely rapid job growth, in fact, the highest 
rate of job growth in the last 30 years.
    By contrast, if we look at the recovery in 2001 from the 
2001 recession, we saw private sector job growth was actually 
slower than private sector job growth in the current recovery. 
So I don't think that there is--there is certainly an 
opportunity for anecdotal experiences of people running into 
problems with particular pieces of legislation, regulation, but 
there is not any evidence of some economic affect that 
dominates.
    Mr. Butterfield. All right. Let me try Mr. Sirkin on my 
second question. In your testimony, sir, you mentioned that 
companies from other countries are recognizing that they can 
more efficiently produce for the U.S. market by locating their 
manufacturing in the United States. Some are even using or 
considering using the U.S. as an export base.
    Number one, can you or any of the other witnesses discuss 
what parts of the U.S. manufacturing sector are growing? For 
example, is it in automobiles, electronics, or power turbines 
or the like?
    Mr. Sirkin?
    Mr. Sirkin. Yes. We are seeing this. The U.S. is a very 
productive Nation. We are about one-third more productive than 
Japan, and about 25 percent more productive per worker than 
Germany. So we are very productive.
    At the same time, given the currency shifts, the U.S. 
worker is earning lower wages than in those countries for 
similar tenures. That makes the U.S. a very attractive place 
for companies to produce. At the same time we are the world's 
largest market, and so if I can manufacture in Japan or in 
Germany, I may choose to manufacture for U.S. consumption in 
the U.S. because it is fundamentally cheaper, and I will be 
more competitive.
    At the same time when I do that versus producing in, let us 
say, Germany, I may have the opportunity to export, and if my 
factory in the U.S. is more productive and lower costs, it 
makes sense to be producing in the U.S. So we have an 
opportunity here because of the economic conditions that we see 
that will allow foreign companies to produce in the U.S., and 
we welcome them. We do not discriminate against foreign 
companies in our country, and at the same time in the example 
of Siemens for Saudi Arabia, we are exporting, Siemens is 
exporting six power turbines to Saudi Arabia to generate 
electricity from natural gas.
    Mr. Butterfield. When you say we are strong, does that 
include assembly plants as well?
    Mr. Sirkin. There are assembly plants and then there are, 
of course, the supply chains that go with it because the U.S. 
is also lower costs. Consider Rolls-Royce manufacturing jet 
engine parts now in the United States because the cost of 
manufacturing in the U.K. or in Europe is far higher.
    Mr. Butterfield. Can you discuss whether these plants are 
mostly assembling parts that are made overseas, or are the 
parts being made more and more here in our country?
    Mr. Sirkin. Well, as we saw in the automotive business when 
the Japanese came to the U.S. and the Koreans are coming to the 
U.S., what happens is originally they become assembly plants, 
and then the suppliers come over because the economics are 
better. It does take some time for that to develop, but we 
expect to see that in all these other industries.
    Mr. Butterfield. All right. Thank you. I yield back.
    Mrs. Bono Mack. Thank you, Mr. Butterfield.
    The chair now recognizes Dr. Cassidy for 5 minutes.
    Mr. Cassidy. Dr. Abowd, I am also an academic, so my gosh, 
it is just fun to see Power Points, you know what I am saying, 
and those are very nice ones. I couldn't help but notice there 
seemed to be a strong correlation with green wherever there--it 
was something I would consider an energy State. Oklahoma, for 
example, my State, Louisiana, if you take out Hurricane Katrina 
effect, Texas going up that sort of belt in the Midwest.
    So can you comment upon the impact of development of 
natural, of our domestic oil and gas resources and its affect 
upon the job market, particularly for those blue collar workers 
who have had the hardest time with employment?
    Mr. Abowd. Certainly. I would be happy to comment on that. 
We won't play the slides again. The point that I was trying to 
make and I think the point that you picked up with the slides 
is that the geographic variability in the way the recession 
moved through the economy and the way the recovery is moving 
through the economy is very striking, and so you could see that 
at the start there was already much more activity in the south 
and over on the southwest and up in a particular part of the 
Atlantic Coast. And in the north and particularly in the north 
and Midwest there wasn't, and those are long-term kinds of 
patterns in the economy.
    So when there is a vibrant labor market, what happens is 
that the job creations are where the economic profit 
opportunities are highest, and those have to be allowed to play 
out, and the workers have to be able to get to those jobs, the 
businesses have to be able to----
    Mr. Cassidy. So I understand your point regarding churning. 
My point, though, the geographic distribution seemed to be 
strongly related to where there is domestic oil and gas 
production. So, for example, both Louisiana, Oklahoma, Texas 
had the good green most of the time, and going up through 
Colorado, North Dakota.
    Is that my imagination, or is that true?
    Mr. Abowd. It is not your imagination, but I am not willing 
to attribute it to natural resource production, although that 
is certainly a possible cause. I am very reluctant to use the 
colors to do a specific analysis.
    Mr. Cassidy. Maybe associated by not causal.
    Mr. Abowd. Things like that are----
    Mr. Cassidy. Mr. Schmitt, your thing is hidden by the--you 
may be a doctor. I can't tell because of the water pitcher. I 
apologize.
    I am struck that we have a problem with blue collar 
unemployment, and yet the President continues to speak about 
hiring more teachers and solar engineers, and you frankly kind 
of echoed that. It seems a strange way to hire blue collar 
workers is to put more money into programs which basically you 
have to have a Ph.D. sometimes in order to qualify for.
    So there seems to be a mismatch there. How would you 
explain, how would you defend, if you will, more Solyndras when 
our problem is blue collar workers?
    Mr. Schmitt. I think that a key issue in terms of 
addressing the problems of blue collar workers is to try and 
get at the kind of infrastructure kinds of issues. I think that 
is where we have an----
    Mr. Cassidy. And you define infrastructure as?
    Mr. Schmitt. Infrastructure, transportation, improving----
    Mr. Cassidy. But you specifically talk about, you know, 
putting more money into public service type employees, which, 
again, I don't think of those as the people who are currently 
being whacked by the recession.
    Mr. Schmitt. I think that the impact of the recession has 
been pretty broad, and I think, therefore, we need to use a 
kind of----
    Mr. Cassidy. But I am correct when I say the blue collar 
workers, particularly non-college educated men, have been 
disproportionately affected, whereas those with Bachelors and 
upwards are frankly doing OK.
    Mr. Schmitt. I wouldn't say they are doing OK, but they 
have fared better in the recession than----
    Mr. Cassidy. So, again, the prescription that I am asking, 
and I don't mean to speak with compressed speech, but I have 
limited time, if the prescription the President continues to 
offer is more kind of, you know, OK, let us go to somebody who 
makes solar panels and hires a bunch of Ph.D.s and engineers, 
or let us hire more teachers or keep them employed--that seems 
a mismatch, if you will, between those who are 
disproportionately affected by this recession.
    Mr. Schmitt. I think that on the other hand it is also the 
case that there is an emphasis on trying to deal with the 
physical infrastructure, whether it is roads and public 
transportation or improving the physical infrastructure of our 
schools, where I think there is a big opportunity for blue 
collar workers.
    Mr. Cassidy. Now, you mentioned also in your testimony that 
the mean hours worked by employees and the mean wages remain 
stable. Is that an average across the economy, or is that 
industry specific? Because if you look at Petra Chemical where 
there has been a huge expansion and they tell me that they 
don't have enough trained workers for it, that if you looked at 
that, do you see within that particular industry that there has 
been an increase in the number of hours per worker or wage 
growth?
    Mr. Schmitt. I don't have access to the specific statistics 
at Petra Chemicals, but what I would say is the numbers that I 
did talk about are averages across the country, and I don't 
doubt that there could be circumstances where there are some 
industries that are facing difficulties.
    My question would be do we see those same firms offering 
more money or installing training systems to try and get the 
workers that are.
    Mr. Cassidy. And that is my question, too, because if we 
are trying to find solutions for blue collar unemployment, we 
should look where they are being employed, and, again, frankly 
I think more public service dollars is kind of a mismatch.
    I yield back. Thank you.
    Mrs. Bono Mack. Thank you very much, Dr. Cassidy.
    The chair is now pleased to recognize my friend from Texas, 
Mr. Gonzalez, for 5 minutes.
    Mr. Gonzalez. Madam Chair, thank you very much, and I want 
to thank the witnesses for their testimony this morning.
    Dr.--is it Abowd?
    Mr. Abowd. Abowd.
    Mr. Gonzalez. Abowd. I am going to kind of--what I heard 
you say, and if I am wrong, you can correct me, but in essence 
jobs go where profits can be made. That is kind of a general 
theory, isn't it, and it makes sense, it is practical, and so 
on. Jobs are created where a profit can be made.
    I mean, you are not going to create a job where you can't 
open the door to your business in the morning unless a profit 
is made. I think that is just--what I am getting at is I think 
in my own opinion, and I want you all to comment on this 
because I am going to go and read a couple of comments made by 
a couple individuals that you have heard of, I think there is 
something--the very nature of our economy is in trouble and has 
been transformed over a number of years, and we are not going 
to be undoing it in the very short term, and it is time for us 
to get very, very serious about undoing it.
    And this is what I am getting at. This is David Stockman 
back in 2010. ``The third ominous change in the American 
economy has been the vast expansion of our financial sector. 
The combined assets of conventional banks and the so-called 
shadow banking system, including investment banks and finance 
companies, grew from a mere $500 billion in 1970, to $30 
trillion in September, 2008.'' That is David Stockman.
    Now, some figures--our GDP a year and a half ago or so, let 
us say was at about $14.601 trillion. The total assets of the 
Bank of America, JP Morgan Case, Citigroup, Wells Fargo, 
Goldman Sachs, and Morgan Stanley stood at $8.977 trillion or 
61.49 percent of GDP.
    In the 1970s and 1980s financial firms comprised 15 percent 
of all corporate profits. By 2006, that had risen to 33 
percent. I believe we have just been investing in money. We had 
been investing in financial instruments and not really 
investing in that which truly creates jobs in this country.
    Now, some commentators would agree with this, and now 
former Fed Chief Paul Volcker, ``I have found little evidence 
the vast amounts of innovation in financial markets have had a 
visible affect on the productivity of the economy.''
    The question is, Where are we directing our dollars, our 
investments, whether it is my 401, whether it is a pension and 
retirement fund? I don't think we are investing it in that 
which really produces jobs in this country. What we got 
addicted to was making money off of money, and it has not 
served us well, but I am not sure that we have moved forward in 
trying to remedy some of this in the past 2 years. Attempts 
have been made.
    So I am going to start with just Dr. Abowd, where are we 
today with financial markets and the tremendous assets that 
they represent, and do they truly create the jobs that all four 
of you have been discussing and which members of Congress 
obviously have a great attention to be paid to through policy 
and legislation. And if you will just give me about 1 minute in 
the remainder of the time to Dr. Schmitt to--for his comments.
    Mr. Abowd. Thank you for the question. I will not take very 
long with my answer. I did prepare a slide on the financial 
sector that shows that it was also one of the sectors that 
suffered stable job losses in the recession but not nearly as 
badly as the construction sector, which basically is the bubble 
that was inflated by the financial services industry.
    I fundamentally agree with you that the growth of the 
financial services industry wasn't entirely related to 
productive profit opportunities in that sector. It happened, 
and it happened for reasons, but it is going to take economists 
awhile to sort out, but other sectors of the economy like 
manufacturing and construction and trade also have to come back 
and jobs have to be created in those places in all conditions, 
recessions and booms. There are jobs being created in all the 
sectors and jobs being destroyed in all the sectors, and that 
removement of workers is what allows businesses that have 
profitable opportunities to grow and flourish.
    The fact that over the course of 2 decades the financial 
services industry was pumped up by other factors is related but 
not part of what I was talking about.
    Mr. Gonzalez. Dr. Schmitt, just a few seconds.
    Mr. Schmitt. The financial sector, I think, is a huge part 
of the problem. I think if it was a lot smaller, there would be 
more possibility for productive economic investment because we 
are currently diverting resources that could be going elsewhere 
into that sector.
    Mr. Gonzalez. Thank you very much.
    Mrs. Bono Mack. I thank the gentleman, and the chair 
recognizes Mr. Guthrie for 5 minutes.
    Mr. Guthrie. Thank you. Over here on the end.
    Dr. Schmitt, you said--I just caught something you said 
that unemployment, you said would increase--unemployment 
insurance's evidence is only increased by a few tenths. And 
that is not significant, the few tenths?
    Mr. Schmitt. Well, if you are in those few tenths, it is 
not very--it is obviously significant to you, but a few tenths 
of a percent on 10 percent, which is where we stood at the 
peak, is relatively small, and that is the negative effect on 
employment, but as I also emphasized, the fact that we are 
giving everybody or about 75 percent, 70, 75 percent of 
unemployed people benefits means that we are actually 
sustaining jobs in the communities where those unemployed 
people are because we are giving them income to bridge the gap.
    Mr. Guthrie. My question, it seems there has been an 
agreement to extend those, but so I guess my question was if 
unemployment increases just a few tenths, and that is not 
significant, then for the last 3 or 4 months we have seen 
unemployment drop just a few tenths, which, you know, we are 
glad to see we are going in the right direction. Is that 
insignificant? I mean, if you are saying increasing it a few 
tenths isn't important, then decreasing it a few tenths, is 
that insubstantial?
    Mr. Schmitt. No. As I said, I think we have made some 
progress since August. The unemployment rate has gone from 9.1 
to 8.3, which is more than a few tenths than what I am saying 
right now, but I also emphasize we are not out of the woods. I 
think we have a long way to go before we get back to anything 
approaching full employment.
    Mr. Guthrie. Yes. That is what we are all here to talk 
about. We want people to get back to work, and so one of the 
things that I saw, I saw this a few weeks ago, I guess, is that 
if you took the growth rate coming--my father lost his job in 
the 1981-82 recession, so that is one that I remember, and 
Japan and Toyota--my dad worked for Ford--so those were our 
experiences. And so I have heard that if we had the same growth 
rate in year 3 or year 4, I think we are in year 4 now, but 
year 3 of the--same growth rate of year 3 of the '84, recession 
or '82, recession now, that we would have over 10 million or 
somebody even said 15 million new jobs. But even cut that by 
two-thirds because that seems a big stretch, we would be at 
full employment if we came out of the--if we were 3 years into 
the recession with the same growth rate of the '82, recession, 
we would have full employment today? Has anybody seen that or 
agree with that or dispute that?
    Mr. Berlau. If I may, there is some evidence that IPOs are 
actually counter-cyclical, that when the debt market is tight 
as it was in the early '90s recession with the S & L collapse, 
IPOs actually increased. There were actually more than 300 IPOs 
in 1991, and that is where you had companies that were 
relatively small like Starbuck's and Cisco Systems, unlike the 
big IPOs today that launch, they were able to utilize that 
process when they couldn't get gas, when they couldn't get bank 
loans, and that is what has been credited with helping the--
actually helping laying--going from a recession in the '90s to 
the boom, but now a lot of these options are foreclosed because 
of the Sarbanes-Oxley auditing mandates and Dodd-Frank, whereas 
80 percent of the IPOs in the '90s were with companies with 
market evaluations below 50 million. Today only 20 percent are.
    Mr. Guthrie. And I want to get to a point we are always 
getting at with, though, is as you moved out of the recession 
in the early '80s, and then Japan went into theirs on the '90s, 
and one of my concerns, I was a freshman here when we started 
discussing the stimulus bill, it appeared to be a lot of the 
same prescription that Japan followed in the '90s, which a lot 
of people say Japan in the '90s had the lost decade.
    So that was the concern. Are we at a point where we--the 
American economy has been so adaptive. That has been our 
brilliance. I mean, in the 1980s my father lost his job, we 
were thinking Ford is out and never going to exist like it did 
before, and here we are, you know, GM is now the number one 
selling car again in the world, which is great.
    But the question is we haven't recovered that quickly, and 
are we putting in prescriptions and policy regulations and 
borrowing 40 cents of every dollar to have a school teacher in 
a classroom? Is that hurting our recovery?
    I know that we are moving in the right direction, but would 
we move far greater if we hadn't have--if we had gone down the 
path that they did in the early '80s? I mean, that is really my 
question.
    And anybody is welcome to--but I do want to--let me stop at 
that, because I do want Dr. Abowd, you said if we change 
fluidity policies for labor, we are--what policies would you 
prescribe, and I only have 40 seconds. I am sorry, but that is 
interesting to me.
    Mr. Abowd. I won't go through a litany list of them but one 
of the big differences now from the recessions you were citing 
is that it happened in--with a housing price bubble that 
collapsed, and that definitely impaired the geographic mobility 
of workers and also impaired the geographic mobility of new 
businesses because they were caught up in some of the same 
financing arrangements.
    So that is a big difference, and that is something that 
takes more than a few quarters to cure because of how much lost 
value there was. So that is----
    Mr. Guthrie. So a manager in Atlanta can't move to Fruit of 
the Loom in Bowling Green for a job available because they are 
underwater in their house in Atlanta. Is that where you are--
that kind of limits their mobility?
    Mr. Abowd. That is the kind of thing I am talking about. 
Yes.
    Mr. Guthrie. OK. Thanks. I am sorry. I wish I had more 
time. I will yield back.
    Mrs. Bono Mack. Thank the gentleman.
    The chair recognizes Mr. Towns for 5 minutes.
    Mr. Towns. Thank you very much, Madam Chair. Appreciate you 
having this discussion.
    In the State of the Union, Mr. Schmitt, the President 
described a blueprint to put Americans back to work, and of 
course, when I go back to my district in Brooklyn, New York, 
people are saying that Congress isn't moving fast enough to 
create jobs, and I couldn't agree more.
    If we follow your full policy recommendations, what 
immediate impact do you think we would see in the job market?
    Mr. Schmitt. I think the immediate impact will be to 
continue to see some positive job growth in the private sector 
that could see a continuation in the decline in the 
unemployment rate nationally. But as I emphasized, if we do 
just the things that I was proposing this morning, I think we 
are still facing a very long road to recovery. We need to do 
more than just those short-term measures.
    On the other hand, I did mention in my written testimony, 
not this morning when I spoke, that one thing we could do that 
could have a long-term big impact would be to get the value of 
the dollar at a more competitive level, which would help to 
expand the manufacturing sector by making it more competitive.
    Mr. Towns. Right. Thank you. If you panelists talked about 
the importance of having a stable job and its impact on 
consumption and demand, when I go back home, people talk to me 
about finding a stable job. Traditionally jobs in manufacturing 
have been very, very stable.
    Mr. Sirkin, can you go into a little more detail about 
reassuring and things Congress can do to make it more 
attractive for manufacturers thinking about moving their 
operation, you know, to other places?
    Mr. Sirkin. Well, I think there are many things that we can 
do to make it easier for companies to do that. The first is 
awareness. One of the problems we have is that companies assume 
that it is cheaper to manufacture in China than in the U.S. I 
remember sitting in a boardroom one day with a company that had 
about 80 percent of its manufacturing in China, a U.S. company, 
and they were similarly just putting another plant in China 
because that is what is logical to them. We forced the question 
on the table, and their decision changed.
    So the most important thing that we can do is get awareness 
that, in fact, the economics of China are changing and that you 
should be looking at it very carefully, and they shouldn't just 
do the math on what it looks like today but look 3 or 4 years 
in the future and take a look at it because you will find that 
if you have a plant, it is going to last for 25 to 30 years. 
And so making a decision today to put a plant in the ground in 
China may not be the most economic decision 5 years out.
    So companies need to be just more aware that the U.S. is a 
reasonable option for the manufacture of many goods. In 2001, 
the Chinese worker was making 58 cents an hour. It was a very 
simple decision. It is getting more complicated now, and the 
tide is turning back towards the U.S.
    So if I have one thing that I could ask people to do is to 
just build that awareness. We are a good place to manufacture. 
It is why foreign companies are coming to the U.S. as well to 
manufacture for U.S. consumption because it is more expensive 
where they are.
    Mr. Towns. All right.
    Mr. Berlau. If I may.
    Mr. Towns. Yes. Sure. Go ahead.
    Mr. Berlau. The President's Job Council report and the 
Kauffman Foundation have stated the findings that in some cases 
100 percent of net job growth are created by firms 1 to 5 years 
old. Firms older than 5 years old have eliminated more jobs 
than they have created, and 90 percent of this job growth 
occurs after an IPO. The problem is there aren't as many IPOs 
for companies that are emerging growth companies, and you had 
sponsored some of the early bills to ease some of the burdens 
on smaller companies from Sarbanes-Oxley 404. Some of the IPOs 
we are getting now are already more than market capital of $1 
billion after the growth has occurred, so they need more--every 
dollar a company can raise for an IPO is that less that they 
have to borrow or beg from a bank and more that they can devote 
to creating jobs and the companies most likely to create jobs.
    Mr. Towns. Madam Chair, I see my time is running out, but I 
would like maybe to ask in writing if you would just sort of 
make a suggestion, a recommendation as what members of Congress 
might be able to do and put it in writing and give it back to 
us. I would like to just see that in writing as to what you 
suggest that Members of Congress should do. Other words, let us 
switch roles. Make me the economist and you a Member of 
Congress.
    Mr. Berlau. Glad to.
    Mrs. Bono Mack. Be careful what you wish for, Mr. Towns.
    The chair is happy to recognize Mr. McKinley for 5 minutes.
    Mr. McKinley. Thank you, Madam Chair.
    Mr. Schmitt, I am just a little astounded with one of the 
comments you made. I would like you to maybe expound a little 
bit on it before I cut you off, but you said that the 
uncertainty is really not a factor. I really wish if you could 
provide us the information that supports that, some statistics, 
because I am just looking--I just in scribbling here list some 
of the companies that were in possibly within 20 miles of my 
home. They are no longer. Banner Fibreboard, Fostoria, Viking, 
Allied North, Solvay, Wheeling Pitt, Weirton Steel, Follansbee 
Steel, Purina. There are just numbers of companies that when we 
talk to them, they say it is absolutely the uncertainty that 
they are facing.
    We talked about a bill we passed out of here earlier this 
year, that the Veritis Group said that without that bill 
because of the intrusion of the governmental, the EPA, it was 
going to cost 316,000 jobs. It was the Coal Combustion Residual 
Bill, the Fly Ash Bill, because the Federal Government stepped 
in and now they are threatening, they have got a stigma 
attached to all the fly ash that is being produced around 
America, and they want to call it a hazardous material.
    So there is a stigma and uncertainly that is swirling 
around all 316,000 jobs to be lost because of this. The 
aluminum industry just last week, we had a meeting with them, 
and they told us that it is uncertainty in their utility bills 
that is causing them not to reopen and operate some of their 
facilities. They want to know what is going to be our utility 
costs.
    We had the EPA back in February of last year pull a water 
permit from an existing coal mine in West Virginia 4 years 
after it had been in operation. I have never heard of that. It 
is unprecedented. It is now in Federal court, and the courts 
are challenging that significantly whether or not that 
intrusion into the process after a permit has been granted, all 
the hearings were held, 4 years operation, they had the right 
to step in and pull a permit and shut a company down?
    Yet you sit here and say uncertainty is not a problem in 
America. I am not hearing that in my district.
    Mr. Schmitt. I think it is important to say, to ascertain 
what kinds of uncertainty, whether you are talking about 
regulatory uncertainty or whether you are talking about all the 
forms of uncertainty like exchange rate shifts, changes in the 
interest rate, how your competitors are going to act relative 
to you.
    Mr. McKinley. Let me just--what your competitors are 
acting, how they are going to--China. OK. Here we had for the 
San Francisco bridge, they didn't use American steel, and it 
was so flawed that we had to send inspectors over to retool, 
remake a lot of that steel, yet because it was the lowest 
price, they are able to buy that from China. Our turbines for 
our wind turbines are coming from overseas. We have got even 
the Keystone Pipeline, from what I am hearing from testimony, 
that wasn't even manufactured--the steel didn't come from 
America.
    What are we doing then about this uncertainty? If you see 
that this competition is coming in unfairly, and I mean that 
word, unfair competition coming in, how does that create 
certainty in the American manufacturer?
    Mr. Schmitt. I certainly share your concern that the trade 
agreements that we have agreed to and signed and ratified over 
the last few decades have created a lot of problems for U.S. 
manufacturers and for the particular cases that you are talking 
about.
    But I think the other issue to think about is that to a 
certain degree that is a working the ref involved in these 
kinds of conversations. Any individual firm is going to be 
talking to the government officials that they deal with and 
saying, look. We are having trouble here. You got to help us 
out. When we look at the, not anecdotal data, but when we look 
at the evidence, when we look at the broader data, we see, for 
example, very rapid job creation in the '90s, and the other 
issue is right now corporate profits are at record highs. So 
the activity that firms are currently undertaking is actually 
giving a very high return to those companies.
    Perhaps uncertainty is hanging over business's future 
decisions, but my point is just that the uncertainty around 
whether there are going to be customers or not far outweighs 
all of the other concerns at the moment.
    Mr. McKinley. I am running out of time, but I have got a 
lot so all I am asking is, please, if you could submit where in 
God's name you came up with the idea that uncertainty is not a 
problem to manufacturers, I would sure like to read it.
    Thank you very much.
    Mr. Berlau. I have an answer on regulatory uncertainty if 
another panelist wants to ask the question.
    Mrs. Bono Mack. Thank you. I, too, echo Mr. McKinley's 
sentiments, too. I am confused myself about your answer, but I 
am happy to recognize Mr. Olson now for 5 minutes.
    Mr. Olson. I thank the chair for her continuing leadership 
and calling this hearing. I would also like to thank our 
witnesses for coming today and giving us your time and your 
expertise.
    We are talking about the current obstacles that stand in 
the way of job creation and discussing the kinds of policies 
that will help create new jobs right here in America. That is 
what we all want to do.
    Doubling down on the failed policies of wasteful spending 
has made our economy worse. It is not the answer, and yet this 
is exactly what our President is proposing in his 2013, budget.
    I have said this in the past, and I will say it again, I 
will say it until I probably meet Saint Peter, I have a three-
word solution to help fix this Nation's job performance. 
American energy development. American energy development. That 
is where the jobs are.
    So I would like to start my questions today by asking all 
the witnesses for their view on what they believe to be the 
main obstacles for the creation of American energy jobs. And 
specifically, is there one, one Federal agency or specific 
regulations that in your views are hindering job creation in 
the energy sector? Or to put it another way that my folks back 
home can understand, which stallion do we need to break so we 
can pull the wagon instead of pulling the wagon apart?
    I will start with you on the end, Mr. Sirkin.
    Mr. Sirkin. Sure. Well, I agree with you that American 
energy development is very important for our economy. Being 
more energy independent has lots of advantages both from the 
economy standpoint and from a national security standpoint.
    I have not looked at, you know, what are the barriers to 
making this happen in our country. The economics of it are 
quite powerful given oil prices that are now looking at least 
over $110 a barrel, and obviously the natural gas reserves that 
we now have 100 years worth is a very important aspect of 
attracting businesses to this country because we have some very 
low-cost natural gas, and that is bringing the chemical 
companies who thought they would never come back to the U.S. 
coming back to the U.S.
    So there are many good things, but what the barrier is, 
that is not something I have studied.
    Mr. Olson. Thank you for that question. Just to follow on 
those comments, though, I actually went out to the Eagle Ford 
Shale Plate in my home State of Texas this past weekend, and 
just to show you how not only jobs are being created there, but 
what a tremendous impact it has on the local community. One of 
our escorts was--they have a couple wells in Zapata County, 
which is a relatively economically-depressed county in my home 
State.
    The gentleman told us that since they have been--the past 2 
years they have been operating there, the sales tax revenue has 
gone up 3,000 percent. The property tax revenue, which is what 
we use to pay for our schools, has gone up 4,000 percent.
    So, again, energy is not just about jobs. It is about 
quality of life. And continuing on with, let us see, number 
two, Mr. Berlau, again, the question, What agency of the 
Federal Government is the biggest hindrance?
    Mr. Berlau. Yes. Congressman Olson, thank you. Regulatory 
uncertainty is a factor in the energy industry and many other 
industries. My fellow witness had talked about surveys, firms 
laying off workers, I think as important are the surveys that 
much research has been on firms factors in whether or not firms 
expand, whether they launch IPOs, and there you can see that 
regulatory uncertainty is a big factor. Eighty percent of CEOs 
of smaller companies said they were--some of their biggest 
concerns about the implications of going public were the costs 
and risks of Sarbanes-Oxley and other compliance requirements.
    And in the energy sector, yes, you have the looming 
regulations on fracking, on the delays in the Keystone 
Pipeline, but I think in all energy businesses and in energy 
sectors from Royal Exploration to green energy, its access to 
capital that they can't launch, and it takes so long that you 
have to be as big as Facebook to launch an IPO, and actually if 
you simplify some of these regulations, it would be easier both 
for companies in the green energy sector and into the 
traditional energy sectors to get the capitals they need.
    Mr. Olson. So it sounds like we need to form the tax codes 
and get our sky-high corporate tax rates down.
    Mr. Berlau. Yes, and our sky-high regulations.
    Mr. Olson. OK. I am sorry. Mr. Abowd. Abowd. I apologize. I 
got it written down there Abowd. My apologies, sir.
    Mr. Abowd. Well, I think the long-term prospects are best 
if we fix the energy distribution network so that more 
electricity can be delivered, especially for transportation 
purposes, stimulating growth in the production of alternative-
powered vehicles, which are a huge growth potential. They are 
basically being held down by no standardized way to distribute 
the electricity to them. That I think would be the--where I 
would look for----
    Mr. Olson. OK, and finally, Mr. Schmitt, and I am out of 
time here, sir, so as fast, as quickly as possible.
    Mr. Schmitt. I am a labor----
    Mrs. Bono Mack. Please turn your microphone on.
    Mr. Schmitt. I am a labor economist, and I don't follow the 
energy sector, so maybe I will just take a pass.
    Mr. Olson. OK. I appreciate that, and kind of following up 
on some of the questions by our chairwoman earlier about 
mentioning the bipartisan jobs that have been passed by the 
House of Representatives and are sitting over there wallowing 
in the United States Senate, I have got an updated list here, 
just hot off the press, and it is from the Republican 
Conference this morning, and I am happy to give you guys a copy 
of this. I am sure our Conference would be happy to give it to 
you so you can pull it out of your pocket like I did.
    But this is a list of 29 jobs all across our economy 
empowering small business by reducing government barriers, 
fixing the tax code, boosting competitiveness for American 
manufacturers, encouraging entrepreneurship and growth, 
maximizing American energy production.
    Again, I will get you guys this if you want it, put it in 
your pocket, you can pull it out and use it just like I did.
    I yield back the balance of my time.
    Mrs. Bono Mack. I thank the gentleman very much and thank 
all of our witnesses.
    As we conclude our first hearing of the year, permit to 
also thank each and every one of our members for all of their 
hard work and dedication to these issues and a special thanks 
to my friend, Mr. Butterfield, who has been a joy to work with. 
I am looking forward to a great year.
    I remind members that they have 10 business days to submit 
questions for the record, and I ask our witnesses to please 
respond promptly to any questions they might receive, and the 
hearing is now adjourned. Thank you.
    [Whereupon, at 11:30 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    [GRAPHIC] [TIFF OMITTED] 80106.053
    
    [GRAPHIC] [TIFF OMITTED] 80106.051
    
    [GRAPHIC] [TIFF OMITTED] 80106.052
    

                                 
