[Joint House and Senate Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 113-336
EMPOWERMENT IN THE WORKPLACE
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JUNE 18, 2014
__________
Printed for the use of the Joint Economic Committee
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JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
HOUSE OF REPRESENTATIVES SENATE
Kevin Brady, Texas, Chairman Amy Klobuchar, Minnesota, Vice
John Campbell, California Chair
Sean P. Duffy, Wisconsin Robert P. Casey, Jr., Pennsylvania
Justin Amash, Michigan Bernard Sanders, Vermont
Erik Paulsen, Minnesota Christopher Murphy, Connecticut
Richard L. Hanna, New York Martin Heinrich, New Mexico
Carolyn B. Maloney, New York Mark L. Pryor, Arkansas
Loretta Sanchez, California Dan Coats, Indiana
Elijah E. Cummings, Maryland Mike Lee, Utah
John Delaney, Maryland Roger F. Wicker, Mississippi
Pat Toomey, Pennsylvania
Robert P. O'Quinn, Executive Director
Niles Godes, Democratic Staff Director
C O N T E N T S
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Opening Statements of Members
Hon. Kevin Brady, Chairman, a U.S. Representative from Texas..... 1
Hon. John Delaney, a U.S. Representative from Maryland........... 3
Hon. Carolyn B. Maloney, a U.S. Representative from New York..... 5
Witnesses
Ms. Diana Furchtgott-Roth, Senior Fellow and Director, Economics,
Manhattan Institute for Policy Research, Washington, DC........ 8
Dr. Barbara Gault, Vice President and Executive Director,
Institute for Women's Policy Research, Washington, DC.......... 9
Ms. Rachel Greszler, Senior Policy Analyst, Economics and
Entitlements, The Heritage Foundation, Washington, DC.......... 11
Dr. Heidi Shierholz, Economist, Economic Policy Institute,
Washington, DC................................................. 13
Submissions for the Record
Prepared statement of Hon. Kevin Brady........................... 22
Prepared statement of Hon. Amy Klobuchar......................... 23
Prepared statement of Ms. Diana Furchtgott-Roth.................. 25
Prepared statement of Dr. Barbara Gault.......................... 32
Prepared statement of Ms. Rachel Greszler........................ 39
Prepared statement of Dr. Heidi Shierholz........................ 51
EMPOWERMENT IN THE WORKPLACE
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WEDNESDAY, JUNE 18, 2014
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The committee met, pursuant to call, at 1:59 p.m. in Room
216 of the Hart Senate Office Building, the Honorable Kevin
Brady, Chairman, presiding.
Representatives present: Brady of Texas, Paulsen, Carolyn
B. Maloney, and Delaney.
Senators Present: Lee
Staff present: Gail Cohen, Connie Foster, Niles Godes,
Colleen Healy, Christina King, Patrick Miller, and Robert
O'Quinn.
OPENING STATEMENT OF HON. KEVIN BRADY, CHAIRMAN, A U.S.
REPRESENTATIVE FROM TEXAS
Chairman Brady. Good afternoon, everyone, and welcome to
this hearing.
Vice Chairman Klobuchar, Members, and distinguished
witnesses:
On May 21st, the Joint Economic Committee held a hearing on
``Women's Retirement Security.'' Today we turn our focus to the
workplace--which policies help to empower or harm American
workers, and especially women in their quest to attain their
vision of the American Dream. This has been a major focus of
Congresswoman Cathy McMorris Rodgers, Vice Chair of the House
GOP Conference.
The disappointing economic recovery led by the Obama White
House remains the most significant obstacle preventing American
men and women from achieving economic empowerment. Although the
current recession actually ended five years ago this month,
almost three out of every four Americans believe we are still
in a recession.
That is because the economic policies pursued by President
Obama and Congressional Democrats have produced the weakest
recovery in more than 50 years, and a troubling ``Growth Gap''
between this recovery and other recoveries since 1960, robbing
over $1,000 a month from a family of four's real disposable
income.
Because of this Growth Gap, we are missing $1.5 trillion of
real GDP from the economy, and 5.8 million private sector jobs.
Merely to catch up with an average recovery before President
Obama leaves office, our economy would have to expand at an
annual rate of 6.2 percent every quarter and add 371,000 new
private jobs every month.
Neither figure has been achieved once during the Obama
recovery. Catching up will be hard to do, especially as the
President continues to throw further roadblocks in front of
this struggling recovery.
Next month this Committee will examine the Administration's
macroeconomic policy failures at a hearing marking the fifth
anniversary of this recovery. For now, though, let's focus on
the workplace.
One of the best means of empowering workers is to provide
choice and flexibility in the workplace. Flexibility is
especially important to the many women who are caregivers to
their children and elderly parents.
Yet in March, President Obama directed the Department of
Labor to extend overtime regulations to several million workers
who are currently exempt. This regulation would harm working
women who need the flexibility and choice between taking
overtime pay and banking those extra hours for time off in
their later work schedule.
A much better approach is The Working Families Flexibility
Act of 2013 which passed the House over a year ago, but has
stalled in the Democrat-controlled Senate. Joint Economic
Committee Member Senator Mike Lee is sponsoring the companion
bill in the Senate.
The bill would allow private-sector companies to offer
hourly workers who put in more than 40 hours a week the choice
between taking overtime pay or time-off. This is a choice that
is currently available to federal, state, and local government
workers, but is denied to private sector workers. It is a
highly valued benefit for government workers, but not for
workers along Main Street. So why did the President and
Congressional Democrats fight so hard to deny women in the
workforce this important choice?
The House passed The Working Families Flexibility Act in
May of 2013. It is past time for Senate Majority Leader Reid to
bring this bill to the Senate for a vote.
There are other ways this White House has made the
workplace less family friendly, especially for women. Economist
Casey Mulligan argues the President's Affordable Care Act will
push more young women out of the full-time work, making them
``29ers''--referring to the maximum number of hours that an
hourly worker can work and still be considered part-time under
the new health care law. Mr. Mulligan expects 2 percent of
workers to become ``29ers,'' an increase by more than a factor
of 10.
Moreover, at the urging of special interests, the
Environmental Protection Agency recently introduced new,
sweeping global-warming regulations on carbon emissions. A
study by the U.S. Chamber of Commerce's Institute for 21st
Century Energy found that through the year 2030 these
regulations would lower America's economy by an average of $51
billion each year, reduce jobs by 224,000 each year, increase
electricity payments from American families by $289 billion,
and lower disposable income for U.S. households by $586
billion.
So thanks to the President, women will compete for fewer
jobs in a slower economy, paying higher electricity bills, with
less money in their family's budget. Thank you, Mr. President.
America's broken tax code and extremely progressive income
tax system penalizes two-income households--which are the norm
today among married, working-age couples.
Although Congress lessened this penalty in the last decade,
it still exists and should be eliminated. It is hard enough to
make ends meet as it is, especially with college costs,
gasoline, utilities, and food costs all rising.
Washington makes it harder to climb out of poverty,
especially for young women and single moms with limited skills.
While unintended, the conflict between the phase-out of many
means' tested federal benefit programs like food stamps and the
tax system, means that working families struggling to leave
poverty face an effective marginal tax rate as high as 80
percent, by one study's estimate. This interaction creates
poverty traps that discourage work and make it harder to climb
the economic ladder.
Moreover, the Cato Institute's Michael Tanner and Charles
Hughes found that welfare can pay more than the minimum wage in
35 states, even after accounting for the Earned Income Tax
Credit. And in 13 of those states, welfare can pay more than
$15 per hour. The President should work with Congress to
correct these perverse policies.
Occupational licensing is another problem facing poor
families, especially those headed by women who are seeking to
work their way into the middle class. Joint Economic Committee
Member Representative Hanna held a hearing on this issue
recently at the Small Business Committee.
Over the last several decades, the number of workers
required to have occupational licenses has risen steadily. In
many cases, occupational licensing goes far beyond what is
necessary to protect public health and safety. It has been a
means for incumbent workers to raise their wages by an
estimated 15 percent, at the expense of new entrants who have
fewer jobs, and consumers who pay higher prices.
Although occupational licensing is primarily a state issue,
Congress should use its investigative powers to shed light on
how licensing abuse harms ordinary Americans, both as workers
and consumers. Catching up will be hard to do, especially as
the President continues to throw further roadblocks in front of
this struggling recovery.
Empowering workers, especially women, should be a common
goal of both Democrats and Republicans. Staying the course with
the same old federal traps and obstacles just simply is not an
option.
With that, I look forward to hearing from today's
witnesses, and I recognize Mr. Delaney for the first of two
opening statements.
[The prepared statement of Chairman Brady appears in the
Submissions for the Record on page 22.]
OPENING STATEMENT OF HON. JOHN DELANEY, A U.S. REPRESENTATIVE
FROM MARYLAND
Representative Delaney. Thank you, Chairman Brady, for
holding this hearing. And I want to thank all the witnesses for
joining us today to talk about this important topic.
As we talk about empowerment in the workforce and policies
that I believe we need to put in place to make a difference
against this issue, it is important to think about the context
of what is going on in the employment market and the labor
market and the economy right now.
We have created over 9 million jobs in the last 4 years,
and the unemployment rate has fallen significantly. In my
opinion, by almost any measure the President's policies have
made a clear and measurable difference in terms of getting
people to work and getting the economy back on track.
But there is much more to be done, and there is more to be
done particularly when you think about what is going on in the
world and the really important macro trends of globalization
and technology, and the disruptive effect they are having on so
many American workers.
People with great educations or with access to capital are
doing great in this economy. Billions of people around the
world are benefitting because they are moving into a global
economy. But the average American, the middle-skilled American
worker is really struggling because of the disruptive effects
of these trends.
And we need smart public policy to make a difference
against these trends. The long game, if you will, is education:
greater investment in education and reform to how we think
about education.
The short to mid-term game, if you will, in my opinion is
increasing our investment in infrastructure. It makes us more
competitive, creates jobs; tax reform, as the Chairman
mentioned, is incredibly important for this debate; and
immigration reform.
But while we hopefully will work on some of these policies
to increase the country's competitiveness, and increase our
ability to create jobs that have a decent standard of living,
we do have to worry about segments of our population who are
either not working, or who are working at jobs where they have
a declining standard of living. Because in fact we have not
seen the standard of living of the average American go up in
the last several decades. We have actually seen it declining.
And that, to me, is the most troubling trend. For those
that are unemployed, we need in my opinion two very specific
things. About a third of them have been unemployed for over six
months, so we need to extend unemployment insurance. That is
incredibly important for these citizens.
The other thing we need to do is invest greater resources
in job training. In my State of Maryland, recent data indicates
that 60 percent of the positions that are available cannot be
filled because people are not trained to do the jobs.
So we need those policies for those Americans who are not
employed. But even for those who are employed, they are facing
pressures. They lack flexibility in their lives, in their
schedules, around child care. They have no ability to negotiate
or position themselves for growing wages, and in fact the
standard of living is declining.
We need a separate set of policies to empower those
workers. One of them, or one policy in particular that is
important particularly as it relates to women is the Paycheck
Fairness Act, because the data clearly suggest that women are
underpaid relative to men. Even if you normalize for
educational disparities, you see these trends. And these trends
are disturbing particularly as you go up the corporate ladder
where you see a talent drain occurring with respect to women.
That is an important policy.
And many of these policies, by the way, are not only good
for the employees but they're good for the bottom line of the
business.
As someone who ran and started two public companies prior
to running for office, and created over 2,000 jobs, I saw first
hand how good employee-friendly policies were very, very good
for the bottom line. So the Paycheck Fairness Act, in my
opinion, would be virtuous in this regard.
The minimum wage, which is often positioned as negative for
economic growth, in fact if you look at the data you see that a
lot of minimum wage earners do business, or shop, or buy food
at places that are minimum wage payers. So there is an
incredibly kind of virtuous cycle associated with raising the
minimum wage.
It has to be done carefully. It cannot be done in a way
that shocks the economy. But if we actually had a minimum wage
that was adjusted for inflation, that to me would be important.
Quality affordable child care is another issue, as well as
expanding family and medical leave. These pieces of legislation
are incredibly important for all these policies: creating jobs
in the long term, dealing with the people who are unemployed,
and helping those who are employed, giving them a little boost
so that they have more flexibility in their lives and an
opportunity to get better wages. There is a role for government
to do it, and I look forward to your testimony very much here
today.
Thank you.
Chairman Brady. Thank you. And I would like to recognize
the former Chair of the Joint Economic Committee, Mrs. Maloney,
for her opening statement.
OPENING STATEMENT OF HON. CAROLYN B. MALONEY, A U.S.
REPRESENTATIVE FROM NEW YORK
Representative Maloney. Thank you so much, Chairman Brady,
and we have a vote on. We are going to have to hurry, and hurry
back to hear your testimony. I would like to also thank Vice
Chair Klobuchar for allowing me to step in on her place today.
This hearing looks at how workplace practices affect
productivity, economic growth, and our economic wellbeing, and
there is a very real cost to our economy associated with losing
experienced and highly skilled workers to the very real
competing demands of child care and looking after an aged
parent.
We will also be looking at whether or not federal and state
laws to require a minimum wage reduces employment or slows
economic growth. The minimum wage is now effectively lower than
it has been at any time since 1968.
The Congressional Budget Office found that if we raised the
minimum wage to $10.10 an hour by 2016, it would mean higher
earnings for 16.5 million workers resulting in $31 billion more
for low- and moderate-income households. And this is very
important because this money would be plowed right back into
the economy, effectively be a stimulus for our economy, and it
is very important to addressing a concern that I think everyone
has in our country that the gap between the haves and have-nots
is getting wider and wider. And we need to make sure that our
workers are paid appropriately and have a living wage.
The CBO also projected it would lift nearly 1 million
people out of poverty. I think it is important. As for
businesses, the Center for Economic and Policy Research found
that they can benefit from improved efficiency and lower
turnover facilitated by a higher minimum wage.
And there are other policies that provide benefits to both
employers and employees. We know that almost 50 percent of
American women work, and yet the laws are not flexible or
supportive for working women.
Some companies have started first-rate policies, but really
the federal policies and other policies really have not kept
pace with the changing realities of the workforce.
I have introduced a bill that I modeled after a bill in
London that has worked very well called the Flexibility for
Working Families Act. I would love Mr. Brady to join me as a
bipartisan sponsor on it.
It would not cost a business one dime, or the taxpayer. But
it would guarantee the right of workers to ask for flexible
work arrangements with not being fired, to allow them to meet
with the human resource staff and try to work out a work
schedule that would really confront the lives that they have.
If granted, that flexibility could mean workers would be
able to adjust their schedules to meet the demands of caring
for children, or aging parents, while staying in the labor
force and allowing companies to benefit from their experience
with less turnover in staff.
Our country's first and only national law to support
working families is the landmark Family and Medical Leave Act
of 1993 which allows individuals to take up to 12 weeks of job
protected unpaid leave. This is an incredible bill. It was the
first bill I voted on when I came to Congress, and very
personal to me. I remember when I had my first child, calling
personnel and asking about any leave policies, and they said
there's no leave policies; people just leave. When are you
leaving?
Well this guaranteed that you could keep your job, come
back to work, and have a family. I have put in legislation to
expand this important legislation to also provide for unpaid
leave so that parents can attend school conferences, or take
family members to the doctor.
We always say that this country is so family friendly, but
if you look at our policies they really are not there. And this
bill would also cover more businesses that employ between 20
and 50 workers.
In the past decades, protections that Congress has already
put in place have allowed women to make some incredible
strides. I can remember when women used to be fired because
they became pregnant, or fired because they wanted to express
milk on their lunch break and on their own time. And I can
remember when advertisements used to be jobs for men, jobs for
women.
But one area where we have really been stagnant is in terms
of pay. When I began working, we were 50 cents to the dollar;
now it is 80 cents to the dollar. We got a raise, but it is not
enough and we should be paid equally for our work. The Paycheck
Fairness Act is a step in that right direction, but still a
great deal more has to be done.
And affordable and accessible child care. We have some
policies, but they have not kept up with--the Child Care Tax
Credit is not keeping pace with the realities of the cost of
child care. And our economy and our families are more dependent
than ever on the earnings of women.
Almost a third of all working mothers are the sole earners
for their household. So I hope we will examine how workplace
policies affect women's ability to stay in the workforce and
take care of their families. And it is important to recognize
that it is just not some feel-good slogan, it is the economic
reality of our country today that when women succeed, America
succeeds.
So thank you, Mr. Chairman, and we've got to run vote,
right?
Chairman Brady. Votes have been called. The good news is it
is a single vote. To be respectful of your time and testimony,
I am going to introduce our four witnesses now, recess for 20
minutes, and then we will come back and start with testimony.
First, Diana Furchtgott-Roth is the Director of Economics
21 and Senior Fellow at the Manhattan Institute for Policy
Research. She has served as Chief Economist at the U.S.
Department of Labor; as Chief of Staff for President George W.
Bush's Council of Economic Advisers; and an economist on the
staff of President Reagan's Council of Economic Advisers. She
received her B.A. in Economics from Swarthmore College, and her
Masters in Philosophy and Economics from Oxford.
Barbara Gault, Ph.D., is Executive Director and Vice
President of the Institute for Women's Policy Research.
Previously Dr. Gault conducted research at the Office of
Children's Health Policy Research, and served as staff and
board member of organizations promoting human rights in Latin
America. She received her Doctorate in Social Psychology from
the University of Pennsylvania, and her Bachelor's from the
University of Michigan.
Rachel Greszler is currently a Senior Policy Analyst for
Economics and Entitlements at the Heritage Foundation.
Previously Ms. Greszler has served as a Senior Economist on
this Joint Economic Committee, Minority staff. Ms. Greszler
holds a Masters in Economics and a Masters in Public Policy
from Georgetown University, and a Bachelor's in Economics from
Mary Washington College.
Dr. Heidi Shierholz is an Economist at the Economic Policy
Institute. Her research focuses on the economy and economic
policy as it affects middle- and low-income families,
especially in regards to employment. She is also a member of
the Board of Directors of the D.C. Employment Justice Center.
Previously Dr. Shierholz worked as an Assistant Professor of
Economics to the University of Toronto. She holds a Ph.D. and a
Masters in Economics from the University of Michigan, a M.S. in
Statistics from Iowa State, and a Bachelor in Mathematics from
Grinnell College.
With that, we are going to recess for 20 minutes and we
will be back after that.
(Whereupon, a recess was taken.)
Chairman Brady. The hearing will reconvene. I recognize Ms.
Furchtgott-Roth for her testimony.
STATEMENT OF MS. DIANA FURCHTGOTT-ROTH, SENIOR FELLOW AND
DIRECTOR, ECONOMICS 21, MANHATTAN INSTITUTE FOR POLICY
RESEARCH, WASHINGTON, DC
Ms. Furchtgott-Roth. Thank you very much for inviting me to
testify today. With your permission, I will summarize my
testimony and hope that the full testimony is accepted into the
record.
Chairman Brady. Yes, ma'am.
Ms. Furchtgott-Roth. Employment of women 25 to 54 years
stands at 45 million and has yet to reach pre-recession levels
of 46 million. Labor force participation for women 16 years and
older has declined from 59.4 percent in December 2007 to 57
percent today. And the labor force participation rate for women
in their prime working years fell from 76 percent to 74 percent
over the same period.
What is important is to provide a flexible work environment
so that employers can hire women, and so that women can feel
comfortable working. Women have an important role not just as
workers in the economy but also as mothers who prefer flexible
work schedules. And for those who do not think children are
important, you should take a look at the website Yale Law
Women. It has just announced its 9th list of top 10 family
friendly firms.
Now few of these young women have children, but already
they are looking at family friendliness indicators, and I will
quote, ``such as the billable-hour requirement.'' That means
fewer, rather than more, billable hours. ``Part-time and Flex-
Time options. Caregiver leave policies, and child care
availability.''
As you just said, Mr. Chairman, President Obama's new
proposed overtime rules would reduce flexibility for working
women. What would be far better would be to pass the Working
Families Flexibility Act of 2013 which would give women the
choice of overtime pay or comp time in exchange for more hours
worked.
Many times when you've worked a very long week, you don't
just want to have extra money, maybe you want to have time off
with your kids, time that you can spend with them. And it is
very difficult to buy more time if you are forced to take
overtime pay instead of comp time, which is what many people
would like.
President Obama's new proposed regulation, which is now
working its way through the Labor Department, would restrict
the number of women who could receive comp time in exchange for
overtime. I think that would be very harmful for working women.
Another problem is the marriage penalty. The marriage
penalty affects working women disproportionately because they
are frequently the second earners in the family. If you look at
women in the top income quintile, you find there are many, many
two-earner families.
You find as they work their way up the income ladder, their
progress is stalled. Similarly, low-income women when they move
into the workforce, they find they have to give up certain
benefits. And that means that they have a disincentive to work.
Just as it is important to have flexibility for working
women, it is also important to put in place conditions that
enable employers to hire women. The Paycheck Fairness Act would
create burdensome reporting requirements for employers. It
would discourage employers from hiring women.
With the Paycheck Fairness Act, which the President by
Executive Order has extended to federal contractors, you have a
reporting requirement for groups of women and groups of men.
And there are many reasons that groups of women and groups of
men are paid differently in firms.
Take Exxon, for example, that has groups of men that drill
on oil rigs, groups of women who serve in office jobs, and
there's no reason for these two groups to pay the same; but
employers would have to justify that difference.
The Paycheck Fairness Act did not even pass a completely
Democrat-controlled Congress in 2009 and 2010 because it was so
costly and so expensive.
Similarly, raising the minimum wage would impede young
women from getting hired. Right now the minimum wage is $7.25
an hour. That means anyone with skills under around $8 an hour
is not allowed to work. President Obama wants to raise it to
$10.10 an hour.
When you add Social Security, Worker's Comp, that means the
cost is about $11 an hour to employers. Low-skill people just
would not have the right to work, and that hurts teens and
unskilled workers.
Ninety-seven percent of American workers are paid above the
minimum wage, but this minimum wage is important to people who
want to enter into the workforce and who want to have their
first job and have the first step on the career ladder.
In the Flexibility For Working Families Act, which was
mentioned by Mrs. Maloney, companies would have to justify and
document if they did not give women the flexible schedules they
asked for. Again, it is a disincentive to hiring women.
We want to make it as easy as possible for companies to
hire workers, including women, not place an additional cost on
them.
Thank you very much for allowing me to testify.
[The prepared statement of Ms. Furchtgott-Roth appears in
the Submissions for the Record on page 25.]
Chairman Brady. Thank you.
Dr. Gault.
STATEMENT OF DR. BARBARA GAULT, VICE PRESIDENT AND EXECUTIVE
DIRECTOR, INSTITUTE FOR WOMEN'S POLICY RESEARCH, WASHINGTON, DC
Dr. Gault. Thank you, Chairman Brady. Thanks also to Vice
Chair Klobuchar for this opportunity to speak to the Committee
about empowerment in the workplace.
Employees are empowered through access to quality jobs and
services that help them build skills to support and care for
their families and to do their best work every day. Research
shows that the important benefits brought to businesses, to
families, the economy, and to society as a whole when employers
offer jobs with fair wages, paid sick days, predictable
schedules, and when workers have access to supports such as
quality early care and education, paid parental leave, and the
earned income tax credit.
Many basic workplace benefits and supports are inequitably
distributed in today's economy. Almost 4 in 10 private-sector
workers in the U.S. lack access to a single paid sick day.
Among Hispanic workers, 53 percent do not receive paid sick
days, compared with 36 percent of white workers.
Employees in food preparation and direct health care
occupations are especially unlikely to be able to take a day
off with pay when they are sick, which increases contagion in
the workplace, forestalls preventive health care, and costs
taxpayers and businesses millions of dollars each year in
unnecessary health expenditures and lost productivity.
Since employees on average take so few paid sick days when
they are available, the cost to employers is negligible and
offset by benefits in the form of health, safety, productivity,
and retention.
Research has also found that when parents have access to
stable child care, they stay in their jobs longer and exposure
to high-quality early care in education among low-income
children leads to social and economic gains to families and
society that lasts decades.
In many states, however, economic growth is hampered by a
lack of access to affordable, quality child care. Infant care
costs more than public college tuition in 31 states, and 19
states have waiting lists or frozen intake for child care
subsidy.
Among community college students seeking to gain job
skills, a striking 30 percent are parents of dependent
children, but less than half of community college campuses have
child care facilities, and those that do have long waiting
lists.
Research finds that when parents attain post-secondary
education their children experience real-time cognitive gains,
especially if parents go to college when their children are
still young.
Empowered workplaces need skilled workers with stable,
reliable childcare arrangements that allow them to focus on
doing their best jobs. Workers in hourly positions often have
difficulty arranging child care, elder care, or college
attendance due to increasingly common scheduling practices that
give them only a few days' notice of their schedules, or that
require them to be available for call-in shifts.
We can empower workers to plan ahead by requiring employers
to distribute schedules with sufficient advance notice, and by
prohibiting retaliation against workers who request schedule
changes.
Improved scheduling practices also have bottom-line
benefits for businesses. They are associated with lower
absenteeism and turnover, and heightened employee engagement.
Expanded access to paid family and medical leave insurance
can also help families stay connected to work while they care
for newborns, sick children, or elderly parents, or seek
treatment for their own serious medical condition.
While such benefits are the norm in other high-income
countries, the United States has yet to establish a family and
medical leave insurance system which would help employers
retain talent and improve the health and welfare of families
and children.
Three states, Rhode Island, California, and New Jersey,
have established paid family leave programs, and these
successful state models demonstrate that a federal family and
medical leave insurance program is both attainable and cost
effective.
In a study of California's paid leave program, the vast
majority of employers report increases in employee morale,
minimal costs, and positive or no noticeable effects on
productivity.
Allowing transparency in pay would also go far toward
creating empowered workplaces and helping women address gender-
based pay inequities.
About half of all workers say they could be disciplined or
reprimanded for sharing salary information. An analysis by the
Institute for Women's Policy Research finds that if women
earned wages equal to those of men with the same education
levels and work hours, the poverty rate among working women
would be cut in half, falling to 3.9 percent from 8.1 percent.
Finally, we can strengthen our economy through basic
supports to help low-income adults when they are looking for
work, attending school, or receiving wages that are too low to
cover their basic needs.
Recent economic analysis of the effects of the EITC over
several decades demonstrates the program's effectiveness at
helping families maintain work. The Center on Budget and Policy
Priorities found that in 2012 alone the EITC lifted 6.5 million
people out of poverty.
Similarly, the U.S. Census Bureau finds that unemployment
insurance keeps millions of job seekers from falling into
poverty each year. Employees, businesses, and our communities
as a whole are stronger when people have the supports they need
to attain new skills, stay healthy, care for their families,
and maintain secure, high-quality jobs.
[The prepared statement of Dr. Gault appears in the
Submissions for the Record on page 32.]
Chairman Brady. Thank you, Doctor.
Ms. Greszler, welcome back to the Joint Economic Committee.
STATEMENT OF MS. RACHEL GRESZLER, SENIOR POLICY ANALYST,
ECONOMICS AND ENTITLEMENTS, CENTER FOR DATA ANALYSIS, THE
HERITAGE FOUNDATION, WASHINGTON, DC
Ms. Greszler. Thank you for the opportunity to be here
today.
I would like to focus on three points:
First is there is a great lack of employment in today's
economy, and unemployed workers cannot be empowered.
Second, existing regulations and workplace policies could
be reformed to encourage greater worker empowerment.
And third, policymakers can look to successful and
innovative companies as a way to encourage empowerment.
First, nearly 10 million workers are unemployed, and
another 8 million have left the labor force. There is no
workplace empowerment for the unemployed, but businesses are
not hiring.
According to a recent survey, only 8 percent of small and
independent businesses say that it is a good time to expand
operations. They cite taxes, followed by government
requirements and red tape as their two primary concerns.
Increased costs and regulation make it harder for
businesses to expand and start up. A recent Brookings
Institution report documents a, quote, ``troubling secular
decline in business dynamism and entrepreneurship.''
Policymakers need to relieve employers and entrepreneurs of
the red tape and economic burdens that are holding them back
from investing, expanding, and hiring workers.
Second, for the roughly 146 million workers who have jobs,
certain reforms such as licensing and government restraint from
micro managing private businesses, could encourage greater
workforce empowerment.
Licensure laws require individuals to obtain a license to
practice a certain trade. Licensing laws are often irrational,
arbitrary, and onerous. For example, the average cosmetologist
spends 372 days in training, whereas the average EMT spends 33
days.
These licensing laws are particularly harmful to low-income
workers who often lack the resources necessary to obtain a
desired license, as well as mothers who often have less time
that they can devote to such training. Despite its widespread
use, evidence suggests that licensing does not improve quality,
but it reduces the supply of workers and increases prices.
States should be encouraged to re-evaluate their licensure
laws in accordance with cost/benefit analysis and to allow
cross-state licensing reciprocity so that a massage therapist
who practiced in one state would not have to obtain a new
license upon moving to another state.
A measure that employers could take to empower employees
through choice and higher wages is to allow employees the
option of exchanging employer-subsidized benefits such as
health insurance for cash wages. The option of cash wages could
increase incomes for many workers, particularly women who are
often the second earners and already have access to health care
through a spouse.
And the primary thing that the Federal Government can do to
encourage workplace empowerment is to refrain from micro
managing private businesses. For example, the President's
proposed increase in the overtime cap would significantly limit
flexible work arrangements.
As a working mother, I place a high value on the ability to
work from home as needed. But if firms are required to pay
workers overtime, they will want those workers in the office
where they can monitor their hours.
What's more, incomes would not rise. Even Jared Bernstein,
former economic adviser to Vice President Biden, has written
that employers would offset the higher overtime costs by
reducing their base pay.
The government should refrain from micro managing employers
and instead encourage employers to empower the workers with
individual choices which can only be provided if those
employers are allowed to determine their employee's pay.
My final point is that policymakers should look to the
successes of less regulated businesses and entrepreneurs as a
way to empower existing ones. Companies and industries such as
Etsy, Uber, and food trucks, are prime examples of
entrepreneurship and empowerment.
Etsy is an online marketplace that allows individuals to
sell their goods and services without having to jump through
significant hoops, invest large amounts of time and money, or
commit to a regular work schedule. Etsy has opened the door for
more than a million individuals who might not otherwise
participate in the labor force to become active workers.
Eighty-eight percent of Etsy sellers are women, and 74
percent consider Etsy as their business place. Etsy sellers are
their own bosses. They decide what to sell, how much to sell it
for, and how often to work.
Uber is a software company that contracts with individual
drivers. The drivers use Uber's unique technology that allows
individuals to request, ride, and pay for transportation
services via mobile app. Uber drivers also act as their own
bosses and work as much or as little as they would like.
Finally food trucks are another example of entrepreneurship
and empowerment. Because food trucks operate without a brick-
and-mortar storefront, they enjoy lower startup costs and
operations. Food truck owners and operators have more control
over their daily schedule.
Uber and food trucks have been wildly successful, yet they
have been threatened by demands from their competitors to
impose hefty new regulations and costs that would depress their
growth and profitability.
Policymakers should refrain from imposing unnecessary and
costly regulations on new, innovative companies and look to the
successes of these businesses as ways to promote greater
entrepreneurship and empowerment.
Where competitive disadvantages and regulation exists,
policymakers should level the playing field by reducing
existing disadvantages rather than creating new ones.
Thank you.
[The prepared statement of Ms. Greszler appears in the
Submissions for the Record on page 39.]
Chairman Brady. Thank you.
Dr. Shierholz.
STATEMENT OF DR. HEIDI SHIERHOLZ, ECONOMIST, ECONOMIC POLICY
INSTITUTE, WASHINGTON, DC
Dr. Shierholz. Thank you, Chairman Brady, and others
Members of the Committee:
I appreciate the opportunity to come here to discuss
empowerment in the workforce. And I think it is perhaps useful
to start by defining what is meant by an empowered workforce.
Under any reasonable definition, an empowered workforce is
one that shares fairly in the fruits of its labor. In
particular, a minimal definition of an empowered workforce is a
workforce where, as productivity grows, most workers share in
that growth and see compensation growth.
By contrast, an economy where productivity grows but the
fruits of that growth accrue to just a small sliver of the
workforce, that is an economy where that small share is
empowered but where the workforce as a whole is broadly
disempowered. So from the 1940s to the 1970s, the U.S. had an
empowered workforce by this definition. As productivity grew,
compensation grew with it. Compensation for typical workers
grew with it.
Since the 1970s, however, the U.S. has not met this minimal
definition of an empowered workforce. Productivity has
continued to rise consistently, but the typical worker's
compensation began lagging farther and farther behind. And
rising wage inequality is at the core of the disconnect between
productivity growth and compensation growth for most workers
since the 1970s.
Between 1979 and 2012, the top 1 percent saw their wages
grow by over 150 percent. The bottom 90 percent, on the other
hand, saw their wages grow by 17 percent. That was far less
than the average growth rate.
In other words, the top captured so much of the growth over
this period that the entire bottom 90 percent saw wage growth
that was lower than the average. Below-average wage growth for
the vast majority means that in a very real sense a discussion
about workplace empowerment boils down to a discussion about
rising wage inequality.
And I am very pleased that the Committee is focusing this
hearing on labor market policies and practices, which I think
are a very key part of this dynamic. And I will list a few of
these things. We need a higher minimum wage. In real terms, the
minimum wage is now 25 percent below its peak in 1968. Raising
it to $10.10 would partially restore this eroded labor
standard.
The real value of the salary threshold under which all
salaried workers are covered by overtime provisions has also
been allowed to erode dramatically. Simply adjusting the
threshold for inflation since 1975 would roughly double the
current threshold, guaranteeing an additional millions of
workers time-and-a-half pay when they work more than 40 hours a
week.
And I think it is worth noting that there is nothing that
prohibits employers from offering comp time to people who get
overtime. There's nothing. They can simply pay their workers
overtime, and then give them unpaid leave. So employers still
have the flexibility to offer employees overtime and comp time.
Low-wage service workers are increasingly subject to just-in-
time scheduling, which is an enormously disempowering practice
where employers give workers little or no advance notice of
their schedules, and send workers home early when business is
slow. Imagine what this does to people who have to arrange for
child care to get to work.
Policymakers should pass laws that require minimum
guaranteed hours per pay period, and require compensation for a
minimum number of hours when workers are called into or sent
home from work unexpectedly.
We need to update labor law, which has not kept pace with
dramatically increased employer aggressiveness in citing unions
and has resulted in a growing wedge between workers' desire to
organize and their ability to do so.
We need to crack down on wage theft and misclassification.
Wage theft is when employers do not pay workers for work they
have done. Employers steal billions of dollars from their
employees each year by doing things like working them off the
clock and failing to pay the minimum wage. And
misclassification is when employers treat employees as
independent contractors, which allows them to avoid paying
Worker's Compensation and Unemployment Insurance, or the
minimum wage, or offering overtime, which means workers are
denied access to these benefits and protections.
So in closing, I would just like to again thank the
Committee for highlighting how labor market policies have
affected worker empowerment. I think there is a strong public
narrative out there that just dismisses rising wage inequality
and worker disempowerment as a natural and unstoppable
consequence of a modern economy, when in fact there are
government policies behind these trends. So that is actually
good news, because it means that the dramatic rise in
inequality that has impeded worker empowerment for a generation
does not have to continue. We need to enforce the labor
standards we have, update the ones that need it, and empower
workers to bargain for better working conditions for themselves
and their families. Thank you.
[The prepared statement of Dr. Shierholz appears in the
Submissions for the Record on page 51.]
Chairman Brady. Thank you, Doctor.
Ms. Greszler, you make the point that there is very little
empowerment for those who do not have a job.
Ms. Greszler. Um-hmm.
Chairman Brady. And as Ms. Furchtgott-Roth made note in her
testimony, for women of prime working ages, there's actually 2
million fewer in the workforce today than there was before the
recession began. Labor participation rates, how many are in
that workforce, has actually declined as well.
So for women of working ages, prime working ages, the
economy has actually gone backwards for them. So how do we get
these women back to work? What are the obstacles? Or what can
Washington do to remove the obstacles so that the businesses
that you referenced in your testimony will begin hiring again?
Ms. Greszler. Well I think the biggest thing that the
government can do is to refrain from a lot of the policies that
are currently being considered: the Paycheck Fairness Act, and
this increase in the overtime cap. These things are going to
reduce flexibility because they are going to enforce employers
to have one-size-fits-all pay scales, and one-size-fits-all
jobs that women don't want.
Women in their prime working years often also have
children, or they may have parents that they need to care for,
and if they are going to have to accept either this job, which
is a defined job and there's no flexibility around it, or
staying at home, they're often going to have to choose to stay
at home because they cannot meet a job that is not willing to
accommodate them.
Chairman Brady. In your view, what impact has the
Affordable Care Act had on hiring, or on full-time employment
for women?
Ms. Greszler. I think the Affordable Care Act is going to
have--well, already has had some implications. It's reducing
the hours that employers are offering, and that hurts women as
well. A lot of women want to work part-time.
It is also going to increase the marginal tax rates for
women. Women are often second earners in their family, and if--
you know, the median wage right now, there is a study by Casey
Mulligan, an economist at the University of Chicago, who showed
the median earner, the marginal tax rate for them, is going to
be 47 percent in 2016 as a result of the Affordable Care Act
and all the other slew of government transfer programs and
benefits.
And this is not going to help working women, or mothers who
would like to enter the labor force who, you know, they are
maybe struggling; they are low- to middle-class, and they would
like to start working so that they can have an additional
income. If they are going to face a marginal tax rate of 47
percent and only be able to take home one of every two dollars
that they earn, they are unlikely to enter the labor force.
Chairman Brady. Thank you.
Ms. Furchtgott-Roth, you know we are told that capturing
more workers in the overtime legislation the President has
directed would be a good thing, and you have a different view.
Could you go sort of deeper into that?
Could you hit the microphone?
Ms. Furchtgott-Roth. It would limit choices for women.
Right now if someone is earning around $23,000-$24,000 a year
and their employer asks them to work more, they are not allowed
to take any time off in exchange. They have to be given
overtime pay.
A lot of these women cannot wait to move to higher income
levels because then they get more flexibility. They get a
choice of overtime pay or time off. And, you know, young people
these days, they are very keen on lifestyles, they want a lot
of choice, and they want to be able to choose.
It would be really detrimental to extend the current
overtime regulations to more women. The President says if you
work more, of course you should get paid more. You find in many
kinds of jobs, for example yours, Mr. Chairman, when you work
longer in Congress, you don't complain that you don't get
overtime pay. You have a particular salary and you know it
consists of a certain number of hours.
The same with people in many, many other professions. They
get a salary and they do not expect then to get paid overtime
when they say stay late. They make up for it later.
So I think it would be extremely detrimental.
Chairman Brady. The majority of part-time workers are
women. Many face the absence of extra benefits at their work,
including health insurance, retirement benefits. Full-time
workers tend to be the ones with those additional benefits.
So what would you recommend to encourage not only greater
pension coverage for workers, but also additional benefits for
workers at smaller firms and those who work part-time?
Ms. Furchtgott-Roth. They should make sure that they are
informed and that they take advantage of any IRAs that they
have. If you think that it is necessary to increase that IRA
amount, then that IRA amount could be increased from $5- or
$6,000 a year to maybe $10,000 a year so that they have more
room to save on their own.
I just want to say that part-time jobs are very desirable
by many people. Many people especially mothers, prefer part-
time jobs to full-time, and they would only work if they have
part-time jobs.
If they have fewer benefits, they often have a higher cash
wage. So quite a lot of the growth in income, as can be seen
from Table 5 of the excellent study that Dr. Shierholz has
written called ``Raising America's Pay,' in Table 5 you can see
that when benefits are included and a comprehensive measure of
income is used, then income has risen substantially for many
income groups, almost all income groups.
But just on an hourly wage basis, that is not necessarily
true because they are getting more benefits. Many people would
prefer a higher cash wage to a lower cash wage and more
benefits.
Chairman Brady. Thank you.
Senator Lee.
Senator Lee. Thank you very much, Mr. Chairman. Thanks to
all of you for coming to testify before this Committee today.
Your insights have been very, very helpful.
Ms. Furchtgott-Roth, I would like to start with you and
talk to you a little bit about the Working Families Flexibility
Act, which was introduced and passed in the House by
Representative Robey.
I am sponsoring the Senate companion bill on this side of
the Capitol, and I just wanted to talk to you about this for a
minute.
It has always been striking to me that federal law puts us
in a position where we even need legislation like this. I mean,
we start out with an understanding that the only people who are
subject to the existing federal restrictions that make this
legislation even necessary are those who are, number one,
hourly as opposed to salaried; and number two, not government
employees.
And so people who are either salaried or who work for the
government don't have to worry about it. So those of us in
those categories are able to, as circumstances may require, go
to our children's school plays, or games, or whatever else we
need to do during the day on one day of the week, if we need to
work more later in the week to offset those hours we do that,
and sometimes we take that for granted.
But it seems particularly unfair that we tell hourly
employees who are not government workers that they do not have
the same advantage.
Can you think of--can you identify any good public policy
reason why we ought to be discriminating against hourly
employees who are generally lower paid merely because they do
not work for the government, is there any good reason to do
that?
Ms. Furchtgott-Roth. There is no good reason to do that.
And as I said in my testimony, it is unfair that upper income
workers have the advantage of comp time and lower income
workers do not.
We should expand that advantage to all American workers.
They should all be allowed the choice.
Senator Lee. Right. I think it is important for all of us
to remember that, you know, whenever people have increased
flexibility they can live their lives better. So this is not
just an economic issue. This has all sorts of social
implications, as well. And it has always been difficult to me
how someone could be against this, how someone would want the
government to continue to discriminate against hourly workers
who are generally less well paid, and particularly those hourly
workers who do not work for the government.
Ms. Furchtgott-Roth. It also takes away an option for
employers. Because employers can offer a benefit of comp time
that enables them to compete. Just as 97 percent of employers
pay above minimum wage, they have to pay more to retain talent.
So allowing them the option to offer comp time is a way to
retain talent. And I brought one of my young staff with me,
Jared Meyer. He often works very late, working on our e-brief,
and sometimes he wants a day off. He wants a day off to go see
his family in Chicago. So I say, fine, Jared, take the day off.
But if the law was to go through, I would not be permitted
to give him that option.
Senator Lee. Okay. I suppose that it has one benefit
relative to government in that it gives perhaps the government
something of a competitive advantage in hiring workers. But
that is probably not the kind of advantage we want to be giving
government. I assume you would not disagree with that?
Ms. Furchtgott-Roth. That is correct, I don't think we need
to give government any more advantages than it already has.
Government workers have very, very low quit rates and they are
undoubtedly at a big advantage in many ways.
Senator Lee. Thank you.
Ms. Greszler, in your testimony you noted that several
regulatory factors tend to add rigidity to the labor market,
restricting job growth and labor flexibility. And some of these
include licensing laws, dated labor laws, and general
government micro management.
I think there is an important corollary to this, which is
that many workers may be drawn out of the formal economy and
into the informal economy as we might describe it. Could you
speak to how these kinds of restrictions, those regulatory
restrictions that I just described, might do this? How they
might encourage people to participate in the informal economy
rather than the formal economy? And what kinds of public policy
ramifications that might have?
Ms. Greszler. Sure. Licensure laws, regulations, all these
things that drive up the cost to either starting a business,
continuing to work if it's a new regulation that's come down
and it's going to cost your company, or you as an individual
too much to implement that and keep profitable, then you're
probably just going to go off on the side and say, well, I'm
going to do this, you know, under the table, or I'll give you
this service but, you know, I'm not going to report that.
It's fairly easy for people who are their own employers to
do that if they're not working for a large company and
receiving a W-2. You see that in restaurants that don't want to
pay a minimum wage. They might just say, okay, I can't afford
to do this. You know, in my home town there was an ice cream
shop and everybody knew, everybody that works there is under-
the-table because they can't afford to pay people the minimum
wage.
And so there are plenty of people that wanted to work
there, and they were willing to accept lower than the minimum
wage but that all goes off the books. The company is not paying
taxes. The individuals aren't. And so we are driving people
into the informal economy, and that is reducing revenues.
Senator Lee. So it's reducing revenue to the government.
That hurts the government.
Ms. Greszler. Um-hmm.
Senator Lee. How might it also----
Ms. Greszler. It hurts--I'm sorry.
Senator Lee. How might--I see my time has expired, let me
just follow up on this one more point, if I could.
How might it also hurt the worker, separate and apart from
how it might hurt the government.
Ms. Greszler. Right. When the worker is not part of the
formal economy, they are not entitled to any of the benefits
that are required of employers. They are not contributing
payroll taxes, so that is not going toward Social Security.
There's no record of that.
They are not entitled to any benefits that employers are
required to provide, and so they are left with really few
protections from the government if they are working under the
table.
Senator Lee. Okay. Thank you. I think that is a great
example of how many of these restrictions that are publicly
touted as ways of protecting the little guy actually end up
hurting the little guy. And men and women throughout America
are often victims to this.
Thank you, very much.
Chairman Brady. Thank you, Senator. I want to thank all of
you for being here today, for taking your time. It was great
testimony. Thank you for being here.
Republicans and Democrats on the Committee will continue to
examine this economy, ways we can get people back to work, and
how we can look at empowering workers and increase their
standard of living.
In this recovery, Wall Street is doing very well. Middle-
class America has been left behind. And so we are looking for
and searching for answers that we can work together on to try
to find a stronger economy for Americans.
With that, the hearing is adjourned.
(Whereupon, at 3:19 p.m., Wednesday, June 18, 2014, the
hearing in the above-entitled matter was adjourned.)
SUBMISSIONS FOR THE RECORD
Prepared Statement of Hon. Kevin Brady, Chairman, Joint Economic
Committee
Vice Chair Klobuchar, Members, and distinguished witnesses:
On May 21st, the Joint Economic Committee held a hearing on
``Women's Retirement Security.'' Today, we turn our focus to the
workplace--which policies help to empower or harm American workers, and
especially women, in their quest to attain their vision of the American
Dream. This has been a major focus of Congresswoman Cathy McMorris
Rogers, chairman of the House GOP Conference.
The disappointing economic recovery led by the Obama White House
remains the most significant obstacle preventing American men and women
from achieving economic empowerment. Although the current recession
actually ended five years ago this month, almost three out of every
four Americans believe we are still in a recession.
That's because the economic policies pursued by President Obama and
congressional Democrats have produced the weakest recovery in more than
50 years, and a troubling ``Growth Gap'' between this recovery and
other recoveries since 1960, robbing over $1,000 a month from a family
of four's real disposable income.
Because of this Growth Gap, we are missing $1.5 trillion of real
GDP and 5.8 million private-sector jobs. Merely to catch up with an
average recovery before President Obama leaves office, our economy
would have to expand at an annual rate of 6.2 percent every quarter and
add 371,000 new private jobs every month. Neither figure has been
achieved once during the Obama recovery. Catching up will be hard to
do, especially as the President continues to throw further roadblocks
in front of this struggling recovery.
Next month this Committee will examine this Administration's
macroeconomic policy failures at a hearing marking the fifth
anniversary of this recovery. For now though, let us focus on the
workplace.
One of the best means of empowering workers is to provide choice
and flexibility in the workplace. Flexibility is especially important
to the many women who are caregivers to their children and elderly
parents.
Yet in March, President Obama directed the Department of Labor to
extend overtime regulations to several million workers, who are
currently exempt. This regulation would harm working women who need the
flexibility and choice between taking overtime pay, and banking those
extra hours for time off in their later work schedule.
A much better approach is The Working Families Flexibility Act of
2013, which passed the House over a year ago, but has stalled in the
Democrat-controlled Senate. JEC Member, Senator Mike Lee, is sponsoring
the companion bill in the Senate.
The bill would allow private-sector companies to offer hourly
workers, who put in more than 40 hours a week the choice between taking
overtime pay or time-off. This is a choice that is currently available
to Federal, state, and local government workers, but is denied to
private-sector workers. It's a highly-valued benefit for government
workers, but not for workers along Main Street. Why do the President
and Congressional Democrats fight so hard to deny women in the
workforce this important choice?
The House passed the Working Families Flexibility Act in May 2013.
It is past time for Senate Majority Leader Reid to bring this bill to
the Senate for a vote.
There are other ways this White House has made the workplace less
family friendly, especially for women. Economist Casey Mulligan argues
the President's Affordable Care Act will push more young women out of
the full-time work, making them ``29ers''--referring to the maximum
number of hours that an hourly employee can work and still be
considered part-time under the new health care law. Mr. Mulligan
expects 2 percent of workers to become ``29ers,'' an increase by more
than a factor of 10.
Moreover, at the urging of special interests, the Environmental
Protection Agency recently introduced new sweeping global warming
regulations on carbon emissions. A study by the U.S. Chamber of
Commerce's Institute for 21st Century Energy found that through the
year 2030 these regulations would lower America's economy by an average
of $51 billion each year, reduce jobs by 224,000 every year, increase
electricity payments from American families by $289 billion, and lower
disposable income for U.S. households by $586 billion.
So thanks to President Obama, women will compete for fewer jobs in
a slower economy, paying higher electricity bills with less money in
their family's budget. Thank you, Mr. President.
America's broken tax code and extremely progressive income tax
system penalize two-income households-- which are the norm today among
married, working-age couples. Although Congress lessened this penalty
in the last decade, it still exists and should be eliminated. It's hard
enough to make ends meet as it is, especially with college costs,
gasoline, utilities and food costs all rising.
Washington makes it harder to climb out of poverty, especially for
young women and single moms with limited skills. While unintended, the
conflict between the phase-outs of many means-tested Federal benefit
programs like food stamps and the tax system means that working
families struggling to leave poverty face an effective marginal tax
rate as high as 80 percent, by one study's estimate. This interaction
creates poverty traps that discourage work and climbing the economic
ladder.
Moreover, the Cato Institute's Michael Tanner and Charles Hughes
found that welfare can pay more than the minimum wage in 35 states,
even after accounting for the Earned Income Tax Credit, and in 13 of
those states, welfare can pay more than $15 per hour. The President
should work with Congress to correct these perverse policies.
Occupational licensing is another problem facing poor families,
especially those headed by women, who are seeking to work their way
into the middle class. Representative Hanna held a hearing on the
occupational licensing issue at the Small Business Committee.
Over the last several decades, the number of workers required to
have occupational licenses has risen steadily. In many cases,
occupational licensing goes far beyond what is necessary to protect
public health and safety. It has been a means for incumbent workers to
raise their wages, by an estimated 15 percent, at the expense of new
entrants who have fewer jobs, and consumers who pay higher prices.
Although occupational licensing is primarily a state issue,
Congress should use its investigative powers to shed light on how
licensing abuse harms ordinary Americans, both as workers and
consumers. Catching up will be hard to do, especially as the President
continues to throw further roadblocks in front of this struggling
recovery.
Empowering workers, especially women, should be a common goal of
both Democrats and Republicans. ``Staying the course'' with the same
old federal traps and obstacles is not an option.
With that, I look forward to hearing from today's witnesses.
__________
Prepared Statement of Hon. Amy Klobuchar, Vice Chair, Joint Economic
Committee
Thank you, Chairman Brady for holding this important hearing on
empowerment in the workplace and our country's economic well-being.
I would like to thank all of the witnesses on today's panel. A
special thanks goes to the witnesses I invited: Dr. Barbara Gault,
Executive Director and Vice President of the Institute for Women's
Policy Research, and Dr. Heidi Shierholz, an economist with the
Economic Policy Institute.
I'd like to take a minute to talk about the condition of the labor
market and the workforce today. Job growth has continued to strengthen,
with the private sector gaining jobs for the past 51 months. During
this time, more than 9.4 million jobs have been added. The national
unemployment rate is 6.3 percent, the lowest level in five-and-a-half
years.
For most workers, the prospects of getting and keeping a job today
are better than they've been in years. The number of unemployed workers
per job opening has decreased from nearly seven in July 2009 to 2.2 in
April 2014, close to the pre-recession level of roughly two unemployed
workers for every job opening. But we still have work left to do.
Despite the drop in the national unemployment rate, long-term
unemployment is still a very real problem. Nearly three-and-a half
million Americans - over one-third of unemployed workers - have been
out of work for more than six months. Long periods of joblessness do
significant damage to workers' future earnings and to our nation's
productivity.
Long-term unemployment problems spill over to create problems for
the next generation. Spells of long-term unemployment not only reduce
life-time earnings and increase mortality rates for the unemployed, but
also lead to lower educational performance and lower earnings for the
children of the long-term unemployed.
We must also do more to address growing income inequality. The
average income for the top one percent of households has grown more
than seven times as fast as it has for the average household. Yet for
the rest of America, income growth has stalled completely: the average
American household earned less in 2012 than they did in 1989. The
middle class is shrinking and is less secure. Seventy percent of our
economy is based on consumer spending. So when families can't afford to
buy things, our businesses suffer and our whole economy suffers.
There are a number of steps our country should be taking to make
sure that our economy continues to grow for everyone so that all
participants in the workplace benefit. We've got to approach long-term
unemployment from all sides. Two months ago, the Senate passed an
extension of unemployment insurance, but it remains stalled in the
House. Unemployment insurance is an important piece of the puzzle, but
it's not the only piece. We also need to make investments in job
training.
Ramping up job training is part of the key to empowering workers.
We know that there are shortages of workers with the skills that
employers need. In a poll of manufacturing companies in my home state,
60 percent of respondents said it was difficult to find workers with
the right skills and experience, up from 40 percent in 2010.
That's why I introduced a bipartisan bill with Senator John Hoeven
that would add 100 STEM high schools and strengthen partnerships
between employers and technical and community colleges. We're already
seeing this model work in Minnesota. Alexandria Tech has a 96 percent
placement rate. Improving access to job training programs and STEM
education will not only help people get jobs, but will also help ensure
that those are good paying jobs.
Another thing we should do is combine workforce training for
parents with quality early education for low-income children. In my
home state, Minnesota Child Care Assistance Programs help lower-income
families pay for childcare costs so their parents can look for work or
attend school. Integrated programs that meet the needs of both parents
and children have been shown to be effective at reducing poverty for
both generations. The idea is simple: helping parents helps the kids.
When parents are doing well, that has an enormous positive impact on
their children.
Raising the minimum wage can help reduce poverty and help families'
economic security. At $7.25 per hour, the real value of the current
minimum wage is now lower than it was in 1968. Low wages hurt workers
but also cost the rest of society. For instance, more than half of the
nation's fast-food workers rely on the federal safety net because their
wages are low, resulting in annual costs of over $6.8 billion to
taxpayers.
Finally, we need to eliminate the gender pay gap. Women who work
full time earn about 80 cents for every dollar men earn. Much of this
disparity is due to differences in education and occupation, but even
after accounting for those and other factors, women still make less
than men. The Paycheck Fairness Act would give women new protections
against pay discrimination and help affirm that basic principle that
all women deserve equal pay for equal work.
We need to keep moving forward, ensuring every person can work a
steady job, with good wages, provide for their families and save a
little for the future.
Labor laws have played and must continue to play a key role in
protecting workers from unfair labor practices:
Child labor laws prevent young kids from being exploited
and forced to work instead of going to school;
Laws that mandate decent working conditions protect
people from being hurt or injured on the job; and
we need to uphold the fundamental right of workers to
organize.
This is about providing stability and consistency to workers and
businesses. It's also about doing the right thing for American
families. Again, I want to thank the witnesses for being here this
afternoon. I look forward to your testimony.
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