[Joint House and Senate Hearing, 116 Congress]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 116-194

                     CONNECTING MORE PEOPLE TO WORK

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

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 20, 2019

                               __________

          Printed for the use of the Joint Economic Committee



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                        JOINT ECONOMIC COMMITTEE

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

SENATE                               HOUSE OF REPRESENTATIVES
Mike Lee, Utah, Chairman             Carolyn B. Maloney, New York, Vice 
Tom Cotton, Arkansas                     Chair
Ben Sasse, Nebraska                  Donald S. Beyer, Jr., Virginia
Rob Portman, Ohio                    Denny Heck, Washington
Bill Cassidy, M.D., Louisiana        David Trone, Maryland
Ted Cruz, Texas                      Joyce Beatty, Ohio
Martin Heinrich, New Mexico          Lois Frankel, Florida
Amy Klobuchar, Minnesota             David Schweikert, Arizona
Gary C. Peters, Michigan             Darin LaHood, Illinois
Margaret Wood Hassan, New Hampshire  Kenny Marchant, Texas
                                     Jaime Herrera Beutler, Washington

                Scott Winship, Ph.D., Executive Director
                 Harry Gural, Democratic Staff Director 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                            C O N T E N T S

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                     Opening Statements of Members

Hon. Mike Lee, Chairman, a U.S. Senator from Utah................     1
Hon. Margaret Wood Hassan, a U.S. Senator from New Hampshire.....     3

                               Witnesses

Dr. Veronique De Rugy, Senior Research Fellow, Mercatus Center, 
  Arlington, VA..................................................     5
Mr. Oren Cass, Senior Fellow, Manhattan Institute, New York, NY..     7
Dr. Jay Shambaugh, Director, The Hamilton Project, and Senior 
  Fellow in Economic Studies, The Brookings Institution, 
  Washington, DC.................................................     9
Mr. Jose Ortiz, Jr., Executive Director, New York City Employment 
  and Training Coalition, New York, NY...........................    11

                       Submissions for the Record

Prepared statement of Hon. Mike Lee, Chairman, a U.S. Senator 
  from Utah......................................................    32
Prepared statement of Hon. Margaret Wood Hassan, a U.S. Senator 
  from New Hampshire.............................................    32
Prepared statement of Dr. Veronique De Rugy, Senior Research 
  Fellow, Mercatus Center, Arlington, VA.........................    34
Prepared statement of Mr. Oren Cass, Senior Fellow, Manhattan 
  Institute, New York, NY........................................    41
Prepared statement of Dr. Jay Shambaugh, Director, The Hamilton 
  Project, and Senior Fellow in Economic Studies, The Brookings 
  Institution, Washington, DC....................................    52
Prepared statement of Mr. Jose Ortiz, Jr., Executive Director, 
  New York City Employment and Training Coalition, New York, NY..    56
Report titled ``Labor Force Nonparticipation: Trends, Causes, and 
  Policy Solutions'' submitted by Senator Hassan.................    61
Response from Jay Shambaugh to Question for the Record Submitted 
  by Senator Klobuchar...........................................    63
Question for the Record to Jose Ortiz, Jr., Submitted by Senator 
  Klobuchar......................................................    64
Question for the Record to Jose Ortiz, Jr., Submitted by Senator 
  Hassan.........................................................    64

 
                     CONNECTING MORE PEOPLE TO WORK

                              ----------                              


                      WEDNESDAY, NOVEMBER 20, 2019

                    United States Congress,
                          Joint Economic Committee,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:15 p.m., before 
the Joint Economic Committee, Mike Lee, Chairman, presiding.
    Representatives present: Schweikert, Beatty, and Frankel.
    Senators present: Lee, Hassan, Cruz, and Peters.
    Staff present: Melanie Ackerman, Robert Bellafiore, Sol 
Espinoza, Harry Gural, Amalia Halikias, Sema Hasan, Colleen 
Healy, Ziyuan Huang, Christina King, Wells King, Kyle Moore, 
Hope Sheils, Kyle Treasure, Scott Winship, and Randy Woods.

OPENING STATEMENT OF HON. MIKE LEE, CHAIR, A U.S. SENATOR FROM 
                              UTAH

    Chairman Lee. Good afternoon, and thank you for joining us 
for this hearing of the Joint Economic Committee.
    The American labor market, which we will be discussing 
today, is strong. The current economic expansion is the longest 
that we have encountered in all of U.S. history. Our 
unemployment rate has remained low, at or below 4 percent, for 
the last 20 months and, staggeringly, encouragingly, it 
continues to fall.
    Average wage growth has of course slowed down a bit, but it 
remains strongest for many workers who in the past have been 
paid less well than others. The gains have been broadly shared. 
African-American and Hispanic unemployment rates are today at 
all-time historic lows. Female labor force participation is 
approaching an all-time high, and analysts speculate that we 
still at this moment have yet to reach full employment.
    Yet, behind these indicators of very significant, robust 
economic strength, there lies a worrisome long-term trend--what 
Nicholas Eberstadt at the American Enterprise Institute has 
called ``an invisible crisis.'' Many American men are leaving 
the workforce altogether. Though on the rise, the employment-
to-population ratio for prime age men, those between the ages 
of 25 and 54, is near levels that we have not seen in this 
country for decades, since the Great Depression in fact.
    Even in today's really strong, unusually good labor market, 
we see that once top connections to the workplace have not only 
started to slacken, but they have also started to fray. The 
economic implications of such disconnection should be clear to 
all, and anecdotally many of us have observed this in one 
fashion or another. But the Joint Economic Committee's Social 
Capital Project, as part of its mission to understand and 
explain what we refer to as ``associational life in America,'' 
has studied the plight of these disconnected men and identified 
potentially greater, more severe consequences for the health of 
our families and our communities.
    In its report, which bears the title ``Inactive, 
Disconnected, and Ailing: A Portrait of Prime Age Men Out of 
The Labor Force,'' the Joint Economic Committee's Social 
Capital Project found that disconnected men are more socially 
isolated, and they are less happy. And, that this is a problem. 
They are more isolated and more disconnected than their 
employed peers.
    At the community level, the disappearance of work can lead 
to the population brain drain and the decline of institutions 
of civil society.
    If we are to expand opportunity by strengthening families, 
by strengthening communities and other institutions of civil 
society, then we have to devote our attention to work, a means 
of supporting ourselves and our families, a source of meaning 
and of purpose, and a site for affirming and satisfying and 
connecting relationships.
    I hope our discussions this afternoon will give us 
something of a clearer sense of how to connect more Americans 
to this wellspring of opportunity and connectedness that we 
need so much in our society for it to thrive.
    At this afternoon's hearing, we will seek to better 
understand the forces shaping the labor market and Americans' 
connections to that labor market.
    A variety of reasons have been offered to explain why fewer 
Americans in their prime years are entering the workforce. 
Several interdependent themes emerge from most analyses. We 
have got declining economic dynamism, falling worker mobility, 
stagnating wages, trade exposure, employment polarization, 
skill-biased technological change, and an expanding safety net 
that sometimes has implications beyond those that were intended 
at the time of the creation of the program at issue.
    Our next step will be to consider policy reforms consonant 
with the most plausible explanations for declining prime age 
labor force participation.
    What barriers to opportunity can we identify first and then 
try to remove? How might incentives to join the workforce be 
strengthened? What might the government be doing to impair the 
removal of those barriers? How might we more smartly invest 
human and social capital to create new opportunities?
    Possible solutions may involve reforming the safety net, 
modernizing labor regulations, and increasing wage growth. The 
Social Capital Project will cover a number of these topics in a 
forthcoming report, all of them in fact. And that report will 
in turn be informed by the insights of today's panelists.
    I look forward to their testimonies, and am grateful to 
each of our panelists for joining us today for this productive 
conversation aimed at drawing disconnected Americans off the 
sidelines and into the workplace.
    I now recognize Senator Hassan for her opening remarks.
    [The prepared statement of Chairman Lee appears in the 
Submissions for the Record on page 32.]

OPENING STATEMENT OF MARGARET WOOD HASSAN, A U.S. SENATOR FROM 
                         NEW HAMPSHIRE

    Senator Hassan. Well thank you, Chairman Lee. Thank you to 
our panelists for being here today.
    Mr. Chairman, I appreciate today's focus, getting this 
Committee to focus on the important issue of getting more 
Americans to participate in our workforce. Members of both 
parties agree that we must increase labor force participation. 
While low unemployment rates in my home State of New Hampshire 
and across the country are welcome news, we know that a low 
unemployment rate can also present real challenges, from 
businesses not being able to find workers, to additional 
pressure being put on the productivity of our current 
workforce.
    For a variety of reasons, too many Americans are falling 
out of the workforce, and a smaller percentage of Americans 
participating in the workforce can drag on economic growth.
    It is critical that we address the root cause that results 
in people not seeking employment. And today's hearing presents 
an opportunity to address those factors and look toward 
bipartisan solutions.
    To start, as our economy changes rapidly individuals may 
not have the skills and supports that they need to enter and 
remain in the workforce. And I have heard from businesses 
throughout New Hampshire that one of their top challenges is 
finding more qualified workers, even at entry level jobs. 
Addressing this challenge requires us to both strengthen job 
training efforts and remove the barriers that prevent too many 
people from participating or remaining in the workforce.
    I have introduced bipartisan legislation, The Gateway To 
Careers Act, that would do just that. This bill would provide 
grants to support partnerships between community or technical 
colleges and workforce development partners such as State 
workforce development boards, industry associations, and 
community-based organizations.
    These partnerships would help remove many of the barriers 
that prevent too many people from completing a two-year degree 
or credential by connecting them to support services, including 
housing, mental health, and substance use disorder treatment, 
assistance in obtaining health insurance coverage, offering 
career counseling, transportation, and other services.
    By strengthening job training and support services, we can 
connect more people with the tools that they need to enter and 
succeed in our changing economy.
    Another systemic barrier that many Americans face is a lack 
of access to paid leave and to child care. Frequently those who 
want to work are held back by pressing family responsibilities 
that make it impossible.
    A recent report by the Hamilton Project showed that 9.6 
million women who are not participating in our workforce list 
family and home responsibilities as their primary reason.
    And, Mr. Chair, I request that the Hamilton Project report, 
which is called ``Labor Force Nonparticipation: Trends, Causes, 
and Policy Solutions,'' be entered into the record.
    Chairman Lee. Without objection.
    [An excerpt from the report titled ``Labor Force 
Nonparticipation: Trends, Causes, and Policy Solutions'' 
appears in the Submissions for the Record on page 61.]
    Senator Hassan. Thank you. By enacting more family friendly 
policies that enable people to balance their work and family 
responsibilities, we can help more people join or rejoin the 
labor market.
    We also must break down employment barriers facing 
traditionally disadvantaged communities. In 2018, Brookings 
found that only 4 out of 10 working-age adults who experienced 
disabilities are employed. So we also need to address the 
challenges that those who experience disabilities encounter 
entering the workforce.
    As governor, I signed legislation banning employers from 
paying workers with disabilities at a lower rate than the 
minimum wage, making New Hampshire the first State in the 
Nation to ban sub-minimum wages for people who experience 
disabilities.
    We must make this a Federal priority, which is why I have 
co-sponsored the Transformation To Competitive Employment Act, 
which would phase out the practice of paying a sub-minimum wage 
to workers who experience disabilities nationwide.
    We should also make sure that workers who experience 
disabilities receive the support they need to succeed in the 
workplace and are less likely to fall out of the labor market.
    Finally, no conversation about increasing participation in 
our workforce can exclude addressing the cost of higher 
education. Right now, students face far too many obstacles in 
getting the education that they need, particularly when it 
comes to affordability.
    No one who is pursuing higher education so that they can 
build a better future for themselves and in turn for our 
economy should have to put that goal on hold because they 
cannot afford it. And they should not have to take out 
substantial debt to do so, either.
    I will continue working on strategies to increase college 
affordability and to lower the burden of student debt so that 
more workers can get the education that they need to thrive. We 
can all agree that tackling our workforce challenges requires a 
multifaceted and comprehensive approach. There is not a single 
solution, and we have multiple opportunities to connect more 
people to work.
    I look forward to hearing more from our witnesses today, 
and now I will turn it back to you, Chairman Lee.
    [The prepared statement of Senator Hassan appears in the 
Submissions for the Record on page 32.]
    Chairman Lee. Thank you, Senator Hassan.
    I would now like to introduce our panel of distinguished 
witnesses. First we have Dr. Veronique De Rugy who is a Senior 
Research Fellow at the Mercatus Center at George Mason 
University. Her primary research interests include the U.S. 
economy, the Federal budget, homeland security, taxation, tax 
competition, elimination of the Export-Import Bank, and 
financial privacy. Just a few small issues that do not affect 
anything else [laughing].
    Every one of them are issues of great importance. 
Previously Dr. De Rugy had been a Resident Fellow at the 
American Enterprise Institute. Also, a Policy Analyst at the 
Cato Institute. And a Research Fellow at the Atlas Economic 
Research Foundation.
    So, Dr. De Rugy, welcome.
    Oren Cass is a Senior Fellow at the Manhattan Institute, 
where his work focuses on strengthening the labor market, 
reforming the social safety net, and organized labor, and the 
costs of regulation. Mr. Cass wrote a widely discussed book in 
2018 titled ``The Wants and Wonder''--I am sorry, ``The Once 
and Future Worker: A Vision for the Renewal of Work in 
America.''
    Before joining the Manhattan Institute, he was Domestic 
Policy Director for Mitt Romney's 2012 presidential campaign. 
Welcome, Mr. Cass.
    We next have Jay Shambaugh, who is the Director of the 
Hamilton Project and a Senior Fellow in Economic Studies at the 
Brookings Institution. He is also a Professor of Economics in 
International Affairs at the Elliot School of International 
Affairs at the George Washington University. He served under 
the Obama administration as a member of the White House Council 
of Economic Advisers, where he was previously Chief Economist. 
So thank you for joining us today, Mr. Shambaugh.
    And we have Jose Ortiz, who is Executive Director of the 
New York City Employment and Training Coalition. Mr. Ortiz has 
spent his career building and overseeing programs at 
organizations focused on education, leadership, innovation, and 
workforce development. He previously served as the Managing 
Director of External Affairs, Partnerships, and Business 
Development at Pursuit, a Long Island City-based nonprofit that 
prepares workers without college degrees for software 
development jobs at some of the world's most innovative 
companies. Welcome, Mr. Ortiz.
    So thank you for joining us today. Dr. De Rugy, we will 
start with you.

  STATEMENT OF DR. VERONIQUE DE RUGY, SENIOR RESEARCH FELLOW, 
                 MERCATUS CENTER, ARLINGTON, VA

    Dr. De Rugy. Mr. Chairman, members of this Committee, thank 
you for having me today. I am a Senior Research Fellow at the 
Mercatus Center at George Mason University. So ensuring that 
American workers can stay attached to the workforce is a worthy 
goal, and in pursuit of this goal understanding what the 
problems with the labor markets are or are not, and 
understanding the reasons for the lack of attachment to the 
labor force by some workers is key to designing the right 
policy. And for that, to that effect, I will be making three 
points.
    So first, the labor market and the state of the American 
workers are better than commonly suggested.
    However, a small but sizeable segment of working-age 
Americans have not shared in that progress.
    Third, some government policies at the Federal, State, and 
local levels today make it harder for some workers to tap into 
a particular market in which workers are paid higher wages.
    So first, as, Mr. Chairman, you have said, the unemployment 
is at its lowest in 50 years, no matter how you measure it. So 
is poverty. And while some argue that the real wages have been 
stagnant over the past several decades, measured with the right 
deflator and after adjusting for taxes and transfer, real wages 
have unquestionably increased. The same is true of real median 
household income, especially after adjusting for household 
sizes.
    Also, while millions of manufacturing and other middle-
skill jobs have disappeared, that decline has been more than 
offset by the increase in high-skill jobs.
    Second, despite this healthy employment number, some 
Americans, disproportionately working age men, have dropped out 
of the labor force entirely. This phenomenon has rightly 
received serious attention from scholars and policymakers.
    One conclusion of this research is that American workers 
confronted with economic disruptions today face relatively new 
and more serious problems than they were facing before. In the 
past, economic shocks were followed by an increase in the 
unemployment rate. But as people moved away to find jobs, or 
change jobs in industry altogether, the unemployment rate would 
go down. Well, not in this case.
    Instead, Americans, especially those who were not college 
educated, do not necessarily move away and remain in hard-hit 
areas even if it means staying unemployed.
    So my third point is that some policies reduce interstate 
mobility, or they change incentives for workers on the margins 
who work less or not at all. And they are in desperate need of 
reform. So I will only cite three type of programs.
    So the first one, which will not be a surprise to this 
Committee, is land and zoning regulations. They have played an 
oversized role in exacerbating work adjustment issues. These 
regulations increase the cost of housing in higher-wage areas 
and make it harder to move there.
    Standard estimates are that even modest housing 
deregulation would lead to a large increase in the supply of 
housing in the most prosperous areas in the country, which 
would give lower income workers greater access to higher-wage 
labor markets.
    Land and zoning regulations also create an incentive for a 
low-skilled worker to stay where housing is cheap, even though 
the job opportunities there are more limited.
    Second, occupational licensing laws raise barriers between 
workers and better job markets. These requirements operate as 
barriers to interstate mobility as they vary between states and 
cannot be transferred.
    Occupational licensing also increases the price of goods 
and services for consumers. In the case of services such as 
child care, this effect is an impediment to working parents 
wishing to stay attached to the workforce.
    Third, in addition to the limits on access to better job 
markets, some government policies may reduce a worker's 
incentive to seek employment. Unfortunately, Social Security 
disability incentive is one of these programs. The program was 
created to support those struck with health conditions or 
injuries that make it difficult or impossible to work, and it 
continues, thankfully, to play that role.
    But scholars have found that the program has also created 
an incentive not to work for a rising number of adults with 
limited earning potential who are physically able to work.
    In conclusion, before policymakers rush to implement new 
Federal Government programs to address worker adjustment 
issues, we should acknowledge that some of the challenge in 
connecting workers to the workforce can be created by existing 
programs.
    Removing these barriers would lead to more opportunities 
and better lives for those who have been frozen out of the 
gains enjoyed by most workers.
    Finally, and I think this is important, while these reforms 
may not be the whole answer at all to this challenge, a failure 
to make these changes will make other reform efforts by the 
Federal Government ineffective.
    Thank you, and I am looking forward to your questions.
    [The prepared statement of Dr. Veronique De Rugy appears in 
the Submissions for the Record on page 34.]
    Chairman Lee. Thank you, Dr. De Rugy. We will turn next to 
Mr. Cass. I may have to go vote in a moment, but I will be 
right back if I do. Thank you.

STATEMENT OF MR. OREN CASS, SENIOR FELLOW, MANHATTAN INSTITUTE, 
                          NEW YORK, NY

    Mr. Cass. Thank you, Chairman, Madam Vice Chair, and 
members of the Committee. My written testimony focuses on three 
topics.
    First, explaining why in my view connecting people to work 
is so important and not something the government benefits and 
transfers can replace.
    Second, reviewing the data on the declining health of the 
labor market for men in particular, and the accompanying 
decline in labor force participation.
    And third, outlining the kinds of policies we might pursue 
in response in areas ranging from regulatory reform, education 
reform, trade and immigration policy, organized labor, a safety 
net, and our programs of taxes and subsidies.
    Here I would like to focus on two points in particular, 
because certainly a wide variety of factors influence the long-
term slide in labor force participation for American men.
    For instance, changes in cultural norms and home 
environments may both be discouraging men from working and 
reducing their capacity. The labor market, meanwhile, has 
failed to generate attractive opportunities that prospective 
workers are capable of seizing.
    Attempts to allocate responsibility among these factors 
have set off two robust, but in my view ultimately irrelevant, 
debates. The first of these is, have wages technically risen or 
fallen?
    Men's median weekly earnings have fallen by seven percent 
since 1979, if adjusted for inflation using the standard CPI 
from the Bureau of Labor Statistics; but an alternative measure 
from the Bureau of Economic Analysis suggests that earnings 
have increased over the period by 12 percent.
    Even using the more optimistic estimate, it is important to 
recognize the gains hold only for men with college degrees--
excuse me, only for women with college degrees. All other 
groups saw declines.
    It is also worth noting that the problem is particularly 
pronounced with younger men, exactly those who in many cases we 
are most concerned with connecting to the workforce in the 
first place.
    The U.S. Census Bureau reports that between 1975 and 2016 
the share of men aged 25 to 34 earning less than $30,000 per 
year increased from 25 percent to 41 percent. And that of 
course is among those who are working, ignoring the higher 
share that are earning nothing.
    I think it is also important to recognize when we discuss 
these data that, while my colleague, Dr. De Rugy, is correct 
that these data look different with respect to taxes and 
transfers and household income, neither of those metrics is 
relevant to how an individual worker would perceive the 
decision to enter the labor market. If anything, at the margin 
but increases in taxes and transfers are likely to have made 
entering the workforce less attractive.
    But ultimately, whether wages are slightly lower or higher 
in real terms is beside the point. No one believes that a 5 
percent wage decline over 40 years would produce a labor market 
exodus while a 5 percent wage increase would flood the market 
with new workers. The important fact, regardless, would be that 
men's median earnings have fallen woefully behind the 
trajectory of growth in the wider economy, and the rising costs 
associated with achieving a middle class lifestyle.
    Our concern ultimately is not only about the absolute value 
of the wage, but also its relative value. The easiest way to 
see this is to recognize that the fact that men may have 
treaded water since 1970 is an arbitrary point of comparison. 
We might just as well ask whether or not men are doing better 
than they were in 1910. And if we truly believed in absolutely 
that wage was all that mattered, we might posit that as long as 
men were earning as much as they had been in 1910 there would 
be no problem.
    Obviously I do not think anyone believes that, and so we 
should not necessarily believe that stagnation since 1970 is 
any more acceptable.
    The second robust but relevant debate centers on attempts 
to allocate responsibility across the myriad factors that may 
be influencing men's behavior.
    Stagnated wages may be one problem, but many people view 
the cultural problem to be even larger. And some worry that, if 
it is truly a cultural problem, then policymakers would be 
helpless.
    In my view, that is not the right way of looking at it. 
Regardless of how wage is assigned the various factors, the 
question for policymakers today is not how we got into the 
situation but how to get out of it. Huge, immovable cultural 
and economic burdens may push toward harmful decisions, but so 
too a number of factors push more constructively: behaving 
responsibly, planning for the future, holding a job, 
sacrificing for a family.
    People are aware that these things really do have benefits. 
And in the past in a world not unrecognizably different from 
the present, with many critical conditions resting in similar 
repose, men were more likely to work.
    Whatever marginal shift changed outcomes for the worse, 
other marginal shifts, even different ones, can cause just as 
much change for the better. So whether major factors are 
cultural, or whether major factors are ones that policymakers 
cannot affect, the question for us for today is what factors, 
economic or cultural, can policymakers affect?
    This is obviously most strongly the case when it comes to 
the labor market, the health of the economy, and the kinds of 
jobs that are created. If more and better jobs are more 
accessible to more people, I think most of us would agree, more 
people would be more likely to work. And in achieving that 
goal, I believe better public policy can help.
    Thank you.
    [The prepared statement of Mr. Oren Cass appears in the 
Submissions for the Record on page 41.]
    Representative Schweikert [presiding]. Thank you, Doctor. 
And just a quick caveat for everyone else who has been staffing 
those things, do understand. I may be up here alone, which has 
always been one of my dreams----
    [Laughter.]
    Representative Schweikert. But you are on hundreds of 
televisions right now around the Capitol with staff and others 
watching you. So we cannot have as much fun as I would like to.
    Doctor.

STATEMENT OF DR. JAY SHAMBAUGH, DIRECTOR, THE HAMILTON PROJECT, 
 SENIOR FELLOW IN ECONOMIC STUDIES, THE BROOKINGS INSTITUTION, 
                         WASHINGTON, DC

    Dr. Shambaugh. Thanks very much. Mr. Chairman, Madam Vice 
Chair, members of the Joint Economic Committee, thank you for 
inviting me to discuss this important topic. Getting more 
people into the labor market and into jobs is a central part of 
raising living standards.
    The United States used to be a leader in labor force 
participation rates, or LFPR, for both men and women, but now 
substantially lags behind many other advanced economies.
    Although overall U.S. LFPR has been stable since about 
2015, it had been on a downward trend beginning around the year 
2000. Much, but not all, of that decline is attributable to the 
aging of the population as more adults are retirement age. If 
we look across age groups, younger adults are participating 
less than they used to, largely because more of them are in 
school.
    Adults over 55 are participating at higher rates than they 
used to. And for those aged 25 to 54, what economists often 
call prime-age workers, LFPR has been rebounding since about 
2015 but is still below its 1999 peak. There is room in the 
labor market for participation to rise.
    Prime-age men have seen a persistent downward trend in LFPR 
over the last half century, largely due to declining rates 
among men with less education. And research has shown that this 
group has seen a decline in demand for their labor. And prime-
age men with less than a high school education make about three 
dollars less an hour than they did in 1980, adjusted for 
inflation.
    In my work with the Hamilton Project, we have argued that a 
great deal can be learned about how to lift participation by 
looking at the gaps across groups and the specific barriers 
they face, and that is what I would like to focus on today.
    For example, LFPR is 94 percent for prime-age men with a 
college degree or more, but 86 percent for those with a high 
school degree, and just 80 percent for those with less than a 
high school degree. Taking steps to increase training and 
education, along with steps to lift wages, could improve labor 
market outcomes and directly lift participation for that group.
    Low-wage U.S. markets are very unstable. And we can over-
estimate how many people are truly out of the labor force as 
opposed to struggling to stay in it. Of those out of the labor 
force in a given month who are not disabled, students, retired, 
or care givers, at least three-quarters are actually back in 
the labor force at some point in the next 16 months.
    If we improve pay, schedules, bargaining power, and worker 
rights in these jobs, we can make them more stable and that 
could help participation. It is important to remember, though, 
that women represent the largest pool of untapped labor in 
today's labor market. Of the 22 million prime-age individuals 
out of the labor force, almost 11 million list, quote, ``taking 
care of family member'' as the reason. And 90 percent of those 
individuals are women.
    While some are home by choice, 35 percent of women who say 
they want a job but are not working list family 
responsibilities as the barrier. And evidence shows that better 
availability of child care in particular for lower income 
households would allow more who want to work to be in the labor 
force, and that well-designed parental leave policies could 
keep more women attached to the labor force after having 
children.
    There are also massive gaps in LFPR across places. In top-
ranked counties, prime-age LFPR is 88 percent, compared to 70 
percent in bottom-ranked counties. And this gap dwarfs the 
recent drop in nationwide LFPR. Place-based policies that try 
to spur labor demand in struggling regions could lift national 
participation.
    There are also huge barriers to working for the formerly 
incarcerated. African-American men have lower rates of 
participation, likely due in part to disproportionate 
incarceration rates, as well as what studies show to be 
considerable discrimination in labor markets. Reducing the 
punitiveness of the criminal justice system in combating these 
barriers is important.
    Finally, the second largest group out of the labor force 
after care givers are those listing health or disability as a 
barrier. We need better health care and treatment to keep 
people in the labor market. It is important to note that it is 
poor health, not the safety net, that is a major barrier to 
work. Not all of those listing health as a reason for being out 
of the labor force receive disability payments, and reported 
health measures for this group show sharply worse health 
relative to the overall population. Furthermore, there is no 
evidence that increasing work requirements in SNAP or 
introducing them into Medicaid lifts LFPR meaningfully.
    Beyond removing barriers, creating jobs is also crucial. A 
strong economy can raise wages, force employers to cast a wider 
net to find workers, and draw people into the labor market.
    Conversely, economic downturns lower LFPR and should be 
minimized by making more use of automatic fiscal stabilizers. 
Americans are trying to work, but they often face major 
barriers. And it is reducing those barriers and maintaining 
strong labor markets that should be a policy focus.
    I look forward to any questions.
    [The prepared statement of Dr. Jay Shambaugh appears in the 
Submissions for the Record on page 52.]

STATEMENT OF MR. JOSE ORTIZ, JR., EXECUTIVE DIRECTOR, NEW YORK 
      CITY EMPLOYMENT AND TRAINING COALITION, NEW YORK, NY

    Mr. Ortiz. Good afternoon, and thank you, Chairman Lee, 
Senator Hassan, and Members of the Joint Economic Committee.
    My name is Jose Ortiz, Jr., and I am the Executive Director 
of the New York City Employment and Training Coalition. Every 
day the workforce development system, including our 160-member 
organizations that serve more than 500,000 under-served New 
Yorkers, demonstrates that given the appropriate tools to 
address specific individual and systemic challenges, people are 
resilient and capable of learning at any stage of their lives.
    The country is experiencing unprecedented economic growth. 
And while we know that talent exists everywhere, in towns, 
cities large and small, a significant percentage of people 
across the Nation lack relevant work experience and 
professional skill that would make them viable candidates for 
employment across industries.
    Research shows us that, while 53 percent of all jobs in 
today's labor market are middle-skill, only 43 percent of U.S. 
workers are trained at this level, which means that industries 
cannot grow to their full potential, and American workers face 
highly limited pathways into careers with good wages.
    In addition to the moral imperative, there is an economic 
imperative to increasing investments in workforce development. 
Sixty-two percent of small- and mid-sized business leaders 
reported that it is difficult to find skilled workers. Seventy-
nine percent of these business leaders also express their 
support for new public investments in workforce policies.
    There are roughly 75 million people who are unemployed, 
under-employed, or not working but not counted in unemployment 
figures. This includes (1) adults with post-secondary 
credentials; (2) adults living in poverty; (3) individuals with 
some college but no credential; and (4) young people ages 16 to 
24 not in school or working.
    Effective workforce programs contain critical components 
that, when combined and structured to be reactive to each 
individual's needs, provide people with deep interventions and 
intensive services required to ensure successful entry and 
growth in a career.
    Recent data suggest that taxpayers reap as much as four 
dollars for every one dollar spent on workforce programs.
    Per Scholas, which provides tuition-free technology 
training to adults across the country, is a clear example of 
the impact of workforce programs. Per Scholas's track record 
includes a 400 percent increase in graduates' post-training 
income and an 80 percent placement rate into quality and stable 
careers in the growing tech field.
    Deris of Cincinnati is a 41-year-old Black man that 
exemplifies the tenacity and potential that exists in all of 
our communities. Having to drop out of college due to family 
obligations, Deris spent years in ``tech adjacent'' jobs with 
limited career growth.
    As valedictorian of his 14-week IT Support course, he found 
a job as a contractor with TEKSystems working on an internet 
security team. His new confidence, in-demand skills, and 
network of tech employers has enabled him to provide much more 
stability for his family, and even prompted him to start his 
own business.
    In New York, there is a direct correlation with higher 
unemployment rates among individuals who identify as Black, 
Latinx, and/or female, making programs like Per Scholas--whose 
students are 87 percent people of color and 30 percent women--
critical to closing that talent gap.
    However, we know that this problem is also affecting non-
educated Whites across the Nation, and especially individuals 
with additional challenges to employment such as criminal 
justice histories or substance abuse issues.
    To tackle these challenges, national organizations like 
Seedco have targeted programs that combine in-demand skill 
development and behavioral and interpersonal growth. Jared, a 
24-year-old White man born and raised in rural Arkansas with an 
early criminal history, sought out Seedco in Memphis, 
Tennessee, seeking to transform his life through work.
    Participating in Seedco enabled him to think critically 
about his own choices, explore viable career pathways, and led 
him to the Kingdom Low Voltage Apprenticeship Program. Jared is 
currently earning $11.50 per hour with Torey Low Voltage 
Communications, while training to become a certified 
telecommunications technician. This is significantly higher 
than the Tennessee minimum wage of $7.25.
    Employment training programs like SEEKO are not only 
critical to connecting more people to work, but are also 
pivotal to our Nation's ability to remain competitive in the 
face of automation.
    Over the next 10 years, more than 10 percent of all 
occupations can be fully automated. The same study found that 
40 percent of all work activities have the potential to be 
automated using current demonstrated technologies.
    The largest occupational categories in the U.S. are also 
the ones with the greatest potential for automation-related 
displacement. Office support, construction, mining, 
agriculture, forestry, fishing, hunting, retail trade, 
accommodation, and food services, and manufacturing. The good 
news is that job growth will net positive over the next 10 
years.
    As the stories of Deris and Jared and the organizations 
that trained and supported them along the way show, we can 
equip people with 21st century skills needed to create 
sustainable futures for themselves and their families. This 
task is enormous.
    However, the Federal Government must ensure that workforce 
development programs like the ones highlighted and the hundreds 
that are not currently funded receive the support that they 
need. Once successful, they will raise the standard of living 
for all who reside in our towns and cities across America. 
Thank you.
    [The prepared statement of Mr. Jose Ortiz, Jr., appears in 
the Submissions for the Record on page 56.]
    Representative Schweikert. That is amazing. You hit the 
time perfectly. In the spirit of love and bipartisanship, 
Congresswoman Beatty.
    Representative Beatty. Thank you so much.
    Let me say thank you to all the witnesses. Please excuse me 
for my lateness, but we have House Financial Services' Housing 
Committee at the same time. But I have had the opportunity to 
listen and to read your testimony and hear 50 percent, I guess, 
of the testimony.
    So, Mr. Cass, let me start with you. In reading your 
testimony and words out of your book, ``The Once and Future 
Worker,'' I find an interesting statement there. And let me 
quote it, in your hypotheses that ``A labor market in which 
workers can support strong families and communities is the 
central detriment of long-term prosperity and should be the 
central focus of public policy.''
    And I think about, as we were walking over here we were 
talking about child care and the expense of things. So I am 
trying to figure out, is that statement saying that the 
detriments are things that we have to do to support our 
families that many people cannot afford?
    For example, I just read something for child care. If you 
have one child here in Washington, D.C., it can be anywhere 
from $2,000 to $2,500 for that child. If you have two children, 
that is more than some of the folks who work on my staff make.
    And so what is the answer to that statement in your book? 
What is it we should be doing in public policy? And then I am 
going to come to an opioid question for you, Mr. Ortiz, since 
you talked about drug addiction. And then, Mr. Shambaugh, I am 
going to come back with a question for you.
    Mr. Cass. Well thank you, Congresswoman. My view would be 
that our goals should be an economy and a society in which 
self-sufficient households can support themselves and their 
families. And so----
    Representative Beatty. But we know most people are not 
self-reliant or self-sufficient when we look at the number of 
people. I just left a hearing, talking about public housing, 
and talking about poverty. One in five children go to bed 
hungry at night. There are many disparities. When you think 
about women of color, they make 74 cents on the dollar compared 
to their White male counterparts.
    So how do we get there?
    Mr. Cass. Well, as I said, I think that should be the goal, 
which means that we need to create a labor market that has 
better paying jobs, and prepare people to work productively in 
those jobs.
    I think the question of----
    Representative Beatty. Child support? Would you say a 
public policy issue raising the minimum wage? We know for 
someone in my district to even afford a two-bedroom apartment, 
they need to make $18 an hour minimum wage. What do you think 
about that as a policy change?
    Mr. Cass. Raising the minimum wage to $18 an hour?
    Representative Beatty. Or, $15. Pick a number.
    Mr. Cass. Well I think this exercise of picking a number 
underscores exactly why I do not think that is a sensible 
response. I think what we wish people earned is a different 
question from whether there are likely to be jobs available.
    Representative Beatty. So let me ask it this way. Do you 
think the minimum wage that we have across the country in many 
of the communities like mine is sufficient to do what you are 
saying?
    Mr. Cass. I think that minimum wages should be set at the 
local level based on local labor market conditions.
    Representative Beatty. And I agree with you. So in our 
market we know it is far too low. It would need to be a minimum 
of somewhere between $15.
    Mr. Cass. I am sorry if I as unclear. When I say ``local 
labor market conditions,'' I do not mean with reference to what 
things cost for people. I mean with reference to what the labor 
market can support.
    And so, while again we might wish that everybody were 
earning a wage that allowed them----
    Representative Beatty. Oh, I think the labor market could 
support it.
    Mr. Cass. Well do you know what the median wage in your 
market is?
    Representative Beatty. Yes. When we look at that, we know 
that there are far too many people who are not making it. But 
yet on the other hand, we know because of discrimination and 
some of the disparities that you also have people who are not 
being hired in that. So, you know, if we lived in an equal and 
fair world, I would probably agree with you. But I am going to 
run----
    Mr. Cass. Well if I could say one thing just briefly, just 
to clarify, when I asked what the median wage is, historically 
economists have looked to the median wage. So what the person, 
midway through the distribution, earns as a reference point for 
what the labor market can support as a minimum wage.
    And so nationwide, for instance, the median wage is still 
only about $18 an hour. There are certainly local urban markets 
where it is much higher and a much higher minimum wage could be 
supported. But if you have a local market where the median wage 
is $18 an hour, raising the minimum to $15 or $18----
    Representative Beatty. No, no, I understand that. And we 
are not into that, of course. I think I have 10 seconds, so I 
was going to ask you a question, and I will get it out and I 
will not be able to get the answer from you.
    Representative Schweikert. I am hopeful you and I are going 
to have two or three rounds.
    Representative Beatty. Oh? Okay. Then I will yield back.
    Representative Schweikert. Thank you, Congresswoman. I am 
going to go off script a little bit because I actually, this is 
one of the areas I am actually fascinated with, and I have 
binder after binder. I have copies of some of your writings in 
those binders. I was not going to be particularly jerky and 
come in with some of my highlighted copies, saying many of the 
things we knew a year ago, data-wise, and I understand the last 
12 months is a small snapshot, appear to be wrong.
    Can I give you the first--and I would like your thoughts, 
and it is not a thought experiment because it has actually 
happened--a year ago, we would all sit around this room and 
look at the labor force participation numbers of millenials. 
And then, come December, all of a sudden the BLS data had this 
breakout, and it had continued, of millenial females. Walk me 
through it, because I see that as an example of many of the 
things we often talk about policywise, and this lever, and that 
lever. Something happened, and we saw suddenly a gender 
differential of movement into the labor force with millenial 
females a year ago December, and it continued.
    Help me understand why. Help me understand why the 
differential. And is it an example of the debate we have had in 
these rooms for decades of the levers we have as policymakers 
turns out that maybe the ultimate lever is availability of 
work?
    Doctor, what did I see in those numbers? Why the sudden 
separation a year ago in millenial males and females?
    Dr. De Rugy. I actually really, although I am not a labor 
economist, but I think where you are right is to actually raise 
the possibility of some skepticism of what the Federal 
Government can do. I mean, I think very often we think that the 
Federal Government has the power to achieve a lot of goals. And 
if we do not know exactly why things are happening, and we also 
have a lot of evidence that projections often are not correct, 
it may actually put in jeopardy this belief that the Federal 
Government can do as much as it thinks.
    Representative Schweikert. And my question was less wrapped 
around the normal skepticism many of us carry, but more if 
something was working how do we figure out what it was and do 
more of it.
    Mr. Cass.
    Mr. Cass. I am sorry, I do not know anything about the 
specific divergence in trends.
    Representative Schweikert. Okay. Doctor, did you see it?
    Dr. Shambaugh. Yes. I think there are a few things you can 
point at. So the first is, I think--my guess is you are 
referring to the 25- to 34-year-old group. So one thing that I 
do think when we look at that group relative to say not just a 
year ago, but relative to a few years ago, is--and this is not 
the positive side of it, which is the birth rate is down. And 
we do not have adequate child care for everyone who wants to 
work. And more women in the 25- to 34-year-olds do not have 
kids. It does not do it on a dime like you are talking about.
    Representative Schweikert. I know that that is actually up 
in the models, but that does not fit what we saw in that, 
because it is a statistically significant number. And I am 
just--it bothered me, because I have not seen anyone dive into 
that.
    Dr. Shambaugh. I think the other thing is, and I would say 
it is two sides to what you are saying, when the labor market 
is stronger it certainly brings more people into the labor 
market. And when you ask why is it divergent between men and 
women, I think a lot of it has to do with which parts of the 
U.S. labor market we are doing better at that time.
    And so the manufacturing and energy sides of the U.S. labor 
market have been slowing, and those are not. And so those tend 
to be more male, and that has the whole side lifting----
    Representative Schweikert. The model would not--look, I 
know you are freaky smart. I have you in my binders in lots of 
places. But that would not equate to suddenly slowing down, and 
then females suddenly exploding. It was not--the differential 
was growth in actual participation.
    Dr. Shambaugh. I would say one last piece, and this I mean 
with all seriousness, which is: we always worry when we see, 
the women's one was actually coming down a little bit when we 
did not expect it to in the months before that, and then it 
surged a little. And so I think there is also some noise in the 
data.
    Representative Schweikert. That is very possible. But the 
trend has continued now for almost, what, three-plus quarters. 
And it is statistically significant.
    Mr. Ortiz--and I will do this with a quick anecdote, which 
I despise when there are bells in this Committee because I 
believe we have an obligation to do big-picture policy. Labor 
market, Phoenix, Arizona. We are stunningly blessed right now. 
But when we visit, when I visit like our homeless campus, they 
have a stack of jobs there with St. Joseph's the Worker, and 
the problem was not available labor, it was transportation. We 
just put together an experimental project with, I think it is 
the company Lyft, to actually cover that transportation gap.
    If you were to think of outliers that are the barriers for 
the participation of so many of those you have worked with, how 
often is it actually transportation, and those types of 
attributes, and not some of the things we would often 
immediately move to?
    Mr. Ortiz. So I appreciate the question. There are a number 
of barriers and transportation is included in that. Child care 
is one of the ones that came up. In New York City, and I cannot 
speak to obviously the specific experience that you are talking 
about in Arizona, but in New York City there are transit 
deserts, locations that require multiple subways and/or buses 
in order to get someone to work. So there is a statistical 
connection and correlation for someone who is further away from 
employment opportunities and higher poverty rates.
    Representative Schweikert. Okay. And, forgive me, I know I 
am over, but, Congresswoman, you can take all the time you--
well, within reason. But it is interesting that maybe in our 
pockets was actually one of the solutions. There is a little 
button for ride sharing that actually may actually be the way 
we cover parts of at least that gap.
    Congresswoman, please.
    Representative Beatty. Thank you. Mr. Ortiz, let me go to 
you. One of the things that I picked up in your testimony is 
the importance of partnerships. As you described, it is 
governments at all levels, business, educational institutions, 
organized labor and nonprofits have a role to play. Through 
those partnerships, we can identify the skills that will be in 
demand in the future, and then help people build up on those 
skills.
    Can you discuss the importance of--how the importance of 
collaborative partner-centric approach is to boosting the labor 
market outcomes? Which models have been especially effective to 
you?
    Mr. Ortiz. Well I would just emphasize in terms of just in 
general, in terms of partnerships to start, that no one 
organization has all of the assets and skills to be able to do 
everything that is required to make a labor market go.
    And I think what we are experiencing in the workforce 
system is that we need to have strong partnerships not just 
with the businesses at the association level, but we need to 
understand real-time data coming from employers to better 
understand the implications on the type of training that is 
required.
    When it comes to the workforce development partners 
themselves, those that are actually executing and providing the 
training, even them, some of them are more specifically focused 
on the skills development, while others are providing the 
supportive services, the wraparound services that are important 
for someone to be successful in a program.
    And of course we need to work more closely with the 
government to better understand where they can--how we can 
better inform policy, where we can direct some of those 
investments to help boost the economy and the labor market.
    But ultimately I think what we are trying--when we say 
``partnerships,'' what we are essentially saying is the most 
effective programs that are the ones that are working with 
multiple layers of organization. As the employers, they are--
you know, the programs are being driven by employer-informed 
data in real time. They are working closely with government to 
scale their programs. They are funded in multiple ways, et 
cetera.
    Representative Beatty. Thank you. And, Mr. Shambaugh, let 
me go to you. I read something in your testimony that says: 
Improving workers' pay, schedules, bargaining powers, workers 
rights, that in these jobs it makes it more--if they are more 
stable with those skills, it could help. Were you talking about 
unions? It sounds like some of the language. Because if so--and 
if not, you can answer it--do you think that has any effect on, 
we have seen somewhat of a decrease in participation with some 
of the unions?
    Dr. Shambaugh. Thank you for the question. I think unions 
are certainly one way to get workers better bargaining power. I 
think there are--private-sector unions play a much smaller role 
than they used to. Their membership has declined as a share of 
private-sector workers, and that certainly reduces the 
bargaining power of regular workers.
    I think there are other things, whether it is getting rid 
of non-compete contracts, getting rid of no-poach agreements 
within franchises, whether it is wage transparency, many things 
that are public policy rules we could take steps we could take 
that would really strengthen the bargaining power of workers 
and give them an opportunity to have somewhat more stable, 
better-paying jobs. And here is where I agree very much with 
Mr. Cass, that having better jobs here is one of the ways to 
keep more people in the labor market. Because right now what we 
see is them cycling in and out a lot, because the jobs are not 
very stable. They cannot hold on to them very long, and that is 
not a good environment to support a family or just to stay in 
the labor market.
    Representative Beatty. To piggyback on my colleague's 
question about the women, maybe if we look at what the Bureau 
of Labor Statistics has reported with the surge of women who 
are Baby Boomers, it increased then. So it opened the door for 
what may have been very difficult for me coming along. I would 
not have thought of STEM. That did not exist. We would not have 
thought about leading a construction demolition, or even an 
engineer.
    So when you look at what the Bureau of Labor Statistics is 
saying up to the year 2024, that there is going to be another 
surge. And many of them will be the millenial women because 
they do not know that they could not have those opportunities. 
Because I think we have done such a great job there. I think 
that is another reason I asked the question, because they come 
in wanting the same things that we have to wait to a certain 
age to get.
    You know, they drive the same cars. They live in condos. 
They do not do rooming houses, and used cars that are 20 years 
old that was handed-me-down. So I think you are going to see a 
surge, because we have opened the door, thank goodness, for 
women to be able to be anything they want to be.
    And I think that is in part why in 2024 it looks like there 
is going to be a surge, according to the Bureau of Labor 
Statistics, of 77 percent, giving us an overall of like almost 
48 percent of millenials and young women in the labor market.
    So, thank you.
    Chairman Lee. We will turn next to Senator Hassan.
    Senator Hassan. Well thank you, Mr. Chair, for the 
courtesy. And again thank you to the panelists for being here, 
and apologies for the interruptions of Senate votes.
    So, Mr. Shambaugh, I wanted to start with a question to 
you. Families are often left making what is an impossible 
choice between earning a paycheck and spending time with a 
loved one in need, or taking care of their own personal health 
care crisis.
    And we know that women are often the ones who meet these 
care-giving needs. As I mentioned earlier, the recent study 
that you did with the Hamilton Project reported that far more 
women say that they remain out of the labor force because of 
their family and home obligations than men do.
    Eight states and Washington, D.C., have enacted paid family 
and medical leave policies to provide partial wages--partial 
wage replacement to workers who need to care for a newborn or a 
newly adopted child, provide care for a family member in need, 
or address their own health care crisis.
    So, Mr. Shambaugh, based on your research, do policies like 
paid family and medical leave help improve labor participation 
rates? And could they help close the gender gap in labor 
participation?
    Dr. Shambaugh. I think what we know about--thank you for 
the question. I think it is incredibly important. And as we 
mentioned, you know, a huge chunk of the people out of the 
labor force who are prime age are people taking care of family 
members.
    And so trying to think about how to deal with that is 
important. As we said, and I think you know, some of them are 
choosing to do so by choice. It is a choice, right? And there 
are people who want to be home taking care of someone. But it 
is the case that roughly 35, or depending how you measure more 
percent of women who are not in the labor force but want a job. 
They say this is the problem.
    And so I think on the one hand, yes, there is very good 
evidence that well-designed parental leave policies can help 
keep women engaged to the labor force. I think they also, 
frankly, have huge benefits to families and children, as well, 
and to infants. And so they are positive in their own right, 
but they also can have, if designed right, positive labor force 
impacts.
    And then I think the child care side is the other very huge 
one, which is we do spend a lot of money as a government on 
child care. We just don't necessarily direct it towards the 
families who need the help the most for whom it really becomes 
the barrier to work. And I think that is a place we could do a 
lot more.
    Senator Hassan. Well that makes a lot of sense. I just came 
from a subcommittee hearing looking at the challenges of the 
growing incidence of Alzheimers, and the care-giving population 
is often wives, daughters, and they are not in the labor pool 
because they cannot be, and we do not recognize it. And that is 
a whole other category, I think.
    I wanted to follow up with another issue, which is housing. 
So, Mr. Shambaugh, I travel all around my State and I 
constantly hear from businesses about the challenges they have 
in recruiting workers. According to the National Low Income 
Housing Coalition, in New Hampshire a family would need to make 
$23.23 an hour to afford a two-bedroom rental. That is the 
equivalent of 3.2 minimum wage jobs. And the vacancy rate for 
rentals is far below the national average, making it harder for 
individuals to find and maintain housing in the communities 
where they work.
    Unstable housing can be a significant barrier to finding 
stable employment and staying in the labor market. So in your 
view what are the most important things we should be doing to 
make it easier for workers to find and keep safe, stable, and 
affordable housing?
    Dr. Shambaugh. Thank you for the question. I think it is 
hugely important that we now have a lot of trouble having 
enough housing near where there are jobs. And that is a serious 
constraint on people's ability to move, and it is a serious 
constraint on their ability to find work.
    And so I think local land use restrictions, unfortunately 
they are not the purview of this Committee because they fall at 
the local level often, although I think there are Federal steps 
that could be taken, but they often prevent enough housing from 
being built in the places where there are jobs. And that is a 
real serious constraint.
    I think there is also the fact that housing vouchers and 
aid for housing are drastically in excess demand relative to 
the supply, and people have to wait a long time to get help for 
housing. And so that can be a constraint, as well.
    But I think the issue of making sure people can live near 
where there are jobs is a big part of why some people are not 
working.
    Senator Hassan. Well I thank you for that. We have our 
overall housing vacancy rate in New Hampshire is less than one 
percent, and it is making it, at all levels, extraordinarily 
difficult to get people to move in and take jobs.
    So thank you for your work. I am just about out of time, 
and I know, Mr. Ortiz, you had been addressing the importance 
of wraparound services as we help people pursue credentials or 
degrees. I will follow up with a question to the record just to 
make sure I get your full answer on that.
    To all of the panel, I really appreciate your work and your 
willingness to be with us today. Thank you.
    Thank you, Mr. Chairman.
    Chairman Lee. Thanks, Senator Hassan.
    I want to talk for a minute about restrictions on entry 
into the workforce. Dr. De Rugy, we will start with you.
    Occupational licensing, as you have acknowledged, continues 
to be a significant impediment for a lot of people getting into 
the workforce. And it also tends, I think, to be something of a 
barrier to interstate mobility, which in turn keeps a lot of 
people out of the workforce, or at least in career paths that 
are perhaps less fulfilling or less remunerative than they 
would be otherwise.
    Now a lot of states--and this is an interesting topic for 
us to discuss here, because we have almost no authority over 
occupational licensing here, just as we have almost no 
authority over residential zoning and things like that. We do 
have some authority at the margins. I have tried to highlight 
the problem and underscore the need for reform in this area by 
exercising what authority we have.
    We have got plenary lawmaking authority under the so-called 
Enclave Clause, Clause 17 of Article I, Section 8, over the 
District of Columbia and other Federal enclaves. It is why in 
the last Congress I introduced something called ``The Allow 
Act,'' which would use Congress' Federal jurisdiction over D.C. 
and Federal enclaves to bring out needed occupational reforms.
    What other Federal changes, if any, would you suggest in 
helping us to try to address the burden of excessive 
occupational licensing? Any other ideas on that, as far as what 
Congress could do? Or are they all at the State level?
    Dr. De Rugy. Thank you for this question. I am actually 
really reluctant of using the Federal Government to micro 
manage State and local affairs. As costly as it a problem, I 
think this may be a case, again apart from information, putting 
out reports, which is not without value, I do not know that the 
Federal Government, unfortunately, has a lot of things to do. 
That said, there have been very successful challenges for 
occupational licensing barriers before the Supreme Court. 
Hopefully there will be more of them.
    There is some good news because it does look like some 
states are actually really seriously looking into the issue. 
Arizona, I mean passed the first step into actually opening the 
door to the transferability of licenses. It is not perfect, 
because my understanding is that, you know, you can come and 
work in Arizona, but then at some point you have to get the 
Arizona license. I am not sure about this, but I think there is 
some of this.
    So, you know, it could be that the Federal Government could 
put out information about best practices in that regard. But 
again, unfortunately I come here and tell you these are like 
really big, big problems, but I do not know that you can really 
do very much about it.
    Chairman Lee. I assume you would not disagree with me on 
our Enclave Clause authority, though. We have got authority 
over----
    Dr. De Rugy. Yes, if you have authority----
    Chairman Lee [continuing]. Federal property on military 
bases.
    Dr. De Rugy. But I mean in D.C. with child care, for 
instance, we have been like talking about the cost of child 
care. The cost of child care is absolutely increased quite 
dramatically in D.C. because of the lack of supply of health 
care brought on by vocational licensing requirements that are 
quite stringent. And, that keep out low-income, low-education 
people.
    Chairman Lee. Is Arizona, the State you have identified, at 
the cutting edge of this?
    Dr. De Rugy. To my knowledge, this is the State that has 
actually taken the broader steps. And again, it is only a first 
step. There is way more to do. For instance, they need to 
reform their own licensing system within the State, which is 
still too burdensome. Because the problem is like the 
progression of vocational licensing since the 1950s has been 
quite dramatic, and as a result it has included a lot of low-
income workers and low-paid jobs. And that is problematic for 
income mobility. It is problematic at many levels. And there is 
a new study that just came out that actually looked at the 
welfare effect of vocational licensing, and it showed that, 
while they increase the wages and the hours of the people 
within the industry who already have their license, it actually 
keeps employment down for those who do not.
    Chairman Lee. So it is classic protectionist.
    Dr. De Rugy. It is absolutely.
    Chairman Lee. It is a government-sponsored welfare system, 
using the overwhelming force of the State in order to protect 
the wealthy and the well-connected at the expense of the poor 
and middle class.
    Dr. De Rugy. And it may be a case, right, for a high-risk, 
higher-risk professions like the medical practice, though there 
is that question about whether actually occupational licensing 
requirements do increase the quality of the work.
    But it is just hard to imagine that the State or the local 
government have, you know, to protect us against nonmatching 
pillows or something like this.
    Chairman Lee. Right, right. I mean, that could be bad. If 
somebody recommends matching an unlicensed, unscrupulous 
interior decorator that gives you clashing pillows----
    Dr. De Rugy. Yeah, well, I do not think it would actually 
come up like a very strong number on the national data, but, 
yeah.
    Chairman Lee. That is a fair point. I had a constituent a 
few years ago make the following observation and I want to see 
if you agree with this. The observation was, in those 
professions where you can identify in the abstract the greatest 
need for occupational licensing, where there is the greatest 
potential health and public safety threat as a result of 
someone practicing outside of something they know how to do, in 
those same areas the occupational license seems to be the least 
significant factor.
    The examples that were given to me by this constituent 
included the fact that, apparently if you get a pilot's 
license, once you are a pilot, in theory you could fly a 747. 
Whether or not you can fly a particular 747 is going to be up 
to the owner of that 747.
    So, too, with a medical degree. In theory, you are licensed 
to practice medicine, which might include delivering a baby, 
doing heart surgery, or brain surgery, or removing a wart. But 
whether or not you know how to do any of those things may not 
be determined as much by your State-issued occupational license 
as by your particular credentialing and training that you have 
received from private organizations rather than a State.
    Would you agree with that?
    Dr. De Rugy. Agree.
    Chairman Lee. Mr. Cass, let's talk about marriage for a 
minute, the marriage and family formation. It seems to me there 
might be kind of a chicken and egg problem, and I want you to 
help me unravel this.
    Like you, I am concerned that if more men cannot find 
stable, steady work, the result is likely to be fewer 
marriages, in the first instance; more divorces in the second 
instance. But it is not also likely that to the extent that 
marriage is collapsing, that marriage rates are falling, men in 
general will tend to feel less pressure, less of a need to be 
bread winners, or to be involved in the lives of their 
children, and that in turn could translate into more 
unemployment, less stable family lives, and other societal and 
economic problems. Would you agree with that?
    Mr. Cass. Yeah, I think that is certainly true.
    Chairman Lee. One of the things I am always looking to do 
in this Committee, because, you know, it is my belief that 
institutions of civil society and free markets cannot be 
created by government. Certainly families are no exception to 
the principle that a government cannot create an institution of 
civil society.
    Governments can, however, weaken those institutions. And 
once it weakens them, where it has weakened them, government is 
not necessarily very good at turning the switch back on.
    Are there areas you would point to that you think represent 
the sort of lowest-hanging fruit of where we could identify 
that the Federal Government is impeding marriage or family 
formation?
    Mr. Cass. Yeah, thank you for that question. I think the 
way you have put the problem is exactly right; that in a sense 
we have a vicious cycle where declining economic opportunities 
and outcomes harm family formation and, in turn, the culture 
that is devaluing and de-emphasizing family formation that 
potentially in turn harms economic engagement.
    I think for policymakers the question, when you encounter a 
cycle like--well, the challenge when you encounter a cycle like 
that is to not just throw up your hands and say, well, that 
looks like a big mess.
    And instead, the question is to say: Well, where in that 
cycle is there potentially an opportunity to intervene? It 
seems to me there is very little potential to intervene 
directly on the cultural side through simply reasserting 
through public policy the importance of family formation--
though with respect to the bully pulpit it certainly helps to 
talk about it.
    But conversely, the labor market side offers I think a very 
salient opportunity to intervene. I think to the extent that 
things have gotten worse, to the extent that we could imagine a 
world in which things got better, that is a world in which you 
would not immediately turn the cycle on its head and solve all 
the problems, but you would expect to slow the cycle, and you 
would expect to have better outcomes than we do today.
    And so I think that is why, rather than getting hung up on 
exactly how much of the problem we can attribute to what, and 
how much of the causation runs in each direction, we should be 
asking where can policy help? Where do we think it would be 
likely to support stronger families? And I think a stronger 
labor market is that place.
    Chairman Lee. Mr. Schweikert.
    Representative Schweikert. Thank you, Mr. Chairman. Let's 
engage in a little bit of the speed round.
    Mr. Ortiz, and then let's go across. If I came to you right 
now and said give me your three wish lists that you think would 
have the most impact on having our brothers and sisters who are 
not in the labor force enter stable work, what would those 
three be? And I am going to ask everyone the same thing.
    Mr. Ortiz. I would certainly start by saying that we need 
to invest more in areas that are called bridge programs.
    Representative Schweikert. Okay, bridge programs.
    Mr. Ortiz. Bridge programs are certainly an area of high 
focus for our organization and the populations that we often 
serve.
    Supportive services, of course, are of vital importance. So 
you referenced earlier transportation, child care, et cetera.
    Representative Schweikert. Okay, so----
    Mr. Ortiz. So supportive services are certainly going to 
take up a number of those issues that we say that that is two, 
three, and many more.
    Representative Schweikert. Okay. Alright, Doctor?
    Dr. Shambaugh. I would start with child care, just because 
it is the largest number of people. Spurring labor demand in 
struggling regions where there is just not enough demand for 
labor and labor force participation.
    Representative Schweikert. Okay, so regional 
differentiation.
    Dr. Shambaugh. And I would say, with programs that try to 
raise returns to work for people at the low end of the 
educational spectrum. So training and education that try to 
boost people and get them into better jobs.
    Representative Schweikert. Okay, Mr. Cass.
    Mr. Cass. I would say first realigning our education 
policies to emphasize non-college pathways over college 
pathways.
    Second, reforming our approach to organized labor to create 
a system that people actually want to participate in, and that 
helps bring people into the work force.
    And third, rethinking our approach to globalization in a 
way that actually constrains access to workers outside of this 
country and focuses firms on using the workers who are here.
    Representative Schweikert. Interesting.
    Doctor.
    Dr. De Rugy. Dramatically increase the supply of housing.
    I would say criminal justice reform is a big impediment to 
people entering the workforce.
    And just lifting like work, labor requirements, or 
licensing requirements would be I guess my three. But there are 
many more.
    Representative Schweikert. Just to be clear, you do not 
mean the reform is the impediment, just the----
    Dr. De Rugy. No, no, the--I mean I could----
    Representative Schweikert. I just did not want to get 
blamed for that one.
    Dr. De Rugy [continuing]. Medical and legalize some of the 
drugs, just to stir the pot.
    Representative Schweikert. You do stir. Okay, now actually 
something a little more specific. If we have an under-
performance, predicting my fixation on millenial males in labor 
force participation, for that one population segment, what 
would be the number one thing you would do to encourage that 
population to participate?
    Dr. De Rugy. So I do not know very much about that 
population, so----
    Representative Schweikert. Okay.
    Mr. Cass.
    Mr. Cass. Non-college pathways.
    Representative Schweikert. Non-college pathways.
    Doctor.
    Dr. Shambaugh. Increase wages for that demographic, for the 
people with less education.
    Representative Schweikert. Okay. We need to talk, because I 
think there is noise in particularly in the last 12 months' 
data that wages have been going up. That is actually partially 
true of females, and I do not know why I have not seen the same 
thing in the male side, but that is more of a geeky 
conversation.
    Mr. Ortiz.
    Mr. Ortiz. I would agree with non-college pathways being of 
high importance.
    Representative Schweikert. For anyone that is listening, we 
have actually sort of in our office fixated on this subject, 
and we have built a list of many things. But you do understand, 
when we talk about non-college pathways, it is everything from, 
you know, types of votech type training at the high school 
level, all the way to are we ready to have a real uncomfortable 
conversation on accreditation at the university level that the 
university is able to provide a degree at 20 months, but it is 
solely training you to be able to have productivity in society, 
and you may not, you know, have great understanding of great 
literature. And we have actually made proposals on that, and it 
is fascinating the incumbent class, which--I mean incumbent 
systems, and regulators, and those who come crashing down in 
here, defending the accreditation systems, or accrediting.
    I will agree with all of you, there are ways to get there. 
It is shocking, though, how much of the bureaucracy around us 
is actually at war with you on all of your ideas.
    And with that, I yield back, Mr. Chairman.
    Chairman Lee. Senator Cruz.
    Senator Cruz. Thank you, Mr. Chairman. Thank you to each of 
the witnesses for being here.
    Dr. De Rugy, tomorrow the Export-Import Bank's 
authorization is set to expire. Unfortunately, when it comes to 
the Export-Import Bank, virtually all of my Democratic 
colleagues and an awful lot of my Republican colleagues have 
been eager to continue the Ex-Im Bank in operation.
    Many of us had been quite critical of the Ex-Im Bank, that 
it serves as a vehicle for chronyism and for giving corporate 
welfare to giant companies on the backs of, and with the 
financial risk and exposure of the American taxpayers.
    Can you give this Committee a breakdown of which types of 
benefits--businesses benefited from the Ex-Im when its Board of 
Directors had a quorum versus which types of businesses 
benefited when Ex-Im's board lacked a quorum?
    Dr. De Rugy. So thank you for this question. So the last 
time we had a full year with a quorum for the Export-Import 
Bank was in 2014 with the whole year data, and by then roughly, 
on the domestic side, 65 percent of the benefit went to 10 
large manufacturer, 40 percent went to Boeing, alone.
    On the foreign side, it was as big companies, many foreign 
airlines. But what was more striking is that 30 percent of the 
bank's activity went to 10 state-owned enterprises. So foreign-
owned companies. If you look at the period from 2007 to 2014, 
the main beneficiary overall was Pemex, the oil and gas state-
owned enterprises. And in 2014 alone it was Air China.
    So basically Air China was the top beneficiary of the 
Export-Import Bank on the foreign side.
    During the time where the quorum did not allow the bank to 
extend loans above $10 million, what ended up happening is 
basically a lot of the big guys were excluded from the 
benefits, though not entirely. Their benefits fell by 93 
percent. And the share of small business benefiting from the 
Small Business Administration--from Ex-Im went from 20 percent 
to roughly 40 percent, even though as a whole the amount they 
received went down.
    And so Air China was, you know, not a beneficiary anymore. 
The share of state-owned, of the Ex-Im that went to the 10 top 
state-owned enterprise fell down, went from $6 billion to just 
a few millions. And Boeing was, you know, hardly a beneficiary.
    And it is interesting to say that during that time there 
was a lot of innovation in the capital market that exports 
continued going up, and apparently there was, as predicted, 
no--the sky did not fall.
    Senator Cruz. So there was a lot of substance in your 
answer. Let's see if we can break out a couple of pieces of it. 
One of the things, if I understood your testimony correctly, 
was that in 2014, right before Ex-Im lost its quorum, that 
support to Boeing, one company, comprised 40 percent of the 
total outlays? I guess that is one of the reasons it has been 
referred to before as ``Boeing's Bank.''
    Dr. De Rugy. Yeah.
    Senator Cruz. Although that raises questions why a giant 
corporation needs the U.S. taxpayers subsidizing its 
businesses.
    If I understand you correctly, without a quorum a much 
higher percentage of Ex-Im's funds went to small businesses who 
were always put forward as the desired beneficiaries, except 
for the fact that when it is fully authorized and has a quorum 
that is not where the money goes.
    Dr. De Rugy. No, the money goes roughly--it is roughly 20 
percent goes to small businesses before 2014, and even the 
majority, something like 89 percent of transactions went to 
small businesses, when you actually follow the money it is 
really only 20 percent. And, yes, and it is worth saying that 
Boeing did really well during those four years where they did 
not have a quorum. They sold more planes. Their backlog 
increased.
    Senator Cruz. So the American taxpayers are on the hook 
giving Boeing a subsidy that it does not need.
    Let me take the second piece of your question, which I 
think is really important for people to hear. You said a major 
beneficiary of Ex-Im's funds and benefits when it has a quorum 
are state-owned enterprises, including state-owned enterprises 
for countries like China.
    So the American taxpayers are subsidizing companies owned 
by the Chinese Government? Is that right?
    Dr. De Rugy. Yes.
    Senator Cruz. Does that make any sense?
    Dr. De Rugy. I do not think it does, but I--I do not think 
it does, especially in the context of a lot of people now 
making the claim that the renewed support for the Export-Import 
Bank comes from the fact that it can be used as a tool to fight 
China. Considering that what really the Export-Import Bank does 
is basically to compete with the other export credit agencies 
in high-income nations where China is. So I do not think it 
makes any sense.
    Senator Cruz. Well in the Senate, every single Democrat 
supports continuing the Ex-Im Bank, and about half of the 
Republicans do. And I certainly hope some of the Members in 
this body will listen to your testimony and the evidence you 
have given. Thank you.
    Dr. De Rugy. Thank you.
    Chairman Lee. I want to follow up on the point made by 
Senator Cruz about the Export-Import Bank, and particularly 
with regard to Pemex, the state-owned energy company owned by 
Mexico.
    It is an interesting dynamic there. There is a term used 
exclusively in Mexico. The term is Huachicolero. I do not know 
whether you have ever heard of this term. It is a term used 
specifically to describe one who steals fuel from a pipeline. 
And in Mexico, it is always a Pemex pipeline, because Pemex is 
the fuel company in Mexico.
    They steal fuel from a pipeline owned by Pemex, and then 
they sell it back onto the black market, often at a discounted 
price relative to what they would pay retail.
    The origin of the term, including the ``c-o-l'' portion of 
Huachicolero, refers to alcohol. Originally this came from 
people adding distilled alcohol, ethanol, to fuel in order to 
dilute it. I find it rich with ironies or coincidences, or 
whatever you want to call it, that our own Government is now 
involved in the process of being a gigantic Huachicolero on one 
side of the border through its awful, absurd policies with 
regard to ethanol.
    And on the other side of the border, it is fueling, it is 
subsidizing Huachicoleros through the Export-Import Bank, 
through Pemex which you have identified as the number one 
beneficiary of the Export-Import Bank.
    So you are an economist and a good one, one of the very 
best in the country. I am just a politician and a poor country 
lawyer from Utah. Can you tell me if I would be incorrect to 
state that I think there is a logical connection between our 
fueling of Pemex and Pemex's fueling of Huachicoleros and the 
elicit drug cartel activity that surrounds that?
    Could we be perpetuating that, and perhaps helping Pemex to 
avoid dealing with these corruption problems and the theft from 
its pipelines?
    Dr. De Rugy. Well certainly, I mean just the fact that it 
is a state-owned company and it is apparently a monopoly, means 
that it is not subjected to market forces as much as it should.
    And it is also true that lowering their borrowing costs, 
whether--I mean, I assume that it is because they are buying GE 
products, or they are not buying Boeing planes, they are buying 
GE products, or Caterpillar, or what have you, that money is 
fungible. So those lower costs mean basically we are helping 
this company that has had massive amount of problems with 
corruption stay in place.
    I mean I know the original intent of using Ex-Im to fund 
Pemex was that they were hoping it would help them move toward 
privatization, but that obviously is----
    Chairman Lee. Yeah, how has that worked out for us?
    Dr. De Rugy. It has not worked out.
    Chairman Lee. In fact----
    Dr. De Rugy. Which I do not also think it is the role of 
the Federal Government to actually pursue such roles.
    Chairman Lee. Sure, sure. In fact, when President Lopez 
Obrador was sworn into office almost exactly a year ago, a 
substantial portion of his seemingly six-hour speech was 
devoted to his desire to preserve Pemex and maintain it as a 
state-owned enterprise.
    I found that surprising. I did not know that this was that 
big of a political issue there. Apparently, it is. But one has 
to wonder why. And one has to wonder what we are doing to 
perpetuate this ring of illicit activity. What we might be 
doing to make it more possible.
    If a private company here, let's say if Chevron, or Exxon-
Mobil, or some other company that sells gasoline and diesel 
fuel, had that big of a problem as they have with Huachicoleros 
in Mexico, they would adopt different security protocols. They 
would figure out a way to stop the theft. That is not to say 
that fuel theft does not occur in the United States, it does, 
but not so much so that we have coined a noun and a verb and an 
adjective after it.
    And it appears to me that we are fueling a very significant 
problem on the south of our border, and one with impacts here.
    Mr. Cass, Yuval Levin wrote in his outstanding book 
``Fractured Republic'' that, quote, ``Worker protections in the 
coming decades will need to take the form of portable, 
individualized benefits and rights that are not attached to 
work places in ways that assume long-term employment 
relationships. They will need to help make a diffuse labor 
market more secure, rather than trying to reverse its 
diffusion.'' Close quote.
    Would you agree with that statement?
    Mr. Cass. I would. And I would emphasize that the U.S. 
system of organized labor is really quite odd by international 
standards.
    Chairman Lee. What would you do to address that issue?
    Mr. Cass. So if you step back and look at how, for 
instance, labor unions typically work in Europe, I think the 
general impression is that in Europe it is a much more sort of 
left-leaning environment. All of Europe is right-to-work. The 
idea that you would vote in your single factory whether or not 
to have a union, and then if you do everybody is in the union, 
does not exist.
    Instead, they have what I would say is a much more 
effective system that is both much more local and much more 
national. At the broader more national end, what they have are 
effectively national unions that are more like membership 
organizations that people join voluntarily because they receive 
benefits from them, training, in some cases social support. And 
then down at the local level, they have what are, for instance, 
in Germany called Works Councils, which is a much more 
collaborative, less adversarial relationship between the firm 
management and workers within the firm.
    And so you essentially at the local level collaborate to 
try to make the company work better for everyone's benefit, and 
at the national level you have what is typically called 
``sectoral bargaining'' where you have negotiation over terms 
and conditions for let's say janitors in the entire region. And 
so the sides get together and agree on that. And it is not a 
contentious firm-by-firm fight.
    And so there are a lot of models. There are a lot of 
variations to think about. I think the important thing to 
recognize is that I think most would say it works a lot better 
than what we have. And unfortunately there is an intractable 
obstacle here in the United States, which is a single provision 
in the National Labor Relations Act called ``Section 882'' 
which prohibits any sort of organized labor activity outside of 
the confines of these standard American unions.
    And so you could just get rid of that. Anyone who wanted 
the kind of union we have now could still have one. But if you 
got rid of that, you would also begin to open up the choice to 
do other things. And I think that that would be an important 
first step in moving toward a better system.
    Chairman Lee. Why do we have 882? And what would be the 
disadvantage of getting rid of it?
    Mr. Cass. So 882 was put in as part of the--the NLRA was 
passed in 1935 at the height of the Great Depression, at a time 
of incredible labor conflict, and there was great concern about 
what was called at the time ``company unions,'' which was the 
idea that essentially firms would subvert genuine efforts to 
organize by instead kind of locking employees into something 
controlled by the management, and thereby foreclose the other 
kinds of organizing activity that wanted to be facilitated.
    I think that is much less of a concern today. As I said, 
especially if you do it in the context of other reforms, you 
can bring in other substitutes that are better. And I think 
just as a concrete example, it is fascinating to look at what 
happened in Tennessee where Volkswagen's plant is not 
unionized. Volkswagen is so desperately wanting to bring in 
this European style works council structure that they actually 
tried to persuade and support--they supported the union and 
tried to persuade the workers to vote in the union so they 
could do the works council. And the workers voted it down twice 
anyway.
    That is how toxic our existing system has become, and how 
relatively more attractive our alternatives are that could be 
out there.
    Chairman Lee. We are unfortunately going to have to wrap up 
here in a moment.
    Congressman Schweikert and I were talking a minute ago, and 
I promised him that I would ask each of you to opine on whether 
you think we could bump up the labor force participation rate, 
and if so how high? Is, for example, 65 percent plausible? Why 
don't you just weigh in each briefly on that.
    Mr. Ortiz.
    Mr. Ortiz. We can--I would not, you know, I am not a 
trained economist so I cannot speak to a specific percentage in 
that sense, but I would certainly say that we can certainly 
bump it up with pointed investments in specific populations.
    Chairman Lee. What would we consider a success? At what 
level? We are at 63.3 percent right now. Is that right?
    Mr. Ortiz. Like I said, I do not think I can speak to a 
specific percentage there with any accuracy.
    Chairman Lee. Dr. Shambaugh.
    Dr. Shambaugh. I would say I think there is room for the 
labor force participation rate to rise. I think demographics 
are pushing it down. We know that as the population ages we do 
not expect the 85-year-olds to work, and there are more of 
them. So the number comes down.
    But I think demographics are putting maybe a quarter point 
a year downward pressure. And so when we are treading water, we 
are kind of winning--we are at least fighting demographics to a 
draw. And when it is rising a little, we are doing even better.
    So I think it could rise. I think it would be hard to get 
to 65 really fast. But I think if you look at, you know, 
frankly, if you look at certain cohorts of, as we talked about, 
younger women are working a lot more than women of previous 
generations. There is no reason over time that you could not 
see the labor force participation rate rise overall, especially 
if we did some of the things we talked about here today that 
would help some of the people who have become disconnected from 
work back into the labor force, and help people who are cycling 
in and out stay in more permanently so they are not kind of 
occasionally counted as out.
    So I do not think there is any reason you could not get it 
that high.
    Chairman Lee. Mr. Cass.
    Mr. Cass. I do not think of it in terms of the overall 
labor force participation rate because obviously you have the 
demographic pressure. Even within prime age workers, I think it 
is very important to separate men from women. Because as we 
have talked about, there are some women who would really like 
to enter the labor force. But polls consistently show that an 
overwhelming majority of Americans, of women and of women with 
children, prefer an arrangement where, particularly when women 
have young children, they are not working full-time.
    And so setting some arbitrary 100 percent is the idea for 
women in the workforce is not necessarily right. In fact, you 
could say the ideal is lower than it is now.
    For men's prime-age labor force participation, I think that 
is exactly where policymakers should be focused. And I think 
Dr. Shambaugh offered a really good way of thinking about it 
earlier when he pointed out that for men with a college degree, 
that number is up 94, 95 percent.
    There is no logical reason in a healthy labor market why 
that number should not be as high as higher for people with 
lower levels of education. And so I would say trying to bring 
that up toward 95 percent, you know, in the 1950s and 1960s it 
was 98 percent, I believe----
    Chairman Lee. Meaning men with a college degree?
    Mr. Cass. For all men.
    Chairman Lee. For all men.
    Mr. Cass. So bringing prime age men back up above 95 
percent and doing it regardless of education level I think is 
the right place to focus.
    Dr. De Rugy. So I do think that there is space to improve. 
I also think that it is--I am less worried--I think women are 
going to--I mean I know it has slowed down but I think there is 
a chance it is going to pick up. And so it is interesting to 
look at the men, the working age men, but it is also important, 
and your Committee actually put out a really interesting report 
on this issue, when trying to actually understand what kind of 
policies can be put in place to understand the motives of 
people who actually have dropped out of the labor force, and 
whether there are reasons to worry or not.
    So obviously the fact that some people have retired, I 
think it is roughly 7 percent of people who have dropped out of 
the labor force, that people who are at school I think is 18 
percent. There is close to, I think it is 44 or 45 percent who 
are disabled.
    I mean these are like it seems a good reason to not be 
there. There are 23 percent ``other'' reasons for being 
inactive. But one of the numbers from that report that I 
thought was really striking in actually trying to think about 
what kind of policy to put in place is actually when asked who 
wanted a job, right, when you looked at the able-bodied, only 
12 percent of those said they wanted a job.
    And when you looked at the entire population, only 23 
percent said. So when you have 75 percent of that population 
that has dropped out of the labor force and says they do not 
want a job, you have to actually think about why that is.
    So if they are retired, if they are in school, there is 
nothing to worry about. If for instance like some studies have 
shown, the disability and kind of the not differentiating 
between being disabled and being completely incapacitated 
create a detachment from the workforce, that could be a reason 
to worry about. But then again, how do you go about doing this? 
You do not want to actually kick out disability rolls. People 
actually really cannot work.
    So there are things to do. But I think if we are going to 
be doing something, we need to really--not all policy would 
work, depending on why people have actually dropped out. And I 
do not think that all of the drop is actually real for concern. 
I mean, so----
    Chairman Lee. Excellent. And you would not recommend an 
expansion of the Export-Import Bank as a means of increasing 
that?
    Dr. De Rugy. No.
    Chairman Lee. Thank you very much. I really appreciate each 
of you coming. This has been an interesting and informative 
hearing and we are grateful to you being here.
    The record will remain open for two weeks. We stand 
adjourned.
    [Whereupon, at 3:57 p.m., Wednesday, November 20, 2019, the 
hearing in the above-entitled matter was adjourned.]

                       SUBMISSIONS FOR THE RECORD

   Opening Statement of Mike Lee, Chairman, Joint Economic Committee
    Good afternoon, and thank you for joining us for this hearing of 
the Joint Economic Committee.
    The American labor market is strong. The current economic expansion 
is the longest in U.S. history. Our unemployment rate has remained at 
or below 4 percent for the last 20 months and continues to fall. 
Average wage growth has slowed down a bit, but remains strongest for 
lower-paid workers. The gains have been broadly shared: African-
American and Hispanic unemployment rates are at all-time lows. Female 
labor force participation is approaching an all-time high. And analysts 
speculate that we still have yet to reach ``full employment.''
    Yet, behind these indicators of recent strength, there lies a 
worrisome, long-term trend--what Nicholas Eberstadt of the American 
Enterprise Institute has called an ``invisible crisis.'' Many American 
men are leaving the workforce altogether. Though on the rise, the 
employment-to-population ratio for prime-age men--those between the 
ages of 25 and 54--is near levels not seen since the Great Depression. 
Even in today's strong labor market, we see that once taut connections 
to the workplace have not only slackened, but frayed.
    The economic implications of such disconnection should be clear to 
all. But the Joint Economic Committee's Social Capital Project, as part 
of its mission to understand ``associational life'' in America today, 
has studied the plight of these disconnected men and identified 
potentially greater consequences for the health of our families and 
communities. In its report, ``Inactive, Disconnected, and Ailing: A 
Portrait of Prime-Age Men Out of the Labor Force,'' the Project found 
that disconnected men are more socially isolated and less happy than 
their employed peers. At the community level, the disappearance of work 
can lead to depopulation, brain drain, and the decline of other 
institutions of civil society.
    If we are to expand opportunity by strengthening families, 
communities, and civil society, we must devote our attention to work--a 
means of supporting ourselves and our families, a source of meaning and 
purpose, and a site for affirming and satisfying relationships. I hope 
that our discussions this afternoon give us a clearer sense of how to 
connect more Americans to this wellspring of opportunity and social 
capital.
    At this afternoon's hearing, we will seek to better understand the 
forces shaping the labor market and Americans' connections to it. A 
variety of reasons have been offered to explain why fewer Americans in 
their prime earning years are joining the workforce. Several 
interdependent themes emerge from most analyses: declining economic 
dynamism, falling worker mobility, stagnating wages, trade exposure, 
employment polarization, skill-biased technological change, and an 
expanding safety net.
    Our next step will be to consider policy reforms consonant with the 
most plausible explanations for declining prime-age labor force 
participation. What barriers to opportunity can we identify and try to 
remove? How might incentives to join the workforce be strengthened? How 
might we more smartly invest in human and social capital to create new 
opportunities? Possible solutions may involve reforming the safety net, 
modernizing labor regulations, and increasing wage growth.
    The Social Capital Project will cover all of these topics in a 
forthcoming report, to be informed by the insights of today's 
panelists. I look forward to their testimonies and to a productive 
conversation aimed at drawing disconnected Americans off the sidelines 
and into the workplace.
    I now recognize Senator Hassan for opening remarks.
                                 ______
                                 
              Prepared Statement of Senator Maggie Hassan
    Thank you Chairman Lee for focusing this committee's attention on 
the important issue of getting more Americans to participate in our 
workforce.
    And thank you to our witnesses for being here today.
    Members of both parties agree that we must increase labor force 
participation.
    While low unemployment rates in my home State of New Hampshire and 
across the country are welcome news, we know that a low unemployment 
rate can also present real challenges--from businesses not being able 
to find workers, to additional pressure being put on the productivity 
of our current workforce.
    For a variety of reasons, too many Americans are falling out of the 
workforce. And a smaller percentage of Americans participating in the 
workforce can drag on economic growth.
    It is critical that we address the root causes that result in 
people not seeking employment. And today's hearing presents an 
opportunity to address those factors and look toward bipartisan 
solutions.
    To start, as our economy changes rapidly, individuals may not have 
the skills and supports that they need to enter--and remain--in the 
workforce. And I have heard from businesses throughout New Hampshire 
that one of their top challenges is finding more qualified workers, 
even at entry level jobs.
    Addressing this challenge requires us to both strengthen job 
training efforts and remove the barriers that prevent too many people 
from participating or remaining in the workforce.
    I have introduced bipartisan legislation--the Gateway to Careers 
Act--that would do just that.
    This bill would provide grants to support partnerships between 
community or technical colleges and workforce development partners such 
as State workforce development boards, industry associations, and 
community-based organizations.
    These partnerships would help remove many of the barriers that 
prevent too many people from completing a 2-year degree or credential 
by connecting them to support services, including housing, mental 
health and substance use disorder treatment, assistance in obtaining 
health insurance coverage, offering career counseling, transportation, 
and other services.
    By strengthening job training and support services we can connect 
more people with the tools that they need to enter and succeed in our 
changing economy.
    Another systemic barrier that many Americans face is a lack of 
access to paid leave and child care.
    Frequently, those who want to work are held back by pressing family 
responsibilities that make it impossible. A recent report by the 
Hamilton Project showed that 9.6 million women who are not 
participating in our workforce list family and home responsibilities as 
their primary reason.
    Mr. Chair, I request that the Hamilton Project Report: ``Labor 
Force Nonparticipation: Trends, Causes, and Policy Solutions'' be 
entered in the record.
    By enacting more family-friendly policies that enable people to 
balance their work and family responsibilities we can help more people 
join or rejoin the labor market.
    We also must break down employment barriers facing traditionally 
disadvantaged communities.
    In 2018, Brookings found that only four out of 10 working-age 
adults who experience disabilities are employed. So we also need to 
address the challenges that those who experience disabilities encounter 
in entering our workforce.
    As Governor, I signed legislation banning employers from paying 
workers with disabilities at a lower rate than the minimum wage, making 
New Hampshire the first State in the Nation to ban sub-minimum wages. 
We must make this a Federal priority--which is why I have cosponsored 
the Transformation to Competitive Employment Act, which would phase out 
the practice of paying a sub-minimum wage to workers with disabilities 
nationwide.
    We should also make sure that workers who experience disabilities 
receive the support they need to succeed in the workplace and are less 
likely to fall out of the labor market.
    Finally, no conversation about increasing participation in our 
workforce can exclude addressing the costs of higher education.
    Right now, students face far too many obstacles in getting the 
education that they need--particularly when it comes to affordability.
    No one who is pursuing higher education so that they can build a 
better future for themselves--and in turn our economy--should have to 
put that goal on hold because they can't afford it. And they should not 
have to take on substantial debt to do so either.
    I'll continue working on strategies to increase college 
affordability and to lower the burden of student debt, so that more 
workers can get the education that they need to thrive.
    We can all agree that tackling our workforce challenges requires a 
multi-faceted and comprehensive approach.
    There's not a single solution. And we have multiple opportunities 
to connect more people to work.
    I look forward to hearing more from our witnesses today.
    And now, I'll turn it back over to Chairman Lee.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    The complete report is available at https://www.brookings.edu/wp-
content/uploads/2019/10/ES--THP--labor-force-nonparticipation--
final.pdf
  Response from Jay Shambaugh to Question for the Record Submitted by 
                           Senator Klobuchar
    Men and women of color suffer disproportionately during economic 
downturns. The unemployment rate for African Americans now stands at 
5.4 percent--nearly two percentage points higher than the overall rate 
of 3.6 percent.

      What can Congress do now to help minimize the expected 
rise in the unemployment rate for people of color during the next 
recession--whenever it may hit?

    Thank you for this question. You are exactly correct that men and 
women of color suffer disproportionately during recessions. In general 
any group that is marginalized in the labor market tends to do worse in 
recessions. In the Great Recession, unemployment rates doubled for 
nearly every group. Since the African-American unemployment rate was 
higher to begin with, a doubling meant a much larger increase.
    In addition, it is important to consider another labor market 
challenge disproportionately impacting African-American workers: the 
dramatic racial disparities in the rates of underemployment (including 
those who are part-time but would rather work full-time and those who 
are marginally attached to the labor force). At all points of the 
business cycle, white workers have lower underemployment rates than 
African-American (or Hispanic) workers.
    For example, in 2018 the underemployment rate for white workers was 
approximately 6 percent in 2018, compared to a rate of approximately 12 
percent for African Americans.
    When we look at underemployment rate disparities during the Great 
Recession an even more grim picture can be painted. In April 2011, 
underemployment among African-American workers reached 24.9 percent, 
over one year after the African-American unemployment rate peaked at 
16.8 (in March 2010). This stands in sharp contrast with the peak white 
underemployment rate in the wake of the Great Recession, which was only 
slightly higher than the pre-recession low for African-American 
underemployment.
    There are two main ways one could minimize the damage done to men 
and women of color during recessions. The first is to minimize the 
damages of recessions overall. Better use of automatic fiscal 
stabilizers could try to limit the impact of a downturn on the labor 
market. For example, one could strengthen the safety net and make it 
more responsive to downturns (including: waive work requirements faster 
in a downturn in the Supplemental Nutrition Assistance Program SNAP, 
formerly the Food Stamp Program], increase unemployment insurance and 
SNAP payments during a recession, reintroduce some countercyclicality 
to Temporary Assistance for Needy Families [TANF]). One could also use 
triggers based on the increase in the unemployment rate to increase 
infrastructure spending automatically, increase Federal support to 
states for Medicaid and the Children's Health Insurance Program (CHIP), 
and mail direct checks to individuals. The Hamilton Project recently 
put out a book (along with the Washington Center for Equitable Growth) 
called ``Recession Ready'' that discusses many of these ideas. These 
policies would not directly target the labor market experience of men 
and women of color, but given that men and women of color are more 
exposed to recessions, by limiting a recession's impact, these policies 
would help.
    Another set of options is to try to make these groups less 
marginalized in the labor market overall. For example, robust 
enforcement of anti-discrimination policies would help. In addition, 
though, because of a range of barriers men and women of color face in 
labor markets and in general, they often face other disadvantages in 
the labor market. Men of color are more likely to have been 
incarcerated, and criminal records are a hindrance in the labor market. 
Both reducing unnecessary incarceration and unequal application of law 
enforcement along with policies to create pathways for the formerly 
incarcerated to rejoin the labor market would both help. Similarly, 
individuals with less education tend to have worse labor market 
outcomes. Policies to improve educational outcomes for young men and 
women of color along with policies that create better pathways to 
employment for those without a college degree could both help the labor 
market outcomes of men and women of color.
    Finally, one could try to take specific actions that safeguard men 
and women of color in the labor market in a downturn. For example, 
making sure that cities do not substantially cut back employment 
opportunities due to budget problems and making sure that poor rural 
areas--which often have large populations of men and women of color--
also feel the impact of fiscal stimulus is important. Policies like the 
emergency TANF support that was included in the American Recovery and 
Reinvestment Act helped stimulate employment in poorer communities. 
Making that an ongoing program that could scale up during recessions 
and making sure that it is applied in a way that benefits communities 
of color would be an important step.
    The negative labor market experience of vulnerable populations 
during recessions is one of the main motivations for robust 
countercyclical macroeconomic policy. Along with policies that try to 
reduce discrimination and help communities of color more broadly, 
strong countercyclical policy could help minimize these damages.
                                 ______
                                 
   Question for the Record for Jose Ortiz, Jr., Submitted by Senator 
                               Klobuchar
    To help both our workers and our businesses that struggle to find 
workers with the necessary technical skills, we need a strong training 
and education agenda. I have introduced legislation to improve 
apprenticeship and workforce training programs and to expand the 
``529'' tax advantaged education savings program to include training 
and credential programs that help workers develop the skills needed for 
21st century jobs.

      In your view, what measures should we take to ensure 
workers are prepared to transition to jobs for which employers are 
hiring?
                                 ______
                                 
   Question for the Record for Jose Ortiz, Jr., Submitted by Senator 
                                 Hassan
    Mr. Ortiz, as Governor of New Hampshire, and in the U.S. Senate, I 
have tried to identify workforce training strategies that would help 
pull individuals into the labor marker who were chronically unemployed 
or underemployed.
    Too often, these individuals are not able to get the training they 
need for existing job openings because they face barriers like access 
to transportation and child care.
    To help address this, I introduced the bipartisan Gateway to 
Careers Act to strengthen career pathway opportunities and help 
individuals navigate barriers that keep too many people from 
participating or staying in the workforce like transportation and child 
care.
    What more do you think we should be doing to help families access 
the services they may already be eligible for and strengthen career 
training programs to be responsive to issues individuals face outside 
of the workplace?
    Can you describe programs and strategies that have worked for 
participants in your programs?
  

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