[Congressional Record Volume 144, Number 85 (Thursday, June 25, 1998)]
[Senate]
[Pages S7172-S7176]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WELLSTONE:
  S. 2215. A bill to provide transitional community employment for 
unemployed persons, and other individuals in poverty, who live in 
certain identified communities, and for other purposes; to the 
Committee on Finance.


             strategic transitional employment program act

  Mr. WELLSTONE. Mr. President, today I am introducing a piece of 
legislation, and Delegate Eleanor Holmes

[[Page S7173]]

Norton has introduced this on the House side. This legislation is 
called the Strategic Transitional Employment Program, STEP. This 
legislation is an outgrowth of some of my work as a senator in 
Minnesota and in other communities around the country.
  If I had to summarize my travel in our country in Delta, MS, or East 
Los Angeles, or Watts, or inner-city Baltimore, or inner-city 
Minneapolis, or rural Minnesota, or Appalachia, Letcher County, KY, or 
inner-city Chicago, over and over and over again, the one thing I heard 
from people was: Where are the jobs at decent wages that we can support 
our families on? More than anything in the world, Senator, we want to 
be able to earn a decent living and give our children the care they 
need and deserve.
  Congresswoman Norton and I had the opportunity to be at First Baptist 
Church here in D.C. Pastor Eldridge Spearman's church, in the Greenway 
community, working with the Marshall Heights Community Development 
Organization. There was a wonderful turnout of people from the 
community. They said this would be the best single thing we could talk 
about. Over the next 4 years, an effort to create 1.8 million jobs for 
people, transitional employment, moving toward living-wage jobs, 
opportunity for education, job training, so that we build up the human 
capital in our communities so that we then can attract the private 
capital.
  This is a major issue that is off the political debate screen but 
should be on the political debate screen and should be part of our 
agenda. There is a jobs gap in our Nation now, close to 5 million jobs, 
and even with the economy humming along at peak economic performance, 
there are many communities, as the eminent scholar, William Julius 
Wilson, points out, where there is no work, work is the most important 
thing we can focus on. When people work, they contribute to family, 
they contribute to community, they have dignity. But there are too many 
communities in our country where there are almost no jobs at all.
  This legislation speaks to that. I will be bringing to the floor of 
the Senate some sense-of-the-Senate amendments that talk about the need 
to have thorough study and investigation. I will work out amendments 
that come from this piece of legislation, build up support, and come to 
the floor over and over and over again to talk about this. This is a 
structural problem in our economy, and this is the key to economic 
opportunity.
  Children do better when their parents are doing better. There is no 
more important priority than to focus on jobs and to focus on job 
opportunities. That is what this legislation does.
  I thank Brian Ahlberg, on my staff, and Deanna Caldwell for doing 
such superior work, and I thank the Center for Community Change, the 
Center for Budget and Policy Priorities, Peter Edelman and William 
Julius Wilson for their work, as well.
  The bill I introduce today, the Strategic Transitional Employment 
Program (STEP) Act of 1998 addresses what I consider to be one of the 
key moral issues facing our country. The issue is jobs. I often say 
that if you want to prevent crime, if you want to prevent drugs, broken 
homes, violence in our homes, violence in our schools and on the 
streets, then focus on providing all Americans with a good education, 
good health care and a good job. Too many Americans who want to work 
and are able to work cannot find a good job.
  During my recent and continuing travels, I have found that even as 
official unemployment figures and other leading indicators suggest that 
we should be celebrating our economic success, many American 
communities continue to struggle with the demoralization of 
joblessness. When I traveled last year to Mississippi, Los Angeles, 
Chicago, Baltimore, Kentucky, urban and rural Minnesota, and when I 
travel to struggling communities, neighborhoods and barrios today, I 
heard and still hear the question: Senator, where are all the good 
jobs? We want to work. We are able to work. Where are the jobs?
  Most Americans are aware that the gap between rich and poor in 
America is widening. Between the late 1970s and the mid 1990s, incomes 
of the richest fifth of families increased on average by 30 percent, or 
about $27,000 after adjusting for inflation. In contrast, the real 
incomes of the poorest families declined on average 21 percent, about 
$2,500. According to the Center on Budget and Policy Priorities, ``In 
the United States as a whole, the poorest 20 percent of families with 
children had an average income of $9,250 in the mid-1990s, while the 
average income of families with children in the top 20 percent of the 
income distribution was $117,500, or 13 times as large.''
  In the United States today, poverty is becoming more and more 
concentrated, the poor are more and more isolated, and joblessness is 
more strongly associated with that poverty than ever before. 
Concentrated joblessness is increasing in urban neighborhoods and poor 
rural communities. Meanwhile, the joblessness is becoming more and more 
prolonged--a chronic condition--for residents of those areas.
  Last Friday I took part in an event at First Baptist Church in 
Southeast Washington, D.C. First Baptist is just across the Anacostia 
River on Minnesota Avenue. It serves the communities of Greenway, 
Marshall Heights and many others across our nation's capitol. District 
of Columbia Delegate Holmes-Norton and I announced that we would be 
introducing this bill, and I would just like to thank the church, 
including its pastor Eldridge Spearman, as well as Mr. and Mrs. 
Strayhorn and others of the church's staff for welcoming us there. 
Representatives of the Marshall Heights Community Development 
Organization also were present and participated in what I believe was 
an important event.
  The problem of joblessness persists today in Washington, D.C. and in 
communities across the country, even at a time when our economy is at 
peak performance. Between 4 and 5 million Americans of working age lack 
the jobs they need to support themselves and their families. Many have 
been jobless for prolonged periods. They have lost their jobs, or they 
have never been able to find a job. They lack the skills and experience 
to get a job, or there are no jobs nearby where they live. Many are so 
discouraged they no longer are seeking work. They are not even counted 
as unemployed.
  We are not talking only about those who are already or soon will be 
losing welfare benefits. Those people, many of them women with 
children, will be required to find work. We also are talking about more 
than a million men--African-American men in our cities, men regardless 
of race or background in urban and rural areas. Many jobless men are 
fathers. They want to work. They are able to work. But they remain 
jobless.
  Why has concentrated joblessness and poverty increased and 
intensified for some while the rest of the country is enjoying an 
abundance of work, when in fact in some areas there are labor 
shortages? There are a number of reasons, but two are fundamental: 
changes in the nature of work and in the location of work. Race is a 
third important factor.
  We have experienced profound economic restructuring that has 
transformed the nature of work and the skills demanded for work. 
Industrial and manufacturing jobs, once a foundation of our economy, 
have given way to work that is driven by new technological developments 
and a global marketplace. The demand for skilled workers, those with 
education and training, is high. Lower-skilled workers, who have always 
been the most vulnerable to economic shifts, have seen their work 
opportunities dwindle or vanish. The gap between average earnings of 
high school graduates and college graduates has become a gulf. In fact, 
``the unemployment rates for low-skilled men and women are five times 
that among their college-educated counterparts,'' according to the 
prominent social scientist and Harvard University Professor William 
Julius Wilson.
  I am pleased that to say that I believe we are on the verge of 
completing conference work on the workforce legislation that will 
improve the country's job-training system. That is a crucial, 
bipartisan work-product of the Senate's Labor Subcommittee on 
Employment and Training, on which I am proud to serve as Ranking 
Minority Member. I am hopeful we can complete and enact that 
legislation in the coming weeks. The bill I introduce today is designed 
to fit closely with and complement that reform of the federal job-

[[Page S7174]]

training system. It would utilize the streamlined and improved job-
training infrastructure that the workforce bill is designed to bring 
about.
  The location of work also has changed. Business has moved to the 
suburbs. New jobs, even lower-skill jobs, are more likely to be found 
in suburban environments than central city or rural communities. In the 
1980s, 87 percent of new jobs in the lower-paying and lower-skilled 
service and retail trade sectors were created in the suburbs, according 
to the Department of Housing and Urban Development (HUD). And all too 
often, jobs in the suburbs are inaccessible using public 
transportation.
  Race is a further determinant of concentrated poverty and 
joblessness. We cannot ignore or dismiss the impact of racial 
discrimination. It has created islands of poverty and joblessness. It 
is no coincidence that the residents of most central cities, of most 
poor rural counties, are more likely to be racial minorities. William 
Julius Wilson describes how many of our central cities have become 
essentially racially segregated and poor:

       In addition to changes in the economy and in the class, 
     racial, and demographic composition of inner-city ghetto 
     neighborhoods, certain government programs and policies 
     contributed, over the last fifty years, to the evolution of 
     jobless ghettos. Prominent among these are the early actions 
     of the FHA in withholding mortgage capital from inner-city 
     neighborhoods, the manipulation of market incentives that 
     trapped blacks in the inner cities and lured middle-class 
     whites to the suburbs, the construction of massive federal 
     housing projects in inner-city neighborhoods, and, since 
     1980, the New Federalism, which, through its insistence on 
     localized responses to social problems, resulted in drastic 
     cuts in spending on basic urban programs. Just when the 
     problems of social dislocation in jobless neighborhoods have 
     escalated, the city has fewer resources with which to address 
     them.

  HUD's State of the Cities report for 1997 observed that, ``In 1995, 
the poverty rate for whites (not of Hispanic origin) was 6.4 percent; 
for Asians and Pacific Islanders it was 12.4 percent; African 
Americans, 26.4 percent; and Hispanics 27.0 percent.''
  The Eisenhower Foundation recently published a report that examines 
what has happened in the 30 years since the historic Kerner Commission 
report of 1968. Here is one finding from that report: ``Since the 
Kerner Commission, the U.S. has had the most rapid growth in wage 
inequality in the Western world, with racial minorities suffering 
disproportionately. . . [T]here cannot be meaningful progress in 
closing the racial divide without an economic corollary.''
  The problem is not only urban. An American Indian in Minneapolis or a 
Mexican-American immigrant in Willmar, Minnesota might still not 
receive fair consideration from too many potential employers. With 
historic Civil Rights legislation through the years, we have largely 
transcended the most blatant policies of racial prejudice and 
segregation in our country. But to some degree we have replaced them 
with policies of inaction and neglect. Poor minorities have been made 
poorer, in some cases are more segregated, and many remain stereotyped.
  We pay for neglect, for the failure to act, in a myriad of ways. 
Neglect breeds destructive behavior that harms individuals, that harms 
those in close proximity, and that eventually harms those far removed. 
Criminal behavior is a child of neglect. We know that there are strong 
relationships between poverty, unemployment, and crime. Work deters the 
kind of crime that is found in communities of concentrated joblessness 
and poverty. It may not be all that is needed, but legitimate work 
opportunity is integral. Without it there is no hope.
  The STEP proposal would build a bridge to close the ``jobs gap''--the 
gap between those who are doing well in today's economy and those who 
are being left behind. The problem in this case is not the cyclical 
nature of our economy. It is chronic and structural joblessness. We 
cannot any longer disregard the substantial portion of our population 
that is being left out of the benefits of general prosperity.
  The Center for Community Change estimates a jobs gap of about 4.4 
million. In other words, 4.4 million people are out of work or 
economically in need of additional employment due to a lack of jobs 
appropriate to their skills and abilities. The estimate includes about 
2.1 million of the officially unemployed who have been without work for 
15 weeks or longer. It also includes about 330,000 persons who are 
without work but have given up their employment search and are 
therefore no longer officially unemployed--also called the discouraged 
worker. And it includes about 2 million full-time equivalent positions, 
which represent the nearly 4 million ``economically underemployed,'' 
people who work part-time because they cannot find a full-time job and 
who are also not included in the count of the officially unemployed.
  The answer to the jobs gap is jobs, and our bill will create jobs--
1.8 million of them over three years. The idea for this legislative 
proposal comes from people who have devoted much of their professional 
lives to attempting to solve this problem: the Center for Community 
Change, the Center for Budget and Policy Priorities, Peter Edelman, 
William Julius Wilson and grassroots organizations around the country 
which serve low-income communities. Our bill will not create every 
permanent job that is needed. Massive job-creation programs have been 
proposed and even tried in the past. They usually were designed as 
counter-cyclical interventions in the economy to address recessions. We 
also acknowledge that there are other reasons for joblessness which our 
bill does not directly address. If there are no jobs nearby, part of 
the solution may be transportation. If a jobless person is a parent, 
part of the solution may be affordable, quality child care.
  Rather, the bill proposes for the first time a specific and limited 
policy tool to address a specific, crucial need. It is a realistic 
effort to provide for out-of-work individuals a transition between 
chronic joblessness and a non-subsidized job in the private or public 
sector. It is a serious, even if initial and partial, effort to close 
the jobs gap. What I propose today is a plan to provide nearly 2 
million Americans with a significant step toward a full-time, living 
wage job.
  It will help these jobless individuals living in poverty with 
meaningful employment experience for one year, as well as with skills-
training and education.
  It will provide hard-hit communities with needed economic development 
and services so they can attract more investment.
  It will prepare workers who, at the end of a year of skills-
developing work, can qualify for many of the positions that private 
employers are telling us they cannot fill because they can't find able 
and experienced workers. That also will help attract investment.
  Finally, it will create a new demonstration program at the Small 
Business Administration to help target venture-capital investment to 
small enterprises that provide jobs in high-unemployment, high-poverty 
communities.
  The core of the bill is a 4-year, $20-billion program to create 1.8 
million entry-level, 12-month, transitional jobs. These will be 
community employment jobs, filling needs in the affected communities. 
The program would be administered by the Department of Labor, largely 
through the existing federal employment and training infrastructure, 
which we are in the midst of reforming and improving in substantial 
ways. Money and decision-making power would be pushed down to the local 
level. Participation by key groups--employers, labor, elected officials 
and community-based organizations--would be assured.
  We are not simply providing make-work jobs leading to nowhere. State 
and local plans would have to specify how the jobs and the accompanying 
skills development would provide a transition to gainful employment 
after one year. Nor are we creating an exploited, low-wage workforce to 
displace current workers or undercut their wages, such as many allege 
is happening with Welfare-to-Work in some places. Strict anti-
displacement language is included in the bill. Workers in the program 
would be paid slightly above minimum wage, plus benefits, and would 
receive full federal labor law protections.
  The program would be paid for from discretionary funds, so no 
budgetary offset would be required for its enactment. Nonetheless, 
offsets are included in the bill. It would be paid for by eliminating 
unnecessary current spending. The bill would revoke the current

[[Page S7175]]

subsidy of excessive executive compensation among large American 
corporations--prohibiting the federal tax deduction for salaries paid 
to executives which are more than 25 times the compensation of another 
employee of the same company for the same year. And it would repeal the 
deferral of income tax owed on assets of U.S.-controlled foreign 
corporations.
  Here is how the bill would work.
  The STEP Act would provide transitional employment to place people 
firmly on the pathway to economic security.
  The STEP Act would provide funding over four years to create entry-
level jobs, and provide benefits, for people who have been jobless 15 
weeks or more, who have a family income at or below poverty, and who 
are living in a community of concentrated poverty and unemployment. The 
jobs would be transitional--meaning that eligible participants could 
stay in the program for a maximum of twelve months, although some 
exceptions would be allowed.
  Under the four-year STEP initiative, States and local communities 
would spend the first year carefully planning a job creation strategy 
to create, nationwide, 1.8 million jobs over three years. With an eye 
towards ensuring quality and the coordination of resources, the STEP 
Act incrementally builds the number of jobs created each year to reach 
the total of 1.8 million jobs. Funding is provided in the second (post-
planning) year to create 200,000 jobs; in the third year to create 
600,000 jobs; and in the fourth year to create 1 million jobs.
  The number one priority of STEP is creating jobs for people who need 
work--people living in communities of concentrated poverty and 
unemployment. STEP is not just a job that ends in 12 months. It is the 
propellant for landing sustaining employment--employment that pays a 
living wage, the kind of job that could provide meaningful 
responsibilities to help people develop work skills and get sound work 
experience under their belt. At the same time, STEP participants would 
have paid time--10 hours per week--to get secondary, vocational, or 
post-secondary education. Their annual earnings would be consistent 
with living wage principals. They would be hooked into services such as 
transportation and child care which will be critical to their ultimate 
success. Also, they would have job search and job placement assistance 
to help ensure their successful transition out of the STEP program.
  The second priority is to create jobs in communities where jobs are 
scarce--in communities of concentrated poverty--whenever possible. 
There is no lack of work to be done in poor neighborhoods. The STEP Act 
would authorize work, regardless of its location, for environmental 
conservation or restoration, to develop infrastructure or affordable 
housing, to provide human services or to support small businesses. Poor 
communities could use the wage subsidies that STEP would provide to 
help with the renovation of schools and community centers, to provide 
child care or community health care services, to provide elder care, to 
provide aides to school teachers, to provide after-school and summer 
recreational programs, to develop parks and playgrounds, to provide 911 
phone service, to remove lead paint and asbestos, to build or renovate 
housing, and to provide community safety and crime prevention services. 
This is just some of the work that could be, and should be, done in 
communities with entrenched poverty.
  The jobs that would be created and the location of those jobs would 
be determined by the people most familiar with the needs of the 
community and with the needs of local residents. Local community 
members, elected officials, labor unions, and representatives from for-
profit business would collaborate to develop work proposals and 
identify worksite employers. When work could be physically located in 
or would benefit a community of concentrated poverty and unemployment, 
that work would receive funding before other proposals. We would allow 
jobs to be located outside a community of poverty for two reasons: (1) 
because we understand that the best skill-developing work opportunities 
may lie outside the boundaries of an impoverished community and our 
first priority is getting people to work; and (2) because we recognize 
that wages alone don't renovate schools or build houses. Other 
resources are necessary and may not be available to those communities. 
Participants, however, would have to be residents of a community of 
concentrated poverty and unemployment.
  Employers could be local public agencies, private nonprofits, or 
private employers. Work created in public agencies and in nonprofits 
would be funded first.
  The bill contains a number of measures to ensure that current 
employees would not be harmed or displaced. Labor organizations would 
play a significant role in selecting job proposals and in monitoring 
work conditions. It also contains provisions to ensure that workers 
would be provided health insurance benefits; would be covered by 
Federal, State, and local labor laws; would be covered by anti-
discrimination statutes; and would be eligible for the Earned Income 
Tax Credit.
  The cost of creating 1.8 million jobs over four years as I have 
outlined is $21 billion. That cost of providing jobs to those who need 
them is a bargain compares to the inescapable price that we pay, and 
that our children will pay, for doing nothing. The price of neglect is 
high--fiscally, emotionally and culturally.
  The bill also provides funding for community development venture 
capital--a critical need in most low-income communities. Equity capital 
is in short supply in low-income areas. Grassroots community 
development organizations have accomplished much through self-help 
economic development efforts, including microlending and technical 
assistance to businesses. However, few of these organizations have the 
financial or technical capacity to make equity investments to launch 
businesses or to help them expand. A field of community development 
venture capita (CDVC)l funds is emerging to fill the gap. These CDVC 
funds are targeting businesses that traditional institutional investors 
shy away from for a variety of reasons. These are businesses that may 
be located in economically distressed urban or rural areas, or 
businesses in need of equity investment in smaller amounts than what 
the traditional investor would consider. Also unlike the traditional 
investment firm, CDVCs target companies that will create good jobs that 
pay decent wages and opportunities for advancement. They seek to shape 
the culture of young companies with respect to sustainable community 
development and environmental impact. That means providing 
entrepreneurial solutions to social problems, creating jobs and 
generating wealth in economically disadvantaged areas, and yielding 
competitive long-term investment returns.
  There are about 30 community development venture capital funds 
currently operating around the country. Northeast Ventures Corporation 
in Duluth, Minnesota is an excellent example. Northeast Ventures 
invests primarily in a seven county area that is a restructured mining 
region. They invest in a wide range of industries, with ``typical'' 
initial investments ranging from $150,000 to $350,000.
  The STEP Act would provide funding of $20 million over four years for 
community development venture capital initiatives. The program would 
help to build the capacity of existing CDVC funds and encourage the 
development of emerging funds. The funds would be channeled through 
experienced, qualified, nonprofit intermediary organizations to provide 
venture capital financing (loans, grants, and equity investments) to 
venture capital funds that serve low-income people and their 
communities. The funding would also be used to provide training, 
education and operating support to develop the technical and 
administrative capacity of emerging community development venture 
capital organizations.
  Mr. President, the STEP Act would be an important effort towards 
bridging America's jobs gap. I hope my colleagues will support it.
  I ask unanimous consent that a list of groups supporting the bill be 
printed in the Record.
  There being no objection, the list was ordered to be printed in the 
Record, as follows:


                    GROUPS IN SUPPORT OF STEP ACORN

       Alameda Corridor Jobs Coalition, California

[[Page S7176]]

       Amalgamated Transit Union, Local 998, Milwaukee
       American Federation of Government Employees, AFL-CIO
       Anishinabe Council of Job Developers, Inc., Minneapolis
       Arrowhead Economic Opportunity Agency, Minnesota
       Californians for Justice
       Campaign for a Sustainable Milwaukee
       Center for Community Change
       Community Resource Center, Colorado
       Community Voices Heard, New York
       Georgia Citizens Coalition on Hunger
       Greater Bethany Economic Development Corporation, 
     California
       Hartford Areas Rally Together, Connecticut
       HIRED, Minneapolis
       Homeless Services Coordination Station, Georgia
       J.E.D.I. For Women, Utah
       Marshall Heights Community Development Organization, Inc., 
     Washington, D.C.
       Metropolitan Alliance of Congregations, Illinois
       Minnesota Assistance Council for Veterans
       National Low Income Housing Coalition
       Northwest Federation of Community Organizations
       Operation PEACE, Inc., Georgia
       People and Policy Center of Mississippi
       Philadelphia Unemployment Project, Pennsylvania
       Reform Organization of Welfare, Missouri
       Rural Minnesota Concentrated Employment Program (CEP), Inc.
       San Luis Valley Welfare Advocates, Colorado
       SENSES, New York
       South Carolina, Fair Share
       South Central Georgia Task Force for the Homeless
       Southerners for Economic Justice, North Carolina
       Tennessee Justice Center
       University of Minnesota, Labor Education Service
       University of Minnesota, Institute on Race and Poverty
       Up and Out of Poverty Now! Coalition, Georgia
       Utica Citizens in Action, New York
       Virginia Organizing Project
       Women's Opportunity and Resource Development, Inc., Montana
       Wister Townhouses Neighborhood Networks Computer Training 
     Center, Pennsylvania
                                 ______