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Madam Chairman, Senator Kennedy and distinguished Members of the Committee,
thank you for this opportunity to discuss how we can make federal employment,
training, and education policy work better for working Americans.
We meet this morning in the midst of a strong and sustained economic
recovery. Last month, the national unemployment rate dropped to 5.4 percent --
with accelerating inflation nowhere in sight. The "misery index" --
the sum of our unemployment and inflation rates -- is at its lowest level since
1972. And jobs in private industry are growing at their fastest pace in a
decade. Corporate America's ingenuity and President Clinton's economic strategy
have proven a winning combination.
Yet the upturn in the overall economy conceals disturbing long-term trends.
The problem isn't that some Americans are getting rich. That's good news.
That's something to celebrate. The problem is that too many Americans are
getting nowhere. Millions of families in this country are working harder, but
getting less. They're taking extra jobs, scrimping on luxuries, drawing down
their savings -- but still they're falling behind. Our middle class, as I've
been saying the past few months, has become an anxious class -- their current
footing uncertain, their future prospects cloudy.
During the three decades after the Second World War, when the economy grew,
nearly everyone's income grew with it. Millions of Americans believed in a
simple bargain: People who worked hard and played by the rules could earn a
better life for themselves and their families. People with the drive and
discipline to make the most of their opportunities had a decent chance to
succeed. American business backed the bargain, too. Employees who worked hard
and gave it their all could share in their company's success. If the company
did well, their jobs were reasonably secure, and their wages and benefits rose.
Growing together was the way it worked in America. But today, Americans are
no longer growing together. We are growing apart -- and at a quickening pace.
Many of the old factory jobs that once formed a gateway to the middle class
are gone. Such manufacturing jobs accounted for more than one-third of all
American employment in the l950s; now, no more than 16 percent. Many of the old
service jobs have disappeared, too. Telephone operators have been replaced by
automated switching equipment, bank tellers by automated teller machines, gas
station attendants by self-service pumps that now even accept credit cards, and
secretaries by computers and voice mail. Any job that can be done more cheaply
by a computer is either gone, or pays far less than before. Global competition
has accelerated this revolution.
Yet the same forces are creating millions of new jobs, some paying better
than ever. The right education and skills don't guarantee a good job in the new
economy, and certainly not job security. But it is getting harder to have
either without education and skills. The three-fourths of American workers
without college degrees have suffered the sharpest drop in wages and benefits.
Fifteen years ago, a male college graduate typically earned 49 percent more than
a man whose formal education ended with high school -- not too large a
difference for the two groups to share the label "middle class." But
by 1993 the average male college graduate was earning 83 percent more than his
high-school counterpart -- a difference so great that they no longer inhabited
common territory. Women are divided along similar, although less stark, lines.
So in these early days of a new Congress, the challenge that confronts us is
this: How to prepare all Americans to succeed in the tumultuous economy of
the 20th century's final years? How to restore the middle class prosperity
that was once this country's defining feature?
And laced through this discussion is a related, equally important, question:
what is government's role in helping to make this happen?
Now, let me be clear: government cannot insulate people from change.
Government should not insulate people from change. The history of this country
has been the history of constant, at times unsettling, change -- young families
pulling up stakes and moving to new frontiers, scrappy entrepreneurs toppling
industrial giants, scientists and researchers inventing new technologies to
change how we live. What government can do is help ordinary Americans adapt to
change. Our history offers a rich tradition of government playing exactly this
role. The Homestead Act. Social Security. Unemployment insurance. The
student loan program. Federally backed mortgages. The G.I. Bill.
But government cannot continue to do precisely the same things in precisely
the same way. We can look to past success for inspiration -- but not for
imitation. In this new economy -- a knowledge economy -- skills matter more.
Skills are what allow people to navigate change successfully. Indeed, each year
of education or job training beyond high school increases average future income
by six to twelve percent. More than ever in America, what you earn depends on
what you learn.
And skills can be learned. Ask Deb Woodbury of Maine, who was a tenth-grade
drop-out struggling to raise three children after her marriage ended. She
worked as a cook, then as a factory worker -- and found herself in trouble a few
years later when she was laid off. No job. Limited job skills. So she went
to the Training and Development Corporation in Bangor, where she earned her
GED, followed by college certificates in office and computer skills. She was
then hired by Bangor and Aroostook Railroad as an office manager and now has a
job that provides a decent income, good benefits -- and a brighter future.
A strong bipartisan consensus in the last Congress has already spurred
significant steps towards building the skills and future earning power of people
like Deb. President Clinton mapped out the next steps in his call for a Middle
Class Bill of Rights, to empower ordinary Americans with the skills to earn
their own prosperity in a changing economy.
This proposal directly addresses concerns that you, Madam Chairman,
expressed in our very first meeting -- and that are echoed in legislative
proposals introduced by you and Senator Kennedy. Nobody knows better than you,
Madam Chairman, that Americans seeking a fair shot at improving their lives
currently confront a confusing and overlapping tangle of programs, services, and
rules. And that's why the President favors a fundamental shift in emphasis
from programs to purchasing power.
President Clinton is proposing education and job training tax deductions to
help working Americans pay for building new skills. Families with incomes up
to $120,000 per year will be able to take tax deductions -- up to $10,000 per
year, when the plan is fully phased in -- for money they spend on
skill-building at community colleges, technical schools, and other learning
institutions. The tax code currently (and properly) encourages investments by
businesses -- but it should also encourage investments by families in productive
skills. Under the President's proposal, the after-tax cost of post-secondary
tuition for a typical family would fall by 15 to 28 percent, rewarding
investments in future productivity and spurring increases in post-secondary
education. The President is also proposing tax credits for families with
children, which they can spend as they see fit, and expanded Individual
Retirement Accounts so families can accumulate funds for investing in new
skills, buying a first home, or paying medical expenses as well as saving for
retirement.
Closely linked with the skill-oriented tax reforms the President is
proposing is a campaign of comprehensive employment and training reform to help
unemployed workers and low-income adults and youth -- many of whom will not be
able to benefit from the tax incentives -- to learn new skills and prepare
themselves for better jobs. The President's proposal eliminates more than 50
separate programs and replaces them with an integrated system that minimizes red
tape and maximizes individual choice. At the heart of this system are Skill
Grants that individuals can use to make their own decisions about post-secondary
training and education. Under the President's plan, unemployed and low-income
workers can get grants of up to $2,620 per year, for up to two years, that they
can use as they choose to learn new skills. We're also proposing extended
unemployment benefits to help workers who lose their jobs get the long-term
training they need to begin new careers.
We're the first to admit that Washington doesn't have all the answers.
States need the flexibility to address local conditions and to respect local
priorities. What's good for Kansas may not be good for Kentucky. So the
President's proposal gives states the freedom to tailor training programs and
delivery systems as they see fit. Federal requirements will focus on results --
not on process. States will be able to apply for waivers from the few
administrative rules that remain, and to plow any savings back into additional
training.
But even that's not enough. Too often, training providers are not held
accountable for their end product -- which shortchanges workers who require
results and taxpayers who finance failure. That's why we are proposing a set
of measures to boost accountability. Our proposal emphasizes individual choice
and competition, so that individuals can pick providers who deliver; it provides
good performance data, so that people know what training pays off; and it sets
quality standards for training providers, to cut off the frauds and
incompetents.
We will put customers first -- by arming them with up-to-date information on
what skills are in demand and where those skills can be learned. Reforms woven
throughout the initiative -- and centered on the networks of One-Stop Career
Centers already under construction by the States -- will give workers access to
reliable information on jobs, careers, and the success records of training
institutions, so that they can make good choices to improve their futures.
What the President is proposing is about jobs -- not government -- and this
means that the private sector has a central role. The programs that have been
most successful with disadvantaged youth -- such as the Center for Employment
Training (CET) in San Jose, California -- emphasize close connections to the
local labor market and combine intensive occupational skill training, hands-on
learning, basic education upgrading, and aggressive job placement. As is
already the case in the best School-to-Work efforts, business and labor will be
full partners in designing and running training, job-search, and information
services. I know from my travels around the country that the best -- the most
competitive and productive firms -- are also leaders in investing in their
workforce.
It is also vital that we prepare America's youth for the world of work.
The President's proposal would restructure Federal employment and training
programs for young people, including vocational education, into the
school-to-work movement already underway in every state, designed and developed
by the states and local communities themselves with the private sector.
Not long ago Chris Brady of South Boston decided that school wasn't worth
the trouble, so he dropped out and got a job cleaning office buildings at night.
When he discovered this work paid barely enough for rent, he found his way
into the Project ProTech school-to-work program in financial services, and
started to see the connection between the workplace and the classroom. In the
morning, he would work at Fleet Bank monitoring large currency transactions --
and then in the afternoon, he would apply his practical experience to his
coursework. Once he got a taste of the business world, he discovered why his
classes were relevant, and how they could prepare him for a better future. He
has since entered a business administration program -- the first member of his
family to go to college. School-to-work is a promising foundation on which to
anchor a wider range of skill-building efforts for America's youth.
Chris Brady is proof that investing in skills and education can pay off --
for individuals and for the nation. Consider the G.I. Bill, which helped
transform a period of conflict and anxiety into an astonishingly prosperous
post-war era. The G.I. Bill empowered ordinary Americans by giving them
opportunities to acquire world-class skills. The rest is history -- indeed, one
of the brightest episodes in our history. The dream of a secure, productive
place in the middle class became a reality for a majority of our nation's
people.
Half a century later, America faces another turning point. It is time to
revitalize the bargain that made this country what it is. Let's respect the
evidence about what works and what doesn't, and pledge ourselves together to an
efficient, creative, accountable approach to building skills and expanding
opportunity. Because even in these days of strained budgets, we need to ensure
that hard-working people who play by the rules get a fair shot at the American
Dream. Many years of collegial work by members of this committee -- including
you, Madam Chairman, as well as Senators Kennedy and Pell -- demonstrate the
depth and breadth of the consensus supporting investments in human skills, and
provide a model for progress in the future.
I look forward to working toward this goal in cooperation with this
distinguished Committee.
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