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Bernstein on Strengthening the Middle Class


Testifying before a House Education and Workforce Committee hearing today on “Expanding Opportunities for Job Creation,” CBPP Senior Fellow Jared Bernstein outlined policies to strengthen the middle class.  Here’s an excerpt:

While the economy is improving and unemployment is slowly coming down, at current growth rates, it will take many years to reach full employment.  The following measures can help build on the momentum we have and accelerate the recovery:

  • Extend the payroll tax holiday and unemployment insurance. Policy makers of both parties have widely agreed on the need to extend payroll relief through the end of the year; failure to do so would add to the underlying fragility of the nascent expansion.
  • Invest in infrastructure investment. As part of the American Jobs Act, the President proposed a national program to repair and modernize the nation’s public schools and community colleges.  This plan is now a legislative initiative called FAST — Fix America’s Schools Today — soon to be introduced in both chambers.  FAST addresses three big problems: 1) the backlog of maintenance repairs in strapped school districts across the nation, 2) the high unemployment among construction workers and other laborers who do this type of work, and 3) the energy inefficiency in many public schools where billions of taxpayer dollars are wasted through bad roofing, aging boilers, and poorly insulated windows.  I urge legislators to give this idea a close look.
  • Manufacturing policy. In his State of the Union address, the President presented some ideas, including tax incentives and trade enforcement measures, to help incentivize the insourcing of manufacturing work in America.  In fact, manufacturers have added over 300,000 jobs over the past 21 months, and anecdotally, some producers say that perhaps they have overplayed the outsourcing idea and are interested in producing closer to where they sell (rising transportation costs and narrower international wage differentials may also be in play here).

    In this regard, policy makers could help tap this development by closing international tax loopholes that incentivize multinationals to build factories abroad.  The President’s most recent budget, recommended to the so-called super committee in September, proposes $110 billion in loophole closures that would both level the playing field for domestic manufacturers and help relieve our fiscal situation.

    Trade enforcement, including actions against countries that manage their currencies to artificially support their exports and block our imports, is another essential piece of this puzzle.

    Note that these measures simply level the playing field and are in no sense protectionist — they do not provide unfair advantages to American firms nor do they block imports.

  • Skills enhancement. This committee has a long history of interest in policies to ensure that the skills of American workers match those demanded by today’s employers.  Ranking Member Miller’s Pathways Back to Work bill supports a subsidized employment program targeted at unemployed adults, modeled on a successful Recovery Act program that employed over 250,000 workers in 2009-10 (TANF Emergency Fund).  This bill also provides work-based job-training for the long-term unemployed and summer jobs for younger workers.

    President Obama also stressed the importance of workforce investment through what is typically called “sectoral employment strategies.”  As opposed to generalized training that too often leaves participants unprepared for actual jobs, sectoral strategies link trainers, often through partnerships with community colleges, with local employers who provide granular information about future demand needs.  Research by Georgetown University professor Harry Holzer shows these programs to be far more effective than traditional training programs that are too often detached from what’s happening in local labor markets.

  • Improving workers’ bargaining power. As with international trade and taxation, the union organizing playing field is badly tilted against those who would like to exercise their right to collectively bargain.  A recent rule change by the National Labor Relations Board will help workers who’ve petitioned to form a union to have a more timely election.  In a climate where some employers who oppose unions can and do block elections with impunity, this new rule removes some of the above-noted tilt.

Click here for the full testimony.