[Senate Hearing 112-809]
[From the U.S. Government Publishing Office]
S. Hrg.112-809
STORIES FROM THE KITCHEN TABLE:
HOW MIDDLE-CLASS FAMILIES ARE
STRUGGLING TO MAKE ENDS MEET
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HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
ON
EXAMINING MIDDLE CLASS FAMILIES
__________
JUNE 23, 2011
__________
Printed for the use of the Committee on Health, Education, Labor, and
Pensions
Available via the World Wide Web: http://www.gpo.gov/fdsys/
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
TOM HARKIN, Iowa, Chairman
BARBARA A. MIKULSKI, Maryland
JEFF BINGAMAN, New Mexico
PATTY MURRAY, Washington
BERNARD SANDERS (I), Vermont
ROBERT P. CASEY, JR., Pennsylvania
KAY R. HAGAN, North Carolina
JEFF MERKLEY, Oregon
AL FRANKEN, Minnesota
MICHAEL F. BENNET, Colorado
SHELDON WHITEHOUSE, Rhode Island
RICHARD BLUMENTHAL, Connecticut
MICHAEL B. ENZI, Wyoming
LAMAR ALEXANDER, Tennessee
RICHARD BURR, North Carolina
JOHNNY ISAKSON, Georgia
RAND PAUL, Kentucky
ORRIN G. HATCH, Utah
JOHN McCAIN, Arizona
PAT ROBERTS, Kansas
LISA MURKOWSKI, Alaska
MARK KIRK, Illinois
Pamela Smith, Staff Director
Lauren McFerran, Deputy Staff Director
Frank Macchiarola, Republican Staff Director and Chief Counsel
(ii)
C O N T E N T S
__________
STATEMENTS
THURSDAY, JUNE 23, 2011
Page
Committee Members
Harkin, Hon. Tom, Chairman, Committee on Health, Education,
Labor, and Pensions, opening statement......................... 1
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming,
opening statement.............................................. 2
Franken, Hon. Al, a U.S. Senator from the State of Minnesota..... 39
Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode
Island......................................................... 41
Blumenthal, Hon. Richard, a U.S. Senator from the State of
Connecticut.................................................... 43
Bennet, Hon. Michael F., a U.S. Senator from the State of
Colorado....................................................... 44
Witnesses
Bernstein, Jared, Senior Fellow, Center on Budget and Policy
Priorities, Washington, DC..................................... 10
Prepared statement........................................... 12
Sipprelle, Susan M., Multimedia Journalist, Englewood, NJ........ 19
Prepared statement........................................... 20
Greubel, Amanda, Director, Family Resource Center, Central
Clinton Community Schools, DeWitt, IA.......................... 26
Prepared statement........................................... 30
Clements, Thomas, Founder, Oilfield CNC Machining LLC, Broussard,
LA............................................................. 33
Prepared statement........................................... 34
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.:
Flight Risk, The Washington Post, article.................... 4
Debbie Stocks, Your Benefits Partner, LLC.................... 6
Dennis Murray................................................ 7
Response to questions of Senator Enzi by Jared Bernstein..... 55
(iii)
STORIES FROM THE KITCHEN TABLE:
HOW MIDDLE-CLASS FAMILIES ARE STRUGGLING TO MAKE ENDS MEET
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THURSDAY, JUNE 23, 2011
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The committee met, pursuant to notice, at 10:06 a.m., in
Room SD-430, Dirksen Senate Office Building, Hon. Tom Harkin,
chairman of the committee, presiding.
Present: Senators Harkin, Franken, Bennet, Whitehouse,
Blumenthal, and Enzi.
Opening Statement of Senator Harkin
The Chairman. Good morning. The Senate Committee on Health,
Education, Labor, and Pensions will come to order.
This is the second in a series of hearings this committee
will be holding to explore the economic State of America's
middle class. Last month, we heard testimony from, among
others, former Labor Secretary Bob Reich, who spoke about the
long-term economic changes that have left middle-class families
squeezed and our economy reeling.
Today, we will expand on that topic with testimony from
Jared Bernstein, the former chief economist to the Vice
President, and by hearing from a diverse group of voices who
will bring that story down to the level of America's kitchen
tables.
A strong America is built on a strong middle class, which
means good jobs, steadily improving wages and benefits, and a
healthy and happy retirement. But sadly, over the last 30
years, that strong middle class has been disappearing.
In the decades after World War II, our economy grew as our
middle class flourished. In those years, rising worker
productivity was met with equally rising incomes. We expanded
access to high-quality, affordable education. Retirement
security was bolstered by a partnership of individual savings,
private defined-benefit pension plans, and Social Security.
Strong unions provided workers with the ability to negotiate
for basic rights on the job like pay raises, workplace safety
standards, sick days, overtime pay.
All of these combined to make our middle class the driving
force of our economy by giving middle-class families the
ability to spend their hard-earned rising paychecks without
taking on huge debt. This, in turn, stimulated the demand
needed to convince businesses to expand. And I might add, when
businesses expanded during that period of time, they expanded
here in America, not overseas.
But since the 1970s, that social contract has disappeared.
Real family income has barely budged, despite our workforce
becoming more productive than ever. Unions have deteriorated,
and defined-benefit pensions have all but disappeared.
Our manufacturing base has been shipped overseas. Large
corporations have put returns for their shareholders and higher
pay for their executives over their workers' economic security.
Income and wealth inequality today are at levels not seen since
immediately before the Great Depression.
The testimony we will hear today will help shed light on
how families across America are coping with these changes. One
of our witnesses, Amanda Greubel, a Family Resource Center
director from DeWitt, IA, wrote me a very moving letter,
inviting me to spend a day with her in her job at the Family
Resource Center at their local school district.
Well, I wasn't able to make it to DeWitt. So I thought I
would bring her here to Washington instead. In her letter--and
I know she will talk about this--she said,
``As parents and public servants, hearing that the
Government wants to cut funding for education and other
important programs while giving tax breaks to people
who don't need them sends a strong message that our
child does not matter to you.''
Well, I couldn't agree with her more and look forward to
hearing more about her experiences.
But the experiences we will hear about today from all are
sadly too common across the country. I just want to note for
the record, to build on this hearing and the stories that we
will hear, my State staff is embarking this week on a 99-county
tour of Iowa to collect more testimony from Iowa's middle
class.
I am convinced that we need to do more to help reverse
these long-term trends and rebuild our middle class. There is
no doubt the economy is in better position than it was before
President Obama took office. But the trend toward wealth
concentration continues.
Simply put, I feel there can be no real economic recovery
without the recovery of the middle class. Most Americans don't
expect to be rich or famous, but we do expect a living wage and
good American benefits for a hard day's work.
I hope it is time we get back to that basic concept, and I
look forward to our discussion.
With that, I will yield to Senator Enzi.
Statement of Senator Enzi
Senator Enzi. Thank you, Mr. Chairman.
We are holding this hearing on how American families are
struggling in this very difficult economy. There is no doubt
that many, many people are suffering. Over 14 million Americans
are unemployed.
It is obvious that the economic recovery has stalled.
Unfortunately, the efforts taken by this Administration to
stimulate the economy have not created enough jobs and have put
us further in debt.
Worse, many of the actions this Administration has taken
are actually preventing and slowing job creation and making
things worse. I hope my colleagues will agree that an average
9.5 percent unemployment rate since May 2009 is unacceptable.
Solving the job crisis should be the top priority of this
committee.
This is the second hearing on the middle class the HELP
Committee has held, and I understand that a third has been
scheduled. If the goal is to hear from real middle-class
Americans working in the private sector about how to get the
economy going, I would suggest we do a better job with the
witness invitations.
At the last hearing, the majority invited an economist, a
policy advocate, and a legal counsel for organized labor. The
minority was pleased to invite an actual job creator that is
still locked in a senseless legal battle with the National
Labor Relations Board about where jobs can be created and who
gets them.
Today, again, I see that the majority has invited a DC
economist and a policy advocate filmmaker. I am pleased that we
have two witnesses today who are on the front lines of this
economy, but I wish there were more. We need to hear from the
small businesses and industries that are actually creating the
jobs America so desperately needs.
It is very important that this committee pay attention to
the economic problems facing the middle class and all
Americans. I don't like doing this based on polls. But I do
think polls give an indication of the mood of our country,
perhaps even more so than the testimony of policy advocates.
Recent polls show that the country is very worried.
Seventy-eight percent of Americans feel the country is on the
wrong track. Seventy-four percent believe the economy is the
most important problem facing the country.
Fifty-one percent think their situation is worse than it
was 2 years ago after President Obama took office. Only 6
percent of Americans believe the stimulus package created jobs,
and 57 percent believe that it had no impact or is making
things worse.
These statistics are startling. I hope this hearing will be
a wakeup call to the Administration. The failure of the
stimulus is not a laughing matter to most Americans, and they
are not looking for excuses. The time to take action is now,
before things get worse.
There are a number of steps the Administration could take
to create jobs and boost this economy. Most of them involve
Washington just getting out of the way. They can push the free
trade agreements with South Korea, Colombia, and Panama, which
have been negotiated for years and will open markets to our
producers, creating more jobs.
They can reduce the regulatory burden the Federal
Government places on employers, especially small employers. We
have heard a great deal of rhetoric about the regulatory
burdens, but the only action we have seen is the creation of
more regulations.
White House Chief of Staff Bill Daley recently said with
regard to the onslaught of new regulations, ``Sometimes you
can't defend the indefensible.'' That is true. But it is an
unacceptable excuse from a representative of the chief
executive.
Mr. Daley may have also been referring to the
Administration's so-called ``independent boards and agencies.''
Two in particular have stretched their authority to tilt the
scales in favor of union organizing bosses and against the
rights of individual employees and employers.
Yesterday, the National Labor Relations Board announced
another new rulemaking. This time, it is an expedited
rulemaking to accomplish the card-check objective of
eliminating an employer's opportunity to make his case during a
union organizing drive.
The board is trying to rush this expedited rulemaking into
place before it loses members due to Senate opposition to its
actions. This amounts to nothing more than an outrageous
assault on America's job creators and workers, and the
opposition that it has already drawn will only get stronger as
the public has a chance to read through the 145-page proposal.
Attempts to distance the Administration from the actions of
these boards are misleading. President Obama nominated and
appointed the Board's officers that are carrying these actions
out. In some cases, he appointed them against the will of the
Senate.
The acting general counsel of the National Labor Relations
Board, who is pursuing the complaint against Boeing and also
suing States over voter referendums protecting the secret
ballot, is an administration appointee and nominee. Since his
nomination is pending before this committee, we do know that
very well. If the President did not agree with this assault on
a U.S. company creating thousands of U.S. jobs in the middle of
a recession, he could withdraw the nomination.
I will note that the acting general counsel's complaint
against Boeing has come under strong criticism from many
quarters, including an editorial in the Washington Post this
weekend. With consent, I will put that editorial in the record.
The Chairman. Yes.
[The information referred to follows:]
[The Washington Post, June 19, 2011]
Flight Risk for Boeing
(By Editorial)
The Opening of a manufacturing plant with nearly 1,000 jobs should
be cause for celebration. But Boeing Co.'s $1 billion facility in South
Carolina has met a different, less welcome response.
The National Labor Relations Board, spurred by the International
Association of Machinists and Aerospace Workers, hit Boeing with a
complaint of unfair labor practices. The board charges that Boeing
illegally shipped jobs to South Carolina from the company's Washington
State facility in retaliation for past strikes by unionized workers in
Puget Sound. Both facilities will have a hand in building the company's
new and mammoth 787 Dreamliner.
The NLRB pegged its case to ``coercive'' threats by Boeing
executives who told the media that disruptions caused by the strikes
played a role in deciding to build in South Carolina. They also spoke
of the need to ``geographically diversify'' to avoid shutdowns caused
by natural or man-made disasters and to control costs, which would be
easier to do in a ``right-to-work'' State through lower labor costs.
As punishment, the NLRB is seeking to compel Boeing to move the
Dreamliner jobs in South Carolina to Washington State--which the
company says would essentially force it to shut the plant. Boeing calls
the proposed punishment ``indisputably the most consequential and
destructive remedy ever sought by an officer of the NLRB.''
The law forbids employers from discriminating or retaliating
against employees for lawful union activity. To prevail, an aggrieved
party typically must show that the retaliation resulted in demotions,
dismissals, wage reductions or other punitive measures. In Boeing's
case, these reprisals are absent; the company also claims its
collective bargaining agreement gives it the explicit and exclusive
right to locate work where it wishes.
The allegation that the company ``transferred'' jobs out of State
is unconvincing because the jobs in South Carolina are new. The company
has not cut jobs in Washington, nor has it demoted or slashed the wages
of union workers. Boeing has added about 3,000--albeit temporary--jobs
in Washington since it announced its South Carolina plans and says it
is likely to add more to keep up with demand for its commercial
airliners.
Employers who engage in unfair labor practices should be penalized.
But the NLRB's move goes too far and would undermine a company's
ability to consider all legitimate factors--including potential work
disruptions--when making plans. It also substitutes the government's
judgment for that of the company. This is neither good law nor good
business.
Senator Enzi. This Administration's energy policy is
actively slowing and preventing job creation. Our domestic
energy production industries can offer good jobs with good pay
when they are allowed to operate and expand.
Mining has been one of the few bright spots in creating
private sector jobs during this recession. But we know that it
could create far more jobs if the permitting process were not
being slow walked. The result of this Administration's
misguided energy policy is lost jobs and bankrupted American
companies.
On the Gulf Coast, many of the thousands of jobs that were
supported by the offshore drilling industry are simply gone due
to the moratorium, and the bureaucratic permit delays on
offshore drilling in the Gulf. Two victims of these policies
are here with us today.
Thomas and Melissa Clements are small businesspeople who
poured everything into building their American dream. Thomas
acquired the specialized skills necessary to assist offshore
oil exploration operations. He and Melissa worked, saved, and
built relationships with customers until they got to the point
where they could start their own shop. Then they hired
employees, created jobs, and were on the way.
Unfortunately, the Deepwater Horizon accident occurred in
April 2010, resulting in the tragic loss of 11 workers. As a
result the Administration placed a moratorium on all offshore
drilling permits. In October 2010, the Administration lifted
the moratorium, but did not issue a permit until March 2011.
Since the accident, the Federal Government has issued 16
deepwater permits. Of those, approximately 14 were in the
process before the accident happened. As Mr. Clements will
point out, the moratorium and refusal to grant permits is not
necessary and is ruining a profitable industry on which the
Nation relies. He says it best in his testimony, ``You don't
ground all planes when there is a plane crash.''
Since the start of the moratorium, eight deepwater rigs
have left the Gulf of Mexico. Another six are being marketed
for international locations. Because of the huge cost
associated with the rigs, once they leave, they are not likely
to return, and neither are the skilled workers who operate
them.
Some production has moved to Brazil and other countries
that are not impeding their domestic energy production, and we
are their customers. We are buying from them instead of
producing ourselves.
Ironically, one of the largest oil discoveries--reserves in
the Gulf of Mexico was just announced last week. This discovery
proves that there is still massive amounts of domestic energy
available to help alleviate higher prices if the Government
would simply get out of the way.
Unfortunately, the slowdown in exploratory drilling as a
result of last year's moratorium is expected to lead to a 20
percent production decline in the next year. Again, the
Administration's policies are making things worse. Thank you
for being here today to explain the cost of these misguided
policies, Mr. Clements.
I also want the committee to hear from the other Americans
that are suffering as a direct result of administration
policies. I have a statement from Debbie Stocks, an insurance
broker from Glen Allen, VA, who runs a small business with two
employees.
Mrs. Stocks' business is selling health and welfare
insurance policies to small businesses. Agents and brokers
across the country have seen their commissions slashed as a
result of the new healthcare law, and this is putting thousands
of people out of work.
I also have a statement from a worker who signed up to work
for Boeing at its new facility in South Carolina. This employee
is frustrated that a Federal agency is attempting to move his
and thousands of other jobs to Washington State so it can be
performed by unionized employees.
With consent, I will place those two statements in the
record.
The Chairman. Without objection.
[The information referred to follows:]
Prepared Statement of Debbie Stocks, Owner, Your Benefits Partner, LLC,
Richmond, VA
I'm a small business with two other employees, located in Glen
Allen (Richmond), VA. I've been in business for myself for 6 years. I
started my agency in 2005, after the insurance company I worked for
restructured. I really wanted to work for myself and knew the value of
creating a book of business that I could sell someday. I've worked hard
these past 6 years to grow my clientele and increase revenue.
About 1\1/2\ years ago, I decided to add property and casualty
insurance to my practice as I was mainly offering health and welfare
(life, disability, dental, vision, etc.) benefits. We were licensed
last year and began offering the beginning of this year. Thank
goodness! In January, we received letters for most of the carriers
announcing commission cuts for small group and individual sales (my
niche). Anthem gave us a 33 percent cut! I don't know too many
businesses that can withstand a 33 percent cut in revenue and stay
afloat.
Why the cuts in commission? When I look at the healthcare
legislation (PPACA), I ask myself how could the carriers NOT cut
commission? Given the required medical loss ratio of 85 percent, only
15 percent remains for administrative costs. When we consider
application processing, billing, claims processing, and State taxes
(though these may have been moved outside the equation--you'll have to
fact check me on that), what could be left? In addition, adding
dependent coverage to age 26, no annual lifetime and annual maximums,
and enhanced preventive benefits, will also increase costs to the
carriers (in both claims and administrative expenses). With PPACA,
we've added these additional expenses to the carriers but they cannot
charge more. It can't work.
The property and casualty portion has certainly carried us this
year. We continue to work with our health clients to service their
policies, help with claims and billing questions, etc.
The shame of this is that individuals and small businesses are the
VERY people who need help from a broker. They have no HR dept. to
research and shop the market. Going to the carrier will only give that
carrier's plans (not competing plans). And yet, brokers in my position
(servicing these smaller clients) are the ones hurt the most.
I will continue to work in the insurance business because I love
it. My customers are very appreciative of the help I give and that
makes me feel good. It isn't just about the commission (I don't make
that much money, in fact). I believe I provide a valuable service to my
clients.
Prepared Statement of Dennis Murray
I am one of the South Carolina-based Boeing employees seeking to
intervene in the National Labor Relations Board prosecution of the
Boeing Company, regarding Boeing's South Carolina operations.
I reside in Summerville, SC. I am currently employed by Boeing in
North Charleston, SC.
Along with my family, I have lived in South Carolina since 1981. I
moved to South Carolina in 1981 when it was made my Air Force permanent
duty station. I served in the Air Force for a total of 8 years, and was
honorably discharged in 1984.
I went to work for Lockheed in 1984 in Charleston, SC. I was
employed within a bargaining unit represented by the International
Association of Machinists & Aerospace Workers (``IAM''). I was a
voluntary member of the IAM for most of the time I worked there.
Eventually Lockheed ran out of contracts and I was laid off. Later,
Lockheed merged with Martin-Marietta, and the jobs in Charleston were
moved to the Baltimore, MD area. I remained in Charleston and did not
relocate to Baltimore.
I then worked for Bayer for about 9 years, in the greater
Charleston area. There was no union in that facility. I got laid off by
Bayer when they downsized and sold off the facility, and I moved on to
other jobs.
In 2008, I became employed by Vought, a manufacturer with a
Charleston facility that assembled two aft sections of large Boeing
aircraft. In approximately July 2009, Boeing bought the Vought facility
where I worked, and I have been a Boeing employee since that time.
When I went to work at Vought in 2008, the IAM had been voted in as
the employees' exclusive bargaining representative, but they were just
negotiating a first contract. In November 2008, an IAM representative
called an emergency meeting but only told 12 of the 200 union members
in the unit about the meeting. A total of 13 employees attended the
meeting and those few in attendance ratified the IAM's contract by vote
of 12-1. Many of the provisions of the new IAM contract were worse than
what Vought employees already had without a contract. For example,
employees lost medical, dental, and short-term disability. The Vought
employees were then extremely unhappy with the IAM's actions. This
unhappiness was exacerbated by subsequent layoffs that lasted from 3
weeks to 5 months. Employees contacted IAM leaders to seek redress for
the way that the contract had been ratified, but the IAM leadership
turned down our requests to intervene and refused to assist us. I also
contacted the NLRB and was told that this was not an unfair labor
practice because the NLRB does not police internal union ratification
votes.
Employees then collected more than 30 percent of signatures to
decertify the IAM, but were told by the NLRB that we could not
decertify until the contract expired, and we would have to wait until a
60-90 day period prior to the expiration of the contract.
In May 2009, we heard rumors that Boeing was going to buy out the
facility from Vought, and we started collecting new decertification
signatures. On July 30, 2009 when it was formally announced that we
were no longer employees of Vought but were now employed by Boeing, we
filed a decertification petition with the NLRB. The case was docketed
as The Boeing Company/IAM, NLRB Case No. 11-RD-723. I was the named
decertification petitioner in that case. After Boeing bought Vought's
facility, it continued to recognize the union as our representative,
but employees wanted to get out of the union nevertheless. Boeing was
not hostile to the IAM in any way and did not encourage us to
decertify. We filed the decertification petition entirely on our own.
Besides our lack of support for the IAM, it soon became clear to
many employees that there was another good reason to decertify the
union. In 2009, during all of this maelstrom and the decertification
campaign, the media was reporting that Boeing was in the middle of a
site election process to decide where it should create a new final
assembly and delivery line for the production of large aircraft. It was
reported that Boeing was looking at several sites all over the country,
including Charleston. Many employees knew about Boeing's site selection
process, and discussed the fact that a decertification of the IAM would
make our facility in Charleston all the more attractive to Boeing,
since it was common knowledge that the IAM had caused major labor
problems for the company in Seattle.
Thus, many employees who wanted to decertify the IAM because of the
contract ratification fiasco also realized that our facility in
Charleston would be in a much better competitive position to attract
the Boeing final assembly and delivery work if we were operating non-
union, without the IAM's rules and labor strife. The decertification
election was held on September 10, 2009, and the IAM was voted out by a
tally of 199-69. Boeing announced that Charleston was selected as the
site for the new final assembly and delivery site about 2 months later.
Now that we are working in a nonunion setting, I feel that Boeing
is treating employees well. Within a few weeks after the
decertification was final, Boeing gave us 3 percent across-the-board
raises. Overall, the wages, wage structure and benefits are better
under the current non-union Boeing than under the prior unionized
Vought. Most employees in my building are happy.
The Boeing Campus in north Charleston, SC is divided into three
production buildings. The former Vought facility is now identified as
Building 88-19. It is the Aft-Body Manufacturing building where
sections 47 and 48 are made. Here the two sections are made from
scratch, and then completed by the addition of all structural members
and systems components. The sections are then joined together, making
the rear third of the aircraft. Next is the former Global Facility, now
known as Building 88-20. This is Mid-Body Assembly Facility where the
mid-body sections are flown in from Italy and mated with the center
wing section brought in from Japan. Once all the sections are joined
and mated with the center wing section, the remainder of the systems
components and wiring are installed completing the center third of the
aircraft.
Last, there is the Final Assembly and Delivery Building, also known
as FA&D. This is where the forward third of the aircraft is brought in
from Spirit Aircraft in Kansas, the Mid-Body brought in from Building
88-20, the Aft-Body section from Building 88-19 as well as the wings
from Japan and Horizontal stabilizer from Italy. All the sections are
then combined to create a complete 787 Dreamliner aircraft. The
interiors will come from the IRC facility being completed a few miles
away, and also be installed at FA&D. After a quick flight for a high
quality customer paint job, the aircraft return to the Charleston
delivery center where the customers will take possession of their new
airliner.
Building 88-19 is currently staffed by about 1,200 employees.
Building 88-20 is currently staffed by about the same amount. FA&D
currently has somewhere in the range of 800 to 1,000 employees with 10
classes going around the clock with several hundred more employees
preparing to work in the FA&D building. When it is fully staffed, FA&D
will employ some 3,800 employees.
Although I still work in the ``old'' section of the building
working on the aft sections of the aircraft, it is possible that I
could transfer over to the new facility.
I understand that the NLRB General Counsel seeks a remedy in this
case that would force Boeing to discontinue the final assembly and
delivery work in Charleston, and transfer it to Seattle. This remedy is
grossly unfair and would devastate our community and my family. As
noted above, I have been laid off several times in my career due to
corporate re-structuring or lack of work, and it is a devastating
experience.
It seems clear that many Charleston-based employees and I would
lose our jobs with Boeing in South Carolina if the General Counsel's
proposed remedy is adopted. The current unemployment rate here is high
and jobs are scarce. If I lose my job, my family will be devastated, as
my son and daughter are both looking for work but are currently
unemployed due to the high unemployment rate in this geographic area. I
have two grand kids from my 22-year-old daughter who are also living
with us. Thanks to Boeing I am able to keep food on the table and a
roof over my head for all of my family, including my grandchildren.
Many other families around here are in a similar boat.
Moreover, even if Boeing gave me the opportunity to move to
Washington to perform the work that the General Counsel seeks to
transfer to that State, I would oppose and decline such a move because
I have already gone head-to-head with the IAM union and do not want to
work in a unionized IAM environment in Washington, especially in light
of what they have done to us here in Charleston.
In January 2009 Vought sent me to Boeing's Everett, WA facility for
training purposes. When I told those rank and file IAM members how we
had been mistreated by the IAM, the rank and file workers voiced
support for us. But of course the union officials were against our
efforts to re-do the contract ratification and our efforts to decertify
the IAM. One union official went on public record and said that he
would try to keep work from coming to our plant in Charleston because
of the decertification. I would not want to work in such a hostile
unionized environment, nor do I believe that I should have to in order
to earn a living and feed my family. The union bosses are trying to
spank us like unruly children, by having all our jobs taken away. And
we're fighting back.
I have chosen to exercise my rights as a citizen of the United
States to live and work in South Carolina. I have chosen to exercise
the rights provided to me under the State and Federal laws that
prohibit compulsory unionism, and allow employees to refrain from
joining or supporting any labor union. I served in the military to
uphold every citizen's basic constitutional rights, which includes the
right not to be compelled to join or support any private organization.
Moreover, along with a large majority of my coworkers, I have already
chosen to exercise my rights under the NLRA to decertify the IAM when
it was our representative at the same facility. I have nothing against
unions, but I do not think they should be compulsory. I do not think
employers should be told by the Federal Government where they can
establish their operations.
Senator Enzi. Too many Americans are suffering in this
economy, and far too many are suffering because of some policy
being carried out by the Administration. I look forward to
hearing everyone's testimony.
The Chairman. Thank you very much, Senator Enzi.
And now, we will turn to our panel. I will introduce them
all, and then we will hear from them as we go from left to
right.
First, we have Jared Bernstein, who recently left his
position as the chief economist to the Vice President, and is
currently a senior fellow at the Center on Budget and Policy
Priorities. During his time in the White House, he served as
the executive director of the White House Middle Class Task
Force. He was previously a senior economist at the Economic
Policy Institute and chief economist at the Department of
Labor.
Next, we have Susan Sipprelle, a multimedia journalist who
is currently working on a documentary entitled, ``Over 50 and
Out of Work,'' which is an ongoing project that details the
impacts of the great recession on Americans that are 50 and
older. She is a graduate of the Columbia University Graduate
School of Journalism and New York University's Stern School of
Business.
Her work has been published widely, including in the New
York Times. Ms. Sipprelle is joined by her husband, Dwight, and
three of their children whom I just met--Clare, Troy, and
Lynne--along with her film colleague Sam Newman.
Next, we have Amanda Greubel from DeWitt, IA, about whom I
spoke. She is the Family Resource Center director in the
Central Clinton Community Schools. She wrote a very moving
letter to my office earlier this year, and I am pleased that
she is able to join us to share her story with the committee.
Ms. Greubel has a bachelor's degree in social work from
Wartburg College and a master's degree in social work from St.
Ambrose. Her husband, Josh, is the band director in the local
schools, and they have a 5-year-old son, Benen.
And Thomas Clements, about whom Senator Enzi just spoke, is
the co-owner of Oilfield CNC Machining LLC, a small business in
Broussard, LA, which he owns with his wife, Melissa. Their
business specializes in machining metal parts for oilfield
equipment used on offshore drilling rigs.
To each of you, thank you for being here, and your
statements will all be made a part of the record in their
entirety. I will ask if you could sum up--the clock says 5
minutes, but let us say 7 minutes. And if you go 1 minute over,
I won't get too excited. But once it starts going over that, I
might get a little nervous, OK?
So, Mr. Bernstein, welcome, and please proceed.
STATEMENT OF JARED BERNSTEIN, SENIOR FELLOW, CENTER ON BUDGET
AND POLICY PRIORITIES, WASHINGTON, DC
Mr. Bernstein. Thank you, Chairman Harkin, Ranking Member
Enzi. I thank you for this opportunity to testify before the
committee, and I applaud the committee for once again bringing
these critical issues to the forefront of your work.
As you mentioned, Senator, I am currently a senior fellow
at the Center on Budget and Policy Priorities, and before that,
along with my chief economist post to the Vice President, I was
executive director of the White House Task Force on the Middle
Class.
More often than not, the stories we heard on that task
force were of middle-class families having a much harder time
than they expected not just making ends meet, but in meeting
their aspirations. Such aspirations typically included a decent
house in a good neighborhood with quality schools for their
kids; the ability to save enough for their kids' college
education, as well as parents' belief that their children
should do better or at least as well as they did; the ability
to afford decent health coverage; working hard but also finding
enough time to enjoy your families; saving for retirement.
Some families went further, talking to us about an implicit
social contract between their families, their government, and
their employers. The terms of this contract were that if they
worked hard and played by the rules, they would have a good
chance of realizing those aspirations I just elaborated.
Need I tell you, many folks now believe that contract is
broken. While many of us are currently focused on the cyclical
problems remaining from the great recession that began in late
2007, it is important to stress that the so-called middle-class
squeeze did not begin with the great recession, and it won't
end when that downturn is finally behind us.
No question the great recession put even more downward
pressure on the living standards of the middle class. But for
many in the middle class, the downturn presented a new problem
on top of an old one. Historical context is helpful here.
Over the three decades from 1947 to 1979, the real income
of the median family grew almost in lockstep with productivity
as both more than doubled. But over the next 30 years, median
income growth was about one-eighth that of productivity growth.
That divergence between middle-class incomes and the economy's
productivity is clearly a structural long-term development, not
a cyclical short-term one.
Understanding why economic growth has increasingly eluded
the middle class is essential. Globalization and technological
change favoring more highly skilled workers plays an ongoing
role for sure. But other contributors have more to do with the
reduced ability of middle-class workers to bargain for their
fair share of economic growth.
High unemployment is a major culprit here. And as I have
shown in recent research, the economy operated with much less
slack over the period when productivity and middle-class
incomes grew in sync. I would say in today's American economy
with extensive globalization and diminished union power,
middle-class workers have no better friend than full
employment. And of course, we remain very far from such
conditions today.
Another factor worth noting is the ``financialization of
growth,'' strong profit growth in sectors where middle-class
workers are less likely to be employed. In this regard, I
wanted to be sure to point out that the recent data show that
while corporate profit rates are returning to their pre-
recession peaks, the paychecks of average workers are now
lagging behind inflation.
The recession hit middle-class families hard. Between 2007
and 2009, middle-class families lost over $2,000 in real terms,
about 4 percent of their incomes. For African-Americans, the
loss was much greater, 7 percent.
Finally, I want to say a few words about policies currently
under discussion that could help or exacerbate the challenges
faced by middle-class families today. When families talked with
our task force about the economic squeeze they were facing, it
was often in the context of how their family budgets didn't
seem to go as far as they used to, particularly in the areas of
healthcare coverage and college tuition.
In fact, while overall inflation has grown by a factor of 3
since the late 1970s, college tuition and fees, according to
the price index, has grown by a factor of 10. It is true that
student aid has grown over this period as well, and that has
been extremely important to these families in offsetting the
climb in the sticker price of inflation.
Retirement is also less secure for many older persons. One
important factor here is the shift away, as you mentioned, sir,
from defined-benefit pensions to defined contributions--a
change that shifts the risk of income inadequacy in retirement
from employers to workers and their families. As I show in my
written testimony, there has been a complete reversal in the
share of coverage between a guaranteed and variable pension
benefits.
In this regard, it bears repeating that Social Security, a
guaranteed pension for retirees, is the first line of defense
in retirement security. Though it is often mistakenly thought
to be unimportant to seniors, in fact, for recipients age 65
and up, Social Security is about two-thirds of their income,
and that share grows with age.
Last, on our task force, we heard from families that health
coverage is another source of the squeeze and as the cost of
family health insurance premiums have gone up many times faster
than their earnings. The Affordable Care Act is targeted at
this problem and is expected to lower the growth of healthcare
spending and premium costs relative to their expected trend.
But in the near-term debate, it is important to the middle
class to protect the Medicaid program against deep spending
cuts. Though Medicaid coverage is generally thought of as
serving the low-income population, the program is the primary
payer for 64 percent of nursing home residents.
With savings and other insurance, middle-class seniors may
be able to initially pay for home healthcare or nursing home
services. But over time, many spend their savings and
eventually need Medicaid to step in as Medicare provides
limited coverage for these services.
Thank you very much.
[The prepared statement of Mr. Bernstein follows:]
Prepared Statement of Jared Bernstein
Chairman Harkin and Ranking Member Enzi, I thank you for this
opportunity to testify before this committee. There are few topics as
important to America's economic success as the well-being of the broad
middle class and I applaud this committee for once again bringing these
issues to the forefront of your work.
I am currently a senior fellow at the Center on Budget and Policy
Priorities.\1\ Prior to my current position, I was chief economist to
Vice President Biden, as well as the executive director of the White
House task force on the Middle Class. Some of what I reference below
derives from the activities of that task force.
---------------------------------------------------------------------------
\1\ I thank Arloc Sherman for the data work on the middle-class
hours and earnings data. Hannah Shaw and Kelsey Merrick provided
valuable research assistance. Any mistakes are my own.
---------------------------------------------------------------------------
the middle-class squeeze and the social contract
It is commonly thought that the economic life of the American
middle class has grown increasingly difficult over the past few
decades. This sentiment has given rise to the notion of the ``middle-
class squeeze,'' which is generally understood to imply that middle-
class families are having a harder time achieving a set of economic
aspirations that we often associate with the American middle class.
These economic aspirations typically include a decent house in a
good neighborhood with quality schools for their kids; the ability to
save enough for their children's college education, as well as parents'
belief that their kids should do as well or better than they did; the
ability to afford decent health care coverage; working hard, but also
finding enough time to actually enjoy their families; saving for their
retirement.
It is also argued that for many years, there was an implicit social
contract between government, private firms, and the middle-class. If
folks ``worked hard and played by the rules,'' they would have a good
chance of realizing those aspirations. But in recent decades, both
policy and structural economic changes, it is argued, have broken that
contract with the middle class.
Some of these concepts are handily measurable. It is clearly the
case, for example, that the cost of health care premiums has risen much
faster than middle-class incomes and that the locus of risk of saving
for retirement has shifted from employers and firms to workers and
their families. It is also true that real median family income grew
more slowly in recent decades than in earlier periods, and that this
slowdown is particularly sharp relative to productivity growth.
But other aspects of this story are less amenable to empirical
economic analysis. Economists have neither a widely accepted definition
of ``middle-class'' nor a construct of a ``middle-class squeeze.''
Certainly, there is no obvious metric for measuring the breaking of an
implicit social contract, one that clearly didn't cover everyone
(women, minorities) anyway.
Given those limits, this testimony evaluates the economic evidence
for the middle-class squeeze where hard evidence exists. On other
matters, like the broken social contract, I will, as best I can,
extrapolate from the data and my experiences in this field of study to
judge the claims being made.
the empirical evidence behind the middle-class squeeze
Median Family Income Growth
I begin this section with an analysis of median family incomes, but
before presenting these data, it is important to stress that the so-
called ``middle-class squeeze'' did not begin with the Great Recession
and it will not end when that downturn is fully behind us. As shown
below, it is demonstrably the case that the Great Recession put even
more downward pressure on the living standards of the middle class. But
policymakers can neither understand nor address the problems documented
herein if their analysis begins only a few years ago.
Note, for example, Figure 1. Over the three decades from 1947-79,
real median family income grew almost in lock step with productivity
growth. But over the next 30 years, middle-income growth was about one-
eighth that of productivity. That divergence between middle-class
incomes and the economy's productivity is clearly a structural
development, not a cyclical one.\2\
---------------------------------------------------------------------------
\2\ A technical issue raised here involves the different price
deflators for family income, which uses a consumer price deflator, and
for productivity, which uses a product-side deflator. Using a product
deflator on family income closes 40 percent of the productivity/median-
income gap, but when considering family well-being, it is not the right
approach, since families face consumer, not producer, prices. For
example, it's true that machine tool prices are rising more slowly than
health care prices, but it is that latter that matters to consumers.
What explains these very different outcomes? First, they reflect
the sharp increase in economic inequality since the 1970s. Yes, the
productivity of the American economy downshifted over the past 30 years
(though it accelerated post-1995) compared to prior decades, but it
slowed much less than the growth of median family income. Clearly, a
larger share of growth over this period flowed to those at the top of
the income scale.
This fact is corroborated by a broad set of inequality statistics,
including the much referenced work of economists Piketty and Saez (P/
S). Figure 2 plots the time series of real median family income against
the P/S data for the income share of the top 1 percent. The two trends
broadly show that while real middle-income growth is not wholly ``zero-
sum''--i.e., a gain at the top does not necessarily come at the expense
of the loss in the middle--median incomes grew much more strongly
during the period when income inequality was flat or falling.
Referencing once again the percent changes shown in Figure 1,
median incomes more than doubled while the top 1 percent share fell by
a couple of percentage points, 1947-79. Since then, when median family
income grew by only 10 percent, the top 1 percent share grew by a
striking 13.6 percentage points.
Correlation is not causation, and it would be wrong to argue that
rising inequality caused the flatter middle-class income growth, post-
1979. The literature has identified many factors that at least
partially explain both of these developments, including globalization,
technological change favoring more skilled workers, much diminished
union power, the declining minimum wage, ``financialization'' of growth
(strong profit growth in sectors where middle-class workers were less
likely to be employed), along with a set of policies that journalist
Harold Myerson labels shareholder vs. stakeholder capitalism, implying
policies (like financial market deregulation) that favor holders of
financial instruments over wage earners.
But the main point of this part of the analysis is that the post-
1970s slowdown of real median family income growth is (a) a key factor
behind the middle class squeeze, and (b) related to the increased
inequality of income as the benefits of productivity growth eluded many
in the middle class over the past few decades.
Work in the Paid Labor Market (Labor Supply)
The fact that family income growth slowed for many in the middle-
class is not because they worked less. As is well-known, women's labor
force participation grew significantly, almost doubling, over the
period shown in the above figure, from about 32 percent in the late
1940s to almost 60 percent in recent years.
To get a closer look at what these changes mean to middle-class
families, and how they might relate to the middle-class squeeze, we
examined the annual hours worked in the paid labor market by middle
income,\3\ ``prime-age'' (25-54), husbands and wives with children,
1975-2009, along with low-income single mothers.
---------------------------------------------------------------------------
\3\ ``Middle income'' refers to household in the middle 20 percent
of the distribution when households are ranked nationally by cash
income.
---------------------------------------------------------------------------
Figure 3 shows annual hours of work by middle-income husbands and
wives, 1975-2009. While middle income husbands in this age range
generally worked full-time, full-year over this period, hours worked in
the paid labor market by middle-income wives grew steeply, by over 400
hours, as shown in table 1.
For working-age, middle-class families, opportunities in the job
market are at the core of their living standards. A detailed analysis
of these opportunities would look at the types of jobs by industry and
occupation available to heads of such families. Here, I look more
closely at outcome measures, including hours worked and hourly
earnings.
The data shed light of the squeeze hypothesis in the following
ways:
Almost 100 percent of middle-income husbands consistently
worked full time, yet suffered stagnant hourly wages and thus overall
earnings;
Middle-income wives and single mothers significantly
increased all dimensions of their labor market work, including
participation, weeks per year, and hours per week; and
Their earnings also rose, though of course from a
significantly lower base than men's earnings.
Certainly, the increased labor market work and better earnings
opportunities for women represent an important societal advance. But as
these are families with children, it also represents a stress factor in
families' lives, contributing to another dimension of the squeeze; the
challenge of balancing work and family life. Middle-
income wives increased their participation by 11 percent, added 9
weeks, on average, over these years, amounting to over 400 extra hours
of working the paid labor market. That's about 2.5 months of full-time
work, added to the family schedule.
And while wives' earnings clearly helped to offset husbands losses,
if we add their earnings together in these two periods, their real
income rises by about $6,000 over about 30 years, or about 0.5 percent
per year.
There is another important point to consider regarding these data.
As the figure above shows, middle-income wives hours have not grown
since 2000, and in fact they fell by about 40 hours, 2000-7 (and
further in the recession). The same is true (not shown) for low-income
single mothers, though even more so (about 80 hours lost). Research has
not determined whether this is a ``ceiling effect''--mothers have
topped out on the amount of hours they can work given current family
responsibilities and divisions of labor--or a function of weaker demand
for the jobs and hours they'd like to work. But if more women, working
more weeks per year and more hours per week at rising wages was a
primary offset mechanism for stagnating men's wages, that route may not
be as available to middle- and lower-income families going forward.
Table I--Labor Supply and Earnings, Middle-Income Married Couple
(Families With Children and Mid/Low-Income Single Mothers)
----------------------------------------------------------------------------------------------------------------
Share
Earnings Hours work [in Weeks per Hours per Hourly
percent] year week wage
----------------------------------------------------------------------------------------------------------------
Husbands:
1977-79................................... $36,150 2,059 95 49 44.3 $17.56
2005-7.................................... 35,343 2,109 96 50 44.0 16.76
Change.................................... -807 50 1 1 -0.3 -0.80
----------------------------------------------------------------------------------------------------------------
Wives:
1977-79................................... $ 6,050 666 56 36 33.1 $ 9.07
2005-7.................................... 12,956 1,084 68 45 35.6 11.95
Change.................................... 6,906 418 12 9 2.5 2.9
----------------------------------------------------------------------------------------------------------------
Single Mothers, Average of Bottom 60 Percent:
1977-79................................... $14,017 1,115 70 40 37.3 $12.58
2005-7.................................... 18,594 1,386 78 45 38 13.42
Change.................................... 4,577 271 8 5 0.7 0.85
----------------------------------------------------------------------------------------------------------------
Notes: Data are from March CPS Surveys. Three-year averages were taken to smooth out volatility. Sample for
husbands and wives, 25-54, parents of children under 18, middle-income fifth. Sample for single mothers same
as above but data are for bottom 60 percent of families. Quintiles use cash income and have equal numbers of
households.
the middle class in the great recession
As noted, for many in the middle class struggling with the
challenges raised thus far in this testimony, the recession that began
officially in late 2007 represented a new problem on top of an old one.
Income that was stagnant during the 2000s fell steeply when the economy
turned down. As Table 2 reveals, households lost between $2,000 and
$3,000 in real 2009 dollars in just 2 years (data for 2010 is not yet
available).
Table II--Middle Class Incomes in the Recession: Households Take a Hit
(Median Household Income, 2009 Dollars)
----------------------------------------------------------------------------------------------------------------
African-
All White American Hispanic Asian
----------------------------------------------------------------------------------------------------------------
2007..................................................... $51,965 $53,912 $35,086 $40,013 $68,382
2009..................................................... 49,777 51,861 32,584 38,039 65,469
Real Dollar Change....................................... -2,188 -2,051 -2,502 -1,974 -2,913
Percentage Change........................................ -4.2 -3.8 -7.1 -4.9 -4.3
----------------------------------------------------------------------------------------------------------------
Source: U.S. Bureau of the Census
For minority households, especially African-Americans, those losses
came off of a lower base, so the percent decline--7 percent--was
historically large (the second largest 2-year loss in a series going
back to 1967).
We can also use our data series on middle-income, prime-age
families in this context. As shown in Table 3, earnings and hours
worked fell particularly steeply for middle-income husbands, who lost
an average $3,600 and 184 annual hours of work, the equivalent of over
1 month of full-time work. Working wives did better than their
husbands, but low-income single mothers also lost considerable ground,
with a particularly sharp decline in their employment rates. This
finding--why low-income single mothers lost more ground in the
recession compared to middle-income wives--is worthy of further study.
Putting aside child support, single mothers are by definition the sole
breadwinners of their families, and these families are economically
more vulnerable than most two-parent families.\4\
---------------------------------------------------------------------------
\4\ Low-income, married women (e.g., wives for quintiles one and
two) had work and earnings patterns over the recession that looked more
like middle income wives than like single mothers.
Table III--The Impact of the Great Recession on Middle- and Low-Income
Families With Children
------------------------------------------------------------------------
Share
Annual Hours work [in
earnings percent]
------------------------------------------------------------------------
Husbands:
2007............................... $36,149 2,118 96.2
2009............................... 32,529 1,934 93.9
Change............................. -3,620 184 2.3
------------------------------------------------------------------------
Wives:
2007............................... $13,003 1,090 67.1
2009............................... 12,944 1,066 67.4
Change............................. -59 -24 .03
------------------------------------------------------------------------
Single Mothers, (Bottom 60 Percent):
2007............................... $18,602 1,379 78.8
2009............................... 17,157 1,279 74.2
Change............................. -1,445 -100 -4.6
------------------------------------------------------------------------
Notes: Data are from March CPS Surveys. Three-year averages were taken
to smooth out volatility. Sample for husbands and wives, 25-54,
parents of children under 18, middle-income fifth. Sample for single
mothers same as above but data are for bottom 60 percent of families.
Quintiles use cash income and have equal numbers of households.
other dimensions of the middle class squeeze
In my work with Vice President Biden on the White House task force
on the Middle Class, we heard middle-class families discuss the kinds
of basic income and inequality problems documented thus far. We also
heard a good deal about working harder yet getting ahead more slowly.
But more often than that, we heard the squeeze discussed in the
context of how family budgets didn't seem to go as far as they used to,
particularly in areas such as health care coverage and college tuition.
These concerns are supported by the data. For example, according to
BLS price data, overall inflation has grown by a factor of three since
the late 1970s; college tuition and fees, according to their price
index has grown by a factor of 10. It is true that student aid has
grown over this period as well, a very important development that I'll
discuss in a policy section below.
Retirement is also less secure for many older persons. One
important factor here is the shift away from defined benefit pensions
to defined contribution, a change that shifts the risk of income
adequacy in retirement from employers to workers and their families. As
figure 4 reveals, there has been a complete reversal in share of
coverage between a guaranteed and variable pension benefits.
Finally, the cost of health coverage for middle-class families is
another source of the squeeze. Data from the Kaiser Family Foundation
(KFF) show that the share of family coverage paid by covered workers
has been relatively constant at about 27 to 30 percent.\5\ But it is
also the case that the cost of premiums has gone up much faster than
middle-class earnings, meaning that families are paying a similar share
of a larger amount. Census Bureau data show that median family income
rose about 23 percent, not accounting for inflation, 1999-2009.
According to KFF, the nominal premium costs of family coverage rose by
134 percent over this period.\6\
---------------------------------------------------------------------------
\5\ See http://ehbs.kff.org/pdf/2010/8085.pdf, Exhibit 6.1.
\6\ See http://ehbs.kff.org/pdf/2010/8085.pdf, Exhibit 1.13.
---------------------------------------------------------------------------
what are the policies that could help the middle class?
This committee has long been committed to tackling many of the
policy challenges implied by the data and discussion above. Here, I
briefly list a few policy areas that could make a difference. I offer
few specifics and more generally just point out areas worthy of more
policy research.
Retirement Security: Social Security, a guaranteed pension
for retirees, is often the first line of defense in retirement
security. Though it is often mistakenly thought to be unimportant to
most seniors, in fact, for recipients age 65 and up, Social Security is
about two-thirds of their income and that share grows with age--for the
old-elderly, it's closer to 70 percent of their income. For a third of
those over 65, Social Security accounts for at least 90 percent of
their income.
So protecting Social Security benefits is a key component of a
retirement security agenda. Beyond that, increasing access to pension
savings through work would help future retirees. The Obama
administration has put forth various proposals to encourage pension
participation and incentivize employer participation. Also, with
seniors living longer, presenting retirees with annuity options is also
worth a close look.
Health Care: The Affordable Care Act was clearly targeted
at helping to improve middle-class health care security, by lowering
the growth of health care spending and premium costs relative to their
expected trend. Analysis by the President's Council of Economic
Advisors that by lowering the growth rate of health care costs, the
real income of middle-class families in 2020 will be $2,600 higher than
would otherwise be the case.\7\
---------------------------------------------------------------------------
\7\ See: http://www.whitehouse.gov/assets/documents/
CEA_Health_Care_Report.pdf.
---------------------------------------------------------------------------
In the near-term debate, however, it is very important to the
middle class to protect the Medicaid program against deep spending
cuts. Though Medicaid coverage is generally thought of as serving the
low-income population, the program is the primary payer for 64 percent
of nursing home residents. With savings and other insurance, middle-
class seniors may be able to initially pay for home health or nursing
home services, but over time many spend their savings and eventually
need Medicaid to step in, as Medicare provides limited coverage for
these services.
Support for College Tuition: As noted above, college
tuition has significantly outpaced inflation and middle-class income
growth. But the large increase in government tuition assistance in
recent years has helped offset these costs for both middle-class
(American Opportunity Tax Credit) and lower-income students (Pell
grants). These measures can lower the net cost of tuition well below
the ``sticker price,'' and in doing so, help relieve income-strained
families.
Jobs and Incomes: The ability of middle-income families to
meet the challenges noted thus far, from saving for retirement,
balancing work and family, paying for college and health care, and
retirement security, will all depend on quantity and quality of jobs
available to middle-class families. While it is beyond the scope of
this testimony to discuss a jobs agenda policy set, the ideas that
President Obama outlined in his ``winning the future'' agenda,
including investments in new industries such as clean energy,
infrastructure, and education should certainly help generate more
opportunities.
But there is much more for policymakers to consider in this area,
including manufacturing policy (including aggressive pushback against
unfair trade practices), a strong, efficient public sector, a balanced
playing field for union organizing, appropriate workplace regulation to
protect workers' safety and basic rights, decent minimum wage levels,
and consumer protections.
These types of ideas have the potential to form the basis of a new
social contract, one that could once again give the American middle
class a fighting chance to loosen the squeeze and regain their economic
footing.
The Chairman. Thank you, Mr. Bernstein.
Ms. Sipprelle, welcome. Please proceed.
STATEMENT OF SUSAN M. SIPPRELLE, MULTIMEDIA JOURNALIST,
ENGLEWOOD, NJ
Ms. Sipprelle. Thank you, Mr. Chairman, Ranking Member, and
members of the committee, for giving us the opportunity to talk
about ``Over 50 and Out of Work'' at this morning's hearing.
For the past 16 months, filmmaker Sam Newman and I have
traveled across the country using video to chronicle the
stories of unemployed older Americans, almost all of them
middle class. Sam is sitting at the press table in the tan
suit.
We have conducted 100 interviews with individuals who are
currently jobless, including steelworkers, bankers, IT project
managers, auto workers, carpenters, engineers, fishermen, and
office workers. Their 3- to 7-minute videos can be seen on our
Web site. But for today's hearing, we prepared a short video
that includes 21 of our interviewees and highlights many of the
issues revealed by our multimedia documentary project.
Maybe we could show it now? It is 3 minutes long.
[Video presentation.]
Before I continue my oral testimony, which is an
abbreviated version of our submitted written testimony, I want
to clarify that our interviewees were not prescreened or
preselected. Their powerful and moving eloquence about their
lives and experiences is unrehearsed and unscripted.
We focused the video you just watched on many of the issues
that emerged out of our ``Over 50 and Out of Work'' multimedia
documentary project--job loss and the erosion of job security,
financial hardship, strained marriages and family
relationships, foreclosure, lack of health insurance,
dependence on children or on parents to help defray mortgage
and living expenses, and the inability to pay for children's
college education.
The job search success rate of our 100 interviewees mirrors
the results of an ongoing national unemployment survey that is
being conducted by the Center for Workforce Development at
Rutgers University. Only 7 out of our 100 interviewees have
found full-time jobs with salaries comparable to what they
earned previously. Most of our interviewees are severely
underemployed, struggling to make ends meet, and approximately
one-third are still without any job at all.
Overall, our project dispels the myth that unemployed older
workers are not trying to find jobs and prefer relying on
unemployment insurance to survive. They prove to be persistent
and resilient, but thwarted by the current dearth of available
jobs.
But the most powerful theme that emerges from our
documentary project is the shock that older middle-class
Americans experience when they realize that they are no longer
set for life. The collapse of the housing and financial markets
often eroded the values of their homes and savings even before
they faced the dislocation and pain of losing their jobs.
Now they are struggling to get back to work, trying to
reinvent themselves and compete for job openings in a depressed
labor market, while facing the double hurdles of age
discrimination and a bias against the long-term unemployed.
They are recalibrating their expectations downward, both for
their own futures and for the future of their children and
their grandchildren.
They are fearful that they will not be able to hang on to
their middle-class status, despite their desire and
determination to work, and afraid that the American dream,
which they worked very hard to achieve, is slipping away, both
for themselves and for their families.
[The prepared statement of Ms. Sipprelle follows:]
Prepared Statement of Susan M. Sipprelle
Mr. Chairman and members of the committee, since February 2010,
filmmaker Samuel D. Newman and I have been traveling across the country
using video to chronicle the stories of older unemployed Americans,
almost all of them middle class. We conducted 100 interviews with
individuals who are currently jobless, covering as broad an array of
professions and occupations as possible, and we concentrated our
interviews in States with the highest rates of unemployment.
Out of these video interviews, we created Over 50 and Out of Work,
a multimedia documentary project.
All 100 3- to 7-minute interviews can be viewed on our Web site at
www.overfifty
andoutofwork.com. A list of our interviewees' names and occupations, as
well as their cities and States of residence, is attached (Appendix A).
For today's committee hearing, we prepared a short video
testimonial that includes 21 of our interviewees and highlights many of
the issues revealed by our multimedia documentary project. Subsequent
to today's hearing, we will add the testimonial to the Videos section
of our Web site on the Documentary page. The names, occupations and
cities and States of residence of our interviewees included in the
testimonial are also attached (Appendix A).
context
I never in my wildest dreams thought that at age 50 I'd be out of
work for an extended period of time.--Tom Bertin, 50, industrial fluid
power salesman, Rochester Hills, MI.
Although the Great Recession was declared over in June 2009, the
outlook for unemployed older middle-class Americans has evolved and
become more complex, but it has not brightened. The collapse of the
housing and financial markets often eroded the value of their homes and
savings even before they faced the pain and dislocation of unemployment
due to the economic downturn.
When older workers lose their jobs, their homes and their financial
security, they confront a vulnerable reality--they have less time than
younger workers to recoup and regain their financial footing. Moreover,
as their needs escalate and globali-
zation races ahead, government at all levels is cutting back on
programs and services that could help them regroup and re-enter the
labor force, which would not only help them personally, but would
reduce fiscal pressures on the U.S. budget.
The unemployment rate of 6.4 percent for workers 50 and over
compares favorably to the national unemployment rate of 9.1 percent,
but once older workers lose their jobs, they find it increasingly
difficult to get rehired. The average length of time that older workers
are jobless has been climbing since 2008 and now exceeds 12 months, 3
months longer than the average time for all unemployed workers
(Appendix B). Decades of structural changes in the U.S. economy,
accelerated by the Great Recession, have resulted in the highest rate
of unemployment among older middle-class workers ever recorded.
The number of Americans who are 50-plus and jobless remains around
3 million, but this figure does not take into account: workers who have
dropped out of the labor market due to discouragement, individuals
forced to claim disability payments or Social Security at the earliest
possible date because they cannot find jobs to support themselves, and,
last, the growing numbers of boomers who are seriously underemployed.
Seven of our one-hundred interviewees have returned to work in jobs
that provide salaries and benefits comparable to the compensation they
received previously. Nine have gotten back to work in full-time
positions where they are now paid one-half or less of their prior
salaries.
I'm making one-third, compared to what I used to make before.--
Joseph Wong, 60, IT specialist, Castro Valley, CA.
Most of our interviewees, however, are now eking out a living by
taking on one or two part-time jobs or by trying to redefine and market
themselves as independent consultants.
I'm currently part-time employed, still looking for other [work]; I
need two jobs.--Mark Miller, 63, computer consultant, New Orleans, LA.
Over one-third of our interviewees remain jobless.
In sum, although most of our unemployed older workers have proven
themselves resilient and adaptable to changing workforce conditions by
learning new job hunting techniques, upgrading their skills, networking
and volunteering (both to do good and build job connections), the
outcome of their lengthy job search has not been rosy. Even if they
found work, they have not been able to recoup the financial setbacks
they suffered when they drew down their savings to tide them over while
unemployed, and they can no longer count on retiring.
The next 5, 10, 15 years of my life will be working my tail off. I
don't anticipate retiring ever. I don't anticipate I'll be able to.--
Rick Peterson, 61, IT project management, Piscataway, NJ.
We interviewed Carl Van Horn, professor of public policy and
director of the John J. Heldrich Center for Workforce Development at
Rutgers University, as an expert for our documentary project. Van Horn
has been studying labor markets for 30 years and jointly authored The
``New Unemployables'': Older Job Seekers Struggle to Find Work during
the Great Recession.
In May 2009, the Heldrich center surveyed unemployed workers of all
ages and repeated the survey in August 2010. By 2010, one-third of the
younger workers had been re-employed, a historically low success rate,
Van Horn said. Of the older workers, only one-sixth had found new jobs,
an even poorer outcome. Older workers who had gotten back to work had
accepted lower pay. Half of the survey respondents were no longer able
to afford health insurance. Overall, the job search outcomes for our
Over 50 and Out of Work interviewees are slightly bleaker than the
dismal results for the survey's participants.
themes
The most powerful theme that emerges from our documentary project
is the shock and pain that older middle-class Americans experience when
they realize that they can no longer depend on a comfortable future
with a dependable job.
That's basically what was instilled upon us--that you worked 30
years in this mill--you're set for life.--Joe Magnone, 50, third
generation steelworker, Weirton, WV.
My journey is one that I didn't expect. I thought I would be able
to retire from Panasonic.--Dan Sato, 53, consumer electronics
marketing, Denville, NJ.
I had 12 years of a job that I really, really liked every step of
the way, and it hurt, it hurt a lot, to get that call to say--we're
going to be letting you go.--Donna Jadis, 60, technical writer,
Antioch, CA.
They are frightened and often overwhelmed by the financial setbacks
and consequences they encounter as a result of job loss.
This is what we're looking at in 2009, when we got laid off: Our
retirement is worth half of what it was last year; we have no equity,
and we're upside down in our home, and we have all of these
obligations, including, we have a daughter, who is going to be a junior
in college.--Pam Buckley, 58, former restaurant manager, Berkley, MI.
When I add all of those things [the consequences of unemployment]
up in my personal situation, the damage to my wife and I is going to
approach half a million dollars.--Stan Bednarczyk, 60+, engineer,
Rockwood, MI.
Fundamentally, our interviewees, who are all 50-plus, are
struggling to understand and adjust to today's depressed labor market.
It seems like you need to be very rich or very poor and not in the
middle.--Deborah Denenfeld, 58, teaching artist, Louisville, KY.
They are trying to cope with job loss, lack of job security, new
methods of seeking and applying for jobs, living on reduced incomes and
savings, cutting expenses and the potential need to upgrade their
skills or educational levels. They are trying to figure out where job
openings exist, both by location and industry. Their ability to
relocate is sometimes constrained by their inability to sell their
homes or because they are caring for elderly parents. They face
daunting hurdles of age discrimination and a bias against the long-term
unemployed. They are persistent and resilient, but troubled and worried
about the future both for themselves and for their children and
grandchildren.
Essentially, whether you're an employee or a consultant, you're
just a hired gun. It's just the way it is. And it's business. I
understand that, but having grown up with a different thinking, where
you keep your nose clean, you do your job, that's what it took, back
then. Now, they'll just work you until they can't work you anymore, or
they don't need you.--Bob and Maura Delpizzo, 56, Flanders, NJ.
My oldest kids. . . . they even tell me that the end of the world's
coming, even though I tell them no. It's just that there's no jobs out
there, and they don't know what to do. They're grown kids and they're
still living with me, and I have to provide for them.--Rudy Limas, 61,
commercial truck driver, Woodburn, OR.
unemployment insurance and savings
Our interviewees accept unemployment insurance to help pay their
living expenses because they cannot find jobs. They deplete their
savings and, sometimes, are forced to tap or use up their retirement
funds to survive.
The 17 months was long. A lot of our savings went. We had enough to
keep us going, but, then, 17 months is a long time, and, if you're just
getting unemployment--I only work part-time--that took all our
savings.--Maurizio and Debbie Adami, 58, tool and die maker, Dearborn,
MI.
In that 17-month period, we had to live off of money that we had
set aside that was supposed to be for retirement . . . For a while
there, we were burning through our savings something fierce.--George
Ross, 48, IT project manager, Livermore, CA.
There's just not enough money anymore. As I said, my savings is
pretty much gone. And it's becoming more stressful because I never
thought I'd be out of work as long as I have.--George Dys, 60, product
design engineer, Forestdale, RI.
I do a part-time job, working 20 hours a week, doesn't even pay the
mortgage payment. That's coming from a 401K, retirement money.--Albert
Yasbick, 59, electrical engineering technician, Las Vegas, NV.
discouragement
Almost all of our interviewees have been working since they were
teenagers, and they are proud of their work history and
accomplishments. They are stunned when they cannot find work, given
their level of experience and their determination to get back to work.
I've never not been able to find a job. I've always found one. I've
never had a problem. . . . I've worked hard and long all my life, and
not to be able to find a job now. It's hard.--Joan McCleskey, 58,
former bank manager, Fort Myers Beach, FL.
Many times, even if you are fortunate enough to get an interview,
you just do not get any follow-up.--Marie Spalding, 62, school
counselor, Louisville, KY.
I'm in the same boat as everybody else here. Nobody calls you back.
There's just so many people that's out of work.--Julie Taylor-Cooper,
62, accounting manager, Conway, SC.
family relationships
Our interviewees have suffered from the strains on family
relationships that job loss and deteriorating financial stability can
produce.
I've been out of work for a little over two years now. My wife
doesn't love me anymore; my kids don't love me.--Mike Risinger, 58,
draftsman, Portland, OR.
When I lost my job, it became very difficult to keep my house, and
I eventually lost it. So, I'm renting a home, and I've separated from
my family, and it's been a real struggle.--Anthony Lalos, sales
representative, Las Vegas, NV.
foreclosure
Eight of our interviewees have already lost their homes due to
foreclosure or face the imminent threat of losing their homes. Many
more now find that their homes are ``underwater''--the amount they owe
on their mortgages exceeds the values of their houses.
The condo I'm living in will be auctioned off tomorrow.--Rich
Galipeau, 58, small business owner, Fort Myers, FL.
I was unable to make my mortgage payments, so one way of keeping
from going completely into foreclosure, I put it on a short sale, so
they had to put it on the market to sell it. Not what I really wanted
to do, but that was the only other option that I had, if I didn't have
the money to catch up and continue.--Deborah Salim, 60, part-time grant
writer, Conway, SC.
The house across the street from this house just sold for less than
what I paid for this house in 1989. . . . Yes, I own this house, but
the bank owns it, but it's in my name. I'm still making mortgage
payments on it. I have two roommates that help me out.--Mary Sironen,
55, bartender, Las Vegas, NV.
lack of health insurance
Lacking health insurance coverage is one of the most frightening
consequences of job loss for our interviewees. More than one-third of
our project interviewees cannot afford health insurance any longer.
They defer routine healthcare and are left hoping that they do not
become seriously ill.
Health insurance is an issue. When I was laid off, naturally, I
lost it and with the unemployment benefits that I am getting right now,
health care is not affordable.--Stan Bednarczyk, 60+, engineer,
Rockwood, MI.
I do not have health benefits at this point in time. When I got
laid off, I had to get a car, so most of my savings went to get a
dependable car. When I allow myself, I am in fear.--Barbara Such, 55,
call center engineer, Randolph, NJ.
I'm upset about it because I feel I worked all these years and,
now, I don't have no medical insurance. I can't afford it.--Julie
Taylor-Cooper, 62, accounting manager, Conway, SC.
dependence on children to help pay living expenses
Several of our interviewees have to turn to their children to help
pay their expenses, which is difficult for them to accept, although
they are grateful for the assistance.
My kids help. I'm not used to that. That's really difficult. I
think that's probably the hardest part of the whole thing. I've always
been the helper of the kids; they would always come to me, and so, now,
it's hard.--Luanne Jones, 61, office worker, Glendora, CA.
Our one daughter is still living in the house with us, which is a
blessing for us, because instead of her paying money on an apartment
and living by herself, she helps us keep the mortgage payments and food
and bills taken care of.--Rick Peterson, 61, IT project management,
Piscataway, NJ.
dependence on parents to help pay living expenses
Two of our interviewees have been forced to move back home with
their parents, a difficult adjustment for adults who are 50-plus.
I'm living with my father. I'm glad to be here. I'm glad we had a
place to land.--Brian King and Jessica Goldstein, 53, retail banking,
Pomona, NY.
This is the house that I grew up in. My mother and I live together.
She's 78 years old. She's going to be 79 this month, and she works
full-time.--Lorraine de Masi, 52, 3D packaging artist, Floral Park, NY.
inability to provide for their children's futures
The impact of unemployment among older workers extends to their
children because our interviewees can no longer provide for their
futures in the way they had anticipated.
The tough part right now is I got two daughters who are--well, I
got one who wants to go to college next year. I don't know how she's
gonna pay for it.--Mike Risinger, 58, draftsman, Portland, OR.
Where we had before planned on him going to college, now he's
thinking more and more seriously about going into the military, which
is not a bad thing, but it's a recalculation from what he had
originally thought his life would be like.--Bill Davis, executive
recruiter, Myrtle Beach, SC.
conclusions
Economic data alone cannot convey the multigenerational pain that
unemployment and its repercussions have created among older middle-
class Americans. Some will never recover. Many of our interviewees talk
about hunkering down and getting by, rather than about anticipating
better times ahead. The traditional American expectation of a better
future for themselves and their families has been upended, if not
reversed.
Since our opportunities came upon us after World War II, what are
we leaving to our children? And the answer is--not very much and it's
very concerning.--David Bowes, 64, IT senior executive, Wayne, NJ.
We didn't grow up with scarcity, like my parents' generation, and I
think that's major. And I think that's what this next generation is
going to be dealing with.--Joel Nitzberg, 57, community educator,
Somerville, MA.
Surprisingly, despite the ongoing hardships that they encounter as
a result of unemployment, our interviewees speak eloquently about their
belief that we can solve the economic problems of the United States and
restore the American dream for the middle class. They are determined to
get back to work.
It's about being able to compassionately understand the fact that,
hey, we're all in this together. This is America.--Joe Magnone, 50,
steelworker, Weirton, WV.
project background
What inspired Over 50 and Out of Work?
In 2010, I formed Tree of Life Productions to create independent
multimedia journalism and documentary filmmaking. The country had been
plunged into the Great Recession, and I could see the long-lasting
impact that the economic downturn was having on my peers, the boomers.
Filmmaker Samuel D. Newman joined the project in February 2010, and
Nikolia Apostolou took charge of the project's social media in late
2010.
How did we find our Over 50 and Out of Work interviewees?
We have collaborated with State and local employment agencies,
unions, technical and community colleges and job support groups. We
have also received many volunteers through our Web site.
We did not pre-screen or pre-select our interviewees and their
stories were not rehearsed or scripted.
Appendix A.--Over 50 and Out of Work Interviewees \1\
----------------------------------------------------------------------------------------------------------------
Name Age City, State Job Unemployed since
----------------------------------------------------------------------------------------------------------------
Dan Sato........................... 53 Denville, NJ.......... Marketing & E- March, 2009
Commerce.
Bob Delpizzo....................... 56 Flanders, NJ.......... IT Project Manager... March, 2009
Patrick O'Donnell.................. 57 Massapequa, NY........ Operations Manager, May, 2009
Trainer, Auditor.
Barbara Such....................... 54 Randolph, NJ.......... Call Center Engineer/ March, 2010
Tech Trainer.
Rob Lotstein....................... 65 Montville, NJ......... Sales & Leasing...... September, 2009
David Bowes........................ 64 Wayne, NJ............. Information January, 2009
Technology Executive.
Kathy Opthof....................... 62 Clifton, NJ........... County Employee...... June, 2009
Dorothy Carlos..................... 68 Engelwood, NJ......... Physician's Assistant November, 2007
Brian King & Jessica Goldstein..... 53 Pomona, NY............ Retail Banker & 2009
Teacher, English/
Theater.
Stephen Murphy..................... 57 Massapequa, NY........ Sales, Printing Unemployed 27 months
Industry.
Valentina Janek.................... 57 West Hempstead, NY.... Founder, Career February, 2009
Support Group.
Bob King........................... 55 Wantagh, NY........... Controller March, 2009
(Securities), Price
Verification.
Susan Kaye......................... 55 Valley Stream, NY..... Pre-K Teaching January, 2008
Assistant.
Regis Thompson-Lawrence............ 65 Hempstead, NY......... Child Care Counselor, June, 2006
Non-Profit.
Lorraine de Masi................... 52 Floral Park, NY....... 3D Packagaing Artist. October, 2008
Bill Fleming....................... 55 Little Chute, WI...... Floorer.............. February, 2008
Steve Ludes........................ 53 Little Chute, WI...... Paper Mill Worker.... September, 2008
Alice Seifert...................... 53 De Pere, WI........... Paper Mill Worker.... January, 2007
Gary Willcox....................... 57 Green Bay, WI......... Welder............... February, 2009
Kevin Lincoln...................... 58 Green Bay, WI......... Paper Mill Worker.... Unemployed 27 months
David Garcia....................... 59 Sheboygan, WI......... Factory Worker....... February, 2009
Alan Balkema....................... 62 Washington, DC........ Co-Owner, Market September, 2006
Research Company.
Carol Morgan....................... 68 Washington, DC........ Artist............... August, 2007
Rick Peterson...................... 61 Piscataway, NJ........ IT Project Manager... April, 2007
Steve Borton....................... 63 Valley Cottage, NY.... Sales, Data Storage.. January, 2009
Frank Pope......................... 57 Weirton, WV........... Steelworker.......... Unemployed 9 months
Joe Price.......................... 51 Weirton, WV........... Steelworker.......... January, 2010
Joe Magnone........................ 50 Weirton, WV........... Steelworker.......... January, 2010
David Board........................ 50 Weirton, WV........... Steelworker.......... January, 2010
Gary Vinson........................ 56 Pine Island, FL....... Barge Captain........ December, 2008
Deborah Shane...................... 60 Fort Myers, FL........ Entrepreneur......... Unemployed 4 months
Rich Galipeau...................... 58 Fort Myers, FL........ Small Business Owner. .....................
Joan McCleskey..................... 58 Fort Myers Beach, FL.. Bank Manager......... August, 2009
Gail Stangeland.................... 56 Lehigh Acres, FL...... Event Planning & November, 2007
Floral Design.
Mary Eilola........................ 60 New Hudson, MI........ Banking.............. January, 2010
Stan Bednarczyk.................... 50+ Rockwood, MI.......... Engineer............. January, 2009
Cynthia Maschat.................... 57 Ypsilanti, MI......... Government Worker.... July, 2009
Michael McClatchey................. 63 Plymouth, MI.......... Information April, 2010
Technology.
Maurizio & Debbie Adami............ 58 Dearborn, MI.......... Tool & Die Maker..... Unemployed 18 months
Wade & Mary Gingell................ 50 Otter Lake, MI........ Skilled Tradesperson October, 2008
& Machine Operator.
Tom Bertin......................... 50 Rochester Hills, MI... Sales, Industrial June, 2009
Fluid Power.
Pam Buckley........................ 58 Berkley, Ml........... Restaurant Manager... January, 2009
Mirko Vitanoski.................... 60 Sterling Heights, MI.. Machine Operator..... March, 2007
Jerome Williams.................... 67 Farmington Hills, MI.. IT Project Manager... August, 2009
Ken Wadland........................ 60 Albion, RI............ Software Development Unemployed 19 months
Expert.
Sheila Bliven...................... 55 Woonsocket, RI........ Human Resources...... Unemployed 16 months
George Dys......................... 60 Forestdale, RI........ Design Engineer...... February, 2008
Rich Fuka.......................... 50 Port of Galilee, RI... President, RI March, 2007
Fisherman's Alliance.
Kelley Briggs...................... 50 Cumberland, RI........ Banking.............. Unemployed 19 months
Anthony Lalos...................... 53 Las Vegas, NV......... Sales................ May, 2008
Edward Walker...................... 56 Las Vegas, NV......... Cook................. June, 2010
Kimberly Gilek..................... 50 Las Vegas, NV......... Lab Technician & 2008
Phlebotomist.
Luis Martinez...................... 66 Las Vegas, NV......... Carpenter............ 2005
Kathleen Smith..................... 52 Las Vegas, NV......... Airline Customer 2008
Service.
Linda Hebert....................... 61 Las Vegas, NV......... Real Estate Marketing January, 2008
Albert Yasbick..................... 59 Las Vegas, NV......... Electrical January, 2010
Engineering
Technician.
Mary Sironen....................... 55 Las Vegas, NV......... Bartender............ .....................
Joel Nitzberg...................... 57 Somerville, MA........ Community Educator... October, 2008
Diane Young........................ 51 Fairlawn, NJ.......... Empowerment Coach.... March, 2009
Jose Ambriz........................ 57 La Puente, CA......... Archiver & Data Entry May, 2009
Operator.
Lorraine Contreras................. 60 Pico Rivera, CA....... Bookkeeper........... November, 2009
Ramiro Flores...................... 76 Whittier, CA.......... Sales Representative, April, 2010
Graphic Arts.
Luanne Jones....................... 61 Glendora, CA.......... Office Worker........ July, 2008
Darlene Palacios................... 54 Bellflower, CA........ Administrative February, 2008
Assistant.
Jose Valdez........................ 64 Pico Rivera, CA....... Printer.............. February, 2009
Mercedes Paez...................... 69 Santa Fe Springs, CA.. Garment Worker....... August, 2008
Virginia Montelongo................ 55 Whittier, CA.......... Apartment Manager.... 2008
Maria, Maria, Valentin............. 50+ Bakersfield, CA....... Fieldworkers......... .....................
Kathryn Balles..................... 57 Newport Beach, CA..... Manager, Commercial April, 2008
Mortgages.
Joseph Wong........................ 60 Castro Valley, CA..... Information Unemployed 9 months
Technology
Specialist.
Mike Boyd.......................... 57 Tracy, CA............. Teacher.............. 2005
Sheila Cooper...................... 53 Fremont, CA........... Dental Lab Technician June, 2010
Elizabeth Zima..................... 57 Calistoga, CA......... Healthcare Writer.... 2008
George Ross........................ 58 Livermore, CA......... Information December, 2010
Technology
Specialist.
Donna Jadis........................ 60 Antioch, CA........... Technical Writer..... 2010
Janet Falk......................... 58 New York, NY.......... Public Relations..... December, 2008
Bill Davis......................... 59 Myrtle Beach, SC...... Executive Recruiter.. .....................
Florentine Hunter-DeMontaignac..... 68 Myrtle Beach, SC...... Real Estate Marketing 2007
Deborah Salim...................... 60 Conway, SC............ Part-time Grant February, 2009
Writer.
Willa Dean Weaver.................. 68 Myrtle Beach, SC...... Office Worker........ 2006
Craig Beaumont..................... 59 Conway, SC............ Music Industry 2009
Consultant.
Julie Taylor-Cooper................ 61 Conway, SC............ Accounting Manager... January, 2009
Lou Angaran........................ 68 Conway, SC............ Customer Service..... January, 2009
Barbara Dixon...................... 68 Hammond, LA........... Receptionist......... Looking for work,
retired
Jesus Anglero...................... 72 Loranger, LA.......... Geophysicist......... 2009
Rick Barrett....................... 59 Hammond, LA........... Veteran & Handyman... .....................
Stanley Ferrand.................... 59 New Orleans, LA....... Painter.............. Underemployed since
Katrina
Mark Moore......................... 63 New Orleans, LA....... Computer Consultant.. Underemployed since
Katrina
Kay Kusy-Eliassen.................. 54 Portland, OR.......... Wine and Spirits .....................
Professional.
Peter Hansen....................... 51 Portland, OR.......... Food Industry Worker. .....................
Mike Risinger...................... 58 Portland, OR.......... Draftsman............ 2009
Rudy Limas......................... 61 Woodburn, OR.......... Truck Driver......... .....................
LeRoy Ellis........................ 59 Woodburn, OR.......... Sea Captain.......... 2008
Alfred Hummer...................... 54 Portland, OR.......... Carpenter............ 2007
Cheryl Cheney...................... 60 Vancouver, WA......... Social Worker........ April, 2011
Gary Sirianni...................... 64 Portland, OR.......... Product Management, 2009
Marketing.
Mark Chase......................... 58 Louisville, KY........ Sales................ January, 2010
Deborah Denenfeld.................. 58 Louisville, KY........ Teaching Artist...... 2009
Marie Spalding..................... 62 Louisville, KY........ School Counselor..... .....................
Frank Kasdan....................... 57 Louisville, KY........ Small Business Owner. .....................
----------------------------------------------------------------------------------------------------------------
\1\ Note: Interviewees whose names are in bold are included in the video testimonial.
The Chairman. Thank you very much, Ms. Sipprelle, and for
sharing the film with us.
Now we will turn to Amanda Greubel from DeWitt, IA. Welcome
to the committee, please proceed.
STATEMENT OF AMANDA GREUBEL, DIRECTOR,
FAMILY RESOURCE CENTER, CENTRAL
CLINTON COMMUNITY SCHOOLS, DEWITT, IA
Ms. Greubel. Good morning, Chairman Harkin, Ranking Member
Enzi, and members of the committee.
Thank you for inviting me to speak to you today.
My name is Amanda Greubel. I am 32 years old, born and
raised in Iowa. I have been married for 10 years today to my
high school sweetheart, Josh. He is the high school band
director in the same district where I am the Family Resource
Center director. We have a 5-year-old son, Benen, and our
second child on the way in December.
Like a lot of American families, we have a lot of debt--
mortgage, two vehicles, and because we both have master's
degrees, a lot of student loan debt. I have been invited here
to speak to you today about my family and the families that I
work with in my job.
Until spring of 2010, Josh and I were both accustomed to
working full-time jobs. During the 2009-10 school year, the
State of Iowa cut education funding mid-year, which forced our
district to make some difficult choices. In the end, my
contract was partially cut to three-quarters time.
As a result, our family lost $10,000 per year in income,
and we considered ourselves lucky because we knew it could have
been much worse. Ten thousand dollars might not seem like a lot
to some people, but that loss of income required a complete
financial, emotional, and spiritual overhaul in our family.
Before the reduction, we followed a loose budget to make
sure that our bills were paid and our needs were met, and then
we spent what was left over as we pleased. We had just started
a college account for our son and were looking at retirement
options beyond our public employer retirement accounts.
After my job was reduced, we cut back our cable, Internet,
phone service. We cut back spending on restaurants,
entertainment, groceries, gas, and clothing. In our new budget,
every penny we make and every penny we spend is accounted for
on paper.
We realized quickly that living with so much debt is a
liability in an unstable world, and so we set up a goal to pay
off both vehicles and all of our student loans within 5 years,
or at least as soon as possible. Every bit of income we have
that isn't needed for bills goes toward that debt reduction
effort.
Let me give you examples of what all this means in real
life, rather than in general terms, on a day-to-day basis. It
means that even though I don't like Wal-Mart and I would rather
shop at local grocers, I shop at Wal-Mart for groceries because
that is where the lowest prices are.
Sometimes the grocery money runs out before the end of the
month, and then we have to be creative with what is in the
cupboard. And that was a fun challenge at first, but the
novelty wears off after a while.
Anyone who has been pregnant or spent time around pregnant
women knows that our appetites are random and changeable and
that we get nauseated very easily. I don't feel like cooking a
whole lot these days. The smell of raw meat is unbearable.
But if my husband is working late, which he often does, and
our restaurant money is gone, we are out of luck. My son ends
up eating more cold cereal at dinner time than I care to admit.
And he thinks it is wonderful fun, but I know that I am not
doing the best I can for him.
It means that most of our clothing comes from Goodwill,
garage sales, and the clearance racks because we try not to
spend full price on anything anymore. It means that when my son
brought me the snack calendar for his classroom and I saw that
that month was his week to provide snack for 15 classmates, I
was scared because I knew it would stretch the grocery budget
even further. And we didn't have roast beef or pork chops in
our house that month.
It means the only way we are able to have much of a
vacation this year is through the generosity of a friend
allowing us 4 days at his lake house for free.
This past spring, our son was hospitalized for 3 days,
resulting in $1,000 in out-of-pocket medical expenses beyond
what our insurance covered. Then a problem with our roof
required $1,500 in repairs. Even though we have been setting
aside money every month for emergencies like that, we still
didn't have enough. And so, we have spent the last few months
catching up.
And finally, this change in our finances meant giving very
serious consideration to whether it was even a good idea for
our family to have another child. Thankfully, life has a way of
reminding us, through our son's brief illness and
hospitalization, that some things are more important than money
and that we will figure it out.
Honestly, it is exhausting to live this way, making every
decision based on how it will affect your finances, and every
little bit of money spent has to be carefully considered. All
we ever wanted was a little bit of security. We never had
dreams of great wealth. We chose careers that inspire us,
knowing that we weren't going to make a lot of money at those
careers.
We want security. We want a little bit of comfort. We want
to know that our bills are paid, that our needs are met, that
we can have a real vacation every once in a while, that our
kids can pursue higher education without the burden of student
loan debt that we have, and that we can choose to retire when
we are ready and spend our final years together as we choose.
When I think back to our adult lives, the gentleman
mentioned the social contract, and it strikes me that we did
everything we were always told to do to have the American
dream. We finished high school. We went to college. We got
married. We work hard. We pay our bills. We have no credit card
debt. We waited to have children until we believed we were
ready.
We both got graduate degrees to be better at our jobs, make
ourselves more marketable, and increase our worth as employees.
We volunteer. We donate to help those in need, and we vote.
We did everything that all the experts said we should do,
and yet still we are struggling. And when you work that hard
and you still sometimes feel like you are scraping, it gets you
really down really quick.
I have given you a picture of how my own family has been
affected. However, my family is not the primary reason I have
been here today. My family has been pretty fortunate overall.
We have money to meet our needs and a few extras along the way.
We don't have to choose between food and medicine or whether to
pay the electric bill or put gas in the car.
I am here today on behalf of the families I work with, the
ones who have lost their jobs, their health insurance, their
homes, and their hope for things to get better. If my family
with two master's degrees is struggling, you can imagine how
bad it is for other people.
The past few years, our school district has seen our
percentage of students on free and reduced lunch increase
steadily. In a community that has a reputation of being very
well off, over 30 percent of our elementary-level students
qualified for that program this year.
I have sat with parents as they completed that eligibility
application, and they cry tears of shame. And they say things
like, ``I never thought I would have to do this,'' and ``I have
never needed this help before.''
They worry that their neighbors will find out and that
their kids will be embarrassed. And it is my job to reassure
them that reaching out for help when you need it is no problem.
It is not a shame. It is not anything to be embarrassed about.
But it is a mindset that they have, that they are responsible
for supporting their families.
I help parents apply for the State Children's Health
Insurance Program, and it kills me to tell them that there is
no comparable program for them because they are equally in need
of coverage. I have held women's hands through pregnancy
terminations because they knew they couldn't afford to have
another baby right now. I bought a week's worth of medication
for a child when a gap in medical insurance came at a bad time,
and parents didn't have the money to continue his medication.
I have listened to a coworker tell about how her spouse
lost his job several months ago and was slipping into a deep
depression. He had finally stopped looking for work. He quit
helping around the house, and he stopped parenting their child.
So not only had she become the sole breadwinner, she had become
a single parent as well.
And I have worked with parents who lay awake at night,
trying to figure out how to tell their children that Santa
wasn't coming this Christmas because mommy lost her job.
Even though economic experts use their nebulous measures to
say that the current recession is over, there is an entire
class of people who were lost before it even started and are
still lost today. And when families are under financial strain,
we see kids struggle in school. They have trouble focusing, and
sometimes they develop behavior concerns that are really just
an outward manifestation of their fear.
Kids don't necessarily tell their parents when they are
afraid because they see that their parents are stressed out
enough already, and they don't want to make it worse. Sometimes
their clothing becomes more tattered, and we see parents cut
the toes off of tennis shoes to accommodate a few more months'
worth of growth and let those shoes last just a little bit
longer.
When kids don't have enough to eat or they worry about
losing their homes, they cannot concentrate on learning their
math facts or their reading strategies. And in some cases,
financial concerns lead to or exacerbate issues such as
domestic violence, child abuse, substance abuse, and physical
or mental health conditions. All of the things that are ailing
our families right now are so interconnected.
When we turn on our TVs, our radios, or pick up our
newspapers, we read about what is going on in our Federal and
State Governments, and we start to believe that you don't care
about us. We hear that corporate welfare continues and that
CEOs get six-figure bonuses at taxpayer expense, and we wonder
who you are working for. And we look across the kitchen table
at our families eating ramen noodles for the third time this
week and wonder how that is fair.
We read that the wealthy get bigger tax breaks in hopes
that their money will trickle down to us, and then we turn the
page and read about how our school districts are forced to cut
staff again. We know that money talks around here, and that
means you don't hear us.
I hold out great hope that today's hearing is not the end
of this conversation, that you will return to your States and
you will ask other everyday Americans like me what they really
need. I may have been called on to be the voice of struggling
families today, but there are millions more out there who want
and need to be heard by you.
And I would ask that you not only listen, but that you then
come back here and do something. Because it was your commitment
and your passion for public service that brought you here in
the first place. Please listen to them and listen to us.
Thank you for the opportunity to be here today, and I look
forward to any questions you have.
[The prepared statement of Ms. Greubel follows:]
Prepared Statement of Amanda Greubel
Good morning Chairman Harkin, Ranking Member Enzi, and members of
the committee. Thank you for inviting me to speak with you today. My
name is Amanda Greubel. I am 32 years old, born and raised in Iowa. I
received my Bachelor's degree in Social Work from Wartburg College in
2001, and my Master's degree in Social Work from St. Ambrose University
in 2007. I have been a social worker for 10 years and have had the
privilege of working with people of all ages, races, and socioeconomic
circumstances.
I am currently employed as the Family Resource Center Director for
Central Community Schools in DeWitt, IA. The purpose of the Family
Resource position is to work with families to meet students' needs
outside of the classroom so that they can enjoy more success in the
classroom. I coordinate an elementary mentoring program, summer
enrichment programming, a grant program for children with disabilities,
a Thanksgiving Food Basket program, and an ``Adopt A Family'' program
at Christmas. I make referrals for health care, mental health care,
utility assistance, housing, domestic violence services, clothing,
health insurance, food assistance, and childcare assistance. And thanks
to the generosity of my community, I have a donations account to help
families in need with some concrete assistance such as school supplies,
winter coats, gas vouchers, medication co-pays, electric bills, and
emergency food baskets. I love my job; it's an honor to be able to
assist so many of our local families in so many different ways.
I have been married for 10 years to my high school sweetheart, Josh
Greubel. Josh and I have known each other for most of our lives. We
began dating in high school, continued through college, and got married
a month after I graduated in 2001. Josh has both Bachelor's and
Master's degrees in Music Education and is the High School Band
Instructor in the same school district where I work. We have a 5-year-
old son Benen and our second child is due in December. Like many
American families we have a mortgage, two cars, and (with two Master's
degrees in the household) a lot of student loan debt.
I have been invited here today to speak to you about my family and
the families I work with every day who have been profoundly affected by
the long-term changes in our economy. Until spring of 2010, Josh and I
were both accustomed to working full-time jobs. As the economy began to
slide, we knew that our jobs could be in danger as States brought in
less revenue and cut spending on education to balance the budget.
During the 2009-10 school year, the State of Iowa cut education funding
mid-year, which forced our district to make some difficult decisions.
We collectively held our breath as the administration met behind closed
doors. In the first round of proposed cuts, my position would have been
reduced to half-time. My husband would have lost portions of his
contract as well. Combined, this meant a loss of almost $30,000
annually in our household. We were distraught, and in those few weeks a
lot of tears were shed in our home. In the end when the district
finally figured out where they stood financially, my husband's entire
contract was restored, and mine was partially restored to \3/4\ time.
As a result our family lost $10,000 per year in income; we considered
ourselves lucky.
Though $10,000 might not seem like much to some people, the loss of
that income required a complete financial, emotional and spiritual
overhaul in our family. Everything about how we managed our money
changed. Before the reduction, we followed a loose budget to ensure
that all our bills were paid, and spent what was leftover as we
pleased. We had just started a college account for our son and were
looking at options for retirement savings in addition to our public
employee retirement accounts. After my job was reduced, we examined our
budget and reduced or cut all unnecessary spending. We cut back our
cable, Internet, and phone service. We cut back on spending for
restaurants, entertainment, clothing, gas, and groceries. We set up a
new budget and new financial goals. In the new budget, every penny we
make and spend is accounted for on paper. We realized that living with
so much debt is a liability in an unstable world so we set a goal to
pay off both vehicles and all student loans in 5 years, or at least as
soon as possible. Every bit of income we have that is not needed for
bills or necessities is used as extra payment on those debts.
These are pretty general descriptions, so let me give you some
examples of what all of this means in real life, on a day-to-day basis.
It means that even though I don't like WalMart and would rather support
local grocers, I buy groceries at WalMart because the prices are lower
there. Sometimes the grocery money runs out before payday, and then we
have to be creative with what we have in the cupboards until we get
paid again. At first this was sort of a fun challenge, but the novelty
wears off after a while. Anyone who has been pregnant or spent time
around pregnant women knows that our appetites are random and
changeable, and that the nausea can strike at any moment. I don't feel
like cooking much these days and the smell of raw meat is unbearable,
but if my husband is working late and the restaurant money is gone we
are out of luck. My son ends up eating more cold cereal at dinnertime
than I care to admit. He thinks it's wonderful fun, but I know I'm not
doing my best for him.
It means that most of our clothing now comes from Goodwill, garage
sales, or clearance racks. We try not to pay full-price for much of
anything anymore. It means that when my son brought me the snack
calendar for his classroom last year, I cringed when I saw that it was
his turn to bring snacks for a week for his 15 classmates. I knew that
it would further stretch the grocery budget. There were no roast beef
or pork chops at our house that month. It means that the only way we
were able to have much of a vacation this year is through the
generosity of a friend allowing us 4 days at his lake house for free.
This past spring our son was hospitalized for 3 days, resulting in
$1,000 in out-of-pocket medical expenses. This month a problem with our
roof required $1,500 in repairs. Even though we'd been setting aside a
little money each month for medical expenses and home repairs, we
weren't prepared enough and have spent the last few months catching up.
And finally, this change in our finances meant giving very serious
consideration to whether having another child was really the best
choice for our family. Can we afford daycare, diapers, medical
expenses, and all the other costs of an infant now? Thankfully our
son's brief illness and hospitalization reminded us that some things
are more important than money and that we would find a way to make it
work.
It means that every penny spent requires thought and planning and
every decision made must be carefully considered in terms of its
financial implications. Do we have money set aside for this? If we
spend it now, will we have what we need for later? Could we get it for
less somewhere else or at a later time? Is this really something we
need? And if we have an unexpected expense, where can we pull that
money from? College and retirement savings aren't even on the radar at
this point, though hopefully that will change for us someday. Quite
honestly, it's exhausting physically and emotionally to live this way.
My husband and I didn't have dreams of great wealth. We never expected
to have summer homes or expensive cars or vacations on the Riviera. We
chose careers that inspire us, knowing that we would never make six
figure salaries. All we have ever wanted is security and a little
comfort: to know that our bills are paid, our needs are met, that we
can have a real getaway every now and then, that our children can
pursue higher education without the burden of student loan debt, and
that someday we can retire and enjoy our final years together in the
way we choose.
When I think back over our adult lives, it strikes me that we did
everything we were always told to do in order to have the American
dream. We finished high school, went to college, and got married after
graduation. We work hard, pay our bills, and have no credit card debt.
We waited to have children until we believed that we were emotionally
and financially able to do so. We both got graduate degrees to be
better at our jobs, make ourselves more marketable, and increase our
worth as employees. We volunteer, donate to help those in need, and
vote. We did everything that all the experts said we should do, and yet
still we're struggling. When you work as hard as we have and still
sometimes scrape for the necessities, it really gets you down.
I've given you a picture of how my own family has been affected by
the economic downturn and explained some of the difficulties we have
had. However, MY family is not the reason I am here today.
Circumstances beyond our control led to some tough times, but from this
situation we were able to make some positive changes--better money
management, clear financial goals, and a shift in priorities that put
our family back at the top of the list. We have health insurance
coverage and paid sick time through work. My family has been
fortunate--we are still able to meet our needs and have a few extras
from time to time along the way. We don't have to choose between food
and medicine or whether to pay the electric bill or put gas in the car.
I am here today on behalf of the families who truly need your help,
the families who have lost their jobs, their health insurance, their
homes, and their hope for things to get better. If my family with two
Master's degrees is struggling, you can imagine how difficult things
are for many others. The past few years our school district has seen
the percentage of students on free or reduced lunch increase steadily.
Over 30 percent of our elementary-level students qualified for the
program this year. This is in a community with a reputation of being
well-off. I've sat with parents as they completed the eligibility
application, held their hands as they've shed tears of shame. They say
things like, ``I've never needed any help like this before'' and ``I
never thought I'd have to do this.'' They worry that their neighbors
will find out and that their kids will be embarrassed. I reassure them
that there is no shame in asking for help when you need it. I help
parents apply for the State Children's Health Insurance program for
their kids and cringe when I have to explain that there is no
comparable program for them, the parents who are equally in need of
coverage. I've held women's hands through pregnancy terminations
because they can't afford another child right now. I've bought a week's
worth of medication for a child when a gap in insurance came at a bad
time and his parents didn't have the $172 to pay for his medicine. I've
listened to a coworker tell how her spouse who lost his job several
months before was slipping into a deep depression and had finally
stopped looking for work, helping around the house, or parenting their
child. Not only had my coworker become the sole breadwinner, but she
had essentially become a single parent as well. I've felt lucky to
offer a temporary solution for parents who, following a job loss,
stayed up at night worrying about how to explain to their kids that
Santa wasn't coming this year because Mommy lost her job.
Even though economic experts use their nebulous measures to say
that the current recession is over, there is an entire class of people
who were lost before it officially started and are still lost today.
They're used to working for everything they have and being self-
sufficient. For their entire adult lives they've taken care of their
families themselves, and we all know that there is pride in being able
to do that. These people continue to be proud even as their
circumstances change, which makes asking for help difficult or even
impossible. And based on my experience, the children are generally a
reflection of what is happening in the family despite parents' best
efforts to hide their worry. When the stability of the family is
compromised due to financial strain, we see kids struggle in school,
have trouble focusing, and develop ``behavior concerns'' that are
really an outward manifestation of their fear. Kids don't necessarily
tell their parents that they're afraid, because they know their parents
are stressed out already and they don't want to add to the strain.
Clothing becomes more tattered and sometimes parents cut off the toes
of a child's tennis shoes to accommodate a few more months of growing
feet. When kids don't have enough to eat or worry about losing their
homes they can't be expected to concentrate on learning math facts. In
some cases financial concerns lead to or exacerbate issues such as
domestic violence, substance abuse, and physical or mental health
conditions. So many of the things ailing our families are
interconnected.
In addition to job loss there are many factors that are further
squeezing families. Health care costs are high for those who have
insurance coverage and impossible for those who don't. Gas prices eat
up a large percentage of income for people who have to drive several
miles to work in rural areas like mine. Grocery prices mean that
families choose between eating what's healthy and eating what's
affordable. And to add insult to injury, families who are scraping by
every day see no real relief in sight. When we turn on our TV's, our
radios, or pick up our newspapers and read about what is going on in
our State and Federal Governments, we start to believe that you don't
care about us. We ask ourselves who our government is truly serving? We
hear that corporate welfare continues and CEO's get six-figure bonuses
at taxpayer expense, and we look across the kitchen table at our
families eating Ramen noodles for the third time this week. We read
that the wealthy get bigger tax breaks in hopes that their money will
``trickle down'' to us, then turn the page and read about how our
school districts are forced to cut staff--again. We hear about the
scandals and the arguing and the backroom deals. We know that money
talks around here, and that means you don't hear us.
I appreciate this committee's interest in these issues and
willingness to listen to me today. I hold out great hope that this is
not the end of this discussion, that you will return to your offices
and your States and you will continue to ask everyday Americans like me
what they really need. And then I hope you will act on what you hear
and remember your passion for service that brought you to our Nation's
Capitol in the first place. I may have been called on to be the voice
of struggling families today, but there are millions more out there who
want and need to be heard by you. Please listen.
Thank you for the opportunity to be here today and I look forward
to any questions you may have.
The Chairman. Thank you very much for a most moving and
eloquent statement.
Ms. Greubel. Thank you.
The Chairman. Very, very eloquent.
Now we turn to Mr. Clements. Mr. Clements, welcome to the
committee, please proceed.
STATEMENT OF THOMAS CLEMENTS, FOUNDER, OILFIELD CNC MACHINING
LLC, BROUSSARD, LA
Mr. Clements. Thank you, Chairman Harkin, for this hearing.
And thank you, Senator Enzi, for the invite to share my
story.
I would hope my story shows the passion and dedication my
wife and I have in our pursuit of the American dream and of
life, liberty, and the pursuit of happiness. These were all at
our reach before the moratorium.
We had projected plans and future goals within our reach.
We were successful business owners. We were living our American
dream. We enjoyed freedom as a result of the fruits of our hard
labor. We felt like we could change the history of our family
lives forever. Those were our hopes and our lives before the
moratorium.
Today, after the moratorium, we are only in pursuit of
survival. There is no future plans whatsoever of any kind. Our
revenue dropped last year 55 percent from 2009 revenues, just
like many other companies all across the Gulf States. And this
year, our revenues are down 85 percent from 2009, 85 percent.
We lost all the employees we had and are running the
business ourselves as husband and wife, a two-person shop. We
have lost 2 years of time and productivity due to the
moratorium and the continuation of the ``permitorium.'' We ask
ourselves today are we to trust our Federal Government anymore
to partner with us in our pursuit of life, liberty, and
happiness? We ask why has the Government become a player, not a
partner in our business?
We don't want or need political answers to these questions.
We want and need action from the Federal Government to put
American energy workers like me and thousands of others back to
work.
We are running out of hope. You, the members of this
committee, offer us hope. Maybe one of you can convince the
Administration to take action. Perhaps it takes the entire
committee. Or maybe the Senate could take action to put
American energy workers back to work.
Immediately putting the American energy workers back to
work should be one of the easiest tasks before Congress. It is
one of the most important. But we need action. The words and
hollow promises will no longer work.
Frankly, I was appalled with the President's speech in
Brazil. I don't understand how anyone can consider it good
policy to borrow money to loan to Brazil so that country can
drill offshore and provide good-paying jobs for their people.
Even more disheartening was the part where the President says
he wants America to be their best customer.
If the energy industry is good enough for Brazil, why isn't
it good enough for America and its workers? The President
disappointed every single energy worker with that comment, and
I expect many of you were concerned as well.
I wish he were more positive about our energy industry and
the great things that are happening in our industry. For
instance, Exxon just discovered a huge reserve of oil in the
Gulf of Mexico, just waiting for American energy workers to
extract. And the industry just produced a state-of-the-art cap
that would ensure that a spill that happened in the Gulf never
happens again.
These are great news stories, but we have heard nothing
from the President. So today I am asking you, the U.S. Senate,
to pass the three bills from last month--H.R. 1229, 1230, and
1231--previously passed by the House, which would ensure the
American energy workers return to work in the Gulf. Putting the
Gulf Back to Work Act, which ends the Administration's de facto
moratorium in the Gulf of Mexico in a responsible, transparent
manner by reforming current law to improve safety and setting
firm timelines for considering permits to drill.
Recently, I heard of a new bill that was just passed, H.R.
2021, Jobs in Energy Permitting Act. I believe Senator
Murkowski introduced a similar bill in the Senate. Yes, the
President may veto these plans, but your override would send a
strong message. A strong message that Congress supports
America's energy industry and its workers.
I am ready to go back to work now, but I need your help.
Thank you.
[The prepared statement of Mr. Clements follows:]
Prepared Statement of Thomas Clements
My name is Thomas Clements. I live in Youngsville, LA, with my
wife, Melissa. We are owners of Oilfield CNC Machining LLC., a machine
shop in Broussard, LA.
We have been married for over 6\1/2\ years and have three grown
children.
CNC stands for ``Computer Pneumatic Controls.'' I have been a
skilled CNC machinist for 24 years. And for the past 24 years, I've
always worked long hours and, for the most part, lived paycheck to
paycheck.
My wife, Melissa, has spent the past 23 years working in the
accounting field. Before we married in 2005, she was a single mother
who had gone through Chapter 11 bankruptcy. She was working full-time,
and her income was supplemented by rental properties she retained after
the bankruptcy. But she worked very hard to keep up with the payment
schedule from the bankruptcy in order to eventually pay off her debts.
I am sharing this with you so that you can better understand how it
is that we became small business owners. Neither of us was born with
silver spoons in our mouths; both of us worked long hours, and together
we invested an enormous amount of sweat equity into finally becoming
small business owners.
Over a period of 3 years, we carefully planned our finances to the
dollar. My wife was successfully discharged from Chapter 11 bankruptcy.
We paid off our cars and we saved everything we could in the hope that
someday soon we could own our own business.
One day 4 years ago, a customer at the machine shop where I was
employed approached me about a need he had for an additional machine
shop. He was looking for someone with my skill set to take on a
significant amount of new work.
My wife and I saw this as an opportunity to build our own business
and live the American Dream, and we took the chance of a lifetime. We
only had one customer, but that customer had as much work for us as we
could handle.
We put in a bid for a $320,000 job and won, and we immediately went
out and leased a building and began purchasing the tools and supplies
that we needed to open our shop. We sold most of our assets, and we re-
financed our house in order to come up with the down payment on a
critical piece of machinery that we needed to get off the ground.
We didn't have enough cash to purchase the tools and supplies we
needed to open, but our customer agreed to give us an advance payment
of $80,000, and that was enough to get us off the ground.
We took enormous risks, but we felt confident that as long as
America had a demand for energy, we could make a living in the
development of America's energy resources.
So on December 3, 2008, we opened our doors for business.
Our first year, 2009, was a very successful year. We put all of our
profits back into our business and caught up on all of our debts. We
still couldn't afford to hire any help at that time, so I worked
approximately 18-20 hours a day. I even slept on the couch in the shop
in order to keep the machine working around the clock.
After 6 months, our customer offered to lease a machine to us that
they owned. It was an opportunity for us to grow and expand, so we
agreed to take another risk and leased the machine. When we could
afford it, I hired someone to work on the weekends and someone to work
with me during the week. Eventually we hired a cleaning lady and a yard
maintenance worker.
The following year, 2010, started out the same as 2009 did--we were
very busy, and we were excited as we planned for another successful
year. As our business grew, we drew up plans to purchase our own
building, more machines and hire more workers. We had purchase orders
for work through the first week of June and verbal commitment for
orders for the rest of the year.
But in April 2010, the BP oil spill happened, and 11 oil rig
workers lost their lives very tragically. We have the deepest
sympathies for their families and loved ones. We know that they were
hardworking people just like us, and some bad decisions unnecessarily
cut their lives short.
For us, everything changed. That's the first time I heard the
President utter the word ``moratorium.'' On May 27, the President spoke
of a moratorium that would last 6 months. That shocked us all. Two days
later, I received an email stating that ``all of our orders for the
remainder of the year were cancelled.'' By the first week of June, we
were out of work, and everyone we knew in the industry was also out of
work.
At that time we had approximately $80,000 in the bank and $12,000
in expenses each month--monthly notes, insurance and utilities. We
unwillingly had to lay off all of our employees and began making plans
to stretch our income through the 6-month moratorium. We went 5 months
without a penny of income and no work orders.
In October 2010 the President announced that the moratorium was
lifted. We were relieved, to say the least, and we were eager to go
back to work.
But no work orders came in.
Later we learned that the Interior Department stopped issuing
drilling permits without any explanation. They claimed that it was
because of a safety issue. And we couldn't understand why, after 50
years of safe drilling, an entire industry had to be shut down because
of the actions of one bad actor. That doesn't happen in the airline
industry, or the rail industry, or the automotive industry.
The oil spill was caused by bad decisions made by BP's top
executives. A Federal court found the Interior Department in contempt
of court, but still there was no action by the Interior Department. No
new permits were being issued.
This country has borrowed money from other countries to loan Brazil
$2 billion to drill offshore and the President says that ``we will be
their best customer.''
Since the 2010 elections, the House of Representatives has at least
tried to do something to get the oil field industry working. I have
seen nothing pass the Senate as far as pushing to get permits issued
and getting the offshore industry back up and working in full speed.
Congress must act quickly to help our industry get back to work. We are
tired of watching the work and the skilled workers move overseas, while
untapped resources are right here in our own waters. We have even
considered moving our business to Brazil, but we do not want to do
that.
In the past 6 months, we've received a few small jobs, which were
enough to barely keep our business from shutting down. But that status
quo is unsustainable. We will be forced to shut our doors permanently
unless American energy production resumes in the Gulf. And there are
many, many more small businesses in the Gulf that are in the exact same
situation as us.
Owning our own business and working to produce American-made energy
in the oil field industry is our American Dream.
We believe that the government's role is to protect our country and
encourage American workers to develop our natural resources. But
instead, our government seem to be doing more to support foreign
workers develop energy sources abroad.
I'm here today because our Nation needs energy, and thousands of
energy workers like me are willing and able to help produce that energy
right here at home. Mr. Chairman and members of this committee, please
let us go back to work.
Thank you.
The Chairman. Thank you very much, Mr. Clements.
And thank you all for your very moving testimonies.
We will start a round of 5-minute questions.
First, Ms. Greubel, thank you very much for your very
moving statement. With no slight to anyone else who is here or
other previous witnesses we have had, I think that is one of
the most eloquent statements about the plight of the middle
class and what really is happening to families out there that I
have ever heard.
Ms. Greubel. Thank you.
The Chairman. I am also told, today is your wedding
anniversary----
Ms. Greubel. Yes.
The Chairman [continuing]. So thank you for being here
today. I hope you make it home in time tonight. So happy
anniversary.
Ms. Greubel. Thank you.
The Chairman. I understand your 10th?
Ms. Greubel. Yes.
The Chairman. Congratulations.
One of the points you made in your testimony is that you
did everything you were supposed to do to reach the American
dream, yet you say--and you said it in your statement and also
verbally that, ``When you work as hard as we have and still
sometimes scrape for the necessities, it really gets you
down.''
I am also aware of studies that have been done by the
Centers for Disease Control and Prevention and other entities
about the rising incidence of depression in the United States
and how it does in many ways track the recession that we have
had and people out of work. It is the kind of depression that
just slows people down because in many ways they have tried to
find jobs. They can't find them. You mentioned that yourself.
I just wonder if you could elaborate on that. Now, you deal
with a Family Resource Center. You deal with people that, as
you say, a lot of them don't have jobs, or they had them and
they don't have them now.
Ms. Greubel. Right.
The Chairman. And they are really at the end of their rope.
Do you see much depression, and do you see this kind of working
on families?
Ms. Greubel. I think access to mental healthcare is one of
the biggest barriers that families face. I think depression, a
lot of times, is triggered by, No. 1, not feeling like you have
any worth or you have any use to your society. And that happens
when you don't work. You don't feel like there is anything
worthwhile that you are able to do to contribute.
And in addition to that, I think anyone who has kids knows
that not being able to take care of your children on your own,
not being able to provide for them, not being able to meet
their needs is terribly, terribly distressing as a parent. And
especially as this goes on for long periods of time, parents
start to lose sight of the reasons that they can't do that, and
they start to feel like failures.
And so, I absolutely think that we see a lot of mental
health concerns--depression, anxiety, all of those things that
are tied to financial issues.
The Chairman. How does that affect the children? What
happens--you mentioned that kids don't study very well. They
start falling behind. Do you see that happening?
Ms. Greubel. Yes. Children, like I said, a lot of times,
they see their parents very worried about what is going on.
They know that their parents are concerned about keeping the
house. They know their parents are concerned about putting food
on the table. And even at a very young age, they know that if
they are worried that adds stress to their parents. So they
don't want to tell their parents that they are worried.
I have kids coming into my office who just break out and
cry in the middle of class, and the teacher brings them to me
and says, ``I don't know what is going on, and they won't tell
me.'' And sometimes I have a little bit different insight into
what is going on with the family than the teacher does. And so,
sometimes I can ask some of those questions to bring that out.
But I ask, ``Have you talked to your parents that you are
scared?'' ``No, because they are already stressed out, and I
don't want to make things worse.''
But we see kids have trouble concentrating. We see kids
start to act out because they just don't know how to handle
those very adult issues that are going on. And I certainly
don't blame the parents for not addressing that with their kids
because they are trying to handle it on their own, too.
The Chairman. One of the topics we deal with regularly in
this committee is pensions. I have been having some hearings.
We are going to have more on pensions. Unfortunately, what we
know is that the majority of Americans are woefully unprepared
for retirement.
In your testimony, you talk about how difficult it is to
save for retirement, save for your kids' education, putting
food on the table, gas in the car. You are a public employee in
Iowa. So you are in the Iowa Public Employees Retirement
System, I assume.
Can you give us a sense of how important earning that
pension benefit is to you? Where would you be if you did not
have that kind of a pension program out there for you?
Ms. Greubel. Kind of a safety net. Well, I can tell you
that college savings and retirement savings for my family
aren't even on the radar right now. And knowing that we have
IPERS, our public employees retirement system, that gives us a
little bit of sense of hope that we will have something when we
are ready to retire, but there have also been a lot of talk
about making changes to that and reducing the percentage of
income that that will provide to people.
Even that isn't secure, and we know that. And we know, most
of the employees know that you have to have something else.
The Chairman. My time has run out. Thank you very much, Ms.
Greubel.
I have more questions for Mr. Bernstein and Ms. Sipprelle
and Mr. Clements. I will do that on the next round.
Ms. Greubel. Thank you.
Senator Enzi. Thank you, Mr. Chairman.
Mr. Clements, I want to thank you for testifying today. I
know that you had to close your shop for 2 days to make this
trip, and I know that that is tough in any business. But I
really appreciate you going to that effort to do it.
Your business and your work doesn't involve directly
drilling for oil, but it has still been decimated by the
drilling ban and the
refusal to grant permits. What other types of businesses in
your area have been negatively affected by this collapse of the
industry?
Mr. Clements. Senator Enzi, there has been several. We have
supply companies that we buy our supplies through. Truck
drivers that actually bring it to you. You know, you have your
local restaurants where people are scaling back on their cost-
of-living and stuff. Insurance, people are not buying life
insurance anymore.
There has been a number of different businesses all
throughout the area, and it is just incredible.
Senator Enzi. How did you obtain the skills and the
knowledge to become a computer pneumatic controls machinist?
Mr. Clements. It was something that I started 25 years ago,
started out with a manual lathe. The passion and the excitement
that I have for being a machinist is something that you take a
blueprint, and you make parts. And then there are other
machinists involved, and it is kind of like putting together an
engine.
You machine all these parts, and it had to be perfect. You
put this engine together, and then you watch it start up and
run. And for some reason, it is an excitement to see that, and
it is also a camaraderie because engineers spend so much time
putting these blueprints together.
Sometimes they spend a year or two designing and building
parts, and then you become part of that process. And for me,
that is where the passion comes from and the excitement. So it
is a great trade.
Senator Enzi. From your testimony, I can see that you have
been involved in the manufacturing world for 24 years now.
Mr. Clements. Yes.
Senator Enzi. Would you recommend that field to young
people that are just starting out?
Mr. Clements. Absolutely. Absolutely. Especially young guys
that are in high school that are in wood shop and stuff like
that, mechanic shop, stuff like this. This would be a field for
them that they can get into. There is journeyman's program
where you can actually be certified as a journeyman and go on
to have a good paying job.
So, yes, I do recommend it.
Senator Enzi. What is going to happen to your business and
to you and your wife if the drilling in the Gulf doesn't return
to what it was before? I heard you say that you had an 85
percent loss of revenue--and I know you can't operate on 85
percent loss in any business. So what is going to happen to
your business and similar businesses?
Mr. Clements. Well, what would happen, we would eventually
have to close our doors. I mean, it is tragic. Maybe we need to
learn Portuguese or learn Spanish and go to another country. I
mean, that is where some of the money, our money is going into
work and stuff.
That is what would happen. Our American dream would go
down, and we would have to go back to living paycheck to
paycheck and try to learn to survive all over again and try to
find the will and the courage to go after an American dream
again and with some kind of hope. You can't give up.
I guess that is why I am here. Because you just can't give
up. I know there are other small businesses out there that are
struggling, and you just can't give up. You have got to keep
after this. Things are going to turn around. And so, we are
just trying to keep the faith, and we are doing the best we
can.
Senator Enzi. Well, I appreciate the courage of anybody
that goes into small business. My wife and I started a shoe
store, and there are a lot of decisions that people would see
as being very normal. But the life of the business depends on
them, and those decisions have to be made daily.
Of course, I don't think a person has really been in
business until they have had that wake up in the middle of the
night, sit bolt upright, and say, ``How do I pay the bills
tomorrow?''
Mr. Clements. Absolutely.
Senator Enzi. So thank you for taking that risk, and we
hope that you get back to a point where you can not only have
the American dream, but have a number of employees.
I see that my time has run out, too, and I have questions
for the other three. So I am glad we are going to do another
round.
The Chairman. Thank you, Senator Enzi.
In order of appearance, Senator Franken, Senator
Whitehouse, Senator Blumenthal, and Senator Bennet.
Senator Franken.
Statement of Senator Franken
Senator Franken. Yes, thank you, Mr. Chairman, for this
hearing.
And thank you all, all of you, for testifying. I have been
a small businessman myself and have sat bolt upright in the
middle of the night. Usually, it was to think of a joke or
something.
[Laughter.]
``Yes, that will work.'' But I hired people, and I like to
think I was a successful small businessman.
Unfortunately, a number of us had to go to a Judiciary
executive meeting. So I missed some of the testimony, and I
missed the Ranking Member's opening statement. But as I
understand it, in it, he mentions polling that over one half of
Americans believe that the stimulus did nothing or hurt the
economy.
Mr. Bernstein, if a majority of Americans believe
something--for example, I know at one point, 75 percent of
Republican-likely voters believed that the President was not
born in the United States or may not have been born in the
United States--does that make it true? Does it make it true
when the majority of people believe something?
Mr. Bernstein. No, of course, it doesn't, Senator. And I
was caught up by that same statistic. I think there are
certainly ways in which polling data can inform our thinking
about how impressions are formed. But when it comes down to the
basic facts of the case, as in the case of the Recovery Act,
that is probably the least informative statistic I can think
of.
Much better would be to look at the evidence, empirical
evidence, and probably the best way to do that would not be to
look at the Administration's own evidence because one could
argue there is a thumb on the scale there and look at, for
example, the Congressional Budget Office. I think widely
regarded in these halls as being an arbiter of such things, the
Congressional Budget Office has found time and again in
numerous reports that the American Recovery and Reinvestment
Act created up to about 3.5 million jobs and shaved a couple of
percent off the unemployment rate and helped essentially move
forward the economic recovery.
That is, the great recession would have been longer and
deeper in the absence of it. None of that is to imply that we
are back to where we need to be, but the evidence is very
strong in that regard.
Senator Franken. Sometimes the American people are subject
to some misinformation. I have heard colleagues of mine on the
floor, some of my friends from the other side of the aisle say
that no jobs were created other than for Federal bureaucrats.
In my State, a lot of roads were built, water towers, and
those things. Do Federal bureaucrats come from Washington to
run heavy machinery in Minnesota?
Mr. Bernstein. Thankfully, no. I, myself, was struck by
some of those comments, having traveled with the Vice
President, the implementer-in-chief of the Recovery Act, to job
sites across this country, including in States of many of the
Senators who are represented here today. And saw with my own
eyes precisely what you are talking about, a great deal of work
in progress.
Senator Franken. A large part, actually, of the Recovery
Act were tax cuts, were they not?
Mr. Bernstein. About a third.
Senator Franken. About a third. I hear a lot about tax cuts
now. I hear a lot of my colleagues on the other side say that
tax cuts always increase revenues. And I am a little bit
confused about that.
I hear that tax cuts always increase revenues, but then I
hear a complete contradictory thing, which is the reason to
have tax cuts is to starve the beast. As President Reagan once
said, ``you can't cut taxes unless you cut spending first.'' If
you tell a child that buys too much, if you cut off his
allowance, then he will stop buying stuff.
And so, this seems to me contradictory that on the one
hand, tax cuts do two mutually exclusive and contradictory
things. They always increase revenue, but on the other hand,
they decrease revenue. Can you tell me which it is?
Mr. Bernstein. Sure.
Senator Franken. Because I am confused.
Mr. Bernstein. Generally, tax cuts are going to decrease
revenue. There are cases where tax cuts can stimulate economic
growth that otherwise wouldn't occur, and some of that growth
spins off revenue. But one has to be careful of overestimating
that effect and going to the kind of a Laffer curve idea,
which, by the way, serious supply-side economists don't even
believe that, that it is a dollar-for-dollar tradeoff.
I mean, if you look at--and here is the punch line, sir. If
you look at the factors that are mostly responsible for the
long-term increase in the budget deficit policy wise--I am not
talking about healthcare costs, which have been an ongoing
structural problem. And the Center on Budget and Policy
Priorities has very good graphics on this that I would be happy
to share with you. You will find that the largest contributor
to the growth in the budget deficit are the Bush tax cuts,
hands down, no competition.
The Bush tax cuts are way, way, way swamp any effect from,
say, the Recovery Act. The second-largest factor, by the way,
in terms of policy changes in recent years in contributing to
the growth of the deficit would be the wars. But the Bush tax
cuts are a very large revenue loser in the sense that you were
asking about.
Senator Franken. Thank you for clarifying those questions
that I had.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Franken.
Senator Whitehouse.
Statement of Senator Whitehouse
Senator Whitehouse. Thank you, Chairman.
Ms. Sipprelle, I understand you grew up in Rhode Island?
Ms. Sipprelle. Yes, I did.
Senator Whitehouse. Wonderful. I congratulate you on your
excellent work on the ``Over 50 and Out of Work'' project. I am
always glad to see Rhode Islanders doing great things, even if
they have moved to other places.
I was happy to see that your project included five of our
fellow Rhode Islanders, some of whom I have had the pleasure of
meeting. One of those is George Dys, from Forestdale. He was
not in your presentation today, but I would like to add his
story.
George was laid off from his career as a design engineer
over 3 years ago and still hasn't been able to fully get back
into the job market. Not for lack of trying. He has gotten
training in other industries and is willing to do just about
anything. But as you know, we are at 10.9 percent unemployment
in Rhode Island, and that makes the job market very difficult.
I think it is safe to assume that George and probably most
of the people that you interviewed never thought they would be
collecting unemployment benefits. That was not something that
was on their horizon at all. And yet the recession came. The
disaster on Wall Street created this cascade of misery across
the country that knocked down people in Rhode Island and other
places, and we have had to fight very hard to try to keep
unemployment benefits going.
As you will recall, we were only allowed to increase
unemployment benefits, you know, a month and a quarter at a
time, and each time there was a price to be paid for it.
Basically, the people in Mr. Dys's situation were held ransom
for other political demands that people had here in Washington.
Just react for me to the people who are the so-called 99ers
now, for whom 99 weeks have gone by, and even though we extend
unemployment benefits within that period, once you are at the
end of the 99 weeks, you are just done. And for a lot of those
people, they never imagined they would be on unemployment at
all, let alone on unemployment for 99 weeks.
So they spent down. They used a lot of their resources
waiting for the day when they would be back on their feet
again, and now they find themselves in real trouble. What are
you seeing for that group of folks?
Ms. Sipprelle. If I answer specifically about George Dys,
he is driving a bus or a van part time, and he also got a real
estate license, and he is trying to sell homes, which is also a
difficult proposition. But that is all he can find. He is a
good example of many of our interviewees who have put out
hundreds of resumes and have been unable to find employment.
I think what it comes down to, Senator Whitehouse, is a lot
of people are then forced to take jobs, as maybe we have heard
a little bit about today, that are severely under their skill
level, or they accept a rate of pay that is much lower than
they received previously. Or they take a job without benefits.
Or they work fewer hours. So even though they get----
Senator Whitehouse. And in some cases, they can't move to
find a better job because they are under water in their home
mortgage.
Ms. Sipprelle. Exactly. And sometimes, even though this is
not an economic effect, people in my generation--because I am
53--are taking care of elderly parents, and they are unable to
move because they are caring for a father or a mother in their
hometown. And you would be surprised how often that comes up in
our interviews.
But underemployment is just a huge issue, and I can give
you so many examples of our interviewees because since our
project has been going on for 16 months, many of our
interviewees have run out of unemployment benefits over that
period of time. And they are really----
Senator Whitehouse. That is pretty harsh.
Ms. Sipprelle [continuing]. Really struggling, and they are
accepting jobs that pay 25 percent or 33 percent of what they
received previously. Or they are forced into becoming
independent contractors or consultants.
I am not saying that that is necessarily a bad thing. But
as Senator Enzi said, becoming a businessperson takes a whole
basket of skills, and not every person who has worked 30 years
as an engineer is suddenly equipped to become a marketer for
his or her own services and to be constantly promoting him or
herself.
I am definitely not saying that people can't acquire those
skills, and many of our interviewees have proven to be
remarkably resourceful and determined and find ways to get back
to work. But I can tell you for sure they are not getting back
to work at salaries comparable to what they received
previously, nor with benefits.
Senator Whitehouse. I have just a few seconds left. So I
will wait for the second round.
But, I did want to mention to Mr. Clements and Ms. Greubel
that in my second round, I would like to discuss the IRS
information that shows the top 400 income earners in the
country who earned over a quarter of a billion dollars each
actually paid taxes of 18.2 percent.
When you have the chance in the next round, I will ask you
to think about if you put your withholding and your income
together, whether you pay more than 18.2 percent. So that is a
preview of coming attractions, but my time has expired.
The Chairman. Thank you very much, Senator Whitehouse.
Senator Blumenthal.
Statement of Senator Blumenthal
Senator Blumenthal. Thank you, Mr. Chairman.
And like others who are here today, I want to thank you for
having this hearing focusing on such a critically and
profoundly important issue in American society today and thank
the witnesses who are here for taking time from your schedules,
which I know are demanding.
Since we are on the topic of local connections, I notice,
Mr. Bernstein, that you went to Ridgefield High School in
Ridgefield, CT, which no doubt has contributed substantially to
your success. I want to focus on a really very fundamental
point in your testimony and I'll begin with you. And if others
have any comments on it, I would welcome them.
You note, and it is substantiated by Table 3, the very
different experience of middle-income married women as opposed
to single mothers, particularly low-income single mothers, in
the economic downturn. And note that single-income mothers, and
I am quoting, ``lost considerable ground'' and say that the
different experiences are worthy of further study.
I wonder if you could offer some potential explanations or
hypotheses that might account for those differences, which I
think in the bare statistics really reflect a very, very
significant impact on children as well as those single mothers.
Mr. Bernstein. Thank you very much for raising that. And
yes, a former Ridgefield Tiger. But I have to go back a lot of
years to remember that.
I appreciate your raising that because too often when we
are focusing on middle-income families, we can ignore the fact
that single mom families in particular have one breadwinner,
one sole breadwinner. So they don't have the ability to fall
back on another earner kicking up their hours or work in a
downturn.
And as you point out, in my Table 3, I show that these moms
on average earned about $18,500. You have heard from folks on
the panel today about what life must be like on that kind of an
income. That was in 2007. By 2009, they were down $1,500, a
huge loss off that low a base.
You mentioned their hours of work fell by 100 hours on
average. That is over 2 weeks of full-time work. My sense is
that when the economy contracted, places where those women
found work were subject to large layoffs. One of the things
that tells you is that probably not enough of them are in
healthcare because, actually, healthcare is a sector that
continued adding jobs even throughout the worst jobs recession
any of us have ever seen every month.
So I suspect many of these women--this is fodder for
further research--worked in the public sector in some way.
Maybe childcare aides, maybe aides in the school. And that is
where we have seen 350,000 jobs laid off in State and local
employment over the past year and a half.
Even as private sector growth begins to come back and
employment in the private sector is up, 350,000 jobs cut from
the State and local sector because of those budget constraints.
And I suspect there is a connection there, Senator.
Senator Blumenthal. Any of the other witnesses have any
comments on that? And I might just say also in the spirit of
coming attractions, I would be interested in what you, as
members of the panel, would recommend be done with regard to
that particular segment of the population.
Ms. Greubel. I would like to say that in addition to women
working, tending to work more in sectors that get cut and also
have lower pay, the single moms especially are limited in the
types of jobs that they can take. If they have school-age
children, they need to work during the school day because,
otherwise, No. 1, finding childcare at night is a disaster and
a nightmare. And No. 2, they don't have someone else at home to
be there when the kids get home and make them supper.
If they don't have school-age children, if they are looking
at childcare, a lot of times childcare takes up a majority of
the income that they bring home. And so, we see these families
who have been on public assistance for years. Because if you
think about it, if you are on public assistance, you can get
your health insurance. You get a little bit of income, even
though it is not hardly anything, and you can take care of your
kids.
And sometimes you can get childcare assistance if you go
back to work. But you don't want to work too much because you
can only work like 28 hours and still get that. So it is sort
of creating a vicious cycle here with these families that we
tell you, ``Go to work, go to work, go to work,'' and the only
jobs that they can find that fit with what their family needs
are jobs that don't pay enough to provide them those same
benefits of healthcare and that assistance.
Senator Blumenthal. Thank you for those comments.
My time is up. But I might just comment that your
explanation, at least in part, I think is substantiated by Mr.
Bernstein's findings, I think in footnote 4, that low-income
married women had work and earning patterns over the recession
that looked more like middle-income wives than single mothers.
So the fact of being married, of having someone at home, in
effect, a means of childcare, is an important factor here.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Blumenthal.
Senator Bennet.
Statement of Senator Bennet
Senator Bennet. Thank you, Mr. Chairman.
Thank you so much for holding the hearing. I am sorry I
wasn't here earlier. I was on the floor, imploring people to
stop screaming at each other over our debt and our deficit.
While we were screaming at each other over the last couple
of years, I spent a lot of time in town halls in Colorado. And
if I had to pick one economic fact out of the mix that worries
me the most, it is the decline of median family income in this
country.
People never thought that they would be displaced in an
economic downturn or thought that they would be working for
less at the end of the 10-year period than they were at the
beginning. And they are coming to my town halls and saying, ``I
have done everything I was supposed to do. I am making less. I
sent my first kid to the fancy school, and I am not going to be
able to send my second kid there,'' or ``I can't send my child
to the best school they got into.''
This is an important issue, and I don't believe we really
have a theory, a working theory about how we are going to
change the arc of that curve. But I wanted to ask Mr. Bernstein
a couple of questions.
First, I have seen some data recently that shows that the
unemployment rate among people with a college degree is about
4.5 percent in this country. It is far, far higher if you have
only a high school degree or no degree at all. I wonder if you
could talk a little bit about the importance of educational
attainment for driving the middle class in this country and the
flip side, the economic disparities that are caused by
educational disparity in this country?
Mr. Bernstein. The unemployment rate for college-educated
workers, as you said, is about 4.5 percent. That is actually a
couple percent higher than it typically is in an economy that
is percolating along at its potential. But even so, 4.5 percent
is about half the overall rate.
Unquestionably the case that a college education, to some
extent, insulates working people from many of the difficulties
that we have heard about in today's panel and that I document
in my piece. The unemployment rate among high school dropouts
is almost always in the double digits. And if you look at
minority high school, even high school completion or
particularly high school dropouts, you will see a permanent
recession, if not depression level unemployment rate.
So there is a very steep gradient to higher education being
associated with lower unemployment rates. That said, as one of
my colleagues mentioned, even college-educated workers find
themselves often underemployed or experiencing declining real
wages right now, but from a much higher level than folks with
less education.
Senator Bennet. People would argue a little with the
statistics sometimes, but rough justice. If you are born into a
low-income neighborhood in this country, your chances of
graduating with a college degree are around 9 in 100, which
means 91 out of 100 will not have the benefit of a college
degree.
How should we think about the chances of people in that
situation attaining a middle-class dream?
Mr. Bernstein. That is a great question, and it is
something that I have tried to focus on in my research. In
fact, I think one of the themes that comes out of the panel
today is the importance of economic mobility, which is really
what you are talking about.
The idea that embedded in the middle-class dream is the
idea that if you work hard and you play by the rules, you will
be able to get ahead. And one of the main ways that parents
help their children get ahead is through access to higher
education.
In that regard, as I pointed out in my testimony, the
increase in the sticker price of college tuition is one of the
factors behind the immobility problem that you documented. And
in that regard, the significant extensions of Pell grants under
this Congress has been instrumental in helping to offset the
increase in those sticker prices, and I see attacks on those
Pell grants coming. And I think they are exactly wrong in the
sense that we are discussing.
Senator Bennet. I am glad you raised that. My time is up,
but I would say on that point that the two groups of people in
the town halls that are worried the most and that I worry about
the most are people in their 50's that are finding themselves
out of work and untrained and our young people, who are
graduating into an economy that just has no place for them.
At least we have got a theory of action for them, which is
take refuge at a college campus, because that investment in the
long run is going to pay off mightily for them and for our
country. So I agree completely with you.
Now we have got to figure out, though, what we do with the
people in their 50's that find themselves in a place where they
need to be retrained or need to move someplace to do their
work.
So thank you to all of you. I am sorry that I didn't get a
chance to ask everybody questions.
But, Mr. Chairman, thank you for holding the hearing.
The Chairman. Thank you, Senator Bennet.
And we will start another round, keeping in mind that we
have two votes starting at noon. So we will try to adhere to
our 5-minute rounds.
Mr. Clements, I read your testimony last evening and
listened to you today. And quite frankly, you and your family
obviously have our sympathy about what happened. And hopefully,
things are getting better.
I understand that permitting is underway. Here is what I
was told--that shallow water drilling has continued. Deepwater
permitting seems to be back up to approximately its pre-
moratorium level that we had before.
So I guess what we are seeing is even though you got hit
pretty hard, do you see things coming back now?
Mr. Clements. Quite frankly, no, Senator. I don't see any
of that. The permits that were issued, these were deepwater
rigs that were already operating before the oil spill, to my
understanding. I believe there is only one or two new
exploration drills, permits for drilling.
You know, the permits are not being issued like they were
back before the oil spill, and that is what needs to happen for
our business to get back accelerating like it was before and to
create the jobs and keep the revenues coming in here for the
Federal Government as well.
The Chairman. I will check this out. But I am told that 56
new shallow water well permits have been issued since June
2010. Permits have averaged more than 6 per month over the past
8 months, compared to an average of 8 permits per month in
2009.
And deep water, 88 permits have been approved since last
October. Eighty-eight permits have been approved. There are 28
pending. Twenty-four were returned to the operator with
requests for additional information, particularly information
regarding containment. And overall, the United States has more
drilling rigs in operation now than at any time in history.
Mr. Clements. Right.
The Chairman. I see this. I hear you. I am thinking, well,
maybe we had a hit, but maybe we are----
Mr. Clements. I am sure your resources are better than
mine. So the only resources I get is from customers that I do
work for.
The Chairman. And I understand that.
Mr. Clements. And they tell me that the work that I am
doing is for international work, for out of the country. We
don't even do work for the rigs that are out here in the Gulf
of Mexico. So, I mean, that is the information that I get
personally from customers that are dealing with customers
overseas.
The Chairman. And the reason I have sympathy with you is I
have a nephew----
Mr. Clements. OK.
The Chairman [continuing]. Who has a machine shop in Rock
Springs, WY, and has had it for some years. His father had it
and since passed away. My brother-in-law since passed away. And
he has operated that. And boy, I have seen his ups and downs.
Of course, we had the oil patch in Wyoming. It went up, and
he had a lot of work. Then it went down. Then it went back up.
But like you, he just toughed it out. There were times when
he was doing a lot of work, then at times less just because of
what was happening with oil in that area around Rock Springs.
But it had to do just basically with the vagaries of what was
happening with the oil patch at that time.
And so, I have seen what happened to him, and it sounds a
little similar to yours.
Mr. Clements. With all due respect, when the moratorium
happened, we got our email. We had verbally committed for 6
months of work, and we got our email, and all our orders are
canceled because of a moratorium that was put in place by the
President----
The Chairman. Yes.
Mr. Clements [continuing]. Without any kind of economic
data or any recommendation from anybody, for the way I
understand it.
The Chairman. Yes.
Mr. Clements. And so, we are very shell-shocked over that.
There was no economic data done in the revenues being lost and
all this. And then, I honestly believed that after the
moratorium was done, that permits would start being issued
again, and we would go back to work. You kind of have that
belief. And then, suddenly, we find out that they are just not
giving out permits.
So this continues on for months later. And then, of course,
back in February and March, they start handing out a few
permits before, I guess, the stories start getting hot or
heated or something. So maybe they are giving out some more
permits. Maybe that just happened recently, and I haven't found
any data about any of it, or there is really no press releases
being issued about it anymore.
But like I said, your resources are better than mine.
The Chairman. I hope it is going back up.
Mr. Clements. I appreciate it.
The Chairman. One question of Mr. Bernstein, my last
question. You said in your statement why low-income single
mothers lost more ground in the recession compared to middle-
income wives is worthy of further study. Putting aside child
support, single mothers are, by definition, the sole
breadwinners of their families, and these families are
economically more vulnerable than most two-parent families.
Could you elaborate on this finding? Low-income single
mothers lost more ground in the recession compared to middle-
income wives?
Mr. Bernstein. Right.
The Chairman. What is that about?
Mr. Bernstein. I think that has to do with the sectors that
they work in and the basic time constraints that a single mom
faces, particularly regarding childcare. By dint of having a
two-parent family, as was noted earlier, the ability to have
more flexibility in the jobs you accept, schedule wise, is
greatly enhanced.
And when you are talking about an income, as I show an
average income in the $18,000 range, I looked at single moms in
the bottom three-fifths of the income scale. So I looked at the
majority of single moms, and that average income is as I just
mentioned. You simply don't have the resources to go out and
buy ``Cadillac flexible'' childcare. So you are very
constrained on your schedule.
I think it probably--and I have to do more research on
this. As I suggested, this is a finding that came up as I was
preparing for this testimony. I think it may well have--I
wonder if it has to do with all of the deep cuts that have been
occurring lately in State and local jobs.
Maybe these are home health aides. Maybe they are some
childcare workers themselves. Maybe they are folks who work for
the education system. And in that sense, that is where you see
really very significant layoffs over the past couple of years.
Even as the private sector employment is growing, the State
budget cuts are leading to a very solid layoff. And yet we
sometimes disparage the public sector workers. They are on the
dole or whatever. These are teachers. These are childcare
workers. These are firefighters. These are folks like we have
heard from today.
The Chairman. Exactly. Thank you very much. I ran over my
time. I apologize.
Senator Enzi.
Senator Enzi. Thank you, Mr. Chairman.
I would like to comment a little bit on the supply of
domestic oil. Because if it was back to normal, the President
would not have had to tap the SPR this morning, and that is the
first time that has happened since Hurricane Katrina. So we are
short of oil.
You mentioned the number of permits that are being given
out, it doesn't matter how many permits you give out if there
are no rigs available. Eight rigs have already gone
international, and six more are being marketed internationally.
What you lose along with the rig are the employees that are
skilled and trained in that as well. And so, the number of
permits, if they come late and all the rigs are gone, which has
happened two other times in U.S. history that have driven up
gas prices, we are kind of in that crisis again.
But to move on before I use up my round on something that I
am very passionate on, another topic that I am very passionate
on and have worked on with Senator Akaka is financial literacy.
There are a lot of people that are going through some real
crises on it now. Ms. Greubel, I really appreciate your
comments about the way that you are having to budget and the
situation that you are in.
You mentioned that you are accounting for every penny. Did
you take a course in this, how did you get onto the budgeting
part? Because that is critical to people in America right now.
Ms. Greubel. Thankfully, I have several friends who, when I
put out a call and said I need to figure this out and how to
cut some money, I have several friends who recommended Dave
Ramsey's ``Total Money Makeover.'' I checked that book out from
the library, and it is just very common-sense and really
resonated, and I thought, ``I can do this.''
And I am not a real math-minded person. You get past the
basics, and it is sort of beyond me. So the fact that Mr.
Ramsey had everything, all these things laid out. This is how
you do it. That was very easy for me to follow. Not easy to put
into practice, necessarily. But easy to figure out how to
follow.
And one of the things that I am hoping to do this next
school year is to have a parent get-together, invite any
parents who want to come in, and sort of talk about, OK, what
does it mean to have a budget? How are some ways you can save
money on groceries and some of these basic expenses?
And have people--because I think, collectively, we have a
lot of wealth of knowledge about how to do this. It is just
that we have to talk about it and share our ideas amongst
people who need that help.
I feel very fortunate that I discovered that resource, and
I know a lot of families who financial literacy is the key to
helping them sort of manage their circumstances.
Senator Enzi. Thank you. You made some comments that kind
of tipped me off that maybe author Dave Ramsey had been
involved.
Ms. Greubel. Yes.
Senator Enzi. One of them was that you had your credit
cards paid off.
Ms. Greubel. Yes.
Senator Enzi. I have had some experience with people in
Wyoming that have gone through that kind of a process, too, and
are now spreading the word. In fact, I mentioned it at one of
my staff meetings, and several people on my staff picked up a
copy of his book and put that into operation and have taken
courses since. And it has had a very positive effect in their
life.
It is about the only way you can get through a crisis that
you have explained. But it goes beyond that, and once the
crisis is over, it helps to put a person in a good financial
position, hopefully, to have that American dream. So I really
appreciate the fact that you are spreading this message of
financial literacy.
Ms. Greubel. Thank you.
Senator Enzi. We probably ought to come up with a more
friendly name than that, to get people inspired to get
themselves out of debt. So I really thank you for your
testimony today and the opportunity to mention that, too.
Mr. Bernstein, in your June 12th article, you talked about
direct job creation and you discount the benefit of private
sector job creation. You seem to suggest that we need a second
larger stimulus bill. You acknowledge, however, that the
problem with large public work projects is the hoops the
Federal Government makes a contractor take before construction
begins. I am not so sure that isn't where the President's
comment came from that the shovel-ready projects weren't as
shovel-ready as he expected.
But I would agree that there are too many rules and
regulations from the Federal Government. Do you have any
specific rules or regulations you think should be repealed to
help move projects forward?
Mr. Bernstein. I don't have any specific rules and
regulations, and in fact, when I have looked at this, I may
view this slightly different than you, though I think we
probably share the basic core of your idea in that it--I don't
know that the problem is with the rules and regulations. In my
view, the problem is how long it takes for those rules and
regulations to get approved.
What I would like to see happen is the decision from
contract approval to contract implementation happens much, much
quicker. And having looked at the regulatory process, I believe
it could be done.
I think rather than--and there are rules. And by the way,
the acronym is OIRA. In the OMB, Cass Sunstein's division over
there have been looking at clearing out some of the regulations
that are antiquated, and I fully support that work.
Senator Enzi. So far, I don't think any of those have
happened. They should happen.
Mr. Bernstein. They should happen. I agree with you. They
should happen and soon.
Senator Enzi. My time is limited. I am actually out of
time, and I do need to mention that we have the Workforce
Investment Act bill coming up for markup. That is a job
training bill that could help to train 900,000 people a year to
higher skill jobs that are available in their area. I am hoping
we can get that through this committee and through the Senate.
I have been working on it for 5 years. Job training is
important. We ought to be able to get it done.
The Chairman. And I want to publicly thank you, Senator
Enzi and Senator Murray, both, for your diligence in working on
this, at least since I have been chairman over the last year.
You have been on it longer than that, and I thank you for all
your hard work in getting it to the point where I hope we are
going to get it done.
Senator Enzi. Thanks for your work and Senator Isakson's,
too.
The Chairman. I hope we get it done before we get out of
here next week.
Senator Franken.
Senator Franken. I want to thank the Ranking Member for his
work on WIA. We also had a nice discussion about the ESEA
reauthorization and his hard work on that.
I haven't read Dave Ramsey's book, but I guess I will go
out and get it.
[Laughter.]
Mr. Clements, thank you for your testimony. I share the
chairman's sympathy, and I think all of us do, with what
happened to you. I liked what you said about your business. You
are a manufacturer, and you are machinist.
Mr. Clements. Yes, sir.
Senator Franken. I liked what you said about young men and
women who are in high school and are looking for something. We
have in Alexandria, MN, one of the best 2-year schools in the
country that does basically industrial arts education. And the
community of Alexandria does an incredible amount of machining,
and actually, they are sort of the Silicon Valley of packaging
machines.
I thank you for being a manufacturer and manufacturing in
the United States. So I want to thank you for that.
Mr. Clements. Thank you, Senator. I appreciate that.
Senator Franken. Now, and I understand your gripe here,
which is that this moratorium was put on. I don't know the
state of the permits exactly, and I don't think that is maybe
even exactly the point right now. Because, obviously, you are
on the ground. You are there. You are experiencing the orders
you are not getting.
Mr. Clements. Right, Senator. I hear a lot of numbers about
how many permits are, you know, shallow water, deep water, and
stuff like that. But the number I don't hear is how many
permits are being held. You know, how many permits are being
held up for whatever obvious reason.
To me, there is no excuse whatsoever, when they have a
state-of-the-art cap----
Senator Franken. Let me ask you about that.
Mr. Clements [continuing]. And there is even more safety
involved in the industry that has had a fairly good record.
Senator Franken. Fairly good record. But I think we all
know what happened with the Deepwater Horizon, and I don't
think that anyone anticipated that that would happen.
I don't think anyone was saying BP is a bad actor, and they
are bound to have one blow and kill 11 people and cause about--
according to BP, total estimates of their costs in cleanup and
capping the well, compensating the injured parties, fines, and
the injured parties included a lot of other people who lost
their livelihood are going to be $40 billion.
Mr. Clements. Wow. Yes.
Senator Franken. OK?
Mr. Clements. They said they would make it right. I mean,
they solely took responsibility for their accident that I look
at as completely their incident. It is not a whole offshore
industry, as far as I am concerned.
Senator Franken. Right. But I think you would agree that
you are a victim of it as well?
Mr. Clements. Absolutely. But under the Oil Pollution Act,
we didn't qualify for any kind of claim or anything. And after
the moratorium was lifted and we thought we would go back to
work, and then we find out no permits are being issued. So we
immediately tried to get a BP claim because our funds are
running down. You know, we have done----
Senator Franken. Right.
Mr. Clements [continuing]. Depleted our savings,
retirement, everything, capital. It is gone. And so, we tried
to get emergency claim. We were denied. Tried to get a final
claim. That was denied.
Senator Franken. So this was through the Gulf Coast claims
facility?
Mr. Clements. Yes.
Senator Franken. OK. Well, I am sorry you didn't qualify
for that.
Mr. Clements. Even the rig workers had a fund set up. We
didn't qualify for that. I mean, we really got left out in the
cold in all this, and we are just one of many, many businesses.
There are other machine shops in my area, all across this
country, everything. There are a lot of people that didn't
qualify for it.
Senator Franken. I guess what I am just saying is because
that was a $40 billion hit to the area, I think that we can all
agree that someone had to make a call one way or the other on
the moratorium. And that probably nothing would have been worse
for the Gulf area and for the economy than another one of these
oil spills.
And again, I think no one anticipated what was going to
happen with the Deepwater Horizon. So I think there had to be a
period there where--and one can argue, and obviously, you are--
--
Mr. Clements. Absolutely. I will argue this point because--
--
Senator Franken. [continuing]. That it was too long.
Mr. Clements [continuing]. You know, who recommended it?
The way I understand it, there was nobody that recommended it.
There was no economic data done, as far as to my knowledge, of
a moratorium being in place.
Senator Franken. Well, of course, I----
Mr. Clements. I mean, did they realize the impact of what a
moratorium would do? I mean, based on one person's incident,
and then you take a whole industry and shut it down? I don't
think that has ever happened in U.S. history of shutting down
an entire offshore industry?
I mean----
Senator Franken. Well, what I am saying this was probably
the worst environmental disaster in the history of our country
and cost the Gulf area region at least $40 billion in the
economy. And all I am saying is, is that a call had to be made
one way or the other. Do we take the----
Mr. Clements. There sure have been a lot of calls before,
especially when the oil spills did happen.
Senator Franken. I just want to say that I admire what you
do. I admire your testimony about people going and making
things in America again. I think manufacturing in America is
what we need, and I am over my time.
So thank you for testifying.
Mr. Clements. Thank you, Senator.
The Chairman. Thank you, Senator Franken.
Senator Whitehouse.
Senator Whitehouse. So, to follow up on my last round, I
suspect that--I know you have had a horrible period since the
Deepwater Horizon disaster. I suspect that before then, you
were making probably more than $40,000 a year. I don't know
about you, Ms. Greubel.
But what the information is from the Internal Revenue
Service is that the top 400 income earners in America for the
last year that they have actually gone back and looked at the
filings and added them all up and averaged them all together
and disclosed factual data, these income earners each made more
than a quarter of a billion dollars. That is with a ``B.'' And
the actual taxes they paid amounted to a grand total of 18.2
percent of their income.
I am from Rhode Island, and I wanted a comparison in Rhode
Island. Well, turns out that the average wage, according to the
Bureau of Labor Statistics, for a Rhode Island truck driver is
about $40,000.
And if you do the math and look at what a single payer
pays. You know, you pay a little bit more as your income goes
up. And the point whereas your income goes up, you hit paying
18.2 percent of your income in taxes, both withholding and
income taxes, is a little over $39,000.
If you put those two data points side by side, you have the
Rhode Island truck driver paying actually a little bit more in
terms of his Federal tax rate than those 400 people who
averaged a quarter of a billion dollars each.
So I guess my concern is that as we talk about taxes in the
discussion that we are having, it is really important that I
think people should pay their fair share, and it concerns me
when you have people making--I don't know how you spend a
quarter of a billion dollars.
I mean, I know people do it, and good on them. That is the
American way. But why they should be paying lower taxes than a
truck driver pulling down $40,000, if they are a single filer,
doesn't make sense to me. And if I could have your reflection
on that, I would appreciate it.
Mr. Clements. Start with me?
Senator Whitehouse. Sure.
Mr. Clements. Sure. I don't know much about the IRS tax
code. My wife does all the accounting now. So I don't know how
much we actually make each year, but all our money goes back
into our business. And so, we are trying to create jobs.
But as far as the tax code goes, I would like lower taxes,
obviously. I mean, it certainly would help us financially and
help us business-wise in creating jobs and stuff like that. My
understanding, maybe just have one flat tax code all the way
down to the bottom, whether rich, poor, or whatever.
Senator Whitehouse. At least they wouldn't be paying less
than you, anyway, at the richest levels.
Mr. Clements. Well, you know, rich or poor, I mean, they
got there somehow. But I keep hearing that Congress here has no
problem, no revenue problem. So maybe that is why there is a
spending problem. But it would be nice to see that if you have
so much revenue, why don't you give some back, you know?
So it would be nice to see every American get a raise and
put a flat code out there or whatever, and take some of that
IRS tax code and thousands of pages and get rid of them. That
is my opinion.
It seems like there are just too many IRS tax codes going
on against businesses, too, you know? I haven't even got to
experience when I get to make more in a business how much my
taxes are going to be.
Senator Whitehouse. Let me give Ms. Greubel a chance to
answer, too. By the way, I think I got the number right. Six
billion American person-hours of work go into complying with
our tax code. So if you made it simpler, you set 6 billion
hours that could go to do a lot of other--America can build a
lot and design a lot and invent a lot and do a lot of help with
6 billion hours of people's work.
Ms. Greubel.
Ms. Greubel. I would like to say that I don't want lower
taxes. I don't want my tax money back. I want my tax money to
be used for what it is intended for, which would be education
and helping people in need and health insurance and all those
sorts of programs that support our families and our kids.
And I agree with you that I think everyone should pay their
fair share. I don't think it is fair that we have to cut public
service programs and cut programs that are a part of our
rights, I guess, living here in the United States just so that
somebody who has more money than they could ever spend in a
lifetime doesn't have to pay as much.
That doesn't seem fair to me at all. I just want tax money
used to help support our citizens like it is supposed to be.
Senator Whitehouse. My time has expired.
The Chairman. Thank you very much, Senator Whitehouse.
And I thank the panel very much. Our time has run out. We
have two votes starting at noon.
Again, I want to thank all of you for being here today. I
thank you for focusing your attentions on this crucial issue of
what is happening to the middle class in America, whether it is
public servants, people who are involved in educating our kids
or starting small businesses.
You are a small businessperson, too, Ms. Sipprelle, because
you have started this. And of course, Mr. Bernstein, I thank
you for all the work you have done in analyzing and looking at
this issue.
This committee will have another hearing on the plight of
the middle class in July, as we continue to bring out more and
more information about what is happening here in America.
So, with that, I thank you all very much. The committee
will stand adjourned.
[Additional material follows.]
ADDITIONAL MATERIAL
Response to Questions of Senator Enzi by Jared Bernstein
Question 1. In your testimony you suggest a number of policies that
could help the middle class. Do you agree with me that the No. 1 change
that would help the middle class is an improving job market?
Answer 1. I do, though obviously this is most relevant for working-
age families. For retirees, protecting retirement security would likely
be the most important economic policy goal.
Question 2. As executive director of the White House Task Force on
the Middle Class, I am sure you looked at many ways to address the
economic problems that they have faced over the last 3 years of this
jobless recovery. What ideas do you have that do not cost either
taxpayers or employers money? Would you support increasing off-shore
drilling in the Gulf of Mexico?
Answer 2. One idea that would not invoke budgetary costs would be
to try to get other countries to cease managing their currency values
in foreign exchange markets in order to make their exports cheaper and
ours more expensive.
This could involve the ``bully-pulpit,'' behind-the-scenes
negotiations with economic officials, and even legislation, such as
H.R. 2378 from the last Congress, the Currency Reform for Fair Trade
Act.
President Obama has recently mentioned patent reform and the
passage of trade deals as ways to help small businesses, including
startups, and to boost exports.
Given my expertise, I cannot speak to the question of off-shore
drilling in the Gulf of Mexico specifically, but I do support an
increase in the domestic supply of oil, as long as exploration and
extraction are carried out in ways that are safe for both our
environment and our workers.
Question 3. Do you agree with the complaint filed by the Acting
General Counsel at the National Labor Relations Board against Boeing,
for its new 787 Dreamliner plant in South Carolina?
Answer 3. My current employer, the Center on Budget and Policy
Priorities, conducts research and analysis to help shape public debates
over proposed budget and tax policies and to help ensure that
policymakers consider the needs of low-income families and individuals
in these debates. We also develop policy options to alleviate poverty.
In addition, the Center examines the short- and long-term impacts of
proposed policies on the health of the economy and the soundness of
Federal and State budgets. Accordingly, since this is the focus of our
expertise, we do not work on or address issues such as this one.
Question 4. In your testimony, you talk about the middle-class
squeeze. In South Carolina, you have a well-respected, major airplane
manufacturer helping American workers earn a good living, without
taking away any jobs in the Puget Sound area. As you may know, the
remedy proposed by the complaint would move all of the jobs from the
South Carolina production line to the Puget Sound. What would this do
to the South Carolina economy and middle class there?
Answer 4. To answer this question accurately, I would need to know
more about the supply and demand for labor in this part of South
Carolina, as well as the dynamics of growth in the relevant community
(i.e., rates of employer and employee turnover, business ``birth'' and
``death'' rates).
Question 5. What happened to the unemployment rate after the
American Recovery and Reinvestment Act (ARRA, or ``stimulus bill'')
became law?
Answer 5. The unemployment rate rose about 3 percentage points in
the year prior to enactment of the Recovery Act (from 5.0 percent in
December 2007 to 8.2 percent in February 2009). Job losses began to
slow significantly following the passage of the act, though the
unemployment rate reached a peak of 10.1 percent in October 2009. Since
then the jobless rate has come down 1 percentage point (to 9.1 percent
in July 2011).
The Congressional Budget Office estimated that without the Recovery
Act, the unemployment rate would have been 0.3 to 0.5 percentage points
higher in 2009 than it was. They estimate even larger effects in 2010
and 2011: the unemployment rate would have been up to 1.8 percentage
points higher in 2010, and up to 1.4 percentage points higher in 2011
without the Recovery Act.
CBO also estimated the effect of the Recovery Act on payroll
employment. Without the Recovery Act, there would have been up to
900,000 fewer jobs in 2009, up to 3.3 million fewer jobs in 2010 and up
to 2.6 million fewer jobs in 2011.
Question 6. Do you believe that the stimulus would have worked
better had it been larger? If so, how much larger should it have been?
Answer 6. The stimulus worked as expected--CBO estimates that it
added as much as 4.6 percent to GDP at its peak of effectiveness in
mid-2010 and held down the increase in the unemployment rate by as much
as 1.8 percentage points. The problem is that underlying economic
conditions were deteriorating faster than was understood at the time
the stimulus was enacted, so even with the positive impact from the
stimulus the economy experienced a sharp decline in GDP and rise in
unemployment.
Given the ultimate depth of the recent recession, a larger stimulus
package would likely have helped to offset even more of the contraction
in aggregate demand. However, it is worth recognizing that a larger
package would have posed a greater challenge to the high accountability
and transparency standards insisted on by the President.
Question 7. Until 2 months ago, you worked in the White House for
Vice President Biden. While you were working as his appointee, did you
take any actions that he did not agree with? If you had, would you have
been asked to leave?
Answer 7. Vice President Biden is open to new ideas and I have no
personal knowledge of the rationale behind any personnel decisions in
the office of the Vice President.
Question 8. Do you believe that the President is responsible for
the actions taken by those he has appointed to Federal, second-branch
positions?
Answer 8. As I am unsure as to what exact actions this question
reefers to, I do not have an opinion on this matter.
Question 9. Do [you] agree with the statement made by the President
at a June 29 press conference: ``Companies need to have the freedom to
relocate, and if they are choosing to relocate here in the United
States, that's a good thing.''
Answer 9. In general, I fully support firm mobility, assuming, of
course, that firms follow the letter of the law in their location
choices.
Question 10. Do you agree with the President's decision to extend
the Bush tax cuts for 2 additional years in December 2010?
Answer 10. One guiding principle for the current Administration, of
which I was until recently a member, is that the burden of bringing our
budget into long-term balance should be shared--including by those who
have benefited most from the economic growth of recent years.
Consistent with this principle is, in my view, the policy of allowing
the Bush tax cuts--initially enacted when the Federal budget was in
balance and surpluses were projected over the coming decade--to expire
as scheduled for families earning above $250,000 a year.
Last December--in the spirit of compromise, and mindful of the need
to improve demand in a still-struggling economy--the Administration
agreed to temporarily extend all of the Bush tax cuts, including for
high-earners. This was done in exchange for the extension of a range of
temporary provisions that put more money in the hands of those most
likely to spend it immediately, providing a very important stimulus and
reducing economic hardship for millions of American families. Given the
economic and political circumstances, I believe that this was the
correct decision for that time.
Going forward, however, even with unemployment still elevated, I
believe that fiscal discipline requires policymakers to allow the
upper-income Bush tax cuts to expire on schedule at the end of 2012.
[Whereupon, at 11:51 a.m., the hearing was adjourned.]