Visit Your Local PBS Station PBS Home PBS Home Programs A-Z TV Schedules Support PBS Shop PBS Search PBS [hb_back_briefings.gif] [strike1.gif] SHARING THE WEALTH MARCH 21, 1996 TRANSCRIPT ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Should government do something to ease the impact of economic change on today's working Americans? Secretary of Labor Robert Reich and Republican Senator Connie Mack, chairman of the Joint Economic Committee, talk to Margaret Warner. ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ MARGARET WARNER: Unemployment is down. Corporate profits are up. Inflation remains low. Yet, many working Americans, like this group in Dayton, Ohio, say they feel economically insecure. LUCILLE DURSCH, Community College Student: I feel very insecure because I haven't got the skills for today's work world. DAVE GAYLOR, Independent Contractor: Well, I think when I graduated from college back in the 70's, I had a perception that my career would be with maybe one or two companies, and that it would last as long as I wanted it to, but the security would be there, and I think that over the, over the past two decades, I've had an awakening to the fact that it's not that way anymore. GINA CLARK, Temporary Worker: I've gone from making well over $50,000 to making less than $12 an hour, so, yeah, not feeling real secure. MARGARET WARNER: Whether these individual experiences add up to a national problem is a point hotly debated by economists. But what isn't debatable is that the American economy is undergoing a major transition, and the changes have left many Americans feeling vulnerable. That makes economic insecurity a hot topic in this election year. But it's not a new theme in America, particularly during times of economic upheaval. PRESIDENT ROOSEVELT: The civilization of the past hundred years, with its startling industrial changes, has tended more and more to make life insecure. MARGARET WARNER: And in such times, such as the 1930's, the President and Congress did respond with measures designed to soften the shock of economic change. MARGARET WARNER: Now this issue is front and center again. Should government do something to ease the impact of economic change on today's working Americans? Here to debate the point are the Secretary of Labor Robert Reich and Republican Senator Connie Mack, chairman of the Joint Economic Committee, a bipartisan House Senate Committee on Capitol Hill. Welcome, gentlemen. Thanks for being with us. Sec. Reich, you just heard those voters talk about their own personal experiences, why they felt economically insecure. Are their feelings rooted in economic reality? ROBERT REICH, Labor Secretary: (Capitol Hill) Margaret, I believe that they are. I mean, this administration came to office and successfully restarted the great American jobs machine, 8 1/2 million new jobs over the past three years, but there is a long-term problem, and there is a long-term challenge that we are going to have to deal with as a society, and that is restoring wage growth. Unfortunately, because the demand has shifted in favor of people with skills, with education, against people without skills and education, and also because so many corporations have to some extent abrogated the old social contracts such that if the company was doing better, the workers were going to do better too. Because of those converging trends, it is vitally important that we make sure that as a society the widening disparities in income, the stagnating wages that we have experienced for now 18 years really those trends do get turned around. MARGARET WARNER: Sen. Mack, do you agree with Sec. Reich's diagnosis of the problem? SEN. CONNIE MACK, Chairman, Joint Economic Committee: (Capitol Hill) Well, why don't we start with what we do agree upon, and that is--and if I could, just kind of tell my own story about what I have heard from people in my state. People have called me and told me that, for example, that they're concerned that their husband, for example, hasn't received a pay increase in the last two years, that the statement is made that the security of the past is no longer there. This is not like the past generations. I can't really feel secure that the job is going to be there; in fact, my husband may give me a call, said one, to come pick me up. I don't know whether I'm going to have the job. But the other story that I heard as well throughout the state of Florida were small businessmen and women who, in essence, said to their employees that the last pay raise that you expected ended up in Washington, D.C., that more government regulation, higher taxes have, in fact, made it more difficult for us to be hiring, and to be giving increases in salary. And the last point that I would make is while the Clinton administration does take credit for some 8 million new jobs that have been created, if the growth in jobs in this recovery were similar to previous recoveries, there'd be 3.1 million more jobs that would have been created. So I would challenge the Secretary in the sense that I don't believe that the policies that have been followed by the Clinton administration, in fact, have created the kinds of jobs and the number of jobs that it could be if we were getting government out of the way. MARGARET WARNER: Let me try to stay briefly, if I could, on the way Americans are feeling right now, and just ask you, do you agree with Sec. Reich that there has been a stagnation in middle class wages, and his diagnosis of that? SEN. MACK: Well, I agree that there's been a stagnation. As a matter of fact, there's been a decline in real median family income in four out of the last five years. In fact, the Clinton administration came to power saying that they were going to address that issue, and they have not done so. And again the point that I would make is that when you have more government, more taxes, and more regulation, it is not unusual that you get this kind of reaction. And the last point in this area is that if you go back into the 1980's, there was one period of time from 1983 to 1989 when all income groups saw their incomes go up. And that was the time when we had less taxing, less spending, less government, and more freedom in the market. MARGARET WARNER: Sec. Reich, you mentioned the social compact between companies and employees, and you've said before that you thought that's been broken. You said it just now. Was that relationship different in the past? What's your evidence for that, and if it's changed, how has it changed, and why? SEC. REICH: Margaret, in the 50's, 60's, and 70's, there was an implicit social contract, and that, as I said, was if the company was doing better and better, workers would do better, as well. They could be assumed to have a certain degree of job security. That has been changed. I think it's been changed for a whole variety of reasons: Technology, global competition, a lot of the forces over which individual businesses have no control. By the way, I don't think--I think it's very important not to vilify or demonize American corporations. This is about incentives. This is about the structure of the economy. Things have changed. Job security is a thing of the past. This is why education and job training are so critical, why the President places such a great, great emphasis on education and job training. This is why raising the minimum wage and keeping the expanded earned income tax credit is so vitally important, and also finally what is so vitally important for people I see all over America to get an easy transition or have an easy transition from job to job, portable pensions, portable health care, making it easy to get vouchers for retraining when you need it. These are the kind of things that we are fighting for, and I, I have to take issue with Sen. Mack. This problem of stagnating incomes has been with us for, for 18 years. In fact, if anything, if you look at non-supervisory workers, the people who have been suffering the most, their decline in median wages have actually stopped over the last few years. That's not to say we're out of the woods by any means. We've got to turn it around, but we do it only by investing in our most precious asset, which is our people. MARGARET WARNER: Senator, tell me your response to that. I know you have your own solutions to the problem. Why don't you critique first Sec. Reich's, and then we'll go on to yours. SEN. MACK: Well, as I say, we have a fundamental disagreement about what the statistics show about income growth. There is, in fact, a period of time during the past 18 years which was roughly 1982 to 1989 in which the incomes of all groups in America rose, and that I think is factual data that's out there to refute the comment that was made. Secondly, with respect to the change in the social compact, the reality is in the 50's and the 60's and part of the 70's, there was growth that was taking place in the economy. And as a result of that growth, there were more jobs that were being offered. In fact, there wasn't the issue that we're dealing with today. The point that I've made over and over again and would continue to do, if we're going to follow policies that create more government and that government requires more resources from the income streams in America, then there's going to be pressure. And the Secretary is exactly right. We do have to address the issue of incentives, and I don't think that you can create incentives to hire more people when you're placing more and more burdens on American business, whether that's higher income taxes, whether that's more regulation, or that's more cost per employee because of mandates, in essence, directed at the federal level. Now with respect again to what the solutions--we have found--one of the things that we have found out and we should have learned-- MARGARET WARNER: Let me stop you there just for a minute to make sure I understand. SEN. MACK: Sure. MARGARET WARNER: So you would reject the idea of raising the minimum wage? SEN. MACK: I do not support raising the minimum wage because I think, in fact, that costs jobs, not creates jobs. MARGARET WARNER: And how about expanding the earned income tax credit for the working poor? SEN. MACK: As long as the income credit is targeted, I have no problems and have supported the earned income tax credit in the past. MARGARET WARNER: And finally, the administration's other idea, vouchers for retraining, i.e., if someone were to lose their job, they would get a voucher and they could go out and spend it at a community college. SEN. MACK: If the administration is talking about paring down, I think there is something like 164 different job programs already. If they're talking about the 165th, I wouldn't support it, but if they're talking about the concept of vouchers and reducing the number of job programs that there are, funding it through reducing those programs, I think that the idea of a voucher is a good one because it's more flexibility, people get to choose where they want that education, people get to decide what kind of training is best for them. It gives the individual, it gives the employee more freedom, and I think that's a positive. MARGARET WARNER: So there's some agreement here-- SEC. REICH: If I may-- MARGARET WARNER: Go ahead, Mr. Secretary, yes. SEC. REICH: Well, I'm delighted to hear that, Sen. Mack, because we have been pushing the voucher idea, consolidating all of the federal job training programs for several years. We've got the House Republicans and House Democrats with us. We have the Senate Democrats with us, but we're having a lot of trouble with the Senate Republicans, and if you would be so kind as to take your support and spread it among your Republican colleagues, I would appreciate it. SEN. MACK: As I said, if we are going to be talking about paring down the number of programs and eliminating some of those and using those funds to provide people with the freedom to make those choices, then we're probably going to be working together. SEC. REICH: Oh, that's terrific. Actually, what we want to do is not only consolidate those programs, but you said a moment ago, Senator, in terms of government, now, remember, the President has proposed a balanced budget that has been certified by the Congressional Budget Office. His priorities are different, however, than perhaps your priorities. His priorities are education and job training, making it possible for people to move easily from job to job in terms of health care and portable pensions. He doesn't want to provide, does not want to provide a capital gains tax break to people at the top end. MARGARET WARNER: All right. Mr. Secretary, I don't want to get into the budget, if you'll excuse me on this. SEC. REICH: You've had too much budget. MARGARET WARNER: Yeah. I think maybe our audience has too. SEC. REICH: I see. MARGARET WARNER: Let me ask you about something you said in a speech-- SEN. MACK: Well, I was-- MARGARET WARNER: Let me just introduce this new topic, if I could, Senator. Umm, Mr. Secretary, you said in a speech at GW that you thought--you called for making corporations more accountable for the social costs and benefits of economic change. Now how would you propose to do that? SEC. REICH: Well, Margaret, I think the first step is actually to celebrate those companies that are doing it right, that have treated their employees as assets to be developed, instead of costs to be cut, and I know that last night you had on your program Mr. Feuerstein, who is the president of Malden Mills. I went up to visit him a couple of weeks ago. This is a man who exemplifies that kind of management or philosophy. And we ought to, as a country, when we're talking about norms and values, we're talking about moral issues with regard to individuals, we also ought to think about companies and their obligations to their employees. MARGARET WARNER: But now you have also talked about granting tax breaks to companies that do some of these things, provide retraining, cap the ratio between the lowest-paid employee and the highest-paid CEO. How would that work? SEC. REICH: Well, we already provide tax incentives for companies for doing all kinds of investments, research and development. Maybe we ought to think about it, and I underscore the word "maybe" because this idea has not been fully analyzed. Various Senators, Sen. Kennedy and Sen. Bingaman, as well as some members of the House of Representatives, such as Congress Gephardt, have proposed more detailed versions, but the issue is simply this: If we are providing tax incentives for capital investment, maybe we should think about capital investments for investments in human capital, capital, i.e., tax incentives, I should say, for investments in human capital, because almost 70 percent of the output in this country is people. And if we don't invest in our people, going back to that basic theme, if we don't invest in our people, we are not going to be able to be prosperous, we will not be able to start to deal with this widening disparity between the people at the top and everybody else. We won't be able to turn around some of the trends that really in this country are threatening the cohesion of this society. MARGARET WARNER: Senator, what do you make of that? SEN. MACK: Well, again, my reaction--I mean, I listen to the Secretary and I certainly can understand his feeling for people who are suffering, as I have talked about the people that I have talked to in my state, but the conclusion that I draw frankly is that this is a natural response on the part of the administration. It is, in fact, more government. They talk about a tax credit, but they--in fact, I've looked at some of the Bingaman language-- MARGARET WARNER: That's Senator Bingaman, yes. SEN. MACK: There's a--excuse me, Senator Bingaman--there is a requirement--I mean, requirement, list after list after list after list of the things that the corporation or the company would have to jump through in order to qualify. I mean, this is more government. I mean, I was speaking with a group of students from the Soviet Union not long ago, the former Soviet Union, and I said, you know, the great strength of America is the freedom of this nation, the ability for, for financial resources to flow from market to market. What the Secretary is talking about, again, are just more restraints, more burdens placed on, on business. And as a result of this more--this greater burden, it increases that company's cost. And frankly, the only place now that the company has left to respond to those increased costs, to remain competitive, is to reduce labor costs. And that's the problem. They put too much of a burden on American business, and now, in essence, they're talking about more. MARGARET WARNER: Mr. Secretary, what about that critique? SEC. REICH: If I may, let's go back to basics here. Education and job training is the top of the President's priority. Now we, unfortunately, are battling a lot of people in Sen. Mack's party who say, no, we want to cut education and job training. Raising the minimum wage is vitally important. It's heading toward a 40-year low. It's only the fair and decent thing to do in this country to make sure the people who are working forty hours or fifty or sixty hours a week are able to get out of poverty. A widening earned income tax credit, the Senator said that he supports it, but, in fact, his Republican colleagues want to take $15 billion out of the earned income tax credit over the next seven years, and that's--again, that's going to hurt the working poor. And then those transitional issues I talked about, helping with health care, with pensions, helping people get vouchers for job training, retraining, helping them move from job to job, we can't bring back job security in this country, but we can give people the sense of employability security. SEN. MACK: Let me just give, again, one more response. One of the things that we should have learned from Europe is that you can't legislate or you can't outlaw job insecurity, but one of the things that we have found from what they've done is that you could inadvertently outlaw job creation, and that's what's happening in this country because of too much government and too much Washington intervention. MARGARET WARNER: Gentlemen, I'm sorry. We're going to have to leave it there. Thanks for being with us. SEC. REICH: Thank you, Margaret. REGIONS | TOPICS | RECENT PROGRAMS | ABOUT US | FEEDBACK | SUBSCRIPTIONS / FEEDS: POD | RSS SEARCH _________ GO Funded, in part, by: ADM CIT Group Pacific Life BP TOYOTA Corporation for Public Broadcasting Support the kind of journalism done by the NewsHour...Become a member of your local PBS station. PBS Online Privacy Policy Copyright ©1996-2006 MacNeil/Lehrer Productions. All Rights Reserved.