america's families and to learn what we can do to strengthen and grow america's middle class this is a key priority for our committee this congress and that's why the specific subject this to so the subject of our first and second hearings during the first  hundred hours i was pleased that two of the committee's bills designed to help our working families passed the house with overwhelming bipartisan support we acted to increase the minimum wage to seven dollars and twenty five cents an hour it long overdue increase necessary to help more families reach the middle class and to help them pay for the basic necessities even graham are supporting the bill to increase the federal minimum wage because it knows that every dime and increase will be put right back into the retail economy and as they noted their customers did not have sufficient funds to pay for the basic necessities we also acted to cut in the interest rate in half on student unsubsidized federal student loans a critical goes to those students trying to decide whether they can afford to take on and pay back a significant necessary to finance a college education today these are the kind of middle class concerns that we intend to focus the nation's attention on every week in this committee and to take action to address these concerns in a way that strengthens and expands the middle class while the business pages across america show the profits and productivity are up for many corporations we know that only that's only half of the economic story the other half of the story is how middle class americans are struggling to keep it all together as our health care bill the gas bills or grocery bills go up faster than their wages as i travel across the country i hear what i hear from workers who are laid off from good pain manufacturing job hobson wound up with new jobs that pay far less than the ones that they lost here from workers whose companies just dumped their pension plans forcing them to scramble to find another way to have a retirement security i hear from workers whose basic expenses for housing food education transportation health care are going up even while their paychecks stay at about th today parents are justifiably concerned their own children having a lower standard of living in adulthood than they had had in a recent poll fifty nine percent of american workers say that they have to work harder to earn a decent living then did workers twenty or thirty years ago sadly the american economy has grown more unequal and anytime since franklin delano roosevelt's new deal we don't have to accept the middle class squeeze as a fact of life we can promote policies that will make work pay help the middle class become more secure in their health care more secure in their nest eggs are more confident of their future i believe that we can have a strong and growing economy the benefits of everyone not just a privileged few today we're going to hear from a panel of distinguished witnesses who will talk about what has made our economy so on balance what we can do to make it fair for workers and for their families i look forward to hearing from each of you on the this issue of paramount performance first i'd like to yield to the senior member a senior republican member of the committee mr quality of life for all americans of all ages and of all incomes i'm especially grateful i have six of these americans here with us they are ready to provide their tough testimony on the state of our consistently growing economy chairman i've never been one doing gaijin class warfare and i'm not about to start here i was found that while putting one class against another often makes for good politics rarely makes for good policy instead i'd like to focus is running on where we've been where we are and where we're going from an economic policy perspective because frankly i think members and their parties have a good story to tell when it comes to our economy at the start of this decade the dot com bubble had burst financial events around the world compound the problem and we found ourselves sinking into a recession congress responded quickly not by adding more layers to the federal bureaucracy and micromanaging our economy back to help but by cutting taxes for every single person in this room and literally in every room in america the use of followed have witnessed dramatic economic growth even after the september eleventh terrorist attacks and the launch of the global war on terrorism and on that strong economic foundation we've said in the motion many important policy reforms including several that were born right here in this very committee room in the wake of the corporate scandals we enacted the first meaning for pension reforms in a generation ensuring workers retirement savings will be there for them when they need it while restricting access of golden parachute executive compensation agreements and adding stability into a system entire need of reform and to your credit though although coming late to the game and particularly after neglecting to offer a comprehensive pension reform plan of your own many on your side of the aisle join with us last summer to send the president a pension bill and send the american people a message that we're serious about protecting their retirement savings will give americans more control over their health care savings than ever before through the establishment of our savings accounts an effort that has gained significant bipartisan traction unfortunately similar efforts to rein in out of control medical lives all of the lawsuits and on this committee in particular to provide small businesses and their workers an easier path to access affordable health care have run into a partisan wall but will keep trying on education we've laid the foundation for a strong work force to the no child left behind act we've worked together to put college within reach from low and middle income families by extending five to nine college savings plans making college tuition tax deductible for low and middle income families and beginning to hold colleges accountable for their role in the college cost crisis with their guns we've begun strengthening math science and critical point language programs to enhance our global competitiveness and would modernize our job training system to meet the new realities of the twenty first century economy is there more work to do absolutely but anyone who ignores the progress we've made so much of it in a bipartisan way is more concerned with party politics than with proactive policy and i would strongly urge them to take a closer look at the facts more than seven million new jobs have been added to our economy since august of two thousand  an all time high rising some ten percent since the start of this decade the average for a one k retirement savings plan is now more than sixty five percent more valuable than it was in two thousand and two the pension plans of our nation's largest employers the end of two thousand and six with more than one hundred percent of the assets needed to pay pensions indefinitely a twenty percent increase in four years an analysis include in the record two recent news articles published in the january twenty third two thousand and seven wall street journal entitled pensions plans to take healthy turn and class of zero seven gets plenty of job offers as well same time it's unmistakable proof that our program policies are strengthening our economy creating jobs and spring investment and we're doing all of this without adding new layers of government and  innovation or competitiveness rather we've brought unleash the entrepreneurial spirit that drives america and filled in the gaps with meaningful reforms that are making a real difference for students workers and retirees that's something to jacob hacker who is a professor of political science and resident fellow of the institution's social of social policy studies at yale university he's also a fellow of the new america foundation a former junior fellow of the harvard society of styles he is the author of several books the title of this most recent book is the great risk shift the assault on american jobs families health care and retirement and how you can fight back currently say in a social science research council project on the privatization of ricin co chairing the national academy of social insurance is two thousand and seven conference has articles and pieces of appear in the american political science review american prospect the boston globe and the new york times resume miller is currently works as a flight attendant for a major airline based in san francisco of two children aged twelve and fourteen lives in reno nevada having to commute to san francisco for the flight assignments eileen apple dramas joined rutgers university is a professor and director of the center for women and work in march of two thousand and two she was promoted to distinguished professor in july two thousand and six formally she was a research director at the economic policy institute here in washington and a professor of economics at temple university she has studied both high road and low wage employers she is the author among the economic developments in the u s and other countries and is author numerous articles on the workforce part time employment the service sector of the economy and the labor market experience for women diane approach scott ross is a senior fellow at the director of the center of employment policy at the hudson institute here in washington where she was formerly the chief economist of the department of u s labor in february of two thousand and three to april two thousand and five previously she served as the chief of staff of the president's council of economic advisors and she has weekly economic columnists and pieces published in the washington post the financial times the wall street journal the los angeles times among others and her area of expertise and labor economics tax policy and economic regulation kelly twenty million dollars in one nine hundred ninety nine her company was named one of america's top twenty five small manufacturers by industry week magazine miss johnson sits on the board of directors of the national association of manufacturers and was named a member of the president bush is a president bush's manufacturing council in march of two thousand and six cushion while i was a senior economist for the center of american progress where he specializes in social security retirement income macro economics the federal reserve and international finance prior to committee we will hear your testimony we will begin with an initial pride in a presentation by each of the witnesses the light will be green and then it will it will go to if everything works right it will go to the yellow which was thank you and good more chairman miller rank ranking member mccain and members of the committee i'm honored to speak with you today about the economic condition of the american middle class without mincing words i believe that condition can be described as serious and unstable over the last generation in nearly every facet of middle class economic life health insurance pensions job security family finances economic risk has shifted from the broad shoulders of government and corporations onto the backs of american families i call this transformation the great risk shift and i think this is the heart of the economic anxieties that many middle class americans feel the united states as you know a distinctive framework of economic security one that relies heavily on employers to provide essential social benefits but today this framework is a roading and risk of shifting back on the workers and their families employment based health insurance has contracted substantially leaving nearly one in three non elderly americans without coverage for some time every two years meanwhile even as pension coverage has stagnated there's been a dramatic movement away from traditional guaranteed defined benefit plans toward individual accounts style defined contribution plans which leave much of the risk and responsibility of retirement planning on workers themselves  today about inequality the growing gap between the rungs on our economic ladder but the shift that i'm talking about is better described as insecurity the growing risk of slipping from the ladder itself and insecurity is clearly what more and more americans feel in an election night poll commissioned by the macarthur foundation excuse me the rockefeller foundation last year for three quarters of voters republicans and almost as large a proportion as democrats said they were worried about their overall economic security now let me emphasize that this is not just these are not just concerns or problems of the poor or poorly educated in security today reaches across the income spectrum across the racial divide across lines of geography and gender increasingly all americans are riding the economic roller coaster that was once reserved for the working poor for example personal bankruptcies and home foreclosures are stunningly more common today than a generation ago and most to experience these dislocations were in the middle class before they did indeed the segment of the population most vulnerable to these trends is families with children in part because they are drowning in debt in two thousand for personal debt exceeded one hundred twenty five percent of income for the median married couple with children w hear more at this hearing about the squeeze between income and expenses to helps account for rising middle class that but another factor can to consider is that incomes themselves have become more unstable research i've done using the panel study of income dynamics a survey that is tracked thousands of families from year to year since the one nine hundred sixty s shows that not only have the gaps between the rungs on our economic ladder increased but it's also increased as how far people  down the ladder when they lose their financial footing for example a recent study shows that the chance that americans will spend periods in poverty has increased substantially since the one nine hundred seventy s for every age group now ours there is really no compelling reason why we could not shore up and up state some of the buffers that protect families from economic risk to help them prosper in our increasingly dynamic increasingly flexible and yes increasingly uncertain economy which brings me to the second misleading claim that providing americans with the basic foundation of security will drive our economy down we cannot and we should not insure americans against every risk they face but it is a gr mistake to see security as opposed to opportunity we give corporations limited liability after all precisely to encourage entrepreneurs to take risks if middle class americans are to make the risky investments necessary to strive in our new economy they need an improved safety net not an ever more tattered one the american dream the economic promise of this great nation is about security and opportunity alike and ensuring the vibrancy of that  require providing security and opportunity alike master's and bachelor's degrees and my incipient career in education and charles to become a flight attendant because it was a profession that would allow me more time at home to raise my two daughters than teaching would and for most of my career i have been able to balance the requirements of a demanding full time job with the needs of an active family however in the past several years airline industry employees have been at the forefront of a trend that is repeating itself all throughout our economy we're working longer and longer hours for less and less pay me it's you know b simply to keep the more basic of health care our pension plans have been frozen or terminated in our employees have our employers have used bankruptcy law to shred uniontown track turning back the clock on jacket the progress toward turning our jobs into decent stable careers since entering bankruptcy my employers and posting imposing drastic wage and benefit reductions that include requiring me to work twenty percent more hours for forty percent less pay an hour away from home so often that i'm absent from any of the important events in my girl's life that i thought i wouldn't matter and i am so angry and frustrated that i will have to withdraw the very small sum that i was able to set aside for the beginning of my girls college careers and use it to pay the mortgage instead would however like to emphasize that i'm not here today just to speak for myself or my industry i'm here to speak on behalf of all the workers of the middle class your constituents i could be in there sitting here today i could be a firefighter a police officer electrician a plumber where the people who install your cable t v who track their groceries from farm to supermarket to check you into your hotel in to teach your kids were the city and county civil servants who run your communities the bus drivers to get you to work every day and we're here to impress upon you what it's really really like in this country's current economy some economists and bureaucrats in washington tell us that the numbers show that the economy is growing unemployment is low when things look rosy well those numbers don't show the whole picture the reality is that middle class americans are under tremendous strain we are watching as our wages comment to levels from ten years ago and more we are watching our benefit packages strengthen our pensions disappear every single day we are having to choose between a dentist appointment in the electric bill between prescription medications and groceries between braces for our kids or new brakes for our one aging car please consider me for just these five minutes the the face and voice of millions of americans who can't be here today for the woman with cancer who says the thought of the senior executives at my company taking bonuses at the same time they're demanding forty percent wage cut for me while i'm literally fighting for my life makes me sicker than the cancer ever had the pilot with over thirty years of experience who is outraged that when he began with his airline there were four senior vice presidents on the payroll and at last count there were thirty seven the woman whose husband lost his job of twenty years to outsourcing and had to start over for seven seventy five an hour i could spend hours telling you these stories but i know i need to move on what do we the middle class workers of this country think is wrong well we five million dollars one is wrong allowing corporate robber barons to reward themselves with retention bonuses upon successfully bringing a company through bankruptcy is wrong successfully is a horrible choice of law something has to be done about health care college costs pension plan i have items to say and he means but i know i need to sum up what i would like to say is to ask you to notice one thing we aren't people who live modest lifestyle we're not here in our remarks today to ask for a new boat or a vacation home an aston or luxury car we're not asking for a thirty thousand square foot or cosmetic surgery for a nice or no we are here to tell you that we need livable wages we need a home that we can own affordable healthcare comfortable retirement security and reasonable means to provide for our children's education it is unconscionable to me that in this country of all of our fathers it is such a struggle to simply live modestly i know that there are many issues facing our government today that when you the members of congress walk onto an airplane or check into a hotel or send your kids to school when you go to the grocery store or pick up the phone to call police you expect us to be there to do our job now we're asking you to do yours which is listen  because we're democrats or republicans or independents or whatever look down because we are the vast majority of taxpaying american we are your neighbors we are your friends we are your own family and we're here to tell you that we're having a really really hard time out here thank you again for inviting me to testify i'd be happy to answer any questions anyone ha rose jazzer but since two thousand the fight the fact that productivity has continued to increase real wages have not increased at the same take the fact as they stand largely flat increasing our only slightly  in the last six years the resources that we have a widening gap once again between productivity growth and wage growth we've been here before and we know that we know how the story ends and it's not it's not a pretty  ending the main reason for that this connect between wage growth and productivity growth are not that difficult to identify this committee has dealt with some of them already the decline in the real value of the minimum wage has undermined the floor that supports middle income earnings the unionization has left middle income americans with no bulwark against greed in the new winner take all economy difficulties organizing unions have left many workers without effective representation or voice in the workplace labor markets where employers and employees once met so negotiate over the distribution of the economic pie are today viewed as a torn with many losers and just a few winners symbolize i've missed miller has pointed out by the unseemly increase in c e o pay many of the occupations that are projected to experience large increases in employment over the next ten years are not let loose they're not going anyplace else and yet they pay very low wages the reason is that employers are able and are in fact shifting the rear of an uncertain marketplace or to their most vulnerable employees as the dr hacker has pointed out the consensus politics of the all change in model has broken down because the interests of today's multinationals no longer coincide with the national interest in rising incomes a growing middle class and a competitive domestic economy and the celebrated decline of manufacturing capacity in the past five years has not only eroded incomes but it has undermined our ability to compete and world markets we have a huge negative trade balance that's threatening not only the us economy but the economic stability of the world economy in median wages but middle class families are still way behind part of productivity increase in the last five or six years has risen by eighteen percent while hourly wages are up just three percent and this increase in hourly wages war by the increase in corporate profits but my concern is that even this small advance and middle class wages is likely to be short lived i want to point to a couple of storm clouds on the horizon growth if you look third quarter of two thousand and five the third quarter two thousand and six the latest data that we have the i knew well is that increase in productivity over that year is down to one point five percent that's where it was from seventy three to ninety five in that area era of low productivity growth this is a problem that we're going to have to think about how we're going to confront the first thing of the housing bubble has already shaved come a point or so off  growth in two thousand and six and threatens to do more in two thousand and seven there's going to be a correction to the ballooning trade deficit if you ask me questions about it i'll talk more about it than i see it i'm running out of time let me just say that working families need policies that support them in their roles as workers and caregivers that make that cement think economy more competitive that's the stain growth and prosperity we need a renewed commitment to full employment it's true that unemployment is low now but we do face storm clouds and we must be sure that we have that commitment to corrections who are polluting the trade deficit when it comes will result in rising prices and declining real wages for american workers if we fight that inflation with rising interest rates we will have i think unemployment and so i hope that we will move in the congress course policies to shore up the u s expansion i think enable the middle class to share in the fruits of economic growth thank hundred ten thousand jobs approximately will be added to the count of payroll jobs that were created between april till five and much to six the unemployment rate is only four point five percent down from four point nine percent a year ago and lower than all industrialized countries except japan the number of unemployed was six point eight million last month compared with seven point three million a year so we are making progress many people say that the jobs created have just been handed  hamburger flipping jobs but this is not borne out by the data employment and industries that pay above average wages such as professional and business services and education and health services are expanding rapidly rising and with the strong economic picture is that talk of economic insecurity and dissatisfaction this economic insecurity can't be proved with the data according to karlyn bowman at the american enterprise institute the nation's leading analysts of pol results people are feeling secure about all aspects of the economy with the exception of health care that the web other than health care people feel that their economic well being is strong run reason for the media is the perception that gains are not just different spending is very important because it determines our current standard of living and i confidence in the future it shows how much money americans have the top fifty percent of adults pay ninety seven percent of income income americans have assets in pension individual time account for the not included in income therefore standing is a far better guide to wellbeing than pretax income last year americans in the top group spend only two and a half times as own their homes free of mortgage compared with only seventeen percent in the top group many are retired in the bottom quintile and living off social security pensions and accumulated savings aside from tax payments and tr last month the unemployment rate for adults without a high school diploma was six point six percent it was only two percent for those with a bachelor's degree reforming education remains the most effective way of increasing income and there's just been a book more education both but shorten and for adults so it's a thumb up in a global economy education and innovation are the keys to high standards of living and job security we can help people gain security in the workforce not by pricing them out of a job by increasing mandated benefits and minimum wages but by improving opportunity and upward mobility through better education thanks to giving the opportunity to testify good morning chairman miller ranking member mccain and members of the committee my name is kelly johnson and i am president of a square water enterprises located in torrance california i'd like to thank you for the opportunity to have here today on behalf of a square water enterprises our employees and to speak about how manufacturers are strengthening america's middle class by providing high paying jobs and benefit a clear water was founded by my grandfather more than fifty years ago or third generation privately owned family business i'm passionate about manufacturing manufacturing and the engine that drives our economy and it's created the middle class i also feel very strongly about education and workforce development our nation's ability to maintain a global edge in technology and innovation hinges on its ability to educate and train people for the jobs of the twenty first century ace clearwater is a small manufacturer we employ a hundred seventy two of the best men and women in our industry but we're crying for more skilled workers i'm proud to say that we are a preferred aerospace supplier  customers are the prime early rocky northrop grumman honeywell boeing and textron demands they put on their supply base are great and in order for us to stay competitive in the global economy we've had to continuously reinvent ourselves make huge investments in our engineering capabilities and capital equipment for technology on our shop floor the only thing that is limiting that growth is that we cannot find enough people to fill the jobs that we currently have last year we interviewed one hundred ninety one people and of those hundred ninety one we hired twenty eight these are great paying jobs with great benefit opportunities for career advancement on the job training to rishon reimbursement but we cannot find the people that have the skills the industry needs currently we have twelve open positions this is our biggest challenge this is affecting the future of my company and the lives of the hundred seventy two men and women that work at the company said that our customers put great pressure on  the past they would come to us and ask us to build to their design specifications or blueprint today they come to us with a concept and ask how would you design it design it for a manufacturer for us once you've made a factory that we expect with the min and women on the shop floor that are innovative and creative and skills that are problem solvers and thinkers and know how to make things and embrace and use the technology that's available today in modern manufacturing we know that seventy percent of the new jobs in the future are going to require more than a high school education that's why i'm reaching out with other manufacturers across the country to work with the community colleges to communicate with them the kind of skills that industry me recently the o e c d report placed united states hence for people aged twenty five to thirty four with a high school diploma this is a road to failure we need to raise the awareness of our workforce crisis with business leaders educators and policymakers and we need to identify solutions at the state federal and local level and promote policies that will strengthen communities and drive a skilled workforce we believe community colleges are key in providing active training and lifelong learning we also need to encourage young people to get into manufacturing we need to reverse the trend of people that are not getting into the math and science and we need to develop our future engineers and scientists and technicians the national association of manufacturers launched a national campaign called dream it do it to try to attract young people into the workforce young people have a bad perception of manufacturing is dirty and boring monotonous dangerous and that's simply not the case in today's modern manufacturing environment we are constantly bringing second and third graders through our shot that they can see firsthand the kind of exciting careers that exist in a factory high school students career tech ed teachers in fact a couple of years ago and we are bringing the group of students through our machine shop the provider was addressing them and talking about his typical day the student raised their hand and said why would i want that job you stand on your feet all day doing the same old thing i'd rather make  kids involved in manufacturing there are huge for manufacturing is what has created the middle class and we can't afford to lose it i would invite every member of this committee next time you're in southern california to come to a clear water so you can see for yourself what we're doing there it's exciting it's rewarding challenging you can really make a difference i appreciate the opportunity to speak today and i welcome any question disappeared despite an economic recovery to has a right to last more than five years miller class families with struggling to pay for home health insurance transportation and the children's college education few to weekly or market recovery and sharply higher prices for other important items to pay for the system necessary expenditures middle class families of borrowing record amounts of money leaving him unable to put away much extra cash for a rainy day family there are also increasing unable to see for an energy and cars to risen more than twice as fast as the cars the smallest five items to maintain your day to day necessary consumption families took on a record amount of debt to call it one hundred thirty one percent of disposable income in the third quarter of two thousand and six the increase in debts to income after two thousand and one has been one to four times faster than the increase in debt to income during the one nine hundred ninety s in line with the rise of indebtedness such payments have also increased to the highest level on record in the third quarter of two thousand and six families paid on average fourteen point five percent of their disposable income in interest and principal under debt up from thirteen percent in the first quarter of two thousand and one that's twenty eight percent faster than the gasoline expenditure increase during that same time the share of family skippable of weathering just financial crunch has decreased less than a third of families forced accumulated financial wealth equal to three months of income to share families with three months of income in financial wealth declined from thirty nine percent in two thousand and we call the typical family dual income couple dual income earner couple between the ages of thirty five and fifty four in with earnings in the middle of the sixty percent of the income distribution the share of the families with three months of the income to be able been national wealth declined from families facing a spell of unemployment the weakest job growth since the great depression means the people who lost their jobs during the current business cycle had a much harder time finding new employment than before long term unemployment in this business cycle averaged seventeen point five weeks the highest average for any business cycle that's what or two as a result of a spell of unemployment can be quite costly for families less than half of our families forty eight percent whether about unemployment two thousand and four down from fifty four percent in two thousand and one within estimated thirty seven hundred dollars in two thousand and four from twenty eight hundred dollars in two thousand and one in inflation adjusted terms the share family sick at the seen a medical emergency consequently dropped to thirty six percent in two thousand and four compared to forty four percent  thousand and one again the drop is sharper for typical middle class families the middle income through on a couples there's no do you have to come available we've updated those numbers for two thousand and five and the trends continue despite some improvements in the labor market establishes to cut crucial policy goals from my perspective first workers need to see stronger income gains and an economic expansion step in my view requires higher minimum wage and a level playing field for workers who want to bargain collect fleet improvements earned income tax credits among other steps second i think public policy should help families don't help but strengthening defined benefit plan improving defined contribution plans with rate health insurance coverage among other important steps thank you very much and i'm happy to take answer any questions thank you very much and thanks to each of you for your for your presentation i think there's enough here to stimulate some discussion though so thank you so much and your entire statements will be placed in the record i know some of your button presentations were longer than your presentation and we appreciate that let me see if i can get to what appears to me a little bit different take on this on this in journals and papers and certainly in the halls of congress in the and in the so called income disparity issues you suggest aren't as they appear because the levels of spending among the various quintiles within the know ninety two dollars per person one i don't know that tells you what they're reading or what have you and i don't know what percentage of that of their income is dedicated to to food and in the other categories and questions of of health care you know i don't know the health status of the top quintile in the lower quintile i don't know are you counting insurance payments in that does that include insurance or is that out of pocket segments of the of the economy question is are people right you know what's the difference in terms of reliance on on second earners and the family to generate that that total household income and secondly  after tax income they've already shelter the huge amount of income in their retirement plans they have made we don't know the status of their health care plan who's paying for that in terms of many corporate benefits and they have enough so they have we might have comments of one or two others on this dr well yeah i would like to i think the issue of spending inequality is somewhat an outcome based measure it looks as if we can we want to look at inequality that's something that tells us where policy issues be going i think mingling in issues such as transfer payments skews the picture somewhat i think overall what's at least our research shows is that families in the middle income relative to income rose four times faster after two thousand and one than before that and that cannot be explained with behavioral changes or can only be explained with the overall economic fundamentals income growth  prices and i would say that those numbers are better measure of measure capturing what we want to know where policy should be going in the future we work very quickly because i know i would survive i don't think it's news to anybody that rich people spend less than what they are and poor people spend more than what they aren't and dr weller's point another class has been doing this by using their house as an a t m machine as to know the amount of equity taken out of their houses to support their consumption up to the last five or six years as the huge now that how things prices have stopped rising this is no longer available to them and this is a huge problem for two proofs of workers in particular those who are approaching retirement and who are counting on the equity in their houses to make up for their lack of pensions and for their lack of return and that's is the problem of the middle class not of the wealthy who in fact have been able to save for their own retirements and the second group are people who were encouraged so we say so to move into some prime mortgages who buy houses at the peak of the market at the rate that are not and you each have a different story to tell and you're all experts in in what you're talking about i spend a lot of time visiting businesses manufacturing and lots of different businesses and i see a lot i see everywhere amazing that all of them are still around even though most them are in bankruptcy or some of the large ones that i i talk to people you mention nurses they're paying around the country they're paying hiring bonuses to try to hire nurses from one company to another great demand for nurses create demand for teachers i talked to a school that that provides teaching for beauticians and barbers they can't begin to fill the ranks truck drivers can't begin to fill they could provide forty thousand truck driving jobs a year we can't get enough people going into teaching every every wife i see i want to have percent unemployment we used to consider six percent  and yet i hear these stories about how bad things are i'm wondering where personal responsibility comes into any of this should the government be responsible for people having hard times i mean when i when i think about hard times i just i try to think i look i look at young people compared to when i was young at the fact i've lived too long i remember i grew up and i know that how much a loaf of bread was and how much a pound were you know i used to work in a market yeah and a gallon of gas when i was a kid twenty five cents but i also remember the carter years in the seventy's when we had gas lines and we said that the next year gas prices were going to be three four five dollars a gallon and and and yet always we seem to make it through and we end up consuming a whole lot more my parents you know they struggle just to get food on the table and then i look now the struggle has a bigger house more cars bigger cars you mentioned boats i understand you're not looking to buy a boat but me and worse are lots of bullets lots of all of these things  care for their families plan for their future i must say that this is jarring because it underscores a sharp difference of philosophy here in washington some of us trust american workers and our families some of us don't over the course of the next two years i think will see the stark difference come into focus simon again particularly on this committee ms johnson about a panelist you're the one with the most experience in supervising and working with rank and file workers that we're here to discuss today what do you make of the this thing that i've noticed throughout some of the testimony today and do you find that those you work with back in southern california are incapable of assuming risk are there they're prepared for challenges in the workplace and you're suited to deal with the new realities of the twenty first century or do you find yourself like me a little more confident in the workforce sales is is not that large when you put in raw materials and out by processing the other cost to go into our product we spend numerous hours training our employees they have embraced being cross trained because they recognize that that brings more value to them and more security in their jobs i i work force is crying out for training they want to advance their careers they want to learn how to use new technologies of course they want to buy new cars and homes in their kids to college but in my opinion the workforce that we have and the people that i deal with on a day to day basis i have all the confidence in the world that they're responsible and capable of managing their own lives i  i've been very concerned about the cost of education the last twenty years going up four times faster than the rate of inflation and proof is that's a government's responsibility why is that happening most of that money is going to call professors right some cases football coaches but when it really works can we get a handle on that you know how to how do we rein in the cost of education because it's it's more and more important we have to lose a lot of jobs going to other countries because of their wages we're going to start losing them because we don't have an adequate trained workforce and they're not turning out enough people and they're turning away people to schools and a lot of people can't afford to go to school how do we get a handle on those costs one well one thing we can do is make more use of community colleges forty five percent oppression in the united states in community colleges they have vocational training can stay for a two year program and then transfer to a state university well you can just go there to take a few classes and there are a lot of we spend fifteen did in all of the federal government on job training and a lot of these funds could be used by channeling them to workers and allowing them to take courses in community colleges community colleges yes if i might just comment on that as well the issue that that we confront when we look at higher education and we can pare it as a proportion of income so what other things cost is johnson has pointed out manufacturing is the engine of productivity growth so we've had enormous increases in productivity growth in manufacturing but it's not clear that you can get those kinds of productivity growth in higher ed or in education in general it's the reason that as a country shaw i'll ask it anyway how does the status of the the middle class non aggression us mr hacker first how does the status of the middle class in western europe or other areas compare to the status of the middle class here in the united states it's a very good question and in fact just the other day i was giving a lecture to my students comparing some of the recent statistics to the hopefully at my disposal now the first thing to say is that  american middle class american the median american has is it's relatively rich in international perspective because we have a very much richer economy than most other countries however as you know if you go even down to the lower levels of the middle class people at the fortieth income percentile then you actually have many many european nations have income levels that are higher the most striking difference between the u s and europe really has to do with both the security or stability of income it's much more unstable  w united states people face people have much have to rely much more on their own initiative or on their employers for health insurance pensions and so on and also it's much more unequal as we all know from the comparative statistics  interestingly most western european nations have not seen the same kind of increase in income inequality that we've seen in the united states it's gone up in in some of them but it's certainly not been as for matic so i think what we can say is that the nine states has economic performance compared with other countries including europe and that there are strains that we see in europe that we don't see in the united states that are worth taking into account but at the same time that middle middle class citizens of european countries have greater increase economic security clearly and especially if you're looking at there is less inequality in those countries and especially as you move slightly below that of the exact middle of the income distribution their their standard of living is actually in many people in any of the panelists today and that is the main concern expressed expressed it's really not that america it's not denying that americans are richer than they used to be it's they're clearly the case but that those bridges have been accompanied by increasing economic risks and it's thinking about ways in which we can ensure that people who have climbed up the economic ladder who've made it in the middle class can stay there when somatic events occur in their life that it's a kind of challenge i think we have to worry about with health care with pension plans with how you deal with the increasing amount of structural unemployment that is people who are displaced from a job for which they develop specific skills and then have to gain new skills or spend periods of time outside the labor market before they can reenter so we really need to worry about not just standing at any point in time of the middle class but how secure they are against precipitous drops in that standing tour there was a whole line of lathes machinists working on the latest turning the screws they hand measuring with micrometers today when i work in a factory in my district there's a seven hundred thousand dollar milling machine computer operator this committee to recognize that the educational institutions have to change to accommodate the needs of the world out there that they face now and that the students are going to face and i have been all over the us trying to get the message across we have to change her educational system particularly mass science education we have to prepare students of today for the charges of tomorrow and we're just not then doing it direction we have to go but i personally would not child left behind has done so we are now beginning the phase of testing in science but we're not going to count towards your early progress for some years i think we should change that and start counting immediately in regards to the qualifications of teachers that are in the field of teaching math and science i would agree that they need to have in many cases more real world experience math and science when the children are learning and in the classroom they need to have the abilities and to have some i'm not sure if i'm using the right words contextual learning so that they can apply what they learned in the classroom thank you write with their learning in the classroom to real world experience and i think that there needs to be better collaboration between industry and education so that we can get people that are actually out on the shop floor and utilizing the technology that's available and sharing that with the teachers so that they have more of a better understanding of the kind of skills that are necessary and how they can better than teach their children the math and the science and apply it to a real skill i am very much supportive of the no child left behind but i also feel that we should be no child should leave without a skill and that there should be a clear path for them in terms of whatever their life situation is if they can push to that fits them and in regards to getting industry more involved i believe that there should be better partnerships the only way that professional development for teachers so that they get the education they need to properly teach those crosses as a car for the jobs of the future and that they feel comfortable doing and can do a good job i have worked with the schools for many years and never talk about blame the teachers because they simply haven't had the opportunity to learn and to appropriate subject matter and methodology for these courses for when they do their very excited about it experiencing on one of the points in which rely read an article you wrote on december eleventh two thousand and six called richard do you think in the article you say and i quote we can see indications of prosperity all around us the boom in self storage facilities catering in middle class america has come about because our possessions had outgrown the capacity of our homes and our other data to support the claim opened up is because prosperous people need room to store their furniture yes or no i'm not familiar with all the data regarding it and so i can't answer the question even though you made the claim if i may mr miller that the ranking member a minute ago made a reference and i'm sure it was in good faith because that's kind of personally is the personal responsibility is one of the keys to people achieving more economic success i wonder if you could describe for us a typical day for you with your fourteen year old your twelve year old living in reno and commuting to san francisco could you tell us what a typical day is like for you and how much personal responsibility you engage in it's difficult for me to do anything but tell you my own experience and the experience of the people that i work with in the experience of people that i speak with  i'm comfortable with the numbers and the confidence that so many people place in the numbers because those numbers don't translate to what's happening in my life and the issue of personal responsibility is a very important one for me i put myself through college i worked six jobs from you know freshman year through the years that i until i graduated and i grew up in a family where none of us and i come from a big family were able to pay for college we had to pay for it ourselves i went to college i got my degrees and i made a specific decision based on my personal priorities which was my family to join our workforce or a profession that didn't use my degrees but it used my energy it use my intelligence it use my  people feels and i work for a company for many years that was run by employers who showed personal responsibility personal responsibility is not just the purview of individual workers it's the purview of the people that run companies it's the purview of the people that represent all companies in legal situations and that sort of thing i look back at the eighteen years that i've spent at this company and i can't i can't think of any moment where i would prosecute or where i was irresponsible at this moment in my life and i happen to have no consumer debt which is a personal personal goal for me and it is not it wasn't it's not the norm though i know that there are people in miami you know parents that have consumer debt and that sort of thing i like i think of getting out of here i want to thank all the witnesses for appearing today and as always there is never enough time i just a couple of things ms miller i found your story very compelling and since i like most members here fly thousands and thousands of miles and many many hours on airlines i and on northwest airlines who i understand to be your employer but one of the larger large carriers and certainly we couldn't do that without the  professionalism and attention of the flight attendants however i have a i'm just looking at your testimony you volunteered that we could replace i with me and you talk about such careers as pilots in the panix and nurses like my life and nice and firefighters are you what are you basing that expertise on i understand that you are a flight attendant are you a nurse and a fire fighter and so forth or you know i think what i was trying to say is that the person sitting here and giving testimony today could be one of a number of american workers who have could not be i mean some of those professions could be doing very well presumably ok thank you i just want to be sure you also mention that you know you're in a in a squeeze and you're trying to pay for a home and so forth and yet and i'm sure that's true i'm glad you're debt free but there's no question that homeownership is at the highest in this country it's ever been including for minorities ms johnson also a very compelling story i have a small manufacturing company in my district run by a woman also and she is having some much difficulty finding employees that they have gone to the practice of in the thing that would be the third shift starting up the machines the loading them up with steel starting tomorrow and then turning off the lights and going home and i just i said don't even have a night watchman no they just lock the doors and go in the point is that there is productivity sometimes with the employees of course but mostly biggest issue and i'm finding increasingly as i travel around the district the biggest problem that employers are having to finding qualified workers and sounded to me like that was your story three years ago when i traveled around the biggest issue was the cost of health care and i'm not meaning to imply that that's not still an issue but how do you know there is difficulty in finding employees as that's how long has this been a concern of yours i've recognized for more than six years now that we have going to be experience you know work skills shortage and it's been something that's been on my radar for a while particularly because of where i grew up in southern california surrounded by the large primarily space companies most of my friends parents either work for one of those companies or owned their own machine shop and i noticed that so many people that were in my generation were not getting involved following their parents footsteps whether it's because their parents felt there was something better for them or like me they might have been the first child in the in the family to go to college and so on that pursuing other things so it's been it's been something that i've been  even realize is going to become a quite a number of you're going to last couple years that we've for example we have a minimum average of ten positions that remain unfilled i mean let me interrupt for just a minute because we are i'm going to run on time and we do have to go vote  i think that most folks can't rock mentioned that one of the things we can do for to ease this shortage of employees is have more people go to community colleges and certainly have i would claim some of the finest in the country and your real life situation in terms of pretty well i don't think that you're alone in that i know preschool teachers of twenty one thousand dollars a year struggling i know people working for general electric who's making engines in flash or whatever who've had their jobs off shore pile people out there who understand that part of the solution is education and you know without a problem with the white house it's on a server basis from crowding vocational technical education cutting job training programs and i'm hoping that the some reflection here that we can work in a bipartisan way to improve that situation we can i keep dropping millions of dollars off of job training programs and having a president who says vocational education is a worthy experience when we know from our experience that just the opposite is true but another thing that you haven't  class squeeze of the snow was talking about yes well thank you for that question i agree with mr johnson about the fact that manufacturing is the engine of productivity growth and of innovation and i'm very concerned about the fact that we had tr manufacturing with such disdain it's not only that we're not training young people to go into sort of manufacturing jobs that we're not infecting in this country and high value added manufacturing and it's not just a problem in terms  china sometimes is going to rise against our we've had a fall of the dollar against european currencies and we have seen just in the last month that that has definitely improved our ability to export to countries like europe but what we really have to see because our trade deficit is unsustainable we have the i m f telling us that we are a threat to economic stability in the world what really has to happen is two things one is our currency has to fall relative to the currency of low wage countries and the second thing is we have got to think creatively about enhancing our domestic manufacturing capacity a better exchange value will enable us to work for us to actually be able to  situations or thank you very much for the question and you're absolutely right that i think that middle class americans just like entrepreneurs need to have some basic protections against economic risks if they're going to have the confidence  their futures to make the choices and the investments the ones that we talk about when we talk about personal responsibility that can advance their family and advance our economy and so i don't think this is just an analogy i mean if you at throughout american history the periods of middle class prosperity and strength are precisely periods where we invested in the middle class through the g i bill for education and homeownership through social security and medicare to ensure that people had security  old age and during their working life that they didn't have to fear that they wouldn't be secure in old age so i think we need to draw on these positive path examples but update them to our new twenty first century economy and i think this is actually a place where we could have a really useful bipartisan discussion both republicans and democrats premised much of their action in the past on the idea that employers will continue to carry out these responsibilities would continue to take on these burdens we subsidize these benefits heavily through the tax code we often tried to regulate them to make them work better and we've seen that even more recently with the pension protection act the one navigable reality about that is that we can't make corporations spend money on these benefits and offer them and if they do not want to write we could certainly mandate that they do it but that would only hurt our competitiveness and hurt corporations even more so we need to recognize that some of these sources of security they're  so important middle class americans have to move outside of that direct employment relationship and i think there's multiple ideas out there we need to have portable health benefits for example whether that means we expand programs for low income workers or as i prefer that we create a new option for middle class americans to buy secure public or private insurance whether that means that we make sure that for a one k retirement plans are available to all workers even if their employers don't offer them and offer new subsidies for those plans that are particularly generous to middle class workers and lower income workers who are most at risk of not achieving their retirement savings goals whether it means we try to so working around the margins at least of our unemployment insurance system to to ensure that that more than just a third of workers who are unemployed are receiving some kind of unemployment benefits and think about for example having some kind of wage insurance or protection against big drops in one's earnings when we lose a job in say a high wage sector and have to move into a low wage sector these are not ideas that are without precedent they're not ideas that would necessarily divide us across ideological lines or lines if we have a realistic discussion about how we would do it how we might pay for it whether this and how this would be a new partnership between the public and private sectors and also when we were talking about a new social contract for the american workfor but i was watching the people behind you know that the pope the room was jammed when when i first got here to hear your testimony probably most of them were middle class folks and i think had the saddest look on their faces i can tell you they know what you're saying is true then lot of solutions and they can watch themselves that about their kids i just looked at them i mean it was just really sad and on their faces so you're giving us straightforward testimony it's very much appreciated and i thank you dr applebaum i forgive me i didn't yet read all of your testimony but i heard your responses to people so i'm asking you a question related to one of your responses and you were talking about it reporting that productivity in the united states actually is growing and that is something for us to celebrate so my question is  attention to who benefits from this growth and how much would it help the middle class the working class if the benefit actually was shared at least equally with that we're going to have to keep an eye on i for the first five years in fact middle class incomes rose along with the productivity growth we had a brief period of shared prosperity of and slight not only of wage  the last year for which we have data middle class family income had not yet recovered five years after the end of the recession to where they had been just prior to the recession we may have made it this year but that's six years to get every available adult in the workforce there either single parent or if you have mary koppel's they are dual arnor families and they differ a little right on the income of every adult in order to make ends meet i think another important aspect of economic insecurity that we haven't addressed here gets is what happens when you have a family member who becomes ill what happens when you have a young wife who becomes pregnant what happens to a couple that adopt a child suddenly you're in the situations where you are caught between a rock and a hard place you want to be a responsible employee people want to do a good job for their employer you need to put a paycheck on the table and you have a sick child that you need to care for and introduced unemployment insurance when men left the family farm and went to work so that there would be some partial wage replacement if a man lost his job for no fault of his own we have got to think about how to have partial wage replacement for people who are losing your house right in the may not the year on you know your perfect straight woman for me today because then you allow me to say as the chair of the workforce protection subcommittee on this major labor  education and labor committee one of my bill is the balancing act which actually includes paper family and many men men in my other ways to help working parents that gap between work and family so i have a question now for dr weller and my question for you has to do with r u nice labor and labor unions and what do you think with is happening with our organized labor and what difference do you think that makes to the average working person well what we see that we presented today in the stories we've heard here are the struggles of the middle class  the i think the most telling numbers are the ones that dr applebaum just presented that compensation has not kept pace for productivity growth clearly we need to institute policies to help that to bring that together the minimum wage is a good first step but it helps at the bottom ten twelve percent of the labor market but is not a middle class policy and the only policy that we really know that helps to strengthen the link between productivity growth the compensation growth of unionization unions have to clients are less than eight has been promoted number years now is an important first step to level the playing field for workers who want to bargain collectively it so it's democratically guaranteed choice to join a union not join a union but i think we really need to level the playing field because unionization is the most powerful tool to strengthen the link between union between economic growth productivity growth and wages look back at the one nine hundred sixty s we did have very strong economic growth with strong productivity growth with  instruments of public policy that has been told to maintain the middle class and so that that's a date was i think apropos of the discussion we're having here and i'm i'm i'm i'm i was a college administrator before i came to the congress and i serve on the higher education subcommittee and i know with one of the discussions that was taking place this morning was a discussion about increased death load and you know that we've just passed a measure that hopefully we're well as an early take on the force of l ours in terms of what we might want to say to colleges in terms of their obligation to help the students with that callously and also their what might be their obligations in terms of holding down the  is that i think that this is an absolutely crucial issue this increasing debt loads is is one of the most important reasons i think why people are concerned about the future of their future economic security because simultaneously we've come to believe and understand that it's going to college is a critical precondition of success in the market and yet the cost of college have gone up in the debt loads people are taking on it's gone up and i do think this is another illustration of the point i was making before it represents tyranny about how the the some of the major risks that people take on like that are often investment in their futures and therefore i think that one one thing i would just put on the agenda is that this is not just a an issue of education or college but it's also a question about whether not people have insurance protection security in their working life because if they're investing in skills to gain access to the upper echelons of the market then they're taking on a lot of burden and putting themselves at risk at the same time it seems to me that what we know about the effect of that on student education choices suggests that the greatest cost of rising debt really a person one moderate income and lower income students we've seen a major decline in pell grants as a share of the cost of going to college and there is good research to suggest that dropout rates are influenced by debt loads and financial burden but because a first order of business has to be focusing on the students most vulnerable in in in in trying to restore some measure of support for college financing it at the federal level i think as a country we're going to have to decide what we think will make us most competitive in world markets and whether or not it is worth spending and increasing for senses of our g d p and investing it in post i would i would say post secondary training and education a restart from  countries and the number of young people that we graduated with for your college degrees now we have held constant our share of college graduates it has not declined but in the meantime other countries if you think of the u k for example where twenty years ago a university degree was an elite separate only the elite went to college it's shocking to find that they have a higher proportion of young people graduating from universities than we do so if we think we're in a global marketplace and we think that higher education is crucial i think we're going to have to face up to the fact that we're going to have to invest more as a country in higher education in order to enable our larger and larger proportion of our young  middle class families people of moderate means to become college graduates if if i may jump in very quickly here the numbers suggest that student loans the typical student loan amount has risen pretty much in line with increases which have been very sharp  we already creating the problems of the future essentially we're sending people into the labor market with the insufficient resources to prepare themselves for their own future especially the future where they have to take on more risks than in the past thank you i know one of the concerns that i have is if you look at history of higher education in our country it was it was essential you lead us into world war two and then and then with the advent of the g i bill and then subsequently sputnik and the national investment in  secondary education it became egalitarian and i'm i i guess my fear is that we're on the precipice of becoming elitist again and i also worry about how that load influences career choice and we are in effect pushing chads should say kids pushing graduates out of perhaps public service careers and into careers that they think will be more beneficial to them financially and i think we johnston when you have you know what recruiting challenges are high we recruit top notch professors when they can go to high tech industries and get five times more and then benefits and retirement if we don't take them top notch salaries and then along with that how do we expect the most important product we have in this country our children to be educated if we don't pay our educators one hundred ten thousand because it says that it's jesting that teachers who teach math and science should have the a's in math and science but right now they're getting attracted into other fields and we need to make up for that differential so this is a real problem on the elementary and secondary school level aside college professors go to their professors competing to get tenure it's a very competitive pro process and colleges do not seem to have problems attracting qualified professors thank you for staying here really appreciate it very much and i have a couple questions i guess first a comment that really pre shared the comments that folks made about education not just because i'm a college professor trying to congressman sort of four year college but we have a lot of community colleges my district and i i think they're just fantastic and the other day when they sent out a press release about the student run rate types my press secretary left our community colleges and i made certain that she put that back in  but also i'm a person who wouldn't be here today had it not been for the opportunities provided for me i grew up in poverty myself as a super mom and all the rounds and i somehow managed to get a ph d i'm kind of the college for college for twenty four years and so the value of educations and i think it's fantastic and i'm here in congress saying on this committee because of what i've seen happen the last six years in particular i don't want to give too long speeches such right i do have a couple of questions to ask a couple of you at this point for example back to well you mentioned something about collective bargaining can you elaborate a little bit on that sort of expanded opportunities along those lines i think importantly collective bargaining that the role of collective bargaining has diminished substantially we used to have over a third of the private sector labor force coverage by collective bargaining by union now it's less than eight percent more collective bargaining w strengthens the tie between productivity growth the compensation growth which as we can substantially lots of years but in there i think there's another important role of labor unions and that's often overlooked or an important labor force intermediary and we have talked a lot about leave now training through the union is a different it's a different entity because the union has to connections to the employers he does know where the next few jobs come from and there's a number of interesting efforts in that regard to strengthen the role of union legal market intermediaries to combine training programs that are exist with the needs of employers in various industries where the unions are pretty strong such as the airlines and others and i think that's an important piece that's often overlooked as a rule of collective bargaining  principally about restoring the cuts that have occurred the last six years or so or are you talking about something beyond that i'm really talking about something beyond that as i said to in response to represent a tyranny i think to improve safety net really has to face up to the central change that's occurred in the framework of economic security we haven't united states in that the erosion of employer provision of social benefits the decline in employer health insurance coverage and i think less recognized perhaps but equally important  away from guaranteed defined benefit pension plan towards individual accounts style defined contribution plans which as many merits but do put much more risk onto individual workers in which the evidence suggests need middle and lower income workers in particular less well protected so i think that a safety net has to go beyond simply shoring up the programs we have to thinking seriously about how we would create a better framework of protection for a more flexible economy when feet in which people can freely move from job to job without worrying about losing their benefits in which people have as dr eckel applebaum mention in which people who have to understand the workforce have some flexibility with so that so if some if there's a need for one parent to be at home for a period of time in which in which we're focused on working age people because many of our programs are really focused on the age who were at one time that the most disadvantaged segment of the population but now have reasonably good protections and many are areas i'm so i've talked in my work and in my book about a number of options including expanded defined contribution pension plans like universal for one k s to improve unemployment benefits that would also perhaps cover some of these in point of family related events the doctor after was referred to a better health insurance framework i think here this is the most obvious place where our system really fails both employers and individuals it's much too costly that coverage is too cramped and we're seeing more and more risk shifting on individuals not because i think employers generally have bad motives because they're drowning to labor conditions and for environmental conditions pride in any case i think blanket approval is not a good idea i think please we've got quite a few train premiss out there we're still struggling to make them work for some american middle class and we need to go slowly as we as we go forward thank you all your back my time thank you very much if i might take the pride of the chair and have a second round of question here and it's education certainly and our state of california but at the end of the day and recognize you know about and then that's that's what we should be doing and need to do and to be more efficient that of course when you see people running in and out of you know we have we said we have the numbers and then we sort of have the experience and you know i represent a district that was maybe called the first ring of the suburbs and sample some cisco bay area in the say world war two dramatic gro dramatic integration of the workforce steel mills six oil refineries chemical facilities and all the rest of that and now biotech and i tack and start ups and all rest of that so we talk to people they simply are in the process of making a series of trade offs today whether they're organized or whether they're on organized you know have a union or they don't have a union the training hours for a dish for help for health care which they're going to pay more for in this agreement but they're going to get less health care or they're going to get the same health care they're going to pay more i mean pensions is open to negotiation they're trading they're trading take home pay for maybe a pension contributions and this is the process of negotiating and employers are in different situations but the overwhelming sense of when and when you when i talk to my constituents is that this is an ongoing process of which they're continuing to slide down the ladder they simply don't have enough money i e a ten many many conferences on tensions and savings you know with the industry and advisors and people participate in and yes we you know for one case have grown in value since we started for one case but it's as a retirement vehicle for a huge significant number of people or for one k s they don't appear to be sufficient there's a discussion we have to have more incentives we have to have additional ways to get people to save one automatic enrollment we want we want to employ our contributions we want all of these things that the fact the matter is it's not there yet for a lot of these people and  you know i mean that's what i think many of us see in our districts all of the time we talk to these families that are running harder and harder they're being responsible their track you know what they really like to be able to do is educate their kids make sure that they can hold on to their house and have and have a secure retirement and have the wherewithal to sort of keep their family together had a modest american dream but they're telling us they're struggling to do this and you know these are good jobs a refinery today's entirely different workplace you know it's a very skilled steel mill everybody in that film is going to school all of the time they're going to pittsburgh pennsylvania they're going to community college they're going to korea to school now about to make another charge and that's when the steel mills can require  together i think that the evidence really supports these anecdotes that you're hearing that health care costs are just going through the roof the idea that there are a lot about it when we think about it when we hear about the medicare crisis and so on but it's not as if it's only in medicare health care costs are crossing our companies and exhausting our our families so that's putting up the health care costs on for them this reducing people's income everyone understand they need to be saving for their retirement use able to rely on a company pension and now you can't but at the end of the week if you pay for the food in the medicine and the net that that means there's no money left to save it's not a question that people don't know what they should be selling it so they can figure out how they're going to pay for it i think that's really right marketers are high the costs are high college question is high all of the things that people have to pay and so it's all of your own health care costs or sort of your own insurance course these are really  the retirement savings that's we can make it easier for employers and employees to save money i think on the employer under pension side under traditional besides i think there's room to to grow that sector and strengthen that sector making it easier for employers regular to make regular proposals there to really introduce low cost annuities in that regard so it's think the important piece is there goes i think we can do a two step here is that that you focus on income growth at the same time that you make it easier for employers to maintain  i don't get it for the constant is the on i just want everyone to keep in mind that i'm speaking as a small manufacturer and when we talk about productivity gains i think the customer wins the company wins and the employee wins and this is from a small business perspective because when we buy a new piece of technology that allows us to make up our quicker faster sheaffer for our customer it also creates more capacity so that we can bring on more work it also allows us to promote the last three years we've provided eight percent increases in payroll year over year every year for the last three years it's been eight percent the company has absorbed all of the our health care cost increases at all in the last sure that we move from the ten dollars co payment to  one hundred twenty thousand dollars a week payroll the twenty four percent added benefit costs in addition to the cost of doing business in the state of california and some of the constraints that are put on us there we do offer a hundred one k that we do have not yet contributed to and we're trying to put together a retirement plan more under the line of a mentoring program we realize the struggles and the challenges that our employees face and we don't want to lose family want to keep our business healthy and we thank you mr chairman i'm very excited about the leadership you're providing on these issues of the middle class squeeze i just have one question and dr hakki maybe best position to answer it there is the the individual families are hurting and they're being hip tween the ice but there's another reason to care i found what you had to say that doesn't have to do with you personally it has to do with the society and i'm interested in what the public investment needs to be to address the issues that are facing for the middle class i'm not looking at it from from the standpoint of the individual but rather what's good for the nation what's good distract us and frankly to make us more secure to use your term safety and security has been that rhetoric is being captured in sort of want to reno but if you think of it in terms of people feeling strong and secure and what that means for our nation is just as important so a classic example of public investment what you would do it with say the cost of college education  and other ways of helping people out what are some other examples of where public investment could make a tremendous difference in terms of going back was strange of the middle class that you could cite for us two or three or four things that parents that act category well i think there are a huge range of vital public investments that could be made and we've talked today about personal concerns about job security and and how the strength unemployment insurance system or wage insurance might help that we've talked about health care cost and how government could help play a role in addressing those concerns to lift some of the burden off both employers and individuals and we've talked today about the wor family strain that dr applebaum so eloquently articulated in how to save and strengthen lead policies or even paid family leave could help what i want to say are two things one is that i don't think these two perspectives that you ar are are actually different in a fundamental way we care about our economy because it serves people and it serves in particular that great swath of americans who consider themselves middle class and so when someone writes me is as a woman wrote me once not too long ago when i have to wrote a piece that i'm sick of working for the economy i want an economy that works for me i actually think that expresses the overall goals that we should have there there is one perspective we should really care about and that is whether the economy is delivering the wellbeing and security and and advancement that for our citizens that we all want and so i think that that these are not opposed perspectives the other thing i want to stress is that when we say public investment almost inevitably we start to think oh we have to spend spend spend and that's obviously something that's very difficult in the current fiscal context and we know that the resources of government are not unlimited it faces a lot of competing toy says i just want to highlight that in a lot of crucial areas such as health care really talking about using government in an insurance role that money will in the long term actually mean our society is is not  ever escalating burdens for certain things for health care for example the evidence i think is clear that if we had broader insurance that we could also more effectively think about how to control costs and improve the quality of health care in that context  so too with pensions with pensions there are huge there's huge amount of subsidies and money that's being poured into our private pension system and subsidizing for a one state what the tragedy here is that we're still seeing rising numbers of americans rising share of americans who have their retirement at risk we need to find ways to make those subsidies work better for middle class americans to strengthen both defined benefit and defined contribution plans in ways that i believe could be done  without spending huge amounts more but just spending it more effectively in thinking more about how government power can be used to ensure that americans have are sharing we're certain key risks in our economy that are calm and so i just want to make that point so i think it's very important that we not lose sight of the fact that a lot of the devout how government has been the great tradition of medicare and social parity can create broad risk pools that all of us can share in common those rare but horrible risks that really devastate fi opportunity to take those funds and go to community colleges there'd be a lot buddy if you take our health care for example the president's plan that would allow level the playing field a lot uninsured tax credits to choose their own health and health insurance that help the forty seven million uninsured that is revenue neutral that's just another way if we allocating resources if you look at education the proposals think freezing teachers salaries and having that a standard that is also fairly revenue neutral because it means we would have to do a lot of the remedial education that we have to do today the children that are just falling behind and dropping through the cracks i can i can serve as a cover for creating a society that's about how how people can opt out and the risk analysis is to provide i think is really about how you can if you can create more opportunities for people try to promote a stronger economy and promote opportunity and i'll just relate quickly that this was brought home to me a few weeks back or a woman came up to me and she was talking about the cost of higher education and she's a professional she little known to man she works in the district of columbia and i want at the federal agencies and she has three children who are college age and she was explaining how difficult it is to pay for this and then she looked at me and she said i did everything they told me i was supposed to do and she said she said my husband and i worked three jobs between us we saved our money and we told our children if you work hard and study you can make it and now you can pay for college and i think she was reflecting the views of many americans who say we work hard we play by the rules and we believed in  america that would reward that and now we're finding that it's all a cruel track so we've really got to get back to restoring the sprog and this promise with the american people strengthen the middle class and let's stop the whole close were not scheduled for today but they occurred but i really appreciate you giving us the time that you gave the committee on this this is the first in the in the series of hearings on this question of growing and strengthening the middle class in this in this country and i hope that we would be able to as you to our faculty from both sides of the aisle as we as we continue this discussion i'm sure some point it will it will lead to consideration of policy and  legislation so we would like to be able to continue to call on your or your talents and your your knowledge and so thank you very much and without objection all members will have five legislative days to submit their dish or materials for the hearing record