U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

80–106 PDF 2013

WHERE THE JOBS ARE: EMPLOYMENT TRENDS 

AND ANALYSIS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, 

AND TRADE 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

FEBRUARY 15, 2012 

Serial No. 112–115 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

MARY BONO MACK, California 

Chairman 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

CLIFF STEARNS, Florida 

CHARLES F. BASS, New Hampshire 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

G.K. BUTTERFIELD, North Carolina 

Ranking Member 

CHARLES A. GONZALEZ, Texas 

JIM MATHESON, Utah 

JOHN D. DINGELL, Michigan 

EDOLPHUS TOWNS, New York 

BOBBY L. RUSH, Illinois 

JANICE D. SCHAKOWSKY, Illinois 

MIKE ROSS, Arkansas 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Mary Bono Mack, a Representative in Congress from the State of 

California, opening statement ............................................................................. 1 

Prepared statement .......................................................................................... 4 

Hon. G.K. Butterfield, a Representative in Congress from the State of North 

Carolina, opening statement ............................................................................... 6 

Prepared statement .......................................................................................... 8 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 14 

Hon. Charles F. Bass, a Representative in Congress from the State of New 

Hampshire, opening statement ........................................................................... 14 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 15 

Hon. Edolphus Towns, a Representative in Congress from the State of New 

York, prepared statement .................................................................................... 80 

WITNESSES

Harold L. Sirkin, Senior Partner and Managing Director, Boston Consulting 

Group, Inc. ............................................................................................................ 16 

Prepared statement .......................................................................................... 19 

John Berlau, Director, Center for Investors and Entrepreneurs, Competitive 

Enterprise Institute ............................................................................................. 23 

Prepared statement .......................................................................................... 25 

John M. Abowd, Edmund Ezra Day Professor of Economics, Director of Labor 

Dynamics Institute, School of Industrial and Labor Relations, Cornell University ................................................................................................................... 31 

Prepared statement .......................................................................................... 33 

John Schmitt, Senior Economist, Center for Economic and Policy Research ..... 51 

Prepared statement .......................................................................................... 53 

(1) 

WHERE THE JOBS ARE: EMPLOYMENT 

TRENDS AND ANALYSIS 

WEDNESDAY, FEBRUARY 15, 2012 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND

TRADE

COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:08 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Mary Bono Mack 

(chairman of the subcommittee) presiding. 

Members present: Representative Bono Mack, Blackburn, Bass, 

Harper, Lance, Cassidy, Guthrie, Olson, McKinley, Kinzinger, 

Butterfield, Gonzalez, Towns, and Waxman (ex officio). 

Staff present: Charlotte Baker, Press Secretary; Kirby Howard, 

Legislative Clerk; Brian McCullough, Senior Professional Staff 

Member, Commerce, Manufacturing, and Trade; Gib Mullan, Chief 

Counsel, Commerce, Manufacturing, and Trade; Shannon 

Weinberg, Counsel, Commerce, Manufacturing, and Trade; 

Michelle Ash, Democratic Chief Counsel, Commerce, Manufacturing, and Trade; and Will Wallace, Democratic Policy Analyst. 

Mrs. BONO MACK. Good morning. As the economy—as the American economy struggles to regain its footing, we are going to spend 

a great deal of time this year as a subcommittee exploring both the 

obstacles and opportunities for job creation. Today we will hear 

from a respected panel of experts who will join us in a wide range 

of discussion about employment trends in America and what factors are driving and shaping these trends. 

I also want to thank everyone here for your ongoing commitment 

and efforts aimed at creating new economic opportunities and new 

jobs for Americans. 

And now the Chair recognizes herself for an opening statement. 

OPENING STATEMENT OF HON. MARY BONO MACK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Last year when I began chairman of the subcommittee, I encouraged all of my colleagues to join me in an effort to make ‘‘Made in 

America’’ matter again. 

Well, today we are actually starting to see a renaissance of sorts 

in manufacturing with companies like Caterpillar, General Motors, 

Master Lock, Sauder Furniture, General Electric, Ford, and many 

other companies all bringing jobs back to the U.S. But is this trend 

sustainable, or will jobs return to America in dribs and drabs inVerDate Aug 31 2005 11:25 Apr 24, 2013 Jkt 037690 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\112-11~1\112-11~1 WAYNE
2 

stead of droves? This is the first in a series of hearings we will hold 

this year looking closely at ways to stimulate job creation and economic opportunities. 

I believe we have a window of opportunity, but it could close on 

us quickly if we don’t take action. China’s overwhelming manufacturing cost advantage over the U.S. is shrinking fast. Within 5 

years a Boston Consulting Group analysis concludes that rising 

Chinese wages, higher U.S. productivity, and weaker dollar increase Trans-Pacific shipping costs and a variety of other factors 

will virtually close the cost gap between the U.S. and China for 

many goods consumed in North America. 

This is our chance, in fact, the best chance we have had in decades to make ‘‘Made in America’’ matter again. But to be successful 

we must remove the roadblocks and barriers businesses are facing 

today when it comes to job creation. Embracing tax reform, regulatory reform, and tort reform are just some of the things that 

Washington can do to help jump start real job growth in America. 

But here is the good news. The data issued by the Bureau of 

Labor Statistics shows a recent uptick in monthly job creation with 

the jobless rate declining to 8.3 percent. Now, here is the bad news. 

To date we have had 36 straight months of unemployment above 

8 percent, the longest such streak since the great depression. Today 

too many people are still suffering. That is why we need to work 

closely together to create forward-looking policies which will create 

economic growth in America, not stifle it. 

Clearly the lack of job opportunities remains a dark, ominous 

cloud over Main Street, USA, with the average duration of unemployment for job seekers lasting more than 40 weeks. 

The bottom line: unemployment today remains stubbornly and 

unacceptably high with nearly six million more unemployed workers right now than there were just prior to the beginning the recession in 2007. 

Additionally, many economists suggest this number does not, in 

fact, represent the true unemployment rate. After factoring in a 

number of people who are under-employed, such as part-time workers in search of full-time employment, and those who have completely given up hope and exited the job market altogether, the Bureau of Labor Statistics reports the effective unemployment rate 

stands at a staggering 15.1 percent. 

What is more, in comparison to recent recessions the rate of our 

job recovery this time is much weaker, too. For instance, at a comparable point in the recovery from the 1981, to 1982, recession, the 

U.S. economy had added 6.2 million jobs above pre-recession levels, 

a growth of 6.8 percent. Yet while the U.S. economy added nearly 

two million jobs over the past year, the employment level today reflects a net loss with America’s non-farm workforce approximately 

4 percent below pre-recession levels. 

Today industry experts are divided and see things differently 

when gazing into their crystal balls. The Boston Consulting Group, 

which is testifying before us today, projects the U.S. has the potential to add up to three million new jobs in the manufacturing sector 

alone over the next decade. The chief factor in support of his upbeat forecast is the decreasing cost advantage of manufacturing in 

China due to the rapid rise in Chinese wages. 

3 

On the other hand, a study recently conducted by the Harvard 

Business School involving nearly 10,000 graduates reveals a more 

pessimistic view, a sense that America has a deepening, competitiveness problem. At the heart of this viewpoint is a sense that our 

Nation is falling behind in fostering an environment conductive to 

job creation. 

The U.S. tax code, uncertain political environment, and burdensome and sometimes unpredictable regulatory regime, a decline in 

education system, and the lack of a skilled workforce were cited as 

contributed factors to this dreary assessment. 

So as we examine the data and analyze the trends, is the glass 

half full or half empty when it comes to our future? While I am 

a big Clint Eastwood fan, I don’t buy the idea that it is halftime 

in America. I think we are in the fourth quarter, we are still trailing in the game, and we need to drive the length of the field to win. 

That will take great teamwork and a smart game plan, but working together and for the good of all Americans I know that we can 

do just that. 

[The prepared statement of Mrs. Bono Mack follows:] 

4 


80106.001
5 


80106.002
6 

Mrs. BONO MACK. And with that I now am handing the ball off 

to the ranking member of our subcommittee, Mr. Butterfield of 

North Carolina. Mr. Butterfield, you are recognized for 5 minutes. 

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH 

CAROLINA 

Mr. BUTTERFIELD. Thank you, Madam Chairman, for holding today’s hearing, which I understand is going to be the first of several 

job-related hearings the subcommittee will hold this year. 

There is no more important issue to working Americans than the 

ability to get and keep a job, provide for their families, and ensure 

that when their children grow up, they can succeed, too. 

The causes of the most recent economic recession are many, and 

they are certainly complex. While the solutions can also be complex, one thing is certain; the creation of jobs benefits the entire 

American economy, and in recent monthly employment reports, we 

have begun to see the fruits of that labor, but there is still much 

work to be done, and I agree with the chair on that. 

On day 1 of his administration, President Barack Obama inherited an economy in the worst shape since the Great Depression, a 

tremendous national debt was inherited, a crippled manufacturing 

sector and auto industry, and he became the Commander in Chief 

of not one but two wars in the Middle East. Just 3 years ago, 3.6 

million jobs had been lost and businesses were eliminating more 

than 700,000 jobs each month. By March of 2010 we reversed that 

course, and by the end of 2010 American businesses would go on 

to create more than one million net jobs. 

But with the national unemployment rate at 8.3, much more still 

needs to be done to return us to full employment. One of the keys 

to returning America to lasting prosperity is education. However, 

the cost of college remains a major barrier to those wanting to attend, and those barriers are particularly acute for minority citizens. In a June, 2011 report by the College Board, the cost of college was cited as one of the biggest roadblocks to gaining an education. The report find that in order to regain the Nation’s once 

preeminent international position in educational attainment, we 

must begin to matriculate and graduate populations of American 

students who traditionally have been underrepresented at the postsecondary level. Only 26 percent of African-American men hold at 

least an Associate’s Degree, compared with almost 50 percent for 

while males. Those numbers are reflected in current employment 

statistics with 13.6 percent of African-Americans unemployed compared to 7.4 percent of white citizens unemployed. 

I am encouraged by the President’s 2013 budget proposal which 

includes $8 billion, $8 billion for community colleges to help train 

workers in high-growth industries. The President proposed the creation of a new community college to career fund. That would be administered by the Department of Labor and Education. This effort 

could lead to over two million unemployed Americans finding goodpaying jobs, paying into the system, and help to reduce the debt. 

The Bureau of Labor Statistics report on employment for 2010 

through 2020 projects that 20.5 million jobs will be created over the 

course of the decade, many in industries requiring significant eduVerDate Aug 31 2005 11:25 Apr 24, 2013 Jkt 037690 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 F:\112-11~1\112-11~1 WAYNE
7 

cation or training. It is, therefore, imperative, Madam Chairman, 

that we invest significantly in these areas in order to build the 

strong workforce necessary to succeed in an increasing competitive 

global economy. 

And so I say in—I look forward to hearing from today’s witnesses 

and thank each of you, each of the four of you, for so graciously 

coming today and giving us your time. Thank you very much. I look 

forward to the testimony. 

[The prepared statement of Mr. Butterfield follows:] 

8 


80106.003
9 


80106.004
10 


80106.005
11 


80106.006
12 


80106.007
13 


80106.008
14 

Mrs. BONO MACK. Thank the gentleman, and in accordance with 

committee rules, Chairman Upton has yielded his 5 minutes to me, 

and I will yield the first 2 minutes to Ms. Blackburn of Tennessee. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Madam Chairman. Welcome to our 

guests, and I think we all welcome the series of hearings that we 

are going to focus on jobs and job creation in the country, and I 

want to start by talking about a time-tested formula that always 

works. 

Less regulation plus less taxation plus less ligation equals more 

innovation and more job creation. It is a formula that we need to 

grow this economy to give American businesses and manufacturers 

the certainty that they need to expand and to allow the U.S. to be 

successful when they compete internationally. 

If you go back and listen to some of the testimony that we had 

in Mr. Guthrie’s manufacturing briefing last week, you see from 

these manufacturers how difficult it is to be globally competitive 

and create jobs when the Obama administration basically has their 

boot on the neck of innovation. We have seen nothing but regulatory explosion from this administration. 

Let me give you an example of this. Just last year the Obama 

administration issued close to 4,000 burdensome and restrictive 

new regulations. In 2011, the Federal Register printed nearly 

80,000 pages of new and additional regulations. The Federal Government has over 291,000 regulatory agency employees. Total cost 

to Federal regulations is estimated to be at $1.75 trillion annually. 

Now, keep in mind that is about twice the amount that the IRS collects in Federal income taxes. 

Just this morning Gallop released a poll where an overwhelming 

majority of small business owners were surveyed. Eighty-five percent indicated that they are not looking, not looking for new workers. Asked why, 48 percent of those that were surveyed said they 

are not hiring due to concerns about possible rising healthcare 

costs, the uncertainty of Obama Care. Forty-six percent said they 

were worried about new government regulations. With what we 

saw last year, is there any wonder that they are worried about 

that? 

I think this is one of the reasons that we also are seeing our 

labor force participation rate at the lowest level that they have 

been in recent memory. It is more than just healthcare and regulations, and I am looking forward to our witnesses and hearing what 

you have to say today. 

I yield back. 

Mrs. BONO MACK. I thank the gentlelady. The Chair now recognizes Mr. Bass for 1 minute. 

OPENING STATEMENT OF HON. CHARLES F. BASS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW 

HAMPSHIRE 

Mr. BASS. Thank you, Madam Chairman, and thank you for having this important hearing. 

15 

I think it is important over and above the very cogent remarks 

of my friend from Tennessee to remember that it is important for, 

in addition to low regulation, low taxes, it is important to promote 

firstly the creation and growth of small businesses in this country, 

and I know we will be dealing with these issues on the floor of the 

House in the next couple of weeks. 

It is also very important not to close our borders to free trade. 

In my State one out of every four jobs in New Hampshire is directly related to our State’s ability to export its products beyond 

the borders of the United States. It is important also not to fall 

prey to the idea that we can tax companies into staying in the 

United States. What we can do is hold business in the United 

States by making them competitive and giving them the ability to 

trade their products across our national borders. 

And with that, Madam Chairman, I thank you for the hearing 

and yield back. 

Mrs. BONO MACK. Thank you, Mr. Bass. 

The Chair is pleased to recognize Mr. Waxman for 5 minutes. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you, Madam Chair. Thank you for holding 

this hearing, and focusing attention on job creation and economic 

growth, which should be our immediate priorities, and I hope this 

hearing will contribute to this effort. 

At last we are starting to see promising news on the jobs front. 

The number of unemployed Americans has declined by more than 

a million in the past 6 months. Yet too many Americans are still 

out of work, and we must do everything we can to ensure that the 

job numbers continue to improve. 

The financial crisis that ripped through our economy in 2008 was 

the worst our country has faced since 1929. These two events have 

much in common. Both were brought about by excesses at Wall 

Street, both resulted from asset bubbles, both followed periods of 

reckless deregulation. 

My colleagues, Mr. Butterfield, indicated when President Obama 

took office, he inherited an economy that had already shed 3.6 million jobs and was losing 800,000 more each month. In addition he 

faced paying for two wars that added billions to our national debt. 

No one action turned the economy around or can turn the economy around, but efforts including the Recovery Act, the rescue of 

General Motors and Chrysler, and billions of tax dollars in tax relief to working Americans have helped. Although factors such as 

what might go on in the European debt crisis could change our trajectory, the U.S. economy is on the right path. But we won’t have 

a full recovery until unemployed people can find work, and we 

know the economy is growing, and that in economist terms the recession is over, but while this may be lagging indicator, our focus 

has to be on getting people to work. 

I know some Republican members think we need severe cuts in 

the Federal budget that put gapping holes in our safety net while 

giving tax breaks to the wealthiest Americans. That is the American equivalent of medieval bloodletting, a cure that makes the disVerDate Aug 31 2005 11:25 Apr 24, 2013 Jkt 037690 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 F:\112-11~1\112-11~1 WAYNE
16 

ease worse. In the aftermath of a recession like the one we have 

just experienced with 12.8 million Americans still unemployed, 

more than 42 percent of them unemployed for 27 weeks or more, 

just leaving the economy alone and cutting Federal spending is not 

an option. 

I am pleased that we are going to have a conference agreement 

on extending the payroll tax cut, paying for some more unemployment benefits, and keeping the promise to the seniors under Medicare that their doctors will be paid so they can still—people can 

still get access to those physicians. 

But the Congress needs to work with this administration on 

long-term adjustments that must be made to ensure that the U.S. 

economy is one that rewards fair play and hard work. The recent 

budget by this administration for fiscal year 2013 shows its commitment to restoring middle class security by attacking wasteful 

spending and instead investing in education, innovation, and infrastructure, the building blocks for an economy that works for all 

Americans. 

I appreciate this opportunity to make this statement, and I yield 

whatever—I yield back my time. Thank you. 

Mrs. BONO MACK. Thank you, Mr. Waxman. 

Today we turn our attention to four very knowledgeable witnesses joining us. Each of our witnesses has prepared an opening 

statement that will be placed in the record. Each of you will have 

5 minutes to summarize that statement in your remarks. Our 

panel today includes Harold Sirkin, Managing Director of Boston 

Consulting Group; John Berlau, Director, Center for Investors and 

Entrepreneurs at the Competitive Enterprise Institute; John 

Abowd, Edmund Erza Day Professor of Economics at Cornell University; and John Schmitt, Senior Economist, Center for Economic 

and Policy Research. 

Good morning, gentlemen, and thank you all for coming. You 

will, again, be recognized for 5 minutes. To help you keep tract of 

time there are the lights on the table in front of you. When the 

light turns yellow, you will have 1 minute to finish your remarks. 

Please remember to turn the microphone on when you are ready 

to speak, and Mr. Sirkin, we are pleased to recognize you for 5 

minutes. 

STATEMENTS OF HAROLD L. SIRKIN, SENIOR PARTNER AND 

MANAGING DIRECTOR, BOSTON CONSULTING GROUP, INC.; 

JOHN BERLAU, DIRECTOR, CENTER FOR INVESTORS AND 

ENTREPRENEURS, COMPETITIVE ENTERPRISE INSTITUTE; 

JOHN ABOWD, EDMUND EZRA DAY PROFESSOR OF ECONOMICS, DIRECTOR OF LABOR DYNAMICS INSTITUTE, SCHOOL 

OF INDUSTRIAL AND LABOR RELATIONS, CORNELL UNIVERSITY; AND JOHN SCHMITT, SENIOR ECONOMIST, CENTER 

FOR ECONOMIC AND POLICY RESEARCH 

STATEMENT OF HAROLD L. SIRKIN 

Mr. SIRKIN. Chairman Bono Mack, Ranking Member Butterfield, 

and other distinguished members of the subcommittee, good morning, and thank you for the opportunity to testify on ‘‘where the jobs 

are’’. 

17 

While many negative comments have been made about the state 

of U.S. manufacturing, I would like to paraphrase, Mark Twain 

and say ‘‘The death of U.S. manufacturing has been greatly exaggerated.’’ 

We have heard the pronouncements of the death of U.S. manufacturing before. In the 1970s conventional wisdom said, Japan, 

Inc., with its low cost cars, televisions, and other manufactured 

goods was going to wipe out U.S. manufacturing. Americans were 

going to be farmers and bankers. Children were sent to schools to 

learn Japanese, the language of their new masters. 

But that didn’t happen. 

In the 1990s, conventional wisdom also said that the Asian Tigers from Hong Kong, Singapore, South Korea, and Taiwan were 

going to wipe out U.S. manufacturing. But that didn’t happen either. 

And in the past decade, conventional wisdom has said the China 

was going to wipe out U.S. manufacturing. 

And that is not going to happen either. 

Why? Our economy is designed to respond quickly to threats, unlike any other economy in the world. We are not a country that 

protects, we compete. Our internal competition is fierce. Companies 

are forced to be competitive or die. 

And the results of all this competition are breath taking. The 

U.S. produces 2.5 times as much manufacturing value added then 

we did in 1972, and we do this with 30 percent less labor. We are 

among the most productive economies in the world, far more productive than Germany and Japan. 

Each time we are attacked, we don’t give up. We respond, we 

adapt, and we thrive. It is what we are as a Nation. 

The threat from China is large, a nation of 1.3 billion people with 

a non-democratically elected government that can move fast and 

subsidize industries. And when China entered the WTO in 2001, 

wages in China were only 58 cents per hour on average. At that 

rate, outsourcing to China was a no-brainer decision for companies 

in many industries. 

But the economics of China are rapidly changing. Wages are rising at about 15 to 20 percent a year. The Yuan, a controlled currency has been rising at 4 percent per year and most economists 

believe would be rising even faster if it wasn’t controlled. And 

while productivity in China is rising at 7 percent a year, an incredible pace for any economy, it is swamped by wage and Yuan increases. And today the average U.S. worker is 3.4 times as productive as the average Chinese worker. 

The tide is turning in favor of the U.S. China is just getting more 

expensive. Companies that went to China for ultra-cheap wages are 

finding it not so cheap, and they are beginning to rethink their decisions. 

We project that at sometime around 2015, we will reach a tipping point for seven key categories of goods where the cost to 

produce in China will be just 10 percent lower than in the U.S. 

While 10 percent is a very important difference to companies, 

when you include all the costs associated with producing in China 

to serve the U.S. market like the transportation to ship goods, the 

inventory costs for the 2 to 3 months of shipping, the risk of obsoVerDate Aug 31 2005 11:25 Apr 24, 2013 Jkt 037690 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 F:\112-11~1\112-11~1 WAYNE
18 

lescence, and the intellectual property capital theft and country 

risk, and just being five to 7,000 miles away from the customer and 

not understanding their needs, the 10 percent differential disappears. 

These seven categories include computers and electronics, appliances and electrical equipment, transportation goods, plastics and 

rubber, machinery, furniture and fabricated metals. These account 

for two-thirds of the $300 billion we import each year from China. 

In June we estimated that the impact, including the manufacturing multiplier, would be about two to three million jobs over the 

decade. 

Given what we have seen since June, we believe that our estimate is conservative because we have seen far more re-shoring 

from China already than our models predicted. Companies like 

NCR, Ford, Coleman, Nat Labs, and many others have re-shored. 

We are also seeing companies from Japan and Europe recognizing 

that they can produce much more economically in the U.S. for consumption in the U.S., coming to the U.S., and many of them are 

using or are considering using the U.S. as an export base; companies like Siemens for power turbines now exporting to Saudi Arabia, Rolls-Royce for Jet engines that will appear around the world, 

and Toyota are seeing the U.S. as a low cost manufacturing location. 

Once again our amazing economy is responding. Once again 

manufacturing is growing in the U.S. because of our underlying advantages. While this is just taking hold now, government policy can 

help accelerate the trend. Whether it is providing funds to train 

American workers, reforming our tax system, or finding ways to 

level the playing field with our competitors, our government can 

make a difference. 

Creating more good paying jobs is something that all Americans, 

whether they are Democrats, Republicans, or Independents can 

agree on. We all need to work together to create good jobs for our 

children and their children and ensure that our economy remains 

strong for generations to come. 

Thank you. 

[The prepared statement of Mr. Sirkin follows:] 

19 


80106.009
20 


80106.010
21 


80106.011
22 


80106.012
23 

Mrs. BONO MACK. Thank you, Mr. Sirkin. 

Mr. Berlau, you are recognized for 5 minutes. 

STATEMENT OF JOHN BERLAU 

Mr. BERLAU. Chairman Bono Mack, Ranking Member 

Butterfield, and distinguished members of this subcommittee, 

thank you so much for inviting me to testify on behalf of my organization, the Competitive Enterprise Institute in this hearing asking the important question of where the jobs are. 

In answering this question I will focus not on particular locations 

or industries but rather on the characteristics of the firms that for 

the past few decades have been most responsible for job creation. 

The respected Kauffman Foundation in Kansas City, Missouri, has 

done some convincing research on this question, and its findings 

have been embraced by many in public policy, including President 

Obama’s Council on Jobs and Competitiveness. 

And on a net basis the bulk of where the jobs are or have been 

created is at young firms of all sizes as noted by the President’s 

Jobs Council report. Over the last 3 decades young firms less than 

5 years old have created 40 million new jobs. Especially important 

among these companies are innovative, high-growth firms referred 

to as gazelles that are found to both double their revenues and employment every few years and are found in every sector and every 

region. 

Unfortunately, a series of adverse financial regulations have 

stunted these young firms’ growth by making it much more difficult for them to access capital through means such as launching 

an initial public offering. 

Now, some of these rules like Dodd-Frank have been enacted in 

the past couple of years, but others like the Sarbanes-Oxley Act of 

2002, were promulgated ironically in the supposedly deregulatory 

era of the last decade. 

As the President’s Jobs Council notes of Sarbanes-Oxley and 

other rules enacted in the aftermath of the Enron implosion, wellintentioned regulations aimed at protecting the public from the 

misrepresentations of a small number of large companies have unintentionally placed significant burdens on the large number of 

smaller companies. 

This regulatory overhang explains part of the slower-than-expected recovery. According to the Treasury Department’s IPO Task 

Force, the long-term decline in the number of IPOs, a decline that 

began more than 5 years before the financial crisis hits, may have 

cost the economy as many as 22 million jobs not created over the 

past decade. 

Now, the good news is there is an emerging bipartisan consensus 

on scaling back some regulations that specifically burden these 

firms. In fact, in one week in November this House passed four 

bills with more than 400 votes for each measure to ease regulatory 

barriers to accessing capital through online social networking and 

general advertising to venture capitalists and angel investors. But 

despite the near unanimous support for these measures in this 

body, they still linger in the U.S. Senate some 3 months later. 

Now, also tomorrow your colleagues in the House Financial Services Committee are slated to mark up H.R. 3606, the Reopening 

24 

American Capital Markets to Emerging Growth Companies Act. 

This is a bill with widespread bipartisan support that is designed 

to smooth the IPO process for these young firms by a 5-year exemption from some of the most onerous provisions of SarbanesOxley, Dodd-Frank, and other burdensome rules. 

Given the ingenuity of American entrepreneurs and the broadmindedness of investors who fund them, clearing away irrational 

regulations might very well lead to a future hearing entitled, 

Where the Jobs Aren’t. This House has passed an essential access 

to capital bills, and the Senate needs to be told to, in the phrasing 

of the President, pass these bills now. 

Thank you again for inviting me to testify, and I look forward to 

answering your questions. 

[The prepared statement of Mr. Berlau follows:] 

25 


80106.013
26 


80106.014
27 


80106.015
28 


80106.016
29 


80106.017
30 


80106.018
31 

Mrs. BONO MACK. Thank you very much. 

Dr. Abowd, you are recognized for 5 minutes. 

STATEMENT OF JOHN M. ABOWD 

Mr. ABOWD. Chairman Bono Mack, Ranking Member Butterfield, 

and members of the committee, thank you very much for this opportunity. 

I am an economist but I am also a teacher, and we don’t do our 

talks without pictures, so I brought some pictures, and we are 

going to play them, and I am going to hope that—my goal is to 

show you the dynamics of the American labor market work through 

both the way in which people are hired and fired and the way in 

which jobs are created and destroyed, and there are some surprising patterns in these creations and destructions and hiring and 

separations. 

And I think the first chart that I want you to look at just shows 

how the recession spread its way across the economy, starting in 

2004, quarter four. As the graph gets green, that is good outcomes. 

As it gets brown, those are bad outcomes, and this is the growth 

rate of jobs spread across the country. 

So, as you can see, the growth rate of jobs basically went south 

after the recession started. A more telling measure is what we call 

stable jobs, which are jobs that last for a full calendar quarter. 

This one shows that those also went south, not when the recession 

started, but after the recession had been underway for awhile. So 

there is 2005, mostly green, 2006 and 2007, there is the start of 

the recession. There is 2008, the fourth quarter, when it really 

kicked in, 2009, 2010, it hasn’t come back very much. 

What is happening? Well, what is happening is that employers 

have basically stopped hiring into these stable jobs, so I am going 

to skip figure three and go straight to figure four here. This is the 

rate at which employers hire into these long-term stable jobs, and 

as the economy progresses from 2004 through to 2010, you can see 

that here is the start of the recession in 2007, and right here in 

2009, that is—the recession has already ended, and the hiring rate 

is at the lowest level of any of these graphs that I have shown you, 

and then in 2010, it has basically not come back very much. The 

latest data that you can do for jobs that last 6 months is basically 

2010, quarter four. When the Census Bureau releases the quarterly 

workforce indicators in a few months—in a few more weeks, rather—for the current quarter, we will have 2011, quarter one. 

So it is important that employers have stopped hiring into these 

stable jobs. In addition, the creation rate of these stable jobs, which 

is the next figure, figure five, slowed early on in the recession. That 

is the separation. I need creations. Number five. That was right. 

Yes. 

What the creations show is that the creation rate didn’t slow 

nearly as much as the accession rate. So jobs were being created. 

They are being created pretty much continuously, but they slow 

down during the recession, and they show down a lot right after 

the recession and then come back up in 2010 a bit. 

All right. So we have both that there is less hiring and that there 

are fewer creations. On the flipside, there are also more separations and more destructions, but not nearly as many as you think. 

32 

Most of the downturn in the economy wasn’t accomplished by massive amounts of job destruction and massive amounts of separation. 

Basically the separation picture—green is now good still, so it is 

the negative of the separation rate. 

The separation rate didn’t tank as you can see from these figures. Green is good, and the next figure seven, the destruction rate 

didn’t tank. Tank is the technical term for head south. As you can 

see, it stays mostly green in the economy, indicating that the jobs 

weren’t being destroyed at massive rates, these stable jobs, compared to the rates at which the hiring went down. 

So what went wrong? If you will skip straight to figure 10, what 

has gone wrong is, the rate of movement in the economy, the ability of workers to move around and to get to new jobs where they 

are created, that has seriously gone south. It is at very low rates, 

and generally that churning rate isn’t cyclical. So the fact that it 

has been so low in this recession is a serious issue for the labor 

market to recover. As you can see, it went very brown in 2009, 

quarter four, and it is still very brown in 2010, quarter four. If the 

workers can’t move around to find the new jobs, and if the businesses can’t adjust to find the new jobs, this excess separation, this 

excess reallocation, won’t occur, and the biggest benefit of the recession, to move high-valued labor into high-valued jobs, doesn’t 

happen. 

So what I urge you to do is to promote policies that will put the 

fluidity back into the labor market and to get this churning rate 

going again. 

Thank you very much for your time. 

[The prepared statement of Mr. Abowd follows:] 

33 


80106.019
34 


80106.020
35 


80106.021
36 


80106.022
37 


80106.023
38 


80106.024
39 


80106.025
40 


80106.026
41 


80106.027
42 


80106.028
43 


80106.029
44 


80106.030
45 


80106.031
46 


80106.032
47 


80106.033
48 


80106.034
49 


80106.035
50 


80106.036
51 

Mrs. BONO MACK. Thank you, and Dr. Schmitt, you are recognized for 5 minutes. 

STATEMENT OF JOHN SCHMITT 

Mr. SCHMITT. Good morning, Chairman Bono Mack, Ranking 

Member Butterfield, and distinguished members of the subcommittee, thank you for inviting me to testify this morning. My 

name is John Schmitt, and I am a Senior Economist at the Center 

for Economic and Policy Research, where I specialize in labor market issues. 

The labor market is in a stronger position today than at any time 

in years. The unemployment rate is down to 8.3 percent from a 

peak of 10 percent, and the private sector has created 3.5 million 

jobs since March, 2010. The American Recovery and Reinvestment 

Act has played an important role in this turnaround. According to 

the Congressional Budget Office, the Recovery Act is responsible 

for saving or creating one to three million jobs in 2010, 900,000 to 

2.7 million jobs in 2011, and 400,000 to 1.1 million jobs this year. 

As many economists said at the time, the biggest problem with 

the Recovery Act was simply that it was not big enough to address 

the size of the jobs crisis was face. 

But despite some encouraging recent data, the labor market is 

not out of the woods. There are 5.5 million fewer jobs today than 

there were in 2007. After factoring in natural growth in the labor 

force which increases about 900,000 potential workers each month, 

the total jobs deficit stands at almost 10 million today. 

At the current pace of job growth about 200,000 jobs per month, 

we won’t close this gap and return to 2000, levels of unemployment 

until 2019, 7 years from now. Even though unemployment has been 

falling, it remains very high by historical standards. Rates are particularly high for African-American workers, almost 14 percent, 

and Latino workers, over 10 percent. 

Meanwhile, measures of long-term unemployment, under employment, and what my colleague Janelle Jones and I refer to as longterm hardship, have barely improved at all in the recovery. Sustained high unemployment has led some to suggest that structural 

problems are the biggest barrier to reigniting job growth. I believe 

this view is mistaken. The two most commonly cited versions focus 

on extended unemployment benefits or an alleged mismatch between skills workers have and the skills employers need. 

On unemployment benefits, the best evidence, however, suggest 

that the unemployment insurance system increases the average duration of unemployment by only a few weeks and increases the 

overall unemployment rate by only a few tenths of a percentage 

point. At the same time unemployment benefits also inject income 

into communities, sustained consumer spending as well as private 

sector employment. 

One recent estimate, for example, suggested a $45 billion extension in unemployment benefits for 2012 could create a half a million jobs this year. 

Nor is skills mismatch a serious structural barrier to growth. 

Media counts sometimes feature employers who want to expand 

but just can’t find the right workers. The data, however, provide 

little evidence that these anecdotal experiences are widespread. If 

52 

skilled workers were in short supply, we would expect to see two 

things. 

The first is an increase in the hours worked by current workers, 

as employers use their existing workforce to meet rising demand. 

In fact, average hours remain below their pre-recession levels. 

If skills were in short supply, we would also expect employers to 

raise wages in order to attract the kinds of workers they need. This 

is basic economics. When something is in short supply, its price 

goes up. In fact, again, we see no signs of rising wages in the economy. 

The real barrier to faster job creation at the moment is a lack 

of demand. The economy is currently operating substantially below 

the limits set by the existing capital stock and the available supply 

of labor. The binding constraint is not the productive capacity of 

the economy but rather a lack of demand in the economy for the 

goods and services that we are already capable of producing. 

What the economy needs are continued efforts to sustain and restore demand. In the short and medium term government deficits 

are an important tool for getting the economy back on course. A 

large-scale jobs program built around repairing our physical and 

social infrastructure would be ideal. 

Short of that, however, three immediate measures would help. 

First, an extension of the unemployment benefits, second, an extension of the payroll tax cut, and third, increased Federal support for 

State and local governments. 

The labor market is looking brighter now than at any point in 

years, but enormous challenges remain. The way forward requires 

measures that will sustain and spur private sector demand. 

Thank you very much. 

[The prepared statement of Mr. Schmitt follows:] 

53 


80106.037
54 


80106.038
55 


80106.039
56 


80106.040
57 


80106.041
58 


80106.042
59 


80106.043
60 


80106.044
61 


80106.045
62 


80106.046
63 


80106.047
64 


80106.048
65 


80106.049
66 

Mrs. BONO MACK. Thank you, Dr. Schmitt. I thank you all very 

much for your testimony and your expertise in these areas that are 

interesting to us all, and I recognize myself now for 5 minutes of 

questioning. 

And my first question is to Mr. Sirkin. You mentioned in your 

written testimony seven categories of goods that will see only a 10 

percent pure cost advantage to manufacture in China. Why aren’t 

other categories such as apparel and footwear subject to the same 

narrowing of the cost gap and therefore, candidates to be manufactured in America? 

Mr. SIRKIN. Well, the goods that we are talking about generally 

have a moderate amount of labor, so about 25 percent labor involved. If you go to shoes and apparel and categories like that, you 

are looking at more like 60, 70 percent labor. So it may in the long 

term come back to the U.S. but over the next decade it is unlikely 

for many of those to come back to the U.S. 

Mrs. BONO MACK. And would it surprise you that a constituent 

in my district, Ms. Liat Talla, moved her manufacturing from 

China to California to produce her brand of apparel and blue jeans, 

even as she faces downward pricing pressure? And is this atypical 

for what we might expect for the apparel industry, or does it validate your analysis of the improving costs and quality differential 

to make products in the U.S.? 

Mr. SIRKIN. Well, we are going to see examples of many different 

things happening, and on the premium side we are going to see apparel companies potentially coming back to the U.S. for reasons 

other than the exact costs but because of the need to have a very 

short supply chain. 

I am very pleased that she is trying this. I think it is a wonderful 

thing for our country, and we need to have more entrepreneurs 

doing this, and if she is producing at a premium price, it will probably work quite well. 

Mrs. BONO MACK. Thank you. I will pass along your words to 

her. 

Mr. SIRKIN. Thank you. 

Mrs. BONO MACK. Your report concludes the cost gap of manufacturing some goods in China will continue to narrow significantly 

enough so that U.S. companies may be able to manufacture their 

products in the U.S. again without loss of comparative advantage. 

I understand that this is based on rapidly increasing costs in 

China including labor, land, and energy. What are the costs affecting decision to manufacture in the U.S. that are prone to increasing, and therefore, disrupting your analysis? For example, additional regulatory costs or higher energy costs, higher taxes. 

Mr. SIRKIN. Well, a lot of those costs are obviously going to be 

decided on government policies, so it is hard to know exactly what 

will the rising costs and what won’t. We are certainly in a time of 

uncertainty, but the ones that you mentioned are clearly things 

that could affect it. 

I think the biggest driver, though, is the Chinese wage rate increases. The reality is they have over-stimulated their economy, 

they have controlled their currency, and what they are seeing is 15 

to 20 percent wages growing a year, and that is the real thing that 

is going to help us in many ways. 

67 

Mrs. BONO MACK. All right. Thank you, and moving now to Mr. 

Berlau, it sounds like the President’s Job Council report has some 

good, bipartisan ideas. Has the President or even Congress for that 

matter followed any of them? 

Mr. BERLAU. Well, yes and no. One of the council reports recommends approval of the Keystone Pipeline, for instance, the President recently delayed that, but I would say on access to capital, the 

President has endorsed the concept and the House bills that has 

passed such as crowd funding which is making it easier to raise 

funds on—through online social networks and exempting from 

some of the SEC red tape and other things. I think the specifically, 

the administration specifically endorsed one of the bills and the 

concepts in some of the others to make public offerings easier and 

similar items. 

The issue is that is somewhat puzzling because these bills, these 

four bills in November passed by more than 400 votes, one of them 

literally had one vote against it, but they have been lingering in 

the Senate for the past 3 months. 

So, yes, we have seen progress in the House, we have seen the 

President embrace some of the bills. You have got Republicans and 

Democrats endorsing H.R. 3606 as far as the onramp for public 

firms, exempting them from some of the regulations from Sarbanes-Oxley and Dodd-Frank their first 5 years after being public, 

but just the Senate, these have just been lingering and with no 

sign that they are going to be brought to the floor. 

Mrs. BONO MACK. All right. Let me jump ahead because I have 

only—less than 1 minute left. Several critics, including your copanelist, Dr. Schmitt, argue that the stimulus was not big enough 

and that the government should consider a second round. 

Would you like to speak to that? What is the opportunity and 

costs associated with such an action? 

Mr. BERLAU. Yes. I think you are right that opportunity cost is 

always an important economic concept. What could have been done 

instead of the stimulus to bring back the economy very rarely is 

the choice between the—taking one action and doing nothing. The 

stimulus, the cost of the stimulus means there is less money to do 

things that would be truly—bring back a vibrant economy like cutting the, some of the highest corporate tax rates in the world, and 

also there has been interesting new data from the Mercatus Center 

of George Mason University that 42 percent of the jobs in the Recovery Act were actually for those already employed. So there are 

some doubts on the stimulus effect. 

Mrs. BONO MACK. All right. Thank you. My time has expired, 

and I am pleased to recognize Mr. Butterfield for his 5 minutes of 

questioning. 

Mr. BUTTERFIELD. Thank you very much. I want to spend just a 

couple of minutes talking about regulatory uncertainty. Ms. 

Blackburn in her opening remarks a few minutes ago opined that 

employers aren’t hiring because of regulatory uncertainty, and certainly we on this side of the aisle agree that regulations should be 

reviewed and streamlined where possible. 

However, it is misleading to suggest that regulatory uncertainty 

has anywhere near the same importance in explaining unemployment as the massive affect of this recession an aggregate demands. 

68 

The Bureau of Labor Statistics data tracking mass layouts from 

’07, to the present support this conclusion. These data showed that 

among employers forced to undertake massive layoffs less than 

one-half of 1 percent cited government regulation or government 

intervention as the reason for the layoffs. 

By comparison, a plurality of anywhere between 29 and 39 percent of employers cited lack of demand, and there was no statistical 

difference between employer responses during the Bush administration and the present Obama administration. 

Let m go to you, Dr. Schmitt. Could you please discuss the extent 

to which you believe regulatory uncertainty has slowed the recovery? 

Mr. SCHMITT. I think that regulatory uncertainty has probably 

played a very little if any role at all in the current situation we 

are facing. We can look at the historical experience of the United 

States at the end of the 1990s, which in some people’s mind was 

a period of higher, greater levels of regulation, regulatory uncertainty say than the 2000s, even up until 2007. And that was a period of extremely rapid economic growth and extremely rapid job 

growth, in fact, the highest rate of job growth in the last 30 years. 

By contrast, if we look at the recovery in 2001 from the 2001 recession, we saw private sector job growth was actually slower than 

private sector job growth in the current recovery. So I don’t think 

that there is—there is certainly an opportunity for anecdotal experiences of people running into problems with particular pieces of 

legislation, regulation, but there is not any evidence of some economic affect that dominates. 

Mr. BUTTERFIELD. All right. Let me try Mr. Sirkin on my second 

question. In your testimony, sir, you mentioned that companies 

from other countries are recognizing that they can more efficiently 

produce for the U.S. market by locating their manufacturing in the 

United States. Some are even using or considering using the U.S. 

as an export base. 

Number one, can you or any of the other witnesses discuss what 

parts of the U.S. manufacturing sector are growing? For example, 

is it in automobiles, electronics, or power turbines or the like? 

Mr. Sirkin? 

Mr. SIRKIN. Yes. We are seeing this. The U.S. is a very productive Nation. We are about one-third more productive than Japan, 

and about 25 percent more productive per worker than Germany. 

So we are very productive. 

At the same time, given the currency shifts, the U.S. worker is 

earning lower wages than in those countries for similar tenures. 

That makes the U.S. a very attractive place for companies to 

produce. At the same time we are the world’s largest market, and 

so if I can manufacture in Japan or in Germany, I may choose to 

manufacture for U.S. consumption in the U.S. because it is fundamentally cheaper, and I will be more competitive. 

At the same time when I do that versus producing in, let us say, 

Germany, I may have the opportunity to export, and if my factory 

in the U.S. is more productive and lower costs, it makes sense to 

be producing in the U.S. So we have an opportunity here because 

of the economic conditions that we see that will allow foreign companies to produce in the U.S., and we welcome them. We do not 

69 

discriminate against foreign companies in our country, and at the 

same time in the example of Siemens for Saudi Arabia, we are exporting, Siemens is exporting six power turbines to Saudi Arabia 

to generate electricity from natural gas. 

Mr. BUTTERFIELD. When you say we are strong, does that include 

assembly plants as well? 

Mr. SIRKIN. There are assembly plants and then there are, of 

course, the supply chains that go with it because the U.S. is also 

lower costs. Consider Rolls-Royce manufacturing jet engine parts 

now in the United States because the cost of manufacturing in the 

U.K. or in Europe is far higher. 

Mr. BUTTERFIELD. Can you discuss whether these plants are 

mostly assembling parts that are made overseas, or are the parts 

being made more and more here in our country? 

Mr. SIRKIN. Well, as we saw in the automotive business when the 

Japanese came to the U.S. and the Koreans are coming to the U.S., 

what happens is originally they become assembly plants, and then 

the suppliers come over because the economics are better. It does 

take some time for that to develop, but we expect to see that in all 

these other industries. 

Mr. BUTTERFIELD. All right. Thank you. I yield back. 

Mrs. BONO MACK. Thank you, Mr. Butterfield. 

The chair now recognizes Dr. Cassidy for 5 minutes. 

Mr. CASSIDY. Dr. Abowd, I am also an academic, so my gosh, it 

is just fun to see Power Points, you know what I am saying, and 

those are very nice ones. I couldn’t help but notice there seemed 

to be a strong correlation with green wherever there—it was something I would consider an energy State. Oklahoma, for example, my 

State, Louisiana, if you take out Hurricane Katrina effect, Texas 

going up that sort of belt in the Midwest. 

So can you comment upon the impact of development of natural, 

of our domestic oil and gas resources and its affect upon the job 

market, particularly for those blue collar workers who have had the 

hardest time with employment? 

Mr. ABOWD. Certainly. I would be happy to comment on that. We 

won’t play the slides again. The point that I was trying to make 

and I think the point that you picked up with the slides is that the 

geographic variability in the way the recession moved through the 

economy and the way the recovery is moving through the economy 

is very striking, and so you could see that at the start there was 

already much more activity in the south and over on the southwest 

and up in a particular part of the Atlantic Coast. And in the north 

and particularly in the north and Midwest there wasn’t, and those 

are long-term kinds of patterns in the economy. 

So when there is a vibrant labor market, what happens is that 

the job creations are where the economic profit opportunities are 

highest, and those have to be allowed to play out, and the workers 

have to be able to get to those jobs, the businesses have to be able 

to—— 

Mr. CASSIDY. So I understand your point regarding churning. My 

point, though, the geographic distribution seemed to be strongly related to where there is domestic oil and gas production. So, for example, both Louisiana, Oklahoma, Texas had the good green most 

of the time, and going up through Colorado, North Dakota. 

70 

Is that my imagination, or is that true? 

Mr. ABOWD. It is not your imagination, but I am not willing to 

attribute it to natural resource production, although that is certainly a possible cause. I am very reluctant to use the colors to do 

a specific analysis. 

Mr. CASSIDY. Maybe associated by not causal. 

Mr. ABOWD. Things like that are—— 

Mr. CASSIDY. Mr. Schmitt, your thing is hidden by the—you may 

be a doctor. I can’t tell because of the water pitcher. I apologize. 

I am struck that we have a problem with blue collar unemployment, and yet the President continues to speak about hiring more 

teachers and solar engineers, and you frankly kind of echoed that. 

It seems a strange way to hire blue collar workers is to put more 

money into programs which basically you have to have a Ph.D. 

sometimes in order to qualify for. 

So there seems to be a mismatch there. How would you explain, 

how would you defend, if you will, more Solyndras when our problem is blue collar workers? 

Mr. SCHMITT. I think that a key issue in terms of addressing the 

problems of blue collar workers is to try and get at the kind of infrastructure kinds of issues. I think that is where we have an—— 

Mr. CASSIDY. And you define infrastructure as? 

Mr. SCHMITT. Infrastructure, transportation, improving—— 

Mr. CASSIDY. But you specifically talk about, you know, putting 

more money into public service type employees, which, again, I 

don’t think of those as the people who are currently being whacked 

by the recession. 

Mr. SCHMITT. I think that the impact of the recession has been 

pretty broad, and I think, therefore, we need to use a kind of—— 

Mr. CASSIDY. But I am correct when I say the blue collar workers, particularly non-college educated men, have been disproportionately affected, whereas those with Bachelors and upwards are 

frankly doing OK. 

Mr. SCHMITT. I wouldn’t say they are doing OK, but they have 

fared better in the recession than—— 

Mr. CASSIDY. So, again, the prescription that I am asking, and 

I don’t mean to speak with compressed speech, but I have limited 

time, if the prescription the President continues to offer is more 

kind of, you know, OK, let us go to somebody who makes solar panels and hires a bunch of Ph.D.s and engineers, or let us hire more 

teachers or keep them employed—that seems a mismatch, if you 

will, between those who are disproportionately affected by this recession. 

Mr. SCHMITT. I think that on the other hand it is also the case 

that there is an emphasis on trying to deal with the physical infrastructure, whether it is roads and public transportation or improving the physical infrastructure of our schools, where I think there 

is a big opportunity for blue collar workers. 

Mr. CASSIDY. Now, you mentioned also in your testimony that 

the mean hours worked by employees and the mean wages remain 

stable. Is that an average across the economy, or is that industry 

specific? Because if you look at Petra Chemical where there has 

been a huge expansion and they tell me that they don’t have 

enough trained workers for it, that if you looked at that, do you see 

71 

within that particular industry that there has been an increase in 

the number of hours per worker or wage growth? 

Mr. SCHMITT. I don’t have access to the specific statistics at 

Petra Chemicals, but what I would say is the numbers that I did 

talk about are averages across the country, and I don’t doubt that 

there could be circumstances where there are some industries that 

are facing difficulties. 

My question would be do we see those same firms offering more 

money or installing training systems to try and get the workers 

that are. 

Mr. CASSIDY. And that is my question, too, because if we are trying to find solutions for blue collar unemployment, we should look 

where they are being employed, and, again, frankly I think more 

public service dollars is kind of a mismatch. 

I yield back. Thank you. 

Mrs. BONO MACK. Thank you very much, Dr. Cassidy. 

The chair is now pleased to recognize my friend from Texas, Mr. 

Gonzalez, for 5 minutes. 

Mr. GONZALEZ. Madam Chair, thank you very much, and I want 

to thank the witnesses for their testimony this morning. 

Dr.—is it Abowd? 

Mr. ABOWD. Abowd. 

Mr. GONZALEZ. Abowd. I am going to kind of—what I heard you 

say, and if I am wrong, you can correct me, but in essence jobs go 

where profits can be made. That is kind of a general theory, isn’t 

it, and it makes sense, it is practical, and so on. Jobs are created 

where a profit can be made. 

I mean, you are not going to create a job where you can’t open 

the door to your business in the morning unless a profit is made. 

I think that is just—what I am getting at is I think in my own 

opinion, and I want you all to comment on this because I am going 

to go and read a couple of comments made by a couple individuals 

that you have heard of, I think there is something—the very nature of our economy is in trouble and has been transformed over 

a number of years, and we are not going to be undoing it in the 

very short term, and it is time for us to get very, very serious about 

undoing it. 

And this is what I am getting at. This is David Stockman back 

in 2010. ‘‘The third ominous change in the American economy has 

been the vast expansion of our financial sector. The combined assets of conventional banks and the so-called shadow banking system, including investment banks and finance companies, grew from 

a mere $500 billion in 1970, to $30 trillion in September, 2008.’’ 

That is David Stockman. 

Now, some figures—our GDP a year and a half ago or so, let us 

say was at about $14.601 trillion. The total assets of the Bank of 

America, JP Morgan Case, Citigroup, Wells Fargo, Goldman Sachs, 

and Morgan Stanley stood at $8.977 trillion or 61.49 percent of 

GDP. 

In the 1970s and 1980s financial firms comprised 15 percent of 

all corporate profits. By 2006, that had risen to 33 percent. I believe we have just been investing in money. We had been investing 

in financial instruments and not really investing in that which 

truly creates jobs in this country. 

72 

Now, some commentators would agree with this, and now former 

Fed Chief Paul Volcker, ‘‘I have found little evidence the vast 

amounts of innovation in financial markets have had a visible affect on the productivity of the economy.’’ 

The question is, Where are we directing our dollars, our investments, whether it is my 401, whether it is a pension and retirement fund? I don’t think we are investing it in that which really 

produces jobs in this country. What we got addicted to was making 

money off of money, and it has not served us well, but I am not 

sure that we have moved forward in trying to remedy some of this 

in the past 2 years. Attempts have been made. 

So I am going to start with just Dr. Abowd, where are we today 

with financial markets and the tremendous assets that they represent, and do they truly create the jobs that all four of you have 

been discussing and which members of Congress obviously have a 

great attention to be paid to through policy and legislation. And if 

you will just give me about 1 minute in the remainder of the time 

to Dr. Schmitt to—for his comments. 

Mr. ABOWD. Thank you for the question. I will not take very long 

with my answer. I did prepare a slide on the financial sector that 

shows that it was also one of the sectors that suffered stable job 

losses in the recession but not nearly as badly as the construction 

sector, which basically is the bubble that was inflated by the financial services industry. 

I fundamentally agree with you that the growth of the financial 

services industry wasn’t entirely related to productive profit opportunities in that sector. It happened, and it happened for reasons, 

but it is going to take economists awhile to sort out, but other sectors of the economy like manufacturing and construction and trade 

also have to come back and jobs have to be created in those places 

in all conditions, recessions and booms. There are jobs being created in all the sectors and jobs being destroyed in all the sectors, 

and that removement of workers is what allows businesses that 

have profitable opportunities to grow and flourish. 

The fact that over the course of 2 decades the financial services 

industry was pumped up by other factors is related but not part 

of what I was talking about. 

Mr. GONZALEZ. Dr. Schmitt, just a few seconds. 

Mr. SCHMITT. The financial sector, I think, is a huge part of the 

problem. I think if it was a lot smaller, there would be more possibility for productive economic investment because we are currently 

diverting resources that could be going elsewhere into that sector. 

Mr. GONZALEZ. Thank you very much. 

Mrs. BONO MACK. I thank the gentleman, and the chair recognizes Mr. Guthrie for 5 minutes. 

Mr. GUTHRIE. Thank you. Over here on the end. 

Dr. Schmitt, you said—I just caught something you said that unemployment, you said would increase—unemployment insurance’s 

evidence is only increased by a few tenths. And that is not significant, the few tenths? 

Mr. SCHMITT. Well, if you are in those few tenths, it is not very— 

it is obviously significant to you, but a few tenths of a percent on 

10 percent, which is where we stood at the peak, is relatively 

small, and that is the negative effect on employment, but as I also 

73 

emphasized, the fact that we are giving everybody or about 75 percent, 70, 75 percent of unemployed people benefits means that we 

are actually sustaining jobs in the communities where those unemployed people are because we are giving them income to bridge the 

gap. 

Mr. GUTHRIE. My question, it seems there has been an agreement to extend those, but so I guess my question was if unemployment increases just a few tenths, and that is not significant, then 

for the last 3 or 4 months we have seen unemployment drop just 

a few tenths, which, you know, we are glad to see we are going in 

the right direction. Is that insignificant? I mean, if you are saying 

increasing it a few tenths isn’t important, then decreasing it a few 

tenths, is that insubstantial? 

Mr. SCHMITT. No. As I said, I think we have made some progress 

since August. The unemployment rate has gone from 9.1 to 8.3, 

which is more than a few tenths than what I am saying right now, 

but I also emphasize we are not out of the woods. I think we have 

a long way to go before we get back to anything approaching full 

employment. 

Mr. GUTHRIE. Yes. That is what we are all here to talk about. 

We want people to get back to work, and so one of the things that 

I saw, I saw this a few weeks ago, I guess, is that if you took the 

growth rate coming—my father lost his job in the 1981-82 recession, so that is one that I remember, and Japan and Toyota—my 

dad worked for Ford—so those were our experiences. And so I have 

heard that if we had the same growth rate in year 3 or year 4, I 

think we are in year 4 now, but year 3 of the—same growth rate 

of year 3 of the ’84, recession or ’82, recession now, that we would 

have over 10 million or somebody even said 15 million new jobs. 

But even cut that by two-thirds because that seems a big stretch, 

we would be at full employment if we came out of the—if we were 

3 years into the recession with the same growth rate of the ’82, recession, we would have full employment today? Has anybody seen 

that or agree with that or dispute that? 

Mr. BERLAU. If I may, there is some evidence that IPOs are actually counter-cyclical, that when the debt market is tight as it was 

in the early ’90s recession with the S & L collapse, IPOs actually 

increased. There were actually more than 300 IPOs in 1991, and 

that is where you had companies that were relatively small like 

Starbuck’s and Cisco Systems, unlike the big IPOs today that 

launch, they were able to utilize that process when they couldn’t 

get gas, when they couldn’t get bank loans, and that is what has 

been credited with helping the—actually helping laying—going 

from a recession in the ’90s to the boom, but now a lot of these options are foreclosed because of the Sarbanes-Oxley auditing mandates and Dodd-Frank, whereas 80 percent of the IPOs in the ’90s 

were with companies with market evaluations below 50 million. 

Today only 20 percent are. 

Mr. GUTHRIE. And I want to get to a point we are always getting 

at with, though, is as you moved out of the recession in the early 

’80s, and then Japan went into theirs on the ’90s, and one of my 

concerns, I was a freshman here when we started discussing the 

stimulus bill, it appeared to be a lot of the same prescription that 

74 

Japan followed in the ’90s, which a lot of people say Japan in the 

’90s had the lost decade. 

So that was the concern. Are we at a point where we—the American economy has been so adaptive. That has been our brilliance. 

I mean, in the 1980s my father lost his job, we were thinking Ford 

is out and never going to exist like it did before, and here we are, 

you know, GM is now the number one selling car again in the 

world, which is great. 

But the question is we haven’t recovered that quickly, and are 

we putting in prescriptions and policy regulations and borrowing 

40 cents of every dollar to have a school teacher in a classroom? 

Is that hurting our recovery? 

I know that we are moving in the right direction, but would we 

move far greater if we hadn’t have—if we had gone down the path 

that they did in the early ’80s? I mean, that is really my question. 

And anybody is welcome to—but I do want to—let me stop at 

that, because I do want Dr. Abowd, you said if we change fluidity 

policies for labor, we are—what policies would you prescribe, and 

I only have 40 seconds. I am sorry, but that is interesting to me. 

Mr. ABOWD. I won’t go through a litany list of them but one of 

the big differences now from the recessions you were citing is that 

it happened in—with a housing price bubble that collapsed, and 

that definitely impaired the geographic mobility of workers and 

also impaired the geographic mobility of new businesses because 

they were caught up in some of the same financing arrangements. 

So that is a big difference, and that is something that takes more 

than a few quarters to cure because of how much lost value there 

was. So that is—— 

Mr. GUTHRIE. So a manager in Atlanta can’t move to Fruit of the 

Loom in Bowling Green for a job available because they are underwater in their house in Atlanta. Is that where you are—that kind 

of limits their mobility? 

Mr. ABOWD. That is the kind of thing I am talking about. Yes. 

Mr. GUTHRIE. OK. Thanks. I am sorry. I wish I had more time. 

I will yield back. 

Mrs. BONO MACK. Thank the gentleman. 

The chair recognizes Mr. Towns for 5 minutes. 

Mr. TOWNS. Thank you very much, Madam Chair. Appreciate you 

having this discussion. 

In the State of the Union, Mr. Schmitt, the President described 

a blueprint to put Americans back to work, and of course, when I 

go back to my district in Brooklyn, New York, people are saying 

that Congress isn’t moving fast enough to create jobs, and I 

couldn’t agree more. 

If we follow your full policy recommendations, what immediate 

impact do you think we would see in the job market? 

Mr. SCHMITT. I think the immediate impact will be to continue 

to see some positive job growth in the private sector that could see 

a continuation in the decline in the unemployment rate nationally. 

But as I emphasized, if we do just the things that I was proposing 

this morning, I think we are still facing a very long road to recovery. We need to do more than just those short-term measures. 

On the other hand, I did mention in my written testimony, not 

this morning when I spoke, that one thing we could do that could 

75 

have a long-term big impact would be to get the value of the dollar 

at a more competitive level, which would help to expand the manufacturing sector by making it more competitive. 

Mr. TOWNS. Right. Thank you. If you panelists talked about the 

importance of having a stable job and its impact on consumption 

and demand, when I go back home, people talk to me about finding 

a stable job. Traditionally jobs in manufacturing have been very, 

very stable. 

Mr. Sirkin, can you go into a little more detail about reassuring 

and things Congress can do to make it more attractive for manufacturers thinking about moving their operation, you know, to other 

places? 

Mr. SIRKIN. Well, I think there are many things that we can do 

to make it easier for companies to do that. The first is awareness. 

One of the problems we have is that companies assume that it is 

cheaper to manufacture in China than in the U.S. I remember sitting in a boardroom one day with a company that had about 80 

percent of its manufacturing in China, a U.S. company, and they 

were similarly just putting another plant in China because that is 

what is logical to them. We forced the question on the table, and 

their decision changed. 

So the most important thing that we can do is get awareness 

that, in fact, the economics of China are changing and that you 

should be looking at it very carefully, and they shouldn’t just do 

the math on what it looks like today but look 3 or 4 years in the 

future and take a look at it because you will find that if you have 

a plant, it is going to last for 25 to 30 years. And so making a decision today to put a plant in the ground in China may not be the 

most economic decision 5 years out. 

So companies need to be just more aware that the U.S. is a reasonable option for the manufacture of many goods. In 2001, the 

Chinese worker was making 58 cents an hour. It was a very simple 

decision. It is getting more complicated now, and the tide is turning 

back towards the U.S. 

So if I have one thing that I could ask people to do is to just 

build that awareness. We are a good place to manufacture. It is 

why foreign companies are coming to the U.S. as well to manufacture for U.S. consumption because it is more expensive where they 

are. 

Mr. TOWNS. All right. 

Mr. BERLAU. If I may. 

Mr. TOWNS. Yes. Sure. Go ahead. 

Mr. BERLAU. The President’s Job Council report and the 

Kauffman Foundation have stated the findings that in some cases 

100 percent of net job growth are created by firms 1 to 5 years old. 

Firms older than 5 years old have eliminated more jobs than they 

have created, and 90 percent of this job growth occurs after an 

IPO. The problem is there aren’t as many IPOs for companies that 

are emerging growth companies, and you had sponsored some of 

the early bills to ease some of the burdens on smaller companies 

from Sarbanes-Oxley 404. Some of the IPOs we are getting now are 

already more than market capital of $1 billion after the growth has 

occurred, so they need more—every dollar a company can raise for 

an IPO is that less that they have to borrow or beg from a bank 

76 

and more that they can devote to creating jobs and the companies 

most likely to create jobs. 

Mr. TOWNS. Madam Chair, I see my time is running out, but I 

would like maybe to ask in writing if you would just sort of make 

a suggestion, a recommendation as what members of Congress 

might be able to do and put it in writing and give it back to us. 

I would like to just see that in writing as to what you suggest that 

Members of Congress should do. Other words, let us switch roles. 

Make me the economist and you a Member of Congress. 

Mr. BERLAU. Glad to. 

Mrs. BONO MACK. Be careful what you wish for, Mr. Towns. 

The chair is happy to recognize Mr. McKinley for 5 minutes. 

Mr. MCKINLEY. Thank you, Madam Chair. 

Mr. Schmitt, I am just a little astounded with one of the comments you made. I would like you to maybe expound a little bit on 

it before I cut you off, but you said that the uncertainty is really 

not a factor. I really wish if you could provide us the information 

that supports that, some statistics, because I am just looking—I 

just in scribbling here list some of the companies that were in possibly within 20 miles of my home. They are no longer. Banner 

Fibreboard, Fostoria, Viking, Allied North, Solvay, Wheeling Pitt, 

Weirton Steel, Follansbee Steel, Purina. There are just numbers of 

companies that when we talk to them, they say it is absolutely the 

uncertainty that they are facing. 

We talked about a bill we passed out of here earlier this year, 

that the Veritis Group said that without that bill because of the intrusion of the governmental, the EPA, it was going to cost 316,000 

jobs. It was the Coal Combustion Residual Bill, the Fly Ash Bill, 

because the Federal Government stepped in and now they are 

threatening, they have got a stigma attached to all the fly ash that 

is being produced around America, and they want to call it a hazardous material. 

So there is a stigma and uncertainly that is swirling around all 

316,000 jobs to be lost because of this. The aluminum industry just 

last week, we had a meeting with them, and they told us that it 

is uncertainty in their utility bills that is causing them not to reopen and operate some of their facilities. They want to know what 

is going to be our utility costs. 

We had the EPA back in February of last year pull a water permit from an existing coal mine in West Virginia 4 years after it 

had been in operation. I have never heard of that. It is unprecedented. It is now in Federal court, and the courts are challenging 

that significantly whether or not that intrusion into the process 

after a permit has been granted, all the hearings were held, 4 

years operation, they had the right to step in and pull a permit and 

shut a company down? 

Yet you sit here and say uncertainty is not a problem in America. I am not hearing that in my district. 

Mr. SCHMITT. I think it is important to say, to ascertain what 

kinds of uncertainty, whether you are talking about regulatory uncertainty or whether you are talking about all the forms of uncertainty like exchange rate shifts, changes in the interest rate, how 

your competitors are going to act relative to you. 

77 

Mr. MCKINLEY. Let me just—what your competitors are acting, 

how they are going to—China. OK. Here we had for the San Francisco bridge, they didn’t use American steel, and it was so flawed 

that we had to send inspectors over to retool, remake a lot of that 

steel, yet because it was the lowest price, they are able to buy that 

from China. Our turbines for our wind turbines are coming from 

overseas. We have got even the Keystone Pipeline, from what I am 

hearing from testimony, that wasn’t even manufactured—the steel 

didn’t come from America. 

What are we doing then about this uncertainty? If you see that 

this competition is coming in unfairly, and I mean that word, unfair competition coming in, how does that create certainty in the 

American manufacturer? 

Mr. SCHMITT. I certainly share your concern that the trade agreements that we have agreed to and signed and ratified over the last 

few decades have created a lot of problems for U.S. manufacturers 

and for the particular cases that you are talking about. 

But I think the other issue to think about is that to a certain 

degree that is a working the ref involved in these kinds of conversations. Any individual firm is going to be talking to the government officials that they deal with and saying, look. We are having 

trouble here. You got to help us out. When we look at the, not anecdotal data, but when we look at the evidence, when we look at the 

broader data, we see, for example, very rapid job creation in the 

’90s, and the other issue is right now corporate profits are at record 

highs. So the activity that firms are currently undertaking is actually giving a very high return to those companies. 

Perhaps uncertainty is hanging over business’s future decisions, 

but my point is just that the uncertainty around whether there are 

going to be customers or not far outweighs all of the other concerns 

at the moment. 

Mr. MCKINLEY. I am running out of time, but I have got a lot 

so all I am asking is, please, if you could submit where in God’s 

name you came up with the idea that uncertainty is not a problem 

to manufacturers, I would sure like to read it. 

Thank you very much. 

Mr. BERLAU. I have an answer on regulatory uncertainty if another panelist wants to ask the question. 

Mrs. BONO MACK. Thank you. I, too, echo Mr. McKinley’s sentiments, too. I am confused myself about your answer, but I am 

happy to recognize Mr. Olson now for 5 minutes. 

Mr. OLSON. I thank the chair for her continuing leadership and 

calling this hearing. I would also like to thank our witnesses for 

coming today and giving us your time and your expertise. 

We are talking about the current obstacles that stand in the way 

of job creation and discussing the kinds of policies that will help 

create new jobs right here in America. That is what we all want 

to do. 

Doubling down on the failed policies of wasteful spending has 

made our economy worse. It is not the answer, and yet this is exactly what our President is proposing in his 2013, budget. 

I have said this in the past, and I will say it again, I will say 

it until I probably meet Saint Peter, I have a three-word solution 

78 

to help fix this Nation’s job performance. American energy development. American energy development. That is where the jobs are. 

So I would like to start my questions today by asking all the witnesses for their view on what they believe to be the main obstacles 

for the creation of American energy jobs. And specifically, is there 

one, one Federal agency or specific regulations that in your views 

are hindering job creation in the energy sector? Or to put it another way that my folks back home can understand, which stallion 

do we need to break so we can pull the wagon instead of pulling 

the wagon apart? 

I will start with you on the end, Mr. Sirkin. 

Mr. SIRKIN. Sure. Well, I agree with you that American energy 

development is very important for our economy. Being more energy 

independent has lots of advantages both from the economy standpoint and from a national security standpoint. 

I have not looked at, you know, what are the barriers to making 

this happen in our country. The economics of it are quite powerful 

given oil prices that are now looking at least over $110 a barrel, 

and obviously the natural gas reserves that we now have 100 years 

worth is a very important aspect of attracting businesses to this 

country because we have some very low-cost natural gas, and that 

is bringing the chemical companies who thought they would never 

come back to the U.S. coming back to the U.S. 

So there are many good things, but what the barrier is, that is 

not something I have studied. 

Mr. OLSON. Thank you for that question. Just to follow on those 

comments, though, I actually went out to the Eagle Ford Shale 

Plate in my home State of Texas this past weekend, and just to 

show you how not only jobs are being created there, but what a tremendous impact it has on the local community. One of our escorts 

was—they have a couple wells in Zapata County, which is a relatively economically-depressed county in my home State. 

The gentleman told us that since they have been—the past 2 

years they have been operating there, the sales tax revenue has 

gone up 3,000 percent. The property tax revenue, which is what we 

use to pay for our schools, has gone up 4,000 percent. 

So, again, energy is not just about jobs. It is about quality of life. 

And continuing on with, let us see, number two, Mr. Berlau, again, 

the question, What agency of the Federal Government is the biggest hindrance? 

Mr. BERLAU. Yes. Congressman Olson, thank you. Regulatory uncertainty is a factor in the energy industry and many other industries. My fellow witness had talked about surveys, firms laying off 

workers, I think as important are the surveys that much research 

has been on firms factors in whether or not firms expand, whether 

they launch IPOs, and there you can see that regulatory uncertainty is a big factor. Eighty percent of CEOs of smaller companies 

said they were—some of their biggest concerns about the implications of going public were the costs and risks of Sarbanes-Oxley 

and other compliance requirements. 

And in the energy sector, yes, you have the looming regulations 

on fracking, on the delays in the Keystone Pipeline, but I think in 

all energy businesses and in energy sectors from Royal Exploration 

to green energy, its access to capital that they can’t launch, and it 

79 

takes so long that you have to be as big as Facebook to launch an 

IPO, and actually if you simplify some of these regulations, it 

would be easier both for companies in the green energy sector and 

into the traditional energy sectors to get the capitals they need. 

Mr. OLSON. So it sounds like we need to form the tax codes and 

get our sky-high corporate tax rates down. 

Mr. BERLAU. Yes, and our sky-high regulations. 

Mr. OLSON. OK. I am sorry. Mr. Abowd. Abowd. I apologize. I got 

it written down there Abowd. My apologies, sir. 

Mr. ABOWD. Well, I think the long-term prospects are best if we 

fix the energy distribution network so that more electricity can be 

delivered, especially for transportation purposes, stimulating 

growth in the production of alternative-powered vehicles, which are 

a huge growth potential. They are basically being held down by no 

standardized way to distribute the electricity to them. That I think 

would be the—where I would look for—— 

Mr. OLSON. OK, and finally, Mr. Schmitt, and I am out of time 

here, sir, so as fast, as quickly as possible. 

Mr. SCHMITT. I am a labor—— 

Mrs. BONO MACK. Please turn your microphone on. 

Mr. SCHMITT. I am a labor economist, and I don’t follow the energy sector, so maybe I will just take a pass. 

Mr. OLSON. OK. I appreciate that, and kind of following up on 

some of the questions by our chairwoman earlier about mentioning 

the bipartisan jobs that have been passed by the House of Representatives and are sitting over there wallowing in the United 

States Senate, I have got an updated list here, just hot off the 

press, and it is from the Republican Conference this morning, and 

I am happy to give you guys a copy of this. I am sure our Conference would be happy to give it to you so you can pull it out of 

your pocket like I did. 

But this is a list of 29 jobs all across our economy empowering 

small business by reducing government barriers, fixing the tax 

code, boosting competitiveness for American manufacturers, encouraging entrepreneurship and growth, maximizing American energy production. 

Again, I will get you guys this if you want it, put it in your pocket, you can pull it out and use it just like I did. 

I yield back the balance of my time. 

Mrs. BONO MACK. I thank the gentleman very much and thank 

all of our witnesses. 

As we conclude our first hearing of the year, permit to also thank 

each and every one of our members for all of their hard work and 

dedication to these issues and a special thanks to my friend, Mr. 

Butterfield, who has been a joy to work with. I am looking forward 

to a great year. 

I remind members that they have 10 business days to submit 

questions for the record, and I ask our witnesses to please respond 

promptly to any questions they might receive, and the hearing is 

now adjourned. Thank you. 

[Whereupon, at 11:30 a.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

80 


80106.053
81 


80106.051
82 

Æ 


80106.052