TRANSCRIPT

RUSSELL SAGE FOUNDATION
FORUM ON THE FUTURE OF WORK

BEYOND THE UNEMPLOYMENT FIGURES

MAY 27, 2004

SHEILAH KAST: Good afternoon. Hello, and welcome to this second Russell Sage Foundation Forum on the future of work. I'm Sheilah Kast. I'm a newscast anchor at NPR and PBS, and I'm very pleased to be with you today because I think this is such an important and interesting topic.

Three weeks ago when the Labor Department reported that the economy had created 288,000 jobs, one private economist immediately told the associated press, "I'm officially declaring the jobless recovery dead," and you could hear the sigh of relief that he was echoing, you could hear that rising from many quarters in the United States, -- the sense that the jobless recovery is finally producing jobs. We can put that worry behind us, right? Not so fast.

That's what we're going to discuss in this next hour. When you look behind the unemployment numbers, what is the real picture of jobs in this country.

We have a terrific panel, and the plan is that I'm going to ask them a few questions so that they can tell you some of their most relevant research and conclusions. I'll do a few follow-ups, and then we'll open it for your questions. And we intend to do all of this in the next hour. We hope to end right on time, at 2:30, and we want to make sure you get your questions in, so let's get started.

Frank Levy is the Daniel Rose Professor of Urban Economics at MIT's Department of Urban Studies and Planning. He has written extensively both on trends and living standards, and on education and the economy. His 1999 book, "The New Dollars and Dreams, published by the Russell Sage Foundation, traces the history of U.S. income distribution since World War II. With his colleague, Richard J. Murnane, of the Harvard School of Education, Professor Levy wrote "The New Division of Labor: How Computers are Creating the Next Job Market" - just published by Princeton University Press and the Russell Sage Foundation. And let me point out to you that you have full bios of each of our panelists in your packet, along with some of their writings.

Dr. Levy, we asked all of you here today to look beyond the unemployment figures. Can you take us there? I mean, what are the jobs being created in this economy.

FRANK LEVY: Well, I think the reason why you want to - the unemployment rate is obviously very important, but the other dimension to the job situation is what kinds of jobs are being created. So if you will bear with me, if you open up your packet, you see that there's a graph in there called "Occupational Change Since the Recession," and this was - unfortunately, this is a little crude, this graph, and it was - it's made up from Bureau of Labor Statistics numbers, and the crude part is that I wanted to get a little bit longer perspective, and so the graph begins in the year - in January of 2000, so that's really a year before the recession, just to give you some sense of job growth over the last four years.

And you can see what's going on there, just sort of going down the different categories. Total employment has gone up since January 2000 by 3.5 million. The biggest chunks of that - two big chunks of that are at the high end - management, business and then professional occupations have grown substantially, and then at the bottom, service occupations, security guards, cafeteria helpers, so on and so forth. Then when you start going down the categories, clerical work has shrunk substantially and then production occupations have shrunk substantially. There is some offset to the growth in construction work because of low interest rates, but basically the picture I want you to take away of this is that if you ordered these in terms of average pay as opposed to the way the BLS ordered them in terms of category, you'd find growth at the top and growth at the bottom, and then shrinkage in the lower middle - in clerical and production, and so on and so forth.

So the question is what causes that, and I think that even though the economy is now creating net jobs, I think you want to think about this as managers still constantly asking the question, which jobs can be done most cheaply by computers and which jobs can be done more cheaply offshore, and this kind of constant evaluation of how you want to reshape who it is you're employing and what they're doing.

As Dick Murnane and I talked about in this new book that Sheilah mentioned, the jobs that are most amenable to being computerized are jobs that can be described in logical rules, and the - sort of the example that many of you have seen in the last six months are now the way that you can get your boarding pass just by sticking in a credit card. You can kind of think through the steps that are involved in that. You don't need a human to do that.

But the other part of it is that when you think about what jobs are most easily sent offshore, for the most part it's the same kinds of jobs. You've heard a lot about programming and radiology and so on and so forth, but the biggest kinds of jobs - call center jobs, manufacturing jobs - are again jobs that can be fairly described in rules in ways that allow you to hand it off to somebody without enormous misunderstanding.

Let me give you two quick examples. You look at call center work being handed off to India, but at the same time, working up from the bottom, you see call center work being taken over by automatic speech recognition software - more slowly, but that's just sort of moving up there.

In the same way you talk about the loss of manufacturing jobs, but if you look in the 1990s, U.S. manufacturing output increased by about - produced in this country - increased by about 35 percent. Manufacturing employment didn't grow at all, and that's just technology doing some of the same things.

So the bottom line is the picture - the overview picture I'd like you to take away from this is that you have this chunk of demand being taken out of kind of the lower middle of the wage distribution, and that means that you have a lot of people competing for a relatively smaller number of jobs, and that pushes down wages and allows these service jobs to grow without benefits and at low wages because the supply just exceeds the demand.

MS. KAST: I - that's a great overview. Thank you.

Beth Shulman, let me turn to you to ask us to paint a fuller picture of this labor market. Beth Shulman is the author of "The Betrayal of Work: How Low-Wage Jobs Fail More Than 30 Million Americans," published last fall.

She's a lawyer and a consultant. When she was a vice president of the United Food and Commercial Workers' International Union, she focused on the interests of working-class and low-wage workers, and she taught at the School of Business and Public Management at George Washington University Business School.

So take us further. What are the characteristics of the kinds of jobs that Dr. Levy was describing?

BETH SHULMAN: Well, as Frank said, there are jobs at the high end and there are jobs at the low end, but it's important to remember that only 30 percent - 30 percent of working Americans have a four-year college degree or higher, so basically we're talking about 70 percent of Americans who are going to be competing for the jobs that Frank mentioned. And so what you've got is manufacturing jobs that have moved overseas or technology has changed, and what you've got left are the low-wage jobs in the service sector primarily, that are growing.

And what are those jobs? Those are nursing home workers, they're home healthcare workers, they're janitors, they're hotel workers, they're childcare workers, they're security guards, they're ambulance drivers, they're educational assistants, they're pharmacy assistants, they're people who work in food processing. And these jobs are the jobs that are growing, so you've got the top end growing and you've got the bottom end, essentially, growing, and these jobs are least susceptible to be moved overseas? Why? You can't do a childcare job somewhere else or a home healthcare job. You can't do a janitor's job somewhere else. They can't be mechanized in the same way that Frank discussed. So you've got this whole range of jobs in the low end.

What are these jobs like? What is the future going to be for the 70 percent of Americans without this college degree or an advanced degree? Low-wage jobs are really characterized by a whole variety of things. Let me start - first, they make a low wage. The jobs I've described make less than about $8.70 an hour for the most part. But that's not the only problem with these jobs. These jobs are the least likely to provide health benefits. Workers who make less than $20,000 - only half are provided health insurance by their employers compared to people who make over $40,000 a year, where 80 percent are provided health insurance by their employers.

What else don't these jobs have? They're the least likely to provide sick pay and family leave. They get the least amount of vacation time. These are the most hazardous jobs in our economy. These are the jobs that require the most night hours, so providing for child care is more expensive and more difficult to find. These jobs are the least likely to provide training. They're half as likely as high-wage jobs to provide any kind of retirement.

So what you've got is the increase of the low-wage sector continuing to grow over the next decade, and the problem is that unlike manufacturing jobs, these are not family-sustaining jobs, and the question for the United States in the next few decades is what are we going to do? What choices can we make to ensure that jobs provide the basics of a decent life to all working Americans?

MS. KAST: Thanks. Thanks, Beth.

One of the points in the economy that is particularly affected by this jobs picture is welfare. Sheldon Danziger is professor of the Gerald R. Ford School of Public Policy at the University of Michigan. He's the Henry J. Meyer Collegiate Professor of Public Policy, and he's co-director of the National Poverty Center there. His research focuses on trends in poverty and inequality, and the effects on disadvantaged people of changes in demographics, government social programs and the economy. His most recent book is "Understanding Poverty."

Professor Danziger, what does this job market mean for women who are making the transition from welfare to work?

SHELDON DANZIGER: Well, I think this ties right into to what Beth was saying, and in your packet - I'm going to just quickly point people to Figure 1 and 2 - which are at the back of a note called "From Welfare to the Low-Wage Labor Market," it turns out the median wage in 2003 in this study is $8.33, which is very close to what Beth just mentioned about low-wage workers. And in thinking about this it's great that the unemployment rate is moving down. Of course the situation for low-wage workers is always, always much better when the economy is booming than when the economy is slow, but the experience of women who were asked - or were told to leave welfare after the 1996 Welfare Reform - shows that even when the economy was as good as it had been in 30 years in the late 1970s - you can - as good as it had been since the late 1960s in the late 1990s, if you look at Figure 1, you see that among women who had been on welfare, at the height of the economic boom, we got up into the 70s in terms of what percentage of them were working in every month. So for people who have the least labor market skills, even in the best economic times, a quarter of them could not find a job in any given month.

And then if you look over to the right-hand corner, obviously you see that during the recession the employment rate in this sample fell to about 64 percent. Now it's much better to have an employment rate in the 70s than it is in the 60s, but the point about the national unemployment rate is that for the lowest wage workers, the people who are most vulnerable, like welfare mothers, even in the best economic times a significant number of them can't find work.

Then if you turn to the second figure, we really get at what we've been talking about here. We have the sample classified as to whether or not they have no job, whether or not they have a low-wage job, and whether or not they have a good job. And in this chart, you have a good job if the job provides you with health insurance and you earn about - at least around $7.75 an hour and you get employer-provided benefits, or if you don't get employer-provided benefits, then we say you have to earn about $9.40 an hour, which would be enough for you to at least buy a minimal policy on your own.

And what we've heard about welfare reform - and it's clearly the case that welfare reform got more women to work that would have otherwise been the case - but again, when we hear the unemployment rate is falling, we've turned the corner, we often hear welfare has been reformed, we've dramatically cut the caseload, what this shows is that six years out from welfare reform, only 28 percent of the sample were in good jobs, and if you take just workers - the people in low-wage jobs and the people in good jobs, so you say, okay, well, let's not talk about the people now who don't have any jobs, still less than half of the workers have these good jobs. The most rapid progress was during the boom, so it's really important to have an economic boom, but I think what it also says is an economic boom isn't enough to reach the low-wage workers we're talking about today.

MS. KAST: Thank you.

I'm going to ask a couple of follow-ups, but be ready with your questions because we're going to get there soon.

Dr. Levy, when you were talking I was thinking, well, isn't training the answer? Training is often cited as what we need to do is get more people who are in low-wage jobs into either vocational training, community college, some way to get their skill level up.

MR. LEVY: I think training and education are important, but the problem is that things are moving pretty fast now and education takes time. And so I think that talking about access to training and talking about improving education as a total solution really doesn't cut. You really have to worry, in a period of transition like this, about what kind of safety net you have and what kinds of health insurance people have access to if they lose their jobs and things like that.

MS. KAST: I directed that to Dr. Levy, but do either of you want to comment on that question of whether training is a big part of the answer?

MS. SHULMAN: Absolutely. I think part of it is certainly there should be better education and retraining for all workers, and as I said before, low-wage workers are the least likely to be provided training, so they are the least likely to be able to get new skills and move up.

But the problem is that when you look at the jobs that I'm talking about, it's not that people lack the requisite skills for these jobs that are growing. Nursing home workers and childcare workers - these aren't unskilled jobs; these are jobs requiring an inordinate amount of skill. It's just that these skills have been devalued over time.

So I think it's important when we talk about training - yes, there needs to be training for a certain amount of jobs that are going to increase, as Frank mentioned, but it's also important to value the jobs that we have in our economy that are central to our lives. We all depend on nursing home workers and child care workers, and home healthcare workers, and janitors, and hotel workers - all the - security guards - all the jobs I've talked about. So in many way, what we need to do is rethink what in fact are the rewards of these jobs. What should they be and what are the choices we can make in our society to ensure that those jobs are rewarded.

MS. KAST: But Beth, isn't it inevitable that any economy is going to have a whole bunch of low-wage jobs, and - I mean, isn't it pie in the sky to think we don't have to have low-wage jobs to make an economy work?

MS. SHULMAN: Absolutely not. There are always going to be jobs that are lower income than another job, but our low-wage workers are the worst-off in the industrialized world, for obvious reasons. Most other industrialized countries provide basic support, like health care, child care supports that we don't provide in our country. We have choices here in the United States that we can make that will improve these jobs and improve the lives of the workers. There are choices we make in terms of whether to raise the minimum wage, how easy it is to organize a union, our trade policies, our whole variety of subsides to corporations - there's a whole variety of political decisions we make every day that have a huge impact on what the quality of these jobs will be tomorrow.

MS. KAST: Professor Danziger, you talk about state welfare programs focusing a lot on getting women on welfare to a job and not enough on whether she can keep that job. What, really, can government do?

MR. DANZIGER: Well, the welfare reform in part was motivated by a concern among politicians and the public that people were turning down available low-wage jobs to stay on welfare, and so we've taken away that option, and basically, women on welfare must go to work after a certain period of time or they'll lose their welfare benefits. So welfare reform requires the recipients to look for work.

It didn't do anything, by and large, on the side of what happens if, in good faith, you go out and look for work, but the unemployment rate in your area has just up, or the jobs that are available in your area are ones for which you don't have any skills. So at a minimum, government, if it's going to provide any opportunity for those who are required to work, has to think about providing some sort of subsidized jobs - community service jobs - for women who, even in the best economic times - are going to have difficulty getting work. So part of the discussion is - what I've written ends up saying, too many women went from welfare to work and are in low-wage jobs, but another part of it is too many women went from welfare and couldn't find a job, and there's not much public discussion about that group. That's a group that wasn't there in the pre-'96 years because pre-'96 you could go back on welfare and say, I've got these young kids; gee, I'm looking for work, but I can't find a job. I need to get back on welfare.

And so, in some sense if we think about labor markets, welfare reform focused on the supply side - getting women to look for work - but it didn't do much on the demand side - are we going to either subsidize employers or is government going to provide some opportunity to work as a last resort?

MS. KAST: And you also write about what, to me, was a shockingly high number of welfare recipients who find a job but it doesn't last very long.

MR. DANZIGER: That's true. In our study - and we followed women over about six and a half years, we interviewed the same women, and typically women lose jobs. Sometimes you're working at a job, and the typical low-wage job, as Beth said, doesn't have sick days, and it's the middle of the winter, and you get the flu or your kid gets the flu, and you miss four or five days of work, and you find out you don't have a job any more. And so in our study, the typical length of job holding was about ten months, and over the course of the study - not surprisingly because we started in a boom and we finished interviewing respondents this fall - the percentage of women at each survey who had been fired from their previous job or laid off had increased. So you can see what happened is that we reformed welfare during a boom. We then went into a recession and we haven't done anything to think about how will welfare operate differently in these economic times.

MS. KAST: Dr. Levy, looking at - beyond the welfare universe to the broader labor market, what one policy change would you like to see on the part of government? Or two?

MR. LEVY: I think one has to be trying to figure out how to get health insurance to people who have lost jobs. I mean, that's at a time of extreme vulnerability, and you're asking people to put together their lives and figure out how to either try and move up, or get training, or do something, and to sort of couple the loss of the job with the loss of health insurance makes it just doubly hard. It also makes it hard to rehire people, too, because of the cost of the benefits.

MS. KAST: And Beth Shulman, what about the non-government players in this - the employers or the unions? What should they do?

MS. SHULMAN: Well, first of all, I think in terms of - in my book, "The Betrayal of Work," I talk about a compact with working Americans, that if you get up every morning - or every evening in the case of low-wage workers - and work hard, there are certain basics you should be entitled to: a basic living wage, basic health benefits, some time off to take care of a sick child or a sick parent, and some basic retirement. I mean, that's what we understood about work. There was kind of a tacit understanding that if you work hard, you should be able to take care of yourself and your family, and America needs to live up to that promise.

With regard to the non-government - or social policies that can change-- certainly the right to organize. Unions have the greatest impact on the low end. A unionized job in the service jobs I'm talking about - a unionized worker makes 25 percent more than the non-union worker, and is far more likely to have benefits.

If you take a hotel job in Las Vegas where it's unionized, that job pays about $13.00 an hour, has health benefits and sick pay, and has a retirement plan. The same job in a similar non-union economic market in Reno, Nevada, would make about $8.50 an hour without health benefits. So it's not the so-called caste of the job that's really determining the quality of the job; it's the ability to have power through a union that's changing those jobs.

One other quick point I want to make - we all look at the manufacturing jobs as, quote, "the good jobs," and you hear it over and over and over again - you know, people pointing to manufacturing jobs. Those weren't always good jobs. Being in a steel mill was not a great job at one time, you know. It didn't pay well, it was dirty, it was hazardous, there weren't great benefits. These became good jobs through unions and through social legislation. The same kind of transformation can occur in the service sector, and we're starting to see it in a variety of jobs.

MS. KAST: Who has a question?

Q: I'd like to ask the panelists what are the two or three characteristics that you would use to describe the transition we're making now from the welfare state that, you know, began with the Depression, the New Deal and the Great Society, that there's something going on that's, you know, more global.

MR. DANZIGER: I think the original goal of welfare reform had - was a two-part sound bite, and we successfully implemented part of the sound bite. It was "Make Work Pay, and End Welfare as We Know It," and we basically ended welfare as we know it, and what we're talking about today is we haven't fully made work pay. What's interesting is that in the U.K., when you say globally, if lots of countries are moving to cut back the welfare state and to move it from a we'll-send-you-a-check welfare state to if-you're-prime-age-years-we'll-get-you-to-work welfare state, you can look at things that the Blair government did in the U.K. and see that they actually focused on both "Make Work Pay" and "End Welfare As We Know It." So they put into place a minimum wage which is higher as a percentage of their average wage than our minimum wage. They put into place an earned income tax credit, which they called the working family's tax credit, which is higher than our earned income tax credit. They have a tax credit for children, which is not only higher than our new thousand-dollar credit for kids, but when Congress put ours in, if you get the EITC and you don't pay income taxes, you don't get it. They obviously have health insurance.

So the components of a work-based safety net are there if governments want to implement them, and I think the Blair government's implementation is a good example. And so, again, in our study, one of the things that we mentioned is the good news is by the end of the study, more women were working in jobs that offered health insurance. The bad news is that even in the best of the economic boom that never got to be more than 60 percent, and many firms offer insurance but don't subsidize it very much, so people were offered - okay, you can buy our health package, but your monthly cost is going to be $400 a month, and so many couldn't take up the offer because of the co-payment. So there are a lot of things that are fairly standard in moving away from the old-style welfare system.

MS. KAST: Anybody else want to jump in on that?

MS. SHULMAN: I just think on a broader level - if you look at what has happened in terms of the private sector, there's been a retrenchment in terms of the things that are, so called, provided by the job. So when you look at the low-wage jobs that I've talked about, many of the things that we assumed you would get through your jobs are not given in those jobs.

But I don't think it's just low-wage jobs. I think you're starting to see many middle-income jobs starting to take on some of the characteristics of those low-wage jobs where employers, because of the cost of health insurance and a whole variety of other reasons, are pulling back from either providing it or shifting costs over to workers.

The same thing with regard to retirement where at one time we had something called the defined benefit plan where you got a benefit at the end of your career. Now you've gotten more or less essentially a savings plan because you've got to contribute to a fund yourself.

So one of the things that I think is important as we look at this issue is, you know, as the private sector is kind of pulling back from providing kind of the basic social contract, as we called it, and the public sector in the United States has traditionally not provided much, the question is who is going to pay for it and how are workers going to provide those basic kind of parts of life that we all need for ourselves and our families.

MS. KAST: Thank you. I should explain - I'm moving around the room not because I'm an Oprah Winfrey wannabe, but because we're going to make a transcript of this hour and so we want your questions captured on microphone as well as their answers.

Another question.

Q: I would imagine, like everything else in this society, there are some substantial racial disparities in all of this work. What can you say about that, or are we not collecting information or paying attention to that dimension?

MR.DANZINGER: It's interesting. We did - the study I'm talking about is a survey in the State of Michigan, and there were surprisingly few differences between the white women leaving welfare for work and the black women leaving welfare for work, and that's certainly not the case in the national data. We know that the wage gap is particularly large for African-American men. It's smaller for African-American women, but in - a lot of it will depend on the specifics of the labor market.

In a number of studies; mainly the Urban Institute, which are large enough to get a national view on African-American, white and Hispanic women's differences in making the transition, but I just - I don't have the numbers at the top of my head. In the Michigan study, we didn't find any.

MS. SHULMAN: With regard to the low wage workplace, you know, there's -- basically two-thirds are white, but I think as you start to go underneath that, you'll see that there's kind of a hierarchy within the low-wage workforce which is that white males tend to have jobs that pay the most or - at the low-wage - in low-wage jobs, and it goes down to white women, and black women, and at the very bottom are immigrants. So the worst jobs in terms of both just wages and benefits and conditions tend to go to immigrant workers, and one above those are generally people of color.

Q: Thank you so much for the handout. It's really a wonderful handout. I had a few minutes to look at it before you started up, and I really appreciate, you know, having this to take away.

I took - I noticed that the data is from a single county in Michigan, and we know during the boom that the boom was extremely uneven. I mean, here in this area - you know, what we saw going on in Northern Virginia was a different story completely than West Virginia, and I was wondering if you had any - could give us a sense for the degree to which the data from this one county would overstate or understate nationally what's going on.

MS. KAST: And you're directing this to - to Professor Danziger.

MR. DANZIGER: To the extent that we've been able to document, this is pretty much the national story. Now I'm sure you know there's enormous variation around the national average, but trends that the Urban Institute reports for the nation, trends that MDRC finds for Cleveland, there's a three-city study of Chicago, San Antonio and Boston - fairly similar issues. Michigan is a higher-wage area, in part in here. It's interesting - I looked when Beth mentioned the union differential; in our study, the union differential is 28 percent. You said 25 percent, which sounds like the national average, so I'd say these are, I'm fairly confident, indicative of the national average. There are obviously places where the labor market was even better and people probably got better jobs, and there are undoubtedly places where people got worse jobs. This is a rust belt; this isn't Ann Arbor, so this is a rust-belt county in Michigan.

MS. KAST: I should probably have been asking people to identify themselves, so would you identify yourself?

Q: Hello. My name is Kate Jesberg and I agree with you that unionization can convert a bad job to a good job, and I'd like to know how successful we are, or if there are any bright spots in converting low-wage jobs, especially in the service sector to unionized positions?

MS. SHULMAN: Yes, there are an enormous amount of bright spots. If you look at the Justice for Janitors campaign, the SEIU campaign, they really have transformed jobs that were once very low-wage jobs into really pretty good jobs, making 11, $12 an hour with basic health benefits.

That same kind of transformation is true of hotel workers if you look at where they're unionized; again, transforming those into what we start to look at as family-sustaining jobs. Home healthcare workers, nursing home workers - there's been real change.

But I - I've got to say that there's bright spots, but I - it's very difficult to organize in the United States. The right to organize is something that it there, but it's there mostly on paper, and the laws are not sufficiently strong to deter what a lot of times is going on, which is employer intimidation or harassment of workers when they try to organize.

If we actually believe that, you know, people should have the right to choose - whether or not they want a union is their choice, but if they want the right to choose, we should ensure, like voting, that we actually give people the right to form a union without any interference or intimidation so that if they do choose that route, they can actually have the power to change their job.

Q: Joan Grojinwa-Thomas for Ms. Shulman. I'm just curious to know what your response is to what seems to be the recent pushback on Wal-Mart - against Wal-Mart, I should say. We had Los Angeles and now we have Chicago, and Vermont also has an issue with Wal-Mart. I just wanted to know what your response to that was.

MS. SHULMAN: Well, I think that - actually, for the first time in a long time, I think people are looking beyond the issue of just saving money and looking at the cost of having a Wal-Mart in their community, so that people are starting to look at when you have a very low-wage employer, it costs your community in terms of taxes, in terms of providing social service, and providing health services, the kind of environmental record that Wal-Mart has, the kind of record they have in terms of immigrants rights. They have a large sex discrimination charge against them. So I think that people are starting to look at cost to a community, not just, you know, how much it costs in terms of a product that's being sold.

I think the other issue that's important when you look at the Wal-Marts is that there are other - there are other models. You know, Costco is the same kind of operation as Wal-Mart, but they've taken the high road. They have a very different value system in which they actually pay workers a living wage and have basic benefits. So I think the real issue for the United States is what kinds of incentives can we put in place to ensure that we go the Costco route rather the Wal-Mart route.

MS. KAST: And how would you answer that question?

MS. SHULMAN: I think there are lots of ways. One, you need to push up the bottom. You need to ensure that we raise the minimum wage so that we - you know, sort of can't go the low route of continuing to push wages further down.

I think with regard to any kind of subsidies or government contracts, we can ensure that those who provide a basic living wage and basic benefits, that they - they get - essentially they get a leg up in any kind of subsidy for federal contracts.

I think we need to make health insurance essentially across the board so that the Costcos of the world that are providing health insurance don't have to compete against a Wal-Mart that's not providing it.

So I think we need to level the playing field and put in place measures that encourage the high road.

MR. LEVY: I think also that there may be some basic symbolism here.People latching on to something that's been bothering them. I mean, we see that in all kinds of political contexts. There's something sort of churning below the surface and then something allows it to - some symbol allows you to start focusing on that, and then it sort of rises up. And it sounds to me - though I'm no expert political analyst - that Wal-Mart is beginning to be that kind of a symbol.

MS. KAST: A symbol of the whole issue of low-wage work?

MR. LEVY : Yes, yes.

MS. KAST: And what do you think the implications of that might be?

MR. LEVY : Well, I don't know yet. I mean, the question of whether - I mean, presumably one implication is if some political movement or politicians begin to start seizing on that or seeing the - seeing the rallying around that as a way of saying, gee, that's an issue you might be able to run on.

MR. DANZINGER : There's been more attention to letting people clock out and then saying, oh, would you come back, I've got some extra work to do. And it's not just Wal-Mart, other firms. I mean, that's an example, I think, that most people, even if they would say, oh, this is a low-skill job; they ought to get low wage, would think it's just not fair if somebody is clocked out, you have them do something and don't pay them for it.

MR. LEVY : Right, and just as an example of that, I understand the Wall Street Journal had an article a couple of weeks ago about the technique of appointing somebody, in Wal-Mart - and other people do it, to - to assistant manager. Ostensibly it's a promotion. It turns out they're doing the same thing, but once you become an assistant manager, you're no longer eligible for overtime, so this is a way of kind of saving on that.

MS. KAST: I just wanted to mention, in terms of whether this issue is catching on - many of you may have seen the cover story this week in Business Week magazine, which comes out in favor of an increase in the minimum wage, which not every business publication would have done.

Here, another question.

Q: Ellen Bonaparth from the National Council of Women's Organizations. I want to ask you about job creation by the public sector. Forgetting - or putting aside for the moment the - either the will or the funding to do it, is it possible for government's to create jobs, particularly state and local, and thinking back to the good or bad old days of CETA, and then of course further back to World War II. But, I mean, if we were serious about doing job creation, is there any experience in terms of public sector job creation that we can look to?

MR. LEVY : Well, we have done that in airport screener, right? I mean, there's been a huge increase in - no, I know, you're saying - speaking totally philosophically - I'll leave the policy to other people - unless you have a real purpose in mind, it doesn't impress me that you'll get as much bang for the buck as talking about seriously legislation on things like minimum wage and regulation of health care to improve jobs that are being done in the private sector. I mean, a lot of what you are talking about here is that without some kind of regulatory floor, it really is a disadvantage for somebody to pay a serious wage. It may not be so easy because, he'll say, well, gee, you know, all my - I would do it if - you know, but I can't do it if my competitors don't. Putting your effort in that sort of thing, I think, gets a lot more mileage than worrying about job creation unless there is something that you really need, as in the case of airport screening.

MR. DANZINGER : I would just add - for welfare mothers who have skill problems, health problems, mental health problems that prevent them from getting the jobs that would be created that prevented them from getting jobs when the unemployment rate was less than 4 percent, then they're not going to get hired unless there are some public service jobs of last resort. In the old days, that's when we wrote a welfare check, we said we're writing too many of those so we're going to change the system, and so that's a group, I think, that would be - I think it's called transitional public jobs, and there are examples of a few cities and states that are trying to do it. But there's not a lot of money to do that.

Q: Hi, my name is Lynn Fairfax , and someone in the back mentioned racial discrimination. What about the discrimination against persons with disabilities. What is your feedback on that because so many people with disabilities are in low-wage-paying jobs?

MS. KAST: Anyone have a thought on that?

MS. SHULMAN: I haven't segregated that out and taken a look at that directly, but I think what you have is that just basically you have employers who are going to kind of tend to go the easy route, which is kind of to hire those who can most easily fit into the job.

Again, I haven't looked at that directly, and it's certainly worth looking at.

MS. KAST: Other questions? Yes.

Q: My name is Debbie Weinstein . I'm with the Coalition on Human Needs. And I did want to start by thanking each and every one of you for the wonderful research and work that you've done that advocates like myself have used for a long time.

I'm thinking about the issue of the government as a model employer or contractor, and, you know, this seems to go very much against the current grain where privatization is just a means of reducing the sort of model aspects of employment. But why could we not - or there is an example in San Francisco, for instance, where they had a living wage campaign. There were nonprofit service providers whose money all comes from government who were initially very nervous about the living wage because they knew they didn't have the money to pay for those salaries, but then worked out an arrangement where they got additional money in their contract so they could pay. That seems like a very happy ending there.

Are there other examples where that kind of thing is being done, or how can we move in that direction?

MS. SHULMAN : I mean, there's an enormous amount of examples of how the living wage movement has basically -- in probably about 150 communities throughout the United States have passed ordinances that say, basically, if you're going to get a contract, a subsidy, any kind of economic development grant from the city or locality then you have to provide a certainly quality job. And that's generally defined by the wage and the kinds of the benefits that an employer provides.

And, I think, that is a good mechanism for, essentially, communities saying we need to lead. We're going to define in our community a certain value and that value is a quality job, and if you're going to get the privilege of doing business or getting taxpayer money, this is what you're going to have to do.

I think that that movement has been inordinately successful. The whole concept of a living wage didn't exist, certainly, 10 years ago. So, I think there are - there's accountability movements that look at what, in fact, states are doing with their taxpayer dollars and putting kind of safeguards in there to ensure that wages and benefits of those receiving sate dollars are - are providing quality jobs. So, I think there - there is a lot of - kind of especially on the local level - rays of hope of really trying to get the government to lead in terms of providing quality jobs.

MS. KAST: Another question.

Q: Yeah, Nolan Walters with the National Press Foundation. I just had a question for Dr. Danziger. I've been looking at Figure 2 in your chart and I'm - I must be misinterpreting it or not understanding it fully. But it looks like percentage-wise the number of workers hasn't changed much over the five years in your study, but the number of individuals in so-called good jobs has gone up quite a lot, and the number of workers in - the percentage of workers in low-wage jobs has gone down considerably as well. So, it looks as if the net - the major effect of this welfare reform has been to push people into good jobs.

MR. DANZIGER: There is a lot of good news in terms of the direction, okay? But here's the thought experiment. These are the same people, after six and a half years 28 percent of the whole sample has good jobs. So that's great - (audio break, tape change) -- of these 79 months for which we have data, women on average worked in 68 percent of the months. And so we have women who have worked - 80 times 70 is 50 - they've worked 50 - they've accumulated 56 months of work experience on average over the past six years.

I would think if your goal was to end welfare as we know it and make work pay, you'd say, well, how many years is it going to take us to get to the point where 90 percent of the women have good jobs? And that, to me, looks - look at the experience from 1990, 25 percent to '03. If the economy keeps up like it has been the last four years, then that'll take you 120 years. I mean, that's the issue. The good news about welfare reform - and if you read the whole thing and there's a web page with lots of it - more women are working because of welfare reform. They are earning more because of welfare reform. We reported here that they were earning less than $7 an hour in 1997 and they're now earning $8.80 an hour so that's the good news.

The bad news is a lot of women can't find jobs given their skills and the economy, and we no longer do anything for them. So there's a growth in women who have no work and no welfare. And there are a lot of women who do everything - they play by the rules, again, the sound bites. They work and play by the rules and they end up not earning enough to support their family. A third of the women who left welfare entirely and went to work don't have health insurance.

The good news is, quote, only 10 percent of their kids don't have health insurance because they cover their kid under the state child health insurance program. Well, that says, gee, why don't we cover the mothers under the state child health insurance program? Well, we don't because it costs money and, indeed, lots of states during the recession cut back on CHIP. I believe the governor of California has said we're going to keep the program in place but just not let anybody in. So states are either freezing or cutting back.

So there's good news from welfare reform. Welfare reform was very successful at ending welfare as we know it. It just forgot about making work pay.

MS. KAST: Other questions? Yeah.

Q: Shaun Coffee with the National League of Cities. One of my questions is how do we frame this debate in terms of what your book talks about? How do we get -

MS. KAST: You're addressing this to whom?

Q: To Beth. How do we frame that debate so that, you know, we're not constantly battling with the right? This is bad for business to do a minimum wage or whatever. And if all three of you have seen good examples or have any thoughts about that?

MS. KAST: Thanks.

MS. SHULMAN: Well, again I think with regard to framing the issue, I mean, I always frame it that - around the value of work. That if we believe in work - which we do in the United States, as Sheldon has talked about - we passed welfare reform because we believe everybody should be working. If we believe in that then we need to reward work, and with regard to kind of the - of employers, I go back to the Costco/Wal-Mart example. I think that it's better for us to level the playing field and saying everybody's going to provide this wage, everybody is either going to provide health insurance or there's going to be a means of everybody to a pool to provide health insurance, and that everybody has to provide a basic certain about of sick pay. That levels the playing field for everyone.

I was once talking, actually, to one of the vice presidents of a large, large manufacturing company. And we were talking about this and he generally would be philosophically against some of the stuff. Finally, he turned around and he said look, just level the playing field. As long as I know what I'm going to be able to - have to do, as long as my competitors have to do it, too, I'm fine with it. So, in a sense we're saying you've got to compete on the basis of innovation, of new technology, of all those things but we're not going to let you compete on the basis of impoverishing people or of failure to provide health insurance or basic benefits.

MS. KAST: We have time for a few more questions and I think there was one back here.

Q: Yes, I just wanted to basically affirm what you're saying. I actually run the welfare for the city and we're one of the few jurisdictions -

MS. KAST: Tell me again who you are.

Q: My name is Kate Jesperg

MS. KAST: Which city?

Q: D.C. And we're one of the few jurisdictions that covers parents and children under CHIP, and what we find trying to level the playing field is that a number of employers are using Medicaid and CHIP and as a subsidy because they don't offer health insurance. So it's really a tax - a tax subsidy implied there that really tends to make it actually worse.

MS. KAST: Thank you. Question here.

Q: Yes, I get to go last. Steve Crawford. We started off - well, let me - let me start with the last comment you made about leveling the playing field. Isn't the playing field now a global playing field, especially the labor market has rapidly been globalized recently? And not only the digitalized cable things that Indians can do on call centers and diagnostics, but really with India and Russia and China coming into the global labor market now, one wonders to what extent our employers can put up market shelters and provide living wages, benefits, vacations, sick time, retirement money, et cetera.

Unless the government somehow - I mean, it seems to me EITC was a terribly effective antipoverty redistribution scheme, but nobody's talking about that. We're talking about make work pay. It was a nice slogan attached to a campaign to get welfare reform passed, but I'm not sure how seriously we as a country were ever committed to making work pay. But, furthermore, I'm not sure how successfully we can commit to making work pay, especially if we're concerned about a jobless recovery and maintaining the number of jobs, and at the same time raising the compensation for them in what is rapidly becoming a very global labor market.

MS. KAST: Who in particular would you like to hear from?

Q: Well, Frank's ready to address that.

MS. KAST: Frank.

MR. LEVY: I think the basic economics really don't - you're painting a picture that is unnecessarily bleak in that sense. I mean, if you think about those kind of - you're right, I mean, a lot of this is going to have to come through government, and there's plenty of reason for it to come through government in the following sense. If you say why do we pursued trade and why do we implement technology? It's ostensibly to make the pie grow.

Now, there's nothing in economic theory that says that if the pie grows everybody individually is automatically going to grow because of the market. And so then it really comes down to, well, if the pie is growing then we ought to have as a society a way for winners to compensate the losers. Now, it certainly is true that the winners in trade is a very complicated picture because one of the things that's going in a world market, while people may protest, is that customers come in and buy low-wage - low cost stuff and so on and so forth. But the point is if you can't work out a situation like that, if you can't work out a way to somehow funnel some part of the growth of GDP to the people who are bearing the costs of these transitions, then the question is why are we bothering to do this? What's the point?

I mean, and I think if you sort of project on the long run, if the idea is that you want continued political support to engage in the rest of the world or you don't want some kind of lead (ph) eyed movement against technology, you really have to talk in these terms. Or otherwise you're saying, well, we're going to let the market go and let the chips fall where they may and too bad. That is not, I think, a sustainable way to run an economy or a society.

MS. SHULMAN: The other thing I would say to is you may take into consideration - I believe in raising the minimum wage, I also believe in pushing up the EIPC. I agree with you. It's been an enormously successful program that both politically has been very, very positive in terms of everyone supporting it. The other thing is it may go to the issue of how we provide health insurance. It may be that what you end up with is maybe a payroll tax or something where employers - a system where you have more government intervention and it's detached from an employer.

There are a lot of ways of doing this. I'm not saying that there has to be one way of doing it, and, certainly, we would want to look at how that - how that makes us competitive in terms of the rest of the world. But, again, I think it's important to say that we're going to provide it, and as Frank said, I mean, the whole basis of growth, the whole basis of us doing this as a society is that everyone gains. I mean, everyone has the basics of a decent life. So, I think, that's important.

The last thing I want to say about these low-wage jobs is that all the jobs that I've mentioned actually don't compete globally, so that the irony is that when people say that it's true on one - it's important on a macro level, on a big level to talk about the global economy, but when you look at low-wage jobs, they actually don't compete globally. So to say that these jobs should - we should raise the minimum wage and we should make sure that there's health insurance, that's not going to impact them in terms of competing with someone in China or Bangladesh or anyone else.

MS. KAST: As we wrap up I want to ask any of you if you - if there's something we haven't talked about today that you think is important to this picture or something we haven't sufficiently emphasized?

MS. KAST: You've done a good job. Okay, let's thank our panelists.

(Applause.)

MS. KAST: And thank - thank the Russell Sage Foundation for supporting this forum. There will be, as I mentioned, a transcript in about 10 days or so on www.lowwagework.org and so you can - you can review this if you like or spread the word to others you work with who might be interested in this.

Thank you for coming.