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A State of the Union Address for Today's Labor Market Realities

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Last week's State of the Union message by the President left out any substantial references to today's labor market realities and the need for new public policy actions to address these problems. A progressive agenda is called for and bipartisan support is needed. Below is our version of a thoughtful, progressive State of the Union address that should have been delivered to our nation:

Two years ago, when I entered office as our nation's 44th President, the national economy was in the midst of a severe economic recession and struggling with a financial crisis. High levels of uncertainty and financial instability prevailed, payroll employment was shrinking at a dramatic rate, and the ranks of the unemployed were exploding. Over the past year, thanks to actions by the U.S. Congress and the Federal Reserve Banking System, economic growth has been renewed, new jobs are being created in the private sector, and unemployment has at least stabilized. Prosperity has returned to much of Wall Street but Main Street has only seen a few signs of recovery and far too many of our working communities have been largely bypassed by the economic renewal to date. Together, we must jointly address this set of critical labor market problems and help put America back to work.

Today, as I look out at America, I see one-fourth of our nation's current and potential work force left either openly unemployed, hidden from the official ranks of the jobless, underemployed, or stuck in jobs that do not utilize the knowledge or skills that they acquired in college and in their training schools. Failure to obtain work, or to secure their desired hours of work, or to use the skills they have acquired through their own efforts and the finances of society will reduce the aggregate output level of the nation, their productivity, their earnings, their family's economic well-being, and their contributions to the tax coffers of the federal and state governments. Both our current and future economic growth and the fiscal strength our nation is adversely affected by these developments.

Among the groups most adversely affected by this substantial labor market downturn have been our youngest workers (those under 30), blue collar workers, lower income workers, and displaced older workers. Their employment prospects will be influenced by both our ability to generate higher rates of economic growth and by increasing incentives for firms to put more workers on their payrolls.

Our nation's teenagers and many young adults ages 20-29 are working at a considerably lower rate today than at any time since the end of World War Two. Absence of work experience in the teen years and early 20s prevents our youth from acquiring marketable occupational skills, solid work habits, the soft skills demanded by employers, and opportunities to interact with adults and observe the skills and behaviors needed to succeed at work. Absence of early work experience will reduce their employment, wages, and training opportunities in their mid 20s. These problems are not confined to young adults lacking college degrees. Too many of our new college graduates are left either jobless or holding jobs that do not utilize the skills and knowledge that they acquired in college, reducing the return on their human capital investments and those of society.

A variety of actions are needed to improve the employment prospects of these young workers. We will work with states and local workforce development boards to expand internship opportunities and paid employment of high school students both year round and during the summer, increase the hiring of career specialists to prepare them to make the transition from high school to the world of work, and work with the nation's employers to expand new youth apprenticeship opportunities, and provide subsidized employment in the summer for the nation's jobless at-risk youth. We also will experiment with employer wage subsidies to promote the full-time employment of out-of-school youth, and we shall work with colleges and universities to provide additional internships and cooperative education positions for our college students to facilitate their transition to the labor market upon graduation.

Worker dislocation problems have risen to record highs in recent years, and many of these dislocated workers who have lost their jobs have experienced severe difficulties in becoming re-employed, thereby dramatically increasing the ranks of the very long- term unemployed. This is particularly true for blue collar workers and many displaced older workers. We need new approaches to improving their employment prospects. I will propose a major expansion of on-the-job training opportunities in the private sector for these dislocated workers, increased investments in their education and training tied to firms in those industrial sectors that are expanding their payrolls. New jobs tax credits for expanding firms that hire these certified dislocated workers will be provided to encourage them to put these experienced workers back to work now. America works when America works. New infrastructure investments in our nation's transportation system, energy generation, and home weatherization also will be promoted to expand job opportunities for our heavily underutilized construction workers.

Too many of our lower income workers have also been left behind in the labor market, becoming either jobless or underemployed, leaving them with too few hours of paid work to achieve earnings adequacy. We will provide new economic incentives in the form of tax credits for the employers of such workers to expand their work hours and their investments in their skills, both occupational and general literacy skills, including literacy training on the job. These programs will help fight unemployment, underemployment, and income inadequacy problems simultaneously."

Fifty years ago, a young newly-elected President John Kennedy proclaimed to the nation in his Inaugural Address, "All this will not be finished in the first 100 days. Nor will it be finished in the first 1000 days nor in the life of this administration. But let us begin". So let us begin.

Andrew Sum, Center for Labor Market Studies, Northeastern University and
Paul Harrington, Director, Center for Labor Markets and Policy, Drexel University