American Jobs in the 21st Century

March 17, 2004

Mr. DREIER. Mr. Speaker, I would like to begin this evening by reading a brief excerpt from a letter sent by my good friend, the gentleman from Michigan (Mr. Dingell). He sent this letter to the chairman of the President's Council of Economic Advisers, Dr. Greg Mankiw. The dean of the House, the gentleman from Michigan, writes, ``I'm sure the 163,000 factory workers who have lost their jobs in Michigan will find it heartening to know that a world of opportunity awaits them in high-growth manufacturing careers like spatula operator, napkin restocking and lunch tray removal.''

Mr. Speaker, I certainly understand my good friend and esteemed colleague's deep concern for the loss of manufacturing jobs in his home State. Jobs are a big concern on everyone's mind, including my own. I believe that there are very few issues that are more pressing or more worthy of debate in this Congress than the issue of jobs. But I believe the premise behind the gentleman's statement is emblematic of a 2-decade effort on the part of anti-trade advocates to convince Americans that our economy is headed for disaster. It encapsulates a tired, yet oft used and mistaken, diagnosis of our economy, that is, that American business is going to ship all of our good jobs overseas, finally leaving American workers with no job opportunity other than the one behind the counter at a local fast-food joint.

In fact, I recently stood right here a couple of weeks ago and talked about the legacy of, quote-unquote, hamburger flipping jobs, that argument, and I traced its roots back to 1984. Mr. Speaker, politicians and pundits have been predicting the demise of our economy and the good American jobs for the last 20 years. The gentleman from Michigan's letter to Chairman Mankiw is a quintessential example of the persistent, yet just plain wrong, rhetoric that jobs overseas mean lower-paying, demeaning jobs here in the United States.

But let us look at what really happened in this 20-year period from 1984 to today. Mr. Speaker, profound and profoundly good changes have taken place. We shifted over this past 20 years from an economy based on heavy industry to our fast-paced, high-technology and ever-growing 21st century economy. This transformation ushered in a new era that fundamentally changed how business is conducted, and it vastly improved how we live our lives. Yet the letter written by the ranking member of the House Committee on Energy and Commerce proves that the predictions of gloom and doom are still alive and well today. He is not the only one predicting our hamburger-flipping future.

Let us take a look at what is being said by the other critics of our growing economy. Senator John Kerry, who apparently now has all the delegates necessary to become the Democratic Presidential nominee, said not too long ago, ``People are worried about their wages, their jobs, about how we're going to compete with other countries, where we're losing a countless number of jobs to those countries.'' Before he dropped out of the Presidential primary, Senator John Edwards commented, ``The mills are gone and so are the jobs.'' Mr. Speaker, Lou Dobbs, the CNN anchor, rails almost nightly against U.S. companies that invest in growing overseas markets, claiming that ``we're exporting many, many jobs.'' Paul Craig Roberts, the economist, formerly committed to this country's open trade policies and a believer in the strength of our economy, has recently done an about face.

Several weeks ago, Mr. Speaker, he joined our colleague in the other body, Charles Schumer, in penning an editorial for the New York Times that claimed the American workforce is doomed, stating that, and I quote, ``Lots of new jobs are being created, just not here in the United States.'' Robert Slater said at a Brookings Institution forum that the United States will be a Third World country in 20 years.

Those are some very dire predictions that we have been receiving, Mr. Speaker. These political leaders and pundits are clearly asserting that our economy is in decline. They say we are rapidly losing all of our good jobs, mostly to foreign competitors, and that we are not creating new ones. Based on these claims, they see a very, very dismal future. That is why tonight I would like to focus on the heart of this issue, jobs, the issue that, of course, is regularly discussed here and should be discussed right here. Or more specifically, I want to talk about the incredibly fast pace at which our economy is creating exciting new types of jobs for Americans.

As I have said, the issue of job creation is always on the minds of the American people, and it is always a very important topic of debate. But in light of these growing attacks that are being directed at our economy, attacks that question our strength and assert that our good jobs are being destroyed or sent overseas, an honest look at the robust and dynamic job creation that is currently taking place is particularly relevant and timely.

Mr. Speaker, I am an optimist. I see a bright and promising future when I look at our economy. While I believe the doom-and-gloomers are correct in observing that our economy is changing, they have completely missed the fact that the change that is being made is change for the better. Like their predecessors who saw the decline of the buggy whip and telegraph industries, I believe those who are making the current gloom-and-doom predictions are missing the dynamism and innovation that have made our economy a global leader and one that continues to spur job creation. Literally thousands of new jobs, often in completely new fields, are being created routinely.

But before we get into these new kinds of jobs, I think it is important to get a firm understanding of the broad changes that are taking place in the American workforce. Throughout much of our economic history, fluctuations in employment have been the product of the business cycle. In the 1970s and 1980s, half of all employment was cyclical, that is, businesses would lay off workers during weak times and would rehire them during recoveries. As business picked up, employers were able to hire workers for the same jobs using the same skills that existed before the economic recession. Often this meant rehiring the very same workers. Because the job opportunities after a recession looked a lot like the job opportunities before the recession, job recovery always quickly followed economic recovery.

Today there is a lot more than just cyclical change taking place. Thanks to growing productivity, improved technology and a highly competitive global marketplace, many industries are undergoing fundamental changes. In other words, this economy has been experiencing a great deal of structural change. It is extremely important to note here that structural change is not just another term for permanent downsizing. As Federal Reserve Chairman Alan Greenspan has noted repeatedly in recent months, for years our economy has been a very dynamic job-creating machine. Every quarter, millions of jobs are destroyed and millions more are created. In 1999, for example, a booming year for the U.S. economy, 33 million jobs were lost and 36 million new jobs were created. The important distinction between structural change and cyclical change is that increasingly the newly created jobs are not only new positions in long established companies and long established industries; more and more a new job is new in every respect, a new type of work in a new business that demands new skills.

Mr. Speaker, this dynamism, which has produced a net gain of 40 million new jobs over these past 20 years about which I have been speaking, means that companies must constantly work to stay competitive and workers must continuously pursue more education and more training. But it also means that the U.S. continues to lead the world in productivity, innovation, and growth. But jobs are still a big concern. The U.S. may be the global economic leader, but what exactly are these new jobs that today's workers are supposed to be doing?

Mr. Speaker, workers in our 21st century economy are finding jobs in fields such as network and communications administration, business administration and management, computer engineering technology, health information technology, legal support, accounting, marketing, advertising, customer relations, news and information reporting, tax preparation and planning, highly specialized transportation and delivery, human resources support, pension and benefits management, purchasing and global sourcing, demand forecasting, inventory control, warehousing and distribution.

Mr. Speaker, these are good jobs using very valuable skills. They are service jobs that are a part of just about every kind of business in America today. They are not get-rich-quick jobs, but they are certainly not hamburger-flipping jobs. Think about the big and growing sectors of our economy. Think about what you spend, Mr. Speaker, on health care; biotechnology and pharmaceuticals; elderly care; education; movies; entertainment and digital gaming; recreation; telecommunications; cable; satellite TV and radio; phones; cellular and wireless networks; fashion; insurance; real estate; auto maintenance and repair; mass transit; investments, whether you call it the stock market, pensions or securities; government services, which is almost unimaginably big, as we all know; leisure; hospitality and tourism.

Then there are the businesses that service other businesses: Engineering, environmental protection services and technologies, risk management, export and import financing, express delivery, high-tech manufacturing, and biomedical informatics.

These are the jobs of the 21st century economy.

Sure, there will always be hamburger-flipping jobs as long as there are hamburger eaters, but the vast majority of jobs that this economy is creating are good, skilled jobs that pay well.

But in our ongoing debate about jobs and job creation, the issue of offshoring is inevitably raised. Whereas the doom-and-gloom crowd used to argue that good jobs will never be created, now they have shifted gears. They concede that for a while our economy managed to produce a few good service jobs, but today all of those jobs are being exported to low-wage countries via offshoring. They claim that countries like India and China are siphoning off our good jobs much faster than we can create them and Americans are being left with, you guessed it, the dreaded hamburger-flipping job.

So what exactly is offshoring and what is its effect on our economy? Since offshoring is a relatively new word in the collective lexicon, it is easy to believe that it is a relatively new phenomenon. In fact, offshoring has always been a part of the free market. Whether it is a Ford plant importing some of its parts from Mexico, a multiplex in London showing American movies, or an Indian accountant crunching numbers for H&R Block, offshoring is a vital component of our economy.

It comes down to one core concept, Mr. Speaker, and it is in many ways the basis on which this country and our market process was established and, that is, competitiveness. Again, there is nothing new about competitiveness. U.S. companies have always had to compete to survive in the free market. Being competitive has always required American businesses to be innovative, increase efficiency, invest wisely and employ the best practices that are available. This has, in turn, been a boon to American workers. Millions of Americans work for global leaders like Hewlett Packard, General Motors, IBM, and Johnson & Johnson and millions more work for small and medium-sized businesses that serve business customers that include these global leaders. The ability of Americans to find good jobs has always been directly linked to the ability of American enterprises to compete here at home and in the global market.

Therefore, it is no accident that the companies that offshore, all those companies that Lou Dobbs rails against on his program on CNN almost every night, those companies are the largest creators of jobs right here in the United States. By investing in growing markets, which maximizes efficiency and increases productivity, these successful global competitors are able to turn around and reinvest here in America. Companies that are globally engaged employ millions of Americans and pay above-average wages. They make the majority of investments in physical capital right here in this country. They perform the majority of research and development right here in this country. They produce the majority of U.S. exports that go into other markets around the world. In short, companies that offshore are the biggest job creators right here in the United States of America.

It is important to remember a key point that I discussed earlier. Job creation does not preclude job destruction. Remember that figure that I gave in 1999, 30 million jobs were destroyed while 33 million new jobs were created. This is a reality, and it is painful for some, I will acknowledge that, but this is a reality of our dynamic, fast-paced 21st century economy. Offshoring functions in the exact same way. Some jobs will be lost. The important thing is that more will be created and that they will be better jobs, using more skills and paying better wages.

So what are some of these new jobs that offshoring is helping to create? One example, Mr. Speaker, comes from the software industry. U.S. companies outsourced 71,000 software programming jobs between 1999 and 2002, and those jobs paid an average of $55,000. Those were offshored. During that exact same period of time, 1999 to 2002, 125,000, 125,000, over 50,000 more software engineering jobs, were created which pay on average $74,000 a year. Let me go through that again. We saw the number of software programming jobs offshored, 71,000 of them paying on average 55 grand a year, and yet software engineering jobs were created to the tune of 125,000 right here in the United States, paying on average $74,000 a year. Not only was there a net gain in software jobs, but they, as I have said, were higher wage, higher value-added jobs.

Another growing sector, logistics, has not only benefited from higher efficiency and productivity, it is actually a direct result of the practice of offshoring.

As companies engage more and more on a worldwide basis looking for high-quality, low-cost goods and services throughout the globe, delivery has become a very complex engineering task. Complicated supply and distribution lines involve multiple sources, often literally a world apart; diverse shipping and transportation modes; weather patterns; political unrest that can affect ports, airports, and other transportation hubs in the developing world; raw material shortages; and, of course, the finicky consumer demand, these all come into the mix, and so logistics is a massive industry in and of itself.

All of these complex factors require the highly skilled work of logistics experts, and companies pay very well for their expertise. Business owners have realized that fast and reliable delivery is one more way to cut costs and improve efficiency, and they are turning to logistics consultants on a widespread basis.

Don Westfall, the director of the Research and Supply Chain Logistics Council at the Manufacturers Alliance, has called this line of work ``a huge growth area for service providers and an important part of improving productivity in U.S. industry.''

Mr. Speaker, demand for these types of workers has risen so dramatically in recent years, the Massachusetts Institute of Technology, for example, has significantly expanded its logistics program and has added a new master's degree dedicated to logistics in its school of engineering.

Other new types of jobs that our robust economy is creating can be found simply by looking at the ways we spend our time and our money. For example, many people turn to eBay when looking to buy or sell anything from sports memorabilia to used books or cars, but the online auction is increasingly a place of business, a powerful resource used by individuals and small enterprises. Small business owners are using eBay to dramatically cut costs and conduct their business. And individuals are turning the Web site into a source of full-time work. In fact, these kinds of practices have become so widespread today, and I met with Meg Whitman last week from eBay and she confirmed this again, over 430,000 individuals and small businesses make their living on eBay. That is their source of income. Mr. Speaker, we are talking about nearly half a million Americans that count eBay auctioneering as their full-time job.

Two decades ago, few economists could have predicted that in 2004, hundreds of thousands of workers would be employed by an online auction site that got its start by catering to collectors of movie posters and matchbox cars. But this is precisely the sort of dynamism that has kept our economy churning out new jobs in the face of rapid change.

Another area where Americans are spending their leisure time and money and spurring job creation in the process is in, and I come from California so I have to talk about this, spa services. Massage therapy, for example, is a booming industry in this country. Just as we visit our internist, our chiropractor, our dentist, these professionals provide therapeutic services that many Americans are increasingly incorporating into their health care regimes, and rapidly growing demand is fueling growth in an industry that pays about $35 an hour, sometimes significantly more than that. The American Massage Therapy Association estimates that there are nearly 300,000 massage therapists in the United States. This is double the number in 1996, and the numbers are continuing to grow.

One might say that a few hundred thousand massage therapists, eBay entrepreneurs, and logistics specialists are not so important to our economy. One might say that the jobs in these three industries, eBay entrepreneurs, massage therapists, and logistics specialists, that these jobs are in industries that are not enough to sustain a Nation of nearly 300 million people. But, Mr. Speaker, I believe that these types of jobs are in fact critical to our economy and to this debate.

But I believe they are important for a number of reasons.

First, in terms of sheer numbers, these jobs are not insignificant. Just this handful of industries taken together represents literally millions of jobs, and in most cases we are talking about very well-paying jobs, jobs supporting families, sending kids to college, and padding retirement plans. But they are also significant because in many ways they represent the new face of the American economy: the independent contractor, the entrepreneur, the small business owner. It is very important.

Again, these people in these three industries that I have mentioned, eBay entrepreneurs, massage therapists, logistics specialists, they are part of this new economy consisting of the independent contractor, the entrepreneur, and the small business owner. These are the types of jobs that are booming the 21st century economy. Yet because of the old economy's mindset that is embedded in our employment survey, these are precisely the kinds of jobs that are overlooked in our jobs statistics.

Our primary method of counting jobs in this country is the Department of Labor's Payroll, or Establishment Survey. Its numbers are gathered by asking a sampling of established corporations how many people they are hiring and how many people they are firing. For years this was a fairly reliable way of figuring out our unemployment rate. The vast majority of Americans worked in factories and businesses that had been around for a long time. And because changes in employment were due largely, as I was saying earlier, to cyclical trends, as I discussed, most workers, whether employed or unemployed, were easy to track because when we would see the downturn, we would see people laid off, and then because it was reasonably static at that time, once we saw an improvement in the economy, people would go back to those same jobs.

But as we have seen, this is no longer the case. Americans are finding jobs in new industries. They are working as independent contractors and consultants. They are starting their own businesses, all of which are difficult to track using these old methods for determining unemployment. If we go looking for workers in their old jobs, we are not very likely to find them.

For example, Mr. Speaker, the Payroll Survey estimates that there are roughly 70,000 massage therapists working in this country. That would probably come as a surprise to the almost 300,000 massage therapists that the American Massage Therapy Association says are working in that industry today. The Department of Labor somehow managed to misplace over 200,000 workers or 70 percent of this industry's workforce. For eBay entrepreneurs the chances of getting counted are virtually zero. The Department of Labor does not currently count anyone making a living by selling or buying on eBay. No category exists for logistics specialists either. And because many of them work as independent contractors, prospects for counting seem pretty dim for those workers in logistics specialty areas as well.

Other workers who are largely getting missed by the Payroll Survey include the growing number of partners in Limited Liability Corporations or LLCs. The establishment of new LLCs is exploding, doubling in some States in just the last 3 years. But because these entrepreneurs are partners in new business startups, they are not counted in our jobs statistics.

And the Payroll Survey is not just ill-equipped to accurately portray our economy in 2004, it has historically been a poor indicator of job creation during a recovery. During the recovery of 1992, the Department of Labor's numbers showed job creation as relatively anemic.

As more and more data became available and a clearer picture of the economy emerged, the Payroll Survey was significantly revised to show that job creation had actually been quite robust. And that was over 10 years ago, before much of the boom in independent contracting, Internet entrepreneurship, and small business startups that, as I said, are such a big part of our economy today.

However, we do have at our disposal another survey which is strong precisely where the Payroll Survey is weak. It is the Department of Labor's Household Survey. Instead of asking businesses if they are hiring or laying off, the Household Survey asks individuals and families if they are working. By going straight to the employees, this survey is well suited to more accurately portray employment in our economy. Whereas the Payroll Survey counts established jobs in established businesses of established industries, the Household Survey counts any and all types of jobs, or more precisely, it counts people no matter what type of job they have. This approach allows the Household Survey to track workers like the self-employed. And, in fact, this survey shows that 31 percent of job growth right now is in self-employment. Thirty-one percent of our job growth is in self-employment. In other words, one third of all job creation is entirely missed by the Payroll Survey.

Therefore, it is no accident and no mystery why the Payroll Survey shows a net loss of 2.4 million jobs in the last 3 years and the Household Survey shows a net gain of 1.4 million jobs. That discrepancy is pretty significant during the highly politicized time that we are in, and it is huge in terms of the average American's peace of mind, which is why an honest discussion of what is really going on in the economy is so critical.

To be sure, while a fast-paced dynamic economy in which new jobs are constantly being created is good for all of us in the long run, it also means that rapid change is a way of life. That can be exciting. And, Mr. Speaker, we all know it can also be scary. The only way we can continue to succeed and lead the world as the strongest, most innovative economy is to significantly step up our commitment to education and training and, yes, retraining.

New jobs mean new skills to be learned, new technologies to develop and harness. But if we keep competing and innovating and remain committed to learning and using new skills, our 21st-century economy will continue to thrive and, Mr. Speaker, so will American workers. They are doing it today, and they can continue to do it in the future. We will keep creating new and better jobs, whether it is a specialized service in a booming industry like logistics or massage therapy, or an increasingly skilled part of a globally-competitive sector like software engineers whose jobs are supported by inexpensive computer programming labor in India, or an entirely new line of work that was just unheard of, inconceivable just a few years ago, like e-Bay entrepreneurship where, as I said, approaching a half a million Americans are working in their full-time jobs.

There is no doubt that many of the cutting-edge industries of today will eventually become routine or even obsolete. What is important is that through technology, innovation, investment, and education hard-working Americans keep on embracing change and propelling our economy forward.