Hearing of the United States Senate Health, Education, Labor and Pensions Committee on Unemployment in a Volatile Economy: How to Secure Families and Build Opportunity
(As Prepared for Delivery)
I'm pleased that all of you could join us here today. In recent weeks, we've seen numerous warning signs that our economy is headed in the wrong direction. Working families know better than anyone that times are tough. They worry about putting food on the table, heating their homes, paying their medical bills, and paying their mortgages. Perhaps more than anything, they're worried about their jobs.
In today's troubled economy, too many people are out of work, and too many others go to work each morning hoping they still have a job. The unemployment rate is rising, and experts predict that it will keep on rising for months to come. It's already 7.6% in Michigan and 6.8% in Mississippi. Ohio, Alaska, and South Carolina are all over 6% as well.
Workers who lose their jobs are having great difficulty finding new work. 18% of unemployed workers -1.2 million people - have been looking for a job for more than 26 weeks but can't find one. There just aren't enough jobs to go around.
There are now nearly two unemployed workers for every job opening in the country. That's a far tougher job market than we saw before the last recession, and if history is any indication, we'll see three or even four unemployed workers for every open job before things improve.
Unemployment doesn't just hurt workers, it devastates families. It means months of pounding the pavement, knocking on doors, struggling without a paycheck. It means choosing whether to pay your heating bill or pay the mortgage. It means worrying about how you'll pay for your son's asthma medication, or telling your daughter you can't afford to send her back to college.
It's not just individual families who are affected. Unemployment hurts the country as a whole. Unemployed workers have no money to spend. Even those who still have a job are worried and cut back their spending. It drags the whole economy down, and forces still more people out of work.
Families lose faith in the American dream. As the economy falters and families fall, the very fabric of society crumbles.
We have to stop this crisis before it worsens, and that takes strong economic leadership. First, we have to strengthen the safety net for families struggling to find work. Our outdated unemployment insurance system doesn't provide enough support. More than a third of unemployed workers run out of benefits before they find a job. 2.6 million people ran out of benefits in fiscal year 2007- before the recession even began. And we know this number will continue to rise as the recession deepens.
That's why I've introduced legislation to extend unemployment benefits for all Americans, and provide extra help for workers in high-unemployment states. Extending benefits is an obvious measure that helps families in crisis, and it also gives an immediate boost to the economy.
But it's not enough. Too many people are left out of the system and don't qualify for benefits, despite their hard work.
The current unemployment insurance system hasn't kept pace with the changing economy. Technology has changed, the workforce is more mobile, and temporary job losses have been replaced by long-term structural unemployment. But the rules of eligibility for our unemployment insurance haven't changed with the times. Federal law hasn't changed since the 1960s. In 2006, only a third of unemployed Americans received unemployment benefits.
Workers who paid into the system for years were left out when they needed help the most.
These holes in the safety net affect low-wage workers the most. According to GAO, they're only half as likely to receive such benefits as other unemployed workers, even though they're twice as likely to lose their jobs when the economy goes south.
We need to modernize our unemployment insurance system by encouraging states to adopt reforms that will cover more workers, help families care for their children, and help workers in job training programs.
The Unemployment Insurance Modernization Act serves these important goals, and gives states the resources and flexibility they need to revitalize their programs and serve working families more effectively. The legislation has already passed the House, and has substantial bipartisan support in the Senate. We need to pass it immediately and fix our broken system.
Finally, we need to recognize the profound shifts in our economy. As the jobs in manufacturing and other industries continue to disappear, job training for displaced workers will become more critical than ever. Hard-working Americans are more than willing to change careers - but they need help to do it.
The Administration, however, has played a shell game on job training. In 2004, President Bush told America: "I believe we can double the number of workers who are going through the job training programs." But his budgets have consistently undermined this promise through drastic funding cuts. This year, he wants to cut total well over a billion dollars. He even wants to eliminate the Employment Service - a longstanding source of needed assistance and training.
The Administration would further undermine existing programs by replacing comprehensive training services with private accounts, requiring workers to pay for federal training services they now get for free, and exposing workers to useless or even fraudulent programs.
The President also wants to eliminate programs that provide vital services to groups with special needs, such as unemployed youth and Native Americans, even though these proposals have been rejected time and again by Congress. That's exactly the wrong solution. Instead, we need to make a real commitment to help unemployed Americans learn new skills that fit the jobs our country needs.
We've obviously got to change direction, and in the new global economy, it's more critical than ever for each American worker to be able to contribute to the economy. That means giving them the genuine support they need to get back on their feet and back into the workforce.
So I look forward very much to hearing from our witnesses today, and to working with my colleagues on both sides of the aisle to build realistic new opportunities for the unemployed and for all our people.