THE WHITE HOUSE
Office of the Press Secretary
SOUTHERN REGIONAL ECONOMIC CONFERENCE SESSION II: STRAINS ON WORKING FAMILIES IN THE ECONOMY
Emory University Atlanta, Georgia
11:15 A.M. EST
THE PRESIDENT: This panel is about strains on working families in the new economy, and doubtless, some of the themes mentioned in the previous panel will come up again, but we will be looking at it more from the personal point of view of the individual citizens of our region and our country.
You already heard some of the statistical realities that were talked about earlier today, but I'd like to call on -- we're going to have three five-minute presentations, and then we're going to have some comments.
I'd like to begin with Professor Steve Allen of North Carolina State, who will talk a little bit about wage stagnation and the importance of training, because this is obviously at the core of a lot of the anxieties in the United States today.
So, Professor Allen, would you start.
PROFESSOR ALLEN: Thank you, Mr. President. If you looked at the U.S. economy from a truly global perspective, you would think our labor market was exceptionally strong. Unemployment is down almost to 5 percent now in the U.S., and has been in the 5 to 7 percent range, really, over the last 15 years.
If you compare this to our other major industrialized nations, you would see Germany may have a very strong currency, but they have an 8 percent unemployment rate. The major European countries that are our trading partners, Britain, Australia, Canada, Sweden -- they're all in the 8 percent range, and many of these countries have 12, 15, even 25 percent unemployment.
Really, Japan, with its unique system of lifetime jobs, unique system of mandatory retirement at age 60, unique system of restricted labor market role for women, and persistent trade surpluses -- all those unique factors have -- somehow Japan manages to have a 3 percent unemployment rate, but even that is under pressure now with the current recession.
So if you take a global perspective, you would say that, really, out of all of the labor markets that you might want to pick, certainly from an unemployment perspective, the U.S. would be the one. You would also see, in terms of industrial production, that we have out-performed the rest of the world over the last 15 years. You would see this in terms of inflation being very much under control in the U.S.
Yet, when you look more closely at the micro level, you see some much more disturbing trends, and I want to mention three of them today that are of particular relevance to the national economy, and the south in particular. One which has already been mentioned, and I'll skip over quickly, is slow wage growth, that no matter how you measure the rewards from working, whether it's hourly wage, weekly earnings, annual earnings, no matter how you adjust for payroll taxes and employee benefits, you still see that we've had the slowest income growth over the last 20 years that we've ever had for a sustained period in our nation's history -- less than 1 percent a year over this period.
The South has done slightly better than that. There has been some convergence from the South towards the rest of the country, but still, when you compare this to the first half of the century, when you compare it to the recovery after World War II, this is very stagnant growth.
Already mentioned as well has been the trend towards inequality. Men who did not complete high school have seen their earnings after inflation drop by 23 percent since 1979, whereas men who have graduated from college have seen their wages go up by five percent. The same pattern holds for women. The same pattern holds if you cut by occupations. Professional, managerial workers are getting ahead, service workers, production workers are falling behind. It shows up in the unemployment rate, where high school dropouts are falling relative to the rest of the labor force in terms of their ability to get and keep jobs.
I'm from the Research Triangle area, and you can see this summarized in the RTP area. You have some well-known, high- tech companies -- IBM, Northern Telecom, Glaxo -- you have small start-ups -- those of you, many of you are probably not aware of Sear* Technologies, Broadband. These companies, along with health care providers and financial institutions, provided a very strong labor market in our area, with high wages and, as one of the charts Dan Ratajczak showed earlier, the lowest unemployment in the South.
But you do not have to get very far from the Research Triangle park to go to the urban areas in Raleigh and Durham and, especially once you get into the rural areas, to find living and work conditions going in the opposite direction.
The problem is not so much the availability of jobs, except in a few isolated rural areas; unemployment in most of North Carolina is quite low. The problem is low wages and an increasing mismatch between the skills demanded by employers and those that are being provided by our work force. Even in the traditional industries in North Carolina, like textiles, furniture manufacturing, there are computers out there on the floor, there's teamwork, there's the quality movement that demands six sigma quality or as close as you can get.
And a lot of our rural workers are not tooled up to meet those jobs. And if you aren't tooled up, you've got some pretty hard choices. There are still jobs, but they're retail, service, agriculture or agricultural manufacturing type jobs, food processing, and it shows up in the state-wide trends, the gap between the rural areas, the poorest rural areas in North Carolina, and the urban areas has grown in income from 93 percent in 1979 to 115 percent today.
So, in essence, you see the national pattern which we've heard about, but even within the State of North Carolina, and I would imagine this holds in other states as well in the South, that rural areas are falling increasingly behind.
There's also more risk in the labor market. There's risk of unemployment. Unemployment, in general, is down, but if you look at who is unemployed, a rising share of the unemployed are not on temporary layoffs. They are not going to be called back by General Motors. They're on permanent layoffs.
We also see, because of the widening income inequality that, even if you have a good job today, the consequences of losing that job become increasingly devastating. Research shows that the losses are largest for people who have been on their job the longest. And we know it's not just a wage loss, but the consequences of losing your health care are also quite severe.
There's also -- and a recent Brookings Institution study shows this -- more year-to-year variability in income. And we're not really sure yet what's driving that, whether it's all the contingent pay practices that are coming in, or more variability in hours of work, but that's an additional level of uncertainly.
So we have slow growth, more inequality, and in many ways, more income risk in our labor market. What's driving it? We certainly know there's some traditional supply and demand explanations, technological change, globalization has been factor, but let's keep in mind that if we take a long-term view of the U.S., we've always had interesting important changes in our economy. We've had the Industrial Revolution, mass production, World War II, the Great Depression, so we've always had to cope with shocks, yet if you compare the wage changes that we're experiencing today to those of earlier historical periods, the wage scale today changes are just off the map. So there's something unique going on that's above and beyond traditional supply and demand.
It's also unique globally. Britain, Germany -- they're facing technological change. But they're not undergoing the same sort of wage inequality that we are seeing. And so there are some additional factors that I hope will get discussed further today. Certainly, I think you'd have to look at the minimum wage as a factor that's part of the inequality story of the U.S., you'd have to look at the reduction in the power of unions and their ability to cope with employer demands, and you have to look at our training system, and especially the schoolto -work transition for those who are not going on to college. North Carolina is mentioned earlier, I think, as a world class system of higher education. It's certainly a privilege to be a part of that system and to be a part of the growth in the Research Triangle area.
We're missing some people there, and let me close on that.
THE PRESIDENT: Thank you very much. I'd like to now call on Cheryl Gibson Smith, the Director of the Downtown Child Development Center in Atlanta, I've had the opportunity to visit, to discuss the problems of combining work and family.
MS. SMITH: Thank you, President Clinton. I bring you greetings from some very small citizens. But they also represent a very big resource in our country. I've heard a lot of references this morning to improving education. The lowest age I heard given was age 4. But what we know is, that the first three years of the most critical growth period for all people -- children who do not receive what they need in the first three years of life play catch-up forever. Our resources seem to be flowing away from children this age right now.
I represent middle and upper income families in our center. And even though they have realized the American Dream in terms of financial stability, they experience extreme amounts of stress in their lives, trying to balance the demands of their jobs with the overwhelming needs of their children.
We're very familiar with the problems of stress that adults face. I think one of the realities that we don't like to say out loud is that this stress causes tremendous suffering among our children. It's not a popular thing to say, but it needs to be said. In the 25 years that I've been working with young children and families, I have seen an increase in this stress at a very dramatic rate in families, and with the children that I work with, I see the emotional and social scars. The behavior problems are more severe, they're not as content, they don't experience the joy in their childhood that they should.
One of the things that we have done in Atlanta that's been a tremendous success is the Downtown Child Development Center. And that's been a response by a consortium of businesses, Wachovia Bank of Georgia, the Federal Reserve Bank, and the Atlanta Journal Constitution newspapers, we have teamed up with the federal government to create a wonderful place for children to experience the joy of childhood while their parents are working.
The federal government is the largest employer in our country. They have 100 child care centers, or will have by the end of this year, ours being one of them. And they require the highest standards in the early childhood professional for those centers, and I think are really leading the way in setting a wonderful example for the business community across the country.
Businesses need to be encouraged to become familyfriendly, not because it's politically correct, but because it's good for the bottom line; it's good for our country. We know that countries who do the best for their children, do the best economically, and we need to strive to compete with that in this country.
I had a little boy last week in the center come into my office around lunchtime; he was very sad, very distressed, because he was missing his mother. And I suggested that he might want to give her a call. And he did, and when he spoke with her, he begged her to come to lunch. He needed her. Unfortunately, she was not able to do that because of the demands of her job. And I suggested that maybe he could draw a picture of his mom and have the picture with him at lunch, which he did. Apparently, he drew a great, big head, which three-year-old children often do to represent adults. And he taped the head of his mother on the chair next to him at lunch; wouldn't let anybody sit in that chair, and talked to this picture of his mother the entire lunch period.
While part of that is very comforting that he had loving teachers to help him through that crisis, the image of that little boy getting through is day with a cardboard cutout of his mother is very distressing to me.
We really need your strong voice, President Clinton. We need to keep the needs of our young children in the forefront of our American consciousness. (Applause.)
THE PRESIDENT: Thank you. You know, this is something not much talked about, but it really goes with something Professor Allen said about the nature of modern life for families, and that's why I think that this is part of the answer to why things are going so well, why aren't we happy.
The nature of modern life for families is such that not only is there, a, wage stagnation and, b, greater insecurity with the clear knowledge that if anything does happen to your job, the consequences are likely to be more severe, but also all the research indicates that the average family is spending more hours at work and less hours at home than they were 25 years ago -- not just 10 years ago, 25 years ago -- and last month or the month before last, there was a new study which came out -- a medical study -- I don't know what to make of this, but it said that on average, American adults are sleeping an hour a night less than they were 20 years ago.
So I think it's important to point out that all these changes are real exciting, and it's wonderful that we can access all this technology. But if we're working harder, sleeping less and spending less time with our kids, it's going to be hard to preserve the fundamental underpinnings that make for a good society. And I think it's big part of what's going on in our country today, and changing the way people feel about our life as Americans. I thank you very much.
I'd like to now ask Sarah Shuptrine to talk. She's a longtime expert on child poverty, to discuss the dilemmas of lower income families. We've had the privilege of working together for many years now, and I thank her for coming to this panel from South Carolina.
MS. SHUPTRINE: Thank you, President Clinton. The Southern Institute on Children and Families works to improve opportunities for children in 17 southern states, with a focus on disadvantaged children.
Last year, the Southern Institute conducted a study to look at the relationship between welfare dependency and health coverage. A major objective of that study was to give voice to the real experts on welfare, and that's the welfare recipients themselves.
Sixty-nine recipients were interviewed personally, and focus groups were held with employers, with community organizations and service groups that work with welfare families on a daily basis. I'd like to preface my comments on reviewing the findings of that study by saying that many of the same problems that are faced by low-income working families are the problems that are faced by these families that are trying to climb out of the welfare system. And those problems are: The high cost of child care and health coverage and the lack of transportation.
The dilemma for welfare families is that even though the combined benefit of cash assistance and food stamps fails to pull them out from under the poverty level, they cannot mae enough money to cover the extra cost that they incur when they go to work -- especially the cost of child care and health coverage.
Welfare recipients that were interviewed for our study were asked to state the benefit that they needed the most to help them go to work full-time. Half of the recipients stated that child care was the benefit that they needed the most. A third stated that health coverage for their children was the benefit that they needed the most. Many spoke of transportation and the vital link to work, and they indicated that it was often a missing link.
They told of bus lines that don't reach out far enough, and central urban bus systems designed not to be responsive to the needs of people traveling to work, but systems that substantially increase the time that it takes a parent to get to and from work, thereby causing them more problems with their child care.
And I might add that our study was conducted in urban areas. I think if we had done it in rural areas, we would have found that transportation was a significantly greater problem for this population.
As part of the study interview, we asked the recipients for suggestions on how to improve the welfare system so that it better supports a parent's decision to go work. Most of the recipients interviewed for our study had been on the welfare system two or three times, cycling in and out. So they were very familiar with the system.
The most often cited suggestion was that benefits should be gradually reduced to give families a better chance to get off and to stay off of welfare. The second suggestion was work and training, but it came far behind the gradual reduction of benefits.
Over and over again, we heard from the recipients that they feel that they lose everything when they leave the welfare system. They've spoke of negative experiences with the workplace, saying that even if you are fortunate enough to find a job, there is no guarantee that you will make it beyond the job probationary period or that the job will not be terminated after a few months. In the meantime, they said, their family has lost benefits.
I'd like to share some quotes with you, which reveal the frustration expressed by these recipients. One recipient said, when you work, they take everything away. You're constantly being pulled back when you try to take a step ahead. Another said, I could keep a job if I had child care for my children. Another said, help me out, I am trying. Medicaid is the biggest thing, especially if you have small children.
The perspective provided by staff and advocates who participated in the focus groups underscored the importance of not withdrawing all assistance when the recipients start working full-time. One person said, once they get a job it is hard to meet basic needs. Day care takes a big chunk out of their salary. They want good day care, like the rest of us, for peace of mind. Another said, it is not uncommon to have women quit working when they know they are going to lose Medicaid for them and their children. If insurance is available through the job, they can't afford it for the whole family. They see it as an insurmountable obstacle. Another said, people are dependent on the welfare system because a minimum wage job will not take are of child care and health needs.
This last quote sums it up. The fact is that a minimum wage job is not sufficient to meet the needs -- the basic needs -- of a family. And the old saying goes, it doesn't take a rocket scientist to figure out that a full-time minimum wage job, which pays approximately $8,000 a year, simply cannot pay for costs such as child care for two children, which conservatively can cost about $4,500 year, and coverage for the family, which could cost between $2,500 and $3,000, if you can get a good contract.
There are a few programs -- there are a few, that can increase the income of low-income working families by allowing them keep more of what they earn. The earned income tax credit can help to pay for some of the extra costs incurred by welfare families to go to work. Also Medicaid can be a resource for these families, and that it pays for health coverage for certain children. But that depends on the age and it depends on the state in which they reside.
Of course, families have to know about these benefits before they can take advantage of them. And our research shows that far too many welfare recipients do not know that the benefits for low-income families exist and know how to access those benefits.
Building a strong economic future in the south must include realistic plans to support and reward the efforts of families as they attempt to get in and stay in the work force, especially single parent families on welfare. The families in our study expressed a strong desire to work. But they were discouraged by shortsighted public policies, which withdrew vital assistance after some arbitrary time period had elapsed.
It makes little sense to invest in education and training for this population without paying attention to their need for financial assistance when they do get into the entry- level jobs, the low-paying jobs. I think that the lack of this assistance is very likely a major reason for the failure of our current welfare employment and training programs to produce the kind of long-term job retention that we would like to see them produce.
These families weren't asking for benefits at no cost to themselves. Their position was the same as the public's position in poll and poll, and that the government should help those who are helping themselves. And I hope their voices will be heard.
THE PRESIDENT: Thank you very much. It's a good time to be saying that as we debate welfare reform in Washington.
I'd like to make a couple of observations quickly. One is, there's some evidence that because of the disincentive of the low minimum wage for people to move to work, some evidence that if we raise the minimum wage now in a moderate fashion it would actually increase employment, not decrease employment overall nationwide by bringing people out of the woodwork.
Secondly, the earned income tax credit, I think because it's a working family's tax credit and because it's refundable -- that is, you can actually get money -- you get a return from the government to some -- on the taxes people pay, they get back, and we can meet it out over the year. Where people understand how it works, it really does make a big difference. And it's made a huge difference.
But I agree that a lot of people who are on public assistance don't understand how it works and don't know how it works when they go to work, and don't understand that they could reduce their payroll out-take every two weeks under the way we administer it now. In other words, you can just pay fewer taxes instead of waiting until the end of the year to get it back, so you can use the money on child care. I don't think people know that.
As you pointed out, the Family Support Act of 1988 permits people to move from welfare to work and keep the Medicaid coverage for their children, but that the rules are different from state to state, and I think also not widely understood.
Another consequence, I should point out, that's a -- maybe somebody will mention this later -- of the downsizing of the work force and more jobs being created in smaller businesses is that we're the only country in the world with an advanced economy that has a smaller percentage of working families with health insurance today than we had 10 years ago. This is not true anywhere else in the world. And this -- obviously, even if the economy's growing it poses enormous strains of the kind we've been discussing on families, whatever their incomes.
I'd like to proceed now to the discussion. And I want to call on just first to discuss this whole business about the relationship between stagnant wages and training, I want to call on some of the people who are here who have lived through this, staring with Efren Puente, who is a former Pan Am employee who went back to college and changed his work experience.
I'd like to -- we have a lot of people we want to call on. And we've got the lights up there, so I want to ask you to look at them, but I want you to -- I really want you to hear all these stories, because we've got some very impressive ones here today.
MR. PUENTE: Thank you, President Clinton, and Vice President Gore, for allowing me to speak today.
What had happened, I'd been with Pan American Airlines as an aircraft mechanic for 10 years. In December of 1991, Pan American ceased operations. And I was in an area, Miami, Florida, that has also seen the demise of Eastern Airlines, so there as not very many opportunities for an aircraft mechanic in my area. I was offered retraining opportunities from the unemployment office, and I took those opportunities to return to school and got my bachelor's degree in marketing. I graduated with honors in May of '94.
Since July of '94, I've been employed now with Schieffelin and Somerset, who's a marketer of premium wines and liquors. And now I am -- I have a new life as a marketer. I go to work in a suit and a tie instead of a work shirt and jeans. My tools are no longer Craftsman pliers and wrenches, but they are Compaq and IBM computers.
And I really have appreciated this opportunity that I was given to be retrained and to change my life because of it.
THE PRESIDENT: Elaine Buckner is a former solderer whose plant shut down. And she received some training through the Job Training and Partnership Act. And she now works with Volunteers of America. I'd like for her to talk about her story.
MS. BUCKNER: Thank you, Mr. President, for having me here, and Vice President. My story is one perhaps many share. And as you said, I did work in soldering manufacturing. And I had done that for several years. That was all I knew. And the last job that I had left the Huntsville, Alabama area. And I was not allowed the option of going with it. So I knew I had to do something different, behind a single parent of two small children.
So I entered into the Job Training Partnership Act, and I went into the clerical cluster. And there I learned a different skill. I learned basic office skills and basic computer skills and went on into the work force after that. This allowed me to get a better job, a better paying job with better hours, and this allowed me to spend more time at home with my children.
And as a result of that, other opportunities have opened up for me as well, because in one of my typing classes, we had -- an assignment was to write an essay or a short composition on any topic we liked. And I wrote one on a topic entitled a childhood memory. And my teacher was so impressed with it that she said I should do something with it. And I did. I submitted it to a local paper, and they published it. And now as a result of that, I am still submitting to this local paper once a month and having an article published. I've also had a couple of poems published I'm writing there, too. And I've sent resumes out to other people, and I'm getting very positive feedback in response, all as a result of changing my job and getting into a new line of work.
And this could not have happened for me had I not gone into the JTPA program.
THE PRESIDENT: Good for you.
Sonja Felton is also a JTPA graduate to counsel dislocated and lower skilled workers. I'd like to call on her and hear her remarks.
MS. FELTON: Okay, I would like to say that job training is something that is very important and vital. And I would like to say that I got my experience with the job training program very early on in my life. The job training program came into my life at a point where I had just given up -- had gave up on life and wanted to succeed in school. The very day that I decided to drop out of high school, the job training stay-in- school program was introduced to my school. And my participation in that program, it really brought the best out in me. It made me feel better about myself, and it made me see that I can become a productive member of society.
And I would like to say that it feels so good to be able to give back what was given to me. I am a case manager and enrollment specialist with the Cobb County Job Training Program. And what we do is we provide job training to economically disadvantaged individuals. And I just really get a sense of joy in having a person come into my office unsure as to what they want to do or if they want to do anything and seeing that I can really make a difference to encourage them to do something with their lives. Don't depend on welfare; try to make a difference.
And I feel that job training, again, is something that's very important. And I think that all of the programs, as far as the youth programs, the adult programs, the older worker programs, and the Title III programs are very important. And I feel that instead of trying to cut funding in those programs, try to find out what the problem is and resolve that problem, because there many people that will need that type of assistance. And if you want a person to succeed in life, you cannot cut the funding and not provide them an opportunity to do so.
THE PRESIDENT: I want to follow up on that for the benefit of the people who are here and also those that are covering this. Elaine -- where are you? I gathered from what you said that you were pleased with the JTPA program. You think it served you well.
MS. BUCKNER: Very much, yes.
THE PRESIDENT: And the Secretary of Labor is between them. One of the proposals in the Congress now to cut the budget is to cut several hundred million dollars from the Job Training and Partnership Act. And we have many members of Congress up there saying that this program doesn't work and doesn't help anybody. And -- isn't that correct?
SECRETARY REICH: Absolutely.
THE PRESIDENT: That's one of the things in this rescission bill, I think several hundred million dollars to be cut out of this. And there -- my position is there's a right way and a wrong way to cut this budget. And I think to whatever extent we do not indulge ourselves in the illusion that we can really put the country ahead by putting education behind, we're better off.
THE VICE PRESIDENT: Mr. President, I'm thinking about two of the presentations on the first panel, the economic overview of the South as a region and Hugh McColl's presentation. And they and other business analysts made the point that the South is facing a real problem in continuing economic growth because of a shortage of skilled labor. And they pointed to the great need to continue business growth, which points us toward giving good training and education and skills, especially to adults, focusing on children, of course, but retraining people.
And their -- the comments of the business leaders match exactly with the experiences that you two have just related to us and what the President just said is, the answer is obviously not to cut job training programs but to build on the successes that you've just experienced in your lives.
THE PRESIDENT: Mr. Puente, when you went back to college, did you finance your college education through your savings or through working while you were going? How did you do that?
MR. PUENTE: No, I financed a college education through government assistance through the worker retraining.
THE PRESIDENT: I think this is very important. Let me go back to what Professor Allen said in the beginning and what Cheryl Smith talked about tensions in the work force, and mothers afraid to come see a three-year-old because you might lose your job if you do it.
If we are going to have to live with a far higher rate of change in our lives then we have previously lived with, and if we want that to be a good thing, not a bad thing, then we have to construct as part of our social compact, part of our social safety net, these kind of programs that Sonja and Elaine and Efran have talked about. Because otherwise, people literally can't stand it and keep their families together. And if the economy is giving us all these wonderful opportunities, but also imposing on people a rate of uncertainty that they have never before had to deal with ever in all of the -- at least the modern history of this country, then we have got to make a commitment to give people a chance to continually remake their lives in the way these three people have. I think that's a very important point to make.
We, meanwhile, are looking for ways we can add security without undermining the creativity of the country. That's what we did with the Family and Medical Leave Act. That's what we think the minimum wage does. That's what we think immunizing all our kids under the age of two does. That's what -- we think that there are things we can do that will give families support.
It's obvious that you all believe -- and this is really tough for the budget the way it is -- that the federal level of support either through direct support or tax incentives for child care is insufficient. And I think it is, too. And perhaps it's something that can be moved up in the welfare reform debate a little more than it has been.
But I thank you for that.
I'd like to ask Bruce Raynor, who is the executive vice president and southern regional director of the Amalgamated Clothing Workers to talk a little bit because he represents a lot of people who have gone through these changes in their lives.
MR. RAYNOR: Thank you, Mr. President, and Mr. Vice President, Ambassador Young. I appreciate the opportunity and the 50,000 clothing and textile workers we represent in the South appreciate the opportunity to have their voices heard in discussion of the nation's economic future.
I think the fundamental problem, from our point of view their voices heard in a discussion of the nation's
I think the fundamental problem from our point of view is there are a lot of jobs, there have been a lot of jobs created in the southeast, but there have not been a lot of full- time permanent high-wage jobs created. And that's what's missing for the working people of the South. I suspect it's missing for the working people of America.
Let's talk about Ann Smith, who is a 29-year sewer for the Arrow Shirt Company in Cedartown, Georgia, about 60 miles away from here. Ann had open-heart surgery in November, successful, and she went back to work and faced an immediate layoff. Ann needs a job with health insurance. She needs a full-time job that pays a decent wage. She is a highly-skilled worker. There is not a job available for her of that nature. She can go to work at Walmart's on a part-time basis without any benefits. She can go to work at some sweatshops in town without any health insurance. But that's not what she needs to live. She needs a job that's a permanent job with decent wages and benefits.
Let's talk about Paulette Gibson, in Waynesboro, Georgia, about 150 miles away from here, who is laid off as a result of being replaced in a strike. She's 25 years old. She has a five-year-old child. She's collecting $119 a week unemployment compensation. She needs a full-time job that pays enough so her child can get some child care and she can work at the same time. Those jobs are not available at this time in Waynesboro, Georgia.
What's missing in this discussion, I think, that the nation's having about economics is how do workers get enough power to do something about the level of wages and the level of benefits. And the mechanism in our society that's available for workers who want to raise their wages and benefits is collective bargaining. And the collective bargaining playing field is, as you've said many times, not now a level playing field. Workers don't have enough power to do something about their wages and benefits.
Let me give you an example. Just this coming Monday, 2,500 workers in the southern Virginia community of Martinsville, Virginia, textile workers, will receive a five- percent raise because they voted in a union in August of last year at a big textile company. Well, the election was in August, and lo and behold, in September, the other large textile company in town granted their workers a wage increase. Now, I don't know if that had any connection to the election; I just think they probably thought it as time to give a raise. And they've got another raise since then.
So the fact that those workers in Martinsville, Virginia, voted for a union has brought the entire level of wages in that community up a notch. That's good for the community; that's good for the working people of that town.
Hugh McColl said earlier that -- he used the basketball analogy; the referee gets out of the way and throws the ball up and lets the competitors play. But if it's myself against Shaq O'Neill one on one, it's not fair competition. You've got to have some rules that allow workers to have a fair shake. And you've done some of the things that are giving workers a fair shake -- things like appointing Bill Gould as chairman of the National Labor Relations Board; and Fred Feinstein and to finally get people who are willing to enforce the federal labor laws and fighting for a higher minimum wage, and the recent change that you made where you said the federal government does not condone the replacement of strikers and will not give contracts to companies that practice that.
I think we have to set standards for corporations and for conduct in this country that say that the government is on the side of working people; that the government wants to encourage companies to raise wages and treat their workers fairly; to provide more full-time jobs with decent benefits.
The kind of examples of the Levi Strausses of the world and the Xeroxes and companies that cooperate with their unions, pay decent wages and provide permanent jobs are what the government needs to encourage. And I would encourage the federal government to use its power to deny contracts to companies that violate laws; to deny contracts to companies that violate the equal rights laws; to deny business with the government to companies that violate the safety and health of their workers. I think that will level the playing field between workers and management in America.
THE PRESIDENT: Thank you.
I want to go now back to the whole child care and education -- that whole cluster of issues and the working family. And I'll call on Linda Tarr-Whelan first, who is the president and CEO of the Center for Policy Alternatives, to give us a couple of minutes on this framework of what we're facing here that Cheryl spoke about. And then we'll go through some topics under this.
MS. TARR-WHELAN: Mr. President, Mr. Vice President, first of all, I'd like to say thank you very much for including family economic security as a major topic at an economic conference, because I think that's where these questions come together that have frequently been in the social welfare realm, all these things dealing with families -- and the over here, the economy. And certainly, in our world today these are merged.
Here in the South, six out of every 10 mothers of children under the age of six are in the work force. The Labor Department says that 99 percent of all women will work during their lifetime. So that we are dealing with the issues of stress on families, time and money as those two major determinants -- we're dealing with it now, but we're going to deal with it more and more.
On a personal basis, I just wanted to add one factor to the child care which has come up, which is so important and is really a concern for young families. My children are now grown. Ours are 28 and 26 years old. But my husband's mother is 85 and is probably watching on television in Arlington, Virginia right now. And many families are dealing with the older age and the concern about the set of issues of family larger than child care. And that's I believe the frontier of some of the concern that we will certainly have as a country as we move forward.
I want to say also that giving women voice at the economic table is important because from the polling that we have done here in the South and across the country, women are leading in the discussion of how do we balance work and family; that, in fact, that is critical for our communities, it's critical for the future of our country; that it is time for that national conversation to take place in really a wider dynamic. And women who want to speak really are underpinning our economy right now. Almost half our work force is women. There are now more Americans employed in women-owned businesses than there are in the Fortune 500 companies. The majority of college graduates in the South are women. The majority of the master's degree graduates in the South are women. So that I think there is a very important dynamic as we look at the future economy of our country and our family economic security to be sure that we deal with these issues all the time as intertwined, important, essential ingredients of where we need to go.
THE PRESIDENT: Thank you.
I'd like to take up the child care issue now and call first on Kim Augustine, who is the founder and owner of Nancy's Child Care in Ormond Beach, Florida.
MS. AUGUSTINE: Thank you very much. I can speak on this issue from both points. When my husband and I started a family, we went out looking for day care centers and just didn't feel real comfortable. There were plenty of big centers, hundreds of kids. And so we decided to work -- he was a general contractor -- he worked in the days, I worked in the evenings. That worked out good until things started to slow down in his business. So we were forced to quick do something.
And with the help of SCORE and SBA I was able to get financing, and just stopped and thought, the community needs a smaller center, affordable quality care where the children's self-image, positive self-esteem is the most important thing, and helping assisting the families to fill the void that's gone, that mommy and daddy love, kind tenderness that they have to miss out when their parents are working. And that's what I pride my center on. And so far it's been very pleasant, a wondrously rewarding experience. And I thank you for giving me the opportunity.
THE PRESIDENT: Thank you.
Irma Flores is the owner of Rite-Way Services, which is a business and residential cleaner in San Antonio. I'd like to call on her for her comments.
MS. FLORES: First of all, I want to thank you, Mr. President, and Vice President, for inviting me to be among such a distinguished group of people, and taking the time to listen to us. I'm glad to know some of the things that were actually discussed in Little Rock have been implemented and have been put to use.
As a small business owner, a lot of our success can be attributed to the Small Business Administration and the programs that they had, which we were fortunate enough to be a part of. Now that we're out of that type of -- excuse me, I'm nervous -- now that we have a company that is considered successful and we have a lot of employees, as far as what's being discussed right here, what we've done for our employees who have children is allowed them to come to the workplace in certain situations.
I certainly don't advocate this for all businesses, and I'm sure that it wouldn't work for everyone, but because we are still a small business and have a small office staff, in certain situations employees bring their children with the understand that they're there to do a job. And this is because their children are important to them, but their is just as important. And in order for them to not worry about losing out on any pay, we've allowed them to do that.
When it first started out, it was without our knowledge, but once we realized that it would work for them and we were helping each other out, we allowed them to continue this. And it's worked really well for us.
THE PRESIDENT: You know, listening to both of you talk and remembering what Cheryl said about the child who drew the picture of his mother, it's kind of a simple and self-evident thing to say, but it's hard to imagine a society succeeding if people can't both be good workers and good parents. And if you have to choose between one or the other, we're in deep trouble.
And it's true not only for mothers, but for fathers as well. This is -- I have a feeling that this is a much bigger problem than anybody has really focused on.
I want to go on to another issue that was raised earlier, too, which is that the challenge of saving for your children's future and what role that plays in family life today. And I'd like to begin by calling on Jim Powers from Gulfport, Mississippi, who's a foreman on the docks there. And I'd like for him to tell his story.
MR. POWERS: Thank you, Mr. President, Mr. Vice President, for allowing me to be here. I work at the Port of Gulfport, which is a shipping industry in the South. And we've experienced tremendous growth at the port, but it's taken a lot of time away from my family and it's taken a lot of hours. My wife also works. And one of our major concerns is the education issue of our children. Both of my children do well in school. My daughter also works. She's in her first year in high school. My son's in his first year in junior high. And they are good students. They participate in some of the other extra-curricular activities.
But our concern is with us both working, we don't have time to help them on some of the major problems that they face on a day-to-day basis in school, to help them make decisions about their future of education. My daughter does want to continue her education to higher education perhaps in the paralegal education industry. And I'm encouraging her to try to start working early to save for it, because I know that there are economic assistance programs out there for young people, and certainly this state has a tremendous program that we've heard about to help anybody that makes good grades get higher education if they desire to do so. And my son also has expressed his desire to go to college when he gets older. He's still a little bit undecided as to what his goals are, but he is a good student. He's very perceptive of what goes on in the world and politics and other things. He asks some real trying questions to me sometimes. (Laughter.)
But what I wanted to go back to, my wife and I both work 40 hours a week. I also work another part-time job. I prepare income taxes with H&R Block. And sometimes I don't have enough time to talk to my children about these issues. And so I guess what I would like to contribute to this conference is, I would like to see the availability of the funding for people like myself who can't save enough money for their children's future and college education be made on the national and local levels, especially around the South.
There are some good institutions in the Mississippi area, but there's always a constant battle it seems like every year in the state legislature over what are we going to do with money. There's always a constant battle over the issue of the teachers and the pay. So there's a lot of things that need to be ironed out. First, the teachers that get the chance to educate our children, it needs to start at the lowest level where the children will be given the incentive to go on to higher education. And then it needs to be continued on up through the ranks where the children when they are at the level of college, they're prepared for the assignment that's beforehand for them to know what they want to do with their future.
So in closing I'd like to say that I feel that the program that they've started in this state should be something that's implemented throughout the rest of the South. And the availability of funds should be made for all of our children to continue higher education.
THE PRESIDENT: Thank you.
I think that the framework we have for dealing with this issue is the right one. And let me -- let me explain what I mean by that. Historically the federal government has provided a guaranteed college loan program that I have tried to change dramatically. I'll talk about that in a minute. And then it's provided scholarship funds for low-income people through the Pell Grant program. And then work study funds for colleges so that young people could work while they were going to school. Particularly in schools that are not in urban areas, it's hard to find jobs unless there's some sort of a job program there.
The states historically have provided the basic framework of scholarship aid and/or keeping the tuition down at the local state university. Secretary Shalala used to be the president of the University of Wisconsin and she knows more about this than I do.
What we have tried to do is to make sure we were adequately funding the Pell Grant programs for the low-income kids, and then to restructure the college loan programs so that more people, more middle class people would eligible for it. The cost would be lower, and the repayment terms would be easier. I found a lot of young people in my state when I was the governor of Arkansas were beginning to drop out of college because they got discouraged about their capacity to repay their loans. They thought either they weren't going to get their loans, or if they did they wouldn't be able to repay them. And under our new system, you can choose a number of options to repay, including limiting your repayment obligation to a certain percentage of your income, so that even if you take a job that doesn't pay a lot of money, you'll never, in effect be crippled by the burden of repaying.
And then I think, of course, what they've done here in Georgia and what other states are doing, that needs to be done everywhere. But people who are -- and it needs to be made available not just to low-income kids, but kids who are in that middle income group who -- there's no way their parents in the present environment can save enough to finance their education. And I appreciate the point you made on that.
I'd like to ask Diana Lyons Wilson who is here, who is an executive assistant in the Louisiana governor's office to talk a little about her story.
MS. WILSON: Thank you, Mr. President, Mr. Vice President, Cabinet members. I want to give you a little background. I married young. I've been married 25 years. I'm 42 years old. I have three children -- 24, 19 and 17. When my husband and I married those many years ago, I was going to be the stay-at-home mom. He was in construction, making good money. And we were going to have a dream.
Well, not 10 years into our marriage, we found out that we were rapidly losing ground. So I thought, well, I'll go and I will do my little clerical thing, because we have no education. I dropped out in my junior year. I did go back and get my GED. My husband got his GED through the military. But it is absolutely true that your education will bring you into your earnings level.
But to get back to what I was saying, I went to work. And we were saving. We were going to send our children to college. They expected to go to college. They wanted to go to college. Well, when my oldest daughter was 16, she was stricken with cancer. And we had a nice home. We had all of the things that we needed. And because of the treatment, the recovery, my loss of job for taking care of her, we have had to start all over again.
So we're back working again. My daughter is well. But it's a long haul. It's very difficult for my children, my 17-year-old and my 19-year-old, who now realize, well, I guess I'll go to college, but it might be on a pay-as-you-go basis. I am very encouraged to hear what you said, Mr. President, about the repayment of loans for higher education. My 19-year-old daughter is planning to take some off-college courses this fall. She works full-time for her father, who has opened up his own plumbing contracting business and has been operating it for the past three years.
It's very difficult. I go to work, I leave work, I go to his office and work, and so it's really a joint family effort, but it's a strain. And if I had one thing to say, it would be to those people who think that I don't need an education; well, you do need an education. Knowledge --education is knowledge; knowledge is power; power is economic financial stability. And when you put your head on the pillow at night and you do not have to worry about someone calling you the next day and saying, oh, by the way, we don't care if you have problems, if you can't make your house note, you're on the street -- if my husband and I, I firmly believe, had furthered our education, I could have been making more money. I could have more options available to me. My husband could have. He could have done much, much more.
And I believe that, even with the health care issue, we would have been better set financially to cope with our situation and thereby making it less stressful, and everyone not having to worry about the higher education issue for our children, because it's something that they deserve, it's something that they intended to do, but they have handled it very well and we have just redesigned our life, but what said is so encouraging to me, and I also plan on taking a few courses myself. So, thank you very much.
THE PRESIDENT: Thank you. Here's another point I need to make here that doesn't have much to do with anything and has to do with everything, which is that it's very important that -- and this is a lot of my job, I think -- that the American people have a realistic expectation about what the government can do and what is outside the province of government. And both are important.
Sometimes, I feel that we're caught in a double bind where people expect us to do everything and don't want us to do anything. (Laughter.) But the reality of life in America, the reason we're still around here after 200 years is, we've had very strong and effective, but limited government, and we have recognized that the most important things that happen in this country happen way beyond the purview of government and families and communities and workplaces.
I think -- you know, this is not what she came here to talk about, but I think that the fact that she kept her family together through all of this and that she and her husband have done what they've done from the time they were teenagers is pretty impressive. And that's more important than what government does. I thank you for what you did.
I want to talk about the strains the health care crisis now imposes on families. I'd like to begin with Hugh Westbrook, who is the Chairman and CEO of Vitas Health care Corporation, a hospice care provider headquartered in Florida. I thank him for coming up here today to be with us.
MR. WESTBROOK: Thank you, Mr. President. I want to begin by thanking you, personally, for the political risk and the great personal courage that you and Mrs. Clinton both showed by addressing and meeting head-on the need for health care reform in this country, which is one of the very vital things that working families do need us to address in a number of ways.
We're hearing a lot today about so-called market- based reforms that have taken place, and I'd like to address that just for a moment, and then conclude with a couple of personal items that Diana reminds me of in her story and about a couple of patients that we take care of in our hospices.
It's true that there are a lot of changes, and when you framed the debate, you did it properly, around the issue of price control and cost reduction, the issues of access to health care for everyone and the issue of coverage of every American for insurance or coverage of their health care needs.
In the marketplace, we are seeing a lot of changes since you began this discussion. There has been an explosion of consolidation and reordering and reconfiguring, particularly among providers and managed care organizations out there; indeed, now there are 12 states or so where nearly 60 percent of the people who are covered by insurance are covered in a managed care program. And, indeed, costs are beginning to come down, prices are beginning to come down, and the rate of increase itself is now a third of what it was, and half of that reduction has occurred since you began this conversation.
In our company, we take care of people who are terminally ill. And so we see folks who, for the most part, have been through the health care system and have been dealing with an illness for some period of time. And as I think about the reforms that the health care system needs, the notion that the market is reforming itself is a misnomer; it's not.
We regularly see people who have come through years of battling with a catastrophic disease which has sometimes exhausted their benefits and oftentimes left them destitute. Fortunately, our hospice company and most hospices around the country have an open-door policy, and they take care of people whether they can pay or not. And so the access to that care is generally available to them.
There is a different issue, though, about a person who reaches this point in life and, listening to Diana reminded me of a very poignant story of a 42-year-old mother of three who did not belong in the hospice, but who ended up there anyway because when the symptoms of her breast cancer became such that they could not be ignored, and she had to take off time from her job and go to a clinic and find care, it was too late for anything to be done for her. And so she ended up in the hospice because she did not have access -- a working person who did not have coverage for her health care needs, and ended up, unfortunately dying in our care just months after she was diagnosed. And nowadays, that is almost criminal, because we ought to be able to be able to access care-givers and providers out there that can help us prevent a lot of problems that we get into, but when we do find that we have a catastrophic illness facing us, there's a lot that we can do, and there's a lot that could have been done for her.
But when she was able to get to the place that she needed to be earlier, it was too late to do anything about it. And there may be a lot of reform taking place in the marketplace out there among health care providers and managed care providers. But that's not doing very much at all to extend coverage to people who don't have it, or to create access for people for whom it doesn't exist.
There are a couple of glimmers of hope that I would point you to. You're going to be in Florida tomorrow, I understand, and one of the reforms brought about under Governor Chiles' leadership there has not only lowered the cost in pricing of health care in the state, but to the point that, and for the first time in the only place I know about of all the states, some people who were previously uninsured are now able to afford that insurance.
A lot of times, people coming into -- the CHPAs and other things, the buying groups that are created, are people who previously had some insurance. But what we're starting to see in a small way in Florida is that the prices ar coming down enough, the buying groups are working well enough so that people who previously did not have insurance through their job or whatever, are able to afford it.
I don't think that's going to be over the long haul, however, enough, the buying groups are working well enough so that people who previously did not have insurance through their job or whatever are able to afford it. I don't think that's going to be over the long haul, however, enough. Forty million people are out there who don't have insurance coverage. And a large number who don't have access to preventative care that they need to have, or the expert treatment that they need to have. And that, we, I think, need to address.
And there are some things that we can do, I believe, with regulations. There are some things that we can do with comprehensive reform which is still needed. I want to thank you again for the leadership that you gave to it, and encourage you and Mrs. Clinton on the behalf of all of us to continue that fight. We need you.
THE PRESIDENT: Thank you very much. I think there is a chance we'll pass some needed health care reform legislation this year in a bipartisan way. We're not -- we've not given up on that. I think what the American people were saying to us last year was, you know, it's a big deal, don't do it all at once, do it in steps. But we have to face this. The stories that you're telling -- there's a lot of them out there. Millions of them. And it's a big economic problem for our country as well, as you know, because the business you're in, it actually adds to our cost of health care that we don't have primary and preventive care for everybody; we'll wind up spending more on it and having a heck of a lot more heartache.
I'd like to give Ron Pollack from Families USA a chance to say a word about the family strains and the health care crisis, and then I want to call on a couple of our other panelists to talk a little more about low-income families. We're going to get, believe it or not, back on schedule here before we're done.
MR. POLLACK: Thank you, Mr. President and Mr. Vice President. I want to pick up on two comments you made earlier this morning when you focused on the paradox of a growing economy and stagnant wages that are occurring throughout the world. But, yet, uniquely, we here in the United States are experiencing reductions in the numbers of people who are employed who have health care coverage.
In the last five years, while the population has grown by about 13 million to 14 million people, we've seen employer coverage for health insurance be reduced by 3 million people. Now, what that means is that the percentage of the American public that has health insurance coverage through the workplace, as Secretary Reich, I think, has remarked on, on numerous occasions, has dropped rather significantly.
Over the past five years, we've seen a reduction of those who have employer-based coverage dropped from 66.8 percent to 60.8 percent of the nonelderly population that has employer- based coverage.
Here in the Southeast, the figures are somewhat lower than that. Whether it's Georgia at 58.6 percent or Louisiana down to 46 percent, there is a rather significant number of people who do not have coverage through the workplace. And it's no wonder, therefore, that we've seen a real growth in the number of people who are uninsured.
In the five-year period, we've seen increases in the number of uninsured from 34 million to 35 million, to now up to 41 million. And here, too, in the South, there is a particular strain with respect to this out of -- there are 13 states in the United States that have an un-insurance rate in excess of 20 percent, and are virtually all located in the Southeast and the Southwest, whether it's Georgia at 22 percent, Louisiana at 27 percent.
But I think there is an unknown piece of the story that I just want to emphasize very briefly. And that is the heavy lifting that the Medicaid program has done, that has averted this worsening situation from becoming catastrophic. At the same time that we've seen a decline in the number of people who have employer-based coverage, an increase in the number of people who don't have insurance at all, in that five-year period, the Medicaid program has grown from 21.1 million people to 31.6 million. There's been a growth of 10.5 million people on the Medicaid program.
And given the constituency that has been brought on to the program, I think it's fair to say that, had the Medicaid program not been there and not been allowed to grow, we would have experienced numbers that I think surely are catastrophic, and the number of people who don't have health insurance coverage.
I say it for one reason only: and that is that I know that we are about to experience a major debate about what to do about Medicaid and what to do about Medicare. And you said earlier that there are some good ways to cut the budget and there are some bad ways to cut the budget. And I'm very worried that we are playing with a very big and bad fire if we overreach with respect to Medicaid cuts. We're hearing that the congressional leadership is talking about cuts depending on who in the congressional leadership you talk to, of $75 billion to $110 billion over the next five years, which is going to cause enormous reductions in federal aid here in the Southeast.
And I think the Southeast is really going to bear perhaps the largest brunt of those reductions for two reasons: One is that the Southeast receives a greater proportion of federal dollars under Medicaid because Medicaid -- federal government here in Georgia, federal government picks up .62 out of a dollar on Medicaid; in Mississippi, it picks up .79 out of the dollar, but for one other reason. The Southeast is where there has been the biggest growth in the Medicaid program because, as you have championed as governor and Secretary Riley have helped end the linkage between welfare and Medicaid, there has been growth in the program, particularly in the Southeast. If we cut Medicaid disproportionately, I think it's going to mean a real trouble for states her in this region. So we need to proceed carefully and prudently.
THE PRESIDENT: Let me just mention very briefly, just for the benefit of everybody here, Medicaid is the government's health care program for the poor, it goes beyond people who are eligible for welfare. There are a lot of people who aren't on welfare who are on Medicaid. There are now people who are in the workplace whose children have Medicaid coverage because we want to encourage people to leave welfare and go to work, so now we permit them to take their Medicaid with them for a period of time so that's not an argument to stay off of work. So it's become a big program.
We are looking at ways to reform it in ways that will keep the costs from going up, but there's something else you should know. The only thing that's going up in the government budget today, federal government budget, is Medicare and Medicaid. Social Security goes up by the cost of living every year, but the Social Security tax is still producing more revenues than we're paying out in Social Security.
We're reducing defense, we're reducing all over all domestic spending; only health care costs are going up. But their increases are moderating significantly. We're bringing it closer toward inflation. What Mr. Pollack is saying is, if we can put more people in managed care, fine. If we can find a way to lower the rate of inflation in the overall health care system, good for us. But if we just cut and throw people off who are -- what we may wind up with is a bunch of people back in the welfare system and trying to back into the health care system in ways that really don't do very much for what we're trying to do either in the South or in the country. That's really behind those remarks that he was making. I think it's worth kind of making explicit.
SECRETARY SHALALA: An additional point on that. It's not only women and children; two-thirds of our Medicaid costs are the elderly and the disabled . We've been talking about the pressures on women to take people out of nursing homes and put them back into families would be close to a disaster in this country and would add to the pressures of every family in this country whose loved one had to be in a nursing home, who have spent down their income. So we're talking about very serious impacts on American families, working American families.
THE PRESIDENT: That's right. Most people in nursing homes on Medicaid are the parents of middle class working people. I think that's very important, and thank you for saying it.
I want to -- I'd like to take about five minutes now to give a couple of folks on our panel a chance to say something about low incomes families. Bob Greenstein is the director of the Center for Budget and Policy Priorities. And Elena Hangii is the director of the Institute for Social Justice and former president of ACORN. So I'd like to give them a chance to say a few words.
MR. GREENSTEIN: Thank you, Mr. President, Mr. Vice President. There's a lot of talk these days, as there should be, about how increases in the number of single parent families have increased poverty rates. But in the last 15 years, the erosion of wages has probably been an even bigger factor. The poverty rate for families with children in which a parent works is now nearly 1.5 times higher than it was about 15 years ago. And about 60 percent of all poor families with children have a worker in them.
In this context, one of the most important things that the federal government is doing to help is providing the earned income tax credit, which you have mentioned earlier, which is a tax credit -- it's really tax relief that offsets the payroll tax and income tax for millions of families and supplements their wages, not just of poor families, but of working families up to about $27,000 a year. And it gets the incentives right. You don't work, you don't get it. Millions of two-parent families get it -- not just single parent families.
It's been bipartisan. Ronald Reagan helped expand it in '86. It was expanded on a bipartisan basis in '90. And you helped lead in taking the critical step in '93 and expanding it for 15 million working families so that that, coupled with your minimum wage proposal, would achieve a historical -- that if a parent worked full time year-round, the parent and the family and the children wouldn't be poor. And this rewards work over welfare.
And nowhere is it more important than here in the South. Because the South has a generally lower wage scale, more families get it here. You know, nearly one of every four families filing a tax return in the South now, gets the earned income credit. Millions of families in the weeks and next couple of months will get a bigger tax refund than they were expecting to get this year. But they may not realize that it's because of the earned income credit, and because of no small part, of the expansion passed in '93.
But, Mr. President, I'm worried now. I have a concern that a significant part of this could be undone in the months ahead. There is a proposal now in Washington, coming from a task force just a few weeks ago, of a few senators -- not of your party, of the majority party. They have a number of proposals to restrain entitlement costs. And a number of them have merit. But among them, they have a proposal to take $25 billion out of the earned income credit over the next five years, primarily by not having the credit to keep up with inflation -- undoing a key reform President Reagan put through so it does keep pace with inflation.
I can't emphasize enough the importance of this. This would have an even bigger impact than not adjusting Social Security for inflation. Here is why. Under the earned income credit, once your income passes $11,000 a year, for each additional dollar you earn, your credit goes down about 20 cents. That $11,000 figure is adjusted or inflation, just like we adjust the tax brackets, so inflation doesn't push you into a higher tax bracket. If we stop indexing that, a family that makes $11,000 or $15,000 or $20,000 a year and works hard, what's going to happen to it is if its wages simply keep up with inflation, each year its payroll taxes are going to go up, and its earned income credit is going to go down. And over time, it's going to face very large increases in tax burdens. It's going to have a bigger effect here in the South than in any other region. It's going to diminish the gains of work over welfare. And it's going to mean that families that work full-time year-round at a low wage not only don't get to the poverty line, they fall farther below it each year.
So, you know, we index the tax brackets and the personal exemptions, so as I said inflation doesn't push families into higher tax brackets and raise their taxes. And some want to index capital gains, which would primarily benefit people over $100,000 a year. I hope on a bipartisan basis and with your leadership we can agree that we shouldn't have policies that are protecting upper income families from having their taxes go up the cost of inflation, but not protecting low-income working families, millions of honest, hardworking families, at lower income levels -- $15,000, $20,000 a year -- from having their taxes go up because of inflation.
We need to do a little tightening here to reduce -- but we shouldn't be raising the taxes on honest, hardworking families. We should be rewarding their work and helping them.
THE PRESIDENT: Thank you. I agree.
MS. HANGII: Thank you, Mr. President, Mr. Vice President. I can never figure out whether it's a privilege or a problem to be the last speaker on a panel. But whatever, I'll take the opportunity.
ACORN, for those who don't know the organization, is the Association of Community Organizations for Reform Now. And we are a multiracial, grass roots, community organization of low and moderate income people. Over 100,000 member families in 30 states, including eight of the states represented at this regional conference.
The conference really could not have come at a more appropriate time. You're to be congratulated for putting this together because right now Americans are saying the full impact of the new congressional leadership's obsession with tax cuts for the rich and balancing budgets at the expense of the most vulnerable. We are seeing the stark reality of poor people being hurt,not because of the attitudes of the poor, but the problem lies in unstable, low-paying jobs and the lack of basic employee benefits, and often in the unavailability of any jobs at all, as we have talked about especially in rural areas and in inner city urban areas.
As I said, the causes of those problems are the persistent joblessness and low pay. When we look at a 5.7 percent unemployment rate, that number, it looks good in comparison to previous years. However, when we put that in real numbers, we're talking about right around 10 million people -- people like us sitting around this table -- 10 million of them unemployed because they can't find a job.
In ACORN neighborhoods, which are low and moderate income neighborhoods, the rate is about twice that much. The solution seems to me to be twofold -- create more jobs in lower income communities, and ensure a decent wage. And you are to be congratulated, Mr. President, for your proposal to increase the minimum wage. We encourage you -- ACORN encourages you to stand tough on that. Don't cave into the pressures. We're there with you supporting in the streets and in the neighborhoods, and we'll continue to do that, because people have to be able to support their family.
And poverty is not the same thing as welfare. We have many, many people in this country who are in poverty, but are not receiving any kind of welfare assistance or benefits of any sort. And those people we have to look after also . We believe that if the minimum wage, as you said last night at the reception, if the minimum wage rises along with average wages, then the whole economy grows together rather than growing apart. And we really cannot, I think, be in the business of pitting some of our people against other of our people. We're all citizens of the United States, whether we're middle income, low income or high income.
A full-time minimum wage worker should be able to support a family. We also believe Secretary Cisneros, as you know, for the first time since its enactment in 1968, had begun to establish regulations for the enforcement of Section III, which would provide that any HUD monies used on any kind of project, CDBG, housing, public housing, whatever, those jobs that were created in those projects would have to look to that low- income community to hire people. We think that idea should be expanded. I know it's under attack right now and is being reinvented in some way, but we believe it should expanded.
The people, corporations, who receive federal contracts, should be required in return to meet decent wage standards. And just as the government refuses to do business with firms that discriminate, we should also insist that employers benefitting from our tax dollars provide livable wages.
In terms of welfare, ACORN strongly opposes punishing children for the circumstances of their birth. And we oppose punishing low income adults and families for the unavailability of jobs or for low wages and frequent layoffs. What welfare recipients need if they are to escape poverty and therefore escape the welfare rolls very often, are real opportunities to support themselves with dignity.
We support training and education programs that lead to real work, not quick fix, in and out employment of some sort. We think that child care, as has been mentioned by almost every one of the other panelists today, is essential. If child care is a problem for middle and upper income families, it's a disaster for lower income families. People cannot -- mothers -- I think your statistics in your manual showed that 38 percent of the people who would benefit from an increase in the minimum wage are single heads of household. And I think we can extrapolate from that that those are most often women. The vast majority of those are women. And so child care has to be a major part in this.
Any effort at reforming welfare must be creative, but it must be creative compassionately rather than punitively. America is a country of caring, compassionate people. We're people who go to church, synagogue, temple every week. We're people who work real hard to house and clothe and feed and educate our families. But we're people who are scared, because as you've said, we see our standard of living declining persistently rather than improving. And we fall prey in those kind of circumstances to the quick fix, if you will, Contract-on- America-kind of solutions to problems. Those are not real solutions.
We believe that, as your familiar with Lou Holtz's "do right rule" -- it's time to put the "do right" rule into effect. And we're there to help you and work with you on that.
THE PRESIDENT: Thank you.
Andy, would you like to say anything before we break.
AMBASSADOR YOUNG: Well, only that -- it seems like everything this morning has been so reasonable and plain, I can't understand why we don't have a national consensus around it. And that's what I've been thinking.
And there are a couple of things that I think we tend to gloss over in the South. One is, we forget that all Americans came here poor practically, and that this was a nation that essentially was founded by poor people who believed that they could in freedom end poverty.
The other thing I think we have here in the South that is sort of a hangover from -- it's almost an old Marxist notion that we haven't gotten rid of -- and that is that in order for the poor to get more, you have to take something away from the rich. And I think we've proved that better in the South with black and white relations. The more black people came into the economy of Atlanta, it didn't take anything away from white people. White people got richer. In fact, the irony of the last 20 years of civil rights is with all of the new wealth in the black community, the income gap is still wider between blacks and whites. I think that's probably because white women came in with us. But it doesn't take anything away from the rich to help poor people grow out of poverty. And I think, Mr. President, that's what you and the Vice President have been attempting to help us to do.
One other thing is that as a mayor of a major city, I had to face the fact that most of my inner city problems were a result of previous generations of rural neglect, of families who were driven off the land in many respects by well-intended government policies that paid the land owner not to grow food or fiber but didn't compensate the sharecropper or the day laborer. And so they came to the city with no education and no preparation. And I think that our city -- big cities -- are still -- that problem has been dumped in our school systems.
When my baby daughter was teaching here in Atlanta, she had grandmothers of her kindergartners who were 32 years old. And they were pulled away from their grandparents so that the value, the traditions that had normally held the South together, kept us in church, moved us forward, were kind of broken by this migration into the cities. And we really have some major repairs to do on our society, which nobody knows any better than you two, because you're products of this land. You survived poverty and helped to transform your state. and I think all we're saying is, we want to give you a chance to do this for the rest of America. (Applause.)
THE PRESIDENT: Well, this has certainly been a good panel. The only way we can get back on schedule is for all of you to go get your box lunches and come back up here and eat them in the peanut gallery up there and up there. And so that's what we're going to do. I'm going to -- we'll take about a 15-minute break, and we'll come back for the third panel and just -- even the panelists, except for whoever is talking at a given time, may have their box lunches on the table. Thank you.
END12:46 P.M. EST