Five Questions for Harry Holzer

Harry Holzer is a visiting fellow at the Urban Institute and a professor of public policy at the Georgetown Public Policy Institute. Harry was the chief economist for the Department of Labor during part of the Clinton administration, and before that was a professor of economics at Michigan State. He has been a contributor to the field of labor economics for many years.

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Really quite relevant. They are the best source of information on employment and earnings, and really the only way that we can find out if different groups of workers are sharing in the economic recovery, or how much they are hurt by any downturn. What we've learned from these figures in the last couple of years is how little non-supervisory workers have shared in the recovery. Their employment rates and their earnings have remained very flat despite the high productivity growth we've enjoyed. So, these numbers have taught us a lot about the imbalance in the current economic recovery. My only caution is that these numbers tend to bounce around a bit month to month. Sometimes commentators put a little too much weight on any one month's numbers. It's better to look at two or three, or up to six months' numbers, to know what the current trend is.

2. How are workers who exhaust their unemployment benefits reflected in these figures?

Workers who exhaust their unemployment benefits get counted in different ways, depending on their employment circumstances. If they take new jobs very quickly, they will be counted as employed. If they keep looking for other kinds of work, they'll be counted as unemployed. If they stop looking, or do something else—like go back to school or stay home and do child care—then they're counted as being out of the labor force. Most workers who exhaust their benefits tend to keep looking for work and therefore end up among the unemployed.

More workers have exhausted their unemployment insurance in this downturn than was true in previous downturns, since this one has gone on for so long. And, because the federal government has been slower to grant emergency extension benefits, the number who have exhausted their benefits and remain unemployed is well over two million at this point.

3. Minority women appear to be gaining in the labor force over minority men. What does this mean?

There are different categories in which minority women are gaining on minority men, and how you interpret the gains depends on which category. For instance, if you look at wages, men's wages in the minority community, as in the white community, continue to exceed women's. So there, when women make more progress it's really just narrowing the gap that's always existed between themselves and men.

In other areas, where minority women are moving ahead of minority men, it's more of a concern. For instance, in education there's some talk of a gender gap, with more young women going to college, enrolling in higher education, than young men. That, by the way, is even true in the white community. But the gap favoring women is larger in the minority community, especially the African-American community.

Of course, the other place you see this gain right now is in employment rates. Young African-American women have comparable, or even sometimes higher, employment rates than young African-American men. And that's a very troubling new development because these women also have child-rearing responsibilities, and yet they're working more than the fathers of the children. That's quite troubling because we know that families and communities need two active parents supporting children, contributing to incomes and child rearing, for those children to do well.

Over the long-term, employment rates among young African-American women have grown quite dramatically in the last 12 to 15 years because of welfare reform and other government policies. Meanwhile, employment rates for the young men have continued to decline. So where the gaps continue to favor men, we don't mind seeing them close. But the trends in employment rates for young black men are a real source for concern.

4. What are the advancement chances for the low-wage worker in 2004?

To some extent, the odds will depend on a few things we don't yet know, like the nature of recovery in the labor market, and even on some legislation still pending, such minimum wage, welfare reform reauthorization and things like that. Either way, no matter how those things turn out, advancement prospects will continue to be a real challenge. This has been, in some sense, the hardest nut to crack in our welfare reform experience. We've found that we've had more success than many people anticipated getting former welfare recipients into the labor market, even getting them to keep the jobs they had. But there's been relatively little advancement over those entry-level jobs. Not just for former welfare recipients, but for most low-wage workers. There are some ideas on how to improve workers' advancement, but that's going to be a challenge—perhaps one of the most important challenges regarding low-income people we face in the next decade.

5. In your view, what's the biggest "labor" challenge facing the winner of the 2004 presidential election?

Whoever wins the presidential election this year will face one set of challenges in the short term, and a different set in the long term. I think the immediate labor challenge is trying to improve employment and earnings for more workers. Most less-educated and non-supervisory workers simply have not shared in the benefits of the economic recovery yet. The challenge will be trying to get those employment rates up and trying to get some earnings growth. At the same time, we have to recognize that policymakers' ability to influence those things in the short term is limited. It's not zero. We have some control over the economy through fiscal and monetary policy. We have some ability to help people left behind through unemployment insurance. But our short-term control over employment and earnings rates is limited, and that makes it more of a challenge.

Over the long run, if we recover from this recession and employment rates get back up, the policy challenge is to ensure that all American workers share in the prosperity of the American economy. The American economy is growing at almost remarkable rates. Productivity growth has been fairly dramatic in this downturn. Yet, you don't see it in employment and earnings rates of most workers.

We know that over the last few decades, the earnings levels of less-educated workers have fallen behind those of their more educated counterparts. So there the long run challenge is two-fold. Number one, it is making sure that people have the right mix of skills that will enable them to share in the benefit of a strong labor market. That involves education policy, training policy, and other ways of trying to enhance the skills of the people that have been left behind. Number two, for the people who continue to have weak skills and low education, we need policies that make work pay more—whether it means increasing the minimum wage, expanding the earned income tax credit, providing health insurance for those without it, etc. Of course, the presidential candidates differ on every one of those issues. But either of them will have to grapple with this whole range of questions if they get elected.