Chief Economist, Alex Mas
Statement of Alex Mas, Chief Economist
Testimony before the Senate Finance Committee, International Trade, Customs, and Global Competitiveness Subcommittee
December 9, 2009
Good afternoon Chairman Wyden, Ranking Member Crapo and other Members of the Subcommittee. I appreciate the opportunity to testify on behalf of the Department of Labor about the place of exports on the path of economic recovery.
Before I begin my testimony, Chairman Wyden, I read your interesting report on U.S. Exports of Environmental Goods. I look forward to discussing this report with you and your staff in the near future.
As President Obama has emphasized, increasing our exports is an essential part of restoring balanced growth. The U.S. economy is beginning to climb out of the recession but with 15.4 million people unemployed and a 10.0 percent unemployment rate, the United States must have steady, strong economic growth to get people back to work. Expectations are that consumers will not be the motor of economic growth they once were so exports must be part of our growth strategy.
In addition to their positive effect on economic growth, export jobs fit in with Secretary Solis' vision for the Department of "good jobs for everyone." An expansion of exports has the potential to create hundreds of thousands of new, good paying jobs. Jobs in exporting firms are more likely to contribute to narrowing wage inequality and helping families get and stay in the middle class. Exporting firms largely employ people in higher paying industries, and within specific industries, export-related firms pay more. Recent research finds that manufacturing plants that export pay 10 to 11 percent higher wages.
An export promotion strategy that creates and sustains good-paying jobs and supports economic recovery would require a range of policy initiatives across the government, including assistance to companies trying to expand to foreign markets and enhanced investment in R&D. The Department of Labor plays a pivotal role in the broader Federal strategy to promote exports and rebuild the manufacturing sector by providing workers with training and employment services in sectors where there is export potential.
Despite the generalized employment declines throughout manufacturing and most other industries during the recession, employment in a number of exporting sectors have been stable, and these are likely to be among the sectors with large export potential in the coming years. For example, employment has remained steady in electromedical apparatus manufacturing as well as in scientific research and development services, both of which have ties to our nation's strong biotechnology industry in which exports are growing. A recent CEA report on "Preparing the Workers of Today for the Jobs of Tomorrow" notes that employment is projected to grow in aerospace and pharmaceuticals, along with other similarly-advanced manufacturing industries in which exports are critical.
To provide a common framework to understand the skills required to work in the manufacturing sector, the Department's Employment and Training Administration and its advanced manufacturing industry partners developed a dynamic, industry-driven model of the foundation and technical competencies that are necessary for workers to enter into and progress in careers in this industry. The model helps to identify employer needs and provides a framework for developing curriculum and training models.
There is also potential to reduce our trade deficit by reducing oil imports if we make investments in clean and renewable energy sources. President Obama and Secretary Solis believe that the green economy will be a key driver behind America's economic revitalization and economic stability as the public and private sectors continue to work to reduce energy consumption.
We saw a great example of how the green economy provides an opportunity for firms to move from struggling industries to expanding ones in Fisker Automotive Company's purchase of the General Motors Assembly plant in Wilmington, Delaware. The plant will soon reopen with the help of a loan from the Department of Energy's Advanced Technology Vehicle Manufacturing Program. Fisker will introduce the world's first plug-in hybrid vehicles. Recovery Act grants are also supporting a domestic battery industry that will allow Fisker to sell affordable plug-in hybrids.
As a key Recovery Act investment, Secretary Solis announced grant competitions totaling $500 million directed to support green jobs initiatives. Recently the Department announced the first round of these grants nearly $55 million in green jobs grants that will support job training and labor market information programs that will help workers find jobs in expanding green industries and related occupations.
These are great examples of how the green economy can create jobs and also highlight the value of public-private sector partnerships.
I would like to close by emphasizing that preparing our workforce for jobs tied to exports and the green economy is critical to continuing our economic recovery and setting the stage for sustained economic growth.
Thank you again for holding this important hearing this afternoon. I would be happy to answer any questions from Members of the Subcommittee.