the

The economy and the 2020 election: If the economy is doing so well, why are so many struggling?

well good evening welcome to Macomb

Community College

we appreciate you braving the weather

this evening and joining us tonight

we're also being revealed on the online

we're available online as well so

welcome to those folks my name is Jim

Sawyer I'm the president here at Macomb

Community College on behalf of our board

of trustees faculty and staff it's my

pleasure to welcome you here but before

we begin there's a few folks I'd like to

introduce I'll start with our board

chairperson Katherine Lorenzo board vice

chairperson Frank Cusumano trustee

Shelly vite Ally I'd also like to

introduce two other special guests

buzzing emeritus Jim Jacobs and

president emeritus a Lorenzo so we

really appreciate the opportunity that

Brookings provided us to host this event

it's it's it's tremendous accolades for

us to be able to bring the caliber of

speakers here to have someone like janet

yellen here to share her thoughts on the

economy in the intersection of the 2020

election it's just fabulous David Wessel

is a leader in this this work as well so

we feel very proud to have them here

David will introduce the rest of the

panelists shortly you have their BIOS in

your in your detailed agenda you know

Macomb County we really recognize as we

get closer to the election in November

well there will be a lot of tensions

paid on our County right we know that

we're kind of a bellwether to the

politics going forward and it'll be

interesting to see what transpires over

the next nine months

and we really see this as a fantastic

kickoff to really give our community an

opportunity here from literally experts

in the field and see what the impact is

of the of the economy and how they may

intertwine with the election so with

that it's my honor to turn this over to

David thank thank you very much

thank you it's very good to be here we

no longer have snow in Washington DC so

we asked the college what is the time

when we're most likely to have snow and

they picked this date so I just want to

thank you for providing that although if

our plane doesn't take off my attitude

may change I have a long-standing

interest in relationship with Macomb

Community College's I think that I often

say that America excels in higher

education but the future of the middle

class in America has a lot more to do

with what happens at places like Macomb

Community College than it does at

Harvard and Princeton and Yale and so

what I think happens here is fundamental

to the future of our country and to tell

you a secret community colleges come in

varying degrees of quality but this one

is at the very top of the list so you

should be all proud that your county

supports an institution like this

Brookings is a think tank in Washington

and a think tank is basically something

like university without students cuts

down on the workload some but one of our

goals is to provide thoughtful

fact-based analytical nonpartisan

insight into major public policy issues

and as you may have noticed it's kind of

hard to have your voice heard among the

Screaming these days when you want to

say okay what's this really about so

this policy 2020 project is our attempt

to do that we have a series of sort of

FAQ style things on a variety of public

policies online and we're this is the

first of a series of events we're going

to do have to get outside of Washington

and as president Sawyer said basically

the entire future of the country rests

and who you vote for for president here

in Macomb County so take that seriously

we hope to help you make that decision

based on policies not on candidates or

partisanship I'm very pleased to have

Janet Yellen here Janet Yellen as you

all know

the former chair of the Federal Reserve

she's a colleague of mine at Brookings

he also happens to be president of the

American Economic Association this year

and so I thought I'd asked her a few

questions and then we'll have time to

have some questions from from you all

before we're joined by our panel which

I'll introduce later so Janet I know

what the topic of this thing is but I

think that there's just an awful lot of

angst about the coronavirus so I wonder

if we could start with so what neither

you nor I nor anybody in the panels and

epidemiologists so we're not going to

tell you what's going to happen and if

we do tell you you should not take it

seriously but I wonder if you could talk

a little bit about what kind of risks

does a virus like this pose to the US

economy in particular and what kind of

tools do economic policymakers the Fed

and others have to respond if this turns

out to be something that spreads to the

United States sure well let me see

there's a lot of uncertainty and it will

depend on how this epidemiologically

evolves over time we have a global

economy that's been pretty weak and a

weak global economy even before the

corona virus hit was a source of drag on

the US economy it's created kind of a

manufacturing recession of sorts in the

United States but consumer spending has

been very strong the service sector has

been doing very well the US economy has

continued to perform quite well and

before this hit it seemed like the

global economy was stabilizing and maybe

beginning to recover the outlook for the

US looked quite good I would have

thought the odds of a recession are very

low now this is clearly something that's

had a very significant impact on China

it may continue to do so for longer I

think if the impact were limited to

China this would probably be something

that would have

some impact on the global economy but

relatively little on the US we're not

that exposed to the global economy

although does make a difference but now

it seems like the viruses extended into

Italy into other parts of Europe into

the Middle East and it's spreading and

it's having two kinds of effects at this

point on the economy one on the supply

side we have global supply chains and so

many firms that make things based on

supply chains getting parts from all

over the world and China is an important

part of that in Korea where we now have

the virus is also a very important part

of that and it looks like with the

factory shutdowns that have taken place

there will be an impact on ability to

continue to make products given

shortages of parts and supplies the

other piece of it is the impact on

demand obviously when people are

quarantined and not traveling and trying

to avoid the virus they stop spending

and they stop spending on parts of the

economy that have been the strengths

both here and globally tourism travel

consumer spending will take a hit and so

you know depending on how serious this

gets I think you know we could see

significant impact on Europe which has

been weak to start with and it's just

conceivable that it could throw the

United States into a recession I think

if it doesn't hit in a substantial way

in the United States that's less likely

um we had a pretty solid outlook before

this happened and there is some risk but

you know basically I think the u.s.

outlook looks pretty good you said what

can what can policymakers do in in terms

of Economic Policy you see to today the

10-year Treasury yield fell to

about 134 which is about its lowest

level in all of history and part of that

is that market participants will look to

the Fed to provide some support in most

developed countries interest rates are

really low and they're very low in the

United States but higher than they are

in most other developed economies and

the Fed does have some scope it's not a

cure-all but it will provide a little

bit of support to consumer spending and

to the US economy into financial markets

and of course if it becomes very serious

fiscal policy could play a more active

role to good so when you look at the

overall numbers on the US economy it

looks pretty darn good 50 year low on

unemployment we're creating one hundred

and eighty hundred ninety thousand jobs

a month the fraction of workers who are

working part-time and prefer to work

full-time has fallen quite a bit it's

now lower than it was before the Great

Recession wages are finally beginning to

climb including wages at the bottom

particularly maybe because of the

minimum wage we have very little

inflation weirdoes we've never gone this

long and since we started keeping track

in the mid 19th century without a

recession so on one hand if you were

just getting the basic vital signs on

the economy it feels really good on the

other hand an awful lot of people seem

to be unhappy and struggling I think the

support for Bernie Sanders and Donald

Trump suggests that they're not happy

with the way things are going how do you

what is the problem here why is it if

the economy is so strong and the job

market is so good so many people seem so

distressed and that they're not

satisfied well it's a glass half full

glass half empty story and I think you

did a great job of discussing the way in

which the glass is half-full we do have

the lowest unemployment rate in 50 years

jobs are plentiful people feel good

about their ability

to get a job firms you talk to almost

any manager of a firm it's darn hard to

find qualified workers that makes firms

much more willing to engage in training

and my experience around the country has

been that a lot of companies are looking

to partner with community colleges with

nonprofits to start up training programs

that can turn out the kind of people who

have the skills that they want and that

is a permanent benefit to the work to

the workforce even if the economy were

to weaken if that's something that lasts

a long time getting training building

skills people coming back into the labor

market who had left it that's really a

positive okay so that's the good side of

things bad side of things is let me give

you two when I would consider horrifying

statistics the median American male has

seen no increase in real wages and wages

adjusted for inflation in 50 50 years 50

years and the median American male who

does not have a college education has

seen their wages decline by 13% over 50

years and in terms of intergenerational

mobility in my generation most kids did

better than their parents and their

parents that's what the kids expected

that's what their parents expected and

gave people the sense we're getting

ahead and we're progressing and that

just isn't true anymore about half of

half of young people will not do as well

as their parents have done and of course

we see in an environment in which jobs

middle income jobs

gradually disappeared over time well I

mean what's going what's going on I

think which

driving it is first and foremost

technological changes that have rewarded

and demanded more skill so that people

with more education and skill are

benefitting from the technology they're

getting ahead and the technological

changes plus globalization and trade but

that I would say to a lesser extent than

just the nature of technological change

it's replacing workers who have less

skills and I think that's something

that's been happening for a long time

and is going to continue to happen in

the future and so people are seeing

their jobs disappear and well there is

work the work that's available to people

who have a high school education or lack

like greater education than that we've

created you said 180 thousand jobs a

month I think since the recovery started

the economy has created about 16 million

jobs but something like 3 million of

those jobs were for individuals with

less than a college education so this

jobs that are being created are high

skilled jobs and those who lack the

skills are just seeing the jobs that

they had that gave them security

disappear and being replaced by jobs

that are insecure and tend to be low

wage and so that's been going on for a

long time and it's making people feel

insecure you're you're seeing until

recently both men and women their

participation but particularly men in

the labor force declining and of course

you know we know we have an opioid

epidemic

so the prevalence of alcohol suicide I'm

so-called deaths of despair we've

actually seen among middle-aged

individuals whites in the United States

and this is particularly true for those

with high school or less education

in recent years we've actually seen

mortality rates rise which is almost

unheard of in a developed country and

we're not seeing that anywhere else

around the world and it reflects I think

the broad-based negative impacts of

these these adverse trends that are not

recent and I say we're going back to 50

years where this goes way back that

these trends began to negatively affect

the workforce so to what extent do you

think trade and globalization has

contributed to this you mentioned

technology I think I'd put technology at

the top of the list but I think

globalization and trade have reinforced

that and particularly when China came

into the WTO and export surge to the

United States economists have documented

that there was a good deal of

displacement but I think the combination

of trade and technological change have

had that adverse impact so what policies

do you think stand a chance of sharing

the prosperity more broadly so that if

10 years from now we are having this

conversation we can say that the median

income of American workers are rising

rather than just how the ones at the top

so I don't believe there's a silver

bullet but at the top of my list when

you're seeing wages rise to those with

more skill and stagnate or decline to

those with less that seems to be a

signal that is saying loud and clear we

have to do a better job of equipping

young people with the skills they need

to succeed in the labor market and

that's what you your enterprise is here

and it's the most important one of

making sure they it but it's both young

people who are entering the labor force

but also individuals who have been

displaced who are not feeling satisfied

with their careers or

seeing job Lawson need to acquire new

skills the importance of giving them the

opportunity to acquire the skills they

need to succeed in the labor force so

that hits my list but you know we could

be doing more to support people also and

when you compare the United States with

other countries particularly in Europe

they're undergoing the same kinds of

structural changes you you you do see

high unemployment often youth

unemployment in European countries but

you don't see as much distress and

income loss as you do in the United

States you know we haven't raised the

minimum wage since 2009 it still stands

at $7.25 an hour in a number of states

and localities maybe half around the

country have increased the minimum wage

but that's certainly something we could

be thinking about supporting incomes of

people who work through the Earned

Income Tax Credit and dealing with the

things that really are such a tremendous

concern to so many people health care

cost of housing and particularly in

places where the jobs are often housing

is unaffordable expensive and it isn't

possible for people with lower income to

be able to move to those but improving

the social safety net and as well as

training image promote unions well I

think partly the decline of unions is a

reflection of these trends and the fact

that we haven't leaned against them but

certainly I think unions can be helpful

in countering these trims let me ask you

one more question before we turn to the

audience in your jobs that the federal

reserve most of your time was spent on

issues of inflation and unemployment and

financial stability banks and you name

it I I was all surprised when I talked

to you a few days ago that when I asked

you

how much do you worry about climate

change you said my hair should be on

fire what what that's not usually a

thing that economists or central bankers

worry about

you've been maybe they worry about hair

but not climate change you've been

active in some of these efforts to

address climate change and I'm just

curious about what motivated you to do

that well I would say that I became

involved in more knowledgeable about

climate change is an issue when I worked

in the White House in the Clinton

administration and we were negotiating

the Kyoto treaty and I was involved in

those those discussions and I learned

then how serious a problem climate

change is and I must say I've been

extremely distressed both to see how

little the United States has done and

most countries around the world but the

United States has been really resistant

to taking the actions that I think we

need to combat it and meanwhile the

consequences have become more obvious

every day to almost everybody when you

see so many extreme weather events these

wildfires that have become

uncontrollable in Australia you're

seeing some of the same things happening

in California we're seeing melting of

the Antarctic ice sheet and some of the

ice ice in the Arctic the spread of

mosquitos carrying illness is increased

sea level rise I don't know if any

really anyone who's looking at the facts

who questions that this is something

that is caused by human activity and

will continue and it's one of the

hardest possible problems to deal with

because it really requires global

cooperation it's not enough for the

United States to do something if

so upset by what other countries do

where they don't pitch in we can't solve

this problem and it's natural for

countries to want to be free riders but

the United States has been such a

significant part of this problem and

contributed to it

so much that I really believe we have to

show leadership when we just start

looking at the numbers essentially the

in Paris the countries of the world set

as a goal that they would hope to

confine the increase in average global

temperatures from pre-industrial

revolution to 2 degrees centigrade and

if possible one and a half degrees

centigrade and the most recent

calculation suggests that the entire

world would have to become carbon

neutral namely we'd have to cut net

global emissions to zero by 2050 in

order to achieve that goal and when you

think about what would be required for

the entire globe to become carbon

neutral by 2050 it's almost impossible

to imagine that that's going to happen

and the consequences of this are very

very serious and we are so far behind in

doing anything you know I believe we

should all have our hair on fire on it

so let me take some questions and I have

a few minutes I propose there's a mic

here I'm gonna take three questions and

then let Janet answer them so you want

to start with a woman in the blue

they're coming but Mike's coming to you

and once you tell us who you are

Paul adrylek retired Macomb faculty

given the gap that you have noted

between the resources we have in the

skill level of jobs do you think that

part of the resistance for this kind of

education which we need in which Macomb

of course is don't dedicate it to is a

possible result of a kind of

intellectualism in the

peeler mindset that's the gist of my

question so you mean I don't want my kid

to go work in a factory I want him to

get a I think it would be the resistance

of of being an egghead or a nerd or the

other kinds of epithets that are thrown

against people who are intelligent eager

to learn and out there trying to better

themselves thank you

so went over here I saw a hand I think

there's one here you had a question

before go ahead sir

dr. Yellen I want to congratulate you

for being probably the most intelligent

woman ever to work in Washington DC

thank you thank you for that I

appreciate that and it's a pleasure to

be in your presence thank you so much my

question to you is we know the consumer

debt is all-time high we know the

government debt is all-time high what do

you think is gonna happen when the

people in this country can no longer

afford $60,000 SUVs and pickup trucks I

think we're gonna have a problem thank

you

my name is Gordon ho is this all the

time my name is Gordon Hall I'm a

retired IT person and I'm 80 so I've

seen his whole arc that you were talking

about and things I went on my father's

middle middle income I went to a

boarding school I went to college I've

had solid benefits and pensions and

health insurance and thanks to Medicare

and our pensions and so on we were very

well off now but I don't see any of

those being spread farther around they

seem to be shrinking and it seems to be

not just a matter of getting more

training but everything like colleges

are now not open to an average person

and what was what's the difference now

between the scenario then and and

creating something like a scenario like

that now great those are great questions

so why don't we take them in order the

first question was basically do we have

some kind of social attitude that

discourages people from getting

education well I think Americans have

gotten more education the fraction of

people who are getting higher education

who've gone to college has been that has

been increasing and that has somewhat

helped hold up wages at the little lower

end of the spectrum but you know and I

think we do appreciate most people do

appreciate the importance of getting

higher education of acquiring skills in

order to be successful in the job market

you know many lots of men probably hoped

that they would be able to have you know

with less education a high school

education a good manufacturing job

with solid benefits of the kind their

fathers might have gotten and it's

probably taken a long time for a lot of

people to realize that that's a future

that is not going to be there for most

people and that the skills they need to

acquire are much much greater than that

to be able to succeed but I do think

there's a broad recognition that it's

necessary and appropriate so what do you

think change that made it possible for

this gentleman to have a middle-class

life and he's worried about the next

generation what is it that explains the

change in the economy and our social

system we had a deal earlier if there

was a hard question I would answer it

because as a former newspaper reporter I

don't have any problem answering

questions I don't know anything about

she's more cautious so well I think you

gave some part of the answer part of us

the economy's change and we haven't

changed enough with it and part of it is

we tolerate a level of inequality in the

United States that was not tolerable 50

years ago I think that I think that is

true and you see you do see in most

developed countries around the world

that there's less willingness to

tolerate this kind of rising rising

inequality you know we have a healthcare

system and a pension system that

historically it's very much tied to

people's jobs and is secure jobs for

middle income people have disappeared

I think that's translated into a lot

more concern about will I have health

care how can I get health care if I

don't have a job that offers it and we

don't have a system that gives people

health care and pension benefits if

they're not in jobs that all offer it

and so I think that's increased

insecurity as well and do you worry

about the United States Business

households and government

having too much debt that's gonna kill

us in the end so that's that's an

important question I think on the

consumer side we have seen some kinds of

debt rise a lot particularly auto debt

there's an awful lot of big increase in

auto lending but since the crisis

mortgage debt relative to income has

declined a lot and overall debt burdens

for household so if you look at monthly

financial obligations that households

have when it to make payments to pay

down or pay their interest or pay down

debt that has fallen dramatically since

the financial crisis partly because

mortgage debt has declined but also

partly because we're in a world of very

low interest rates so you know consumer

spending is supporting the economy and

the run-up to the financial crisis a lot

of it was debt fueled people were using

their houses like piggy banks taking out

home equity lines of credit and really

spending not based on their income but

based on the value of their homes that's

not what's happening now spending is

strong it's based almost completely on

jobs incomes that people have and really

not not so much based on debt so I'm not

very worried about households the

government the government also has a lot

of debt the amount of federal debt has

doubled relative to the economy since

the financial crisis the US debt to GDP

ratio was about 40 percent pre-crisis

and now it's about 80 percent an 80

percent historically it's the kind of

number that would make financial markets

flash orange or even red that that's

getting awful close to what can bring on

a debt crisis in the country but look

today the ten-year Treasury rate hit 135

which is I believe the lowest it's ever

been in the

history of the country so you can see

that financial markets are looking at an

80% debt to GDP ratio and they're not

saying oh this is a country that's about

to default well you know we are in a

very low interest rate environment and

so even though that has doubled relative

to the economy federal government debt

has doubled on the interest burden on

that debt hasn't gone up at all it's

actually declined ever so slightly

because interest rates are so low and

the truth is they're expected to stay

low for a long time so I do worry in

many ways about the trajectory of the

deficit going forward we still have

large deficits and as our population

ages and spending on Social Security and

Medicare go up the deficit is slated to

get worse and I do think it's something

we need to address

but in especially in this low interest

rate environment I don't think that the

current debt situation rates is you know

that high on my list of what I think

American priorities should be

let me invite my three other panelists

up so we're gonna talk probe and then

we'll have time for more questions so

first here is Molly kinder who's a

colleague of mine at Brookings she's a

Rubenstein fellow as a we have a number

of people who come mid-career for a

couple of years and you can read about

her in her in the little brochure but

what you won't read in the brochure is

that her father Drew was here and he

drove all the way from Buffalo

it's kind of set a frightening example

for me I'm trying to imagine doing this

from one of my kids and then we're

joined by a couple of people from your

community

JP Rey who's the deputy County Executive

in Macomb County and sandy who's the

head of the Detroit Chamber of Commerce

and among other things former

administrator of the FDA and several

other jobs in Washington so if you don't

like what's going on in Washington talk

to him

[Laughter]

so Molly I want to start with you

because you've done some really

interesting work Janet and I are

students of the numbers on the economy

but you've spent a lot of time talking

to workers so I wondered if you could

discuss the question that we discussed

which is what is it that's on the minds

of so many workers particularly workers

in the lower half of the other wage

distribution great thanks David well

first of all it is such a pleasure to be

here I love this topic of this question

of this panel because it is so on the

minds of workers all across this country

before I started at Brookings last

summer I led a project at new America

where I led a team where we travel the

country and we talked to dozens of

workers who hold some of those jobs that

we're talking about there at the lower

end of the wage spectrum and going to

what we just heard from Janet Yellen in

some of these occupations that stand to

change the most from technology and in

fact they're the most common occupations

and most communities including here in

the greater Detroit area so fast-food

workers retail workers folks our grocery

stores I also talked to administrative

workers and really the headline there

reflexed I'm just gonna quickly go to a

number first before I get into the

stories my colleagues at Brooking found

that in this area in the greater Detroit

area 42% of all workers hold low-wage

jobs and the median hourly wage for that

group of workers that 42 percent is

going to probably surprise you it's

$9.94 and

so just imagine what that's like to try

to provide for a family and to pay your

bills on that salary those were the

workers that I talked to across country

in Indianapolis and in Buffalo and in

the Bay Area in Washington DC and there

were a few things that really stood out

first is that those wages mean that

workers are feeling a lot of insecurity

they live with the very precarious

circumstances and what that meant to

them was it was a real struggle to pay

bills especially in the more expensive

regions the lengths people went to just

afford housing was just extraordinary

you know married couples living with

multiple roommates living far away long

commutes it was really really a struggle

there was a real feeling that their

their money just doesn't stretch far

enough and then in fact it's getting

harder over time and really what that

meant the anxiety was that people were

just one unexpected expense away from

being tipping over the edge so stories

of you know a young person who worked at

a grocery store telling me I've got a

car that's the only way I get to work

it's not a good car I have no savings if

something happens to this car I have no

way to get to work folks a lot of

youngsters who had dropped out of

community colleges because of unexpected

financial expenses so these hardships

really meant a lot in people's lives

they felt very precarious I heard over

an hour over how impossible was to save

and how people had no financial cushion

the second thing was that people too

spoke to that anxiety we heard just this

discussion of how technology is a factor

and this is not an academic discussion

the folks that I interviewed know that

those jobs are changing in fact they

described their own workplaces being

temporarily paused for renovations they

see ubereats starting or self-checkouts

mobile payments they many workers spoke

to hearing newspaper reading newspaper

stories about the cashier las' Amazon go

opening in Seattle they know

technology's coming and in fact they

were deeply pessimistic for what it

looked like in the long term for humans

in those workplaces and that fed in

was an extension of a deeper feeling

that they had which is so many of these

workers felt that when they showed up in

their workplace that they were a cost

that their employer was trying to get

rid of and they weren't really valued

and that really technology was just

another way in addition to maybe cutting

back benefits that really that they were

see they didn't feel that they actually

mattered at the end of the day as a

human in those workplaces so I picked up

a lot of economic precarity a lot of

struggle and then also some uncertainty

and concerns about what the future looks

JP you only on the phone that the

biggest problem in the labor market here

is you have poor jobs and you have

qualified people to fill them so how can

that be

that's why Brookings is here I thought

we brought in the big gun okay I guess

is the Macomb County representative on

the panel thank you all for coming to

the east side it is an absolute thrill

not only to be able to have this

conversation here but not only see

someone like Janet yellen's speak to

some of these macro trends that we're

tracking and trying to say okay as a

county that is the third largest in the

state of Michigan with eight hundred and

eighty thousand individuals and eighteen

thousand businesses where you shop for

groceries

okay highest population that we've ever

had highest educational attainment that

we've ever had increases in diversity

inclusion that we've never seen in the

county's history with an integration of

people both domestically and

internationally workforce that's about

four hundred and forty thousand

individuals which is larger than some

states some of the most dynamic skill

sets and the greatest concentration of

thought leadership in industries that

are changing every single second of

every single day we have 35,000 unfilled

jobs as we sit here today and when we

look at that number it is a stark

reality into multiple trends of

disruption that we're seeing across so

many different industries

you know you spoke a little bit earlier

into the training and the skills gaps

look I think we're faced with the

daunting reality that the traditional

way that we view education I think is

changing because we need to be skills

ready and industries that are changing

it's so much more frantic of a pace and

I think that's why it's absolutely

critical that we're forging partnerships

on a daily basis with the Community

College and dr. Sawyer and his

in our intermediate school district

which oversees a hundred and fifty

thousand kids in our K through 12 system

and linking that to Detroit drives

degree at the Regional Chamber because

we need to look at micro-credentialing

we need to understand that when a

company comes to us and says I need more

systems engineers than every single Big

Ten school can provide us over the next

ten years to fulfill multibillion-dollar

DoD contract

I can't cash that check on behalf of our

community and that's workers that we not

only have to source and bring together

and a full slate of economic incentives

and quality of emplace incentives that

will ensure that company not only

remains competitive here but couldn't

fulfill those requirements so what what

kind of what are these jobs

what are these jobs you can't fill here

so I think probably one of the most

interesting one is any position

affiliated with the next generation of

mobility I mean we look at the work

that's a next generation of electric

cars yeah not only electric cars but

automation what's it look like connected

and autonomous vehicles it's something

that we're working with with our

domestic OEMs in for GM and FCA you know

we got 150 miles of connected corridors

right here in Macomb County where each

one of those companies is testing

frankly componentry that's gonna go in

the vehicles of tomorrow that's gonna

change everything from transmission

plants to assembly plants here in this

state as we sit here today less than a

five miles away there's a major

transmission plant two million square

feet that GM is idled there's another

plan up in the village of Romeo an

engine plant that Ford is just saying

yeah we're good we're good there's 900

workers we'll figure out how they

saturate into some other market or some

other plant that we have and yeah those

are strategic business decisions but

when we look at it yeah that's more than

four million square feet of industrial

space that had hundreds of employers you

know that we're putting output in

production to our economy that's now

pivoting and yeah we're engaged in

dynamic discussions with our partners at

the state level and also our partners at

the federal level understanding how do

we ensure that that work continues to be

done here when we're building electric

vehicles when we're building you know

vehicles to meet those emission

standards and everything like that it's

it's challenging but I think the

resiliency of southeast Michigan in the

state of Michigan has always met the

Bell we've always gotten off up off the

mat we've always figured out how to

innovate

we've always figured out how concept of

consumer there is no other place in the

continental United

dates or I would even say across the

globe that can continue to meet that

demand on so many different fronts and

that's something that we're working with

our regional and statewide partners to

keep doing hmm

so sandy what do you think are the

biggest obstacles to improving the

standard of living for the bulk of

people in the greater Detroit region in

which you work so actually I'll go back

to one of the questions that came in

from the audience and is really about

educational attainment so when you look

at the jobs that are open today and

certainly going to be open tomorrow

roughly 78 percent of them are going to

require a four-year degree or something

equivalent to a four-year degree you

know a two-year associate's degree was

you know some additional skill training

or something like that right now in the

state of Michigan our educational

attainment rate is roughly you know

sixty one sixty two percent so that

means 62 percent of our adults in this

state have either a four-year two-year

or a highly skilled certificate like a

nursing certificate or a welding

certificate so right away we start with

a Delta if 70% of the jobs require that

and we only have 60 some-odd percent

with those we're already starting with

that skill gap and the the skill gap

that JP just talked about right here in

Macomb County is attributable to that

it's not that Macomb County or the state

of Michigan is lacking people we've got

people yep we just don't have people

with the right skills and that is not

just a Michigan story that is that is a

United State story and you know the you

know when you look at you know this this

technological transformation that we're

going through that you know the mall you

just talked about in terms of in terms

of your work you know our nation our

arses are the world we go through this

from time to time when we went from the

Gurian Society to the mechanical Society

right I mean the number of jobs and

agriculture dropped amazing I mean it

was just it just fell off the map right

but we moved to other industries right

the same thing is going to happen this

time around so there's a lot of jobs yes

are going to become obsolete we're

seeing it right before our faces but

we're creating new types of jobs the

challenges that these new types of jobs

are being created require a much

your level of skill than we've had

before and just to go back to the the

audience person who asked about you know

college and you know do people won't

want to avoid that I almost think the

problem is is is reversed I think you

know between the about the 1970s to the

1990s the American society kind of

started to downplay technical skills and

we downplayed technical skills me

downplayed even things like Community

College and the the ethos was you have

to go to a four-year institution and you

can't you know remember how many people

had shop right in high school right your

office raise your hand this is a little

bit like church and also the you know

but we lost those we lost those things

so you talked about you know skills and

skill development stackable skills you

know we're gonna have to go to a much

more nimble and much more aggressive

educational attainment ethos goal

process whatever the right word is in

this society because we're really

lacking right now okay but so we all I

think we all agree that investing in

education is a good and necessary step

but someone I can't remember who once

told me that education is the ultimate

act of faith in the future it's an act

of hold it it takes its that's a

generation so what do we do in for the

we as Janet described there are a lot of

prime age economists use the phrase

prime age 25 to 54 I've discovered that

like at age 66 I don't really like that

notion but just for this I am 54 and I

actually present but I'm soon I'm 85

something like 15 percent of the men

between ages of 25 and 54 aren't working

and that number has come down some since

the Great Recession but it's been

steadily down over the last you know 50

or 60 years so what do we do for a whole

generation of people you know tell great

tell your kids to go to college and they

can get a job making autonomous vehicles

but meanwhile what am I supposed to do

it surely we can't write off an entire

generation anybody get any sleep well

I'll just quickly say I mean I'm not

suggesting that anyone who we could

consider under-skilled today for today's

economy and tomorrow's economy you know

has to go and roll at the University of

Michigan right I mean you know talking

about you know this micro skills yeah

argued its skills right I mean a lot of

people go to institutions like this one

not to get a two-year associate's degree

but to take two or three or four classes

to prepare them for a particular job

that's available right now in the

community and frankly we need more yeah

right so especially here in this county

sometime education yes so I mean I think

that has been a model that not only

Macomb Community College has excelled in

but I think that's been a model where

has actually got the employers to bring

down some of the defenses and come to

the table and invest in it it was always

one of those questions when we were

getting out of the recession is whose

responsibility is this does the employer

invest in the employees and put forth

the capital needed to ensure hey this

new line of business this new product

this new machinery is going to innovate

and make us competitive in this arena to

go get these contracts I think what

we're seeing in the state of Michigan is

the whole notion that all right

obviously as Molly was saying in both

sandy would say the a-word automation as

automation is coming into play as we're

staring down the barrel of the next

Industrial Revolution and Industry 4.0

how do we ensure that we have enough

robotics technicians how do we ensure

that in a county that has 1,600

manufacturers that employ more than

72,000 individuals with an average age

of 57 can continue to ensure that our

production based economy is a foundation

of prosperity here and also a major

driver in our nation's economy

I think whatever I think despite this I

think skills are absolutely essential

and I don't think anyone wouldn't wish

upon everyone the highest potential

skills to navigate but the reality is

this economy is producing a lot of

really really really low quality's jobs

and those jobs are not there growing in

the future they're just going to be

different than the ones we see today so

just take the the job Home Health Aide

or personal care aide

labor statistics projects over a million

of those jobs are gonna be added in the

next ten years

that's works any other occupation you

can think of including all the buzz

around IT jobs there's a million of

those jobs being added and those are

really bad jobs on any dimension that

you can possibly consider and that's a

policy choice because it's really public

dollars that that fund a lot of that but

they're really bad jobs in terms of pay

stability mobility safety getting hurt

these are really on any dimension

respect I'm actually part of my next

interviews we're gonna be of home health

aides because I want to better

understand those positions those are

jobs that primarily women and people of

color and immigrants have which is why

we don't talk about them more and don't

prioritize them more we could make those

better jobs but there are a lot of other

jobs that are being created that are low

though that are low paid and they're low

quality jobs and in addition to all the

energy and activity that's going into

giving giving people skills we have to

make those better jobs and that's I read

that's a lot of the things we talked

about it's minimum wage it could be

sectoral bargaining but we really have

to make lift up the standards of those

jobs because in talking with so many

workers typical workers that are not

here at Macomb there are so many

barriers particularly for adults to go

back to school

they're busy I call it in the thick of

it those prime age they're raising kids

there's no pay their bills they're

getting up at all hours there's a lot of

barriers financial time and even knowing

what you want to do so it's really

unrealistic to expect that everyone is

gonna magically go back and so I think

there's a there's a job quality question

and I would just add one more dimension

just to go to the Union conversation a

lot of the workers I talked to felt that

their power visa vie shareholders or

employers is really out of whack that

there's really never been a time that

American workers have less voice in the

workplace and including and making those

jobs better so in addition to skills and

job quality I think there is at least in

my personal view I think there's really

a role for forgiving workers more voice

to improve the quality of our jobs but

just real quickly that issue of IDI

educated versus the general population

that's what's driving that because you

know we have so many people who are

available for those low skill

low-wage I'm gonna call them dead-end

jobs right that's why there's been no

pressure to raise the minimum wage

because that group is theirs there's a

lot of supply there those with the

skills with today's skills those are the

ones who are doing really well and

that's what's driving a big part of this

of this wealth gap that we're seeing in

this country that has reached European

levels right I mean our social mobility

ladder in the United States has stopped

that escalator has stopped if you were

born for unfortunately in this country

you're now we're going to stay poor

because of that dynamic and because of

Education which is why I again I think

we need to intervene from a policy for a

Down only thing I I don't like I think

these are essential jobs that we need to

make better

we're gonna need home health aides we're

gonna have a lot of elderly people so I

think we have to be careful not to

suggest that these are bad jobs

inherently they're just poorly paid poor

condition jobs and we they're essential

we need to be great right now there's

not a pathway there's a lot of people

who are in those jobs are passionate

about helping others right and in fact

when we think about the jobs that are

growing and demand their interpersonal

they're caring they're educating it's

hard to automate and their hearts they

won't be automated and and the people

who do them are passion about doing them

when I say they're bad jobs I mean we

make them bad jobs by choice by not

paying I got I just yes so I think their

jobs that a lot of people would choose

to do if they were paid a decent wage

and there was a path upwards so that's

what I'm I'm calling for it so Janet I

am for a long time

I think the image of the Federal Reserve

was just when time started to get good

the Fed would worry about inflation

raise interest rates and prevent the

good times from going so it's all over

all the good times are over now no no

I'm gonna make the opposite point that

it seems to me in the last few years

both in the end of your term as Fed

chair and in J pals term that the Fed

has sort of changed its mind and felt

you know good things happen when the

unemployment rate is low and stays low

and maybe lower than we thought was safe

and as long as inflation doesn't pick up

maybe we should run this experiment of

very low unemployment and see if we can

get some of these problem solves so my

two-part question is one is my

description have any resemblance to

reality and to do you think that we are

seeing any signs that running the

economy hot as they'd like to say with a

very low employment unemployment rate is

helping to lift the wages of people at

the bottom and these bad jobs is there

enough shortage of Labor enough demand

to make this better

ok so to start with we are running that

experiment in the past a labor market I

mean compare the 1960's the unemployment

rate got almost this lower maybe this

low and by 1969 the inflation rated

risen to 5 percent and that started us

off on several decades of high inflation

the Fed was worried about if you had

told me two years ago that the

unemployment rate would get down to

three and a half percent and that

inflation would still be running below

two percent and maybe even falling a

little I would offend it very surprising

I mean I felt let's run this experiment

you know we raised interest rates

somewhat we didn't you know we they were

at zero for seven years and we started

moving them up very gradually but not

enough to stop this experiment it's

continued the labor markets continued to

tighten and there is wage growth has

moved up a little bit but nothing very

dramatic

nothing that is threatening to push

inflation up you know we've got about

three percent wage growth productivity

growth is running about one percent

that's consistent with inflation around

two percent which is what the Fed would

like to see inflation and inflation too

low is the problem for most of my life

the problem is inflation is too high Fed

has to get it down now the problem is

inflation is too low it's average one

and a half percent for the last decade

and you know one of the things that

determines inflation is what people

think inflation will be and we now have

a generation of people you talk about

inflation they never experienced it and

you know you ask them what do you think

inflation is gonna be they don't think

it's gonna be 2% they think you're

smoking something if you say you think

it's going to average 2% for the next

that's illegal now in the state of

Michigan all right

and you know the Fed has to worry about

a phenomenon called Japan off' occasion

in which inflation is so low inflation

expectation slip inflation Falls yet

more interest rates get stuck at zero

that's a world we don't want to be in

it's a world where you could even have

deflation it's a totally different world

than the one I grew up in

so really bottom line the finn is very

focused on keep this expansion going if

anything push inflation up a little bit

we're not even at 2% inflation and

there's no reason at all to stop this

experiment from running and you know the

fastest wage growth now is for those at

the bottom of the income distribution

now look those are the people who have

over 50 years taken the worst in and

when the financial crisis hit and

unemployment rose those were the people

who experienced the biggest losses so

we're talking about a group of people

who have suffered very serious losses

for a long time

were beginning to regain some of what

they lost so you know we shouldn't think

of this as oh this is totally solving

the problem but it's a good it's a good

thing and I think it absolutely has

further further to run it's not gonna

stop it

hmm sandy JP one of the things I was

thinking about when you spoke was my

impression is that a lot of the jobs you

were talking about that are hard to fill

are in manufacturing in some fashion

high-tech manufacturing and I wonder

whether part of the problem here is that

a lot of people grow up thinking that

manufacturing jobs aren't as secure as

they used to be then after all we've

been through in the next 20 last 20

years with companies moving companies

folding layoffs that that you can't

count on a manufacturer the way a

previous generation did and that they

haven't overcome that yet so which makes

it why people want to go into healthcare

rather than manufacturing but that's

just a impression I have do you think

there's anything - yeah that's probably

been one of our greatest challenges is

breaking down some of the outdated

perceptions of manufacturing our County

coordinates one of the largest annual

celebrations of national manufacturing

day were to date for seven consecutive

years we've gotten more than 12,000

students into next generation

manufacturers to look we're the future

of industry is going and actually kick

the tires on some of these careers we've

not only been able to facilitate

externships also apprenticeship programs

and now we're even taking teachers

counselors and superintendents into

these shops to get them to understand

how we can better connect classroom to

careers I think another arena where

we're starting to see some deficiencies

and ensuring that there's going to be

the next generation of talent is in the

skilled trades you know the joke that we

have around the office is when we're at

any of our outreach with any of our K

through 12 systems and a parent comes up

to me and says I have no idea what my

kid want to do number two things

electrician welder

you're gonna write for me I'll take it

right now specifically in Southeast

Michigan critical skills with an economy

in which we're building multi-billion

dollar OEM facilities across our region

in which those two positions are going

to be monumentally important to ensuring

those jobs get done well so David that's

a great question so our

nation runs the statewide Industry

Association for next-generation mobility

it's called Machado and one of the

things that we do is that we spend a lot

of time on research and data one of the

research syriza's that we do is a

national survey of young people and

their influencers teachers parents

counselors both at the high school and

the collegiate level and we've been

doing this now for about six years and

we ask people you know what is your view

of the auto industry what is your view

of Michigan what is your view of jobs in

that industry

and part of what we found is not

surprising you know I really don't want

to go into the auto industry because you

know it's it's too it's too volatile but

the some of the things that we learned

were we're really counterintuitive so

when I moved here a little over nine

years ago people said listen you know

because obviously I have eleven fortune

500 companies that I report to all their

CEOs or you know in my ears and you got

to tell people that the auto company is

high-tech our research shows that is not

an issue you know you know people young

people people across the country

influencers say no the auto industry is

incredibly high-tech well that's not an

issue then then what is the issue

it was ethics it was it was you know

said you know I don't want to send my

child or my student into the auto

industry because I am concerned about

the ethics of the auto industry and that

makes you scratch your head for a second

and it's like you know every time you

would do this survey it would be

something like you know VW dieselgate

the GM ignition crisis you know is

something you know was happening and but

the killer the killer issue was was that

young people not so much their

influencers but young people said the

auto industry is causing the problems I

care about not solving the problems I

care about global gridlock environmental

environmental stewardship

you know they felt that the auto

industry was contributing to those

problems as opposed to what those of us

who are in this industry know really

well is that you know they're working to

solve those problems interesting um CNN

staying with you for a minute

what you've been on both Washington and

now you've been in Detroit for nine

years

what are the kinds of federal policies

that you think make a difference in

addressing the kind of issues that we've

been talking about well one that we're

we just kind of lived through right now

was was trade policy the you know the

helpful was it I'm sorry it was helpful

was it ya know so ya know the the

uncertainty around NAFTA in particular

was was quite disruptive I mean you know

right now general EES generally

companies are hoarding cash right now

right big time they've got huge balances

you know they're not laying off people

but you know you know companies are

concerned they're cautious if you look

at every national indicee in terms of

CFO CEOs cos you know you know business

surveys you know it's either flatlined

or slightly down right it's this it's

the consumers it's all of us I mean

we're I mean those Amazon boxes are

flying because we're spending money on

everything that we look at right now and

it's what seventy one seventy two

percent of the economy consumers are

right and if it weren't for consumers

you know our national economy would look

very differently but I tell you and even

with that news the manufacturing sector

automotive in particular you know has

really been much more cautious because

of the trade issues uh Molly can you you

started to talk on this but what are the

kind of federal policies if we were if

this were a rational and calm

presidential debate no commentary on on

the last one what one of the kind of

things that you think federal government

could do that would alleviate some of

the tensions you've seen and make for a

better working place for low wage and

middle wage workers well I think some of

these issues are are coming out in the

in the 2020 campaign you know these

issues of middle class anxiety of the

struggles that workers are facing you

started this conversation saying Bernie

Sanders is surging Trump is in office

there's a lot of discontent so I think

even since the last election four years

ago issues of work and labor are much

more at the forefront of

I think this election and you're seeing

candidates talk more about this whether

it's support for federal minimum wage

increase for the first time in a very

long time to putting issues of labor

more front and center

I think there's bipartisan agreement on

some of the conversation we've been

having about better pathways to training

to apprenticeships to the skilled trades

I think that's actually not a

contentious issue we just are so far

from meeting the the needs of workers

the some of the the sentiment that I

picked up and talking to workers is it's

really tough to invest it to take time

off when you need to pay your bills and

enroll in some kind of training program

either in your unpaid time or in the

work place low-wage workers typically

have very little access to employer

provide a training to do this on the job

it's really really challenging this

country compared to most of our peers

really is very paltry we're very thrifty

when it comes to actually meeting

workers and providing them with

wraparound services pathways funding for

things like apprenticeships I think all

of these things are necessary and

something that doesn't come up a lot is

even something like child care is really

important especially busy working adults

and women in particular shoulder a lot

of the second shift came up a lot in my

interviews they work during the day and

they go home to a second shift the

notion that they have some extra time

and bandwidth to take on some training

on the side I think is really

unrealistic so child care and that's

something you're seeing a little bit

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