An Agenda for the President: Interview with Thomas Kochan - Interview

Challenge, Nov, 2000

Earnings are up since 1996, but the typical male worker is still behind. To compensate, women have gone to work in huge numbers, families are working many more hours, and Americans are borrowing like crazy. What can we do to improve individual earnings in the next four years?

Q We constantly hear terms such as "unprecedented prosperity" these days, especially from our politicians. How would you describe the actual state of working America?

A. Well, it is clear that at a macro level we have had a very strong economy and favorable economic growth for almost a decade now. But the reality is that the average American worker feels left out.

Q. Has he or she actually been left out?

A. The average male worker is at about the same place today as he was in 1979, except for those at the very high end of the occupational and income ladder. Women have done better because women are working more hours and are more engaged in career-oriented jobs, and so women's earnings have improved somewhat.

Q. But they still remain below men's earnings on average?

A. Yes. The gap has closed only slightly, and largely because men's earnings have not grown in the last fifteen years the way they had in the previous decades.

Q. There are a lot of skeptics who, when you contend that the average male worker is in the same place he was in 1979, will respond that it is not true and try to shoot holes in the argument. Precisely on what do you base this contention?

A. The two best measures are average hourly earnings and annual income. If you look at family income, there has been an improvement for those in traditional two-parent families with a good education and both parents in the labor force. Family income has increased enormously for married people when both are working and both have a good education. The reality is that there is a lot of purchasing power out there in the economy for these intact, traditional families. But, remember, that is because they are contributing many more hours to the paid labor force.

Q. They are working many more hours?

A. Yes, largely because women with children are working more hours. On average, two-parent families added from 15 percent to 20 percent more hours to the labor force over the past twenty years.

Q Let me get back to this average-worker concept because people misunderstand, and I want to get it clear. When we say the average worker, do you mean the average worker, say, thirty-five years old with twelve years of work experience is earning less today than the average worker thirty-five years old with the same kind of experience in 1979? Or are most workers earning less than they did before?

A. The average earnings of all workers in the full-time labor force have been down. We have seen growth of about 2 percent in each of the past three years, so after six years of sustained economic growth, we are beginning to see some modest improvement. But that is a far cry from what we have observed in other periods of expansion. Then if you look within particular age cohorts, the workers who are doing especially poorly are young workers without college degrees or even with college degrees that are not in highly technical areas. There is a whole cohort of young people who are having a harder time reaching the same level of income today as earned by cohorts of an earlier generation. That is going to stay with them throughout their careers. Their lifetime earnings will be lower than earlier cohorts' unless something dramatically changes. That is the reality we are facing in the labor market.

Q. Is it fair to say that one of the only ways people were able to keep their standard of living up over the past twenty-five years was to have the spouse work?

A. There is no question that the economy and family living standards have benefited enormously from increased contributions of women to the paid labor force. Now that is beginning to taper off. There is not much more room for increases in hours of work in labor force participation of women, and therefore we cannot depend on that source in perpetuity. We will have to do something about increasing the wages of individuals as opposed to adding more family members to the labor force.

Q. That is an interesting point. Do you have a number in your head about how many more hours a typical family is working these days than it did, say, twenty years ago?

A. It varies by family status. I believe the best estimate comes from the Council of Economic Advisors. They say that women have increased the hours of work by about 16 percent over the last fifteen years. That is a substantial increase. Unmarried mothers are increasing their hours significantly now because of welfare reform. I have not seen the actual numbers on that segment yet because it is too early. Unmarried mothers have always worked a lot of hours just because they had to, but now we are seeing more women going into the labor force and moving off welfare roles.

Q When Al Gore, in his acceptance speech last summer, talked about helping working families, it really seemed to strike a chord. I know that you think it struck a chord for a good reason.