A 21st Century Economic Strategy for America

Why Obama is Right To Be Focusing on Credit Card Debt

The New York Times has a must read article by Eric Dash and Andrew Martin this morning which looks at the crushing burden credit card debt has become for many American families, and how worsening financial conditions is driving many into credit card default.  The article once raises a fundamental question we've been raising for months - what is the best course for consumers now? should they borrow and spend, helping fuel a recovery, or should they pay down their debts and clean up their own balance sheets? The answer will help determine how deep and long the Great Recession will be:

It used to be easy to guess how many Americans would have problems paying their credit card bills. Banks just looked at unemployment: Fewer jobs meant more trouble ahead.

The unemployment rate has long mirrored banks’ loss rates on card balances. But Eddie Ward, 32 and jobless, may be one reason that rule of thumb no longer holds. For many lenders, losses are now starting to outpace layoffs.

Mr. Ward, of Arkansas, lost his job at a retail warehouse in April and so far has managed to make minimum payments on his credit card debt, which he estimates at $15,000 to $20,000. Asked whether he thinks he will be able to pay off his balance, he said, “Not unless I win the lottery.”

In the meantime, he said, “I’m just doing what I can.”

Experts predict that millions of Americans will not be able to pay off their debts, leaving a gaping hole at ailing banks still trying to recover from the housing bust.

The bank stress test results, released Thursday, suggested that the nation’s 19 biggest banks could expect nearly $82.4 billion in credit card losses by the end of 2010 under what federal regulators called a “worst case” economic situation.

But if unemployment breaches 10 percent, as many economists predict, the rate of uncollectible balances at some banks could far exceed that level. At American Express and Capital One Financial, around 20 percent of the credit card balances are expected to go bad over this year and next, according to stress test results. At Bank of America, Citigroup and JPMorgan Chase, about 23 percent of card loans are expected to sour.

Even the government’s grim projections may vastly understate the size of the banks’ credit card troubles. According to estimates by Oliver Wyman, a management consulting firm, card losses at the nation’s biggest banks could reach $141.5 billion by 2010 if the regulators’ loss rate was applied to their entire credit card business. It could top $186 billion for the entire credit card industry.

In the official stress test results, regulators published losses only on credit cards held on bank balance sheets. The $82.4 billion figure did not reflect another element in their analysis: tens of billions of dollars in losses tied to credit card loans that the banks packaged into bonds and held off their balance sheets. A portion of those losses, however, will be absorbed by outside investors.

What is more, the peak unemployment level that regulators used to drive their loss estimates is roughly what current rates are on track to reach. That suggests that if the unemployment rate gets much worse, credit card losses could be worse than what regulators projected.

And many economists expect the number of job losses to climb even higher. On Friday, the unemployment rate reached 8.9 percent as the economy shed 539,000 jobs. The unemployment rate and the rate of credit card charge-offs, or uncollectible balances, have been aligned because consumers who lose their jobs are more likely to miss payments.

Banks wrote off an average of 5.5 percent of their credit card balances in 2008, while the average unemployment rate was 5.8 percent. By the end of the year, the rate of credit-card write-offs was 6.3 percent; more recent data was not available.

Experts predict that the rate of credit-card losses could eventually surpass the jobless rate because of the compounding effects of the housing crisis and lackluster consumer confidence. Shortly after the technology bubble burst in 2001, credit card loss rates peaked at 7.9 percent.

“We will blow right through it,” said Inderpreet Batra, a consultant at Oliver Wyman, which specializes in financial services.

Unlike in prior recessions, cardholders who recently lost their jobs are unlikely to be able to extract equity from their homes or draw down retirement accounts to help pay off their debts. That means borrowers who fall behind on their bills are more likely to default, leading to higher losses.

Throughout this Great Recession analysts have been repeatedly suprised by the gravity of the economic decline.  But as this article points out, one of the central dynamics driving this downturn was the unusual economic circumstances of this decade prior to the Wall Street collapse and recession - that in a period of sustained growth incomes in America dropped.  The American consumer was in an already terribly weakened state prior to the slowdown, and this is why it is critical - as the President is doing with his new credit card initiative - to begin to focus much much more on getting the balance sheet of the battered American consumer in better shape.  

For without the typical American family getting back in the game we could see this far-reaching global recession last much longer than of any of us would want.

NDN Backgrounder: Rebuilding the American Economy

This week, the White House release results of the "stress tests" and President Obama presented a vision for retraining the American workforce. NDN is pleased to present a number of recommended pieces on rebuilding the financial system, the American workforce, the housing market, and a number of other important items on America's economic future.

  • Short Sales and the Market Meltdown by Dr. Robert Shapiro, 5/7/2009 - Reflecting on a recent speaking engagement with SEC commissioners, Shapiro argues for additional regulation of short sales.
  • Obama: Upgrade Worker Skills Through Community Colleges by Jake Berliner, 5/5/2009 - In a recent interview, President Obama advocated using the nation's community colleges as a resource for worker IT training, an NDN proposal that Rep. John Larson introduced as legislation.
  • Should We Try to Save the Damaged Brands? by Simon Rosenberg, 4/30/2009 - Rosenberg asks if these mainstay, now troubled American brands - AIG, Chrysler, Citi, GM - can be saved by being propped up by the government or if their brands are permanently insolvent.
  • Carbonomics by Michael Moynihan, 4/2/2009 - Moynihan looks at the connection between pricing carbon and the future of the American automobile industry.
  • The Global Economic Crisis and Future Ambassadorial Appointments by Simon Rosenberg, 11/26/2008 - With the mammoth task of rebuilding international financial architecture and recovering from a global recession awaiting the new President, Rosenberg points out the the ambassadors to the G20 nations will be key members of the economic team.
  • A Stimulus for the Long Run by Simon Rosenberg and Dr. Robert Shapiro, 11/14/2008 – This important essay lays out the now widely agreed-upon argument that the upcoming economic stimulus package must include investments in the basic elements of growth for the next decade, including elements that create a low-carbon, energy-efficient economy.
  • Back to Basics: The Treasury Plan Won't Work by Dr. Robert Shapiro, 9/24/2008 - As the financial crisis unfolded and the Bush Administration offered its response, Shapiro argued that, while major action was needed, the Treasury's plan would be ineffective.
  • Keep People in Their Homes by Simon Rosenberg and Dr. Robert Shapiro, 9/23/2008 – At the beginning of the financial collapse, NDN offered this narrative-shaping essay and campaign on the economic need to stabilize the housing market.

Voters Deliver a Mandate for a New Economic Strategy

Over the last few months, NDN has been part of a broad progressive campaign to explain why the American economy was not delivering the type of broad‐based prosperity this country needs. This week, American voters delivered a clear and unmistakable mandate for action on our economy. The facts are simple: during the Clinton era, the average family income increased by more than $7,000; but in the Bush era the average family has actually seen their income decline by more than $1,000. And the results this week make it clear that this lack of upward mobility was a critical issue in removing the Republicans from power.

There is a prevailing wisdom emerging that this election was about the Iraq war. This is only partially correct. Of course, Iraq mattered. But the exit polls and post‐election analysis make it clear that the economy mattered a grea deal, perhaps even more than Iraq. The economy was a deciding factor in key battleground states, and was especially important for swing voters. Moreover, voters who felt the economy was doing badly were overwhelmingly more likely to vote Democrat (all exit polls referenced are the official national exit polls which can be found here).

  • The economy was the most important issue. The exit poll asked voters if they considered various issue important in deciding their vote. If you add up those who responded ‐ where issues were extremely, very, or somewhat important ‐ the economy comes out number one.
  • Table 1

  • Economy Crucial in Battleground States. The economy played a critical role in the key battleground states that decided the election. In these areas the results could not be clearer: the economy was the number one issue. The exit poll asked voters in key swing states about Iraq and the Economy. In each swing state more voters thought the economy was either “extremely important” or “very important” in their decision over who to vote for their senator.
  • Table 2

  • Economy Plays Big with Swing Voters. Stan Greenberg’s post‐election analysis shows that Iraq was the dominant issue for the majority of voters. However, Greenberg is clear that the economy was the second most important issue overall, and that it played a disproportionately important role in persuading swing voters who were considering voting for the Democrats. Among this group of swing voters 51% cited economic issues like gas prices, while 38% cited jobs and the economy. Only 23% cited Iraq.
  • Only 30% of Americans believe they are getting ahead. The exit poll in two separate questions about the perception of their own economic situation, only 30 percent said their own economic situation had improved in recent years. And remarkably, the same number – only 30% ‐ said they believed the life of the next generation would be better than theirs. Of those who felt they had prospered voted about 2:1 for the Republicans. For those who were struggling, they voted the opposite way, 2:1 for the Democrats.
  • Those struggling to get ahead voted Democrat. Additional questions confirm how much a factor perceptions of the economy were in driving the Democratic vote. Those who thought the economy was “excellent” voted overwhelmingly for the Republicans (86% vs 13%.). Democrats easily carried those who thought the economy was either “not good” (74% vs 23%) or “poor” (85% vs 13%.).

All of this added together clearly shows that the American people want the new Democratic majorities in the House and Senate to focus and pursue an aggressive strategy to help them and their families get ahead.
This administration’s economic record has left America weaker, and the American people worse off. This election year, the American people held them accountable. Now it is time for action.

Obama: Upgrade Worker Skills Through Community Colleges

In the now oft-quoted and talked about David Leonhardt interview of President Barack Obama in this weekend's edition of the New York Times Sunday Magazine, Obama made an argument about worker skills that we here at NDN quite enjoyed:

I think everybody needs enough post-high-school training that they are competent in fields that require technical expertise, because it’s very hard to imagine getting a job that pays a living wage without that — or it’s very hard at least to envision a steady job in the absence of that.

And so to the extent that we can upgrade not only our high schools but also our community colleges to provide a sound technical basis for being able to perform complicated tasks in a 21st-century economy, then I think that not only is that good for the individuals, but that’s going to be critical for the economy as a whole.

NDN couldn't agree more. In fact, just two weeks ago, House Democratic Caucus Chairman John Larson introduced H.R. 2060, The Community College Technology Access Act of 2009, which is based on a paper written in 2007 by NDN Globalization Initiative Chair Dr. Robert Shapiro called Tapping the Resources of America’s Community Colleges: A Modest Proposal to Provide Universal Computer Training. The legislation offers free computer training to all Americans through the already existing infrastructure of the nation's approximately 1,200 community colleges.

President Obama has a long track record of supporting such proposals. During the presidential campaign, then-Senator Obama endorsed the idea as part of his platform, and we're pleased to see that the idea of community colleges as a crucial resource for improving worker skills is in his agenda for creating economic prosperity.

This proposal is part of a broader argument that NDN has been making for some time, that in the globalized, interconnected, technology-dense 21st century economy, facility with and connectivity to the global communications network is central to the life success of any worker or child. The 21st century economy is idea-based, in that most of the value of the large companies at the center of U.S. economy is now determined not by their physical assets, but by their intellectual property. Thriving in such an economy requires 21st century skills.

This argument is expounded upon in a paper written by NDN President Simon Rosenberg and Alec Ross, then with the One Economy and now a Senior Advisor on Innovation to Secretary of State Hillary Clinton, that would put A Laptop in Every Backpack of American sixth graders. Additionally, Tom Kalil, now Associate Director for Policy of the White House Office of Science and Technology, continued this narrative, authoring a paper entitled, Harnessing the Mobile Revolution, for NDN’s affiliate, the New Policy Institute. This paper argued that the explosive growth of mobile communications can be a powerful tool for addressing some of the most critical economic, political, and social challenges of the 21st century.

Stay tuned to NDN's Globalization Initiative for additional work on 21st century skills and technology. We believe, just as President Obama started to spell out in his recent interview, that tapping the resources of America's community colleges, putting a laptop in every backpack, and ultimately connecting all Americans and the rest of the world to the global communications network can and must be a hallmark of the economic agenda going forward.

NDN Backgrounder: What Future for the American Auto Industry?

As Sam told us in his morning round-up, Chrysler is to undergo a "surgical bankruptcy" process that will leave the United Auto Workers with a controlling stake in the company, with Fiat and the US Government as junior partners. In addition, as Dr. Rob Shapiro discussed Tuesday on Fox News, the federal government and the Auto Workers now own 89 percent of GM and on his 100th day in office, President Obama said that he wanted the federal government out of the auto business as quickly as possible. NDN has been following the automakers and their search for a profitable future for quite a while, so enjoy this backgrounder on the American auto industry.

  • Here in the Real World They're Shutting Detroit Down by Morely Winograd and Mike Hais, 4/30/2009 - NDN Fellow Winograd and Hais pont out that GM's problems come at a time when the inherent tension between the investor class and the country's manufacturing sector have never been greater.
  • Should We Try to Save the Damaged Brands? by Simon Rosenberg, 4/30/2009 - Rosenberg asks if these mainstay, now troubled American brands - AIG, Chrysler, Citi, GM - can be saved by being propped up by the government or if their brands are permanently insolvent.
  • Carbonomics by Michael Moynihan, 4/2/2009 - Moynihan looks at the connection between pricing carbon and the future of the American automobile industry.
  • Sympathy for the Car Guys by Michael Moynihan, 12/5/2008 - Moynihan compares Capitol Hill's treatment of Wall Street CEOs to that the auto makers received.
  • With recent news that Congress and the Obama Adminsitration are interested in a "Cash for Clunkers" proposal, enjoy this video from a Green Project event on August 1, 2008 during which Jack Hidary speaks about this idea.

Tapping the Resources of America's Community Colleges

Publish Date: 

It is time that America ensures that all workers have real opportunities to build the skills necessary to operate one of the most important new technologies of our time, computers. Young Americans are increasingly adept at working with computers, but many American workers still lack those skills. Here, we propose a direct, new approach to giving U.S. workers the opportunity to develop those skills, by providing federal government grants to America’s community colleges to keep open their computer labs three nights every week, staffed by instructors who will provide basic instruction to any person in the community who walks in and requests it.

The primary way any nation can ensure that its people enjoy broad-based upward mobility is to raise the productivity of its workers and businesses. Achieving that goal, as the United States has done throughout most of its history, depends largely on three critical factors. First, the economy must promote the development and spread of new technologies, new ways of organizing and operating businesses, and other innovations that create new value and new efficiencies. Second, companies must invest in those technologies and in other business and economic innovations, so workers can use them to perform their jobs more productively. Finally, workers, companies, and the government must provide continuing support for all workers to acquire the skills to operate new technologies and perform well in innovative business environments. The program proposed here, fully implemented, could provide that support and enable all American workers to learn basic computer skills at a total annual cost of less than $125 million a year.

Executive Summary    It is time that America ensures that all workers have real opportunities to build  the skills necessary to operate one of the most important new technologies of our time,  computers. Young Americans are increasingly adept at working with computers, but  many American workers still lack those skills.  Here, we propose a direct, new approach  to giving U.S. workers the opportunity to develop those skills, by providing federal  government grants to America’s community colleges to keep open their computer labs  three nights every week, staffed by instructors who will provide basic instruction to any  person in the community who walks in and requests it.    The  primary  way  any  nation  can  ensure  that  its  people  enjoy  broad‐based  upward mobility is to raise the productivity of its workers and businesses.  Achieving  that goal, as the United States has done throughout most of its history, depends largely  on three critical factors. First, the economy must promote the development and spread  of  new  technologies,  new  ways  of  organizing  and  operating  businesses,  and  other  innovations that create new value and new efficiencies.  Second, companies must invest  in those technologies and in other business and economic innovations, so workers can  use them to perform their jobs more productively.  Finally, workers, companies, and the  government must provide continuing support for all workers to acquire the skills to  operate new technologies and perform well in innovative business environments.  The  program proposed here, fully implemented, could provide that support and enable all  American workers to learn basic computer skills at a total annual cost of less than $125  million a year.    1  We gratefully acknowledge the invaluable assistance and insights of Aaron Banks, former Chief Editor at  NDN and now Online Campaign Coordinator at the One Campaign.  America’s Productivity Record     America  is  enjoying  an  extended  period  of  strong  productivity  growth.    The  1950s  and  1960s  were  a  period  of  historic  upward  mobility  for  the  United  States,  largely  because  productivity  marched  up  at  an  annual  rate  of  more  than  3.2  percent.2    This  progress  slowed  sharply  from  the  early‐1970s  to  the  mid‐1990s,  with  annual  gains  averaging  just  1.5  percent.    This  critical  trend  has  moved  upward  again  since  1996,  averaging 2.8 percent annual gains over the last decade.  The sources of these impressive  productivity  gains  are  not  mysterious.    Economists  and  other  experts  generally  agree  that  the  most  important  factor  in  the  resurgence  of  productivity  growth  has  been  the  spread of information technologies across the U.S. economy.    The  Department  of  Commerce  tracked  the  link  between  the  spread  of  IT  and  productivity  growth  in  a  series  of  landmark  reports  on  the  “Digital  Economy”  issued  from 1997 to 2003.  The 2003 report noted,    The widespread dispersion of productivity growth across major sectors of  the economy – largely paralleling the spread of IT – suggests that massive  IT  investments  by  U.S.  industries  are  producing  positive  and  probably  lasting  changes  in  the  nation’s  economic  potential.  These  conclusions  add  to  recent  findings  by  other  economists  concerning  the  widespread  and  lasting impacts of IT on the revival of U.S. productivity growth.3      Those  productivity  gains  are  continuing  as  American  businesses  adopt  and  adapt  to  successive  new  generations  of  digital  technologies  and  the  rapid  expansion  of  global  communications  networks.    In  addition,  some  parts  of  the  U.S.  economy  have  lagged  behind  others  in  adapting  to  information  technologies,  including  such  major  sectors  as  health  care,  education,  construction,  and  the  public  sector.4    As  operations  in  these  sectors  become  increasingly  digitally‐based  and  other  sectors  adopt  the  latest  generation  of  IT,  anyone  who  hopes  to  improve  his  or  her  economic  conditions  must  possess the capacity and skills to operate in an IT‐intensive workplace.     In  the  latter‐1990s,  the  strong  productivity  gains  of  the  overall  economy  were  matched  by  equally  strong  progress  in  average  wages  and  salaries,  as  well  as  in  overall  growth,  business  investment  and  corporate  profits.    Over  the  last  five  years,  however,  this  pattern  has  changed.    Since  2001,  the  nation’s  strong  productivity  growth  has  been  matched  by  healthy  gains  in  overall  growth  and  historically‐high  corporate  profits,  but  most  workers  have  experienced  little,  if  any,  real  (inflation‐adjusted)  wage  progress.  In  2  Bureau of Labor Statistics database, http://www.bls.gov/lpc/home.htm.   3  Digital Economy 2003, Economics and Statistics Administration, December, 2003.  4   “Will  We  Build  It  and  If  We  Do  Will  They  Come:  Is  the  U.S.  Policy  Response  to  the  Competitiveness  Challenge  Adequate  to  the  Task?ʺ  Remarks  by  Robert  D.  Atkinson  at  the  2006  American  Association  for  the  Advancement of Science Policy Conference, April 21, 2006, Washington, DC.      fact,  the  combination  in  recent  years  of  stagnating  wages  for  most  Americans  and  corporate  profits  that  have  doubled  since  2000  has  reduced  workers’  share  of  total  national income to its lowest level since the early 1930s.5  The unexpected decoupling of  productivity gains and wage growth also has occurred while prices have risen sharply  for many middle‐class necessities, including health insurance, electricity, gasoline and  college tuitions.6  In the midst of historic productivity progress, life is getting harder for  tens of millions of Americans; and the median income of American households fell  almost 6 percent from its record high level in 1999.7    These developments, especially the critical decoupling of productivity growth  and wage gains, reflect pressures generated by economic globalization and technological  change – and the failure of our government to respond urgently and creatively.  For  today’s  Americans  to  enjoy  the  upward  mobility  experienced  in  much  of  the  last  century, we will have to address some very difficult issues. We urgently need serious  reforms to contain the rising costs of health care and energy, because when intense  global competition limits the ability of U.S. companies to pass on those rising costs, the  result is often depressed wages for ordinary Americans. We also need new approaches,  as soon as possible, to ensure that every American worker can have the skills he or she  needs to operate with the information technologies that are mainly responsible for our  strong productivity gains.     Throughout  the  last  decade  of  strong  productivity  gains,  both  when  overall  wages rose in the late 1990s and then stalled in the last six years, Americans with the  largest gains were those in the top 10 to 20 percent of the workforce, by income, with the  most  developed  information  and  communications  technology‐related  skills.  But  computers and online communications technologies have become part of most jobs in  the  U.S.  workforce,  from  tax  accounting  to  trucking  and  across  manufacturing  and  service industries.  It is already virtually impossible in America to find and hold a  higher‐paying job without proficiency in computer and communications skills.  To help  address  this  challenge  for  the  next  generation,  the  NDN  Globalization  Initiative  proposed recently to provide every Americans schoolchild a laptop computer and basic  computing skills.8     Here, we propose a simple and effective way to provide every worker today with  an opportunity to build the same skills.  Tens of millions of Americans graduated high  school or even attended college in the years before computers and the Internet became  ubiquitous.  Many of them are now entering, or are already in, what should be their  most productive and highest‐earning years.  But without basic information technology  5  The Bush Economic Record, NDN Globalization Initiative, September 2006.  6  Ibid.  7  Ibid.  8  Alex Ross and Simon Rosenberg, “A Series of Modest Proposals to Build 21st Century Skills: A Laptop in  Every Backpack,” www.ndn.org/advocacy/globalizaiton/laptoppaper.html.       skills,  many  workers  are  trapped  in  dead‐end  jobs,  and  as  non‐wired  employment  becomes obsolete, they face being locked out of the mainstream workforce entirely.    The United States has a cost‐effective and ready‐to‐deploy infrastructure already  in place to provide universal access to basic information‐technology skills: The computer  labs of the nation’s vast network of community colleges across the country.  A relatively  modest investment of federal grants for community colleges can make these on‐campus  computer  facilities  into  powerful,  part‐time  community  resources  for  workforce  training.      A Modest Proposal to Provide Universal Access to Computer Skills     The United States maintains a network of 1,202 accredited community colleges  across the country.  They are located in major cities and quiet suburbs, and new efforts  such as the Ford Foundation’s Rural Community College Initiative are extending these  critical  educational  resources  to  rural  Americans  as  well.9  Virtually  all  of  these  community colleges already have created and staffed computer labs for their students.  We should take advantage of these sunk costs to help every working American build  critical IT‐related job skills.     Since the establishment in 1901 of Joliet Junior College, the first two‐year college  in the United States, the missions and scale of America’s community colleges have often  changed  in  response  to  the  nation’s  needs.    In  the  1930s,  hundreds  of  community  colleges  added  workforce  training  to  their  existing  liberal  arts  curriculum,  to  help  Americans who had lost their jobs in the Great Depression.  Following the Second World  War, the system expanded greatly to meet the new demand from the influx of students  supported by the GI Bill. Similarly, community colleges expanded their campuses and  facilities in the 1960s and 1970s to accommodate the rising demand for higher education  from baby boomers.      Community colleges are now going through their next period of reinvention, in  which most of them have already placed new emphasis on incorporating technology,  computers  and  advanced  communications  skills  into  their  curricula.  The  American  Association  of  Community  Colleges  has  identified  background  and  competency  in  information technologies as critical to students’ success in finding jobs after graduation.   In  response,  computer  labs  have  become  a  universal  feature  of  community  college  campuses, and the numbers of students graduating with degrees in IT and IT‐related  fields have risen.       9  American Association of Community Colleges, “Fast Facts” and “Rural Community College Initiative,”  www.aaec.nche.edu.       The typical community‐college computer lab is open and used by students 66.5  hours per‐week.10  These hours are highly concentrated in the daytime of weekdays,  when  most  working  people  are  on  their  jobs.  Under  our  proposal,  the  federal  government would provide grants to defray the costs of keeping these labs open and  staffed by community college instructors an additional 30 hours each week, on evenings  and weekends when these labs are generally closed or little‐used. During those hours,  any person would be able to walk in and receive instruction in computer‐related skills,  at no cost.  We estimate that if two‐thirds of community colleges participate, and each  provides three instructors for 30 hours a week, 48 weeks a year, Congress could provide  every worker in America access to IT training for about $125 million a year.11    Each community college would be able to determine the specific content of the  instruction, based on its own assessments of local needs and what people walking in ask  for.  The most likely areas of instruction would include basic computer operations, word  processing,  spreadsheet  construction  and  manipulation,  Internet  research  and  communication, database entry and operation, and basic graphic design.  Gaining these  skills can open up new job opportunities for people currently in low‐paying fields and  help millions of other workers improve their productivity in their current jobs. Most  important,  this  new,  21st  century  partnership  between  the  federal  government  and  America’s community colleges can help transform the careers and lives of millions of  Americans.      This effort can also build on recent initiatives in places like Arizona to develop  community‐driven curricula, in which businesses, community colleges and government  collaborate on new approaches to worker training.  As reported recently by the Arizona  Capital Times,      An  extensive  workforce  study  by  the  Maricopa  County  Community  Colleges and Salt River Project examined current and future needs of  employers and employees, with an eye toward the role of the colleges. In  the next two years, the study forecasts a 33 percent increase in technician  hires in science, software manufacturing and application development,  drafting, design and product development …. At the Arizona Association  of  Industries,  Stuart  Banks,  president,  is  working  with  the  Arizona  Department  of  Commerce  on  a  plan  to  help  small  and  mid‐sized  manufacturing companies obtain job training funds.12      10  This estimate is derived from micro‐data collected by NDN based on a random sample of community  colleges nationwide.  11  The average wage of computer instructors at junior and four‐year colleges is about $27‐$34/hour.  Based  on those wages and the assumptions enumerated above, we estimate the total labor costs for the program at  roughly $103 million.  We assume 20 to 25 percent additional overhead costs for the use of the facilities and  other expenses incurred by participating community colleges.  12  “Building a Talent Pipeline,” Arizona Capital Times, November 24, 2006.      In the Arizona project and similar efforts elsewhere, community colleges are  planning  their  curricula  to  help  students  prepare  for  well‐paying  jobs  in  their  communities.  Our  proposal  would  enable  community  colleges  to  provide  similar  benefits for working people in their communities, focusing on the IT skills that are most  central to productivity and wage gains in this period.        The United Kingdom also recently launched a large, new private‐public initiative  in collaboration with the Microsoft Corporation to train 100,000 Scottish workers in basic  IT and communications technology skills.13 Microsoft surveyed 600 employers in 10  European Union countries and found that computer and Internet‐related training was  needed not just in traditional IT fields, but across the economy.14  The project, which  Microsoft is helping to fund, is part of the broader “Unlimited Potential” campaign  spearheaded by Microsoft to provide IT and communications training to 100 million  people around the world.15  That campaign and our proposal share the fundamental  insight  that  expanding  training  in  information  and  Internet‐related  technologies  is  critical to both future productivity growth and wage gains.    The benefits from this new initiative will go far beyond the millions of American  workers who will gain access to computer and Internet‐related training.  The program  also will expand demand for IT instruction, raising incomes and creating new jobs for IT  instructors.    Some  of  these  instructors  will  come  from  the  ranks  of  those  currently  teaching at the community colleges; others may come from the growing numbers of self‐ employed  IT  professionals  doing  free‐lance  work,  or  current  undergraduate  and  graduate students with these skills.  Improving the IT‐related skills of current workers  can  also  enable  firms  to  adopt  and  adapt  to  the  next  generation  of  information  technologies,  potentially  increasing  their  efficiency  and  even  their  own  capacity  for  innovation.     Most important of all, this initiative can help us deliver on the basic promise of  progressive  politics,  that  anyone  willing  to  apply  themselves  and  work  hard  can  improve their lives.  In a technologically‐driven economy adapting to the pressures of  accelerating globalization, progressive government has a responsibility to ensure that  everyone has real access to the means to achieve that goal.  This initiative can help our  government meet that responsibility.  13  “Scots to receive IT training,” Financial Times, January 30, 2007.  14  Ibid.  15  “Getting to Work: Computer Skills Help Untapped Labor Force,” San Jose Mercury News, March 2, 2007.     About the Author      Robert J. Shapiro is the chairman of the NDN Globalization Initiative.  He is also  chairman and co‐founder of Sonecon, LLC, a private firm that advises U.S. and foreign  businesses, governments and non‐profit organizations on market conditions and  economic policy. Dr. Shapiro has advised, among others, U.S. President Bill Clinton and  British Prime Minister Tony Blair; private firms including MCI, Inc., New York Life  Insurance Co., SLM Corporation, Google, Nordstjernan of Sweden, and Fujitsu of Japan;  and non‐profit organizations including the American Public Transportation Association,  the Education Finance Council, and the U.S. Chamber of Commerce.  He is also Senior  Fellow of the Progressive Policy Institute (PPI) and a director of the Ax:son‐Johnson  Foundation in Sweden. From 1997 to 2001, he was Under Secretary of Commerce for  Economic Affairs. Prior to that, he was co‐founder and Vice President of PPI.  Dr.  Shapiro also served as the principal economic advisor to Bill Clinton in his 1991‐1992  presidential campaign, senior economic advisor to Albert Gore, Jr. and John Kerry in  their presidential campaigns, Legislative Director for Senator Daniel P. Moynihan, and  Associate Editor of U.S. News & World Report.  He has been a Fellow of Harvard  University, the Brookings Institution and the National Bureau of Economic Research. He  holds a Ph.D. from Harvard, as well as degrees from the University of Chicago and the  London School of Economics.

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