Economic Report of the President 1994 - The American Presidency ...

edented partnership to develop a number of new programs. Governmentprograms have traditionally provided extensive support forthose going to college. The School-to-Work initiative of the Departmentsof Education and Labor will help those who begin their careerswith a high school diploma to obtain meaningful work-basedtraining. This training will go hand in hand with a new system ofskill standards and certification, which will make the skills workerslearn more portable and consequently more valuable. The Administration'sWorkforce Security Act will provide training and jobsearch assistance to dislocated workers who are having difficultyfinding new work. The aim is to transform our unemployment systeminto a reemployment system. The Administration's proposedwelfare reform plan will provide funds for training to some of themost disadvantaged in our society: mothers and fathers with childrenin poverty.Another part of the Administration's answer to the problem ofgrowing inequality is the substantial increase in the earned incometax credit that has been put in place. This tax credit, primarily forlow-wage workers with children, along with the full range of othergovernment transfer programs, will lift many families with a fulltimeworker out of poverty. It is described in detail in Chapter 1.Increased productivity growth is the answer to stagnant realwages, and improved training and education—particularly for theleast advantaged—is a major part of the solution to growing inequality.But we cannot expect firms to purchase new equipmentunless there is demand for more products, and we cannot expectworkers to train for jobs that do not exist. Therefore, an integralgoal of the Administration's economic policies is the return to fullemployment.Maintaining a high rate of economic growth is also essential fordealing with the second major labor market trend of the last twodecades: increased unemployment. The analysis presented abovesuggests that most of the increase in average unemployment overthe 1970s and 1980s was due to slack aggregate demand. There isalso some indication of a permanent increase in the natural rateof unemployment in the 1970s. Whatever the cause of the increasein the natural rate, the Administration's Workforce Security Actshould help reduce the natural rate by facilitating a more efficientmatching of workers and employers.An initial step toward the establishment of a reemployment systemwas taken last fall with the passage of legislation extendingFederal emergency unemployment benefits. That legislation put inplace for the first time a system of worker profiling to help identifyworkers who are likely to experience long-term unemployment, andto provide them with a package of job search assistance services.Several controlled experiments have now shown such services to be129