E C O N O M I C R E P O R T O F T H E P R E S I D E N T

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and ethnic gap in college graduation rates remains large. In 1940, 6.4 percentof whites aged 25-29 had completed college; by 1998, 28.4 percent had.African American and Hispanic graduation rates have improved over the sameperiod, but they still lag far behind that of whites. Although the rate for AfricanChapter 4 | 133
Americans has risen almost 10-fold since 1940, only 15.8 percent of AfricanAmericans and only 10.4 percent of Hispanics aged 25-29 held bachelor’sdegrees in 1998. A number of Administration policies seek to improve access topostsecondary education and are discussed later in this chapter.Changes in the Demand for SkillsThese statistics show clearly that the American labor force is becomingmore educated over time, but are these increases in educational attainmentkeeping up with the demands of an increasingly technology-driven labormarket? And in that market, what happens to those who do not keep up?The rise in importance of basic computer skills illustrates the concern. Computeruse on the job has increased tremendously since the introduction of thepersonal computer in the late 1970s. Already by 1984 about a quarter of allworkers were using a computer at work, and by 1997 that proportion hadrisen to virtually half. What this trend implies is that the pool of potentialjobs is shrinking for those who lack basic computer skills.But it is not just computer skills that are in demand in today’s labor market.Survey evidence from the 1992-94 period indicates that most jobs availableto workers without a college degree require not only specific experiencebut the ability to perform basic tasks involving reading, writing, or arithmeticand the interpersonal skills to serve customers effectively. Focusingspecifically on jobs available to those without a college degree, this surveyfound that over half of such jobs required workers, on a daily basis, to dealwith customers (70.0 percent), read or write paragraphs (61.1 percent), doarithmetic (64.7 percent), or use computers (50.7 percent). Only 8 percentof the jobs available to non-college graduates required none of these skills.Does this imply that the skill demands of employers have been increasingover time? Direct research evidence on this question is limited, but it suggeststhat indeed they have. The same survey asked employers directly whetheroverall skill use on jobs they had recently filled had risen in the past 5 to 10years. The results indicate substantial increases in each of the skill categories(23 to 25 percent) over this relatively short period. The data also show thatthe changes in labor outcomes (wages and employment) for certain groupsthat took place over this time have occurred in a manner consistent withfirms demanding greater levels of skill.A mismatch does seem to be emerging between the skills that workers possessand the skills that employers demand. For example, a 1996 survey ofmedium-size and large businesses by the American Management Associationfound that 19 percent of applicants for vacant jobs lacked the necessary mathand reading skills, but by 1998 this proportion had increased to almost 36percent. Another recent study, this one of manufacturers, found that demandfor nontraditional skills, such as computer skills, interpersonal and teamwork134 | Economic Report of the President
Page 1 and 2:
E C O N O M I CR E P O R TO F T H E
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C O N T E N T SPageECONOMIC REPORT
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ECONOMIC REPORT OF THE PRESIDENTTo
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my State of the Union address, I pr
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hard-pressed families—with additi
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LETTER OF TRANSMITTALCOUNCIL OF ECO
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PageSources of Business Cycle Moder
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PageHeterogeneity in Abatement Bene
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Page2-3. Net Worth and the Personal
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PageLIST OF BOXES2-1. The CPI-U-RS,
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These successes notwithstanding, th
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$33,740, Americans today can acquir
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those in the highest decile rose 0.
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Data on poverty also show progress.
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Over the years, government support
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asis, the current expansion also sh
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The current expansion, by contrast,
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InflationAccelerating inflation pos
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it was argued, must be shifting the
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is that the direction of technologi
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Challenges for the FutureThis chapt
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in the new labor market. The chapte
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disruptive in some cases. Finally,
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C H A P T E R 2Macroeconomic Policy
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Chapter 2 | 51
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usiness cycle has changed over the
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cent over the four quarters of 1999
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framework that continues to pay dow
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The labor force participation rate
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Box 2-1.—continuedof no substitut
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feed directly into the index. Moreo
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funds rate (the interest rate that
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nesses with below-investment-grade
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From 1989 to 1999, corporate earnin
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ital includes the value of intellec
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of gross personal saving to GDP has
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The beginnings and ends of U.S. bus
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introduced in 1913 and Social Secur
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Of course, it is premature to decla
Page 79 and 80: Box 2-3.What Did We Learn from the
Page 81 and 82: TABLE 2-3.— Accounting for the Pr
Page 83 and 84: future extrapolates long-term trend
Page 85 and 86: Over the past 6 years, the CPI-U-RS
Page 87 and 88: work enables job hunters to work wh
Page 89 and 90: Chart 2-17 shows how this could hap
Page 91 and 92: of professional economic forecaster
Page 93 and 94: Administration’s forecast is used
Page 95 and 96: Innovations during the 20th century
Page 97 and 98: transformations the Internet and e-
Page 99 and 100: Another industry that saw major cha
Page 101 and 102: One example is the “lean” produ
Page 103 and 104: Box 3-1. Measuring the Economy in a
Page 105 and 106: Box 3-2. Implementing Local Competi
Page 107 and 108: of fiber optic cable deployed by te
Page 109 and 110: How Information Technology IsChangi
Page 111 and 112: total investment in information tec
Page 113 and 114: For e-retailers, the Internet repla
Page 115 and 116: suppliers for surplus quantities of
Page 117 and 118: However, the same technology that d
Page 119 and 120: value of each network to its users.
Page 121 and 122: many possible uses but that depends
Page 123 and 124: Maintaining CompetitionAnother way
Page 125 and 126: Similarly, by reducing barriers to
Page 127 and 128: Formal education was a far less imp
Page 129: The Transformation of the Labor Mar
Page 133 and 134: diploma (Chart 4-5). That same year
Page 135 and 136: ensuring equal opportunity for all
Page 137 and 138: those of men (again looking at full
Page 139 and 140: Box 4-1. The Role of Government Pol
Page 141 and 142: severe disabilities. For example, a
Page 143 and 144: Box 4-2.—continuedOther policy in
Page 145 and 146: equirements of jobs. To right this
Page 147 and 148: uild and maintain a world-class ele
Page 149 and 150: Class Size Reduction. Average class
Page 151 and 152: During this Administration, the Fed
Page 153 and 154: years ago. In 2000, 13.1 million st
Page 155 and 156: through a period of unpaid training
Page 157 and 158: The first major mandatory training
Page 159 and 160: a 30-year low, labor force particip
Page 161 and 162: ConclusionTwo key developments—th
Page 163 and 164: TABLE 5-1.—Contrasting American F
Page 165 and 166: opened up for women to work and as
Page 167 and 168: The increased prevalence of single-
Page 169 and 170: to an increasing share of the popul
Page 171 and 172: Box 5-1.—continuedAlthough most f
Page 173 and 174: For the past 50 years, the median i
Page 175 and 176: gle mothers the median rose from $1
Page 177 and 178: TABLE 5-3.— Share of Women with C
Page 179 and 180: income growth over the last 30 year
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consumption patterns have changed,
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Increases in the Minimum WageThe mi
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Box 5-4.The National Strategy to Re
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or older, and of those 85 or older,
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of single-parent families increased
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caregivers for the elderly say thei
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would allow all workers who get tim
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C H A P T E R 6Opportunity and Chal
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Meanwhile innovations in transporta
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But to look at U.S. trade only in t
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Data from the U.S. computer industr
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net indebtedness of about 18 percen
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capital flows. Coupled with other d
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forces to play themselves out. In t
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The Benefits of a Global EconomyThe
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Domestic production can expand when
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In short, increased globalization b
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key sectors such as finance, teleco
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international trade is not a zero-s
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As these data suggest, not all WTO
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For example, preferential U.S. trad
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By contrast, in 1998 output fell on
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Box 6-3.The New International Finan
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The key objective of the initiative
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Chapter 6 | 233
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demand for exports. It would be a m
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integrating with the world economy
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The past century of experience in a
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242 | Economic Report of the Presid
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Box 7-1.—continuedand energy pric
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Box 7-2.—continuedproviding usefu
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Incentive-Based Approaches to Addre
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compliance costs may fall by less t
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Box 7-4.—continuedroughly 5 to 15
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so a system of multipollutant tradi
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sulfur dioxide trading program. The
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coastal zone. Trades can occur with
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Permit Trading: Phasedown of Leaded
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To address the problems associated
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Box 7-5. Individual Quotas for Fish
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A landmark international agreement
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However, the country could cut ener
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Quantitative Restrictions on Tradin
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comprehensive domestic trading syst
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Box 7-9.—continuedthe use of ener
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C O N C L U S I O NA Century of Cha
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More than 40 percent of the work fo
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growth and are credited with helpin
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have much to gain from continuing t
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Appendix AREPORT TO THE PRESIDENT O
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Council Members and Their Dates of
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previously served as the New Centur
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(antidumping, countervailing duties
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with a number of developing countri
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Michael Treadway provided editorial
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Appendix BSTATISTICAL TABLES RELATI
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POPULATION, EMPLOYMENT, WAGES, AND
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AGRICULTURE:PageB-95. Farm income,
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NATIONAL INCOME OR EXPENDITURETABLE
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TABLE B-2.—Real gross domestic pr
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TABLE B-3.—Quantity and price ind
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TABLE B-5.—Contributions to perce
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TABLE B-6.—Chain-type quantity in
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TABLE B-7.—Chain-type price index
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TABLE B-8.—Gross domestic product
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Year orquarterGrossdomesticproductT
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TABLE B-12.—Gross product of nonf
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TABLE B-14.—Personal consumption
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TABLE B-16.—Private gross fixed i
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TABLE B-18.—Government consumptio
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TABLE B-20.—Private inventories a
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Year orquarterTABLE B-22.—Foreign
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TABLE B-24.—Relation of gross dom
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Year orquarterTABLE B-26.—Nationa
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TABLE B-27.—Sources of personal i
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TABLE B-28.—Disposition of person
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TABLE B-30.—Gross saving and inve
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TABLE B-31.—Median money income (
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TABLE B-33.—Civilian population a
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TABLE B-34.—Civilian employment a
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TABLE B-36.—Unemployment by demog
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TABLE B-38.—Civilian labor force
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TABLE B-40.—Civilian unemployment
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TABLE B-42.—Unemployment by durat
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TABLE B-44.—Employees on nonagric
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TABLE B-45.—Hours and earnings in
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Year orquarterOutput per hourof all
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PRODUCTION AND BUSINESS ACTIVITYTAB
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TABLE B-51.—Industrial production
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Year or monthTABLE B-53.—New cons
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TABLE B-55.—Manufacturing and tra
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Year or monthTotalTABLE B-57.—Man
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Year ormonthTABLE B-59.—Consumer
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TABLE B-60.—Consumer price indexe
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TABLE B-62.—Changes in consumer p
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TABLE B-63.—Producer price indexe
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TABLE B-65.—Producer price indexe
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TABLE B-66.—Changes in producer p
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TABLE B-68.—Components of money s
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TABLE B-69.—Aggregate reserves of
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Year andmonthBills(new issues) 13-m
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TABLE B-72.—Credit market borrowi
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TABLE B-73.—Mortgage debt outstan
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TABLE B-75.—Consumer credit outst
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TABLE B-77.—Federal budget receip
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TABLE B-79.—Federal receipts, out
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TABLE B-81.—Federal and State and
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TABLE B-83.—State and local gover
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TABLE B-85.—Interest-bearing publ
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End of monthTABLE B-87.—Estimated
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TABLE B-89.—Corporate profits by
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TABLE B-91.—Sales, profits, and s
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Year or monthTABLE B-93.—Common s
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AGRICULTURETABLE B-95.—Farm incom
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TABLE B-97.—Farm output and produ
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Year ormonthTABLE B-99.—Indexes o
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Year orquarterExportsINTERNATIONAL
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TABLE B-102.—U.S. international t
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TABLE B-104.—U.S. international t
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TABLE B-106.—Industrial productio
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PeriodTABLE B-108.—Foreign exchan
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TABLE B-110.—Growth rates in real
show all

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