1. The Labor Market in Michigan: Trends and Policy Challenges Rebecca M. Blank Gerald R. Ford School of Public Policy University of Michigan

8. Policy Issues Nationally, rising minimum wages and expanding Earned Income Tax Credit have offset some of the wage declines for less skilled workers. The effect of the two together: 1989 2000 1. Minimum Wage $4.40 $5.15 2. Maximum EITC Subsidy Single Mother (1 child) $1,195 $2,353 Single Mother (2 children) $1,195 $3,888 3. Earnings (Single mother working full-time at minimum wage) Single Mother (1 child) $9,995 $12,653 Single Mother (2 children) $9,995 $14,188

9. Issues for Less-Skilled Women Big LFP increases, especially in the late 1990s following welfare reform Big shift in income composition, with increased earnings and declines in public assistance income. This produced a rise in the working poor. The EITC and higher minimum wages definitely increased LFP and incomes among less-skilled women.

10. Other issues key to women’s LFP: * Child care availability and subsidies * Health care availability Can we do better at covering low-skilled working adults with health care? Wisconsin Badgercare is one model.

11. Job Training issues -- Availability of low-cost loans and subsidies for community college and vocational training -- Effectiveness of job training system/WorkFirst! Program What’s the appropriate balance between work first programs and training programs? Is there too little focus on more disadvantaged workers? -- Improvements in school outcomes for the non- college bound are probably the most important long-term issue.

12. Larger U.S. Labor Market Questions in 2004 Why is job growth non-existent in this recovery? Particularly given the recent high rates of GDP growth.

14. Theories of lack of job growth Employer caution due to an unusual degree of international uncertainty Restructuring due to recent technological advances are finally producing productivity gains International competition continues to result in loss of some U.S. jobs

15. A major policy issue at the national and state level must be how to deal with the “losers” due to job restructuring. Expect to see ongoing discussion of policies designed to slow down restructuring; provide retraining to job losers; and/or provide subsidies that allow time to adjust to these changes.