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LET AMERICANS TURN TO BUILDING FOUNDATIONS OF NEW MIDDLE CLASS

Since Labor Day a year ago, the economy has generated more than 2.5 million jobs for Americans.

Despite this progress, long-term trends are splitting the old middle class into three new groups: an underclass largely trapped in center cities, increasingly isolated from the core economy; an overclass, those in a position to ride the waves of change; and in between, the largest group, an anxious class, most of whom hold jobs but are justifiably uneasy about their own standing and fearful for their children's futures.The fundamental fault line through the labor force divides workers by education and skills.

As recently as 1979, a male college graduate earned 49 percent more than a man with only a high school diploma - a sizable difference, to be sure, but not too much for the two to share the label "middle class."

By 1992, the gap had widened to 83 percent, and the notion of common prospects had faded considerably.

There is a similar divergence in benefits. Employer-sponsored health coverage has declined only slightly for workers with college degrees, covering 79 percent in 1979 and 76 percent in 1993.

But the rate for high school graduates has fallen from 68 percent to 60 percent, and among high school dropouts, from 53 percent to 36 percent. Nearly two-thirds of workers with college degrees have employer-sponsored pension plans, but fewer than a quarter of high school dropouts do.

Similarly with the risk of joblessness. Unemployment among high school dropouts rose from an average of 7 percent during the 1970s to 12 percent in the 1980s, and it was over 12 percent last year.

But over the same two decades, unemployment for workers with college degrees held fairly steady at around 3 percent.

This helps explain why Wall Street can fret that unemployment is too low to contain inflation while 8 million willing workers are jobless. Markets for skilled labor are becoming tight in parts of the economy. Yet many less skilled workers are walled off from the leading edges of the economy.

What lies behind these widening disparities?

Manufacturing jobs were once the gateway to the middle class. While it is a myth that international trade has robbed America of its manufacturing industries, technological changes have diminished the role of labor, especially unskilled labor, in the modern factory. Global trade and investment have surely hastened these changes.

Labor unions have long helped shore up wages and benefits for workers without high-level skills. But today, only 11 percent of the private sector work force is unionized. Let there be no doubt: A revitalization of the labor movement would help reverse the erosion of the middle class.

But the forces unleashed by technology must be mastered, not merely buffered. As increasingly capable machines join Americans at the workplace - join them as both co-workers and competitors - the payoff to education and training has soared, and the penalty for lacking skills has stiffened.

The most striking change has been the brash arrival of the computer. Yet while the information highway promises to speed some people to desirable destinations, it may leave others stranded in the technological version of inner-city ghettos. Two-thirds of college graduates use computers at work but fewer than one in 10 high school dropouts.

Yet the long-term data also affirm the potential for building a new middle class. Some of the fastest job growth in America is occurring among technicians, who defy the categories of the old economy.

In my travels I've met vending-machine repair workers who use hand-held computers to identify problems and communicate with the home office, and managers in retail stores who tap personal computers to monitor sales and inventories.

Some workers drive trucks equipped with computers and modems and make just-in-time deliveries. Others orchestrate sophisticated spreadsheet and graphics programs to create value in ways unimaginable a decade ago.

The technician jobs that will sustain the core of the new middle class usually require some education beyond high school, but they do not always demand a four-year college degree. Degrees from community colleges, the unsung heroes of the new middle class, are paying off, and their enrollments are rising.

This administration's work-force agenda is inspired by the evidence that skills matter and that they can be learned. The fruits of our commitment to creating a new middle class are already emerging.

Ironically, many of these accomplishments have been little noticed because of the bipartisan consensus supporting them. Bipartisanship summons less attention than ideological brawls.

Consider: 130,000 more children each year can now be made ready to learn through Head Start. School systems have millions of dollars in new incentives to improve their performance. Over the next six years, almost half a million young Americans will start youth apprenticeships.

Starting this fall, 20,000 young people will enter National Service, earning money that they can apply to a college education. The 3.5 million people who take out education loans each year may now repay their loans as a percentage of future income.

American business has its own role to play. Skills learned on the job or in a work-related setting are especially valuable. But with some exceptions, companies do too little training and concentrate on workers who are already skilled.

We need a new social compact with American business. In its first year and a half, the Clinton administration has delivered much of what business has sought to bolster its competitiveness - lower deficits, low inflation, more open world markets, promotion of American business abroad. Now business needs to do its part by investing in the skills of all workers.

Unlike the citizens of most other nations, Americans have always been united less by a shared past than by shared dreams of a better future. If we lose that common future, we lose the glue that holds our nation together.

As we approach Labor Day 1994 - the 100th anniversary of America's workers' holiday - let us commit to building the foundations of a new middle class.