Remarks Prepared for Delivery by U.S. Secretary of Labor Elaine L. Chao For “Workforce Empowerment Strategies for the 21st Century” Neil D. Levin Graduate Institute SUNY

June 17, 2005

Thank you, Paul [Tagliabue]. I want to commend you for your leadership as Chair of the Board of Directors of the Levin Institute. I’d like to introduce my father, Dr. James S.C. Chao, who is here with me today. I would like to recognize Dr. Joseph Jen, Undersecretary for Research, Education and Economics at the Department of Agriculture. And I also want to recognize Christy Ferrer and commend Governor [George] Pataki for his vision in establishing this Institute to honor the memory of her beloved husband, Neil Levin.

The topic of thisconference, the Global Talent Pool, is indeed timely. As we embark on the 21st century, technology and political revolutions have allowed more nations to pursue the benefits of open markets and free trade. Fostering a skilled workforce has become a critical driver of growth—as many of your panelists have discussed.

As Secretary of Labor, the safety, skill level, retirement security and competitiveness of the U.S. workforce are my prime concerns. So, I welcome the opportunity to discuss the challenges in attracting, developing and employing the talent necessary to foster innovation and growth.

Today, the world is much different than even a decade ago. Global competition and information technology have increased both the rate and intensity of change. The economic strategies of the past, which have tended to emphasize building a competitive advantage in one specific area, are obsolete. A single, static advantage—such as cheap labor or competency in one sector—is no longer enough to sustain growth. Successful economic strategies of the 21st century will focus on the ability to constantly evolve and adapt to change.
Throughout its history, that has been a singular strength of the American experience. As one columnist has observed, Americans have always shown a willingness to adapt to change, even when it is unpleasant.

When the United States was founded, for example, nearly our entire workforce was employed in agriculture. Today, only about 2 percent of American workers are in agriculture. Yet, America produces enough food to feed much of the world. This positive correlation between change and increased productivity has been a powerful historical advantage. And it is critical, not only to our success as a nation, but to the higher incomes and standards of living that American workers enjoy today.

To give you an idea of the dynamism and flexibility of the American economy, consider this. Last year, 50 million Americans left their jobs and found new jobs. That means about one-third of our entire workforce of 149 million persons turned over. The fact that our society can generate this level and pace of change is a tribute to America ‘s unique characteristics, which are part economic and part culturally driven.

It is remarkable that despite high oil prices, the war on terrorism and the economic weakness of many trading partners, the American economy continues to strengthen and create new jobs. We’ve seen 24 straight months of job growth, for a total of 3.5 million new jobs created since May 2003. Real wages—including total compensation—have outpaced inflation. And the majority of new jobs being created, according to the Bureau of Labor Statistics, pay above average wages. In fact, it is interesting to note that real earnings—adjusted for inflation—have gone up since the recession that began in March of 2001. If the majority of new jobs created were low wage, then real wages would be falling.

This Administration is committed to reducing the over taxation, excessive regulation and abusive litigation that hamper growth, innovation and job creation. The goal is not to imitate the go-go growth of the 1990s. That growth spurt, built around a single industry, spiked quickly. When the bubble burst, it left many people hurting who have still not recovered.

Instead, President Bush has favored economic policies that support steady, consistent economic growth. As a result, today’s unemployment rate of 5.1 percent is lower than the average of the 1970s, 1980s and 1990s. In fact, the average unemployment rate of the 1990s was 5.7 percent. And, more Americans are working than ever before. And last year, the United States had the highest growth rate of any major industrialized nation—averaging more than 4 percent—the best in 25 years. But the most telling facts are the long-term trends: population growth is declining in old Europe at the same time that unemployment is rising. But the United States is going in the opposite direction: employment continues to outpace population growth.

A major factor is the favorable balance the United States has achieved between worker protections and labor market flexibility. Preserving this balance is critical to our long-term future. The longer a worker remains out of the workforce, the more difficult it is for him or her to find a new job. That’s especially true today, given the rapid changes in technology. The balance and flexibility our country has achieved means that displaced American workers can find new jobs faster. About 12 percent of unemployed Americans remain jobless for a year or longer. That’s compared with 34 percent in France and 50 percent in Germany, where incentives are skewed in the opposite direction.

There is still unease, however, in some sectors of the U.S. economy and the American workforce. Many factors, especially outsourcing, contribute to this. It may interest you to know that the number of U.S. jobs outsourced to foreign countries is about several hundred thousand. But we can’t talk about outsourcing without talking about insourcing. So during this same time, between 22 to 27 million Americans work for foreign companies here in the United States or have jobs that depend upon foreign trade.

The heart of the outsourcing debate, however, is not about numbers. It’s about people and their legitimate concerns. America is a compassionate nation. And nowhere is this more apparent than in the generous assistance offered to workers whose jobs have been displaced by trade. The government will provide the following benefits for these dislocated workers:

* 104 weeks of income support;
* 104 weeks of job training;
* 104 weeks of assistance in paying for child care and other support services including transportation, training related tools and moving expenses;
* Help in paying 65% of qualified health insurance premiums; and
* If a worker is over the age of 55 and they get a new job that pays less than their old one, the government will pay 50% of the difference.

As compassionate as these assistance programs are, THE most important assistance a displaced worker can receive is a solid pathway to a new career. That’s why this Administration has made job training a centerpiece of its pro-growth policies. And that’s why the Labor Department has proposed a comprehensive overhaul of the $15 billion, federally funded job training system.

Everywhere I go, employers tell me they cannot find workers with the right skills for the jobs they have available. The strategy behind this Administration’s workforce training reform, therefore, is to link employers, education institutions and workers together in a powerful partnership. The goal is to help workers gain the skills that are in demand by employers right now.

Many of the more than 3.5 million jobs that are currently unfilled require higher education and upgraded skills. Advanced manufacturing is a good example. Recently, I announced a multi-million dollar grant to help manufacturing workers in Pennsylvania upgrade their skills so they can access the new high-tech jobs being created in the plastics industry. Although U.S. manufacturing employment has been steadily declining since the 1950s, U.S. manufacturing output has actually increased because of productivity gains. So, it’s critical to build a pipeline of talent to access these, and other good paying, value-added jobs. Increasingly, that’s where the future lies for the U.S. workforce.

That’s why education will continue to be one of the critical drivers of competitiveness. The President recognized this when he introduced the most comprehensive education reform in 50 years, No Child Left Behind. By requiring local schools to be accountable and results-oriented, he jump-started efforts to close the achievement gap in our society. But there is still more to be done. It is critical to extend this achievement-oriented program to grades 9 through 12.

Beyond that, this Administration is working to streamline the process that allows highly skilled foreign workers to fill jobs for which sufficient U.S. candidates are not available. As you know, Congress has put caps on the number of visas that can be issued in any given year for H-1B, or temporary high-skilled workers, and H-2B, for temporary non-agricultural workers. In recent years, Congress has attempted to adjust these caps to meet the demand for temporary workers. But in some cases, the annual caps have been reached in the first few months of the year. It is clear that the system is in need of a major overhaul.

Recognizing these challenges, the President has proposed reforming our current system for admitting and employing temporary foreign workers.

The President’s proposal is based on five basic principles:

* Controlling our borders;
* Matching a willing worker with a willing employer. This means providing U.S. employers with the opportunity to fill job vacancies through a streamlined, efficient and timely process when temporary foreign workers are needed.
* Protecting the rights of legal immigrants;
* Promoting compassion to prevent exploitation; and
* Providing incentives for temporary workers to return home.

The key to a competitive workforce in the 21st century lies in successfully meeting all the challenges I have touched upon. They include:

* Maintaining a skilled and flexible workforce;
* Ensuring a strong education system;
* Remaining open to talent from all over the world; and
* Reducing the regulatory and economic barriers to risk taking and innovation, including tort reform.

But it is also important to recognize that, when it comes to leveraging the global talent pool, economics is not the only force at work. Culture and political factors are also important. Open societies that reward individual initiative, foster transparency and accountability, and protect individual rights will continue to have an advantage over those that do not. That is the most important competitive advantage of the United States. When you combine our nation’s cultural bias in favor of individual achievement with freedom, transparent institutions and the rule of law, the result is a powerful magnet for the world’s talent.

So, as we address the challenges of the 21st century, it’s time to get rid of the old paradigms about the workforce. For the last two centuries, the world was viewed as a zero-sum universe in which some prospered at the expense of others. The world of the 21st century, however, is a place where revolutionary advances in technology have empowered more people than ever before. They can reach beyond the confines of their birthplace and realize their dreams. This is not a threat. It is an opportunity for more people to share in the prosperity that was once available to only a few. And the best way to make this a reality is to promote the elements necessary for this powerful expansion in human progress. Those elements are freedom—including free markets—the rule of law and values that affirm the dignity of the individual human person.

Thank you.
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