Remarks Prepared for Delivery by U.S. Secretary of Labor Elaine L. Chao For Workforce Innovations 2007

July 17, 2007

Thank you, Emily [Stover DeRocco, Assistant Secretary, Employment and Training Administration (ETA), U.S. Department of Labor]. I want to thank Emily for the terrific job she is doing. And I want to thank Bill Sanders [Director of Workforce Innovations, ETA, U.S. Department of Labor] and the ETA staff who have put together another great conference.

Welcome, everyone. It is great to see so many people here from across the country! This is my 5th Workforce Innovations Conference, and each year is bigger and better than the last.

This year, in conjunction with the conference, we are also celebrating the 70th anniversary of Registered Apprenticeship. These partnerships among employers, labor, education, and government have provided quality training and employment to America’s workers for 7 decades. So congratulations!

And let me extend a warm welcome to our very special guests, Missouri Governor Matt Blunt and Kansas Governor Kathleen Sebelius. Both of these leaders have done a terrific job of strengthening their state workforce development systems. And they continue to set the example for the rest of the country.

This afternoon, I’d like to share some thoughts on the state of our economy, how we can work together to develop the competitiveness of America’s workforce, and the role the workforce investment system can play in the 21st Century economy.

Our economy has seen some challenges recently — rising oil prices and a bumpy residential housing market. Yet despite these challenges, the fundamentals of our economy remain strong. Job growth is healthy and wages are rising.

The U.S. national unemployment rate remains low at 4.5 percent. That’s more than a full percentage point lower than the average 5.7 percent unemployment rate of the 1990s. You can contrast this with Europe — Germany’s unemployment rate is one and a half times higher, and France’s is close to double that of the U.S. And, their rate of long-term unemployment is three and a half times higher than in the United States.

Our economy has created 8.2 million net new jobs since August 2003. There have been 46 months of job creation. That’s more jobs than Eurozone countries and Japan combined have created.

America’s workers are also among the most productive of any major industrialized economy. And productivity growth in recent years is translating into higher wages and a higher standard of living. Real per capita disposable income since January 2001 has risen 9.9 percent. And real hourly earnings for workers grew 1.1 percent over the 12 months ending in May. This translates into an extra $729 for a typical family of four with two wage earners.

But there are challenges. America’s competitive edge is our creativity, innovation, and knowledge. This has increased the demand for post-secondary education and training. Two-thirds of all the new jobs being created, in fact, require post-secondary education or training. And wages in these jobs are rising more quickly than in others.

More than ever before, education, training, and re-training are the keys to future employment and earnings. In fact, here are just a few examples of the link between education, employment, and earnings:

Today, high school dropouts make about $519 per week on average for full-time work and the unemployment rate of this group of workers is about 6.7 percent. Workers with a high school diploma average $725 weekly and this group has a 4.1 percent unemployment rate. Workers with some college or an associate’s degrees average about $856 per week and this group’s unemployment rate is 3.5 percent. But workers with a bachelor’s degree or higher average $1,408 per week and have an unemployment rate of 2.0 percent.

So post-secondary education really pays off!

And our economy is creating so many opportunities. Over the decade ending 2014, our country will need over 900,000 engineers, including aerospace, biomedical, civil, computer software, and environmental engineers. There will also be over three and a half million job openings in the education, training, and library occupations fields. The skills trades will need almost 1.8 million workers in the building trades alone. We will also need workers in other high growth industries including nanotechnology, geospatial technology, and the life sciences, to name a few.

But these emerging sectors are not the only ones facing workforce challenges. Many jobs today require more skills than in previous decades.

Over the next decade our country will need over three million healthcare providers and technical specialists, including physicians, therapists, and over 1.2 million registered nurses. Nurses today do a lot of the things doctors did 25 years ago. And stationary engineers who are responsible for heating, ventilation, and air conditioning systems now use computers. Workers in many fields are migrating up the skills ladder. And with this evolution of skills comes a greater need for training.

And this Administration recognizes the importance of investing in worker education and training. Each year, it spends nearly $15 billion on worker training and employment services. The Labor Department administers nearly $10 billion of this amount. And the private sector spends much more.

But, there is a growing recognition that our publicly funded workforce training systems must do more to prepare workers for the 21st century. Historically, the workforce investment system has consisted of a number of independent parts. It was originally designed to meet the challenges of a different economy than we are in today. It was designed for an economy characterized by interchangeable labor, cyclical layoffs, and workers with a high school diploma.

Today’s economy is markedly different. It demands a workforce with postsecondary education credentials. It demands workers who are comfortable in a rapidly evolving, high-technology environment that can respond quickly to changing economic conditions. And it demands a workforce investment system that can meet the challenges of a knowledge-based economy. So we’ve worked together over the last few years to strengthen the system’s capacity to serve workers.

First, employers and industry needed to become engaged in the workforce investment system. Employers in the high-growth, high-demand sectors of the economy — such as advanced manufacturing, aerospace, biotechnology, and health care — offer jobs and solid career paths for workers. But one of the challenges they faced is a shortage of workers with the education and skills required for these good paying jobs.

So in 2003, President George W. Bush announced the High-Growth Job Training Initiative. The aim of the initiative was to expand the workforce investment system’s capacity to respond to local economic needs. And by partnering with industry leaders, educators, and economic development officials, the initiative has helped provided a pipeline of workers trained for these great opportunities.

Since 2003, the Department of Labor has invested over $288 million in 156 partnerships. And these partnerships are showing great results.

The next step was to engage educators and educational institutions. Today’s jobs require more specialized skills and higher levels of education. So in 2005, President George W. Bush announced the Community-based Job Training Grants to strengthen the role of community colleges in developing the full potential of the U.S. workforce. We chose community colleges because they are affordable, accessible, and have close connections to local labor markets. They are perfectly positioned to prepare workers for high-growth occupations.

Last year, in 2006, the Department awarded another $125 million to 72 community colleges and organizations in 34 states. And this year, the Department will be conducting a third grant competition.

Together, these two initiatives are helping communities develop solutions to workforce challenges and labor shortages.

Finally, over the last several years, it has become clear that for economic development to be successful, it must be centered at the regional level. Regions are increasingly where the action is — where employers, workers, researchers, entrepreneurs, and governments come together to create a competitive advantage in the global marketplace.

And so, a third initiative was launched, Workforce Innovation in Regional Economic Development or WIRED. This encourages states and localities to integrate their different economic and talent development activities into a single regional strategy. This strategy calls for strategic partnerships between a variety of regional stakeholders. These include philanthropists, foundations, capital investors, research and R&D institutions, education partners, employers and industry representatives, regional infrastructure stakeholders, community leaders, and others.

Human capital is our most precious resource. And talent development is a critical component of regional competitiveness. So it is important to have all stakeholders work together, so that there is a clear understanding of the education and skills necessary to attract and sustain investments that create jobs.

In February 2006, the Department of Labor announced the First Generation of WIRED investments totaling $195 million in 13 regional economies. Then, in January 2007, the Department added another 13 regions and an investment of $65 million for a Second Generation of WIRED investments. And just a few weeks ago, I announced the Third Generation of WIRED investments totaling another $65 million for 13 regions. So our total investment to date in the 39 regions is $326.3 million.

Finally, I know many of you are aware of reforms this Administration has proposed to the workforce investment system. The system has done a good job serving workers, but we want to challenge it to do more. Specifically, we want to enhance the ability of the One-Stop Career Center system to serve workers.

But you should also know that there are other proposals out there that, however well-intentioned, would create a separate, duplicative employment and training delivery system for workers dislocated by trade. The vehicle is reauthorization of the Trade Adjustment Assistance program. A number of advocates are calling for a large expansion of this program that would include a new, separate state-based delivery system that would exist alongside the locally-based One-Stop Career Center system. This is partly a result of the fact that different Congressional committees oversee the WIA and TAA programs.

Creating a new TAA delivery system would expand the program from its current $1 billion budget to a $3 or $4 billion per year appropriation. This would dwarf the WIA Dislocated Worker program and make it unnecessary for displaced workers to need or use the One-Stop Career Centers. Some of these ideas may gain momentum. So workforce system leaders need to be aware of these proposals and follow the TAA reauthorization debate closely.

Any workforce program proposal should be designed to move the entire workforce investment system in a direction that supports and advances the competitiveness of our nation’s workers.

Workers are the backbone of the American economy. And we must do everything we can to ensure that they have access to the skills training and education they need to thrive in a knowledge-based economy. That means being good stewards of the resources we are entrusted with, so that the bulk of these resources go directly to helping workers.

The billions of dollars in workforce investments that I have outlined today have enabled regions across the U.S. to strengthen education and training programs for workers. But equally valuable are the collaborative partnerships that now exist between various regional systems, as a result of these initiatives. Together, the Department and its stakeholders have helped to strengthen communication, cooperation and a more comprehensive approach to the delivery of worker training services.

The process itself has been beneficial. In fact, the Department recently received several letters from applicants who had unsuccessfully submitted WIRED proposals. And the letters explained that although the regions hadn’t received funding, they still intended to continue pursuing the projects they had developed. By participating in the bid process, they are recognizing the importance of a regional approach to economic development and job creation. And many regions have reported that they are stronger and more united as a result.
Let me close by citing an old, well-known proverb, which I think is especially appropriate for us today: “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” And that is what we are trying to achieve — to help America’s workers gain the skills and education they will need to thrive in an increasingly knowledge-based economy. And this Administration believes that the best way to do this is to continue to promote strategies that empower the individual.

America’s economy is strong because America’s workforce is among the most innovative and productive in the world. As I’ve said many times before — America is a beacon of hope and opportunity throughout the world and we shouldn’t fear the worldwide economy. America’s greatest strengths lie in our democratic institutions, respect for the rule of law, transparency, accountability, and the most creative and compassionate workforce in the world. These unique qualities comprise our country’s strongest competitive advantage.

By working together, we can continue to devise and promote strategies that emphasize education, empower workers, and increase access to opportunity.

Thank you.
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