Speeches by Assistant Secretary Emily Stover DeRocco

Remarks by Assistant Secretary of Labor Emily Stover DeRocco at the West Michigan WIRED Event

October 11, 2007
Grand Rapids, MI

Thank you.  Quizzes are always a little easier when you are allowed to decide the questions!

Seriously though, while that was just a game, there is an important message embedded in it – that no one is going to have all the answers to all the questions, but when you team up and bring your individual expertise, the group benefits from each other’s knowledge.

Our WIRED Initiative works on a similar principle.  The federal government certainly doesn’t know what is best for West Michigan or any other region of the country, but we do possess both knowledge and resources that can help a committed group of partners from the region develop a strategy and achieve their vision. 

But before I get into the specifics of WIRED, let me describe the genesis of the Initiative and, frankly, why the Labor Department is involved in this in the first place.

As this region knows all too well, globalization has fundamentally altered the American economic landscape.  Jobs and industries that many of us took for granted as American institutions are now facing stiff competition from overseas.  Whether it is the Big Three in Michigan, the textile mills in the Carolinas, or thousands of small manufacturers in towns all across the country, each is having to transform their business to increase productivity and efficiency in order to compete.

The most immediate impact of this transformation is felt by our workforce.  For generations, an individual could finish high school and find a job at the local plant or mill earning enough to support a family, afford a mortgage, and save for retirement.  Today, those jobs have all but disappeared.

In their place come new opportunities, ones focused on design, systems integration, and computer engineering.  These are high value, high wage jobs that drive innovation, creating new products, product features, and services that push the marketplace and provide opportunity and growth.  But to access these opportunities, individuals must have greater education and more specialized skills than ever before.

Statistics from the Labor Department prove this point.  Last year, individuals with a Bachelor’s Degree saw five times the job growth, twice the earnings, and half the unemployment as individuals with just a high school diploma.  Innovation is truly where the American economic advantage rests and education is the gateway to those opportunities.

In fact, education is at such a premium that we have begun to see a shift in the power structure between companies, individuals, and locations when it comes to economic development.

For years, economic development consisted primarily of incentive packages.  Companies would locate in regions that gave them the greatest tax breaks, the most free land, or the best new infrastructure.  Those incentives are still elements of economic development, but in the last five years, surveys of corporations now show that the availability of a skilled workforce is the number one factor in determining where companies will locate operations.

The implications of this are enormous.  Individuals with skills and education are now the most sought after commodity, with locations and corporations chasing them rather than the other way around.  Given this relationship, if an area is going to prosper, they need a lot of skilled individuals.  There are two obvious ways to make this happen.  The first is through attracting smart people to your region. 

Most areas have decided that improving quality of life is the best way to do this.  That is why so many places are revitalizing downtowns, building arts centers, adding sports teams, and investing millions of dollars in amenities.  Richard Florida, the professor from George Mason University and the author of Rise of the Creative Class, has been the leading voice in improving quality of life as a major economic development asset.

There are only a handful of areas in the country though that can survive simply by attracting talent.  For most areas, they must produce and retain it themselves.  It is that realization which has had such a profound impact on education and workforce development programs.  No longer do we simply have to react to market conditions, but we can actually begin to shape our local economy based on the quality of the workforce.  In fact, our local economic success depends upon our ability to do so.

My agency, the Employment & Training Administration, invests over $10 billion a year in workforce development programs.  In the past, we have rarely viewed ourselves as an economic development tool or even as a partner with economic development.  In an effort to change that and integrate our activities into the larger economy, we created the Workforce Innovation in Regional Economic Development Initiative or WIRED. 

WIRED began last year with the selection of thirteen regions from around the country, each receiving a $15 million investment over three years.  Michigan was the star of that competition receiving awards both here in the seven county West Michigan area and in the thirteen county Mid-Michigan area.  The interest and excitement that was generated at the start of WIRED led us to add a 2nd and 3rd generation, bringing the total to 39 regions in which we have invested over $325 million. 

WIRED is not a typical federal grant program.  In fact, I don’t call it a grant at all.  Instead, I prefer to think of WIRED as a force, with the $325 million acting as seed capital to catalyze both actions and additional investments.

There are several pillars upon which WIRED is based.  One is regionalism.  The brightest economic minds recognize that today’s optimal geographic area for economic development and prosperity is a multi-county region.  Economic activity tends to cluster not in political jurisdictions, but instead in labor sheds with common infrastructure, assets, and commuting patterns. 

West Michigan’s understanding of the importance of regionalism was something that set them apart from the beginning.  It was clear from the partnerships and organizations representing this area that the counties, cities, and towns of West Michigan have been collaborating for some time.  This gave you a head start on many of the other WIRED regions that had to start their project by developing a regional identity. 

It does not mean though that you can simply declare victory for your region.  All cities and counties are going to have parochial interests and each area must believe that those interests are respected and that they continue to benefit from the relationship.  In some ways that is even more of a challenge in this type of region where one city and one county are clearly larger than the rest.  The fact that the areas of this region built a relationship prior to our investment is a testament to both your foresight and leadership and gives me great confidence that it will continue after our money runs out.

That leads directly to another pillar of the WIRED Initiative -- partnerships.  In order for an area to begin thinking and acting like a region, the key assets, organizations, and leaders must form a partnership that leads to an agreed upon action plan.  This isn’t simply for all the partners to get along, but instead because each brings unique talents and fills specific needs. 

The list of partners participating across WIRED regions is extensive and includes:  economic and workforce development organizations, businesses, K-12 education, community colleges, angel capital funds, industry associations, foundations, and universities.  In short, everyone that has a stake in the development of talent in a region should be encouraged to bring their resources and expertise to the table.

While partners in our WIRED regions align and leverage funds, we are attempting to do the same thing in Washington.  It starts with my own agency.  Each year, Michigan receives over $200 million from the Labor Department for employment and training.  We are working with the Michigan Department of Labor and Economic Growth and the local Michigan Works agencies to see that those funds are used to support the economic strategy of the region.

Of course, it isn’t just the Labor Department that puts money into states and local areas.  From research and development investments to infrastructure projects to trade promotion, other federal agencies provide a vast array of resources and expertise to assist regional economies.  I have visited over a dozen other federal agencies over the course of the WIRED Initiative and many of them are now actively assisting our regions.  For example:

• The Commerce Department’s Manufacturing Extension Partnership has a pilot project in eight regions, including right here in West Michigan, focused on technology transfer and transition between large and small manufacturers. 
  
  
• The National Science Foundation’s Advanced Technological Education program is working with community colleges in three of our regions to build centers of excellence focused on creating curriculum to develop technicians in high-tech fields.
  
  
• And this past spring, the Department of Energy’s National Renewable Energy Laboratory near Denver hosted a two-day Institute to introduce our regions to the resources available at the Lab and help develop detailed business plans around bio-fuels and renewable energy.

While regionalism and partnerships are key to establishing a foundation that enables WIRED to be successful and sustainable, it is ultimately about the strategies that each region develops, the actions that they take, and the impact that they have on individuals living in their region.

West Michigan has chosen both an ambitious and challenging path.  You have identified 12 “innovations” clustered around market intelligence, enterprise development, and workforce system transformation, with each aligned in support of an overall economic vision.

The choice of “innovation” as a name for these actions is appropriate because we cannot expect to serve an innovation economy if we do not innovate ourselves.  And it is easy to see where these “innovations” will hopefully lead. 

Whether it is someone entering the job market for the first time or transitioning to a second career, they will have confidence in knowing they possess an industry-recognized skill portfolio in a sector that this region has committed to supporting and growing. 

Or to put it more simply, an individual knows that by pursuing education and training, he or she can find a job and build a career here in West Michigan. 

I am proud to be a part of the work that you have done here and look forward to even greater accomplishment in the future.

Thank you again for inviting me to speak today and I look forward to hearing Governor Granholm and participating in the rest of the day’s event.