Emily Stover DeRocco Speech
Lehigh Valley Workforce Investment Board
Allentown, PA
December 20, 2005
Good afternoon and thank you all for inviting me. It is good to be back in my home state around the holidays and I am happy to have the opportunity to visit eastern Pennsylvania today.
We are now witnessing an amazing economic transformation. The advent of the internet and the emergence of Asia as an economic power have forced all of us to reevaluate how we will remain competitive in the 21st Century. At the national level, a high powered group of CEOs, university presidents and government officials, working through an organization called the Council on Competitiveness, addressed these exact questions and their findings were recently released in a report called Innovate America.
That report identified innovation as the single greatest asset to the American economy. But it also found that innovation cannot simply be assumed; policies and conditions must be optimized to foster innovation. And they should focus on three vital areas: Infrastructure, Investment, and Talent.
At the Department of Labor, we are responsible for a large part of the federal investment in talent development through a nationwide employment and job training system.
The origins of that system can be traced back to 1933 and the start of the New Deal. We were an industrial economy then, where labor was interchangeable and layoffs and employment mirrored the cyclical nature of that industrial economy.
Through the creation of unemployment insurance and the employment service, the government sought to establish a system that would cover workers during the short term period of slower production and give employers a place to find those workers again when production increased.
Thirty years later, our country was in the midst of tremendous social upheaval. The government made the decision to engage in a War on Poverty through a series of new programs that constituted the Great Society. One of those programs focused on job training.
Thanks to the post-war boom, our economy had evolved since the 1930s, but the basic structure remained the same through at least the 1980s. A high school education was usually sufficient along with some short-term training. That training would be provided either by the employer or by a network of training providers that grew up around the government’s job training system.
Policy analysts and economists can argue over the details of these systems, but for the economy of the time, they were more than adequate to perform the needed tasks.
Today, the economic landscape has changed drastically both in this country and around the world. Advances in technology and communication and a broad acceptance of open and free trade have created a global marketplace where nearly any company in any country can compete in any industry and deliver goods and services in real-time, on-demand across the globe.
This incredible transformation has caused profound changes to the United States economy, the way we operate, and the relationship that exists between the government, employers, and workers.
No longer are individuals spending 30 or 35 years with the same company and retiring with a defined pension and full health care benefits. Domestic and international competition will not allow companies to take on such costs. And those that have, such as our flagship airlines, are now defaulting on those pension commitments and leaving the government as a last-option insurer.
And it is not just in retirement plans where companies must change. The speed of innovation is so fast that companies are often laying-off and hiring workers simultaneously, in search of a workforce with the right skills at the right time. This is fundamentally different from the old hiring cycle where workers were laid-off when production slowed and rehired as production increased.
With so many foundational changes occurring in our economy, now is the time to look at the systems and structures in place to support the economy and update their 20th century models.
This begins with the basic design of the workforce investment system. Seventeen funding streams, forced to integrate but remain separate, cannot possibly move at the speed today’s economy requires.
Truly integrating and consolidating these funding streams and giving states and local areas the freedom to design a system and services for their regional economy is the only way to be flexible enough to serve this transformational economy. That system will encourage state and local leaders to innovate; design customized solutions to the challenges they face and move with the speed and agility to effectively serve local businesses and workers.
Consolidating programs ensures the ability of the workforce system to transform, but does not guarantee transformation. For that, we must change the entire way in which we approach services to individuals and employers.
To regain success, individuals who have been laid-off must transform themselves and their skills. This process requires more than sending checks for 26 or 104 weeks while workers wait for jobs that will never return. It means creating accounts that provide individuals with the resources necessary to change and update their skills while also covering their day-to-day needs.
