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Remarks Prepared for Delivery by
U.S. Secretary of Labor Elaine L. Chao
"Strategies for a 21st Century Workforce"
GREF Center
Moscow, Russia
Monday, October 9, 2006
Thank you, Mikhail [Dmitriev, Research Director], for that warm introduction. And thank you also to Ambassador Burns [William Joseph Burns, U.S. Ambassador to Russia], for being here tonight.
My visit is unfortunately very short. So I am pleased to have this opportunity to reach out to this group of distinguished Russian leaders.
Our countries share many common challenges. We can learn much from each other. So this evening, let me share with you a little about how the Labor Department helps address some of our country's workforce challenges. And I'd also like to discuss the principles that are fundamental to our country's economic system and its ability to create jobs.
The U.S. Department of Labor is one of the largest regulatory departments in the U.S. government. Its mission is to protect the health, safety, retirement security and competitiveness of America's workforce. It carries out this mission with a budget of about $51 billion and about 17,500 workers.
The Department regulates every private workplace in America. We ensure that workers are safe on the job and fairly compensated. The Labor Department also regulates every private pension and health benefits plan in America. We ensure that these plans are administered in a financially responsible way.
The Labor Department enforces transparency and accountability requirements for labor organizations, as well. The Bureau of Labor Statistics, a trusted source of data about employment trends in our country, is also part of the Labor Department. But the largest part of our budget is devoted to worker training and assisting unemployed and dislocated workers.
The first, and most important way our government helps workers is to create the climate for growth and job creation. We believe that the private sector creates jobs, and that the role of the government is to create the climate for growth. We also foster a diversified economy that provides plentiful opportunity for workers at all education levels, both full time and part time.
So, for example, we make it easy for small firms to start up by lowering taxes and regulations on these enterprises. Over the past five years, firms with fewer than 500 employees have created 64 percent of all the new jobs in the United States.
Keeping taxes low on capital and labor is also critical to job creation. Over the past 5 years, President Bush pushed through a series of tax cuts for employers and workers. They boosted capital investment and created new jobs. And they put more money in the pockets of workers during a time of economic challenge. These tax cuts are a major reason why our economy has continued to create new jobs and thrive despite the unprecedented challenges of the past five years.
America has a diversified economy that has grown at 4.1 percent so far in 2006. That's not as fast as Russia, but remarkable for a mature industrialized nation. We have seen 37 straight months of job creation, for a total of more than 6.6 million net new jobs created since August 2003. Unemployment is a low 4.6 percent — lower than the average of the last three decades. Per capita, disposable income rose 9.2 percent since 2001. Total compensation rose 6 percent since 2001. Let me also note that 63 percent of workers who begin at the minimum wage find a better job within one year. Within two years, it's 80 percent.
In a dynamic and changing economy there will be disruptions. And some workers will become unemployed from time to time. For those workers, the Department of Labor helps in three major ways. The first is to provide unemployed workers with temporary income assistance and other services. The second is to help workers access education so they can learn skills that are in demand in the workplace. And the third is to help workers find jobs.
America offers generous assistance to unemployed and dislocated workers.
Unemployed workers can access up to 26 weeks of income support. In the past year, about 2.5 million workers — or about 1.9 percent of the insured workforce — accessed unemployment benefits in the typical week. This amounts to about $28 billion a year. The unemployment insurance system is administered by the state governments, with some administrative expenses provided by the federal government. The system is supported by taxes levied on employers and workers.
Workers who lose their jobs because of trade can access additional support. This includes up to 104 weeks of income support, training, assistance with healthcare and other services. But the longer a worker stays out of the workforce, the more outdated his or her skills become. So our policies emphasize job training and getting workers back into the labor market as soon as possible. The typical unemployed worker in America finds a new job in about 8.2 weeks.
A key difference between America's workforce, and those of many other industrialized nations, is our flexibility and mobility. Nearly one-third of America's workforce of more than 152 million changes jobs every year, largely to access better opportunities. Let me emphasize that the majority of people who leave their jobs do so voluntarily, because they have found a better job.
Flexibility is key to keeping pace with the worldwide economy. America is transitioning to a knowledge-based economy. The majority of new jobs being created in the United States are in professions that require some kind of higher education. By definition, they pay higher wages. So accessing higher education and training is critical to helping our workers prosper.
That is why training is another major focus of the Labor Department. The federal government spends more than $23 billion annually on training and other employment services. In addition, the private sector spends ten times that much on training alone.
This Administration has focused on expanding access to higher education for workers. Community colleges are a key part of this effort. These are 2-year institutions that award degrees and certificates. They are supported by funding from federal and state governments, and tuition that is kept low. There are 1,200 community colleges in the United States. They hold evening and weekend classes. They focus on specialized skills needed for specific industries. For example, in the decade ending in 2014, the United States will need about 3 million nurses and other healthcare workers to assist physicians and care for patients. So many community colleges are adding and strengthening their healthcare curricula.
A key value of community colleges is ensuring that the skills they teach are relevant to the workplace. During the past five years, the Labor Department has invested about $500 million to bring employers, community leaders and educators together to strengthen community colleges. Getting the right kind of training is important because our country is facing a skills gap. That's the mismatch between the skills of our workforce and the skills needed for the new jobs being created.
The third focus of the Department is helping workers find new jobs. The Department funds a nationwide system of 3,500 employment centers. They help workers access training and connect with employers in their communities who have jobs to offer.
Let me also mention a few other policies that the United States has developed to help workers face change with confidence. Defined contribution pension plans were developed so that workers could take their pension benefits with them when they changed jobs. Both workers and employers contribute — but the pension assets belong solely to the worker.
Health savings accounts allow workers to put aside money for healthcare expenses. These accounts are owned exclusively by the workers, who save money on their taxes by contributing to them.
And this Administration has proposed Career Advancement Accounts. The government proposes to give eligible workers up to $3,000 annually to purchase the education and job training that suits them best. The goal is to train about 800,000 workers annually. And the training would be focused on the skills that are in demand in the economy.
All of this activity takes place within a larger political and legal framework that makes our system work.
Private property and intellectual property rights are legally protected. You may be interested to know that the American Constitution explicitly offers protection to inventors' and scientists' rights. To boost innovation, President Bush has proposed an additional $136 billion of government spending on research, development and other programs. But the majority of research and development in the United States is funded by the private sector.
Transparent and accountable institutions, especially in the financial sector, help attract capital investment and create new jobs. That is why several years ago, after a number of corporate scandals in our country, President Bush proposed reforms to hold financial institutions and their leadership more accountable and Sarbanes-Oxley was enacted. The Department of Labor played a key role in developing these reforms.
And the U.S. operates under a system of checks and balances between the government and the private sector. This encourages risk taking and entrepreneurship — but in a responsible way.
Our system also strives for a favorable balance between worker protections and labor market flexibility. To many outside observers, the United States system may seem chaotic. But the fundamental elements never change. They are the rule of law, transparent and accountable institutions, and a culture of freedom that rewards individual achievement and initiative. These are our country's greatest strengths.
Thank you for allowing me to share these observations with you. I have brought some more information with me about America's workforce and how it compares with other countries. I hope you will find informative. Copies will be available as you leave. Now I would be pleased to take a few questions.
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