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Remarks Prepared for Delivery by
U.S. Secretary of Labor Elaine L. Chao
Strategic Skills Initiative Summit
Indianapolis, Indiana
Wednesday, July 11, 2007
Thank you, Andrew [Penca, Commissioner, Indiana Department of Workforce Development].
Congratulations to all of you on the second successful year of the Strategic Skills Initiative!
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 positive. 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.
The Indiana unemployment rate was 4.5 percent in May — in line with the national rate. And this 4.5 percent rate was the lowest rate recorded since September 2001. The unemployment rate right here in the Indianapolis metropolitan area was a low 3.7 percent in May, well below the national average.
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 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 wages alone do not give a full picture of how workers are doing in our economy, because more and more workers are receiving compensation in the form of benefits, rather than wages. One third of all total compensation represents benefits. These benefits include bonuses, paid leave, and employers' health insurance, Social Security, Medicare, and retirement contributions.
Wherever I travel, our country's economy is the envy of the world. Recently, I represented our country at the International Labor Organization in Geneva, Switzerland and also traveled to Helsinki, Finland to meet with members of the new government. The flexibility of the U.S. workforce astonishes our European colleagues. Their countries have rigid regulations that limit the ability to create new jobs and discourage workers from taking new opportunities.
But there are challenges. America's competitive edge is our creativity, innovation and knowledge. This has increased the need for greater access to post-secondary education and training. Two-thirds of all the new jobs being created, in fact, require post-secondary education or training. And wages for these workers are rising much more quickly than others.
More than ever before, education, training, and re-training are the keys to future employment and earnings. 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!
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. 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 it is not only the arrival of new jobs that poses a challenge. 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, however, do a lot of the things doctors did 25 years ago. And stationary engineers who are responsible for heating, ventilation and air conditioning 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.
To meet the growing demand for higher skilled workers, a strong partnership has been formed between the U.S. Department of Labor and the state of Indiana. Indiana's strong commitment to education and training is shown by the fact that your state has successfully competed for grants in all three of the Department's major talent development initiatives. And these grants are expanding worker access to education and training that is in demand in today's rapidly changing workplace.
The first of these initiatives is President Bush's High Growth Job Training Initiative. By partnering with employers who identify skill needs and by engaging educational institutions, the High Growth Initiative aims to more closely involve employers in talent development. Through this initiative, the Department has invested over $288 million in 156 partnerships that include employers, educators and the workforce investment system.
Last November, the Ivy Tech Community College system was awarded $1.8 million under the High Growth Job Training Initiative to train workers for careers in advanced manufacturing. In 2005, the Indianapolis Private Industry Council was awarded $1 million to prepare workers for good-paying jobs in the healthcare and biotechnology sectors.
The President also has a second initiative to encourage job creation called the Community-Based Job Training Initiative. This initiative recognizes the increasing importance that employers place on an educated and skilled workforce, and helps community colleges increase their capacity to educate and train workers for the high growth jobs of today and tomorrow.
In 2005, under the Community-Based Job Training Initiative, the Ivy Tech Community College system in Indiana was awarded over $2.5 million to train workers for careers in the healthcare sector.
Over the last several years it has also become clear that for economic development to be successful, it must be centered at the regional level and focus on human talent development. By identifying and leveraging resources from several different towns, communities and counties, a region is better positioned to compete for new jobs.
In recognition of these factors, the Department launched an initiative called Workforce Innovation in Regional Economic Development (WIRED). WIRED seeks to integrate the activities of economic development and talent development into a single regional strategy.
In February 2006, the Department selected 13 regions to be a part of the First Generation of WIRED and invested $15 million in each of those regions. In January 2007, we added another 13 regions with an investment of $5 million each, for a Second Generation. And just a few weeks ago the Department announced the Third Generation of WIRED regions.
As you may know, Indiana has two WIRED Regions: North Central Indiana and Southwest Indiana. This is a tribute to the leadership of your governor, your local officials and the strong partnerships that you have been able to put together at the regional level.
Indiana communities and organizations have also shown great compassion in seeking to help troubled youth connect with education and skills training that is needed in the new economy.
Recently, the Department awarded more than $41 million in grants to invest in education and skills training for troubled youth and address the nearly 30 percent high school dropout rate.
The city of Gary, Indiana received nearly a half million dollars to help youth with career preparation and put them on the path to post-secondary education. And the Indianapolis Private Industry Council received $1 million to assist ex-offenders ages 18 to 29 in transitioning from prison to the workplace.
Governor Daniels and local leaders have also been instrumental in making improvements to Indiana's workforce investment system. This is critically important as this system is what serves as the backbone for addressing worker skill needs.
Because we believe so strongly that WIA resources must provide better access to post-secondary education and training, this Administration has proposed reforms to both improve workers' access to education and training and strengthen the One-Stop Career Center system.
That's why we introduced Career Advancement Accounts. The accounts would allow more workers to access the education and training they need to enter and advance in 21st Century jobs. Funds would still be available for skills assessment, career counseling and job search assistance.
Career Advancement Accounts are already being piloted in Indiana as a result of a $1.5 million Department of Labor grant awarded in the fall of 2006.
This Administration also proposes to promote state and local flexibility by removing or simplifying statutory requirements that create rigidity, and hinder flexibility and innovation. We would empower governors and local officials to design customized One-Stop systems that meet regional economic needs and priorities.
Lastly, our proposed reforms to the workforce investment system would improve performance accountability by focusing the current system on three primary measures — employment, retention, and earnings.
We want to enhance the ability of the One-Stop Career Center system to serve workers. But you should know that there are current proposals 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.
Indiana has an active workforce investment system and a vibrant community of stakeholders. And it has a Governor who understands the importance of the workforce investment system and what it can do to help create jobs and opportunities for workers in this state. We hope that his leadership will serve as a model on the national level and for other state systems as well.
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.
The American workforce continues to be the foundation of our country's economic strength. Together, we can ensure that the workforce investment system will continue its long tradition of serving the needs of workers and our communities. And we can help ensure that Indiana — and our country — remain a beacon of hope and opportunity.
Thank you.
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