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Remarks Prepared for Delivery by
U.S. Secretary of Labor Elaine L. Chao
U.S. Chamber of Commerce
"Labor Policy at a Crossroads" Event
Washington, D.C.
Thursday, October 2, 2008
Thank you for that kind introduction. It is a pleasure to be here with all of you today and I want to thank the host for putting together this important forum.
It has been an honor to serve the American workforce as the first Secretary of Labor in the 21st century. In a few months, the torch will be passed to a new administration. It will be faced with many challenges, not the least of which is seeing that our economy rebounds from the many recent challenges and provides a positive environment for job creation.
Our country's flexible and productive workforce is the foundation of our economic strength. And it is imperative as our country moves forward in this young century, we continue to empower workers to succeed in the global economy. Today, I'd like to share some thoughts on the future of America's economy and the challenges for labor policy in the coming years.
Over the past several decades, the American economy has evolved in ways no one could have anticipated. Today, America is linked to the rest of the world through technology and trade — relationships that continue to revolutionize the flow of capital, goods, labor and services. These links cannot be severed without destroying our national economy.
Despite some of the rhetoric you may have heard recently, the days of economic isolationism are effectively over. The ability of isolationism to prolong and deepen economic crises is too well known. But despite the overwhelming evidence, there are still those who cling to these outdated and dangerous protectionist ideas. But make no mistake — we cannot go back. We must move forward. We must keep up. And as trade barriers evolve from duties to non-tariff barriers, our country must not fall behind our global competition.
One of America's greatest historical advantages is our willingness to recognize and embrace change. And to do that, I believe American labor policy must continue to emphasize flexibility, training and competitiveness.
At the most basic level, America's economic stability and strength rests on our workforce. Ensuring the continued strength and productivity of our workforce is the key to our continued competitiveness. It is critical that labor policy focus on fostering cooperation between employers and workers to update technology, educate and train workers, and fill the jobs of the new economy. A greater emphasis must be placed on making our publicly funded workforce investment system responsive both to the needs of workers and to employers. We have made great strides toward this goal over the last seven and a half years, but we are not there yet. Our publicly funded workforce development system cannot simply be a means of funneling money into states and localities for administrative overhead.
Labor policy must embrace the idea that workforce development is not a social welfare program — it is a fundamental building block of economic development. And the next administration must be willing to challenge the current system to do even more.
It isn't a secret that education is key to getting a better job. Today, high school dropouts make about $540 per week on average for full-time work and the unemployment rate of this group of workers is about 9.6 percent. Workers with a high school diploma average $776 weekly and this group has a 5.7 percent unemployment rate. Workers with some college or an associate degree average about $902 per week and this group's unemployment rate is 4.8 percent. But workers with a bachelor's degree or higher average $1,484 per week and have an unemployment rate of 2.7 percent. More than ever before, education is the real ticket to the middle class.
An unskilled, uneducated workforce cannot advance in a global economy. Over the long run, government plays an important role in promoting the flexibility of human capital, and it can also play a role in providing a labor system that works for everyone — workers, employers, unions, government, and all of the other stakeholders. But we should be clear about this — government can ensure a level playing field and provide opportunities, but it should never guarantee outcomes. It is critical that government only interjects itself in the relationship between workers and employers when it is absolutely necessary.
Unfortunately, there are those who would prefer that government play a much larger role in the workplace permanently. They advocate that the United States should be more like Europe, and adopt European-style entitlement programs and more rigid labor laws. On the other side are those who value opportunity over predetermined outcomes. They value the American work ethic and the desire to succeed.
Congress has already begun to push our economy towards Europe. Already proposals have been offered in which the government would dictate to employers what leave policies they must offer, who they can promote, which benefits their health insurance plans must offer, what types of investments can be included in their pension plans and how they can handle even the most basic business operations. And this is the short list! This kind of Europeanization of the American workforce would have dire consequences for our country's ability to compete abroad and would disrupt the traditional labor relationships here at home.
Europe's labor policy revolves around a number of concepts that directly contradict the ideals that have made America the envy of the world. These policies include state mandated limits on the work week, limits on working hours, and mandated leave policies subsidized by the government and paid for with extremely high tax rates on everyone.
In America, employers and workers come together to make these types of decisions, either individually or through collective bargaining. In Europe, instead of allowing workers and their employers to negotiate the best package of benefits for themselves, the government decides for them. And the results have been disappointing — slower growth, lower per capita income, higher unemployment and longer durations of unemployment.
In the United States, the average unemployed worker has been looking for a new job for about 17 weeks. In Europe, the average is well over a year.
What is ironic about this push towards Europeanization is that Europe itself is abandoning many of these very same policies. France recently ended its 35 hour work week. And, without fail, at every international labor conference or summit I attend, labor ministers from Europe and especially the Scandinavian countries approach me asking advice on how to make their labor laws more like the United States.
More government interventions in the workforce will not make our country's workers more competitive. It will not increase growth. It will not decrease unemployment. It will not increase wages.
Government is ill-equipped to make the kinds of decisions employers and workers make together every day. Every sector of our economy is different. Adopting a "one-size-fits-all" system limits flexibility. It will have a ripple effect on other decisions affecting things like pay, benefits and job creation — all while taking negotiating power away from workers. Does anyone really think it's a good idea to make the federal government the human resources manager, union representative, and plant manager for the whole country?
These decisions should be left in the hands of the people best equipped to make them — employers and workers themselves.
How employers and workers make those decisions is evolving just as fast as the economy is. In particular, we have seen considerable changes in the relationship between employers and organized labor in the past 50 years. More changes in this relationship can be expected in the years to come.
The most intensive organizing activity today is not amongst manufacturing workers, but amongst workers in government and in services like health care, hospitality and retail. And the tactics unions are using in those drives are changing as well. Gone are the days of strikes, traditional leafleting and picketing campaigns. Nowadays, unions are using corporate campaigns, pushing for card check and neutrality agreements, and tapping their pension plan assets to use as leverage in organizing campaigns.
These tactics can be effective, but the baseline question is — "Are they good for workers?" For example, does it make sense to threaten workers ability to make a real free choice about joining a union through card check legislation? As George McGovern wrote recently in the Wall Street Journal, this legislation represents a "disturbing and undemocratic overreach not in the interest of either management or labor." This legislation should not become the law of the land. It is critical that workers be able to make an informed choice about joining a union, a choice unaffected by coercion, threats, or intimidation by either unions or employers.
And when unions use their pension assets as an organizing tool, are they placing workers' retirement in jeopardy? By law, fiduciaries must use these assets for the exclusive benefit of the members who have earned them. Abuse of these assets to pursue social, political or other unrelated objectives cannot be tolerated.
Rather than embrace a regulatory and labor-management regime from the Old World, our country should pursue standards in keeping with the values of the New World-- the unique American way forward. We need to work to protect the principles and ideas that have made our economy the envy of the world. That means keeping taxes low, and being wary of regulations that stifle job creation. That means advancing free and fair trade. That means lowering trade barriers to goods and services manufactured in America, which promotes export growth and job creation at home. Public policy should focus on advancing a new model of labor-management relations in which both sides work together, recognizing that the true competition isn't sitting across the bargaining table. Our regulatory system must focus on producing benefits, not simply needless costs, and actually solving problems, not creating more of them. And we can develop tax policies that reward risk-taking and keep our country competitive globally.
America faces serious economic challenges right now. The next administration will undoubtedly pursue significant oversight and reform of the financial markets. And it will play a major role in the crafting of labor policy for the evolving economy. But it will also determine the direction of labor policy, potentially for far longer than the next four years. Recent events have demonstrated all too clearly the pitfalls of inappropriate regulations that, however well intentioned, have unintended consequences. So the larger issue today — not only in labor policy, but in economic policy in general — is not too much regulation versus too little regulation. It is bad regulation that has unintended consequences in the real world. With such uncertainty about the future, this is not the time to adopt inflexible and rigid employment policies that will doom America to compete with one hand tied behind her back. Policy makers should be very wary of adopting new policies that strike at the core of what has made our country great.
Labor and employment policy is truly at a crossroads. I am confident, however, that if we focus on ensuring that our country's workforce remains flexible and competitive, there are no challenges too difficult and no obstacles too high to overcome. America's greatest strength lies in her people, and we can never go wrong by relying on the productivity, innovation and hard work that has been the hallmark of the American workforce since the founding of our great republic.
Thank you for the opportunity to discuss these very important issues that will determine the long term competitiveness, vibrancy, and standard of living within our country.
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