Secretary of Labor Elaine L. Chao

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Remarks as Prepared

National Association of State Work Force Agencies
Winter Policy Forum
Hyatt Regency Capitol Hill
Washington, D.C.
February 27, 2003

Thank you, Catherine [Leapheart, President of National Association of State Work Force Agencies and Executive Director of the Missouri Department of Labor and Industrial Relations].

Last Friday, I was in your home state of Missouri announcing National Emergency Grants to help workers in the St. Louis area. So it’s a special pleasure to join you today to talk about our workforce investment system.

In fact, your organization couldn’t have chosen a better time to meet in Washington, D.C. Obviously, I’m not referring to the weather… but to important new policy developments in which the state workforce agencies will play a key role.

President George W. Bush recently introduced a comprehensive jobs and growth plan to jump-start the economy and put people back to work. We worked hard to ensure that the public workforce investment was an integral part of that plan.

As leaders of the public workforce investment system, you know the human face of the economy better than anyone else. You know that while the American economy is in its second consecutive year of growth, it is still not growing fast enough or strongly enough. Too many people cannot find work, many family budgets are strained, and many companies are holding back on new investments and on hiring new people.

The President has proposed a bold plan that will boost the economy by focusing on the two things most lacking in this recovery: new business investment and new job growth.

His plan will stimulate spending, savings and investment by providing tax relief for every American who pays federal income taxes.

That includes relief for 92 American families by eliminating the marriage penalty tax, increasing the child tax credit and moving several million working Americans immediately into the lower 10 percent tax bracket. It helps 23 million small business owners—the engineers of job creation—by tripling the equipment expense allowance, killing the death tax and reducing individual tax rates. And it puts more money into the pockets of 13 million American seniors by eliminating the double taxation on dividends.

Taken together, these proposals will help create the new investment capital necessary for businesses to expand and create new jobs.

We believe the cumulative effect will be $52 billion added to the private economy this year alone and 1.4 million new jobs created by the end of 2004.

The President’s package recognizes that workforce investment is vital to economic growth. That’s why it focuses on both long term and short-term challenges in the labor market. As you know, the President twice requested and the Congress approved 13-week extensions of unemployment benefits to help workers currently having difficulty finding jobs. He has also proposed a longer-term reform of the unemployment insurance system that will return administrative responsibility for these services to you, the states. We will be working with you to refine this important proposal and move it forward.

But for me, the most exciting part of the President’s package is the proposal for Personal Re-employment Accounts. I am proud to say the Labor Department played a leading role in crafting this $3.6 billion initiative, which is built around the public workforce investment system. It gives your agencies a key mission in the economic recovery: to find out where the new jobs are and to help get unemployed workers back to work as quickly as possible.

Personal Re-employment Accounts will allow individuals to custom design their own training and purchase the supportive services they need. We are in the process of working out the details to ensure that you will have enough resources and support to effectively administer this key component of the President’s plan. But once enacted, it will be up to you to show that the public workforce system can deliver for the American people.

We all know the challenges. We know which industries are troubled and where the lay offs are occurring. But the system has to do a better job of connecting with employers to find out where the new jobs are and what skills are in demand in the 21^st century workplace. That requires a significant, more pro-active culture change. And we look to the leadership of everyone in this room to help us accomplish this difficult, but vitally important, task.

Fortunately, we have a wonderful opportunity this year to strengthen your hand. The Workforce Investment Act of 1998 expires on September 30, 2003, and reauthorization gives us a chance to make timely improvements. Our goal is to continue to transform and integrate the One-Stop Career Center delivery system into a cohesive network that responds quickly and effectively to changing economic conditions.

Emily DeRocco, your former Executive Director and now our very able Assistant Secretary for Employment and Training, will be talking to you about the specifics of our proposals after this lunch. But I’d like to take a few moments to outline for you the five key principles upon which our proposals are based.

WIA reauthorization gives us an unprecedented opportunity to:

• First, strengthen the governance structure of the workforce investment system. We want to streamline state and local workforce investment boards and strengthen the state role.
• Second, support more comprehensive operations of the One-Stop Career Center system by creating a new way to fund infrastructure costs.
• Third, better target adult services by consolidating funding streams into one network that will increase state flexibility and customer accessibility;
• Fourth, better serve at-risk youth by targeting services to school dropouts, court-involved youth and young people transitioning out of foster care; and
• Fifth, ensure greater accountability by focusing on the most important outcomes and by eliminating burdensome and duplicative requirements.
• These five principles are the result of extensive consultation and experience with what works and what doesn’t.

Our governance reforms, for example, respond to many complaints that the state and local boards are too large and unwieldy. They are at the heart of our goal to better connect the workforce investment system to employers. They know where the new jobs are and what skills are in demand.

Our proposal to consolidate funding streams will give you badly needed flexibility. We want resources focused on key employment needs and outcomes.

We would also like to simplify burdensome reporting requirements that currently discourage training partnerships with key institutions—such as community colleges.

And we want to enhance individual training accounts. We have a new name for them—Career Scholarships, which will promote individual choice and better leverage other public and private resources. These are just a few of the reforms we will be advocating. We believe a reinvigorated workforce investment system, built around our five principles, will become a powerful economic development tool for your communities.

This opportunity couldn’t have come at a better time. In the current economic climate, the task for putting people back to work will have a higher profile than ever before. Policy makers and the public will be looking to the public workforce system for results. The President’s Personal Re-employment Account proposal and WIA reauthorization provide us with a window for constructive change that we may not see again for many years. So we must make the most of it.

That’s why I hope you will join me in strengthening and revitalizing the workforce investment system. With the changes we advocate, you will have the tools to become more strategic, more pro-active and more responsive to the needs of the 21^st century workforce. With these powerful new enhancements, you can play a key role in ensuring that the promise of the American dream reaches every willing heart.

So thank you for inviting me here today. And thank you for everything you are doing to help the American workforce remain the strongest and most competitive in the world.

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