Speeches by Secretary Elaine L. Chao

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"I had the opportunity to attend the World Economic Forum and spoke with pride about the Department of Labor's programs to assist dislocated workers and return people to work."

Secretary of Labor Elaine L. Chao
World Economic Forum
New York, New York
February 3rd, 2002

Thank you …

I find today's subject a bit ironic: the return of unemployment - when did it ever go away?

U.S. unemployment just went down from 5.8 percent in November to 5.6 percent in December. Our unemployment figures are now hovering around where they were before the great economic boom of the last century.

In fact, the U.S. unemployment average since 1948 has been 5.6 percent.

Regardless of historical analogies, we believe today's unemployment numbers are still too high - though many countries would envy 5.6 percent as the national unemployment statistic.

Just talk to the Argentineans.

While we now live in age of nano-technology and genetic cloning we're still held hostage to the old business cycles of the Mercantilist Age - with busts and booms and unemployment rising and failing like the tides at regular intervals.

Today it appears that the dot-comer's predictions of perpetual growth were more fiction than fact.

That said, we really are not at the mercy of these fluctuations - and we can help the casualties of these recurring economic slowdowns.

And what a slowdown it's been -- each recession carries its own unique stamp and this one is no exception. The stamp of this recession is September 11th.

Recent studies suggest that job losses resulting from September 11th may ultimately total 1.6 to 2.0 million. Since March of 2001, the "official" beginning of the recession, we have lost 1.4 million jobs.

Almost a million of these jobs -- two-thirds --have been since September 11th. A phenomenon we must not let happen again. One Bin Laden recession is enough for the world.

It has exacerbated the global downturn. It's no secret that Japan is still mired in its decade-long recession, the rest of Asia remains in a down cycle, and Europe has had anemic growth at best.

By definition, this increases the pressure on the U.S. to lead the way out of this "synchronized" global recession.

Our country is up to the challenge. And while some doubters remain, we believe that the economic recovery is at hand.

The Federal Reserve's expansion of the money supply and credit, combined with the President's extraordinarily well-timed tax cuts, have already born fruit. As you've heard, our GDP grew unexpectedly in the fourth quarter -- and once the President's economic security package gets through the Senate - not to mention energy and free trade legislation - we will gain even more momentum.

Moreover, according to IMF estimates, US growth will pick up in the second quarter of this year and accelerate at a four-percent clip in the second half - almost what we experienced in the recent boom.

That's not bad - not bad at all.

Now, bringing this all down to earth, what is the best employment strategy during an economic turndown? The answer is obvious: move workers from unemployment checks to paychecks.

How you do that is more complicated.

One continent's approach has been to carry people on public assistance for years - sometimes at 80 percent of former wages. On another, dislocated workers are basically left on their own - which has created a bit of resentment among workers promised a job for life.

Here in the US, I believe we have struck a better balance. My department [the Department of Labor] administers a financial safety net, but puts equal - if not more - emphasis on training and re-employment services.

The Labor Department may have an alphabet soup of agencies - OSHA, MSHA, PWBA, etc - which are responsible for everything from worker safety to pensions -- but 90 percent of our $59.4 billion dollar budget goes to help dislocated workers.

Think of us as the honest broker of the American labor market. We act as the go-between, between employers who need people, and workers who are unemployed.

Here's how it works: federal monies are allocated to the states, and states and localities then decide how those monies are best spent on helping the unemployed.

For example, states can issue vouchers called "Individual Training Accounts" to dislocated workers. It is then up to the individual to spend that voucher in a way that best suits his/her training needs - from community college to on-the-job training.

State governments also use our funds to enter into partnerships with employers - connecting them with people who are looking for jobs.

And One Stop Career Centers have replaced what we once referred to as the dreaded "Unemployment Office."

Gone are the days of gray, dusty, Stalinist-era ticket windows where the unemployed went to get their cards punched. One Stop Career Centers are built for the 21st Century: they are wired, staffed by professionals and sometimes are even housed by actual employers - ready to train people who come in the door.

Workers still apply for unemployment insurance at these locations, but they can also use on-site computers to conduct job searches, seek advice from career counselors on how to write their resumes, and get connected with local training programs.

At the federal level, we're busy forging partnerships with multi-state and national corporations - with the sole intention to link the job seekers with businesses.

And there are plenty of businesses seeking workers.

Although high-tech and manufacturing, and especially retail, were hard hit by the recession and are proving slow to rehire, there are other industries, especially in the service sector, that remain vibrant.

There's health care and financial services.

We've actually signed a partnership with Citigroup, which now boasts a 71 percent retention rate of referrals coming through the public workforce system.

Next, we're going to look at the home-improvement industry. This is an exploding market, given that nearly 70 percent of Americans own their own homes.

Every 43 hours a new Home Depot store opens - and they're looking for a quarter of a million workers to hire over the next several years.

And the same holds true for Wal Mart and a host of others great companies.

The key is bringing the demand and supply of workers together - quickly and efficiently without breaking the budget and creating a lumbering bureaucracy.

It's a combination of employers willing to reach out to new sources of labor, and workers literally willing to go the extra to mile to get a better job.

I know my time is running out, so let me sum up:

Our strategy is based on nothing more complex than providing skills and placement services to dislocated workers. Unemployment checks are a necessity, but they're not an end in themselves.

If the global economy is going to pick up steam and bring hope to millions of people looking for work and new opportunities, we must continue to place the emphasis on skills, education and creating a nexis between business and the workforce.

Thank you…

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