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Remarks Delivered by
U.S. Secretary of Labor Elaine L. Chao
Economic Club of America
Miami, Florida
Wednesday, May 31, 2006
Thank you, John [Messer, Partner, Grant Thorton LLP], for that warm introduction.
I am so pleased to be with you. Today, I would like to discuss the progress of our economy and two issues that are on the forefront of debates about public policy — wage disparity in our society and immigration reform.
Let me start by giving you a snapshot of our nation's economic progress.
Our nation's economy has expanded for 18 straight quarters. It grew at a solid rate of 3.5 percent in 2005 — that's the fastest rate of any of the G-7 major industrialized economies. And growth continues — the economy grew at a strong 5.3 percent in the first quarter of 2006.
The national unemployment rate remains low at 4.7 percent, which is below the 5.7 percent average unemployment rate of the decade of the 1990s.
Contrast this with Germany and France, which have persistent unemployment rates nearing 10 percent! And their average unemployment duration is about three times that of the U.S.
Our economy has experienced 32 months of uninterrupted job growth, creating approximately 5.3 million net new jobs since August 2003. That's more jobs created than Europe and Japan combined.
More Americans are working than ever before. And they are producing more than ever before. Productivity growth over the last five years has averaged over 3 percent annually. Robust productivity growth plays an important role in our ability to compete in the global economy and leads to higher standards of living.
Real disposable personal income has increased by 8 percent during the Bush Administration. And because wage growth is typically greatest further into an economic expansion, look for those figures to improve even more. In fact, we're already seeing signs that workers are feeling more confident about the labor market and their job security.
That's because wages are up in many industries. Hourly earnings of production and non-supervisory workers grew at 3.8 percent over the last 12 months — the fastest in nearly 5 years. And signing bonuses are back in vogue. According to a recent poll by Mercer Human Resource Consulting, 65 percent of employers are offering signing bonuses for technology-related positions.
And our college graduates face the best jobs market since 2001. Most employers say there is increased competition to hire new college graduates. And 20 percent of the employers say they have raised or plan to raise starting salaries. In fact, accounting and computer-engineering graduates can expect starting salaries that are more than 5 percent higher this year.
But even as our economy grows steadily, there are challenges. One of the major challenges is the growing skills gap in our country. There is a growing mismatch between the new jobs being created and the skills of our nation's workforce. I believe this is the core issue surrounding the debate about wage inequality in our country: we don't have a wage gap, as much as we have an education and skills gap.
For most of the last century, no more than a high school education was required in our economy. Almost anyone could find a job that would allow them to support a family, own a home, and build a career. Today, the technical skills required for the typical job are at much higher levels than they were during most of the previous century. Without these higher skills, workers are unable to provide the increases in productivity or take advantage of high demand opportunities that lead to wage growth. The more advanced the workplace becomes, the more valuable higher skills become.
Just look at the trend in the U.S. labor market. More than two-thirds of the new jobs being created in our economy are in occupations that require some kind of post-secondary education. By definition, they are higher skilled and pay higher wages. While post-secondary education is essential to accessing these opportunities, that doesn't necessarily mean they require a 4-year college degree. Some of the strongest demand is for workers with 2-year degrees in specialized fields from community colleges. And apprenticeship programs offered by the skilled trades are another wonderful way to gain highly marketable skills. But it is more important than ever before for workers to complete their education and keep their skills current.
A look back at the last 25 years reveals the growing gap between the wages of the skilled and unskilled. Some have suggested this gap represents the rich getting richer at the expense of the poor. But a closer look at the data shows otherwise. It shows that the wages of low-skilled workers have remained flat, while those with advanced education have jumped. Adjusted for inflation, the hourly earnings of college-educated workers have grown by 21.6 percent since 1980. At the same time, the hourly earnings of high school drop-outs have fallen by 2.6 percent.
In the technology-driven workplace of the 21st century, education determines a worker's earnings for life. Workers ages 18 and over with a bachelor's degree today earn, on average, about twice that of workers with a high school diploma. Workers with the most advanced degrees make an average of over three times as much as those with a high school diploma.
And education is important to employment security as well. Last month's unemployment rate for workers with a bachelor's degree or higher was 2.2 percent. For workers with some college or an associate degree, it was 3.8 percent. For workers with a high school diploma, it was 4.4 percent. And for workers with less than a high school diploma, it was 7 percent. Unemployment rates for high school graduates are twice that of college graduates. And unemployment rates for high school dropouts are three times higher.
So it's impossible to address wage disparity in our society without addressing the education and skills gap. This Administration has launched many programs to help workers gain the skills they need to access these new opportunities. These include the American Competitiveness Initiative, a $136 billion program announced by the President in the State of the Union address. And two other programs, administered by the U.S. Department of Labor — the President's High Growth Job Training Initiative, and the Community Based Job Training Initiative. But the government cannot do it all. In fact, the private sector spends more than the government on job training. Yet the skills gap is still growing. So we must get the message out that education is key to accessing the growing opportunities in our country.
America's tremendous achievements are not diminished by the fact that there is still more to be done to ensure the gains in our economy are shared by all. Our country is the land of opportunity. With the dynamism and flexibility of our economy, there is no limit to the dreams that can be achieved through education and training, hard work, and determination.
This truth is reflected in the tremendous number of people who want to come to America and take part in our economic growth. That's why, earlier this month, President Bush spoke to our country about his proposals for comprehensive reform of our immigration system. In his remarks, he shared his goal of leading America toward a more lawful and welcoming society.
The President acknowledged that securing our nation's borders is a basic responsibility and an urgent requirement for national security. At the same time, we are a nation that has welcomed immigrants and benefited from their contributions.
An important element of the President's plan is a temporary worker program. It will empower immigrants with an honest way to provide for their families while respecting the law. It will allow them to escape from the shadows and the fear of deportation to become lawful taxpayers.
A temporary worker program will add to our security. It will enable us to know who is here and why. A secure border and a temporary worker program depend on and reinforce one another.
President Bush believes that deporting every illegal worker is neither wise nor realistic. The President supports increasing the number of green cards that can lead to citizenship. But for the sake of justice and security, he is opposed to amnesty. He is seeking the rational middle ground. He wants a system that is secure, orderly and fair — an immigration system that is appropriate for the 21st century.
The President's vision for reform honors the tradition of the melting pot and recognizes that America was built by immigrants.
For many, this is a charged and emotional issue. That's why the President has been devoting so much time to communicating a clear vision on where he wants to lead America. As the Senate and House work on a compromise, it is important to address these issues in a reasoned and respectful tone.
So let me conclude by thanking you for everything you are doing to raise public awareness and provide a forum of discussion for critical economic issues. As the President has said, it is important to come together in the spirit of cooperation to address the major challenges facing our country. And no challenge is more important than ensuring that our nation remains the most productive and competitive in the world.
Thank you.
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