|November 4, 2008|
Speeches by Secretary Elaine L. Chao
Remarks Prepared for Delivery by
Thank you, Bob [Shircliff, President and CEO, Jewish Hospital & St. Mary's HealthCare], for that introduction.
It's great to be home in Louisville! I'm so proud to be a Kentuckian and I love every moment that I spend back in the Commonwealth.
This afternoon, I'd like to talk about some of the principles that are fundamental to the U.S. economy and our ability to remain competitive in today's global environment. As we move forward into the 21st century, there is no issue more important for our country's future economic strength than the competitiveness of our workforce.
As you are aware, the U.S. economy is currently experiencing some short-term challenges. But, the long-term foundations of America's economy remain strong.
Productivity growth is the most important factor in long-term economic growth and it has averaged 2.5 percent per year in the U.S. for the last seven years. This is above the averages for each of the past three decades. In addition, GDP growth is still positive. And, while job creation over the past five months has been disappointing, job losses are averaging about half the pace of even the mild recession of 2001.
The job report released earlier this month showed that the unemployment rate in the U.S. rose unexpectedly in May from 5.0 percent to 5.5 percent. However, we believe this large one-month jump was largely due to the fact that the survey reference period was later in the month than usual, and so the survey captured an unusually high number of new entrants into the labor market. Because of the substantial flows into the labor market during the early summer months, particularly of young workers, the month-to-month changes in labor market measures can be volatile, and BLS itself cautioned against reading too much into the May jump in the unemployment rate.
This Administration is continuing to keep a close eye on the economy and the job market. About $56 billion in stimulus payments have already gone out the door and the total stimulus package will put about $150 billion back into the U.S. economy. That's equal to about one percent of our country's GDP. This stimulus is expected to create over half a million more jobs by the end of the year.
Still, we do recognize that there is real concern about the economy. Declining home equity is hitting consumers hard. And, consumers are reeling from the sticker shock of filling up at the gas pump and buying groceries. That's because high oil prices are a direct tax on the consumers, which is passed along in the price of just about everything.
That's why now is not the time to raise taxes and take more money out of the pockets of working families and employers who are trying to create jobs. But, that's just what will happen if Congress allows the President's tax cuts to expire.
If this tax relief is allowed to expire at the end of 2010, Americans will pay about $280 billion more in taxes each year the largest tax increase in our nation's history. And, it will happen quietly. Congress will just do nothing and let them expire. But, make no mistake about it every taxpayer will be hit with an increase, including small business owners. In fact, 27 million small business owners will face a $4,066 tax increase on average.
Helping small businesses is especially important to our economy because about two-thirds of the new jobs created in this country in the last decade and a half have been created by small and medium-sized businesses. Small businesses are indeed the engine of job growth in our country. And, the best way for the government to help is by creating the climate for growth and job creation, which means reducing the excessive taxation, over-regulation, and abusive litigation that hamper growth.
Of course, like any other nation, America faces challenges. And, one of those challenges is the skills gap. That's the mismatch between the skills of some in our workforce and the skills needed for jobs in growing sectors of our nation's economy. Providing workers with access to post-secondary education and training is critical to remaining competitive in today's global economy.
In the next decade, nearly two-thirds of the estimated 15.6 million net new jobs created in our country will be in occupations that require post-secondary education or considerable on-the-job training. By definition, these jobs pay above average wages because employers are increasingly paying a premium for workers with skills that are in demand. So, our free market system is not only producing more jobs, but better-paying ones. In fact, from 2001 to 2007, the number of jobs in high-paying occupations grew at a rate almost 3 times that of lower-paying occupations.
Over the next decade, the U.S. will need to fill job openings for nearly 3 million healthcare professionals. We will need over 950,000 engineers, including aerospace, biomedical, civil, computer software, and environmental engineers. We will also need workers in other high growth industries including nanotechnology, geospatial technology, and the life sciences, to name a few. In fact, health services along with professional and business services currently account for nearly one-fifth of total employment in the U.S. And, these sectors are projected to account for more than half of U.S. employment growth by 2016.
So providing workers with access to post-secondary education and training is critical to remain competitive.
In order to address this challenge, a series of initiatives has been launched over the past seven years to expand access to relevant worker training and post-secondary education. These initiatives are all administered by the U.S. Department of Labor.
The first initiative identifies the growth sectors of the economy and the skills needed to access these opportunities.
The next step is to engage educators and educational institutions. Now that we are doing a better job of identifying the type of workers employers are looking for, we need to take it a step further and relay those needs to the educators. The goal is for educators to tailor their curricula to ensure graduates receive the training and education that is required to access opportunities in today's economy.
And the President chose community colleges as a centerpiece of this initiative because they are affordable, accessible, and have close connections to local labor markets. They are perfectly positioned to prepare workers for high-growth occupations. Today, these partnership grants are helping communities develop solutions to workforce challenges and labor shortages.
Here in the metro Louisville area, you understand the importance of working together towards a common goal. You're continuing to develop collaborative partnerships that are showing great results. And, by creating these relationships between businesses, community leaders, and schools you are strengthening the regional economic community.
And, regions are really where the action is where employers, workers, researchers, entrepreneurs, workforce and economic development organizations, and governments are partnering together to create a competitive advantage in the global marketplace.
Likewise, the third part of our strategy is bringing the leaders of regional economies together to create economic development plans based on our most precious resource, which is human talent. This initiative, the Workforce Innovation in Regional Economic Development or WIRED provides the seed capital to bring together employers, government officials, educators, investors, non-profit and labor unions leaders and others to design regional economic development strategies. Today, 39 regions across the U.S. including Central Kentucky are participating in this initiative, with great results.
In June 2007, the 15-county Central Kentucky I-65 Corridor which includes Louisville was selected as a Third Generation WIRED Region. And, today, our $5 million investment is helping the region fill workforce gaps by supporting worker education and entrepreneurship. In particular, this seed money is helping with current expansion projects at the Louisville Airport and the UPS Distribution Hub.
These three initiatives underscore the strong belief that a productive workforce is the backbone of our nation's competitiveness. America's economy is resilient because our workforce is among the most innovative and productive in the world. And, we must continue to work together to remove barriers to growth and to help provide workers with the skills they need to succeed in today's global economy.
Thank you for inviting me here today. Now I would be pleased to take a few questions.
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