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Remarks Prepared for Delivery by
U.S. Secretary of Labor Elaine L. Chao
"Workforce Competitiveness in a Global Economy"
American and Finnish Chambers of Commerce in Finland
Helsinki, Finland
Wednesday, June 13, 2007
Thank you Ole [Johansson, Chairman, Finnish-American Chamber of Commerce] for that warm welcome. And thanks, also, to Teppo [Rantanen, Chair of AmCham Finland].
I am so pleased to be here in Finland. The spirit of the Finnish people and your country's rich beauty are truly extraordinary.
Today, the United States and Finland share common challenges as our countries become part of the worldwide economy. And this week, I look forward to meeting with my Finnish counterparts, and learning more about Finland's labor market and growth policies. Both the U.S. and Finland have shown that we can compete in a global economy, even though we have somewhat different approaches to many aspects of our economy. So there is much we can share and learn from one another.
Briefly, I'd like to share with you some of the principles that are fundamental to the U.S. economy and its ability to create jobs. And I'd also like to discuss what the U.S. Department of Labor is doing to help our country's workforce remain competitive in the worldwide economy.
The first and most important way the U.S. government helps workers is by creating the climate for growth and job creation. We believe that the private sector creates jobs, and that the role of the government is to create the climate for growth. That means reducing the over-regulation, excessive taxation, and abusive litigation that hamper growth.
Today, despite rising energy prices and a bumpy housing market, the fundamentals of our economy remain positive. U.S. GDP growth slowed in the first quarter of 2007, due to a drop in exports and a few other factors that we believe will moderate in the rest of 2007. But the U.S. job market remains strong and is providing momentum for economic growth in the second quarter of 2007. Since August 2003, we've seen 45 consecutive months of job growth for a total of 8.0 million net new jobs. The U.S. national unemployment rate remains low at 4.5 percent. That's more than a full percentage point lower than the average 5.7 percent unemployment rate of the 1990s.
The U.S. labor force is approximately 153 million people, of which approximately 54 percent are men and 46 percent are women. And our workforce has three unique assets: high productivity, flexibility and mobility.
America's workers are among the most productive of any major industrialized economy. In the U.S., productivity growth since the start of this Administration has averaged about 2.8 percent (annualized). And productivity growth in recent years is translating into higher wages and a higher standard of living. By most measures, Americans today have more money in their pockets. Real per capita disposable income since January 2001 has risen 10.2 percent. And earnings for workers grew 1.1 percent over the 12 months ending in April. This translates into an extra $672 for a typical family of four with two wage earners. And despite rising oil prices, the core inflation rate remains low at 2.3 percent.
But real wages alone do not give a full picture of how workers are doing in our economy, because more and more workers are asking for compensation in the form of benefits, rather than wages. For every dollar increase in employee compensation over the past decade and a half, 67 cents represented wages and salaries, while 33 cents represented benefits. These benefits include bonuses, paid leave, and employers' health insurance, Social Security, Medicare, and retirement contributions.
America's workforce is also characterized by its flexibility and mobility. Every year approximately one-third of the U.S. workforce leaves their jobs — largely because of better opportunities — and one-third finds new jobs. This level of change often astonishes my European colleagues! By the time he or she is 40 years old, the average American workers will have had 10 jobs. So change is the norm is our society and is the way workers advance.
Along with other industrialized nations, our economy does face challenges. The U.S. is transitioning to a knowledge-based economy. Two-thirds of all the new jobs being created require post-secondary education. These jobs require more creativity and critical thinking. And so workers with more knowledge, skills, and creativity are in greater demand.
Over the next decade, for example, our country will need 3.4 million healthcare professionals. We will need over 900,000 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.
Providing a higher-skilled, more educated workforce is clearly the future for the U.S. in the worldwide economy. And the U.S. Department of Labor plays an important role in helping American workers prepare for these challenges.
The Department of Labor is one of the largest regulatory departments in the U.S. government. Its mission is to protect the health, safety, retirement security and competitiveness of America's workforce. And it carries out this mission with a budget of about $51 billion — give or take a few billion — and about 17,000 workers.
The largest part of the Department's budget is devoted to worker training and assisting unemployed and dislocated workers. We administer about $9.5 billion to help fund workforce services that are designed to provide individuals with the education and skills they need to find and keep a job. And the private sector in the U.S. spends much more. Everyone recognizes that training is a must if our nation's workforce is to remain competitive in the growing, worldwide economy.
The U.S. has a nationwide network of what are called One-Stop Career Centers. There are more than 3,000 of them throughout the country and they are in almost every community. They are full-service centers that the Department of Labor administers in conjunction with state and local workforce and economic development offices. These centers are very welcoming, with banks of computers and career counselors, to help workers connect to jobs and education opportunities.
Also, through a key initiative, the U.S. Department of Labor provides seed capital to economic regions across the U.S. facing difficult economic transitions. This funding brings employers, entrepreneurs, educators, and others together to nurture the talent base that will attract new industries to regions undergoing economic transitions.
And the Department funds many other programs focused on increasing the pipeline of talent for skills in demand, including mathematicians, scientists, engineers, technicians, and scientific support staff.
In 2005 and 2006, the Department awarded $150 million to over 142 community colleges and organizations for worker training. For 2007, the Department anticipates issuing the third grant competition of this kind. And for 2008, the President proposes in his budget an additional $150 million for this program.
We realize that in a dynamic and changing economy there will be disruptions. And some workers become unemployed from time to time. For those workers, the U.S. Department of Labor helps in three major ways. The first is to provide unemployed workers with temporary income assistance and other services. The second is to help workers access the education they need to learn the skills that are in demand in the workplace. And the third is to help workers find jobs.
The longer a worker stays out of the workforce, the more outdated his or her skills become. So our policies emphasize job training and getting workers back into the labor market as soon as possible. We recognize that this is a different approach from many of our European colleagues, but it has worked well for our country. Because of our country's strong record of job creation, it takes the typical unemployed worker in America about 8.3 weeks to find a job! About 10 percent of unemployed Americans remain jobless for a year or longer. That's compared with 44 percent of workers in France and 57 percent of workers in Germany, where rigid rules discourage businesses from creating jobs and hiring new employees to fill them.
Over the next almost two years, this Administration will continue to promote a pro-growth agenda and a strong education system for America's workers. This is key to helping our workforce remain competitive in the 21st century worldwide economy.
One of the reasons our country has thrived over the past six years despite so many challenges, is the President's strategy of letting Americans keep more of their hard earned money. This has given workers more money to spend during an economic downturn, which stimulated the economy and provided more capital for employers to expand and create new jobs. And it has worked. Despite unprecedented challenges over the past six years — an economic downturn, terrorist attacks, corporate scandals, the worst natural disaster in our nation's history and rising oil prices — our economy continues to grow at a steady, sustainable rate and create new jobs.
Let me close by noting a few more assets that contribute to our country's competitiveness in the worldwide economy, many of which Finland shares. America is an open society that rewards individual initiative, fosters transparency and accountability, and protects individual rights. Armed with these strengths — and a productive and skilled workforce — we believe the global economy is nothing to be afraid of!
So thank you for inviting me here today, and I would be pleased to take a few questions.
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