Remarks by Assistant Secretary Emily Stover DeRocco

National Governors Association Policy Forum

Washington, DC
December 11, 2007

Thank you, Martin, and good morning. It is a pleasure to join you to discuss the future of talent development and the role that the workforce system will play in that critical competitiveness issue in the years ahead.

I know that all of you are familiar with the goals and initiatives of the Employment & Training Administration, so rather than describing the journey for you again, let me attempt to paint a bigger picture.

I began as Assistant Secretary almost six and half years ago, and I was greeted on the job by a survey done by the U.S. Chamber of Commerce indicating that 95% of businesses either didn't use or, worse, had never heard of the One-Stop Career Center System. As someone who believed that business was a primary customer of the workforce system and business engagement was critical to the success of workers, this was both shocking and disturbing.

We immediately set out to change this by establishing a goal of a demand-driven system and taking a series of steps at the national level, including meeting with executives from nearly every major industry in the economy. These meetings led to the identification and funding of model programs where industry worked to design training programs that would meet their needs.

This, of course, is the High Growth Job Training Initiative and 5 years later, we have funded over 150 projects, investing nearly $300 million. As part of our commitment under the High Growth Initiative, we now have a collection of competency models, curricula, and other products developed under these projects that are available to the system as whole.

But more importantly, I believe we demonstrated that the workforce system can partner with and serve not only traditional industries, but also ones on the cutting edge of the innovation economy like biotechnology and advanced manufacturing. It also showed that when industry has a stake in workforce training programs, they are willing to commit the time and energy to design programs that meet their needs.

Something we learned very quickly in that process was that it wasn't enough to simply design training programs that worked for businesses; we also needed the right players to execute that design. That means finding the right educational institutions and having the right faculty, equipment, and facilities. Fortunately, this country has over 1,200 such institutions that are affordable, accessible, and adaptable. I'm speaking, of course, of our community colleges.

So in 2004, we established the Community-Based Job Training Grants to help community colleges improve their ability to deliver industry-designed education and training programs. We have now funded 142 projects at $250 million and will soon add another 70 or so programs and $125 million.

While both the High Growth and Community College initiatives were important components to building a talent development system, they were still just individual projects focused on discrete issues. We couldn't help but feel that we were only seeing one very small part of a much larger economic and talent development picture.

It was during this same time period that the full impacts of globalization were beginning to be understood. Thomas Freidman, of course, deserves a great deal of credit for bringing this home to the general public, while inside Washington, groups like the Council on Competitiveness and the National Academy of Sciences were focusing on the policy implications.

The business community was also reacting. While much of the media's focus was on “off-shoring” to lower cost centers in Asia, there was a migration happening here at home as well, towards areas of the country that could provide the highest levels of talent. We all know the “hot-spots” in our country and one thing they all have in common is an abundant supply of talent.

Our response to this was the WIRED Initiative, trying to bring a comprehensive view to economic and talent development and leverage the resources of all the organizations that have a stake in education and training and a region's competitive advantage. We have now put $325 million in 39 regions around the country to demonstrate this comprehensive view. I hope that all of you in this room are familiar enough with the vision and principles behind WIRED.

We are now far enough into the Initiative, particularly with our First Generation regions, to allow us to make some early observations. The first and probably most important thing that we and our regions have learned is that building a broad-based, functional partnership group is absolutely critical to success of the project.

The WIRED approach does not come naturally to most areas. Counties in a shared economic region have more often been rivals than partners. Organizations are more often in competition that collaboration. So a well defined governance structure that includes and respects the priorities of the region's assets is really the starting point for any area hoping to build a region-wide vision and strategy. With the WIRED funds acting as a catalyst and each organization bringing their resources to the partnership, everyone has both a stake in the outcome and an opportunity to advance their interests.

It was this lesson of WIRED that led us to make available Regional Innovation Grants, in effect, mini-WIRED grants that encourage the partnership building and strategic planning that will help to define where assets can be deployed and where additional investments are required.

With all that as background, I think I can sum up our vision for talent development in a single sentence: A regional partnership of critical assets, strategically investing in talent development through programs designed by employers and available at local education and training institutions.

I hope that sounds familiar, because in a nutshell, that is exactly what was envisioned under the Workforce Investment Act. The Workforce Investment Boards were going to be catalysts for this partnership, bringing together an array of partners representing investments and assets in the region while being led and directed by business and industry who would understand the requirements of both individuals and companies as well as the overall direction of the economy. Education and training programs would be available through an eligible provider list where a wealth of information would allow individuals to accurately understand and judge what those programs were offering. And every couple of years, this partnership would need to develop a strategic plan that guided the investment of not only education and training funds but also a unified array of resources available to support a regional economy.

Considering that this was 1998 and the term globalization hadn't even entered our lexicon, WIA was one of the more forward looking pieces of legislation with the principles it established truly ahead of its time. So the question then is, why did we have to invest nearly $900 million in several initiatives to demonstrate what was already in the law. Or in other words, what went wrong?

I want to be abundantly clear about the following statements. I will generalize and I do recognize there are exceptions to these broad statements.

Some of the symptoms are clear:

• One-third of the states have WIA and Employment Services systems operating side-by-side, and are resistant to changing the structures and systems built to support the very different 20th century economy;
  
  
• A flawed governance structure was grand-fathered in so that natural regional economies had 2 or 4 or 8 separate boards representing them;
  
  
• The “business majority” is often not representative of the growth sectors in the regional economy with legacy industries, search firms, and system contractors filling a much too large proportion of the seats.

And for that, there is plenty of blame to go around:

• Congress embedded Byzantine rules into a visionary structure;
  
  
• The Labor Department enacted and enforced short-sighted regulations;
  
  
• States had abdicated their leadership role, unwilling or unable to address the multiple inefficiencies in the system; and
  
  
• Locals operated with lack of creativity and imagination, allowing services and approaches to continue because “that's what we have always done.”

Now when I bring up any one of these issues, the almost instant reply from system audiences is that “you keep cutting our funding so we can't do anything else.” That reply goes directly to my point about creativity and lessons learned from WIRED. There is a staggering amount of resources available in any regional economy. And I'm not just talking about federal resources either. Some of the biggest and most widely respected foundations have now become players in the talent development arena. Universities are slowly but surely looking beyond their ivy-covered gates and playing an active role in the regional economy. Growing businesses put financial capital for human capital solutions on the table. The list goes on.

And as for declining budgets, I shouldn't have to tell you that the budget environment is only going to get tighter. This is particularly the case when the only people who ever lobby Congress on behalf of the system are members of the system itself.

This is not meant to be a doom-and-gloom scenario but an honest accounting of where the system stands. There are two examples from Congress, though, that illustrate both the challenge and the opportunity before us.
The first is from the recent debate concerning the expansion of the Trade Adjustment Assistance program. It has been our position that TAA and particularly an expanded TAA program should be an integral part of the WIA system. Well Congress shows such a lack of faith in the workforce system that it is moving to create an entirely new structure to deliver TAA training. One Congressman even went so far as to say WIA staff are not capable of helping trade-impacted workers because they don't have the know how and skills to provide the help TAA workers need.

As discouraging as that example is, there is another that offers hope. In a recently introduced bill by former Chairman McKeon, WIRED is actually authorized as an on-going program for the workforce investment system. While the final details will obviously be important, we believe that Workforce Investment Boards are the natural place for a WIRED-like leadership team and broader partnership to form.

It is approaching 10 years now since WIA was passed. Someone recently asked me what I would like to see WIA and the system look like 10 years from now. I hope to see a WIA system that offers a suite of talent development options, run by a partnership of the most important assets in a regional economy.

That system would be nimble enough to customize solutions for individuals affected by a major layoff and visionary enough to lure a major new employer to the region on the strength of their training and talent development programs.

The Board meetings would be about identifying upcoming challenges and opportunities and deploying teams to address them, with only the last five minutes of any meeting devoted to a briefing on the financials and the reporting.

But most of all, this talent development system would be so effective that companies would be coming to us to help solve their workforce needs and the most respected individuals would be seeking appointments to the Board, because they can see the opportunity to have an impact on their business and the region as a whole.

Recently I have seen some extraordinary progress in this direction. For example, the workforce boards in central New Jersey at a recent WIRED launch showed us a whole new approach to their responsibilities as they took on this leadership role. In some states, there are signs of important alignment of economic development with education and WIA. But make no mistake, we are still only at the beginning of a necessary transformation.

It is safe to assume that the importance of education and training is only going to continue to increase, and since that is our core business, there is no reason why this vision cannot become a reality. Everything that is important in today's business – innovation, creativity, imagination – is also important in our business and I hope that 10 years from now, our workforce system has realized its potential.

Thank you very much for the opportunity to speak today and I hope the nation's governors will provide the leadership to make our workforce system the keystone to every region's talent development strategy.

Thank you.