Speeches by Secretary Elaine L. Chao

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Secretary of Labor Elaine L. Chao
“Challenges to Modernizing the Workforce in the 21st Century”
Los Angeles Town Hall
Los Angeles, California
September 19, 2002

Thank you for that warm welcome. It’s wonderful to be back in California, where I started out in the private sector.

Today I’d like to talk to you about the state of the American workforce and what the U.S. Department of Labor is doing to keep it vibrant.

But before I do that, let me just say what a remarkable time it is to serve our country as a member of the President’s Cabinet.

Just last year, our nation was viciously attacked by terrorists. We fought a war and liberated a nation. But the war against terror is hardly over.

We are still rooting out terrorist cells based in this country. We are facing down a dangerous and secretive regime in Iraq. As the President has often reminded us, the only guarantee of security that we have is our continued vigilance and resolve to overcome the forces of terror.

Obviously, the role of the Labor Department is quite small when it comes to national security.

But Americans are also concerned about other challenges that have emerged in the wake of 9/11. The first of these is the economy.

The terrorist attacks intensified an economic slowdown that had started the year before President Bush took office. Our airline, hospitality and tourism industries were suddenly devastated. 1.5 million Americans lost their jobs.

I’m pleased to say that the Labor Department played a major role in helping the President respond compassionately to those in need.

Just days after 9/11, we issued Disaster Unemployment Insurance to victims in New York and Northern Virginia. We released millions of dollars in National Emergency Grants, across the country, to get laid-off workers back on their feet.

With the approval of Congress, the Department also distributed $8 billion to replenish state unemployment insurance accounts.

Then we started rebuilding our economy.

Because of our good relationships with building trades unions, we helped build a coalition to support the President’s energy security bill—which is expected to create thousands of good-paying jobs all across the country.

Another casualty of terrorism has been large building construction—billions of dollars worth of projects on hold because of liability concerns. Together with the Carpenters and other unions, the Administration is promoting terrorism insurance legislation—so we can build skyscrapers again.

And just recently, the President won approval of Trade Promotion Authority from Congress, paving the way for free trade agreements that will boost U.S. exports. That’s important, because export-based jobs pay at least 13% more than non-export jobs.

On that issue, much of organized labor was in the opposite corner. But our Department put together a responsive package to increase help for workers who lose their jobs due to foreign trade. That package not only secured the votes needed to pass TPA—it was also the right thing to do.

So, I remain optimistic about our country’s economic future.

We have an excellent, resilient workforce. Even in this anemic recovery, nearly 40% of unemployed job-seekers find a new job in five weeks or less.

We have the most productive economy in the world. And I can tell you that the President and his Cabinet are committed to strengthening our economy and creating jobs.

As I talked about the Labor Department’s activities in the wake of 9/11, you may have glimpsed the Department’s size and scope.

Actually, our Department is relatively small by federal standards—a mere 17,500 employees and an annual budget of $45 billion – give or take a few dollars.

However, it’s also one of the largest enforcement agencies—responsible for more than 180 federal laws that affect 10 million employers and 125 million workers.

Many of them you’re probably familiar with: OSHA, minimum wage, child labor laws, overtime requirements, the Family and Medical Leave Act…

When employers see the Labor Department coming, they cower in fear.

But the Department does a lot more than regulate employment practices. It also oversees every private pension and 401(k) plan in America – ensuring the security of over $4 trillion in workers’ retirement savings.

We fund a $10 billion workforce training system that we want to make into an engine for economic growth and career-building opportunity.

We administer the nation’s unemployment insurance system. And we are transforming the old, depressing unemployment offices into re-employment centers, to get people back into the workforce as quickly as possible.

Basically, if it has anything to do with work, the Department of Labor is somehow involved.

To me, that’s an exciting challenge—because the American workforce is undergoing a transition larger than anything we have seen since people left the farms for the cities and started working in factories.

Just think for a moment about how people used to work only a few decades ago.

If an employer needed workers, it hired people from the area. Whatever the new employees needed to know, they would learn on the job.

Employees divided neatly between “blue-collar” and “white-collar” workers. The contrast between “labor” and “management” was as clear as the lines in the employee parking lot.

Almost everyone worked at the plant or the office, and they mostly worked 9 to 5. When they turned 60, they took the company pension and retired.

Obviously that’s not the way it was for everybody, but it describes how the majority of Americans experienced work for many years.

Today, all that has changed.

Notwithstanding the current unemployment rate, employers still have a hard time finding workers with the right skills for the job. We call it the “skills gap.”

The lines between “labor” and “management” have blurred, as workers are encouraged to be managers and executives take on line responsibilities.

More and more people work away from the office—connected by nothing more than a laptop, a cellphone and a Blackberry.

In the 24/7 economy, the concept of working 9-to-5 may go the way of the mimeograph and the typing pool.

The average person will change jobs 9 times over the course of their career. That’s one reason why they are attracted to highly-mobile 401(k) plans.

All of these changes have a tremendous impact on how we work. And the Department of Labor is having to change what it does—to keep fulfilling its mission of serving workers.

Many people today value flexibility and freedom as much as they do their weekly paycheck. That means we need to give employers and employees the option to substitute paid time off in lieu of mandatory overtime.

If a worker wants to convert time-and-a-half into comp time—to go to their child’s soccer game—he or she should have that choice. In fact, people who work for the federal government already have that ability; so should the rest of America.

I said earlier that it’s getting more difficult to distinguish between “white-collar” and “blue-collar” employees.

That puts employers in a “Catch-22” situation when they try to comply with the Labor Department’s Wage & Hour laws. These laws were first written in 1938. Major portions of them haven’t been updated for over 50 years.

As a result, a computer programmer with a degree from Cal Tech, who earns $100,000 a year, can be classified as an hourly employee subject to overtime requirements.

Meanwhile, an assistant manager who makes $12,000 a year at the local video rental store may not be entitled to overtime. That’s just wrong.

These outdated regulations are also spawning a cottage industry of litigation. The system is clearly broken, and we’re working on new regulations to fix it.

Let me mention one other pressing concern that our Department is focused on: retirement security. I said before that the old, reliable company pension is being replaced by easily-portable 401(k) plans.

There are lots of benefits to 401(k)s—but also more risk.

We can’t insulate people from fluctuations in the stock market, but we can protect them from unethical behavior by corporate executives and union pension trustees.

The Labor Department was the first federal agency to open an investigation of Enron – even before the company declared bankruptcy.

Soon after that, the President appointed a task force co-chaired by Treasury Secretary O’Neill, Commerce Secretary Evans, and myself – giving us the task of developing a Retirement Security plan to send to Congress.

The plan we submitted has now passed the House of Representatives and is awaiting action in the Senate. Everything awaits action in the Senate!

It would give three crucial things to every 401(k) investor in America:

• First, the choice of how to invest their 401(k) assets – including matching stock contributed by the company after a vesting period.
• Second, the confidence workers need to invest their savings wisely – by allowing employers to give them access to professional investment advice.
• And third, the same level of control over their 401(k) assets that their senior executives enjoy.

Of course, what happened at Enron and WorldCom and elsewhere is much larger than a pension law matter. It raises issues of ethics, accountability and transparency.

Thousands of loyal employees lost their jobs in the wake of these corporate failures. 42 million Americans who own 401(k)’s watched their retirement savings shrivel as the market recoiled from the scandals.

Let me be very clear: I believe in the free market system. My family came to this country because we believed in its promise. But the success of free markets depends on transparency and reliable information.

That’s why the President called for—and Congress enacted—new legislation that returns accountability and transparency to corporate governance.

At the end of the day, however, it still comes down to trust and character.

Over the last year since 9/11, I’ve spent a lot of time meeting with workers.

I have met with union crane operators who showed up and started working at Ground Zero while the fires were still burning—before they had any thought of getting paid.

I talked to OSHA inspectors who gave up weekends and holidays to make sure there wasn’t a single fatality among the rescue and recovery workers at Ground Zero—a place called “the most dangerous work site in America.”

I’ve met human resource directors who are partnering with us to train those who lost their jobs after 9/11 and connect them to new opportunities.

Just yesterday, I visited with some of the nurses at UCLA who helped care for those twins who were separated. We talked about how to attract people from declining industries and prepare them for a great career in health care.

After all the meetings I have had this last year, I get outraged by the recent scandals—but I don’t get discouraged. Because I have seen that America is still a great country, full of great people, and capable of great things.

My mission is to bring positive change to the Department of Labor, so it can more effectively help Americans pursue their dreams at their place of work.

Thank you.

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