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Remarks Prepared for Delivery
by U.S. Secretary of
Labor Elaine L. Chao
Conference on Challenges Facing the 21st Century
Workforce
The Heritage Foundation
Washington, D.C.
Thursday, August
4, 2005
Thank you, Ed [Fuelner]. I want to commend you for your leadership and
for making the Heritage Foundation one of the most sought-after sources of
thoughtful policy analysis in the nation's capital. And it's good to see Diana
Furchtgott-Roth, the former Chief Economist of the U.S. Department of
Labor.
The topic of this conference, the Challenges Facing the 21st Century
Workforce, couldn't be more timely. In my travels around the country and around
the world, it's clear that the importance of maintaining a skilled, competitive
workforce is one of the most important challenges facing our country.
Today, the world is much different than even a decade ago. Global
competition and information technology have increased both the rate and
intensity of change. The economic strategies of the past, which have tended to
emphasize building a competitive advantage in one specific area, are obsolete.
Successful economic strategies of the 21st century will focus on the ability to
constantly evolve and adapt to change.
Throughout its history, that has been a singular strength of the
American experience. As one columnist has observed, Americans have always shown
a willingness to adapt to change.
When the United States was founded, for example, nearly our entire
workforce was employed in agriculture. Today, only about 2 percent of American
workers are in agriculture. Yet, we produce enough food to feed much of the
world. This positive correlation between change and increased productivity has
been a powerful historical advantage. And it is critical, not only to our
success as a nation, but to the higher incomes and standards of living that
American workers enjoy today.
To give you an idea of the dynamism and flexibility of the American
economy, consider this. Over the past 12 months ending in May, 52 million
workers left their jobs and 55.3 million found new jobs. That means about
one-third of our entire workforce of 149 million persons turned over. The fact
that our society can tolerate this level and pace of change is a tribute to the
strength of our economy and the resiliency of our workforce.
And it is remarkable that despite high oil prices, the war on terrorism
and the economic weakness of many trading partners, the American economy
continues to strengthen and create new jobs. We've seen 25 straight months of
job growth, for a total of 3.7 million new jobs created since May 2003. And the
majority of new jobs being created, according to the Bureau of Labor
Statistics, pay above average wages. In fact, it is interesting to note that
real earnings—adjusted for inflation—have gone up since the recession
that began in March of 2001. If the majority of new jobs created were low wage,
then real wages would be falling.
All this has been possible because President George W. Bush is committed
to reducing the excessive taxation, over regulation and abusive litigation that
hampers growth and job creation. And he has favored economic policies that
create the climate for steady, consistent growth. Today's unemployment rate of
5 percent is lower than the average of the 1970s, 1980s and 1990s. Compare that
with Germany and France, where the permanent unemployment rate is above 10
percent. More Americans are working than ever before. And last year, the United
States had the highest growth rate—4 percent—of the major
industrialized nations known as the G-8.
A major factor is the favorable balance the United States has achieved
between worker protections and labor market flexibility. Preserving this
balance is critical to our long-term future. It means that American workers can
find new jobs faster. For example, 34 percent of unemployed workers in France
and 50 percent of unemployed workers in Germany remain jobless for a year or
longer, compared with 12 percent in the United States.
We all recognize that change brings disruption, especially for older
industries and those experiencing rapid technological change. And sometimes,
that can mean difficult challenges for workers. But America is a compassionate
nation. And nowhere is this more apparent than in the generous assistance
offered to workers whose jobs have been displaced by trade. They can access 104
weeks of income support, job training and supportive services such as child
care, transportation and many more. And the government helps to pay 65 percent
of qualified health insurance premiums for these workers. And if a qualified
displaced worker is over 55, and gets a new job that pays less than their old
one, the government will pay 50 percent of the difference up to $10,000. But we
all recognize that the most important assistance a displaced worker can receive
is a solid pathway to a new career.
Workers today are finding that many of the new jobs being created
require more education and higher skills than in the past. More than 3.5
million jobs go unfilled in this country on any given day. I often hear from
employers who say they cannot find workers with the right skills for the jobs
they have available. The problem is the skills gap. This Administration has a
comprehensive strategy to address the skills gap and help workers thrive in the
21st century.
First, the President introduced No Child Left Behind, the most
comprehensive reform of the nation's public education system in 50 years. The
goal is to ensure that each and every child has a strong foundation of basic
knowledge and skills. It's impossible to overstate how critically important
this is to our nation's workers, especially extending these reforms to high
school.
Second, the President has proposed comprehensive reforms to bring the
$10.5 billion, publicly funded workforce training system into the 21st century.
Currently, this system is a collection of heavily regulated programs that are
micro-managed by Washington. They are disconnected from the economy and the
workers they are supposed to serve. The Administration proposal will:
- 1. Give states and local communities maximum flexibility and
authority to customize the system to meet their needs;
- 2. Reduce overhead costs, including the layers of bureaucracy,
complicated rules and regulatory loopholes that are wasting approximately $300
million annually;
- 3. Enhance individual choice; and
- 4. Streamline and eliminate where possible, duplicative programs to
better serve workers.
And in exchange for greater flexibility, this Administration will demand
greater accountability and real, measurable outcomes for workers.
Third, the President's High Growth Job Training Initiative identifies
sectors of the economy that are growing rapidly and helps workers get the
skills required to access these new jobs. And the President also launched a
$250 million community college initiative, to tap into the resources of local
job training providers to meet the skill demands of the future.
And fourth, the President will continue to pursue free and fair trade
agreements, like CAFTA, to create more good paying jobs here at home. He
recognizes that export-related jobs, for example, pay 13-18 percent more than
the national average.
The key to sustaining a competitive workforce in the 21st century lies
in successfully meeting these and other challenges, which many of your
panelists have touched upon.
They include:
- 1. Maintaining a skilled and flexible workforce;
- 2. Ensuring a strong education system that provides opportunities for
workers to continually upgrade their skills; and
- 3. Reducing the regulatory and economic barriers to risk taking and
innovation, especially tort reform.
The Labor Department is doing its part to foster a climate for growth
and job creation by continually updating and refining its regulatory agenda.
Many of you are familiar with some of the Department's major regulatory reforms
over the past four years.
They include:
- a. Updating the white-collar overtime rules, which haven't been
updated since Elvis was a teenager;
- b. Reducing the Department's regulatory agenda from approximately
145-just before this Administration took office-to 85 in the spring of 2005.
The goal is to give the regulated community an honest appraisal of the number
of regulations that are actually in the pipeline and are likely to be
completed; and
- c. Updating the financial reporting requirements for labor unions,
which haven't been updated since 1959, to empower rank-and-file union
members.
But it is also important to recognize that, when it comes to fostering
the conditions necessary for growth, economics is not the only force at work.
Culture and political environment are also important. As an immigrant to
America, I am especially sensitive to these factors. Open societies that reward
individual initiative, foster transparency and accountability, and protect
individual rights will continue to have an advantage over those that do not.
That is the most important competitive advantage of the United States. When you
combine our nation's cultural bias in favor of individual achievement with
freedom-including free markets-transparent institutions and the rule of law,
the result is the world's most powerful engine for growth and job creation.
Nurturing these values is the best way to preserve our nation's unique
competitive advantage in the world and to ensure a high standard of living for
our workers.
Thank you. In closing, we at the Department of Labor will continue to
promote America's core values and to create and support policies that ensure a
bright future for America's workers.
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