Speeches by Secretary Elaine L. Chao

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Remarks Delivered by
U.S. Secretary of Labor Elaine L. Chao
Rep. John Mica's
Chamber of Commerce Fly-In
Washington, D.C.
Tuesday, May 23, 2006

Thank you, Congressman Mica, for inviting me here today to talk about our economy, and what this Administration is doing to ensure that our nation remains competitive.

As Congressman Mica knows, our country is now part of a worldwide economy and is transitioning to a knowledge-based workforce. Most new jobs being created in America place a premium on knowledge and technology, and these value-added, high-skilled jobs are increasingly the jobs of the future.

America has experienced 32 months of uninterrupted growth, creating approximately 5.3 million net new jobs since August 2003. That's more jobs created than Europe and Japan combined. And the national unemployment rate, which the Bureau of Labor Statistics announced several weeks ago, remains low at 4.7 percent. This is well below the 5.7 percent average unemployment rate of the decade of the 1990s.

In addition, our nation's economy has expanded for 17 straight quarters. It grew at a solid rate of 3.5 percent in 2005 — that's the fastest rate of any of the G-7 major industrialized economies. And growth continued — the economy grew 4.8 percent in the first quarter of 2006.

These numbers have translated into real gains for America's workers. More Americans own their own homes than at any time in history. Productivity is high — showing 3.2 percent growth in the first quarter of 2006. Inflation is contained. And the small business sector is thriving.

Compare our country's economic growth with some of the countries of old Europe — like France and Germany. They have permanent unemployment rates near 10 percent. In fact, their long-term unemployment rates are three times that of the U.S. And because job growth is stagnant, young people are facing a lack of opportunity. By contrast, a recent independent survey reports that U.S. college graduates are facing the best job market in recent memory.

But there is an important caveat to the growth in our country. There is a growing skills gap in our country. That is, the mismatch between the new jobs being created and the skills of our nation's workforce. Nearly two-thirds of 18 million new jobs that will be created by 2014 will be in occupations that require some kind of postsecondary education.

Now, postsecondary education doesn't necessarily mean a 4-year college degree. Some of the strongest demand is for workers with 2-year degrees in specialized fields from community colleges. But completing some kind of advanced education is necessary to accessing the good paying new jobs being created.

The Department of Labor has launched several initiatives to help close the skills gap. In 2002 and 2003, the Department launched the High Growth Job Training and Community Based Job Training Initiatives. The first initiative identifies sectors of the economy that are growing, and helps workers get the relevant education and training to access these opportunities. The second initiative expands the capacity of community colleges to provide job training in collaboration with valued partners, such as employers and the workforce investment system.

In his State of the Union Address, President Bush presented his vision for the role of America in a global economy and launched the American Competitiveness Initiative. The initiative is based on the premise that innovation — the creation of new ideas, products and services — is a critical driver of economic growth in the 21st century.

So, the President's American Competitiveness Initiative pledges an additional $136 billion in national resources over the next decade to:

• Increase U.S. investments in research and development;
• Strengthen U.S. education in math and the sciences; and
• Encourage entrepreneurship and innovation.

Strengthening math and science education is very important because the demand for knowledge in the sciences is especially great. Over the next 10 years, for example, there will be more than 6 million new and replacement job openings that require strong math and science skills. The vacancies will occur in engineering, science, computer, health care and technical occupations.

As part of the Competitiveness agenda, this Administration is proposing the creation of Career Advancement Accounts. CAAs, which would be administered by the Labor Department, are modeled after Pell Grants. They would empower workers with up to $3,000 annually to choose the training or education program that suits them best. Accounts could be renewed for an additional year, and would be available to the following people:

• Adults and out-of-school youth entering or re-entering the workforce or transitioning between jobs; or
• Incumbent workers in need of new skills to remain employed or to move up the career ladder.

Career Advancement Accounts would help states to meet their unique economic development needs by giving them greater flexibility.

The Workforce Investment System and community colleges will have an important role to play in providing counseling, assistance and referrals for workers who access these accounts.

Workforce issues are much more important today than they were 20 years ago. For most of the last century, the earnings advantage of holding a 4-year university degree was not as great as it is now. Almost anyone with a high school education could find a job that would allow them to support a family, own a home and build a career.

But today, the gap between these groups is growing. Workers ages 18 and over with a bachelor's degree today earn, on average, about twice that of workers with a high school diploma. Workers with the most advanced degrees make an average of over three times as much as those with a high school diploma.

Unfortunately, the reality of this message is not getting through. High school drop out rates in the United States are shockingly high. About one million high school students per year drop out. And about 30 million Americans read below basic proficiency levels. Another 60 million more read only at the most basic level. Our 15-year-olds rank 24th out of 29 developed nations in math literacy and problem solving. And nearly half of our 17-year-olds don't have the necessary math skills to work as a production worker at a modern auto plant. Our country must reverse these trends if our workforce is to remain competitive in the worldwide economy.

It is also important to instill upon this next generation an appreciation for the opportunity, hope and freedom our Nation provides. We have a duty to help preserve these virtues. So before I close, let me recognize the service of the men and women in our communities who are defending our country abroad in the war on terror.

At a recent Cabinet meeting, President Bush shared with us how important it is to continue to take the battle to the terrorists, so we don't have to fight them here at home. The events of 9/11 demonstrated the absolute necessity of discarding the old paradigm that law enforcement actions could defeat terrorism. Now we know that the terrorists have global ambitions, and it takes the combined power of military, political and economic resources to defeat them.

Our men and women serving in the armed forces and the Reserve and National Guard are a key part of the strategy that is keeping us safe here at home. They are taking the battle to the terrorists, defending forward and depriving those who seek to harm us of resources and sanctuaries.

The Labor Department is the lead agency in protecting the reemployment rights of our citizen soldiers when they return home. For the first time, the Department has codified these in a new regulation that spells out clearly the rights of returning service members and the responsibilities of employers. You can find out more about these new regulations — called the USERRA regulations — by going to www.dol.gov/vets.

Thank you, again, for inviting me to join you today. Now, I will be happy to take your questions.