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Remarks Delivered by
U.S. Secretary of Labor Elaine L. Chao
Labor and Human Rights Officers Joint Training Conference
U.S. Department of State
Washington, D.C.
Wednesday, July 19, 2006
Thank you, Barry [Lowenkron, Assistant Secretary of State for Democracy, Human Rights and Labor] for inviting me to share some thoughts with this group.
First I want to say thank you for what you do on behalf of our country. You represent America overseas and this role is more important than ever before.
I am especially cognizant of how America is perceived overseas because I am not a native-born American.
As some of you know, I was born in Taipei, Taiwan, in the 1950's when that island was just recovering from civil war and developing its own economy.
I don't know if you realize what a large swath you cut when you go to a foreign country, as a representative of the United States.
I remember as a child, growing up in Taipei, never meeting a westerner or an American of any color. Americans were people who hailed from a safe, stable, secure country. America is the prosperous country where opportunity and freedom abounded.
It is difficult to describe in words the intangible feeling of awe and admiration that we felt for America's might, and also for America's potential and promise of opportunity for all.
As a child, even catching sight of the American government's compound conjured up visions of a powerful nation of affluence and opportunity.
As our country's representatives, your individual contacts have impact. The policies you implement have impact. Your actions have impact.
That's why I appreciate this chance to chat with you about the President's Freedom Agenda, and how labor and human rights officers can help spread progress, hope and opportunity.
A key element of that agenda is fostering the conditions for economic growth and job creation worldwide.
But as you know, creating the framework for sustainable growth is much more complicated than in the past. Global competition and information technology have increased both the rate and intensity of change. So, successful economic strategies of the 21st century must focus on the ability to constantly evolve and adapt. And the United States is in a good position to help others meet this challenge, because that has been a singular strength of the American experience.
As one prominent columnist noted, Americans have always shown a willingness to adapt to change, even when it's unpleasant.
When the United States was founded, for example, nearly our entire workforce was employed in agriculture. Today, only about 2 percent of the American workforce is in agriculture. And yet, America produces enough food to feed the world.
This positive correlation between change and increased productivity has been a powerful historical advantage. The high productivity of our workforce is largely responsible for America's high standard of living. And the balance our country has achieved between worker protections and workforce flexibility is critical to our nation's economic strength.
To give you an idea of the level of flexibility in the American economy, consider this:
Last year about 54 million Americans left their jobs and more than 54 million American found new ones, largely because of better opportunities. This means that more than a third of the total number of payroll jobs in the United States turned over. Here's another interesting statistic: the average American worker will have had 10 jobs by the time he or she is 38 years old.
This level of flexibility is made possible by robust growth and job creation.
Our nation's economy grew 5.6 percent in the first quarter of 2006. It has seen 34 straight months of job growth, for a total of 5.4 million new jobs created since August 2003. And the national unemployment rate is 4.6 percent, more than a point lower than the 5.7 percent average unemployment rate of the 1990s.
For a comparison, look at other mature industrialized economies of equivalent size. For example, France and Germany had 1.5 percent and 2.1 percent growth rates, respectively, in the first quarter of 2006. They also have persistent unemployment rates nearly double that of the U.S.
Another trend worth noting is that today, about 12.5 percent of wage and salary workers in the U.S. are union members — down from 20.1 percent in 1983. If the government sector is excluded, about 7.8 percent of the private-sector workforce belongs to unions.
This trend reflects the fact that our nation is transitioning to a knowledge-based economy. The lines between labor and management have blurred. More and more people work away from the office in flexible environments connected by little more than a laptop, a cell phone and a BlackBerry. Technology has changed the expectations of workers, who are demanding more customized flexibility in the workplace.
Higher education and skills are at a premium and command the highest wages. In fact, the majority of new jobs being created in our country are in occupations that pay above-average wages. That is where our country's economic future lies.
I've shared these details about the American economy because they might be helpful in public diplomacy efforts. In my own travels abroad, I have found that there is a lot of misunderstanding about how our economy works and how well it serves workers.
Many people do not realize that our nation offers a generous safety net for workers. For example, workers who lose their jobs because of trade may be entitled to up to 104 weeks of direct income support, job search and relocation allowances, health insurance tax credit, job training and other services. And trade impacted workers over 50 years of age who return to lower-paying employment may also have the option of receiving wage insurance. But our system also recognizes that in today's rapidly changing worldwide economy, the best help for a displaced worker is a new job.
So now, let me address the larger mission of transformational diplomacy. How can our country use its experiences to benefit the workers of other countries and build prosperous, free societies?
While each country is different, I believe there are fundamental principles that can benefit everyone. And key among them is the flexibility to adapt to the rapidly changing conditions of the 21st century global economy.
Rigid workforce rules and structures can cripple an economy's ability to create new jobs and hamper the ability of workers to access new opportunities. The result can be especially harmful to young people, as we have seen recently in some developed countries.
Another fundamental principle associated with growing economies is the link between job creation and economic growth. I never thought this was a controversial idea — until I attended a worldwide meeting of economic leaders this past winter, where this proposition was hotly debated! But I believe history shows that it is impossible to have real, sustainable job creation without economic growth.
And there is also some confusion about who is responsible for creating jobs — the government or the private sector? This Administration believes that the private sector creates jobs, and the role of the government is to create the conditions for growth. The President has emphasized this over and over again, especially to countries undergoing difficult transitions to market economies.
So, what are some of the government policies that create the climate for growth and jobs?
Well, accountability and transparency are fundamental. They are key to developing public trust, which is necessary in building a stable, prosperous society. Accountability and transparency are essential for all institutions, public, private and non-profit.
The rule of law that protects fundamental freedoms is also a key building block of prosperity. It allows workers grievances to be addressed fairly through mediation or collective bargaining or other mechanisms. And it creates the framework to reward individual achievement by protecting intellectual and other property rights. Intellectual property rights are critical to spurring innovation, which creates the knowledge, products and services that create new jobs.
Another critical foundation of prosperity is small business development. This means fostering a regulatory environment that makes it easy for individuals to launch small businesses, and a tax system that allows them to keep the fruits of their hard work. You may be interested to know that small business growth is important for both mature and developing economies. In the United States, for example, 65 percent of the new jobs created in the last several years have been created by enterprises with fewer than 500 employees.
Keeping taxes low on labor is also critical to creating the climate for job growth. The OECD measures how much an average employer and employee pays out in social security and income taxes. Among the major industrialized nations, Germany has the highest tax on labor — 51 percent of total labor costs. The United States was among the lowest — 29 percent. It's not surprising, therefore, that over the last couple of years, job growth in the U.S. has outpaced the European Union and Japan combined.
These are just a few of the strategies that can help to foster opportunity for workers and growth around the world. Flexibility, transparency, accountability and the rule of law are especially important because they provide a nexus between economic and political freedoms. All of these elements work together to strengthen the foundations of democracy, opportunity and prosperity.
So, let me finish by thanking you for all that you do for our country. By helping workers and employers, you are strengthening the foundations of freedom worldwide. And by spreading hope and opportunity, you are ensuring that the 21st century will be safer, more secure and prosperous.
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