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Remarks Delivered by
U.S. Secretary of Labor Elaine L. Chao
New Jersey Chamber of Commerce
Bergen County, New Jersey
Monday, August 28, 2006
Thank you, Congressman Garrett [Representative Scott Garrett, R-NJ, 5th Congressional District].
I am delighted to join members of the New Jersey Chamber today here in the great Garden State.
Today, New Jersey is at the center of an economic transition taking place as our nation becomes part of a worldwide economy and transitions to a knowledge-based economy. Some countries are in a race to the bottom, competing fiercely to secure the lowest skilled, lowest paid jobs in the world for their citizens. That is not where our country's economic future lies. It is not where New Jersey's future lies. We want to attract and create the highest skilled, highest paid jobs in the world for America's — and New Jersey's — workers.
But to realize this goal, we must ensure that our nation's workers remain among the most productive and skilled in the world. And we must ensure that our nation remains a leader in innovation, which creates the new products and services that create new jobs.
So this afternoon, let me share with you some thoughts about these challenges, and why it is critical for employers and workers to join together to strengthen our nation's competitiveness.
Let me start with a brief snapshot of our country's economic progress. The national unemployment rate for July was a low 4.8 percent. To put that in historical perspective, that's lower than the average 5.7 percent unemployment rate of the 1990s.
Regionally, the Bergen area's unemployment numbers were 4.2 percent in June of 2006, which is well below the national average.
New Jersey's unemployment is somewhat higher than the national average and stood at 5.1 percent in July, but that is still more than a full point lower than its average during the 1990s of 6.2 percent.
Overall, the U.S. economy is one of the most vibrant of all industrialized nations. Real GDP grew at a healthy 3.5 percent over the past four quarters. Our economy continued to post solid gains in July, which was the 35th consecutive month of net job growth. In fact, 5.5 million net new jobs have been created since August 2003. Contrast this with Europe where job growth has been half that of the United States and where two major economies — Germany and France — have unemployment rates nearly double that of the U.S., and long-term unemployment rates triple that of the U.S.
This economic performance is due, in part, to the flexibility and productivity of our nation's workforce. It is also due to our nation's ability to adapt, innovate and create new products and services. And President Bush has helped to create the climate for growth by reducing the over-taxation, excessive regulation and abusive litigation that hinder growth and job creation.
But new worldwide trends are emerging that require us to draw upon and reinforce these strengths even more. Our country is transitioning to a knowledge-based economy. This transition has created millions of new jobs in industries that did not even exist a generation ago. These industries provide high-value, high-paying jobs and demand workers with higher skills and more education.
Nearly two-thirds of the estimated 18 million new jobs created in the next 10 years will be in occupations that require some kind of higher education. Now this doesn't necessarily mean a 4-year college degree. It can be a 2-year degree from a community college or specialized training. That includes apprenticeships, which combine classroom and on-the-job training. In fact, apprenticeship programs are wonderful opportunities for workers to get highly marketable skills and invest in their futures.
In addition, some of the strongest demand is for workers with 2-year degrees or professional certificates from community colleges. But it is clear that completing some form of higher education is critical to building solid, sustainable career paths for our nation's workers.
This is good news for the Garden State, which is home to some of the finest universities and community colleges in the nation.
President George W. Bush has announced programs to build on these assets. One of these is the High Growth Job Training Initiative. It brings together government, employers and education providers to implement industry-identified strategies that offer solutions to workforce challenges.
$4 million has been awarded under the High Growth Job Training Initiative to programs with New Jersey participants, including:
- A $1,000,000 grant to the International Association of Jewish Vocational Services to recruit and train individuals with disabilities for financial services. A pilot site will be set up in New Jersey. It was announced on July 18, 2006.
- A $2,815,000 grant to the National Retail Federation Foundation, which is working with the Customer Service Skills Center partnership in Jersey City. They created the Institute for Service Excellence, which is being operated by Atlantic Cape Community College.
The Department has also provided a $1,608,948 Community-Based Job Training Grant to Passaic County Community College for "Skills that Work: Enhanced Preparation for Health Care Workers." It was announced on October 19, 2005.
But the President realizes that more needs to be done. That's why President Bush has also announced the American Competitiveness Initiative. This initiative pledges $136 billion in additional 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.
While helping workers access higher education is critical to our nation's future, it is important to recognize another changing dynamic. Regional — rather than local — economies are increasingly becoming the key players in our nation's economic development.
New Jersey is a perfect example of a state that is organized around regional economies. Parts of the state are heavily incorporated in the New York City regional economy. Others are part of the region are clustered around Philadelphia. The Garden State can benefit greatly by — to paraphrase a bumper sticker — acting locally, but thinking regionally.
This is the framework for the Department's newest initiative, Workforce Innovations in Regional Economic Development, or WIRED. As part of this initiative, I recently announced the investment of nearly $200 million in 13 regional economies across the country. WIRED brings employers, labor organizations, education providers, researchers, entrepreneurs and others together to develop a consensus on a regional economic strategy.
While we strongly believe that this investment can bring transformation to these economies and the systems and structures that support them, the Department also recognizes that thirteen regions is a small number. So a second phase of the WIRED Initiative has been launched.
The Department invited thirteen additional regions to participate in the WIRED framework as WIRED Virtual Regions. They are invited to the WIRED quarterly meetings and have access to all the products created for the initiative. In addition they will work with experts specially chosen by the Department to help participants implement the WITED initiative. In addition, each group received $100,000 planning grants about 4 months ago to help them with this process.
New Jersey's Northeast Regional Economic Innovation Alliance (NREIA) has been named one of the new WIRED Virtual Regions. It seeks to revitalize urban areas such as Newark, by encouraging development of health services, life sciences, transportation and logistics, and advanced manufacturing. A NREIA study found that these industries — if given the proper attention and resources — could potentially produce high-growth jobs and add more than 130,500 jobs to the Northern New Jersey region over the next 10 years.
Finally, let me discuss another proposal that is a great concern and a great challenge to all of you.
As you know, healthcare costs are a challenge for workers, for employers, and for the state. The President is working to address these rising costs, strengthen the doctor/patient relationship, and help people afford the health insurance coverage they need.
The President supports efforts to give small and medium sized employers access to affordable, quality health care through Association Health Plans.
Small employers currently pay as much as 30 percent more than large employers for similar health benefits. By allowing small and medium size employers to pool their buying power and spread their risk, AHPs will put them on an equal footing with large corporations and unions. That means healthcare cost stability for small- and medium-sized employers. And it means better healthcare for America's working families.
Let me also mention another important challenge for workers today — retirement security. On August 17, 2006, President Bush singed into law the "Pension Protection Act of 2006." This legislation helps ensure that the retirement security promises made to workers are promises kept.
This law accomplishes the objectives of the President's pension reform proposals, which I outlined in a speech at the National Press Club in January 2005. Among the many benefits of the new law:
- Increases workers' access to investment advice and gives them more information about their plans;
- Requires employers to fully fund their pension promises;
- Takes steps to meet the long-term funding needs of the Pension Benefit Guaranty Corporation (PBGC).
- Makes permanent the retirement savings provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001.
This is good for workers and good for retirees, and I want to commend Congressman Garrett for the vital role he played in securing passage of this important legislation.
So thank you for inviting me here today and for everything you are doing to create opportunity for so many in New Jersey.
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