Secretary of Labor Thomas E. Perez
Secretary of Labor Thomas E. Perez,
The City Club of Cleveland,
August 21, 2014
[as prepared for delivery]
Good afternoon. Thank you, Steve, for that kind introduction, for your great friendship and for your incredible service to this community as U.S. Attorney for the Northern District of Ohio. Steve and I go back a ways we've been a lot of foxholes together and he is one of the finest prosecutors I've had the privilege of working with.
Thank you all for coming out today. It's such an honor to speak to an esteemed forum like the City Club, a "citadel of free speech" for more than a century. And it's an honor to be in Cleveland, a city with a rich industrial past, a place whose calloused hands build American prosperity in the 20th century. My roots aren't far from here, in Buffalo my parents moved there because they heard it had the same weather as the Dominican Republic another proud, gritty place that's had its share of hard knocks and keeps bouncing back.
In a new, 21st century economy, Cleveland is answering the bell with an increasingly diversified job base that includes a strong health care industry and a deep reservoir of human capital. This is not your father's Cleveland. I was just reading the other day in the Plain-Dealer about Cleveland's "brain gain" as this area's young adult workforce ranks among the most skilled in the nation.
The bottom line: Cleveland is a place you want to be. Just ask a certain native son he's quite a good basketball player, I hear who just decided to return home after a few years in South Florida.
After just over a year on the job, and as we approach Labor Day, I thought it was time to go around the country and have a conversation about where we've been and where we're headed... our accomplishments of late and also our unfinished business.
We've Come a Long Way...
As President Obama prepared to take office, we were on the ropes. The nation was hemorrhaging jobs roughly 2 million jobs lost in the last three months of 2008 alone. Businesses were shuttering. Families were going bankrupt. We were taking it on the chin.
But gradually and painstakingly, we've pushed the car out of the ditch. Thanks to the grit of our people, the ingenuity of our businesses and the leadership of the Obama administration and our state, local and non-profit partners, we've emerged from the worst economic crisis of our lifetimes.
July was the sixth straight month of job growth north of 200,000 the first time that's happened since 1997. All told, we've added just shy of 10 million private sector jobs since February 2010. That's 53 straight months of private-sector job growth, the longest streak on record. Last June, the unemployment rate was 7.5 percent. Today it's 6.2 percent nationally and 5.7 percent here in Ohio.
Last week, the Labor Department's Bureau of Labor Statistics reported that there are more job openings than there have been since February 2001 only two unemployed people for every vacancy, compared to a nearly 7-to-1 ratio during the depths of the Great Recession. Consumer confidence is at its highest level since October 2007.
Manufacturing is back we're making things in America again. America's manufacturers lost 3.4 million jobs in the seven years before the recession and another 2 million jobs during the recession. But now, manufacturing is growing faster than at any point in the last 15 years 707,000 new manufacturing jobs created since early 2010. And the manufacturing renaissance in Ohio has been even more dramatic than in the nation as a whole.
The Obama administration has taken strong steps to catalyze this growth. We've invested hundreds of millions of dollars in regional manufacturing innovation hubs, bringing together private sector leaders and universities to do cooperative research, develop cutting-edge technology, train workers to use that technology, and make sure research is turned into real-world products made by American workers. The pilot hub was in Youngstown. We've since added three more in Chicago, Detroit and Raleigh with four more to come.
Everywhere I go, I meet with employers who are more bullish about the future than they've been in years and who are looking to invest in American communities again. Outsourcing is out and insourcing is in. A study by the Boston Consulting Group concluded that insourcing from China will generate at least $80 billion in manufacturing revenue over the next several years, creating more than 2 million jobs.
In Detroit, I met a woman named Andra Rush, a businesswoman of Native America origin who is CEO of Detroit Manufacturing Systems. She's deeply committed to the economic renewal of the city of Detroit. Hers was the first manufacturing company to relocate to the city in 20 years. When she got a contract to assemble dashboard consoles for Ford and needed to fill several hundred jobs right away, she turned to the local Labor Department-run American Job Center. We helped her find the people she needed, many of whom who had been down on their luck but just needed an opportunity.
Across the board, so much of the data is trending in the right direction.
We've made huge strides in energy independence. For the first time in 20 years, the U.S. is producing more oil at home than it imports from abroad. Natural gas production is on pace to reach a record high this year, and we have passed Saudi Arabia and Russia to become the world's leading source of petroleum and natural gas.
Our high school graduation rate is at a record high. More young people are earning their college degrees than ever before. The Latino dropout rate was cut in half between 2000 and 2011, with the number of Latinos pursuing higher education on the rise.
And thanks to the Affordable Care Act, health care costs been tamed and families finally have the peace of mind of knowing they won't have their savings wiped out by an injury or illness. 154,000 Ohioans enrolled in a plan through the Health Insurance Marketplace, and another 292,000 gained coverage through Medicaid or the Children's Health Insurance Program.
I had an extraordinary experience here in Cleveland a few months ago at a MetroHealth hospital. I met a little baby she was a triplet and she was born premature weighing about 1 pound. She spent almost a year in neo-natal intensive care, but she made it. And when I met her, she was finally going home. The medical care she required cost over a million dollars. Under the old health care system, her family would have faced crushing debt. But because the Affordable Care Act eliminated lifetime limits that insurance companies used to impose, her family won't go bankrupt just because they wanted to keep their little girl alive.
...But There's More Still To Do
But despite the resurgent economy, despite all the cause for optimism, there are undeniable storm clouds to contend with. There's more to do if we're going to have a nation truly built on opportunity for all.
For too many people, the recovery feels like little more than an abstraction. Too many of them are on the outside looking in at the American Dream. Too many job seekers are still on the sidelines. Because of stagnant wages, too many people are working harder but falling further behind. The challenge before us is to restore the basic bargain that's always defined America if you work hard and take responsibility, you'll have a chance to succeed. We have to pick up the pace of growth and make sure the rising tide lifts all boats in a meaningful way.
Let's look at the long-term unemployed, for example. Of all the issues I face as Labor Secretary, this is the one that keeps me up at night. The numbers are staggering and virtually unprecedented: there are 3.1 million people who've been out of work for 27 weeks or more, and they account for about one-third of the total number of unemployed.
And if you think the statistics are alarming, the personal stories are really a kick in the gut. I'm still pen pals with one woman I met, a single mother of two sons who are both in the military. She wore a hat and a coat around the house last winter because she couldn't afford to turn the thermostat above 58 degrees. She told me that being jobless for more than a year had left her with a "poverty of spirit."
I met a veteran who's been unemployed for two years after 31 years of IT experience and two tours in Iraq. He developed huge infrastructure projects in war-torn regions of the world, but now he's living with his wife and three daughters in a 275-square-foot camper.
Their stories are heartbreaking, and at the same time their resilience is inspiring. They're diligent and determined. They're not looking for a free ride, just a fair chance. One man right here in Cleveland told me: "I've got no quit in me." So we can't quit on him.
Just this morning, I had a follow-up visit with three local unemployed workers that I first met when I was here back in March. One has 25-plus years of experience in corporate real estate; another has an MBA. But they're still having a hard time getting back on their feet. These folks don't lack intelligence or virtue or strength of character; they were just in the wrong place at the wrong time. There but for the grace of God go any of us.
The president and my department are confronting this challenge head-on. We'll be announcing the grant winners soon for a program called Ready-to-Work, which promotes strategies and best practices for the hiring of more long-term unemployed.
It's not just that these folks need our help; it's that we need them back in the game. We're all stronger when America fields a full team. These are skilled, talented people with an important contribution to make to the economy. And we don't have a person to spare.
Helping the long-term unemployed is just one piece of unfinished business. We also have to take the necessary steps to ensure that we reward hard work with fair pay. That starts with raising the federal minimum wage to $10.10 per hour, a step that would make a difference in the lives of more than a million Ohioans.
No one who works full-time in America should have to raise their family in poverty. No one should have to lay awake at night, gripped with anxiety about whether they're going to buy a gallon of gas or a gallon of milk because they can't afford both.
The old conventional wisdom is that the business community thinks the minimum wage is a job-killer and opposes it universally. But in fact, more than three in five small businesses agree with the president that we ought to raise it to $10.10 an hour. They know it's the right thing to do for their workers and the smart thing to do for their own bottom lines. They know that well-compensated employees are more productive employees. They know that higher wages reduce turnover and training costs.
What businesses need more than anything, in an economy driven by consumer demand, are customers. When we give working people a raise, they pump it right back into the economy, spending it on goods and services in their communities. And that helps more businesses grow, which creates more jobs.
We have to do more to address stubborn opportunity gaps that persist. Here's a staggering statistic: in 1950, the share of African-American youth with a job was 65.2 percent; today it's down to 37.3 percent. The President's My Brother's Keeper initiative is designed to address this crisis to help young men and boys of color find pathways to success. We must do more to empower populations that haven't been given the opportunity to maximize their economic potential not just African-Americans but also veterans, people with disabilities, ex-offenders and more.
The biggest private employer in my home state of Maryland is Johns Hopkins University. And do you know who is Maryland's most prolific employer of people who have been through the criminal justice system? Also Johns Hopkins University. And if they were here, the Johns Hopkins leadership would tell you that this isn't charity; it's enlightened self-interest. Because ex-offenders are hungry for opportunity and are some of the most motivated and passionate employees he has.
I believe we have some folks from the local Job Corps Center here today, so I want to give a shout-out to that program, run by the Labor Department, which is celebrating its 50th anniversary this week. Job Corps is an extraordinary program, a crown jewel of the War on Poverty. It takes disadvantaged, at-risk youth young people who have big dreams but who have been dealt a tough hand or failed by the education system. And in a disciplined, residential setting, Job Corps teaches them the skills both job skills and life skills that will allow them to rise above their circumstances and succeed.
We all benefit when opportunity expands and participation increases, when more people are paying taxes and contributing to the economy. That's just one of the reasons this administration has fought so hard to fix our broken immigration system. It's a moral imperative, but also an economic imperative. Comprehensive immigration reform would reduce the deficit by $850 billion and grow the economy by $1.4 trillion over the next two decades.
Consider the implications for Social Security. With an aging population, with more Baby Boomers retiring every year, the number of workers per Social Security recipient is shrinking. Bringing more people out of the shadows and into the mainstream economy will help address that problem. Immigration reform specifically would extend the solvency of the Social Security Trust Fund by two years and reduce the 75-year shortfall by nearly half a trillion dollars.
One way to grow wages and strengthen the middle class is to make sure people have the skills to compete for the jobs of today and tomorrow. That's the guts of our work at the Labor Department. We are the quarterback of a workforce system that serves millions of people a year. But we're not just a resource for job-seekers; businesses are our clients as well. I think of the system as being kind of like Match.com, helping workers and employers make a connection with just the right chemistry.
All over the country, I meet with employers who are ready and eager to grow and expand. But what they need is a steady pipeline of skilled workers that will make that growth possible.
Putting together a skills agenda that serves workers and businesses is a tougher proposition than it used to be. In my parents' generation, you could punch your ticket to the middle class with a 10th grade education. Today, we need to be more aggressive and innovative about workforce development.
Fortunately and, let's face it, you can't say this about a lot of issues there's some bipartisan consensus in Washington around this. Last month, the president signed the Workforce Innovation and Opportunity Act, which passed with overwhelming majorities in the House and Senate, by far the most significant reform of federal job training programs in more than 15 years.
WIOA reinforces the principles that we are applying to workforce development. First of all, it has to be demand-driven, industry-driven, job-driven. The key is engagement and partnership with the business community. It stands to reason: if you want to create jobs, you've got to talk to the job creators.
Otherwise, you're doing what I call "train and pray" train someone to be a widget-maker and then pray that some company out there has widget-making positions available. Don't get me wrong I'm all for prayer. But when it comes to workforce development, I'm all about data and empiricism.
We are implementing regional strategies and sector strategies. More than ever before, you see companies in the same industry technically competitors working together on workforce development because it's to their mutual benefit.
We're making strategic investments in high schools to build the next generation of middle-skill talent, particularly in the STEM fields. I was with Education Secretary Arne Duncan a few weeks ago in Toledo, where we've awarded a $3.8 million grant part of our Youth CareerConnect program to support the school system's efforts to give students hands-on training in things like plastics technologies and computer-automated design. This is an entirely different conception of the high school experience a whole lot more than the Three R's. And what makes the program truly successful, again, is partnership with local job creators. The school works closely with employers so that students have industry-recognized credentials and certification. Plus, students can earn advanced credit at local two- and four-year colleges.
Speaking of which... community colleges are incubators of opportunity and innovation the secret sauce of workforce development and the partnerships we're building with them are unprecedented. This year, we will make the fourth installment in a nearly $2 billion federal investment in community colleges and their capacity to build a pipeline of skilled workers.
I was with President Obama last month at a community college in Los Angeles that led the consortium receiving one of these grants for their programs that train people for health care careers. Before receiving the award, though, the eight community colleges in Los Angeles had never collaborated on curriculum development. Nor had they done effective outreach to local employers their work was totally de-linked from the competency and demand needs of the people who actually are looking to hire nurses or x-ray techs. But the grant has catalyzed a dynamic partnership that has industry involved in designing the programs and the different campuses working together more seamlessly.
We are also elevating successful models like apprenticeship a time-honored strategy that we are repurposing for the 21st century. We can and must expand apprenticeships beyond construction and other trades it's traditionally associated with. There's no reason this kind of work-based learning can't be successful in IT, health care, energy, cybersecurity and advanced manufacturing.
If apprenticeship works for plumbers and pipefitters, why not for computer programmers? Learn while you earn, training by doing the apprenticeship paradigm is really based on common sense. Take it from an attorney. I never did understand the law school model, where they crush your soul with lectures in torts and then just send you out into the world to be a lawyer.
There's a lot of untapped potential here. And the challenge isn't just a policymaking challenge. We have an outreach challenge too. In Germany, for example, when you reach that fork in the road at the age of 18... you can either go on to university or pursue the apprenticeship track... and both options have equal stature. But when I talk to families in the United States about this, they say: my kid's going to college. We need to let them know that a bachelor's degree isn't the only path to economic security.
So I come to you today with an unrelenting sense of optimism. As I travel the country, I see workers, employers, elected officials, labor unions, the non-profit sector and others rallying around shared values as never before.
Ironically, while there's all this divisiveness in Washington, my observation is that consensus and cooperation are increasingly ruling the day in communities nationwide. There's a recognition that we all succeed when we all succeed. More and more, people are thinking long-term instead of seeking the quick fix that feels good today. More and more, they're rejecting the false choices of the past like the idea that protecting corporate or shareholder interests has to come at the expense of workers' interests. Nonsense, we can do both.
At the end of the day, it's not a zero-sum game. We really are all in this together. Blowing out your neighbor's candle won't make yours shine any brighter. That's not idealism. That's a pragmatic philosophy for building a 21st century economy that works for everyone. And I look forward in the coming years to building it in partnership with you. Thank you very much.