Secretary Elaine Chao


Helping America Work: Meeting the Challenges of the 21st Century Workforce

Good morning, and welcome to our Summit on the 21st Century Workforce.

I want to thank everyone who is participating today: our panelists, congressional Summit Delegates, representatives of business and labor, and my colleagues at the Department of Labor.

Let me also pay a special welcome to the 14,000 regional Labor Department employees, some of whom are joining us as “virtual attendees” via the Internet. You’re an important part of our team, and we appreciate everything you do.

Now, whenever I go somewhere important, I like to bring a lot of friends with me. So let me introduce you to some of the staff and customers of the Nia One Stop Center in my hometown of Louisville, Kentucky — joining us by satellite hook-up. Welcome to the Summit, Louisville!

I think it’s significant that the president took time out of his busy schedule to be here today. His presence confirms that the 21st century workforce isn’t just a Department of Labor issue; it’s a national issue — and it deserves national attention.
But we shouldn’t just look to our national government for all the answers.

That’s why I wanted to have with us the mayor of our great city, Mayor Anthony Williams. He knows that the workforce issue matters at the local level, too. One of the first questions companies ask, when they are doing site selection, is: What is the local workforce like? What is the skill level?

In a lot of ways, workforce development is synonymous with economic development. It’s about jobs and growth and building the tax base.

Just outside this meeting area, Mayor Williams and I are hosting a 21st Century Job Fair, together with 128 companies from the region. As I see it, this Job Fair is a practical application of what this Summit needs to be about: Helping people connect to better jobs, find a new career path, and improve their lives.

During today’s Summit, you are going to hear a wide variety of opinions. Each one of our speakers brings a vital perspective on America’s workforce. Some of their views will support the Administration’s positions, and some won’t.

We shouldn’t be afraid of our differences, but as the president says, we can disagree without being disagreeable. And in this spirit, we can work to find common ground.

I am pleased to have so many representatives of organized labor at this Summit. In my meetings with union leaders as Secretary of Labor, we are finding a number of issues where there is common ground to strengthen America’s workforce.

For example: Doug McCarron, President of the United Brotherhood of Carpenters and Joiners. Doug and I have talked at length about workforce training as the future of his union.

And Cecil Roberts of the UMW is also here with us. I’ve had similar conversations with him, John Sweeney of the AFL-CIO, and John Wilhelm of the Hotel and Restaurant Employees Union.

But this issue doesn’t just matter to unions. It matters to business as well. It matters to our country.

This Summit was convened for two reasons.

First, America needs a wake-up call about its workforce — because the trends that are impacting it will have huge economic consequences if we don’t act on them.

Second, Washington also needs a wake-up call about the workforce — because the way that America works has fundamentally changed, yet the way that Washington deals with workforce issues has not.

Most of the Labor Department’s activities began prior to the advent of personal computers, 401(k)‘s, widespread use of stock options and the Internet.

That doesn’t mean we should change everything. We still need to protect workers’ safety and health, retirement security, and equal access to jobs and promotions.

But we also need to be open to new and better ways to achieve those goals, taking into account how Americans actually work today.

During today’s Summit, I want us to focus on three issues that will impact our nation’s economic strength in the decades ahead, and shape the quality of life of America’s working families:

  1. The skills gap;
  2. Our demographic destiny; and
  3. The future of the American workplace.

These trends didn’t develop overnight — and they won’t be resolved overnight, either.

So our horizon needs to be farther out than the next appropriations season, farther out even than the next election. That’s a challenge in this town.

But let’s get started: first, with the skills gap.

Throughout most of our lifetimes, the chief economic challenge has been unemployment. But that is changing dramatically.

The economy is still producing thousands of service and technology jobs that go unfilled — even with the recent downturn in the dot-com sector.

That’s because there’s a disconnect between the new jobs that are being created and the current skill level of many people in the workforce.

Signs of this growing skills gap are all around us:
· We see it in the Department of Labor’s monthly unemployment figures — which show a consistent decline in traditional manufacturing jobs, while the demand for highly-skilled workers remains strong.
· We see it in the “digital divide,” which separates this nation into technological “haves” and “have-nots.”
· We see it in the earnings gap between college and high-school graduates, which has grown from a 38 percent gap in 1979 to over 70 percent today.

Right now, the unemployment rate for a high-school dropout is four times the rate for college graduates.

Our economy is making a huge transition into high-skilled, information-based industries.

If our workforce isn’t ready, then the “macro” effect will be a lower GDP and lost productivity.

But we should also be concerned about the “micro” impact of the skills gap — the effect on people who work so hard in a job for years, only to lose it and find that the economy has passed them by.

This cuts at the hope that lies at the heart of the American dream — the belief that honest hard work will always open doors of opportunity.

How can we build the skills to affirm that hope?

First, through education — through reforms that replace a culture of complacency with a culture of challenge.

It’s no accident that our Summit will conclude with the Secretary of Education — because our schools will ultimately decide whether America can successfully overcome the skills gap.

But the Department of Labor has a role to play role as well. Secretary Paige and I have talked about how our departments can work more closely together.

And I urge you to stay around… in case we announce something about our plans.

Our training programs should be “venture capital for the 21st century workforce” — offering hope to workers that the private sector hasn’t reached out to yet.

There’s a second issue I’ve mentioned that we must address: Our demographic destiny.

Americans today are living longer and spending less of their lives working. We are having fewer children than ever before. Our birthrate has been below the “replacement rate” for a quarter of a century.

The net effect is what I call “the incredible shrinking workforce” — the advent of an unprecedented labor shortage.

If we fail to respond to this issue, the results could be disastrous: high labor costs driving up inflation. Shortages of time-intensive services like personal health care.

In just a few decades, our demographic destiny will leave us with a ballooning class of retirees — all relying on expensive entitlement programs — and a shrinking class of workers who are paying the taxes to fund those programs.

At that point, it won’t just be an economic problem, it will be a political one as well.

To me, the solution is fairly obvious. America — the land of opportunity — will need to open those doors of opportunity even wider than they are today.

In fact, there may well be a silver lining to America’s labor shortage: Necessity is going to make us a nation open to the talents of all our people — including those who have been left out of the workforce up to now.

Our department, the Department of Labor, just announced five new grant initiatives, totaling over $10 million, to reach out to disabled Americans and bring them into our economic mainstream.

On July 26, the 11th anniversary of the Americans with Disabilities Act, we will convene the President’s Task Force on Employment of Adults with Disabilities to begin laying the groundwork for the New Freedom Initiative.

This Initiative embodies President Bush’s vision of harnessing technology to open the doors of the workplaces to the disabled.

We also need to push further to make our workplaces free of discrimination on the basis of race, gender, color, ethnicity or disability. Our laws say that employers must do it; and the coming labor shortage means that employers need to do it.
There’s another source of experienced labor we need to tap into: older workers.

Some employers encourage older workers to retire early. But in the next ten years, the opposite will happen: employers will bend over backwards to keep seniors on the job longer, offering flexible work arrangements.

We need to develop the concept of phased retirement — letting seniors gradually transition from full-time to part-time work, while giving them partial access to pension benefits.

And speaking as an immigrant, it is exciting to see our nation opening its doors a little wider to people who want to come here and work, who want to raise their families here, who want to share in the pride of saying they too are Americans.
Our growing labor shortage will make us take a fresh look at immigration — because the immigrant’s hope is closely entwined with America’s need.

Finally, we need to respond to the trends that are changing the American workplace.

Anyone can tell you that this isn’t our parents’ economy.

Consider this:
· The average 32-year-old has already worked for nine different companies in his or her brief career.
· Around 10 million people work away from their corporate office at least three days a month — twice as many as eight years ago.
· And almost half of these corporate nomads have been with their current employer for two years or less. We’re not just spending less time with each employer.

We’re also spending less time at home.

The average mother and father now spend a stunning 22 hours less with their children each week than their own parents did.

More than 40 percent of all families have two wage-earners working outside the home.

As people sort out the priorities of financial needs and family life, they all face the same concerns:

A career move that leaves behind health care coverage… abandoning pension benefits before they are vested… renegotiating with each new employer the balance between work and home.

This is what America talks about when it sits around the kitchen table. That’s why I think it should at least be part of the discussion at this Summit.

Some say that the answer to these three “macro” issues I have raised is more government regulation. Others say the answer is actually less regulation.

Maybe we should put it to a vote.

My own view is that the answer doesn’t start with legislation and regulation. It starts with leadership.

That’s why it was so important to have President Bush here today—demonstrating his concern for our workforce, and for the individual workers who make up that workforce.

And I appreciate your being here as well. Whether you are here as a presenter or as a listener, you too are demonstrating the leadership and concern that will be needed to prepare America’s workforce for the 21st century.

Thank you. Let’s get going.