Emily Stover DeRocco Speech
Penn State Higher Education Economic Summit
State College, PA
December 5, 2005
Thank you, Craig. It is great to be back among so many friends at a place I called home for three years. And it is wonderful seeing the pride and spirit of the school so renewed by Joe Pa and our Orange Bowl-bound boys. What a tremendous season!
While football may be the talk of the town, it is economic development that has brought all of you here today. Craig tells me that this is the first conference in the country focused on the role of higher education in economic development. I am proud that it is being held here at my alma mater, but I also hope that many other schools and regions across the country imitate it because education is now fundamental to economic development and growth.
For many years economic development was always synonymous with targeted tax breaks. Cities and regions would design incentive packages to entice companies to locate operations in their area.
In the relatively static, national economy of the 20th century, this type of tactical economic development was effective. But the world has changed. We now find ourselves in an international economy where we are no longer competing against one another, but against countries from across the globe.
And this new economy requires a new strategic approach to economic development. It means that we must establish, through policy and actions, the conditions that best encourage innovation, entrepreneurship, and economic growth.
The Council on Competitiveness, in their groundbreaking report Innovate America, identified the three key areas needed for economic growth. The first is infrastructure. Do regions have the transportation system to support a robust economy and do they have the technology assets required to succeed?
The second is investment. Is the capital available to support the risk required in today’s economy? Are the government’s policies designed to encourage capital risk-taking or restrict it?
Together, these two areas have traditionally provided the basic tools required for economic development. But today, we must add a third pillar: talent development. The tremendous advances in communications, travel, and trade, together with the emergence of Asia as an economic power, have changed the nature of our economy.
The low skill, rules-based jobs that provided a living for so many millions of Americans are disappearing or leaving our shores. And in their place, new, higher skill, specialized jobs are being created. Companies now need a steady supply of workers capable of filling these new high skill positions and many use the availability of those talented workers as a determining factor in where to locate their operations.
This changing economy is reflected in employment projections, which showed that over 90% of the fastest growing jobs will require post-secondary education and training and 76% will require a college degree.
If the answer to economic development and growth is greater education, the question still remains how we integrate our education and training systems into the region’s and nation’s economic strategy and how we make those systems, affordable, accessible, and accountable.
The Secretary of Education, Margaret Spellings, recently created the Commission on the Future of Higher Education to explore exactly these issues. I have the pleasure of serving on this Commission and I believe that some of the policy questions that we are considering are instructive for the future direction of education and its role within economic development. For instance:
- How do we promote collaboration between industry leaders and educators in order to align education strategies with the restructuring of the work environment? The speed of change and a company’s ability to adapt are among of the defining characteristics of today’s economy. By collaborating with businesses, faculty can stay abreast of the latest business developments, thereby better preparing students for the business world.
- How do we adjust our education system to respond to the increasing number of adult learners, transitioning workers, and career changers? As the economy and the jobs it creates grow more complex, individuals are returning to school to learn the skills required in these new jobs. Community colleges have been at the forefront of serving these new students through flexible scheduling and certificate and other non-degree program options.
- How can we use innovative funding mechanisms for lifelong learners? While many grants, loans and tax credits exist to help traditional students pursue higher education, additional mechanisms are needed. We at the Labor Department are already piloting different types of individual accounts and we are hoping to expand their use in the future. And,
- How does higher education remain a key player in regional economic development? When you think of some of the hot spots in today’s economy, Silicon Valley, Boston, the Research Triangle, you usually find several universities near-by where technologies were developed and incubated. Right here, Penn State has the beginnings of a burgeoning nanotech cluster driven by the university’s research.
While this Commission and groups from around the country study the ways to transform our education system, we at the Labor Department have sought to bring change to another education resource--the nation’s $15 billion public workforce system.
This system was created back in 1933 as one of the many New Deal programs, and, in too many areas, it still reflects its roots as a social services program. For example, the process of helping an individual is still more important than the results of our services. This is evident from the language of the law, which describes in painstaking detail how and in what order services should be delivered.
This situation leads rather naturally to a system where employers are regarded merely as the end of the process rather than customers or even partners. This mentality must be overcome if the public’s investment in talent development has any chance of showing a positive return.
The Administration has moved to reform the system by creating the High Growth Job Training Initiative. By partnering with employers and engaging educational institutions, the High Growth Initiative hopes to demonstrate to our system how to put employers back in charge of talent development.
