Emily Stover DeRocco Speech
National Association of Workforce Boards
February 28, 2006
Washington, DC
Thank you, Len, and good morning to all of you. I am happy to be back for my annual visit. There have been lots of exciting events since we last met, but before getting to them, I always believe it is important to put events into context.
This past April, New York Times columnist Tom Friedman published a book that has given shape to the process we have known as globalization. And that shape is flat. It is not the same flatness thought by those who mocked Christopher Columbus though. Instead, it is a world without barriers, without the obstacles that used to impede commerce and trade.
Information, goods, and services now travel freely around the world in real-time. Companies and industries no longer cluster their assets in a single region. Instead they outsource them to all parts of the country and the globe, confident in the ability of our economic structures to deliver them just-in-time.
Our position as leader of the global economy allowed us to capitalize on this flattening, bringing us nearly unprecedented economic and productivity growth. And the past couple years have given us a false sense of security that that growth will continue in perpetuity, that our economy can steamroll whatever obstacle man or Mother Nature throws in our path.
Though Friedman’s book may be best known for naming this era, it also was intended to serve as an alarm. There are competitors on the horizon and they possess many more people and a greater understanding of the importance of education than we do.
Thankfully, Friedman is not alone on the watchtower. Just over a year ago, a collection of the best minds in business, government, and academia came together through the Council on Competitiveness to publish a report entitled Innovate America. It states that if we expect to maintain our global economic leadership, we must optimize our system for innovation.
Their report identifies three key areas that must be optimized for innovation: infrastructure, investment, and talent. Our competitors will surely beat us on cost and may soon equal us in technical ability, but no other country possesses the freedoms needed to be the global innovator. If we can reform and revitalize our infrastructure, investment, and talent for a global economy, we can ensure our continued leadership in the years ahead.
This past October, a report from the National Academy of Sciences brought greater attention to the issue. Entitled Rising Above the Gathering Storm, it also focuses on innovation and identifies improved math and science education as the key to encouraging innovation.
What these and other reports and books have identified is that as our economic systems and structures have adapted to meet the demands of a global, real-time economy, those systems and structures that support our economy have not kept pace. While this includes our health care, legal, and pension systems, it is our education and workforce development system that requires our leadership in transformation. Consider the following the statistics:
- 90% of our fastest growing jobs require education or training beyond high school and nearly two-thirds of all new jobs in the next decade will require a college degree
- Yet only one-third of the population possesses a college degree and the percentage of those degrees in math and engineering is below nearly every other industrialized country in the world.
- And perhaps most concerning, nearly one-third of ninth graders do not finish high school.
Each of these statistics, along with the realization that half the world’s population has now entered the global economic competition, led to an agenda President Bush unveiled during The State of The Union called the American Competitiveness Initiative. It includes increased focus on math and science in high school through AP and Baccalaureate programs, expanded teaching options and incentives for professionals in the math and engineering fields, and reformed immigration policies to attract the best and brightest from around the world to the United States.
The initiative recognizes that the bedrock of America’s competitiveness is a well educated and skilled workforce. And although global competition is often seen as a national challenge, it is actually at the regional level where solutions must be developed and the challenge met. It is in regional economies where companies, workers, researchers, entrepreneurs and governments come together to create competitive advantage and where new ideas and new knowledge are transformed into advanced, high-quality products or services. In other words, it is in regions where innovation occurs.
That is why our recently-announced WIRED Initiative is focused on regions and regional economies. At the beginning of January, we received 97 proposals from 49 states to demonstrate how talent development can drive the transformation of regional economies and the systems that support those economies. Earlier this month, thirteen were selected and will each receive $15 million over three years to facilitate that transformation.
The partnerships that form the basis of the WIRED Initiative include universities, community colleges, K-12 educators, businesses, economic development organizations, investors, foundations, and workforce development programs. Given that roster, workforce boards were ideally situated to lead the effort.
There are a couple good examples of Board leadership from our thirteen regions including the Finger Lakes Region in upstate New York where the Rochester WIB organized a leadership team that includes the region’s two big universities and the WIBs encompassing the entire nine county region. And in Northeast Pennsylvania, all the WIBs in the Scranton-Wilkes-Barre-Allentown corridor are coming together to support their strategic plan.
These examples are exactly the catalytic role that was envisioned for WIBs when they were created – to bring together all the assets and resources of the region to drive the workforce and economic policy for that area.
Unfortunately, experience tells us that in too many areas, federal policies and dictates do not give boards the flexibility they need to do that. Artificial boundaries and borders keep workforce boards from representing regional economies, while fragmented and siloed programs and the predictable turf battles that ensue undermine the programs themselves.
The WIRED Initiative is an attempt to find a better way. To show that a regional approach to talent development can drive economic growth and that the boundaries and restrictions that we place on our education and training programs are affecting our ability to compete.
So while WIRED continues in the thirteen regions, another component of the President’s Competitiveness Agenda seeks to reach that same goal in every region in the country. That component is Career Advancement Accounts.
In a world where education and training are the critical factors to economic success, we have allowed a workforce training system to develop where 75% of the funds are spent on non-training activities. Career Advancement Accounts are one way to flip that equation and invest 75% of our funds in training.
I know this proposal creates a lot of questions and I would like to take this opportunity to address some of them.
First, is this just a way to give workforce funds to community colleges? The answer is clear. We are a workforce education and training system and our funds should be used for people to obtain training.
Community colleges are the most affordable, accessible, and adaptable education resource in most communities and it is only logical that they would be the institution most often selected by individuals for training courses.
Second, are these reforms intended to eliminate the system or local boards? Absolutely not. They are intended to refocus the system back on its primary mission--to prepare individuals for jobs. Regions whose systems and boards have strong relationships with employers and education will be valuable assets in this pursuit. Those that do not must transform quickly.
How will boards survive under these reforms? While the reforms call for 75% of our funds to be used to educate and train workers, that leaves 25% for non-training activities. We envision the major savings under CAA’s to be in the service delivery system, where tuition assistance can be delivered with substantially less administrative infrastructure. Boards, it seems, could well survive and prosper within that 25%.
You know, however, there are some important issues for us to consider in relation to this question. First, for 4 years plus, we together have attempted to learn just how much it costs to run our system. We even hired Price Waterhouse to analyze the costs, and they were unable to access the data necessary to report results. As business men and women, that should concern you as much as it concerns me. If any boards are able to provide the data to illustrate their job could not be done within the 25% of non-training dollars, we would be pleased to work with you to re-examine that recommendation.
In fact, within the next 2 weeks, we will be inviting board executives to meet with us, in smaller groups, to discuss the CAA proposal and issues of concern. And, already, several boards have asked to pilot the idea and we will pursue their interest.
These comments may help explain why we are not in favor of prescriptive language from either Congress or the Labor Department on the design of the system. State and local officials must be able to react when the system is not meeting local workforce needs and to design a different solution to their talent needs.
Let me conclude today by sharing an e-mail I received last week from a WIB executive director with over 20 years in the business:
Systems should look like they were intentionally designed. Ours does not. Our current system is a mix and hodgepodge of well intentioned programs that now needs to be intentionally fixed. Even though my Board is viewed by many as a leader and an innovator, we do much of this despite the faulty structure in which we operate. My point is not to say how good we are, but to stress that some regions perform and do some good things even against the odds of a faulty system that needs reform. I make no claim that we are the top performer, but instead stress what we might be able to do should we have a structure that is intentionally designed for the customer.
He goes on….Obviously, I believe in strong regional workforce boards. Currently, however, there are too many boards and not nearly enough strong ones. I applaud your desire for reform. The exact “how” is certainly up for debate, but let’s all agree we are overdue for reform and begin to do something innovative.
I thank that board director for his open-mind and his courage. And I thank you very much for the opportunity to visit with you today. I hope that we can together do something innovative.
