Emily Stover DeRocco

Roanoke Regional Chamber of Commerce

Draft 6/3/03

Thank you.

I'm very pleased to be here with you today to discuss the workforce issues you are facing and what we can do together to address them.

The most immediate challenge we face in the lack of job creation. Last week, we took a big step toward this goal when the Senate passed key elements of President Bush's Jobs and Growth plan. This initiative provides tax incentives for entrepreneurship and economic growth. It allows workers to keep more of their hard-earned pay.

Most importantly, it will create jobs and opportunities so that everyone who wants to work can find a good job. Some economists estimate that the President's plan will add one million new jobs by the end of 2004. [Source: President Bush's Remarks on the Jobs and Growth Plan, May 13, 2003, Indiana].

That's critically important, because although our economy is in the midst of a recovery, there are still far too few jobs. With unemployment at 6 percent nationwide, we know we have a big challenge ahead of us. Nearly 9 million Americans are looking for work; many others are underemployed, or have given up the search.

Yet I'm very optimistic about the prospects of job creation in today's economy, and my optimism stems from my experience at the Department of Labor's Employment and Training Administration.

From my vantage point, I see the emerging signs of recovery. Many industries, in fact, are growing, and have a many unfilled job openings.

America's Job Bank, a free online job posting service funded by the Department of Labor, shows that employers right now, today, are looking for workers to fill more than 900,000 jobs.

Nearly 93,000 unfilled jobs are in the transportation industry, mostly for drivers of heavy trucks and tractor trailers. There are 73,000 openings in the retail industry, many of them at the entry level, but more than 10,000 open jobs are for sales managers who make an average wage of more than $18 per hour.

By far the greatest number of openings is in the health care field. There are more than 142,000 unfilled health care jobs listed in the Job Bank. That number will explode over the next few years as the Baby Boom generation ages. As many as 6.5 million long-term health care workers - including nurses, aides, and personal care assistants - will be needed by 2050, up from 1.9 million such workers employed in 2000.

It's clear that there are jobs out there. The challenge is matching the employers who need workers with the people and places that need jobs.

That's where the workforce investment system comes in. Our goal is to ensure that every available worker has the education, training, and skills to fill the gap so that no worker is left behind.

We believe that to reach this goal we need to bring all the resources devoted to employment, education and economic development together, and use them strategically to create opportunities for workers and build the skilled workforce that American industry needs to remain globally competitive.

We call this linkage of education, employment and economic development the "power of e-three." By leveraging this power, we are building a demand-driven workforce investment system that will better serve the employers and employees of the future, effectively respond to the global and national trends that are shaping the workforce and the economy, and make a greater contribution than ever before to our nation's economic growth and prosperity.

What exactly does that mean? At the most basic level, it means that we are gearing the workforce investment system to prepare workers for jobs that employers need to fill.

It sounds simple, but in fact, as I've outlined above, there's a mismatch. There are far too many people unemployed. Yet many employers in high-growth industries have thousands of unfilled jobs.

To address this mismatch, we have created a High-Growth Job Training initiative to identify high-growth businesses and industries, evaluate their skill needs, and use the nation's workforce investment system to ensure that people are being trained with the skills these rapidly-expanding businesses require. We're holding forums and building partnerships all over the country in fields as diverse as health services, biotechnology, retail sales and services, and the geospatial sector.

I'd like to share with you a little bit of what we've learned.

The health care industry is one of the largest and fastest growing industries in the nation. Today it accounts for about 13 percent, or $1 trillion, of our annual GDP, and provides more than 11 million jobs. Nine of the nation's 20 fastest growing occupations are in the health care field. We anticipate explosive growth in the demand for home care aides, medical and physician assistants, and health information technicians.

The information technology field is another field that is rapidly growing, and changing. The "hardware" side of the IT industry overlaps many sectors, and accounts for nearly 7 percent of GDP. The "software" side makes up nearly 6 percent of GDP. Interestingly, 92 percent of all workers in the IT field do not work for in the IT industry; rather, they fulfill IT functions in non-IT industries. The IT field attracts a young workforce, with nearly 40 percent of workers being between the ages of 25 and 34; earnings in the field are expected to grow by 86 percent between 2000 and 2010.

The biotech field is another rapidly growing part of the economy. Between 1992 and 2001, the number of jobs in biotechnology doubled; biotech jobs will grow by 3 million between 2000 and 2010, with double-digit increases in jobs such as pharmaceutical manufacturing, biological technicians, and scientists. Biotech companies have raised $70 billion over the past five years to support investments in their research, development, and production activities.

The geospatial technology industry has a current worldwide market of about $5 billion, and is growing by 10 to 13% per year, a growth rate that is expected to continue throughout this decade. The market is projected to have annual revenues of $30 billion by 2005. A survey of geospatial product and service providers revealed that 87% of respondents said they had difficulty filling positions requiring geospatial technology skills.

The financial services industry plays a huge role in our economy, generating more than 20 percent of GDP, or more than $2 trillion. The insurance industry sector was greatly affected by the terrorist attacks of 2001. The sector outlaid $40 billion in 2002 to cover damages incurred during the September 11 attacks. Yet unemployment in the banking/financial, insurance and real estate sectors is well below the national average, and these fields are expected to grow.

Finally, the automotive industry. Automotive technicians, mechanics, and repairers hold more than 1.3 million jobs in today's economy, and employment in the automotive industry is expected to increase 10 to 20 percent through the year 2010. Motor vehicle and equipment manufacturing is expected to grow 9 percent over the 2000-2010 period. More than one-third of the workforce is over 44 years of age, so a substantial number of job openings will occur due to replacement needs.

These high-growth sectors of the economy need a growing number of trained and skilled workers if they are to grow and be competitive in the years ahead. Our workforce investment system is working in partnership with them to help meet that need.

For example:

The Department of Labor and HCA have formed a $10 million partnership to address the severe shortage of workers in the health care field. This program was initially focused on providing scholarships to train workers who lost their jobs in the aftermath of the September 11th terrorist attacks for jobs in the fast-growing health care area. HCA has built on this program's initial success to extend it to every major city where HCA has a presence. Joint contributions from the public and private sectors have enabled this partnership, which will help assist thousands of individuals become registered nurses, licensed practical nurses, radiology technologists, surgical technicians and certified nursing assistants.

ETA is working with the Automotive Youth Education Systems by providing a grant of $600,000 to support an expansion of the national automotive industry certification program. It's increasingly difficult for the industry to find qualified employees, especially service and body-shop technicians. This partnership expands, for the first time, a link between high school automotive programs and professional certification and will help fill the demand for skilled workers.

We're providing grant funds to Forsyth Technical Community College in Winston-Salem, North Carolina to establish an Associate Degree program in biotechnology, to take advantage of new opportunities in the region from investment in the biotech sector. The Piedmont region has been hard hit by a decline in its traditional manufacturing industries, including furniture, textiles, and tobacco. But the area has attracted new investment from biotech firms; North Carolina has more than 170 biotech firms and the industry is growing at a 10-15 percent rate per year. The grant funds we're providing to Forsyth Tech will train dislocated manufacturing workers, many of whom have limited formal education, for technical jobs in this burgeoning field.

In Illinois and Ohio, the ETA has provided nearly $5 million to establish training programs at local community colleges to help workers who have been laid off obtain the skills they need to work in the high tech manufacturing jobs. This successful initiative is a model for similar programs in community colleges across the nation. The program works closely with high-tech industries in the area to train workers to be Integrated Systems technicians, a fast growing field where the shortage of skilled workers is already acute.

Nationally, we've provided nearly $3 million to the National Retail Federation Foundation to create models for training retail employees and to encourage partnerships between employers and the workforce investment system. The grant will help establish innovative recruitment, assessment, and training services.

These are just a few examples of the initiatives we have underway to create a demand-driven workforce investment system. We're working closely with businesses and community colleges to identify and create curricula that meet employer needs. We're working with students and workers to emphasize the importance of a strong academic foundation, and to educate them about the opportunities that are available in high growth industries them when they have some post-secondary training. We are offering new and innovative options in proven programs such as apprenticeship. And were tapping all the resources of the workforce investment system to target specific populations, including older Americans, migrant and seasonal farm workers, Native Americans, minorities, and young people.

We're encouraging communities to use the resources of the workforce investment system as an economic development tool. We're reaching out to the unemployed to help them get the training and supportive services they need to help them get back in the workforce, and we're proposing legislative changes to the Workforce Investment Act to make the workforce system more effective and flexible.

WIA was a groundbreaking piece of legislation that has sparked dramatic improvements in the delivery of employment and training services nationwide. Now our challenge is to build on these reforms in order to make the system even more effective and responsive to the needs of local labor markets.

We propose to do this in five ways. First, we want to create a more effective governance structure to ensure that services get to workers as soon as possible. Too often in the past, state and local boards have been mired in administrative detail rather than focused on connecting skilled workers with job opportunities. The Administration proposes to strengthen the role of the state and local boards in various ways. State boards would still be chaired and directed by employers, but these boards would have increased representation by One-Stop partner programs. This would, among other things, ensure that these partner programs have a place at the table when state boards decide the policies and priorities for the delivery of workforce services through the One-Stop delivery system. Local boards would be streamlined to provide an increased voice for employers, community groups and worker advocates in order to make the boards more responsive to local needs. And the requirement that workforce investment boards establish local youth councils would be eliminated, though governors and elected officials would be provided the authority to create or continue Youth Councils if they find them useful.

Second, our proposal would strengthen the One-Stop system by creating a new way to fund and maintain the system. Let me first address the funding issue. In the past, the system has been compromised at times by turf battles among service providers and the lack of a stable funding stream for local One-Stop Career Centers. We propose to fund the One-Stop system by creating a separate funding stream for One-Stop infrastructure funding to which all partner programs would contribute. This would alleviate a great deal of the current local negotiation issues around operations and allow local areas to focus on what is most important - meeting the service needs of businesses and workers.

In addition, we want to ensure that all One-Stop Career Centers make a broad array of employment, training and supportive services available to both job seekers and employers. We particularly want to strengthen connections between the One-Stop delivery system and programs such as Adult Education and Temporary Assistance for Needy Families, or TANF.

Third, we propose to eliminate obstacles to getting money where it is needed by combining the WIA Adult, WIA Dislocated Worker and Wagner-Peyser funding streams into a single formula program. This change would result in streamlined program administration at the state and local level and reduce the current complexities of management across three separate "programs". We also propose to permit more flexibility in the delivery of services to adults in order to encourage greater collaboration and integration of programs to the One-Stop setting. Under current law, many states and local areas have misinterpreted the "sequence of service" strategy to require individuals to spend a specific amount of time in one tier of service before moving to the next. Under our proposal, individuals would have the opportunity to receive the services that are most appropriate for their unique needs. And we propose to eliminate burdensome eligible training provider requirements to incentivize more training providers to participate in the workforce investment system.

Fourth, we propose to create a targeted approach to serving youth. Currently, funds for the WIA Youth program are spread too thinly across the country due to statutory formula and lack of strategic focus. The Administration recommends reforming current WIA youth programs by focusing resources on out-of-school youth through a Targeted State Formula program and challenge grants to cities and rural areas.

Finally, we propose to address the concerns many states and local areas have raised about the performance accountability provisions in WIA. The seventeen statutory performance indicators under WIA title are perceived as too numerous and overly burdensome. Through reauthorization, the number of WIA title indicators would be reduced from seventeen to eight (four for youth and four for adults). As part of the Administration's new common performance measures initiative for employment and job training programs, these indicators would cut across federal job training programs and would have a common set of definitions and data sets.

The House of Representatives adopted nearly all of our proposed changes in the bill they just passed. Now, that bill is being taken up by the Senate HELP Committee. The Committee leadership is hoping to take up the bill very quickly.

I encourage you to watch this bill closely. It will have a tremendous impact on the flexibility your state has in meeting the workforce needs of business.

Thank you very much. I would be happy to take any questions at this time.