Emily Stover DeRocco Remarks National Association of Workforce Boards, Employment & Training Administration (ETA)

Emily Stover DeRocco Remarks
National Association of Workforce Boards
Washington, D.C.
March 4, 2003

Good morning. It is good to be back with you. Any time I hear about a group that starts their meeting on the weekend, I know that is a group whose members are serious about their conference and the challenges before them.

Well, that is exactly the world we live in today, isn't it? We have to find every advantage, make every contact, leverage every dollar, form every partnership, pursue every angle, answer every question, and make the most of every minute.

Doing the same thing, the same way, at the same pace is no longer good enough. It certainly isn't good enough for the workforce investment system. As I have been known to put it, we have to move at the speed of business.

You should be receiving, if you haven't already, some handouts with the graphic "The power of E3" on the cover. The three E's in this case are employment, education, and economic development. This is a theme we have adopted at the Department of Labor and one I hope you will consider taking and making your own. The underlying principle behind this theme is that we must bring the resources devoted to employment, education, and economic development together and use them strategically if we are to build the skilled workforce that employers need to remain globally competitive and if workers are going to be able to get the good jobs at good wages with opportunities for advancement. I call this "creating a demand- driven system." There is more about this philosophy in your handouts that I hope you will read - not during my presentation, I hope, but afterward.

But for this short time that we have together, I don't want to talk theoretical philosophies. I want to discuss the real, tangible, nose-to-the-grindstone, rolling-up-our-sleeves action that we are taking to make us all more successful.

The first thing this Administration is doing to help make us all more successful is working to link the workforce investment system to employers. Let me tell you about three different sessions I have had the privilege to conduct in the past four months.

Automotive

The first session was on October 30th. It was a chilly and stormy morning. A group of high-powered automotive industry leaders from extremely competitive companies flew to Greenville, South Carolina, from all around the country. The list of attendees included:

The Chairman of General Motors, John Smith

The President of the Ford Motor Company, Edsel Ford

The President and CEO of Mercedes-Benz USA

The President of Volkswagen of America

The President and CEO of DaimlerChrysler

The President and CEO of Subaru of America

The Chairman and CEO of BMW

And other high-level representatives from other auto manufacturers.

Together, they represent an industry that:

Produced $916 billion in revenues in 2000
Employed 840,000 service technicians and mechanics in 2000
Employed 221,000 auto body and related repair workers in 2000
Employed 285,000 diesel service technicians and mechanics in 2000
This industry represents some fast growing occupations:

Service technicians and mechanics are expected to grow 18-percent by 2010
Supervisors/managers of mechanics, installers, and repairers are expected to grow by 16-percent by 2010
Auto body and related repairers are expected to grow by 10-percent by 2010
Automotive glass installers and repairers are expected to grow by 10.5- percent by 2010

It is an industry full of good- paying jobs that are going unfilled. Most of these jobs require some postsecondary education but not four- year degrees. And these jobs are stable. Although auto manufacturers occasionally have lay offs, auto dealers rarely do. And, that is where these service technicians and mechanic positions exist.

Retail

The second session I held was on January 14th. It was a cold and stormy morning. A group of high-powered retail industry leaders from extremely competitive companies flew to New York City from all around the country. The list of attendees included top-level executives from companies such as:

Home Depot
Petco
Pier 1 Imports
Saks, Inc.
Dress Barn
Office Depot
Target
Crate & Barrel
CVS

Together, the people in the room represented an industry that:

Covers a wide variety of sectors including:

Clothing
Department stores
Discount stores
Drug and health retailing
Grocery retailing
Convenience stores and gas stations
Electronics and appliances
Building materials and gardening supplies
Home furnishings
House wares
Auto parts
Sporting goods
Toys and hobbies
Jewelry
Music
Books
Videos
Computers and software
Office products
Auto dealers

This industry produced 9.2-percent of the Gross Domestic Product in 2001
And, employs 26 million workers in sales and related occupations alone

Although many of these employers offer part-time jobs, many also offer career ladders to workers who want to and are able to become managers. In fact, one of the companies I mentioned earlier just used the workforce investment system to fill a $120,000 opening for a manager. Another retailer, Toys R Us, used the workforce system to hire its part-time seasonal workforce. They tell us it was the best seasonal workforce they have ever had, and estimate approximately 50-percent of those workers will go on to become permanent full-time staff.

Health Care

The third session I participated in was on February 24th. It was a cold and stormy morning. A group of high-powered health care industry leaders from extremely competitive companies flew to Chicago from all around the country. The list of attendees included top-level executives from organizations such as:

St. Joseph Health System
Mayo Clinic
Inova Health Systems
Geisinger Health System
Providence Health System

Together, they represented an industry that:

Includes 469,000 employers
Produces about 6-percent of the Gross Domestic Product
Supplies more than 11 million jobs
Will represent about 13-percent of all wage and salary jobs created between now and 2010
Includes nine of the 20 occupations projected to grow the fastest, including:

A 67-percent increase in personal and home care aides,
A 60-percent increase in medical assistants,
A 57-percent increase in physicians' assistants, and
A 54-percent increase in medical records and health information technicians.

Most of these fast- growing jobs require some postsecondary training or education, but do not require four-year degrees. That means people can be trained and placed in these jobs relatively quickly.

What did these three meetings have in common? Well if you say they all took place in really bad weather, you would be correct, but there is a much bigger point here.

In each case, these leaders, who are normally cut-throat competitors, came together to see if they could join forces to eliminate one of the greatest barriers to their growth and success: their need for a skilled workforce.

What else did these sessions have in common? The bad news is that in each case there was a general lack of awareness about the workforce investment system and what it does.

But the good news is that at each session, there was a contagious enthusiasm for the workforce investment system and our services, once I had the opportunity to describe them. Each of these sessions ended with these top- level executives making a commitment to linking their organizations with our system to try to fill the openings they have in these high-growth industries.

Do you know what else these sessions all have in common? These meetings, at least parts of them, were all scheduled and planned before I found out about them. I was able to join these meetings and lead portions of them only after I asked to be invited.

Do you hear what I'm saying? These leaders of industry in three of our largest industry sectors had already scheduled these meetings and were going ahead to find the solutions with or without us. I imagine the same thing is happening every day at the local level as well. We have to find these employers with good jobs at good wages, we have to make them aware of our system and how we can help them, and then we have to link them to the skilled workforce they need in order to be competitive. The work is going to continue with or without us. The question is: Are we going to be part of the solution? I don't believe they can be successful without us.

Growth and Jobs

So there you have it. Employers in numerous high-growth occupations have many unfilled jobs. Meanwhile, the most pressing challenge we have before us is the unemployed. Although January's UI rate dropped to 5.7 percent, there are still too many people out of work.

In announcing his Jobs and Growth package in January, the President stated his three economic goals:

Encourage consumer spending that will continue to boost the economic recovery;
Promote investment by individuals and businesses that will lead to economic growth and job creation;
Deliver critical help to unemployed workers.

It is up to all of us to ensure that the workforce investment system is successful in the third goal of delivering help to unemployed workers, so Congress, businesses, and individual taxpayers know we are providing critical services that keep our economy strong.

If the first action this Administration is taking to make us all more successful is working to link the workforce investment system to employers, the second action to make us all more successful is proposing a budget that gives you the resources you need to provide quality workforce investment services.

Budget

The President's FY 04 budget request for the Employment and Training Administration shows the President's commitment to this third economic goal and his willingness to try bold, new, innovative, and flexible initiatives to get people back to work more quickly.

The President's request reflects this Administration's commitment to:

Investing in the workforce system, combining a steady investment of $11 billion with carryover of $1.6 billion, for a total of $12.6 billion;
Supporting the One-Stop Career Center system as the cornerstone of the workforce investment system; and,
Creating a more flexible, streamlined, and consolidated workforce investment system to allow state and local areas as much flexibility as possible to create the best solutions to address their unique needs.

Personal Reemployment Accounts

In addition to the $11 billion budget request, the President has requested $3.6 billion for Personal Reemployment Accounts to help get workers reemployed more quickly.

These accounts are a new way of targeting assistance to unemployed workers who have been identified as likely to exhaust unemployment benefits before finding a new job.

Personal Reemployment Accounts would allow workers to custom- design a reemployment services package in accordance with their needs. For example, some individuals may determine they need extensive retraining in order to compete for jobs in a high-growth industry; others may only need to complete a short-term computer course in order to return quickly; still others may need to purchase childcare in order to search for work. By enabling unemployed workers to access the reemployment services they need most, Personal Reemployment Accounts increase the likelihood that individuals will return to work quickly. The accounts will be administered through the One-Stop Career Center system and individuals will be given flexibility to purchase the services of their choosing, within broad limits to prevent abuse.

Account holders will be able to keep the cash balance as a Reemployment Bonus if beneficiaries become reemployed within 13 weeks of the effective date on the account. In most cases, we estimate the remaining cash balance will be no greater than $500. That is clearly not enough financial incentive to persuade people to take bad jobs and keep them for six months in order to keep the remaining cash, as some have suggested.

A bill including Personal Reemployment Accounts has already been introduced in the House and a hearing has already been held. The bill is H.R. 444, and we are hopeful Congress is going to move quickly to pass it.

Reauthorization of WIA

A third tangible action that we are taking to make us all more successful is proposing practical changes to the Workforce Investment Act that will give you more flexibility to meet your state and local needs.

This Administration believes strongly that workforce investment is an integral part of economic development, and that a better prepared workforce promotes economic growth.

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 (WIBs) 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. 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.

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 would 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 in 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. Through reauthorization, the number of WIA Title I 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.

Conclusion

We believe the Administration has set the scene for business growth, for increased employment, and for building a more skilled workforce. The President is proposing tax cuts to stimulate business investment. He is proposing a new $3.6 billion program to help the hardest to employ remove the last barriers to their employment. And he is proposing a legislative package to strengthen WIA so that the workforce system can be more effective, efficient, and flexible.

We think we have proposed the right level of stimulus, investment, and reform to help businesses grow and to get the unemployed back to work. Now, all we need is a group of action- oriented, out- of- the- box thinking, tirelessly working, and selflessly dedicated colleagues to make the employment, education, and economic development connections. I think that is this group. The Secretary of Labor and I are calling on you. The unemployed workers of America are calling on you. And, the business community is calling on you.

While your assistance is optional, the effort is not. The work is going to continue with or without us. We believe success depends on the level of your involvement. We are counting on you to prove us right.