The Urban Institute , Employment & Training Administration (ETA)

Emily Stover DeRocco Speech

The Urban Institute
6/26/03

Good morning. It is a pleasure and honor to be here. I want to commend Bob Reischauer for bringing together such a talented group of policymakers, analysts, and practitioners. This conference offers us a tremendous opportunity to gain new perspectives and hear about new ideas in the dynamic field of workforce development.

Today's constantly changing global economy presents us with unprecedented challenges at every turn, yet one thing remains constant: The vitality of the American economy is intricately tied to that of its workforce. Accordingly, President Bush believes that a well-trained workforce is an essential component of economic growth and strength, and his Administration is committed to enhancing the capabilities of America's greatest asset - its workers.

Educational and training opportunities not only enhance the productivity, potential, and prospects for individual workers, but they also have a positive impact on the economy at large. They not only allow us to keep pace in the changing global economy, but also permit us to remain at the forefront of the innovative process that drives such change.

Indeed, acknowledgment of a vital link between worker training and economic growth is widespread. This is why President Bush's budget for Fiscal Year 2004 contains $11 billion for the nation's workforce investment system, and why the Employment and Training Administration at the Department of Labor has taken great strides to ensure that these funds are being used to effectively provide people with the skills and information they need.

Last year, over 20 million people were served by ETA programs. This figure includes:

70,000 students participating in JobCorps, a residential training program for disadvantaged youth, which has been shown to produce net benefits of $17,000 per participant.

Over 490,000 individuals participating in our apprenticeship programs, where job training is combined with classroom instruction.

337,000 participants in the Workforce Investment Act dislocated workers programs, four-fifths of whom have re-entered the employment rate with an aggregate earnings replacement rate in excess of 90%.

Nearly 30,000 participants in the National Farmworker Jobs Program, an initiative which has brought nearly 85% of its participants into the employment rate and has created earnings gains of over $3,800 per worker.

Approximately 35,000 individuals over the age of 55 who are participating in our Senior Community Service Employment Program where they are given jobs to acquire needed skills and experience while contributing to the community.

Over 66,000 people covered by National Emergency Grants, a program which serves individuals adversely affected by economic dislocations throughout the country.

The list goes on and the point is clear: the Employment and Training Administration's programs have reached many people.

The workforce investment system has come so far since it was created in 1998, but, we are still so far short of what we need to become. There are some local areas that have taken the vision of WIA and expanded it and breathed life into it, making it meet their local needs and having great success with it. On the other hand, there are others who have taken WIA and have pressed it and squeezed it until it fits nicely into their JTPA mold with a few different terms.

We have some very real challenges this administration is working hard to address through WIA reauthorization.

We are still struggling to find a meaningful role for employers that will engage them enough to make them want to stay and participate on the boards. Our nation's productivity depends on the workforce system's ability to place workers in suitable jobs as quickly as possible so they can continue earning income. Therefore we must realign our operations to be more integrated, and recognize business is a customer of workforce investment services, a provider of training, and a leader and policy setter in the management of local programs.

Specifically in this area, we are working at:

Increasing business use of the public workforce investment system.

Informing the workforce investment system about labor market changes and the skills that are in-demand.

Identifying training programs that help individuals acquire requisite skills and certifications used by business in hiring and promotion decisions.

Simplifying means to develop financial partnerships with business.

Once people are in jobs, we must ensure they are not trapped in low-wage, entry- level jobs. We must provide adequate opportunity for them to move up career ladders. This requires individualized opportunities for training and youth programs with a strong education component leading to a credential and to long-term attachment to the labor market and life-long learning. Connections between academic and occupational learning should be encouraged.

In addition, the workforce investment system should provide customers greater opportunities through more choice, control, and customization of services to develop the knowledge, skills, and abilities that are sought after in the new economy.

Improving access to youth program services through One-Stop Career Centers either through existing centers or special centers serving youth.

Improving links to the local job market and other community youth services, including activities that promote youth development and citizenship, mentoring and follow-up.

Improving opportunities for out-of-school youth.

In addition, the workforce investment system should provide customers greater opportunities through more choice, control, and customization of services to develop the knowledge, skills, and abilities that are sought after in the new economy. Specific enhancements include:

Providing job training that leads to industry-standard certifications of skills.

Simplifying ways for education and training providers to provide information about their success in preparing individuals for jobs or career advancement.

Matching more ambitious program goals and outcomes with richer and more professional services.

Encouraging co-enrollment among programs to maximize available training and related resources and avoid duplication.

The Workforce Investment Act already created a national network of One-Stop career centers that offer a host of federally funded employment and training services. There are over 1,900 access points nationwide where individuals and businesses can access services. Our challenge now is to make these centers more integrated and customer friendly to serve the needs of employers and jobseekers.

Improving access to a range of products and services both in-person and electronically.

Bolstering access to services through One-Stop Career Centers, including customers at-risk in the labor market, such as dislocated workers, individuals with disabilities, current and former welfare recipients, migrant and seasonal farmworkers, immigrants, older workers, and school dropouts.

Establishing easier ways for partners to share One-Stop Career Center costs.

Encouraging states and localities to design and operate common information systems.

Providing increased opportunities for faith and community-based organizations to participate as partners in the One-Stop Career Center system.

Increasing availability for English as a Second Language training and other services for Limited English Proficiency individuals through One-Stop Career Centers.

Providing opportunities to try new ideas and service approaches.

The employers and taxpayers who support the system need to know their money is being used in the most efficient manner. That means States should have a greater policy role and more flexibility; there should be more local focus on program design, staff capability, and monitoring program quality. There should be a stronger federal focus on technical assistance, knowledge development, and data integrity.

Simplifying the governance structure and empowering states to use workforce investment resources as an economic development tool.

Increasing authority for states to build on existing reforms to improve performance.

Providing incentives to encourage state and local innovation and risk taking.

Increasing state flexibility to shift funds within states based on documented need.

Increasing overall focus on grant integrity and the safeguarding of funds through an emphasis on programmatic and fiscal monitoring.

We must also focus the system on outcomes and results and use information on outcomes, quality, and customer satisfaction to drive change, making sure that data are valid.

Establishing a core set of common performance measures such as employment, retention, and earnings that would apply across partner programs.

Creating common definitions and reporting formats that encourage common state and local reporting systems for one-stop partner programs.

Providing significant incentives for states and localities to help individuals and businesses get the services they need, leading to high performance levels.

We must also realize that why the workforce investment system is the critical public sector player in the worker training arena, we are not the only game in town. Instead, it is important to realize that employers have a tremendous impact on this process, and that workforce development is best achieved when the public and private spheres act together as complementary partners. This is why today's conference is so valuable. As we discuss ways to "enhance the role of employer-led training in the United States" we will gain a better understanding and appreciation of the private sector's undeniable involvement in workforce investment.

We can consider the role of employers in training and educational provision through two avenues. First, the workforce development system is demand-driven, meaning that the services and programs made available to our workers are determined by the needs of America's employers.

For instance, the impact of employers on public training provision is evident in their partnerships with our country's One-Stop Career Centers, which serve as the cornerstone of the workforce development system. One-Stop Career Centers provide universal access to a wide range of employment and training services, ranging from resumé writing and interviewing skills to placement in apprenticeship and vocational programs.

When properly engaged in strategic planning, employers have taken an increasingly active role in the operations of these One-Stop centers, and a mutually beneficial relationship has developed as a result. Employers benefit from the services provided through the One-Stop system, while the One-Stop centers gain from employer input regarding local labor market conditions. The demand driven system uses this reciprocal connection to ensure that workforce development services are in line with labor market needs so that individuals participating in our programs can be adequately prepared to enter the workforce.

In Louisiana, the New Orleans Workforce Investment Board governs a partnership that brings together the New Orleans' business community, job seekers, unemployed, and underemployed city residents. Employers who come to the One-Stop can receive financial and logistical support in establishing on-the-job training programs, which can last for up to 26 weeks and provide workers with easily transferable skills.

And in Orange County, California, employers are actively encouraged to come to the One-Stop center where they can search a database of resumés, develop apprenticeship and other training programs, and receive guidance on topics such as OSHA standards or workers compensation issues. Meanwhile, job seekers can enter their resumés in the database, enroll in training programs established by employers, and receive important labor market information. Employers and job seekers are therefore brought together under one roof, where labor market demands are addressed.

For further illustration of the impact of employer demand on our workforce system, consider the customized training and incumbent worker services available under the Workforce Investment Act programs for adults and dislocated workers. Through these programs, the Department of Labor shares the costs of training with employers, who agree to hire or retain participating workers. The curricula used in these programs are designed to meet the specific needs of the given employer.

Ohio's Edison Technology Centers used incumbent worker and customized training funds to upgrade the skills of its workers in plastics processing and the latest welding methods. Through these training programs, divisions within Ohio Edison were able to transform their production processes and workers were given the tools necessary to adapt to these changes. In one summer, nearly 200 workers were trained through the program. The end result was that Ohio Edison saved money and jobs by teaching existing employees new skills.

Finally, consider the President's High Growth Job Training Initiative, which was inspired by a realization that far too many people are unemployed, yet many growing industries are suffering from skills shortages. The Initiative, highlighted by President Bush at last week's Jobs Forum, seeks to identify skill needs and skill gaps for high growth industries, now and into the future. Using this information, we develop model training initiatives and strategies to address industry needs. All of this is accomplished through strategic alliances between local educational institutions, employers, and the public workforce system. In a word, the Employment and Training Administration acts as a broker between employers and employees to ensure that our workers have the right skills for the right jobs.

The extent to which our workforce development system is driven by demand and engages employers and was demonstrated last May when the Department of Labor and the Hospital Corporation of America awarded a combined $15 million to four states so that they could address the severe shortage of healthcare workers. The funds, which came from the High Growth Training Initiative, are being used to establish a partnership between healthcare employers and potential employees in which the latter receives scholarships to train for one or two years. After completion of the training program, employees work with the Hospital Corporation of America for a duration equal to that of their training. The Department of Labor was able to successfully create a partnership with business through which employment needs were identified and steps were taken to give workers the skills necessary to meet those demands. In addition to health care, we are forming similarly valuable partnerships with the geospatial, biotech, retail, and automotive industries.

The positive impact of the High Growth Training Initiative is also being experienced in Farmington, New Mexico where a $2.1 million grant was awarded to train workers for jobs in the oil and gas industry. The training program is focused at San Juan College, and will serve all of the United States' major energy producing regions, ranging from the Gulf Coast to Alaska. This effort, which places special emphasis on populations suffering from disproportionately high unemployment rates, is being made possible by the cooperation of actors from industry, education, and workforce development.

I mentioned earlier that we can think of employers as having an impact on the training and educational opportunities of our workforce through two avenues. In addition to their role in shaping public programs, employers are the most important source of training in their own right.

Our presenters today have written extensively on the prevalence of employer-provided training: Evidence indicates that seventy percent of all establishments provide formal training and that there has been a significant increase in the amount of training provided by employers over the past two decades. We also see that financial assistance from employers is the most common form of financial aid, as twenty percent of graduate students and as many as one-third of undergraduates in fields like business and engineering receive financial assistance from employers. In fact, on the aggregate, employers tend to spend about $60 billion annually on training, eight times more than federal and state funding combined.

The ubiquity of employer-provided training provides positive evidence of the benefits of such provisions. Conventional economic theory might have had us believe that employers stood to lose from such investments in their workforces since education is often portable between jobs and expenditures on training might be viewed as a burdensome fixed cost in financial markets. However, these findings contradict such notions and much of the work presented today will offer theoretical explanations for the contrary evidence.

Over time, we have come to learn that employers' investments in education for their workers are not only viable, but may be necessary to the success of a given organization. Employer-provided training can enhance a firm's future capability and allow it to earn a premium by attracting and retaining more productive workers. An optimal allocation of resources requires that firms make substantial investments in their human capital, and, as our presenters will explain throughout the morning, such investments are likely to yield high returns. Much is to be said about the value of employer-provided training, but I will leave these discussions to be explored more fully by our guests.

As a group of people interested in the success of our economy, we must be equally interested in the versatility of our workforce. Simply put, our workers must be given the training and education they need to adapt to changing labor market conditions. Such an assertion is admittedly far from groundbreaking, but it begs many important questions. The issues that are especially interesting, and more complicated, concern how we are to provide such training and who should do so. We are here today to engage in a discussion that will allow us to better understand these points.

Providing the opening address for an event like this is certainly a challenge. In my humble attempt to set the tone for today's presentations, I hope to have made it clear that employers play an imperative role in workforce development, both as a provider on their own and as a driving force behind public programs. By working in partnership with employers, I am confident that the Department of Labor will continue to provide our workers with the skills needed in today's economy…and tomorrow's.