President Obama formed the Council on Jobs to provide differing perspectives and non-partisan advice on bolstering the economy through fostering job creation, innovation, growth, and competitiveness. At this CFR meeting, experts discuss the Council's work and recommendations.
GARRICK UTLEY: Ladies and gentlemen, good afternoon. If we can continue with our -- if we can continue with our lunch and conversation but begin to redirect the conversation in this direction, we can get under way with our program today, a very timely one, a very important one, with an excellent panel of participants.
First of all, I'm Garrick Utley and a member of the council, former director. I'm happy to introduce -- to introduce the panel and then enjoy some conversation and most of all look to your questions later on. We promise to be done in 55 minutes from now, at 1:30, so we can get on with other business.
And it's my pleasure also to introduce the panel. The bios are in the -- on your tables, so you know Jeffrey Zients is the acting director of the Office of Management and Budget at the White House, therefore (imminently ?) connected with the White House efforts on jobs and competitiveness.
Ellen Kullman, to my right, chairman and chief executive officer of DuPont, really a major global firm, as well as a major employer in this country.
And Robert Wolf, in the middle, chairman, UBS Americas, and president of UBS Investment Bank.
All are members of the President's Council on Jobs and Competitiveness. We've heard about -- a lot about this. We know the economic situation, and we're going to find out what the Jobs and Competitiveness Council of the president has accomplished, where it is, where it's headed, and how that connects with, obviously, the economic and job situation and skill situation here in this country.
First, the usual announcements. A, this is on the record. Today there are members of the media, of the press here. Secondly, this is being communicated online through a password-protected teleconference system, and we have our trusty iPad here for some questions. If anybody's listening in in Mozambique or Mongolia, they can -- who's a council member. And third, please turn off all electronic devices -- all, all, all off -- because they can interfere with the recording system, et cetera.
So, without any further ado, let's get on with the session itself. We'll talk for about -- among the panel members for the next 20 to 25 minutes or so.
We know the basic situation of the economy. We know the job situation; we're familiar with that. We're familiar it's also a presidential election year, and we are also familiar how the agenda has changed for so many of us and organizations, not the least of which is the Council on Foreign Relations with its Renewing America initiative, which started up a year or so ago, which is an integral part of what the council is doing because unless we get our act together here in competitiveness, jobs, standard of living, it's going to limit our ability to act around the world in foreign affairs/foreign policy increasingly.
So -- and I would add just personally for the last eight years, following my life in news and journalism, I have been building an institute here for the state university, the SUNY Levin Institute down the street, which deals with these competitiveness issues, and we deal with many of the -- job creation, innovation, entrepreneurship, et cetera. And our -- one of our slogans we just came up with one day or I -- it came to me is that in global -- today global begins at home.
You turn it around: Global begins at home; we've got to deal with these problems, and then we work and interact and compete, above all, with the rest of the world.
So going through -- first of all, I think we want to thank you for taking your valuable time to serve on the president's council. This is not, I've learned -- and I'll tell you a bit about it -- or you put your name on a list, and that's the end of it. There's skin in the game and time in the game.
But we want to start off with Jeff first. You're dealing with long -- the council was set up and evolved out of previous efforts, the commission or the committee headed by Paul Volcker. So this has been institutionalized, really, in the White House, in the administration, because it's a permanent challenge for all of us. What has the council really -- where is it today at the beginning of 2012, with a number of recommendations -- we'll get into some of them -- and where -- how satisfied are you with the work, and where do you see it going from here?
JEFFREY ZIENTS: I think it's important to start three years ago when the president came into office and we were losing 700,000 jobs a month. And now we realize that the depth of the greatest -- Great Recession was even deeper than we thought. We were shrinking about 8 percent quarter over quarter. At that point the president, as you alluded to, put together a council headed by Paul Volcker to help stabilize the economy. And that council, which Robert served on, and Mark Gallogly, who I think is here, also served on, was invaluable in terms of providing advice and counsel to the president on creating an environment of stability and recovery.
About a year ago, as we stabilized, the president asked Jeff Immelt to put together a group that included again Robert and Mark, and Ellen, to advise on specific ideas on how we could create jobs in the short term and increase our competitiveness over the medium to long term.
Having spent all my time prior to three years ago in the private sector, I know it's incredibly helpful to have people who are on the front lines creating jobs, growing businesses, bringing forward specific recommendations. And this council is -- as you described, it is a hard-working council that has put forward a total of 90 specific recommendations.
About two-thirds of those, or 60, are things that we as an administration can do on our own through executive action, and 30 are legislative proposals. It probably won't surprise you that our track record on the administrative side is better than it's been on the legislative side, although we've had some decent (wins/winds ?) there too.
But of those 60, about 90 percent are either fully implemented or well on their path to implementation. And the council's not only put forward the recommendations, they've helped us implement. On several, they've taken the lead and have done the lion's share of the work, and on all of them they have helped us work through bottlenecks, whether it's helping us to think through lean processes and Six Sigmas approaches, and they've, importantly, held us accountable. Knowing that the jobs council is meeting regularly and we're reporting back on implementation has helped keep our feet to the fire as an administration and get a lot done.
So, you know, we are not out of the woods. We've had 24 months of job growth, 3.9 million jobs, but 8.3 percent unemployment is clearly unacceptable. And we look forward to continuing to work with the jobs council both on implementing the remaining recommendations and continuing to receive new recommendations, which the job council continues to generate. So the job council has -- we had high expectations. The president had high expectations.
I think it's fair to say that team under Jeff's leadership, Jeff Immelt's leadership, has far exceeded those high expectations.
UTLEY: Well, thank you for setting the scene -- the stage on that. We might just comment, as I think we read the other day, this week Congress did pass the jobs bill, sent to the White House for a signature.
UTLEY: And it was one of those rare things, a very bipartisan, very strong majority vote on it. We'll get into some of the -- maybe some of the aspects of that as far as the council's larger work.
Ellen, tell us how much time you and Robert put into this. You were saying that day you had your day job, which was 12 hours a day, and then your council job, which was the other 12 hours a day.
ELLEN KULLMAN: Yeah, well, it kind of fit well that way, yeah.
UTLEY: (Inaudible) -- yes, very good. But you focused in this -- you were focused in on a number of key areas you worked on. There were subcommittees, we understand, and you were doing innovation, education, skills -- talent, talent, talent. So tell us a bit about what you were discovering.
KULLMAN: Yeah, I -- so, you know, so DuPont is a science company. We have a lot of engineers, a lot of scientists, and innovation is really at the core -- science is at the core of everything we do. And I'm a big believer, from a U.S. standpoint, that we have to get back to advanced manufacturing and have to focus on that as -- from an economic strength of our company. I think it is a huge job creator.
So I was intrigued by the concept of the council and, you know, volunteered -- and be careful for what you volunteer for -- in many different aspects, because we did real work. I mean, so this was about short term, what you could do mid-term, long-term. You know, my focus was on innovation and education. You know, we'd been, as a company, working in the patent reform area for close to 10 years. And Dave Kappos, who now runs the U.S. Trademark and Patent office, I think, has done a fantastic job.
And really, you know, we helped push that America Invents Act over the finish line all collectively, the council very supportive of it in getting that done. And a really important part of that innovation is having certainty around patents, having certainty around the process, around the time frame and -- just huge step in that direction.
I mean, it -- 60 years ago was the last time there was any kind of major patent reform.
And then when you thought about how we're going to -- and this is not a short-term issue, right? This is long-term sustainability. It gets back to education. It really gets back to how we're training our kids to fully participate in society.
Now, granted, I am biased; I am an engineer, and I'm married to an engineer. So we got it doubly. And hopefully two of my children will be entering engineering school in the fall. (Laughter.) And not too much pressure on them, as you can tell.
But, you know, it comes down to the fact that STEM education -- science, technology, engineering and math -- is, you know -- less than 15 percent of our kids that are in the education system today, at, you know, post-secondary level. And we lose 30 (percent) to 40 percent of them in the first two years.
And so we got about doing some very real things. Ten thousand engineers program, we're -- we graduated -- it's been stagnant at -- for years, at about 120,000 engineers a year. We're going to add another 10,000 engineers on that. So how do you do that? Well, companies like GE, Intel, Dupont -- we're doubling the number of internships we'll have this summer in science, engineering, technology and math. And that'll add some -- well, just the three companies (alone ?) I think will close in on 7,000 additional internships. And you know, if kids have a way to practice their craft, get real application of it in the summer, they'll maintain interest in it. We've -- we're having outreach programs at universities to really connect the companies and the universities. We had a -- (inaudible) -- program at Georgia Tech, I think it was last month, to really help figure out how to keep kids interested in science, engineering and math.
And there's just a lot of stuff going on in the community college level. Darlene Miller, who's a small-business owner in the council -- she's done a fantastic job with the Manufacturing Institute -- national standards, certification program, connecting it to business to get, you know, maintenance in my operators. And they need to be certified in -- somehow -- and we work with community colleges locally, but how do we leverage that nationally and really get an opportunity for kids in the community college system to get connected into very real jobs and long-term manufacturing jobs?
So you know, we're coming at it in a lot of different ways, but the key is, it's got to be practical, it's got to be implementable, and it's got to be leveragable, right?
KULLMAN: There's a lot of great things going on out there, but how do you leverage it nationally, where you can really make an impact?
UTLEY: Before we go on to Robert, let me just follow up, because you're on an important point. We might just take a second or two on this.
We know there's been long-standing relationships between higher education, research, government, private sector, et cetera, and one of the trends now, big discussions in higher education is the extent to which the research capabilities should be oriented more towards the needs --
KULLMAN: Basic research?
UTLEY: -- well, not just basic research, but the needs of companies, the needs of the economy, et cetera.
A little controversy among the pure, you know, academics -- you smile; I won't ask you for a comment -- but also what is applicable -- that plus the curriculum and getting the engineers and the others out there with the STEM skills. So that's a new -- an alliance that has to be strengthened.
The second part you touched on is the community colleges.
UTLEY: Do you see community colleges becoming an addition -- in effect, quite aside from their traditional role, an additional or final two years of what you might call high school, high school-plus, to get the skills -- many of the skills that you need in the industry?
KULLMAN: You know, if you -- if you look at what Germany has done with the trades and the post-high-school education to get kids ready for working for the automotive industry, for manufacturing industries, they've done a fantastic job by really focusing on a one-, two-year education, post-high school, that really gets them the skills they need to operate a plant, to work in a manufacturing (environment ?), to maintain, you know, these highly computerized, you know, distributed control systems we have today.
KULLMAN: And if you think about our community college system, all of us work locally, you know, with -- you know, our plants in Virginia work in the Virginia system; our -- you know, to get a curriculum so that we can hire these kids to work in our plants, right? And we need to do that on a national level. We need to be able to leverage it with a certification program. I think it's an absolutely critical component. If you look at the age of our workforces and -- you know, they're all my age. And so they'll be retiring in -- you know, they're 58, 56 years old. They're going to be retiring in the next few years, right? And we need the kids, the trained kids, to come along behind that. And I think absolutely the community college system is a critical system to get aligned with those needs. They're tremendous jobs.
UTLEY: OK, well, let's hold the thought. We're going to come back to this.
But go to Robert, because you were focused on a number of other aspects, working on the committees -- entrepreneurship, investment, innovation -- your thoughts, what you took away?
ROBERT WOLF: So I'll start with the one I was most involved with, actually, start with the PRAB with Laura Tyson, and that's infrastructure, and then I'm going to touch base on two other initiatives that I had less to do with, but I'm amazed by the outcome.
On infrastructure, you know, it's very clear it is our best engine of growth. For every dollar spent, it's a multiplier of 1.6 times. For every billion (dollars) spent, it's 25,000-plus jobs. And it's the most bipartisan issue. I hosted a summit on behalf of the jobs council in Texas.
We had the AFL-CIO, the Chamber of Commerce, the government, Burlington Northern, AT&T, Comcast, all in their own little love fest on infrastructure, thinking about next-generation air traffic control, a national electric grid, broadband going to rural areas, water treatment centers, as well as bridges and highways.
And it's something that, I think, no matter who you speak to, this country knows that we need to improve our infrastructure. And we believe it should be in a public-private partnership. We are for a national infrastructure bank. There's about a trillion dollars of jobs -- of job work needed to be done, and there's hundreds of billion of private sector money ready to go. So that's something we're a high proponent of.
The second thing is win in America. And what we have found is that foreign direct investment into this country in the '90s used to be somewhere between 25 and 30 percent. It's now around 15 percent. And one thing a lot of of the manufacturers that were part of --
UTLEY: Sorry, that's 15 percent of total investment?
WOLF: Of total investment. And what we've learned is we're just losing to other countries, because of either regulatory hurdles or whatever it may be. And so the jobs council, the Commerce, the White House worked on what is now Select USA. It is a division within the Commerce where foreign businesses come and we help them establish their (hub ?) site or expand in the country.
And we've had some good wins. We had a Canadian company that was looking at Mexico that came here. We had an India company that's now going to Texas. And so we've had some great wins, and it's obviously key to our manufacturing.
And the third one is what you mentioned and what I'm happy to highlight because it just got passed this week, is -- really started with the jobs council, the jobs council, and it was really Steve Case and John Doerr and Sheryl Sandberg really taking this on.
We're venture capital.
Over the last three decades, I think we -- there's been 40 million net new jobs. They have all been from startups. So all of the net new jobs really this country has had has been from startups, and we've started to see that tail off over the last three to four years. And the reason is either they can't get the capital or the regulatory hurdles of small companies.
So two -- so Steve started this thing working with the White House called Startup America, which gives resources to these venture capital ideas that really can't get off the ground. That really led to two great things. It led to BusinessUSA, and BusinessUSA is where small companies can go to the government to figure out how to register and what's available and how to permit, almost one-stop shopping. And then, on the Startup America, it led to the recent JOBS Act which is jumpstart our business startups. And that is really getting venture capital, entrepreneurship back in -- into the forefront where they're able to get capital creation.
So, you know, it has -- I think to Jeff's point, we've had a lot of great things. And one thing on infrastructure, you know, that maybe Jeff will discuss is we have put in a fast-forward basis 14 different infrastructure projects that are now off the ground and going that maybe -- Jeff, you may just want to touch base on.
UTLEY: (Well ?), that's a good point because, reading through the reports that you have issued periodically, many if not most of these issues are at best (meant ?) to long term efforts, initiatives that have to be undertaken. We're talking, you know, 2020 and beyond because you're changing systems and cultures and attitudes when you get into education. But there's short-term needs.
WOLF (?): Yeah.
UTLEY: And so how do you define the short term, Jeff, what you, from the administration's point of view, want to see, that can be implemented that can have that impact. Is it just infrastructure? Is that -- or is that the most important component?
ZIENTS: Yeah. I think -- I mean, I think the short term is how can we immediately create jobs.
ZIENTS: Yesterday I was with a group of 10 travel CEOs, and if you look at our global market share in international travel, it's gone from 17 percent down to 12 percent across the last decade. A root cause of that is both 9/11 and how difficult it is to come to this country. Infrastructure and other things also contribute. But recovering market share in travel is a huge deal, and the travel, in a very good way, is labor intensive. And in fact, in the last year the travel industry has added 100,000 jobs.
One of the root-cause problems was the backlog of visas for people from China or India or Brazil to come to the U.S., a hundred days to wait and hundreds of thousands of visas backlogged. The State Department doubled down, started running double shifts, added people. It's a good return on investment when you think about the incremental cost to the State Department. A, it's fee funded, and B, when people come here, they spend thousands of dollars. So we have increased visa processing by 40 -- a minimum of 40 percent in all three of those countries, and that's having a direct impact on the industry.
We still have some backlog, which is a good sign. It means there's even more demand. And we'll continue to work it. But that travel, I think, is a good case study in how the jobs council pinpointed an opportunity to have immediate job creation, we were able to work on it with the State Department and Department of Homeland Security, and it's already having a tangible impact.
UTLEY: I would just note that -- for those of you who haven't gone through the reports -- the recommendations -- you came out with recommendations -- I think there have been three sets that came out since last June.
It covers areas which are familiar, but I just might touch on some of them -- dimension of education, innovation, energy, manufacturing -- interesting topic -- can you build it, can you bring a little bit of this back -- tax and regulatory reform, entrepreneurship that you're talking about, and above all, you know, the education and skills, training.
Let's push this one step further now. All right. It's the President's Council on Jobs and Competitiveness, and the two are intertwined. What if it had been the President's Council on Competitiveness and Jobs? Maybe it's no significant difference but a question of emphasis. Is this council -- and I don't know who wants to take this question -- is it about jobs? Is it about competitiveness? Granted that the two are intertwined, what is prior
It was identified by the jobs council. Penny Pritzker took a very active role in a pilot, Skills for America, that's working beeautifuly, where businesses are working -- Ellen, you want to take a shot at this? Because you lead a global company.
KULLMAN: So if you're not competitive, you can't create jobs, right?
KULLMAN: So they go hand in hand.
KULLMAN: And you can do some stuff -- like on infrastructure development and government investment in the short term -- that can help, but it's not going to last if you don't fundamentally create the kind of skills that we need, have the right kind of tax system that we need. So -- and regulatory environment, infrastructure -- it all goes hand in hand.
But if we can't -- you know, I can't put a manufacturing job in this country if that job doesn't lead to a competitive product --
KULLMAN: -- for the market in which it's serving. And so it's -- it's not an either/or; it's an and.
ZIENTS: Well --
UTLEY: Go ahead.
ZIENTS: I was going to say, on the community college that Ellen talked about earlier, there are 3 million jobs in this country right now that are unfilled in places like advanced manufacturing, health care, technology. That's an opportunity. And the community college, I think, is a -- is probably the right vehicle or the right set of vehicles for achieving it.
It was identified by the jobs council. Penny Pritzker took a very active role in a pilot, Skills for America, that's working beautifully, where businesses are working closely with community colleges. So community colleges are offering the courses that allow students either out of high school or later in their career to achieve the skills for us to compete, as a country.
That turned into a major proposal in the president's 2013 budget, an $8 billion proposal for community colleges to work closely with their business communities to create 2 million graduates and fill that gap of the 3 million that exists today.
WOLF: You know, I think another way to look at your question is kind of how we looked at it, which -- there were two bookends, which we probably never got an answer to, on why unemployment is high. On one side we would discuss the skills gap. Is it because, you know, construction unemployment's at 25 percent and there's a skills gap and to have them retransform into another area? The other side that the CEOs would talk about was the supply-and-demand effect. Is there enough demand to keep hiring?
And so if you look at what we came out with, I think we really bridged those two bookends very well. We have some things that are definitely just education-related, and we have some things that are really, I would say, business demand-related, whether it's things like SelectUSA or how we look at energy and things like that.
UTLEY: But let's follow up again with what Ellen was just saying, because -- let's say: All right, the council's doing a good job in what -- exactly on what it should be doing. The administration's concerns are there. We all understand that. The recommendations are absolutely right on.
Ellen just said she has to hire the right people in the right places to make DuPont grow and be profitable and satisfy their shareholders, and that's a very important agenda.
And you and your -- Jeff Immelt have done the jobs, you know, brilliantly on that. That's why you're here and why DuPont is around the world. I think you said more than 60 percent of your revenue is now from oversea. And that's's where the emerging markets, particularly in agriculture, where you have a lot of your chemicals at work. It's a wonderful opportunity, right on.
So when you're on the council here, you're weighing these two things. Yes, we need these skills, and you're deeply committed to that, but the business imperative is saying, I've got to be out there. So even long term -- and we need the skills and all of these actions to create the talent pool and be competitive, but are we going to -- it's not a question of going back to the old order. That's the new world you're operating in. What's the implication for that or for what the jobs council is trying to do?
KULLMAN: So a couple of things I would reflect on from that is that first of all, we export -- about 30 percent of what we make in the United States is exported. And we have -- we're not a labor- intensive company. We are advance manufacturing, a lot more than chemicals, but -- you know, in agricultural products, in advanced materials for electronics, for protection -- Kevlar, Nomex, Tyvek.
And so I need to put our manufacturing jobs where I can not only have the right cost position but where I can protect the technology and where I can access the market. So you got to consider all of it.
And so it is a multi-varied equation that you're trying to solve when you do this. But there is, I think -- you know, we find -- we just opened up a brand-new manufacturing facility in Kevlar in South Carolina six months ago, half a billion dollars of investment. State of South Carolina was very clear on helping us get the right trained employees with the right skills. They were very helpful. It's in a location in a port and the infrastructure's there that I can get that material anywhere I need it in the world, in the United States or anywhere else in the world.
And it's -- it is a globally competitive plant.
And so it's there. It's possible. But you know, you have to consider all of those various aspects of it when you do this. And so, you know, we all have examples of that, right? How do we get more of it? How do we leverage it, you know?
And that's why we focused on a number of different areas, not only what big companies can do, but what can entrepreneurs do. A lot of my suppliers, a lot of my customers are small companies, right?
ZIENTS: You know, Robert was talking about the U.S. as an attractive place to invest for foreign companies. And that's picking up, and we need to work on that.
And what Ellen is talking about is a tipping point that is happening for a lot of companies that are headquartered here, which is that it's no longer a no-brainer to send those jobs or set up those manufacturing facilities overseas. Boston Consulting Group, McKinsey, others have done some very good work. The president held a summit, based on a jobs council recommendation, with major CEOs from big companies, little companies that are now looking at the economics, labor rates here versus abroad, shipping costs, energy costs, intellectual property protection. And it is now -- for many segments and many industries it makes more sense to build here than it does abroad.
So obviously, we want to do everything we can to encourage that. And you see that in the president's policies. But this is different than a decade ago when you look at the basic economics.
UTLEY: We're going to go to questions in just a minute, but before we do, I'll come back to an example. We're talking about big issues, broad approaches which have to then become granular, you know, as we deal with this, investments of money, et cetera.
In the State of the Union message, President Obama mentioned, among other things, the success of the bailout of the auto industry, of GM. And this is not the business or the job of the -- of the council, so I'm not asking this as council per se. But I think it's all on our minds.
And he said government intervention, government support -- GM went through the process, scaled down and came out competitive, hopefully -- knock on wood -- competitive in the global market, certainly here in the United States. What he did not mention, of course, is that it's a smaller workforce, and the new hires on the production line are earning $15 an hour; the senior workers next to them are earning 29 (dollars) or $30 an hour. So this is a -- this is the competitiveness side of a success story. And you can say it's also a success for the jobs for those people who are happy to work for $15 an hour. But that's basically what the story is.
To what extent is GM -- and I'm not asking you to speak on behalf of the council -- is the GM model a model for the future, quite aside from the skills issues and entrepreneurship, et cetera?
MR. : (Inaudible.)
KULLMAN: I mean -- yeah, I mean, so look, I -- you know, the automotive industry has its own set of needs, its own set of skills, its own set of economics. It's got to deliver globally. The businesses I'm in have their own set of needs, their own set of economics. And certainly I have very high-skilled manufacturing jobs, and I have lower-skilled manufacturing jobs. And you got to price to the market, or we can't be competitive.
So there might be a little bit of reality in that, right --
KULLMAN: -- because it is -- you know, from that standpoint, other places in the world -- Latin America, you know, or -- I mean, are growing at a faster rate than the U.S. is.
WOLF: I would answer it a different way, which you may or may not be surprised I'd be answering it a different way. But I think that when we went through the deep part of our recession, the average- hour workweek in our country went down to somewhere around 32 to 33 hours per week.
And what you had CEOs across the country do is really get much more their productivity and efficiency gains. And over the last few years you saw those efficiency gains in their returns, their balance sheets (were more nimble ?), so on, so forth. Today you see the average hour workweek at around 34 1/2. It's at pre-recession levels, which means that they've made a lot of their productivity gains and now for growth, organic growth, they need to hire. And we're seeing the hiring take place.
And I think what we fail to realize when we look at these unemployment numbers, we don't take in the average hour work week going up almost an hour, or seven-tenths of an hour, which actually equals 2 million job equivalents. And we all know in a consumer- driven country like we are, which is 70 percent of our GDP, that at the end of the day, 2 million job equivalents go a long way in wages and in spending and everything else.
So I think -- you now, maybe that's not answering the GM question, but I think that corporate America made a lot of productivity and efficiency gains, and you see that the labor force is starting to get a little tighter. The numbers for jobless claims were the best in four years today. So I think you're seeing now the gains that have been made, and so I think you'll continue to see actually unemployment continue to lower.
UTLEY: We're going to go to questions. I just -- I was talking about this with a European friend the other day, a colleague, a businessperson from Europe, who made the observation -- because they're going through their own competitiveness issues and jobs issues -- about one of the great advantages in America is not just our sense of flexibility, being able to adapt, innovative, entrepreneurial, but is that Americans have a high threshold of pain, accepting to adjustments. (Laughter.) I'm not sure whether this was a compliment, but I'd never really heard it put that way, that we will accept more pain, our workforce, than people in other countries will accept, or in Europe and Japan.
So with that, let's go to questions. Hands up.
Please get up. There's microphones coming around. State your name and a brief question -- no statements, please, just a brief question.
We'll start right here.
QUESTIONER: My name is Khalid Azim (sp). My question is about the growing income inequality in our company -- in our country. How does that affect competitiveness and job growth?
UTLEY: Who wants to take that?
KULLMAN: Well, you know, I think part of that stems from education. You know, we -- of our young people today, only 75 percent graduate from high school. Twenty-five percent don't get a high school education, and we all see the data that says you have to have a high school diploma and then you have to have maybe a little bit beyond that to get into some of these jobs that we're talking about. You don't have to necessarily have a full college degree.
But I think a big part of that disparity stems from an educational gap that is growing, you know, especially in some of the lesser-advantaged populations in our country. And that's why education is one of my passions. I think science and math, you know, education -- you got to start with kids in middle school and get them interested, and if you can, then you can -- you can -- they'll take advantage of that in high school. They'll take advantage of that post-high school.
But I think that you've got to deal with the education gap, because that is a big driver for the income disparity.
UTLEY: Question right here. And then we'll move close to the back of the room. Right over here.
QUESTIONER: Thank you. Mora McLean with the Africa-America Institute. My question is on the education front as well. Is the council's position that the community college approach is going to be sufficiently catalytic to overcome this 75 percent high school graduation rate, a patchwork of uneven financing and regulation of education, huge disparities in quality and a higher education system that is nominally public, sufficient to rival China, which is grooming engineers in kindergarten?
KULLMAN: Yeah, you know, so you got to start young, right? You got to start and get kids -- and if you read the full text of the report, we start in pre-school, saying that pre-school has been shown very clearly to enable kids to get to math, you know, language and skills by third grade to be at par or, you know, where they need to be. And if they can't get there by the third grade, if they're behind by the third grade, it just follows them right through. And so we need to deal with pre-school.
We need to deal with transparency for parents around the quality of the education in their school districts and have real data that's meaningful so parents can make a decision about, you know, where they move, where they live. Common core standards -- you know, every state you go to has a different standard on math, has a different standard on language, on what it means to get out, and they're not all that close. I even talk to some of our people we transfer around the United States, and you know, you hear it.
So there's a variety of different recommendations that we have in there that start with pre-school and go all the way up through community college and college and then how to connect that into the workforce, because we're the -- we're the customer of the education system, right? We're the ones that are hiring. And that has to be much more closely connected. So I don't mean to sound like it's a simple series of issues to solve. I think we all understand what they are. I think we have to continue to drive --
ZIENTS: You know, I think Ellen is exactly right. And obviously, it's been a priority of the president from day one -- education, starting with pre-K, early childhood, all the way through. It's been an added emphasis across the last 12 months on college affordability.
If you look at tuitions, both state, private and for-profit schools, they've been compounding at a very high rate, and students are taking on exorbitant amounts of debt. So, you know, there's an emphasis here on how can colleges become more affordable, reward innovation around affordability. The president wants to continue the American Opportunity Tax Credit, which gives up to $100,000 per family for a four-year education.
So we need to do all we can to make higher education, whether that's a for-profit college and making sure that those students have gainful employment after that investment or a community college or a private college, that they're more affordable and students don't walk out with the combination of a lot of debt and without a job.
UTLEY: OK. Let's go back -- right back there first. Mmm hmm.
QUESTIONER: Thank you. Lauren Leader-Chivee from the Center for Talent Innovation here in New York. I don't know if you saw there was a fascinating piece by James Surowiecki in last week's New Yorker about the pressure on the retail industry to keep a very low number of jobs, the pressure from Wall Street to keep labor costs as low as possible, and his theory that in fact that actually negatively impacts the profitability, that in fact greater jobs can make the companies more profitable in the long term. I wonder if you've been discussing in the council the dimension of the Wall Street pressure on labor cost and what that means in terms of their long-term investment.
Just one more point, you mentioned the pain. Part of what we're seeing -- what we're seeing is just burnout, exhaustion, really negative impact on remaining workers who are hugely overtaxed in working actually a lot more than the 34 hours you mentioned in many cases.
UTLEY: Robert, do you want to take a crack at that?
WOLF: Well, that wasn't part of any of our subcommittees that we brought up as a topic.
My guess is everyone may have a view on it, but it wasn't part of the jobs council's agenda.
UTLEY: But is the basic point of the question valid? I mean, obviously there are pressures on anybody, retailers, all the time. There are continuing pressures on labor costs, and that's a given. So --
KULLMAN: Well, there's pressure on all costs, right? I mean, so at the end of the day it comes down to profitability and return. And each industry has its own set of economics there.
And Wall Street's poll focuses on short-term results, but we as business leaders not only have to satisfy our shareholders for the short term but for the long term, because many of our shareholders are, you know, long-term holders -- right? -- because of the nature -- we're 210 years old, so maybe they think we'll stick around till we're 300, hopefully, with some focus.
But I do think that there are a lot of those pressures out there. And I think it's up to individual businesses. Robert makes the decisions for his, and his people, we do the same. That we've got to have that right mix to be successful for our customers, because if we're not going to be successful for our customers, then we won't be around. And I think that part of it has to continue to come into play.
UTLEY: Questions. I'll go here and then -- we have another quarter of an hour, so we're going to try to get as many in as possible.
QUESTIONER: Michael Levin (sp). I'm one of those people who didn't have enough STEM education.
KULLMAN: We can work on that still. There's time -- (inaudible). (Laughter.)
QUESTIONER: But I do have a -- (inaudible) -- calculate -- a question. I never understand the new net job creation format. So let's say that there are 500,000 new jobs created and there are 300,000 jobs lost. So I guess net job creation is 200,000. If 100,000 of those are new firms that you referred to, that are hiring, you know, or 101,000, that's 50 percent of the new job -- the net new jobs, so you think -- one tends to think that's important. But it's only 20 percent of the 500,000 new jobs that are created. So if it's only 20 percent, why does it deserve as much emphasis as one might think it deserves by assuming its 50 percent?
Do I have that right, or do I have it wrong?
KULLMAN: Well, actually, you know, he could have been a mathematician. (Laughter.) I think actually, your math is working out fine.
MR. : There's still time.
MR. : Yeah, I think --
QUESTIONER: And then the second part is irrespective of that calculation, which you'll explain --
WOLF: You're talking about entrepreneurship? Which aspect are you --
QUESTIONER: No, you made a statement -- a lot of people make the statement that the large -- the largest number of new net jobs created come from startups. And I don't -- I'm not sure what the import of that insight is. And I'm not even sure how you calculate it.
The second part is whatever those jobs are, what type of jobs are they? Are they the type of jobs that create firms, that scale and hire new people? Or are they lawn service, beauty parlors and, you know, lifestyle type companies that don't create new jobs for the economy?
WOLF: Well, a lot of the jobs over the last three jobs have been technology-driven. So, you know, as you see -- whether it's the Google, the Microsofts, the Apples of the world, I think -- I think what we were trying to do is to make sure that we -- it was not just entrepreneurship, but as well, small businesses. So I talked about the JOBS Act, but also Business USA, which is startups.
So our view is you need large companies; you need small companies that are growing; you need those that are maturing. It's a collective. But when we look at net new jobs, we were just saying that over the last three decades there are 40 million-ish net new jobs, and of the new companies that are actually under five years old that -- equal to about 40 million.
So we're not saying we added and subtracted each monthly basis. I mean, that's no different than saying, hey, we create 4 million jobs every month, right?
I mean, that's really what we do. There's about 4 million new jobs every month, and there's about 3.8 million jobs that are left every month. So we could actually argue that net we're creating 50 million jobs a year. We were trying to look at a net number with respect to the math.
The one thing that we were trying to focus on for us was, I think, as Ellen mentioned -- was manufacturing. So right now we live in a country that's really consumer-driven. We were trying to emphasize export, the export initiative, and one thing we don't give the president enough credit for is the -- his doubling export initiative over the last five years.
One thing that our country has gone -- we've gone from 11 percent of our GDP was exports to now it's over 15 percent. And it's the first time in a three-year period we've seen double-digit growth in exports, and that's before free trade.
So we could go into a bunch of different job creation avenues. I was focusing, actually, just on the entrepreneurship. But we think we have different reasons of where we're growing in a lot of different sectors.
UTLEY: A footnote on -- a footnote on your point. We shouldn't confuse -- not all entrepreneurs -- new entrepreneurial enterprises are going to be big job creators. You could go out and start selling sausages on the corner, you know, if you want to. And not all small businesses are going to grow.
We're really talking about job creation. Some entrepreneurial enterprises that start will create jobs. A lot of others will be happy to have five people. And so there's a difference when you get to job creation.
Back there. The lady right there. Mmm hmm.
QUESTIONER: Hi. Ryanne Fruhart (sp), Time Magazine. Two quick questions. What should manufacturing be as a percentage of the economy? And of the jump in exports that you talked about, how much of that is down to weak dollar, compressed labor cost, as opposed to a real sort of leap in competitiveness?
And number two, in terms of technology-related job destruction, where do you think we are in that process? And is technology moving so fast now that we can't actually educate our way out of the problem?
ZIENTS: I don't -- I don't have an answer for you on what the ultimate percent of the economy should be manufacturing. We have created 400,000 new manufacturing jobs across the last couple of years. Many of them are high paying, good middle-class jobs. And I think we all believe that we need to make more here to be globally competitive.
The second question was -- (audio break).
WOLF: (Audio break) -- just on the manufacturing, one good gauge is Germany. About 40-plus percent of their GDP is exports. We're at somewhere around 15 (percent). So versus the industrialized countries, we're probably at the lower end.
ZIENTS: To add to that -- and now I'm recalling your question on the -- on the export side -- it clearly has -- it's multifaceted.
That said, when we benchmark our efforts in terms of how we promote our products abroad and how we help our companies compete, we do very little when benchmarked versus Germany or Singapore or others. So it's important that we do all we can to help.
That said, it's primarily about what Ellen and Robert and others are doing to make their companies even more competitive. And obviously currency -- as you point out, currency fluctuations are a major contributor. All that said, the -- we're on course to do what the president said we would do, which is double our exports by the end of 2015.
UTLEY: Next one, down here.
QUESTIONER: Turn that off? Or is that on? Paula DiPerna, the NTR Foundation. Thank you. I just wanted to tie -- taking note of the energy subcommittee and the infrastructure references and now the manufacturing emphasis, I wonder if maybe -- Jeff, this is for you -- just sort of describe if you plan any kind of further highlighting of the sort of green nature of job creation, because there you have DuPont, probably the leading environmental company in the world; UBS, probably the first bank in the world to recognize the importance of green investment.
And there's a high degree of multiplier when you characterize these investments as environmental, even though politically that word may be -- and the AFL-CIO is very much behind getting -- facing climate change as a jobs creator.
QUESTIONER: And yet I don't quite see the -- I see a little flavor but I don't see a big seasoning of that. I wonder if that's deliberate or where you plan to go with that.
ZIENTS: No, I think, you know, the president's been spending lot of time across the last few months, for good reason, on energy, given gas prices. And, you know, he believes and we believe in an all-of-the-above strategy. So domestic production of oil and gas is actually at an eight-year high. At the same time, across the last couple of years we've doubled our investments in renewables, geothermal, wind, solar. And we've encouraged that through a tax credit for those investments as long as they're here in the U.S., the 48(c) tax credit. so as you see the president go around the country delivering his energy message, many of those stops are at solar facilities, geothermal facilities, wind facilities, highlighting that is essential for our all-of-the-above energy strategy.
The other piece of it is efficiency. And there was an effort that was started by the jobs council in conjunction with the Clinton Global Initiative, called the Better Buildings Initiative, where many of the jobs council member companies signed up to create efficiencies in their buildings, which has a very high return, to invest in manufacturing facilities and office buildings. At the same time -- so that was a total of a $2 billion commitment made by job council companies and other private sector companies. At the same time, the federal government committed to $2 billion of upgrades at no expense to taxpayers because there are companies that are willing to come into federal facilities and take -- make the capital improvements to improve the efficiency.
And these efficiency gains can be 20 (percent), 30 (percent), 40 percent. And they do that by -- they get their payback through reduced utility bills. We the federal government end up saving money for taxpayers with no taxpayer money at risk, as -- once the private sector recoups their investment, we then have those savings going forward.
So the president has a(n) all-of-the-above strategy when it comes to energy, and clean renewables and efficiency are pillars of that -- of that strategy.
UTLEY: OK, we have time just for maybe one more question back there, and then we have to wrap up.
QUESTIONER: Stephanie Murphy, SunGate Capital. Ellen, you had talked about how there was a need for more trade education and certificate training and that community colleges was a key component in that. Some 40 percent of certificates and more, depending on what sector you're talking about, actually are given through trade and career colleges. And I was wondering if you look at all at the role of that sector in the education -- for certificates and training to fill that gap?
KULLMAN: Yeah, so Darlene Miller, who led that effort for the Council on Jobs and Competitiveness, was very much focused on creating of a certification program and something that can be leveraged -- worked with, I think, the Manufacturing Institute, which is part of the NAM. And you know, community colleges is an easy place to go because we all know them locally, right? I mean, got my manufacturing plants in -- you know, in West Virginia, there's a community college, you know, associated with West Virginia University we work with to create the right kind of skills.
What we're looking for there is something that can leverage broader.
And it is broader than just community colleges. There are other institutions, other organizations that can provide that.
And I think our criteria was around is this something that we can standardize and leverage across a larger population to get momentum, because we all have those examples of that small, you know, impact that we have for my one plant here or my one plant there. And you know, those are hard things to sustain. And if we can get it on a national standard level and really driving that from a leverage standpoint, I think you can create real momentum, regardless of whether it's a community college or another institution that's helping provide that, well, collaboration that you have to have in order to be able to set those standards.
UTLEY: Really quick -- (inaudible) --
WOLF: Actually one of our sessions with the president in the White House was about skills for America. And the idea was how do you align community college education with the business needs so there's a more direct drive to hiring.
And it was interesting, we had the CEO of McDonald's, Skinner, come in and the CEO of GAP. And McDonald's has this training called English Under the Arches, I think it's called, where they actually do specific training for people to come in and own franchises in certain urban areas so they can actually develop businesses. Another one that was discussed was Pac. Gas, where they came in and they talked about the training they do, similar to DuPont, in their local areas, that aligns with their manufacturing and building needs.
So you know, I think the Jobs Council -- like, we started pre-K, but we also went to post-high school, where we talked about a better alignment. And I think that that's something we're spending a lot of time in that Darlene's (sp) really taken up the lead on that.
UTLEY: We want to wrap up with some quick comments from the panel members. First I just want to remind you that this conversation continues in many forms and aspects, but on the 12th of April there's a breakfast event here on U.S. education reform and national security. And that's going to be with Joel Klein, former head of the school system here, and Margaret Spellings, a former U.S. secretary of education. So that's breakfast on April 12th. If you haven't gotten it, you will be getting it, but you might want to mark that in your calendars.
Final comments -- Ellen, head of a big global corporation. Jeff Immelt is the chairman of the council. But speaking from your own point of view, the role of these big U.S.-based, deeply rooted like DuPont, corporations which are now global and depend on those expanding, emerging markets -- I asked a CEO of one of these firms awhile back about to what extent is it important for your company to be seen as or to see yourselves as an American company, since you're operating everywhere. This is a -- (inaudible) -- question as well as a -- and he, she -- I won't say which -- said, that's an interesting question, and thought about it and said, I can think of one reason: If we get into a serious issue with the WTO, you want to have the United States in your corner. Aside from that, not necessarily. Now, there are other aspects, because they are rooted there.
So if you, from a perspective of the head of a global, Delaware, United States, going back, you know, the 300 years and awhile --
KULLMAN: Two ten.
UTLEY: Two ten.
KULLMAN: Two hundred ten.
UTLEY: Two hundred and ten, sorry, 210.
KULLMAN: We're working on it.
UTLEY: Three hundred, hopefully. What does it mean to you -- I mean, how do you see -- you're on the council. You give your time; you give your energy for -- but from a CEO's point of view or Jeff Immelt's point of view?
KULLMAN: Well, yeah, so look, we are an American company. We were founded by immigrants who moved here from France 210 years go and found a place where they could create technology, innovation, apply it, a strong workforce, and build a, you know, multinational, global business. But we are an American company.
And we have to be competitive everywhere in the world. But you know, your home country kind of gives you the guidance, whether it's around regulatory or tax or whether it's around, you know, WTO or anything like that. And so that's the reality. And so what you have to do is play to your strengths.
KULLMAN: Right? And science and innovation has historically been a great strength of this country, and it can continue to be if we focus on it and focus on it advanced manufacturing -- OK, that's my (shtick ?) -- and really to be able to play it out over the next few decades.
UTLEY: Robert, employment levels, about job creation -- immediate problem, long-term challenge. What -- to what extent did the council address where you would like to see job -- employment levels be -- rise to or unemployment rise or sink towards a certain figure? And if not specifically, what was the consensus as to what we and you are aiming for? In other words, what's the new normal going to be in job creation? If we're down to 6 percent, 6 1/2 percent, is that the new normal? Any thinking on that?
WOLF: So we didn't come out with any one number.
WOLF: It's not -- you know, I think it's anyone's guess. Our idea was, how can we fast-forward job creation and make our country more competitive on the shortest wavelength possible? And our view was to have a three-pronged approach. One was quick wins. One was more of a two- to five-year process, and that had to do more with some regulatory hurdles and working with the executive branch. And then the other was long-term competitiveness. So our ideas was to attack it in three different ways.
And I think one of the best things for us as a group was we went out and listened to people. We had 24 listening sessions around the country that we continue to go on. This is, in essence, one of them. And we hear of different ways that we think we can bring messages back to the White House, different ways that we think we can get competitiveness more ramped up or job creation faster.
So I think for us it's to -- in some ways, to be that business outreach for the White House, for the U.S.
UTLEY: Jeff, finally, when Franklin Roosevelt gave his inaugural address in March of '33, we know what he said in the first paragraph, from the depths of the Depression: "The only thing we have to fear is fear itself." If you go down to the bottom, the end of that speech, he also said: I will in the immediate days and few weeks send to Congress a package of proposed legislation, action steps which must be implemented immediately to meet the current emergency -- that was the word, "emergency." If Congress does not approve these steps, I shall not hesitate to use my executive authority to implement them. Period.
You mentioned that the administration has the power to implement a lot of these, particularly the quick wins that are going on.
ZIENTS: Mmm hmm.
UTLEY: So I'm not comparing this administration to FDR or the economic situation to the Depression. What can the -- what does the president have in his powers to do now?
ZIENTS: I think the president is doing all we can and -- because we can't wait for Congress to act. They have not shown their ability to act quickly. Congress is sitting right now on specific proposals from the president that would significantly increase our investment in infrastructure, paid for through the savings from ramping down Iraq and Afghanistan. So they're paid for. And this would not only put people immediately to work on infrastructure projects, as Robert and Ellen have talked about, but also enhance our global competitiveness. So the president's urging to act on specific proposals that create jobs now, that make us more competitive in the long term.
In the interim, the president is doing everything he can within his powers. And you've heard about several initiatives today that are representative, whether it's tourism or expediting permitting or, you know, piloting innovative hubs for manufacturing.
The president is pushing his team, his jobs council, to come up with new ideas to have immediate impact on job creation and our longer-term competitiveness. At the same time, we need our friends on the Hill to act on these specific proposals that would enable us to do even more in the short term and the long term.
UTLEY: Well, at least you have this jobs bill this week headed to the White House. That's something. But a lot more needs to be done.
Lady and gentlemen, thank you very much.
MR. : Thank you.
UTLEY: Thank you all for being with us. We stand adjourned. (Applause.)
KULLMAN: Thank you, Garrick.
(C) COPYRIGHT 2012, FEDERAL NEWS SERVICE, INC., 1120 G STREET NW; SUITE 990; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.
UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.
FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.
FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR EMAIL INFO@FEDNEWS.COM.
THIS IS A RUSH TRANSCRIPT.