The Work Ahead: Machines, Skills, and U.S. Leadership in the Twenty-First Century

The Work Ahead: Machines, Skills, and U.S. Leadership in the Twenty-First Century

Kaveh Sardari

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Robots and Artificial Intelligence

Technology and Innovation

Labor and Employment

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United States

Economics

The world is in the midst of a transformation in the nature of work, as smart machines, artificial intelligence, new technologies, and global competition remake how people do their jobs and pursue their careers. The Work Ahead: Machines, Skills, and U.S. Leadership in the Twenty-First Century, the report of a CFR-sponsored Independent Task Force, assesses the future of work and workers and the implications for the U.S. economy and national security.

SIEGEL: Good morning. I’m Robert Siegel, formerly of NPR’s “All Things Considered,” now retired. And I’d like to welcome you to today’s launch of the Council on Foreign Relations-sponsored Independent Task Force report The Future of the U.S. Workforce.

Today we’re pleased to be joined by the task force co-chairs—John Engler, former Governor Engler, joins us via video from Michigan; and Penny Pritzker, who is here—as well as Project Director Ted Alden and Deputy Project Director Laura Taylor-Kale, who is here. Welcome to all of you.

The subject of The Future of the U.S. Workforce, as you will read in the report I hope, touches on so many things—education, technology, benefits, mobility of labor—that this is an important, broad study, and I think you’ll be impressed by the—by the depth of it as well.

Penny Pritzker, I’d like to begin with you by giving us some sense of, as you’ve looked ahead to the future of the U.S. workforce, what the—what the challenges were, broadly, that you saw, and how well-prepared we seem to be to meet them right now.

PRITZKER: Well, Robert, before I start I just want to thank Ted and Laura and the entire—and Anya, all from CFR, who really were the—they were the workforce behind the brainpower of our task force. And I want to thank our—our task force is sitting up here in the first couple of rows, and I want to thank them for all of their great work.

You know, the task force was really focused on how do we build America’s confidence that we can reconnect the link between education, work, opportunity, and economic security. And the opinion of our group is this is the economic issue of our time. And frankly, our institutions—our government institutions, both at the federal and state level, as well as our educational institutions, and our entire ecosystem—is kind of failing Americans at this point.

We have 75 percent of Americans, according to Pew Research, have real fear about their jobs, their job—the current jobs they’re in, the prospects for them to remain in their jobs, and the prospects for their families. And this is a very serious challenge that requires—

SIEGEL: Justifiable fear, as you—

PRITZKER: Absolutely, because what’s happening is technology. And we want to blame globalization and trade, but the reality is the real forces at work are technology. Robotization, automation, artificial intelligence, according to studies—McKinsey has done many studies, and others—are really changing the nature of work. And this is the issue that we’re trying to address.

SIEGEL: Laura, I wanted to ask you about the challenges posed by technology. They don’t—they won’t affect all workers equally by any means.

TAYLOR-KALE: No, not at all, and this is something that we did look at in the report. We decided to really focus on a broad swath of the U.S. workforce, but there are definitely differential effects, whether you’re talking about women in the workforce, there are certain occupations that will be definitely much more affected by—that are typically female-driven that will be much more affected. There are certain other, you know, distressed groups, vulnerable groups. People of color in certain occupations will also be affected by technology.

SIEGEL: I want to ask Governor Engler about the question of education, since you’re now running Michigan State at this point. Are our universities—our state systems, our community colleges—are they at least tuned into the problem? Are they thinking about good solutions?

ENGLER: I think there’s some awareness. I don’t think it’s nearly where it needs to be. Are they tuned into the solutions? Again, I think it’s very sporadic. I don’t think it’s consistent. It certainly isn’t organized and planned in any kind of way. I think there’s a whole conversation that’s taking place in America that sort of runs parallel to this report, and it generally is about the future of higher education—what’s that mean, what’s it going to look like, how is it going to be delivered, how can we pay for it.

And I want to echo what Penny said to start with that the work that Ted and Laura led, and so many of our task force members. And Penny in particular as the—we’re co-chairs, but she is the primary co-chair, I have to say—(laughter)—because she really, when I got tapped to come here to Michigan State, stepped in and has done a tremendous job.

But this report talks about the jobs that are going to be eliminated, the jobs that are going to be created. All of those jobs that are going to be created are getting created in many different ways, and they’ll be even more different as we go forward. And when you think about, as this report tries to frame up, sort of the work, the opportunity, and the economic security that are everybody’s objectives, the work ahead, as the title of the report indicates, is pretty daunting, but it’s something that we’ve done in our past.

I’m here at Michigan State, the first land-grant university. When we started out, agriculture was pretty rudimentary. Look where we are today. Well, in the 21st century, with this infusion of technology, the opportunities are limitless, but we have to be prepared. And I think the one thing this report talks about is you better get a plan, and then you better be prepared to keep reworking that plan and doing that over the course of your life.

SIEGEL: Well, over the course of your life is a phrase, Ted Alden, that I wanted to pursue here. The report and the task force foresee a time when Americans will be changing jobs many, many times. The age of people like me, who spend 40 years at the same employer, is pretty well behind us. That means education should not be seen as something that happens until you’re about 22 or 25.

ALDEN: Yeah. I mean, I think there are really sort of two key issues there.

And we are already in that age. I mean, people are changing jobs a lot more than they ever did before. If you look at all of the net job growth over the last decade, it’s occurring in these gig economy jobs, part-time work, independent contractors. We’re already really in that new world, and it’s only going to accelerate as a lot of these technologies mature and they’re widely adopted in the workplace.

So I think there are really two keys that our report zeroes in on. One is that we really do need to strengthen the relationship between education and work. That’s true at a younger age. You know, we’re very much fans of apprenticeships, internships, every possibility to connect what people are learning in schools with what their work opportunities are going to be in the future. That’s sort of piece one.

And then, once you’re in an occupation, it’s not—it’s not like you’re coming out of school—you know, community college or university or wherever—and you’re done. You’re going to find many times in your life you’re going to need to acquire new capacities, new capabilities. And so we talk a lot both about the obligations of companies and about how individuals can prepare themselves for that kind of world.

I think the other piece that I hope we get into a little bit is just the way our society supports work. So many of the benefits that we have, from retirement to health care to vacation to sick pay, are attached to full-time work. And as we move into this more flexible world, we really need to rethink how we do that.

SIEGEL: Yes. And I wanted to ask Penny Pritzker about that, because one very—well, it would be quite a dramatic change in the way we organize benefits. You propose we should attach benefits to the employee rather than to the job and we should have portability. I could ask you what you think the prospects are of us being able to make that change, given how contentious discussions of benefits are in the country. But how, ideally, would it work? How, ideally, would that improve our coping with the challenges facing the workforce?

PRITZKER: Well, I think that the idea that we proffer is really one of you as a worker can earn your benefits partially from different jobs; in other words, so you can accumulate, in essence, the equivalent of what full-time benefits would look like by virtue of the fact that you have a portfolio of work.

Aside from the fact, the reality is is that we have to be—that people are going to be changing jobs 10 and 15 times. I mean, I see it with my kids who are in their 20s. They’ve already had three jobs, and they’re in their mid- to late 20s. It’s sort of an amazingly different experience than, Robert, you and I have had. I think I’ve had two major jobs in my life. And that’s different.

But why should you be denied the ability to access a retirement benefit or health care benefits or worker’s compensation, et cetera, because instead—because we live in a world where we’re creating work in pieces as opposed to a complete job or career? And so this has got to—I think we’ve got to adapt to this.

Fifty-five million Americans today work either in the gig economy or in contract economy. As Ted said, all the net new jobs created since the Great Recession are basically in the gig economy or in the contract world. And those are just nice ways of saying you really don’t also have benefits attached to those jobs, and I think workers are going to say this isn’t acceptable. And frankly, for us as a country, not having a safety net for that size of our population is just not workable.

SIEGEL: Well, you do—and perhaps, Governor Engler, you can take this—the report does propose increasing unemployment insurance, that we should—we should accept that there will be more people with periods of unemployment, there should be better unemployment benefits. But can you sell to the worker the idea that you will—you will be better off if your benefits—if you don’t get a job that comes with benefits because your benefits come from someplace else? And if that someplace else isn’t the federal government, who is it?

ENGLER: Well, I think that—I think there are some models out there today. If we think about the way the whole shift in retirement moved from the defined-benefit to the defined-contribution, that brings in portability. That’s actually something in a university we’ve had for a long time, I guess, the TIAA-CREF kind of system.

But I think what Penny’s discussing and what your question gets at is how do we—how do we—and Ted teed this up—how do you make this an economy and an employment world where every time I move I can put something aside, and if I’ve got an employer they can match it, or if I don’t have an employer—if it’s truly contract work, I’m doing something over the internet—then I can put even more aside that’s for my future and I get that same sort of tax-deferred benefit so I’m not taxed immediately, but I’m taxed later on when I withdraw it? I think there’s a whole set of options—and the report discusses some of them—that create flexibility, and I think that’s really what we want, and we can’t be prescriptive.

And for the worker, I’m not sure there’s going to be much of a choice. I think that’s what’s emerging. And what we’re creating, then, are really options that a worker can take advantage of regardless of the work they’re doing. It’s not so much that the employer’s going to offer it because they’re not going to find employers, probably, that are going to put forward these traditional kinds of packages. And you’ll see, I think, as there’s a competition for talent, maybe employers then trying to bid up their ability to hire you by being more generous in what they’ll offer. But if you don’t have that situation and you don’t have those skills that are in demand and you’re trying to take care of yourself, then you need those options and the flexibility.

ALDEN: And just—sorry, Robert—just to be clear, I mean, the idea of portability doesn’t take employers off the hook.

PRITZKER: Exactly.

ALDEN: Right? I mean, you’ll have employers who are going from full-time to a part-time workforce as a way to kind of shed benefits. Aspen Institute’s Future of Work Program has laid this out in some detail. So there is still an employer obligation here. It just—you don’t get out of it by turning your workforce from a full-time workforce to a part-time or contingent workforce.

PRITZKER: Exactly, which is today a big motivation of going to—

ENGLER: I think—I think you have it exactly right, Robert. But—

SIEGEL: Go ahead, John.

ENGLER: Oh.

SIEGEL: Yes, governor?

ENGLER: No, I think Ted’s point’s a really important one. And it’s also this gets really sensitive politically, but even the rigidity of the current Social Security system, you know, this needs reform. This could be embodied in this. And you’re right, the employer’s not going to be off the hook, but we ought to help the employee have the best set of options for that individual to prepare for their life down the road. And we’re just—we’re too ossified in what we’ve been doing, and it needs to change faster.

SIEGEL: I wanted to put—yes, Laura? Yeah.

TAYLOR-KALE: Well, I think we need to understand that we need to put the individual at the center of the equation.

PRITZKER: Right.

TAYLOR-KALE: This is not about the type of companies that people are working in. It’s about the individual. And the benefits need to go to that person and they need to be something that’s very flexible.

And so one of the things that we saw in our research was that, you know, the mindset is very different when you look at different generations that are in the workplace. We have four generations in the workplace right now. And as we’ve talked about sort of the need for flexibility, the idea of, again, being, you know, a younger worker, going into a career for 30 years is not there. So we need to create options where it makes it very much central for that—for that individual, the idea of where their benefits are and how they’re going to get them.

SIEGEL: I was also curious, you’ve done so much research on competitiveness and other countries and where the U.S. stands. Is it—is it obvious to you that the U.S. workforce now puts the country at a disadvantage for its lack of—lack of training or its lack of organization?

TAYLOR-KALE: Well, the interesting thing about this is that every country in the world is dealing with this in some way, whether you are a low-income country, or a high-income country, or middle-income country. They’re all dealing with these issues in some way. And so I think, as we look forward, there will be, you know, multilateral organizations—the World Bank is doing some work on this, the G-20 is doing work on this—they’ll all need to figure out ways of looking at this. What’s important for us here in the United States is trying to figure out our own systems for our own health and wellbeing, but also people are looking to us—countries are looking to us for leadership and for options, and potential workable solutions, and for opportunities. So we need to really put some, you know, concerted effort in this, whether it’s government at all levels, educational institutions, businesses, employers, trying to figure out—be creative in figuring out different solutions for this.

SIEGEL: I think, Ted, it falls to you—

ENGLER: Robert, one of the things—

SIEGEL: Yes, John. Go ahead.

ENGLER: Yeah. Well, it builds on the point Laura’s making. I think where there’s an opportunity for—where countries are not looking to us is how well we’re doing with early childhood education, elementary education. And that’s something where we make a massive investment. Today, sort of coincidentally, the National Assessment of Education Progress, NEAP reports, are out. And they’re basically showing very flat performance, once again, in reading and mathematics in our children in elementary schools. And we need to have a much stronger foundation, because competitively when our youth get older, they’re creative, their entrepreneurial, they’re doing amazing things.

But we have a need demographically not to leave large segments of our population behind. And so we’ve got across America today a challenge. The report gets into this really, the bifurcation that happens in our economy with those who’ve got great skills and those who don’t. And those who don’t, that number has to be a lot smaller. And that starts from the earliest days on up. And that’s the area where I would say competitively we’re greatest at risk. And my old job, at the Business Roundtable, there was an awful lot of concern that we just are not helping young people get to high school and college with the skills they need to get ready to then go off and compete. Not all of them, and we do need all of them today.

SIEGEL: I’d like someone, and I think it’s Ted, to define the word flexsecurity, which I read in the report. I believe that’s a portmanteau of a word. What does it mean to have flexsecurity?

ALDEN: So one of the—one of the hardest challenges, I think, in this whole space is what you do with mid-career workers who lose their jobs. I think it’s easier to think through how we prepare young people for the changing nature of work. I mean, we know to a reasonably good extent what the demands of the economy in the future are going to be. I think there are very good projects out there across the country in terms of linking work and education. The question of what you do for the mid-career worker is very hard. And when you look around the world, a lot of countries simply do this a lot better than the United States. We spend very little money trying to help mid-career workers. We do very little to support their income in their periods of unemployment. We do very little to reeducate and retrain them for new opportunities. We do virtually nothing to help them relocate to where the jobs are.

So we took a deeper look at the best European models. And the fact is, Europeans do this a lot better than we do. The Germans, the Danes, the Swedes, and others. What they have are quite flexible economies where it’s actually relatively easy to hire and fire people. You don’t want an economy where people have kind of tenure in their jobs, that you simply can’t let them go. That is not a recipe for a productive, competitive economy. But when people lose their jobs, you have a lot of resources that go into figuring out, OK, you have a set of skills that is kind of like this set of opportunities over here. How do we move you into this other occupation? What kind of training it’s going to take? What kind of support is it going to take?

I mean, one of the really key ingredients here is guidance and counseling. And this is true at the younger age and for midcareer workers too. In this country, we really leave people on their own when they’re looking for work, when they lose jobs. There’s a lot of good information out there. You know, we have Allen Blue from LinkedIn on our task force. We did a lot of work looking at the various data pieces. There’s a lot of work out there to help people make better career decisions, younger and midcareer. We’re not giving them that information. We’re not providing it to them.

So that’s the essence of flexsecurity, which is—which is a job market where it’s fairly easy to hire and fire, but when people lose their work there’s a lot of assistance to getting them back into the labor market quickly and effectively.

SIEGEL: One question that you address is simply the mobility of labor, that is when there are opportunities elsewhere, what can we do to make—Americans used to be famous, I think, for our willingness to get up and move to where the jobs are—doing that again? Some of your proposals, you know, that we should have lower housing costs in place where the are jobs seem, you know, hopeful. But some of them—and I wanted Governor Engler to describe this—some of this—some of them seem a little bit more manageable, which are credentialing issues, that often when people might want to move to another area for a job, credentials pose a problem. And it seems to be a peculiarly American federal problem.

 ENGLER: That’s a good point. And the commission really looked at that carefully. There are a couple of issues. There’s the sort of occupational licensure and credentialing that many states have looked at, and I think increasingly they’re recognizing you need to take some of those down as barriers. Then also, we looked at what does my education and training represent? Is it valued by the employer? Does there represent in that credential the kinds of skills necessary to do the work that I’m being considered for? And we found—and this is something that the Lumina Foundation and Business Roundtable started on, a lot of others joined in now, setting up a credential engine, which is actually trying to create a registry of credentials.

So in other words, this is the training I get. How can I show the employer I’m prepared to do the work they need to have done, if I got my training in Michigan but the job is now over in Oklahoma? Can they rely on my credential? And so there’s two kinds of things we’re trying to do to help people. And this is the point Ted made earlier about the middle career worker. Almost nobody is without any skills. They may just not have sufficient or the total package to go to work. But maybe they’ve got five of the 10 skills needed for a new job. Well, then we shouldn’t train them for all 10. We should train them for the five they need.

And trying to delineate and define what people have. We cite in the report Singapore just as one example, where they almost did—now, they can do this—but the report suggest it’s an opportunity for a state, because Singapore’s the size of a bunch of our states. If you could actually kind of almost do a baseline analysis of your workforce, a gap analysis, to determine what skills are needed and where they’re lacking, and who could provide them in your education system. And it’s thinking more systemically, and then helping our people as they get those skills to show the marketplace I got them. So that’s kind of what we’re talking about in this report.

PRITZKER: Robert, one of the things we thought about as we were creating this report was the idea of who’s going to bring all these forces together to actually help with greater coordination and greater clarity? And we used, as an organizing principle—I mean, we laid out in the report, you know, ideas for the federal government, state and local government, businesses, and educational institutions. But I think our—the audience we kept in mind were governors, with the ability to convene and bring together both the economic development capability of their state, and the educational organizations, and the business community, and the social safety net, which all need to be coordinated in order to address the challenge that we’re talking about.

And it’s—you know, one of the things that we’re saying here is there’s a lack of transparency. What do I as a business leader need in my businesses? How do I, as a midcareer person, know what the skills are or the job opportunities that my skills are applicable to? How do I, as a young person, know what do I need to accumulate as both experiences and on the job training, or internships or apprenticeship experiences, in addition to basic education, in addition to skills? There’s just not—there’s not enough clarity around that.

And we’re not suggesting that the solutions are, per se, national, but far more regional because if you think about the businesses, they’re not the same region to region across the country. So precisely what you need may vary. But what we’re trying to do is also offer up a model—if you could think about the governor as an instigator of change—I think that’s a way for us to see a path forward to begin to address the myriad of issues.

SIEGEL: But as for the role that employers play in all this, it would seem that the commitment to a high-road workplace that you write about—that is one that provides good wages, schedules, benefits and the like—would be much more likely to expect of established, larger employers than of start-ups. And we’re—Governor Engler, I’m assume we’re counting on lots of small business startups to account for many of the new jobs in this country.

ENGLER: Well, that is our—that is our pattern. And a significant number of those actually started by new citizens to our country, even, immigrants who come here. But we do think that—if you look at the tech sector in particular, where there have been very innovative startups, some of them have been out in front in terms of the kinds of benefits and the flexibility that we talked about here. And some of them certainly have been leaders in developing pathways, if you will, for somebody to—when Penny was talking about credentials and I was mentioning them earlier—one phrase we refer to as stackable credentials. You learn one thing, you learn another, it builds on top of that. Again, in these startups, some of them have been the most effective at helping workers build those credentials.

So I think that, yes, it’s true that the Walmarts, who’ve been unbelievable leaders in training and have tried to raise—one of the things we talked about is what the minimum wage is that people need. And we’ve seen with the tax cuts there have been a number of hikes in minimum wages, hiring—entry level hiring at companies. All of that’s positive. But again, the report is suggesting that we have to, as a society, as an American community, step up on this and recognize that if somebody doesn’t have those skills, we need to help them get it. The employer’s got to play a role in that. But government can’t sit by idly and think it’s somebody else’s job.

And one of the reasons that the governors are important is that probably the linkage between the employer and government is the closest at the state level. Every state has economic development as its—as part of its DNA. They want to grow. They want to create jobs. They want to have a better climate. And today, so much of that depends on the workforce and their skills. And so that’s a hugely important element in the attractiveness of any place as a business location.

TAYLOR-KALE: And also—may I add very quickly?

SIEGEL: Just—yes, of course. Laura, yes.

TAYLOR-KALE: One of the—one of the things that we saw was that some of the best examples of how small businesses in particular can be involved in education and training efforts is through cooperation. So we saw plenty examples of companies where it was a large company that had a(n) apprenticeship program or training programs. And they allowed their suppliers or anyone who wanted to opt in to join in these efforts. All they had to do was promise that they would be able to provide internships or opportunities as well. This is a way for small businesses to be involved in these larger training efforts, without having all of the big overhead costs. It helps the whole supply chain, and I think these sorts of cooperations, along with working with the local community colleges, are the ones that are going to be the most impactful going forward.

PRITZKER: And one of the most encouraging things that we’ve seen is the leadership by the business community in this area, recognizing obviously they have a need for the work force, but also a desire to play a bigger role than may just suffice for their own corporation, and willingness to share their training, intellectual property with local community colleges and others. And so there’s—this business leadership is something that’s been an important factor that we need to continue to build on.

ALDEN: And just one final comment on the same one. One of the values of doing this in a tight labor market—because a lot of businesses are struggling to find the employees they need with the right set of skills. And so there’s a big incentive for them to step up their activities in this area. And, you know, a lot of it’s still anecdotal. I’m not sure it’s to scale yet. But we’re seeing some very positive signs.

SIEGEL: We’re going to take questions—

ENGLER: Robert, one area where—

SEIGEL: Yes.

ENGLER: —we’re seeing a really significant impact—and Penny just mentioned community colleges. And I would say here community colleges have done a better job than much of higher education, if you think four-year institutions, of really listening to the customer. And Eduardo Padron from Miami-Dade was part of our commission. And there’s good discussion in this report of some specific programs of Miami-Dade. But these community colleges that are really serving their communities are listening very intently to what that local workforce need is. And then they’re divining and tailoring programs to meet those needs. And many of those programs are open doors for nontraditional students, either to come back to school or underserved populations to get an opportunity to get into the mainstream of the workforce with a specialized skill. And those skills, once learned, again, become what we refer to as stackable. You can build on them. It’s important for a young person to have the first skill, to get the second skill, to get the third skill. And the community college has played a huge role in this. And often, they’re much more cost effective.

SIEGEL: Let’s turn to the members now for their questions. And just before doing that, I should—one other point that I might have neglected, you did say we should encouraged skilled immigrants, was one point. And I believe on minimum wage—just hot-button questions—different minimum wages around the country may make sense, according to the report.

I’ll call on you, and the—we’ll find you with a microphone. We’re on the record right now. And let’s—this lady here. Could you wait for the mic to find you?

Q: I’m Mitzi Wertheim with the Naval Postgraduate School.

I’m incredibly excited about this report, but I want to suggest to everyone, if they haven’t done it, is to read The New York Times Sunday section on learning. And they address all of these questions. It’s in addition to what you’re doing, but everybody ought to read it.

ALDEN: Can I just say, and I think it’s important in this context, more than any other report I’ve ever worked on here at the Council, we’re standing on the shoulders of others. There is a lot of great work going on in the country, both in academic institutes, in other think thanks that are working on this. I mentioned the Aspen effort. There are programs around the country, what the Merkel Foundation and others are doing in Colorado with the Skillful initiative. This is really, truly a problem that we are all going to have to grapple with as a country. It’s not one institution. There’s not one set of solutions. So I want to encourage people to really look as broadly as they can at some of the amazing things that actually are going on in this country right now.

Q: Can you create a list so we know where to go look?

ALDEN: A lot of it’s in there, but we could probably organize it better.

PRITZKER: It’s in the report.

ALDEN: I encourage you to look at the website presentation we’ve got, which does distill a lot of this stuff, so.

SIEGEL: And, as Ms. Wertheim did, could you please stand and identify yourself when you ask a question? Sir.

Q: Thank you. Jack Goldstone. George Mason University.

I know you’ve worked hard on this. You don’t want the report to be dead on arrival. The recommendations are important. So let me play devil’s advocate for a moment and challenge you, put you on the spot. A lot of these recommendations are going to call for more taxes, and more government spending. And if I’m a businessman who says: I don’t really care about your concern, which seems to be how do we make the average worker successful in the future. I’m fine if I can recruit from the top 25 percent of the labor market. And if there are people who are not willing to invest in themselves to get the skills I need, they’re not willing to start a business, why do we want more government programs to make it easier for people to have benefits that are not tied to work? Much of our policy is trying to move in the opposite direction. So how do you push back against the concerns that this is just another recipe for big government, easier to get benefits, and wasted resources for workers who are not pushing themselves to the max?

SIEGEL: Penny and John can both address that.

ALDEN: You want to tackle that, Penny? Or do you want me to take it?

PRITZKER: Well, let me start and then—

TAYLOR-KALE: We’ll all tackle that one.

PRITZKER: —as always, Ted has more depth than I do in this. But we’re not calling necessarily for larger government solutions. We’re calling for greater coordination and greater transparency, one. Two is, I haven’t met a business leader in this country who hasn’t said that they can’t find the workforce that they need. So this idea that I’m just going to find the top 25 percent and I’ll be fine and to heck with everybody else isn’t working. That is not the case today. And so the challenge becomes one of how do we help more and more of our workforce be ready for what is greater and greater change, and this kind of constant lifelong learning, which is—frankly, requires a cultural change in our country.

I mean, this is more than just, oh, let’s go help more people. This is, we’ve got to also rethink the way we think about training in general from, you know, I go to school, then I go out and do my career. We’re all needing to evolve constantly. I don’t care where you fall on the spectrum. It’s particularly more difficult for someone at the lower end of the spectrum because being able to get over the bridge from where you are today into the opportunity—you know, if you’re, you know, Eduardo Flores in the southside of Chicago, who was—you know, ran a large logistics warehouse. And then your warehouse becomes automated, you lose your job after 25 years, it doesn’t mean you don’t have skills. Your challenge is you haven’t interviewed for a job, you’re 50 years old. How do you present yourself? And you need help. So this is a—it’s a very multifaceted challenge that we’re discussing, but it’s far broader across society than just this is a solution for government only.

TAYLOR-KALE: And I’d like to jump in quickly. Believe it or not we actually struggled to—when we thought about the role of the federal government in particular in this. We had to really think, where is there potential political will for solutions that can be effective and really help businesses and individual workers, and workers as a group. So the idea that there’s solutions that will come, you know, from on high from the government, I don’t think it’s there. I think the real action is happening at the local level, at the community level, and that’s where we need to keep our focus.

ENGLER: One point I would make too in response to that question is that we focused a lot on taking the things that are there today, and how do you make them work maybe the way they were intended. Good ideas, and I’ll use one. The Workforce Opportunity Investment Act and the workforce boards, they’re blanketing every inch of America. Those boards, by federal law, are supposed to be dominated by employers. Too many employers have sat back and, I guess, let somebody else do that work. But we are calling for employers to get much more engaged. That’s how you coordinate at a local level, a sub-state, maybe two counties, three counties, maybe it’s one very large county.

But what are the educational opportunities that are there, what are the skills needs in that community and that region, and how do we meet those? And so these are all things where money is being spent, programs are being offered, young people and returning workers that—mid-career, transition worker. They’re getting training and they’re getting schooling. Often it is not aligned with what the needs are. Simply fixing that would probably help fill what is estimated to 5 or 6 million jobs that are unfilled. So there are employers wanting to hire today who cannot find the workers with the skills. Shame on us if we can’t figure out where those opportunities are and then train the people with the training dollars we’re already spending.

That, to me, is common sense. And I think that’s a better bang for the taxpayer dollar. And for the government—small-government conservative that says, look, I don’t want to spend more money, let’s spend the money that we’re spending already much more effectively, because if we can have more people paying taxes the burden gets a little lighter for all of us.

SIEGEL: So I’d take another question from farther back in the room. There you are. Could you stand, please?

Q: Thank you. My name is Nomouyo Oguenda (sp). I’m from the World Bank.

We’ve talked a bit about machines and skills. I’d like to focus on U.S. leadership in the 21st century. And we know that in a sense the U.S. is the flagbearer in terms of the rule of law. And my question relates to the fact that, Laura, you mentioned that all economies—all levels of economies around the world are going through this process at this time. So in terms of signaling to them, what if any are the principles of—principles of an enabling environment that is created through lawmaking to facilitate some of the recommendations that you’ve made? Because from what I’m hearing, there’s issues of government executive orders or corporate voluntary guidelines that can facilitate this. But do we rely just on that, or are there basic principles such as interactions between the kinds of laws that we have, between labor laws and education laws, to ensure that mid-career folks who lose their jobs actually are covered also by education policy, and not just in terms of labor policy. So if you could speak to that, please.

SIEGEL: Laura.

TAYLOR-KALE: I’ll say very quickly, I think transparency is very much a key. So keeping to a principle of transparency—and we talk a lot about this in the report—is important both in terms of thinking through the potential effects of policies, thinking through access issues. And again, as I said earlier, sort of keeping it individual at the center is a key here. We tend to forget that even in this country there are millions of Americans that don’t have access to broadband. If you don’t have access to broadband, how are you able to participate in the digital economy, right? So our policymakers at the federal level, state level, local level have to keep these sorts of things in mind in terms of access and transparency and making the system work for all.

PRITZKER: I think another issue to think about is in terms of laws in the states. If you look at states like Delaware or Colorado or other states that have really begun to tackle this issue, part of what they’ve done is acknowledged that codified in their state is the idea that, you know you’re incented as a high school toward sending kids to four-year college, as opposed to broadening the incentive to say what—how do you gain the skills?

And I’m not against four-year college. This is an “and,” not an “or.” And how do you make sure that the state laws, let’s say with licensing, are welcoming to families moving into your state? If you’re a two-income-earning family, let’s say a military family, and you’re moving, and your spouse has got to have a license in order to work in your state, maybe that’s easily achievable or not. There’s very little reciprocity between states, which is very much a barrier to mobility.

So there’s a lot that governors and state legislatures could look at within our laws to say what are we doing that is actually creating a barrier? Could you—for example, what is my right as a high-school student to take courses at a community college that give me training so I’m job-ready at the end of high school under the, you know, free public high school that I’m in?

These are the kinds of flexibilities that need to be more and more created so that we’re offering everyone the opportunity to access economic opportunity, not just those on one particular path.

SIEGEL: Just to—one nonmember-privilege question for a sec. I was struck by the fact that the report expresses the hope that business will commit itself to high-road workplaces. And some of the issues—there were issues that were addressed by the Fair Labor Standards Act a couple of generations ago. They were the stuff of legislation. It wasn’t let’s hope that business will give people overtime if they work 70 hours a week. It’s a law.

I assume that—is that an issue of practicality or believe that federal law is—it could never get passed, or it wouldn’t work?

ALDEN: I mean, let me flesh out on this a little bit, because we did wrestle with this a lot. I mean, there’s the question of do you do this stuff top down through standards? And there was certainly some merit for that for many years. Not clear there’s a political appetite for that in this country.

And we think there is very much another approach, and it goes to Laura’s transparency point. If you give people real solid information about what outcomes are—and that’s one that modern data gives us, right. You know, a young person who’s thinking about a community college or a college program should be able to know, you know, what’s the graduation rate? What’s the job-placement rate? What are the starting wages? Where are you after five years? Similar with the employers: Who are the good employers? Who are the ones who are providing a suite of benefits? What are the different wages that are paid?

We have the capacity with modern data—and some of that’s going to take legislation. Some of that’s going to take an enabling environment from government. But that kind of information is potentially radically transformative. It allows for better decisions by individual employees. And it also puts institutions, including educational institutions and companies, much more on the hook. We know what they’re doing. We know what they’re offering. We know what the success rates are.

PRITZKER: And there are—

ALDEN: We know where you can go in your life if—(inaudible).

PRITZKER: And there are current examples of that empowering information being provided—Credential Engine, which Governor Engler was, you know, part of at the creation of at the Business Roundtable, which is creating a lot greater clarity about credentials; Journey, which is a program out of San Diego, clarifying pathways from where you are in middle school, how you can achieve, you know, into certain career types. So this is happening very much organically. But we need it at a much greater scale.

SIEGEL: A member question here. Sir.

Q: Thank you. Steve Charnovitz, George Washington University Law School.

I wanted to circle back to something that Penny Pritzker said, which I think there are a couple of profound points that she made—one, that we have to rebuild confidence in the system; two, that we’ve really got to fix the system. And she described it as an ecosystem. And I wanted to look at the respective role of the federal government and the state and local. And the report does lay out recommendations for each.

But I don’t see anything in the report with any principles as to which level should do what. And I’ve observed over the years it’s that confusion that leads to unaccountability by both the federal and the state levels.

And you did say at one point in your remarks that the states—the governors should have a more important role. And I think that’s quite right. But I’m wondering what principles this group has found that could guide the allocation of responsibilities. And I note in the report it makes a recommendation at the federal level for an experiment on wages subsidies. And I would have thought an experiment on wage subsidies would be done at the state level. So I was puzzled by that.

SIEGEL: Penny Pritzker.

PRITZKER: Well, I’m going to let my colleagues, you know, comment on this. I think you have a lot to offer, Ted.

SIEGEL: Ted.

ALDEN: I mean, I guess I think that there should be a lot of energetic competition among states on these items. I mean, Governor Engler makes the point that, you know, the states that get these pieces right are going to be very attractive. They’re going to attract investment. They’re going to attract highly educated employees. I’m not sure you need to delineate precisely who does what. I mean, on the wage insurance, yeah, you could experiment at a state level. You could experiment at the national level.

I mean, I think some—you know, our divisions here are not hard and fast; the same with portability. I mean, there are states that are experimenting on a small scale with portability of benefits. New York State has looked into this. Washington State has looked into that. That really is the way the United States has operated for years. You know, we look at what happens at the state level, what works well, and then, if possible, try to bring it to a national level.

I don’t think there’s anything inherently broken in that model, but I think we clearly need a lot more energy on a lot of different fronts.

ENGLER: If I could just make a follow-on comment. I—everyone who was on the commission knows that I was consistently a pretty big skeptic of what Washington could get done. So I tend to be almost all over on the state side, thinking that the 50 state governors competing will move us faster and more effectively than waiting for anything to come out of Washington. I just—I think you’re—we’re hoping.

But there are some things where Washington could help facilitate. I think back to when we were doing welfare reform in the mid-’90s. And there was a very energetic competition among the states to try to help families break that cycle of poverty and get back into the workforce. And there were some stunning successes. And it was really transformative. I think we can get to the same place in training and workforce.

I do think companies need to rethink—and Penny’s been a strong advocate of this, but the report really dwells on this—get away from the idea that we’re hiring based on some artificial threshold that I’ve got this degree or this degree plus X number of years of experience, because that does have a way of discriminating against the worker who’s got maybe 25 years of experience without the proper degree. But they’ve got all of the skills that are really needed.

And so make the competition for employment based more on the skills and abilities to do the jobs. And that’s going to allow the—you know, whether it’s the person who didn’t finish college but went on to start Microsoft or, you know, the fellow that dropped out and started this great tech company, or the middle-aged worker who had a great career but the job went away and now can move over and do this other task.

So I’m very optimistic at the state level, and I think states will see this as a way to compete economically. And when they do, they’re going to move to the other packet. And if the governor can figure this out, you know, you’re talking to somebody who’s going to be future president probably.

SIEGEL: OK. Let’s go to the side aisle. Sir.

Q: Good morning. My name is Jerry Johnson with RLJ Equity Partners, based here in—actually, in Bethesda, Maryland.

I had a—I think Laura mentioned that there’s four generations in this workforce. We haven’t talked a lot about the fourth generation, and those are folks that are over age 65. I believe sometime between 2030 and 2035, the majority of Americans will be over age 65. And I’d be interested in what your prescription is in order to make that group effective in the workforce kind of as we move toward 2030.

TAYLOR-KALE: So I would say that the same dynamism that we need in terms of policy for younger folks or folks that are just entering the workforce is the same sort of dynamism that we need for—in order to accommodate and really retain older workers. We need those workers. There are some industries where the average age is, I think, 58 in aerospace, or something like that. And the knowledge that you’ve accumulated over those years is incredibly valuable. So we need those people.

Also, just given, you know, our own health outcomes, it’s more likely that we’ll have people continuing on in the workforce. So the ability—so when we talk about lifelong learning accounts, it’s something that I sort of—when you think about, you kind of struggle with, because you think someone who’s 55 and who’s going back to school doesn’t have—may not have that long to be able to repay a big loan or something like that.

But we do need to look at ways of—we talked, you know, yesterday about ways of looking at federal grants; potential, you know, lifelong learning accounts that allow people to be able to build up, you know, essentially at the pot of funds over time and be able to use it for maybe shorter courses; you know, a 10-week course or just a certificate. Right now we don’t have that capability within our policy to be able to do that. And that needs to happen in order to be able to facilitate the training needs of older workers and not present a huge financial burden.

ALDEN: Can I say one thing just quickly? This is one of the reasons portability of benefits is such a powerful idea, right? I mean, a lot of people age 65 and older aren’t going to want to work full-time. They’re going to want to work in more flexible ways, work from home, work part-time. We need to have a system that encourages that. That’s not just good for the individuals, allowing them to stay in the workforce longer and earn income longer, but it’s great for the employers, who want to hire those people. But those are people who don’t fit necessarily into the traditional full-time work mode.

So I think, again, getting back to one of the core principles of our recommendations, flexibility, I think it speaks exactly to that generation and the opportunities they’re looking for and what employers want from them.

SIEGEL: And on this side of the room. Sir.

Q: Hi. Vincent Abramo.

SIEGEL: Can you let the microphone find you?

Q: Sorry. Excuse me. Vincent Abramo. I’m over at the State Department, and I work with the construction of our embassies and so on and foreign nationals doing the work on the construction sites. In a previous life, I worked at the Job Corps for several years. I worked at the Peace Corps for several years.

One of the things that I wanted to ask you is did you ever look at Association of Manufacturers or trade associations? Because in my Job Corps days, we used to kind of try to work with trade associations and identify what the job opportunities were, what the training needs were, et cetera, et cetera. So that might be a place for us to look also and not focus exclusively on the states.

ALDEN: I mean, I would agree with that.

PRITZKER: Yeah.

ALDEN: Governor Engler—

PRITZKER: (Inaudible)—his personal experiences.

ENGLER: Yeah. I mean, I ran two of those associations. And, yeah, this report presupposes they’re going to be deeply involved. They have great opportunities. Credential Engine is one of those places where we’re asking some of the verticals, like the Restaurant Association or the National Retailers Federation, to identify what are the skills that one needs to have a retail-clerk job, retail one, retail two.

In other words, how do you get prepared to do this kind of work? How can we signal to a young 16-, 17-year-old in high school, if you want to get that first job, that second job, here’s an easy way to do it? What does somebody who’s worked—how many people in America work their first job at McDonald’s? Well, that actually teaches you some teamwork skills and a number of other things. So how do you layer that into then future jobs?

And so we’re asking in the Manufacturing Institute, at the National Association of Manufacturers, where I used to be, that they’re way out in front in terms of what are the skills that are needed for specific manufacturing jobs. We use—I’m trying to think. I don’t think we cited them specifically, but the American Welding Society has long had a very good set of credentials for welders.

And if you give the American Welding Society credential, it’s the gold standard. And the Credential Engine picks that up and points to that as the gold standard, that any employer will hire that person with that credential. But if you just got a welding degree from the local community college that isn’t benchmarked, that may not be as valuable and it sure isn’t as portable.

So the questioner is raising a very good point. And I think the business associations are integral to the functioning of the workforce boards and is signaling to the trainers, the community colleges, and others, this is the kind of training we need.

SIEGEL: And presumably the community colleges should be asking, is the certificate that we’re giving—

ENGLER: (Inaudible.)

SIEGEL: —actually getting people a job?

Another question from the—let’s go back there. Haven’t done that part of the room. Sir.

Q: Good morning. Lucas Koontz (sp), Joint Staff.

My question is, if you put states in competition with one another, how do you prevent there from being winners and losers? We read a lot in the news about how the economic recovery has happened more in urban areas versus rural areas. So it sounds like this competition is sort of happening already, and there are winners and losers. I’d like your thoughts.

SIEGEL: Governor Engler, I think we’re going to put that to you. Let’s say there happens to be a company that does a lot of retail sales over the internet that’s looking for a—(laughter)—second city to establish its—it seems remarkable the number of expenditures and changes that localities are willing to promise to win that competition. There will be losers and winners, no?

ENGLER: Well, there are. And the mention earlier of technology, that helps to defeat some of these limits of geography. But I do think that, again, this is where you’re having to get creative. There are things that the federal government needs to do; for example, you know, leveling the playing field by making sure that the sales tax is collected, whether that’s being sold with the local bricks-and-mortar store that employs your neighbor or it’s being sold online from a service center or fulfillment center in, you know, three states away.

So those are—those are some rules of the road. But the competition is there. There was competition years ago when people moved from the South to places like Michigan to build cars. That was the point earlier about mobility. There was a while ago where the North Dakota economy was booming so much, they were paying, I think, $20 an hour for somebody to work at McDonald’s, as I mentioned earlier. They couldn’t find anybody in their workforce.

So if people are willing to be a little bit flexible, there obviously are some opportunities to move. But at the same time, the point we make in the report is that there’s a trend that’s sort of been anti-mobility; then you’d better be able to use your technology to sort of defeat those limits of geography.

And there still always will need to be a certain number of jobs that are located closer to population centers. I grew up in a rural area. I think it’s actually harder for the rural areas in the country today. But then that quality of life out there can be augmented by your ability to use technology. But people—this is why people need to be paying attention to what these opportunities are. And, depending on what their personal choices are, I’d love to see an American economy where you could make choices to live here or live there, and if you make those choices, these are the kinds of opportunities that are there and this is how you get prepared.

Today it’s way too random and not enough people are really thinking this through. And from the employer standpoint, they’ve got to do a better job of signaling what it is they need too.

ALDEN: Can I just say quickly, because I don’t want to leave a misimpression here—we really grappled with this on the task force—the encouraging mobility. To some extent, obviously you want people to move where the jobs are. But there are huge regional inequalities in this country. And we talked a lot about how to encourage investment in some of these distressed communities. That is something that does take more of a federal role.

You know, you look at some of the stuff you did in the Commerce Department, Penny, in terms of the manufacturing extension partnerships and spreading some of the pre-commercialization research facilities around the country. Broadband access is absolutely a key here. There are pieces in the tax bill that I think are going to encourage investment in some of these communities. But there definitely is a federal role there. And this is a serious problem in our country, growing regional disparity. So we try to tackle that.

SIEGEL: Since we have only a few seconds left, I’ll just ask very briefly of—well, Penny, I’ll ask you. The first story I did on what a great apprentice system the Germans had and how well they train people was around 1990. And it wasn’t a new story then. Some of the ideas we’re talking about have been around for quite a while.

And I wonder whether you feel that we have been—although there have been a great many dramatic changes at the community-college level and such, has the U.S. been especially resistant to absorbing new ideas about the workforce? Or is there so much progress that you can feel reasonably optimistic about these things?

PRITZKER: Well, I think we haven’t absorbed enough learning, and we’re behind. And that’s what you hear us talking about. And we’re growing further behind. And we spend less money than almost every other OECD country except, I think, Mexico and Chile in terms of training. And you struggle to find out what are corporations actually spending per person on workforce training. So I think we have a lot of work to do.

But what I’m optimistic about is there’s a lot of focus. You hear a lot of—and what the report does is a massive catalogue of the activities that are going on across the country at the state and local level with corporations, with educational institutions. What we’re yearning for is more scaling, taking the best ideas and bringing them to greater scale, having more governors or business leaders or educational leaders embrace these good ideas, taking advantage of the fact we live in an age with great data availability and making that more available to everyone.

So I think those are reasons to be optimistic, but we have to be spurned on to actually address this. And I think the challenge of keeping up with the work as work changes is going to encourage us to meet those needs.

SIEGEL: Well, Penny and John, Ted, Laura, thank you very much for shedding so much light on so many interesting problems that we face together. And it’s been fascinating.

PRITZKER: Well, Robert, thank you. And I want to thank Governor Engler, my co-chair—he’s a terrific partner—and everyone else on the task force.

SIEGEL: Hear, hear.

PRITZKER: Thank you. (Applause.)

(END)

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