[Joint House and Senate Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 112-127
MANUFACTURING IN THE USA: TRAINING AMERICA'S WORKFORCE
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
JULY 12, 2011
__________
Printed for the use of the Joint Economic Committee
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JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
SENATE HOUSE OF REPRESENTATIVES
Robert P. Casey, Jr., Pennsylvania, Kevin Brady, Texas, Vice Chairman
Chairman Michael C. Burgess, M.D., Texas
Jeff Bingaman, New Mexico John Campbell, California
Amy Klobuchar, Minnesota Sean P. Duffy, Wisconsin
Jim Webb, Virginia Justin Amash, Michigan
Mark R. Warner, Virginia Mick Mulvaney, South Carolina
Bernard Sanders, Vermont Maurice D. Hinchey, New York
Jim DeMint, South Carolina Carolyn B. Maloney, New York
Daniel Coats, Indiana Loretta Sanchez, California
Mike Lee, Utah Elijah E. Cummings, Maryland
Pat Toomey, Pennsylvania
William E. Hansen, Executive Director
Robert P. O'Quinn, Republican Staff Director
C O N T E N T S
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Opening Statements of Members
Hon. Robert P. Casey, Jr., Chairman, a U.S. Senator from
Pennsylvania................................................... 1, 6
Hon. Kevin Brady, Vice Chairman, a U.S. Representative from Texas 8
Panel I
Hon. Jim DeMint, a Senator from the State of South Carolina...... 2
Hon. Daniel Lipinski, a Representative from the State of Ilinois. 4
Witnesses
Panel II
Mr. Ron Painter, Chief Executive Officer, National Association of
Workforce Boards, Washington, DC............................... 11
Mr. Charles Wetherington, President, BTE Technologies, Inc.,
Hanover, MD.................................................... 13
Ms. Diana Furchtgott-Roth, Director, Center for Employment
Policy, Hudson Institute, Washington, DC....................... 14
Dr. Harry Holzer, Professor, Georgetown Public Policy Institute,
Georgetown University, Washington, DC.......................... 16
Submissions for the Record
Prepared statement of Representative Daniel Lipinski............. 38
Prepared statement of Representative Kevin Brady................. 39
Prepared statement of Mr. Ron Painter............................ 41
Prepared statement of Mr. Charles Wetherington together with
letter dated July 12, 2011 from American CEOs to members of the
United States Congress......................................... 46
Prepared statement of Ms. Diana Furchtgott-Roth.................. 70
Prepared statement of Dr. Harry Holzer........................... 78
Prepared statement of Representative Michael C. Burgess, M.D..... 83
MANUFACTURING IN THE USA: TRAINING AMERICA'S WORKFORCE
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TUESDAY, JULY 12, 2011
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The committee met, persuant to call, at 10:17 a.m. in Room
216, Hart Senate Office Building, the Honorable Robert P.
Casey, Jr., Chairman, presiding.
Senators present: Casey and Klobuchar.
Representatives present: Brady, Burgess, Duffy, and Amash.
Staff present: Brenda Arredondo, Gail Cohen, Will Hansen,
Colleen Healy, Jesse Hervitz, Madi Joyce, Christina Forsberg,
Robert O'Quinn, and Michael Connolly.
OPENING STATEMENT OF HON. ROBERT P. CASEY, JR., CHAIRMAN, A
U.S. SENATOR FROM PENNSYLVANIA
Chairman Casey. The Committee hearing will come to order.
Prior to our opening statements, I would like to introduce
our first panel and then allow them to testify.
We have both a United States Senator and a United States
Member of the House of Representatives with us today.
I first want to welcome Senator Jim DeMint from the State
of South Carolina. Senator DeMint serves on the Commerce,
Science, and Transportation Committee; the Banking, Housing,
and Urban Affairs Committee; the Foreign Relations Committee;
and of course is also a member of this, the Joint Economic
Committee.
In late 2006, Senator DeMint was elected Chairman of the
Republican Senate Steering Committee. He received his Bachelor
of Science Degree from the University of Tennessee, and an MBA
from Clemson University.
Welcome, Senator DeMint.
I would also like to welcome Representative Dan Lipinski of
Illinois's Third Congressional District. Congressman Lipinski
is a member of two House Committees: Transportation and
Infrastructure; and Science and Technology.
Congressman Lipinski serves on the Subcommittee on Aviation
and the Subcommittee on Railroads, Pipelines, and Hazardous
Materials. In the Committee on Science and Technology, he is
the Ranking Member of the Subcommittee on Research and Science
Education and sits on the Subcommittee on Technology and
Innovation. He received his Bachelor's Degree in Mechanical
Engineering from Northwestern University, a Masters in
Engineering Economic Systems from Stanford University, and a
Ph.D. in Political Science from Duke University.
Welcome, Congressman.
Senator DeMint, why don't we start with you.
PANEL I
STATEMENT OF HON. JIM DEMINT, A U.S. SENATOR FROM SOUTH
CAROLINA
Senator DeMint. Thank you, Chairman Casey, Vice Chairman
Brady, Congressman Duffy. I appreciate the opportunity.
Training in the workplace is something I did professionally
for a number of years, and I certainly know the importance of
it and am thankful for the opportunity to talk a little bit
about it today.
The training and skills of a workforce are perhaps more
important than ever as our economy relies more and more on
technological innovations and individual productivity. We have
seen that, even in retail, if you can't operate a computer you
can't even get a job as a cashier.
Training is key to continuing to develop our workforce. We
know that new technologies drive economic growth and
opportunity, but they present challenges--particularly when it
comes to the training of our workforce.
The challenge of keeping pace with improving technology and
innovation has been constant throughout our history, but we
must always remember that innovation is still a good thing. Our
embrace of innovation is a primary reason for America's
century-long economic resilience and prosperity. Every economy
periodically stumbles, but nations that embrace innovation
recover more quickly and get back to work.
I will leave to the experts more of the explanation about
particular government job training programs. I have my
questions, but I will let them get into the details. Instead, I
would like to focus my testimony on this simple lesson that I
learned in the private sector:
The only sure-fire training and skill development program I
know of is actually having a job. And it is in this area, job
creation, that Washington has utterly failed in manufacturing
and every other sector of our economy.
Businesses small and large have every incentive in the
world to train their employees to develop their skills and to
keep them current on the latest technologies. As I said, in my
professional life many companies hired my company to come in
and train on continuous quality improvement, team building,
other aspects of their operation. They knew, once they have an
employee they have invested a lot; they want to keep them
current.
That is our best tool for getting training; for people to
have a job. But unfortunately the current economic policies
give those same businesses every disincentive in the world to
actually create new jobs and hire new employees.
This week I came up on a plane with a man--a gentleman who
works with community colleges across the Southeast. He says
they are having difficulty now getting people who are in the
workforce to do additional training at night because in order
to avoid hiring new people, many employers are extending the
hours of those who are already working. And it has created a
situation where the new training that is needed is not
happening because people are working not 35, 36, but sometimes
45 hours a week because they are afraid to hire new people.
This is very consistent with other meetings I have had with
businesses. They do not know what their taxes will be, and they
hear a lot of talk of increasing them; unemployment insurance
rates are going up; the cost of new health plans is still
undetermined. We don't know what's going to happen with trade
agreements for manufacturers that are trying to anticipate new
markets.
The liability of doing business in America seems to
continue to increase, and periodic episodes like the National
Labor Relations Board going after a company like Boeing just
tell us that it appears that this Administration, and even this
Congress, is intent on making it harder and more expensive to
do business in America.
They are not paranoid. Every news report about ongoing debt
limit negotiation reaffirms the Administration's insistence on
new taxes.
As last Friday's job reports revealed, there are only so
many people in businesses left who are doing well enough to
create new jobs in this country, yet these are the very people
now being targeted for tax hikes.
Meanwhile, we have free trade agreements with loyal allies
awaiting ratification, agreements that will open new foreign
markets for American products and create American jobs. Yet
these agreements with Colombia, South Korea, and Panama remain
on the shelf because of some add-ons that the President has to
have before moving forward.
If you look at our $1.7 trillion regulatory state,
according to the Small Business Administration, federal
regulations add an average of $8,000 to the cost of every
employee. And I have a feeling that is very old data, from what
I am hearing from businesses today.
On taxes, spending, trade, and regulation, every signal
from federal policymakers to job creating businesses and
entrepreneurs is that success will be punished. There is no
better illustration of these misguided ideas driving federal
policy today than what I just mentioned: the National Labor
Relations Board against the Boeing Company.
Two years ago Boeing decided to build a new airplane
factory in north Charleston, South Carolina. It didn't replace
one in Washington. In fact, they have added thousands of jobs
since they built this. They have invested over a billion
dollars in the plant. They have created more than 1,000 jobs,
which will ultimately probably be well over 5,000 direct and
indirect jobs. And they are one of the world's greatest
exporters.
What could be a better case for creating American jobs?
Yet, the NLRB, led by President Obama's own recess-appointed
Acting General Counsel, filed suit against Boeing to shut down
the new factory simply because they do not like South
Carolina's Right To Work law.
People wonder where all the jobs are? Policymakers looking
for someone to blame for America's high rates of unemployment,
under-employment, and long-term unemployment need only find the
nearest mirror. And it cannot be forgotten that those who bear
the greatest burden of these policies are those who can least
afford them: those Americans who grew up in dysfunctional
communities, trapped in failing government schools in a cycle
of dependency. Those with the fewest skills are the first to
lose their jobs and the last to find work again.
These struggling Americans have not been left behind by the
free market. They have been kneecapped by well-intentioned but
catastrophic government policies. Jobs, growth, investment,
innovation, and opportunity are what really train America's
workers and develop their skills, and they are an inevitable
byproduct of a free economy.
They are readily available to us, as they always have been,
if only we reform policies here in Washington that have put
handcuffs on our economy in the last several decades. I am not
blaming this on this Administration or one party. If you look
out over the last couple of decades, it appears we do
everything we can to make it harder and more expensive to do
business in America.
If we really want people to develop the skills, we need to
get them in the workplace. Employers, working with community
colleges and other training resources, will get their people up
to speed and we can do it. Americans will work if we get them
the jobs. But I don't think we can pretend that we are helping
if we create these large government training programs when
people do not have any place to take them.
We need to get the economy going. That will bring more
workers. That will bring higher budgets from the private sector
for training, and then those training resources in the
government and private sector can help raise the skill level of
our workers.
Thank you, Mr. Chairman. I appreciate the opportunity to
share my thoughts.
Chairman Casey. Senator DeMint, thank you very much.
Congressman Lipinski.
STATEMENT OF HON. DANIEL LIPINSKI, A U.S. REPRESENTATIVE FROM
ILLINOIS
Representative Lipinski. Chairman Casey, Vice Chairman
Brady, Members of the Committee, I want to thank you for
inviting me to testify today.
Americans need jobs. This fact was emphasized once again
last Friday with the release of the June unemployment numbers.
Americans are asking: Where are these jobs going to come from?
While some believe that America can no longer compete in
manufacturing, I believe that robust job creation can and must
come from manufacturing--from what we think of as traditional
manufacturing such as Northstar Aerospace in Bedford Park,
Illinois that makes parts for the Apache Helicopter, to
Advanced Diamond Technologies in Romeoville, Illinois, that
makes coatings for artificial heart valves. Manufacturing in
all its forms is critical for America's economic future and for
our national defense.
So how can we promote manufacturing job creation? One way
is workforce education and training. It is simply not the case
that when a manufacturer is ready to create a new position
there will be an American ready to start the job.
I constantly hear from manufacturers in my district, which
has a long and proud history of small manufacturers, that they
are having an increasingly difficult time finding qualified
workers--even in these times of high unemployment. This is true
for all types of manufacturing, from steel to nanotechnology.
And if there is no qualified worker, there is no job creation.
We need a two-pronged approach to address this problem. One
is to improve the K-12 education system so that students have
the necessary basic skills for the jobs of today and tomorrow;
and the other is focused on postsecondary training and
retraining to improve the skill sets of workers.
One way to identify and help devote the necessary resources
for the Nation's manufacturing workforce is through the
development of a national manufacturing strategy, something
that this Committee explored last month. H.R. 1366, my National
Manufacturing Strategy Act, would require government and
private sector stakeholders to assess the current state of
American manufacturing, look at future technologies and
economic challenges, and develop a plan for keeping America's
industry competitive. This bill passed the House last year
overwhelmingly 339 to 38, and with the support of Vice Chairman
Brady at the time.
Now, manufacturing strategies can work in a high-wage, free
market democracy. Just ask Germany, which runs a robust trade
surplus. But of course we cannot wait for a national strategy
to address the workforce needs that our country currently
faces.
In grades K-12, students must be better educated in
Science, Technology, Engineering, and Math, commonly known as
the STEM fields. We all have heard countless times how American
students are falling behind others around the world.
Provisions of the America COMPETES Act, along with its
reauthorization which passed last year, seek to improve STEM Ed
by calling for a wide range of initiatives, including better
teacher training and hands-on learning at National Labs to
boost interest and improve education in STEM fields at all
levels.
Private industry has also gotten involved. For example,
Abbott Labs has invested more than $25 million over the last 5
years to support programs that advance STEM education from
early elementary school to college. In classrooms, museums, and
after-school programs, these investments are tailored to build
a workforce prepared for the increasingly technical job market.
Now, at the postsecondary level, training and retraining
initiatives can produce workers capable of filling the growing
number of highly technical manufacturing jobs. In June,
President Obama expanded the Skills for America's Future
Program to increase partnerships between manufacturing
companies and community colleges.
This initiative will establish a standardized credentialing
system, certifying community college students with industry-
recognized credentials and making it easier for employers to
find potential employees.
The America COMPETES Act also included a grants program
aimed at expanding education and training in advanced
manufacturing at community colleges and requiring Manufacturing
Extension Partnership Centers to inform colleges of the skill
areas manufacturers need so that students are prepared to join
the workforce upon graduation.
American industry has also been a leader and innovator when
it comes to workforce development at the postsecondary level.
One example is the Steelworker for the Future Initiative, a
public/private partnership, including Arceor-Mittal, the United
Steelworkers, and community colleges, which will pay for
students to receive the technical training necessary to fill
skilled positions throughout the Nation. Not only does this
program develop the skills needed for sustaining the
increasingly high-tech steel workforce, it helps grow interest
in manufacturing jobs.
But obviously we cannot rely on the private sector alone to
make the investments and develop the programs that will ensure
that the United States has the skilled workforce our economy
needs. Through smart investments, incentives, and well-designed
programs, we must continue to support workers gaining,
sustaining, and improving the skills necessary to support
American manufacturing success.
I am convinced that if we do not make a concerted effort to
produce the workforce needed by manufacturers, that it will
mean nothing less than giving up on much of the American middle
class, throwing in the towel on ``Made in America,'' and
accepting that most of the products we buy--even those that are
necessary for our national security--will be made somewhere
else.
I don't believe, and I don't think any of us believe, that
we can allow this to happen. Thank you very much again for the
opportunity to testify, and thank you for your work in
promoting manufacturing in the United States.
[The prepared statement of Representative Daniel Lipinski
appears in the Submissions for the Record on page 38.]
OPENING STATEMENT OF HON. ROBERT P. CASEY, JR., CHAIRMAN, A
U.S. SENATOR FROM PENNSYLVANIA
Chairman Casey. Thanks very much, Congressman. And we want
to thank Senator DeMint and Congressman Lipinski for your
testimony.
We will now move to our second panel. And as we do, I will
go through my opening and then turn it over to Vice Chairman
Brady.
Today's hearing is the second in a series that the Joint
Economic Committee is holding to determine the best strategies
to revitalize manufacturing in the United States of America.
At the first hearing we focused on the need for a
comprehensive national manufacturing strategy and examined some
of the policies needed to support manufacturing companies and
workers.
We looked at policies such as cracking down on currency
manipulation, making the R&D tax credit permanent, extending
trade adjustment assistance to workers who lose their jobs as a
result of foreign trade, as well as other strategies as well.
With today's hearing, our focus is on skill-building and
preparing our workers in manufacturing and in other sectors to
compete and win in the global economy. Arming our workers with
new skills is critical to bolstering our U.S. competitive
position and strengthening our economy.
Workers across the country continue to feel the effects of
what we now know as the Great Recession. Unemployment is at 9.2
percent. We have regained just 1.8 million of the 8.8 million
jobs lost during the Recession. There are 2 million--2
million--fewer manufacturing jobs today than when the Recession
began.
A sustained and robust recovery will help many unemployed
workers find new jobs, but it is clear that we have to do more
to equip workers with the skills they will need for new jobs in
the growth sectors of our economy.
And it is equally clear that workers in these sectors that
have been hit hardest during the Recession, such as
manufacturing and construction, face particular challenges. Our
country is facing a skills gap. There is a mismatch between the
skills employers need and those that workers have.
A 2011 survey by Manpower, the temporary staffing company,
found that more than half, 52 percent of companies, are having
difficulty finding mission-critical positions--I should say,
filling mission-critical positions. The share of companies
unable to fill key positions is at an all-time high. And it is
not just a short-term problem.
By the year 2018 it is projected that the U.S. will have 3
million fewer people with postsecondary credentials than we
need. With Congress expected to take up the reauthorization of
the Workforce Investment Act, we know as WIA by the acronym W-
I-A, WIA, this is a critical moment to focus on job training
and to take a hard look at what works, what does not work, and
where the Federal Government should put its limited dollars to
get the greatest return on our investment.
We need to modernize and reform our job training programs
to reflect recent knowledge on workforce development and to
ensure that the programs are as efficient and as effective as
possible.
Today's hearing can help us chart that course forward. We
know a lot more than we used to know about job training. There
are proven approaches and models that are delivering impressive
results today. Yes, there is some good news out there in this
tough economy.
Sectoral training programs are a prime example. These
programs identify the sectors of the economy that are for the
greatest potential, or the strongest growth opportunities in a
particular community, and then work with nonprofit
organizations and private sector employers to craft programs
that build skills that will be in demand.
These programs are delivering earnings' increases of 20 to
30 percent. The increasingly important role that community
colleges play in helping students earn industry-recognized
credentials is another recent development that offers great
promise.
Community colleges have solid relationships with local
employers and are able to create certification and degree
programs that build skills that are needed in their
communities.
There are other successful models that pair unemployed
individuals with employers. The starting point is that a job
training program should be connected to specific needs of a
specific corporation.
I know that a priority I have is ensuring that we scale up
programs which are working and end those that are not
delivering results.
One proven program is the Trade Adjustment Assistance Act,
which helps workers who have lost their jobs to overseas
foreign competition. It helps them build new skills for these
workers, and it helps them find new jobs. In the past two years
alone, Trade Adjustment Assistance has helped hundreds of
thousands of workers get back on their feet.
I recently introduced legislation to extend TAA for another
five years. Congress should extend this program, in my
judgment, before considering any trade agreements.
Additionally, reauthorization of WIA provides an
opportunity to apply proven metrics, proven metrics to any
workforce program, and any workforce program that WIA supports
ensuring that taxpayer dollars are spent efficiently and
effectively.
Strengthening job training is critical to strengthening
middle-income families, and that is why updating and improving
our training programs is so important. We need to help workers
develop new skills to find new jobs, and we need to ensure that
employers are able to find the skilled employees they need to
operate and expand their businesses.
The benefits run both ways: Employers and employees.
We are fortunate today to have with us a distinguished
panel of experts who have deep knowledge of workforce
development and a keen understanding of the most powerful and
effective job training strategies. I appreciate our witnesses
being here. I will introduce each of you in a moment before
your testimony, but I want to turn it over to our Vice
Chairman, Vice Chairman Brady.
OPENING STATEMENT OF HON. KEVIN BRADY, VICE CHAIRMAN, A U.S.
REPRESENTATIVE FROM TEXAS
Vice Chairman Brady. Thank you, Chairman Casey, for
convening this hearing on job training in manufacturing. I
remember with fond memories one of my many college jobs on the
manufacturing floor of Electromagic, punching and bending sheet
metal to build air compressors, because it paid well.
Manufacturing in the United States has changed dramatically
since then. Low-tech, labor-intensive goods such as apparel,
shoes, sporting goods, and toys that were once made in America
are now imported, while U.S. manufacturers sell high-tech,
capital-intensive goods to the rest of the world.
Computer-driven machinery has replaced routine labor in
manufacturing. This has boosted productivity growth, averaging
2.9 percent a year. What took 1,000 workers to manufacture in
1950 now takes only 184 workers. Consequently, manufacturing
jobs as a share of the total nonfarm jobs have declined from
over 30 percent in 1950 to a little under 9 percent today.
Six decades ago, a high school dropout with no special
skills could get a job on an assembly line, work hard, and over
time enter the middle class. Today, a job in manufacturing
demands special skills and may even require a college degree.
The changing nature of manufacturing demonstrates the
importance of job training for the success of both America's
manufacturers and their workers. Congress enacted the Workforce
Investment Act in 1998 to consolidate the Federal Government's
fragmented job training system into a coherent one-stop system
that could serve the needs of employers and workers.
However, the Government Accounting Office found continuing
fragmentation, overlap, and potential duplication in job
training programs run by multiple federal agencies. For fiscal
year 2009, the GAO found 47 federally funded job training
programs administered across nine different agencies. Almost
all of these programs overlap with other programs in the
provision of similar services but with differences in
eligibility, objectives, and service delivery.
In addition to costly duplication, federal job training
programs do not necessarily serve their purpose well either for
those seeking jobs or workers seeking retraining. Job training
programs that work best are employer-driven, not bureaucracy-
driven. Manufacturers know what skills employees need to
succeed better than bureaucrats.
The Senate will soon be reconsidering the Workforce
Investment Act. Congress has an opportunity to consolidate and
reform existing federal job training programs and to improve
their value for U.S. taxpayers. I urge Republicans and
Democrats in both Houses of Congress to seize this opportunity.
However, the best job training programs are meaningless if
there are no jobs available for their graduates. The Employment
Situation Report for June, which was released last Friday,
confirms that the economic policies of the White House and some
in Congress are failing to revive our moribund economy and
create jobs--manufacturing or otherwise.
By the Obama Administration's own standards, its stimulus
plan has failed spectacularly to create jobs. According to the
June report, the United States still has 6.5 million fewer
payroll jobs than promised. And June's unemployment rate of 9.2
percent is far above the promised 6.7 percent.
History demonstrates that business investment in new
buildings, equipment, and software--not federal spending--
drives the creation of new payroll jobs. U.S. businesses are
sitting on nearly $2 trillion that they could invest here at
home to create jobs for American workers, but they are refusing
to do so.
So why does American capital seem to be ``on strike''? The
answer is that the Administration's economic policies keep
businesses guessing what onerous burdens await them. As several
Texas businessmen have told me: Predicting market conditions is
tough enough in what we do for a living; predicting what the
President and Congress may do? Forget it.
It now is widely understood that excessive federal
spending, budget deficits, and debt accumulation mortgage our
economic future and increase uncertainty over the size and form
of future tax increases. However, we also have a regulatory
explosion currently that thwarts business expansion and
increases uncertainty.
Here are just a few examples of regulatory excesses:
The State Department's failure to issue a construction
permit for the Keystone XL pipeline from Canada, a project
estimated to create over 13,000 high-wage manufacturing and
construction jobs across the country, stimulating significant
additional economic activity.
The Administration's illegal moratorium on and subsequent
slow rolling of permits for deep-water oil exploration and
development in the Gulf.
The EPA's proposed regulations on greenhouse gas emissions.
And, as mentioned by Senator DeMint, the National Labor
Relations Board's unprecedented actions against Boeing for
locating one of its manufacturing facilities in South Carolina.
While solving our fiscal problems requires Congressional
action, President Obama could end decisively his regulatory
onslaught on American businesses on his own and without delay.
If the President is serious about relieving unemployment--and I
believe he is--he should act now to reverse his
Administration's confidence-shattering, job-destroying
regulatory policies--sooner rather than later.
Mr. Chairman, I look forward to hearing the testimony of
today's witnesses, and appreciate your leadership on this
issue. I yield back.
[The prepared statement of Representative Kevin Brady
appears in the Submissions for the Record on page 39.]
Chairman Casey. Thank you, Vice Chairman Brady.
I wanted to introduce our panel, and then we will move to
your testimony. I will be moving to my left to right.
First of all, Mr. Ron Painter is the CEO for the National
Association of Workforce Boards, known by--we always have
acronyms, don't we, in Washington----
[Laughter.]
NAWB. It's the leading workforce association that
represents the Nation's nearly 650 business-led Workforce
Investment Boards, also another acronym, WIBS, W-I-B-S. These
Boards, so-called WIBS, plan and oversee state and local
workforce development and training programs. Mr. Painter's
previous work includes Chief Executive Officer of the Three
Rivers Workforce Investment Board in my home State of
Pennsylvania; the U.S. Department of Labor for the Enterprise
Project; and the National Association of Business. He also
served as Butler County, Pennsylvania's, elected Clerk of
Courts. Welcome, Mr. Painter.
Mr. Charles T. Wetherington serves as President of BTE
Technologies, Incorporated, a provider of technology solutions
to the physical therapy market worldwide, with sales in 35
countries. Mr. Wetherington serves on the board of directors of
the National Association of Manufacturers and has been trustee
of the Foundation for Physical Therapy since 2006. Welcome, Mr.
Wetherington.
Ms. Diana Furchtgott-Roth is a Senior Fellow at Hudson
Institute and directs the Center for Employment Policy. From
February 2003 to April 2005, she was the Chief Economist of the
U.S. Department of Labor. Also, she was Assistant to the
President and a Resident Fellow at the American Enterprise
Institute from 1993 to 2001. Prior to that, she served as
Deputy Executive Director of the Domestic Policy Council, and
Associate Director of the Office of Policy Planning at the
White House under President George H.W. Bush. Ms. Furchtgott-
Roth, we welcome you here today, as well.
And finally, Dr. Harry Holzer is Professor of Public Policy
at Georgetown University and a Founding Director of the New
Georgetown Center on Poverty and Equality in Public Policy. He
is currently a Senior Fellow at the Urban Institute, and a
Senior Affiliate of the National Poverty Center at the
University of Michigan, among his many other affiliations.
Prior to coming to Georgetown, Professor Holzer served as Chief
Economist for the Department of Labor in 1999. Welcome, Doctor.
Mr. Painter, we will start with you.
PANEL II
STATEMENT OF MR. RON PAINTER, CHIEF EXECUTIVE OFFICER, NATIONAL
ASSOCIATION OF WORKFORCE BOARDS, WASHINGTON, DC
Mr. Painter. Thank you, Mr. Chairman, Mr. Brady, Mr. Duffy.
It's a pleasure to be here this morning. I thank you for the
invitation to testify.
On behalf of the National Association of Workforce Boards,
NAWB, I am pleased to testify on how the Nation's workforce
system is working to equip workers with the skills they will
need to help ensure our Nation's long-term economic success.
Let me first provide a brief description of my
organization, the country's workforce system, and the
challenges that it has faced over the last several years.
Today there are over 550 Workforce Investment Areas across
the country, all overseen by local, business-led, business-
chaired Workforce Investment Boards.
As you mentioned, they have the responsibility for
developing workforce policies and strategies for federal and
state funding to meet the employment and skill needs of
America's employers and job seekers.
NAWB represents these Boards by communicating with
policymakers such as we are doing today, translating practice
to policy, and providing information about promising practices
and professional development to the Nation's Workforce
Investment Boards, or WIBS.
We believe that many in the business community find the
workforce system to be of value to their local communities and
their economic regions. Over 12,000 employer representatives
serve on local and state WIBS across the U.S., many of them in
manufacturing.
NAWB's national board, chaired by Laurie Moran, the
Executive Director of the Danville-Pittsylvania, Virginia,
Chamber of Commerce, includes both large employers in
manufacturing such as Microsoft, Boeing, and Ford Motor
Company's Fund, as well as small manufacturers, financial
planners, health care providers, community bankers, education,
and the Philadelphia AFL-CIO.
Their common bond, like the local Boards, is to help
America's employers compete through having a skilled and
available labor force. Despite overall stagnant funding over
the past 10 years and cuts in FY 2011, the workforce system has
experienced an over 200 percent increase in demand for services
over the past 2 years.
In the last reporting year, the workforce system served
over 8 million individuals through its Adult Dislocated Worker
and Youth Programs, and over 4 million job seekers who were
placed in employment, with hundreds of thousands more placed
into training for new jobs and careers.
The workforce system has increasingly adopted sector-based
strategies, as you mentioned, to not only support but in some
cases to develop training programs designed to meet the
specific skill requirements of those employers.
Let me cite one example of where the Workforce Investment
system has played a vital role. In your home State, Mr.
Chairman, of Pennsylvania, manufacturing employees in Berks and
Lancaster County were losing their skilled industrial
maintenance workers to retirement and were concerned about what
they viewed as an inadequate pipeline of new entrants.
In addition, the job requirements were changing
drastically. These new jobs, which are now called
``mechatronics,'' are high-tech jobs that combine mechanical,
electrical, and controls' engineering with computer science.
Driven by employer input, the Berks and Lancaster County WIBS
teamed with the Reading Area Community College to develop and
offer Advanced Manufacturing, Integrated Systems Technician
Certification Program through the community college and the
region's secondary career and technical centers.
More than 400 workers have earned their certification in
Mechatronics through this collaborative effort. The
competencies that were developed are now a part of the National
Packaging Institute's Competency System. As well as producing
an Associate Degree Program at the community college, graduates
of this program can now transfer credits to one of three
baccalaureate programs--one at Penn State Berks, one at
California University of Pennsylvania, and one at Perdue
Calumet in Hammond, Indiana.
This is an example--and there are many more on a website
called ``workforceinvestmentworks.com'' that has stories from
every state across the U.S. about the impact that your
investment, this Congress, in workforce development is working.
WIA was enacted in 1998 in a very different economy, and we
recognize that it is in need of updating, to factor in not only
the significant changes in the economy, changes in the
occupations we have, anticipation of occupations or emerging
jobs and skills, and to incorporate lessons that we have
learned over the 12 years of WIA.
NAWB strongly supports the HELP Committee's bipartisan
efforts to reauthorize WIA, and we would urge you to do the
same. In addition, funding for WIA is also of deep concern.
These programs should be seen as investments in our human
capital, critical to getting people back to work and rebuilding
our economy.
The workforce system at the local level leverages many
multiple funding streams, including critical funding through
Pell and TAA, as funding from the private sector as well, and
from foundations and other sources. Some of these resources
could be at risk if we continue to watch funding reductions.
We do appreciate and recognize the importance of deficit
reduction, but we also recognize that the skills of America's
workforce are directly related to our economic recovery and
future competitiveness.
NAWB and the Nation's Workforce Investment System are in
the front lines of helping America's business access a labor
force with the skills they need to be competitive and helping
job seekers to make often difficult transitions to new jobs in
what are some of the most stressful times of their lives. We
stand ready to continue to serve, and I appreciate the
opportunity to have been here today.
[The prepared statement of Mr. Ron Painter appears in the
Submissions for the Record on page 41.]
Chairman Casey. Thank you, Mr. Painter. And I should have
mentioned at the beginning that of course we try to keep
witnesses to five minutes, and you actually did it. It doesn't
happen every day. But obviously as part of that agreement, if
you have a statement that you want submitted for the record, it
will be. So each of your statements will be made a part of the
record, in addition to your testimony that summarizes the
statement.
So, Mr. Wetherington.
STATEMENT OF MR. CHARLES WETHERINGTON, PRESIDENT, BTE
TECHNOLOGIES, INC., HANOVER, MD
Mr. Wetherington. Good morning, Chairman Casey, Vice
Chairman Brady, and Congressman Duffy.
I am Chuck Wetherington, President of BTE Technologies
based in Maryland. My company is widely regarded as the leading
provider of advanced technologies for physical testing and
rehabilitation, as well as solutions for workplace injury
reduction for large employers.
I am pleased to testify on behalf of the National
Association of Manufacturers. The NAM represents manufacturers
in every industrial sector and in all 50 states. Manufacturing
supports an estimated 18.6 million jobs in the U.S., about 1 in
6 private sector jobs.
To put this into perspective, that is about the total of
the population of the cities of New York City, Los Angeles,
Chicago, Houston, and Phoenix combined. The NAM appreciates
Congress's interest and support of manufacturing. Jay Timmons
appeared before this Committee a couple of weeks ago and shared
with you our manufacturing strategy for jobs and a competitive
America.
I support that strategy, and I urge you to adopt it as a
guiding document for legislation you consider. The strategy is
focused on things Congress can do to make America the best
place in the world to headquarter a company, manufacture, and
innovate.
A key issue for manufacturers is the need for a skilled
workforce, as everyone has said here today. Manufacturers have
applauded President Obama for his support of partnerships
between manufacturers and community colleges to make
manufacturing credentials available nationwide and to help
close the skills gap.
The NAM encourages the Senate to refine the draft Workforce
Investment Act reauthorization to promote and emphasize the
adoption of portable industry-recognized skills credentials
within the legislation.
However, I think it is important to note that the economy
as a whole needs to grow in order for manufacturers to create
new jobs and fill those currently available. I urge you to look
more broadly at factors impeding job growth.
To highlight the need to address issues affecting the
economy, I would like to submit for the record a letter signed
by nearly 500 CEOs, including myself, encouraging Congress to
act in the Nation's best interest and reach an agreement on the
debt ceiling.
Chairman Casey. That will be made part of the record.
Mr. Wetherington. Thank you very much, sir.
Manufacturers and businesses across the Nation face
considerable uncertainty, which stifles growth and discourages
hiring. For example, actions such as the National Labor
Relations Board complaint against Boeing Company, proposed
regulations from the NLRB, Department of Labor, the EPA, the
FDA, and others will raise the cost of conducting business and
further inhibit the creation of jobs.
The NAM recently polled over 8,000 of its members about the
impact of the NLRB's complaint and other actions by the Board.
The survey asked the following question:
Would this complaint and other recent NLRB reactions
negatively impact your ability to create jobs?
The results should get everyone's attention. Of the more
than 1,000 responses, almost 69 percent said: Yes, it will
impact their capital investment and hiring decisions; 18
percent said ``no,'' and 13 percent were not sure. Clearly
these actions are of great concern to manufacturers.
An issue of great importance to me and my company is the
FDA's 5-10K approval process used by medical device
manufacturers. Last year the FDA suggested significant changes
to this approval process that would have devastated companies
like mine.
The prospect of these changes being implemented, despite an
exemplary safety record for the current process, hangs over the
heads of manufacturers and other companies, creating a sense of
uncertainty about capital investment and hiring additional
employees.
Mr. Chairman, the United States remains the world's largest
manufacturing economy, producing 21 percent of the global
manufactured products. As manufacturers, we face many
challenges due to intense global competition. We would do well
to make sure our own government is not one of the challenges
manufacturers and employers need to overcome in order to be
successful and create good, well-paying jobs for Americans.
Thank you, Mr. Chairman. Thank you, Vice Chairman. And
under five minutes.
[The prepared statement of Mr. Charles Wetherington
together with letter dated July 12, 2011 from American CEOs to
members of the United States Congress appears in the
Submissions for the Record on page 46.]
Chairman Casey. Thanks very much. Well under. You get extra
credit for that.
[Laughter.]
Ms. Furchtgott-Roth. Thank you.
STATEMENT OF MS. DIANA FURCHTGOTT-ROTH, DIRECTOR, CENTER FOR
EMPLOYMENT POLICY, HUDSON INSTITUTE, WASHINGTON, DC
Ms. Furchtgott-Roth. Mr. Chairman and Mr. Vice Chairman,
thank you so much for inviting me to testify here today. With
your permission, I would like to submit my written testimony
for the record and summarize right now in just under five
minutes, I hope, like Mr. Wetherington.
Training is immensely important. I myself have coauthored
papers on the importance of community college training in
economic mobility, looking at a large data set in the State of
Florida. But the problem is, right now there are very few job
openings, and so training has limited effects in reducing our
unemployment rate.
Today, at ten o'clock, the Bureau of Labor Statistics
brought out its monthly Job Openings and Labor Turnover Survey,
which I have right here before me, and it showed the changes
from April to May in job openings, hires, separations, and
layoffs.
The job openings rate stayed the same between April and May
at 2.2 percent. In 2008 it was 2.6 percent. Total hires stayed
the same, 3.1 percent in April versus 3.1 percent in May. The
total separations rate--that is people who have left their
jobs--rose from 2.9 percent in April to 3.1 percent in May. And
the total layoff rate went up from 1.2 percent in April to 1.4
percent in May.
These might not seem very large changes, but these indicate
that employers are not increasing their hiring; rather, they
are keeping their hiring the same and increasing their layoffs.
So what we need to do is look at what can we do right away
in order to change this picture for employers? Because right
now we have, as you know, discussions on the debt ceiling,
deficit problems, and we need to look at what we can do in a
costless manner that can help employers hire right now.
The President can control his Cabinet Secretaries, and the
whole Executive Branch. I would just like to mention briefly
four areas where he could help.
As was mentioned before, the National Labor Relations Board
(its actions as was mentioned previously today towards Boeing's
decision to expand in South Carolina) has sent a chilling
signal to any employers who want to start plants, especially in
unionized states. If they build a plant somewhere, and they
want to expand elsewhere and the National Labor Relations Board
doesn't allow them to do so, this is a big disincentive to
locating in a unionized state. This actually hurts unionized
states more than right-to-work states. Firms know if they
locate initially in a right-to-work state, will be allowed to
move.
Boeing, for the record, hasn't laid off any workers in
Washington State. It has kept its entire workforce. But with a
backlog of over 800 Dreamliners, it needs another plant. The
NLRB action is something the President could change
immediately. He could replace his Acting General Counsel, or
withdraw the nomination of Mr. Lafe Solomon, and he could
express his regret with what's happened, or change the policy.
He hasn't done that.
Environmental Protection Agency. Just last week it brought
out a new set of regulations that they called the Clean Air
Transport Emissions Rule, about emissions going over state
lines. We have increasingly cleaner air since 1980. Our air has
got cleaner every single year. Why don't we just hold off on
additional EPA regulations for a couple of years until maybe
our unemployment rate is down to 7 percent? Our air is
continually cleaner, so we would not be making our air dirtier,
because with every new plant we put in place, every new car
Americans buy, our air gets a little bit cleaner because we're
using new technology.
Labor Department. The Mine Safety and Health Administration
is bringing out new regulations on dust in coal mines. Those
are going to decrease the potential for employment in these
coal mines, especially in hard-hit states in the Midwest. It is
bringing out new regulations for affirmative action for women
on construction sites. And, by the way, for the record, women's
unemployment rate is 1.1 percentage points lower than men's
right now.
DOL is bringing out new affirmative action regulations for
veterans and new affirmative action regulations for the
disabled. Again, it is very hard for employers to comply with
all these different regulations.
Department of the Interior. Not allowing any new drilling
in the Gulf of Mexico. Again, this is something that could be
changed right away at no cost.
Along with these different regulations that could be
changed, there are laws that we have in place that also
discourage hiring, such as the new $2,000-per-worker penalty
for employers if they don't have the right kind of health
insurance, beginning in 2014.
But I see my time has expired, and I would be glad to
expand on those in the question and answer, if anyone is
interested.
[The prepared statement of Ms. Diana Furchtgott-Roth
appears in the Submissions for the Record on page 70.]
Chairman Casey. Thank you for being cognizant of the time.
Dr. Holzer.
STATEMENT OF DR. HARRY HOLZER, PROFESSOR, GEORGETOWN PUBLIC
POLICY INSTITUTE, GEORGETOWN UNIVERSITY, WASHINGTON, DC
Dr. Holzer. Thank you. Good morning, Chairman Casey, Vice
Chairman Brady, and Mr. Duffy.
I would like to make five major points today about
manufacturing, employment, the U.S. labor market, and the
Nation's education and workforce development system.
Point number one: Despite the loss of over 2 million jobs
in manufacturing in the last four years and high unemployment
among these workers, employers still have difficulty filling
jobs created in that industry--at least partly due to a lack of
workers with the appropriate technical skills.
The single clearest piece of evidence on this is that the
ratio of job vacancies to new hires in manufacturing is higher
than we see in any other major industry group, suggesting
employers are having difficulty filling those job vacancies.
And descriptive evidence from several different sources
reinforces this viewpoint.
Point number two: In order for America's prosperity to be
widely shared, and in order to help reduce currently high
levels of unemployment, the skills that Americans bring to the
labor force will have to increase. At over 9 percent, today's
high unemployment does mostly reflect cyclical factors, or a
shortage of jobs, but a piece of it is structural, again with
employers having difficulty filling job vacancies requiring
technical skills. And several important analyses recently by
Professor Michael Elsby at the University of Michigan,
Professor Bill Dickens of Northeastern University and others
support this claim.
The large fraction of unemployed workers who have been out
of work for six months or longer will reinforce the structural
component of unemployment because the long-term unemployed
always have more difficulty reentering the labor market after
an absence of work.
Over the long term, the gaps between the skills demanded by
American employers in good-paying jobs and those supplied by
American workers contributes to the enormous levels of
inequality that we have in the U.S. today. So unemployment
could be reduced and prosperity more widely shared if Americans
had more of the post-secondary credentials that employers seek
both in middle-skill technical jobs and in high-skill jobs
requiring a BA or more.
Point number three: While the public and private systems of
K-12 and higher education in the U.S. and private sector on the
job training do contribute to the skills of the workforce, a
very robust public system is still necessary for meeting these
needs.
On their own, our system of higher education will not
produce enough of the skills needed by American workers. The
drop-out rates at our two-year and four-year colleges are very
high. Students who manage to finish a credential often don't
get the credentials that our labor market happens to reward.
This is partly because our education workforce systems
largely operate in isolation from one another, with too few
students gaining access to career counseling and other
employment services.
Private employers do provide some of the training they need
on the job, but they are reluctant to provide general skills or
occupational training for a variety of reasons. So a strong
publicly funded workforce system is still necessary to meet
these skill needs.
Point number four: Though it clearly provides employment
services and training cost effectively, the publicly funded
workforce system right now has too few resources to be fully
effective, and these resources should not be further reduced.
A very rigorous body of research evidence indicates that
our public workforce system provides services to job seekers
and training that is clearly cost effective, but the funding of
the system has declined by as much as 90 percent over the last
three decades.
Title I of the Workforce Investment Act now receives under
$3 billion of funding in a labor force with 150 million
workers, and an economy that has a GDP of $15 trillion per
year. I believe the concerns over duplication raised by the
recent GAO report have been wildly overstated, since most of
the 47 programs they cite use very small sums to target very
detailed worker populations.
Even if you include all of those funding sources, virtually
no other industrial nation in the world spends as little on
employment services and training as a percentage of its GDP as
we do in the U.S.
Finally, point number five: The U.S. needs to develop a set
of more coherent education of workforce systems, mostly at the
state level, but with federal support that is better integrated
with the demand side of the U.S. economy and with the labor
market.
Performance of the WIA system could be improved along a
number of dimensions. WIA could provide more support to states
and localities that use the kinds of sectoral strategies that
Chairman Casey talked about earlier. Indeed, the evidence on
the cost effectiveness of sectoral programs is very, very
compelling.
A number of states--like Pennsylvania, Michigan, Oregon,
Washington, and Wisconsin--have made enormous strides in tying
their education of workforce systems to areas of strong
industry demand. I believe a major new competitive grants
program to fund state activities, perhaps modeled on the Race
to the Top Program in education, could be very helpful to
encourage more states to better integrate their education in
workforce system with industry demand. But any such program
should represent a net addition to, and not a carving out, of
current WIA funding.
Thank you very much.
[The prepared statement of Dr. Harry Holzer appears in the
Submissions for the Record on page 78.]
Chairman Casey. Doctor, thanks so much. Everyone was on
time. That is impressive.
Doctor, I want to take you back to your final point about
the sectoral training programs, not only because you mentioned
Pennsylvania, but that certainly doesn't hurt, because there is
a good track record there. But tell us about what are the, for
lack of a better word, the characteristics, or features of
those kinds of programs that have worked at the state level.
You mentioned in your testimony five states, in addition to
Pennsylvania--Michigan, Oregon, Washington, Wisconsin--where
they have made great strides and, as you say, quote, ``tying
their education of workforce systems to industry demand,''
unquote. How does that work?
What are the features of the programs that have worked on
the ground? Because we have to get away from just, you know,
theory in Washington. We need to point to strategies that are
working in the real world, and I want to get your sense of
that, especially as we are about to reauthorize the Workforce
Investment Act.
Dr. Holzer. Well I want to distinguish, Senator, between
programs that work in individual industries, that target key
industries, versus state-level systems that effectively
encourage these partnerships. And just for the sake of
bipartisanship, I also want to note that some of the most
successful programs, like Project QUEST in San Antonio, and
Capital Idea, have occurred in the State of Texas, and those
are also very good programs.
Chairman Casey. It is important to mention Texas here, too.
Dr. Holzer. I noted that.
[Laughter.]
Chairman Casey. But separate from these programs, and I
think these programs actively encourage intermediaries to work
with employers to target key sectors of the economy where
demand is growing, where good paying jobs are available, and
employers are engaged in the process of creating the education
and training programs, and often actively commit to hiring the
workers that come out with the appropriate credentials.
So they do that at the programmatic level. I think what
they do at the state levels that is important is they create
systems of looking broadly across the different sectors of
their economy, identifying the industries where demand is
projected to be strong, where there might be unmet needs for
skilled workers, and then creating the partnerships between
employers, skill providers, and the workers in those industries
in a more systematic way.
I think those states, among many others, have taken the
lead in creating those systems on a broader scale.
Chairman Casey. Is there anything that we do here, or can
do by way of WIA or otherwise, legislation or strategies that
we can employ here that will incentivize or foster that kind
of, I guess for lack of a better word, engagement between the
particular business community at the local level and this
strategy on a particular sector?
Dr. Holzer. I would say two things. First of all, I think
there are some changes in WIA that could encourage more of that
kind of activity.
For instance, simplifying the performance measurement
system and putting more weight on the attainment of industry-
recognized credentials within the performance measures of WIA I
think would be very helpful.
Right now, sectoral programs are allowable under WIA but
not particularly encouraged by WIA, and I think we could do
more to encourage their development.
But the other thing, as I mentioned before, I personally
would advocate a competitive grants program as part of WIA, but
not carved out of WIA funding, to provide funding to those
states that are taking a lead in that area, that have shown
evidence of doing it so far that are willing to use existing
pots of money that they already have, to tie them together more
effectively, to create systems at the state level that reach
out to these growing industries and better serve their needs.
Chairman Casey. Because any suggestions now are helpful
because we have got the reauthorization that is coming in the
next--well actually we're working on it this week and over the
next couple of months within the Committee, and hopefully we
will get it to the Senate Floor as well as in the House.
I am going to be running short on time, but I wanted to,
Mr. Painter, I wanted to raise a question with you that I might
hold for the second round, but about the Westmoreland County
Community College, which is of course a community not too far
from Pittsburgh, who received a $4.9 million grant. I wanted to
have you talk about that. But I see I am close on time and we
will pick that up in the second round.
Vice Chairman Brady.
Vice Chairman Brady. Thank you, Chairman. Thank you all for
your testimony. Ms. Furchtgott-Roth, thanks for your points
about uncertainty. We had real impacts in southeast Texas. At
one point just several years ago we had the need for about
10,000 welders due to refinery and chemical plant expansions.
Many of those are now on hold. One of them, I think the
Motiva Plant, cancelled their expansion due to both global
factors and the concerns about some of the cap and trade
legislation we were looking at. That was 1,500 construction
jobs, 250 permanent jobs.
And it was interesting, as our local companies sought to
find welders for these expansions, one, the skills were not
there. And secondly, many could not pass the drug testing
requirement at the outset. It was very frustrating. And these
are jobs that pay between $60- and $80,000, above the median
work scale in America. And it is one of those challenges that,
as the economy picks up we hope to have that challenge going
forward as well. But your point about uncertainty is real.
Mr. Painter, before coming to Congress, as a Chamber of
Commerce executive I served on our Private Industry Council
that oversaw job training programs in the Houston Region. My
impressions were, one, it was very bureaucratic. We did spend a
lot of the time trying to, you know, fit into the boxes of the
plans; but we also had a variety of contractors, some who were
extremely effective in their job training efforts in their
communities, and others not so much.
I want to talk to you in a minute about what those
characteristics are of successful programs.
Mr. Wetherington, thank you for being here. Have you
hired--as an employer, have you hired a worker trained through
the Federal Job Training Program?
Mr. Wetherington. I know I am supposed to be here to paint
the dire picture, but--and we are a small company, only 80
employees--this year we have increased employment by 9 percent,
so 7 new people this year. But I do have some issues.
I have open jobs that are very difficult to fill right now.
So I have three positions that have been open for a month where
my skill sets are very difficult to find in the market that I
play.
Vice Chairman Brady. Have you worked, or hired through a
Job Training Program, federally funded?
Mr. Wetherington. I have not, no. I have hired ex-military.
That tends to be a great place for me to go. I get both great
skill set training as well as great work ethic.
Vice Chairman Brady. Is this new? This inability to fill
these positions? I don't know what you're looking for, but this
mismatch between skills and jobs, is it something that is
growing wider?
Mr. Wetherington. I believe it is growing wider. For us,
our jobs are getting more technical. These are electrical
technician positions that I need. It is an issue that BRAC is
just down the street from me and is sucking up a lot of the
technical capabilities that I need to have. So I think there's
some microeconomic issues as well as macro.
Vice Chairman Brady. Where do you recruit from for those
positions? Is it done locally, for the most part?
Mr. Wetherington. It's done locally. My plant is close to
BWI up in Baltimore, so I do local recruiting, and I
occasionally have to go broader.
Vice Chairman Brady. Dr. Holzer and Mr. Painter, the same
question. Is the skills' gap getting wider? And if so, why? I
mean, it seems like the mismatch between skills and jobs today
seems greater than--or at least appears to be greater than it
has in the past. Is that the case? And if so, why?
Mr. Painter. I'll take the first part of that, Congressman.
I think in many parts of the country, as I talk to the
Workforce Boards, I think the answer is--Is it getting wider?
I'm not sure. But I think it is this convergence of, with
technology, with innovation, with changing in the production
processes.
I think even I hear from local Boards that say companies
that laid off maybe two, three years ago and are now starting
to rehire, even the jobs that they are rehiring for are
different jobs. So the skill sets are changing dramatically.
And I think that a lot of it is also trying to encourage people
to go back and get the kinds of training.
Workforce Boards, we support the drive for certifications
and for competencies, and industry-recognized certification is
part of the process. So I can't tell you definitively it is
getting wider. It is not uncommon for me to hear that as I
travel the country.
Vice Chairman Brady. Thank you. Doctor.
Dr. Holzer. Congressman, I believe it is getting wider. And
I think there are two reasons for that, and it parallels what
Mr. Painter said.
First of all, I think economywide forces of new technology
are raising the demand for skills in the economy--``skills''
broadly defined, above the secondary level--and I think the
supply of skills is failing to keep up with that growing
demand. This has been true for a while for a lot of different
reasons: The fraction of young people finishing some kind of,
not only postsecondary credential but a relevant credential has
been falling off, even though many more people are attending
community college, four-year colleges, et cetera.
And I think, frankly, as the Baby Boomers retire, that gap
will grow even more, that gap between skills' demand and
supply.
I think the other issue is we are in an economy where the
exact specific skill sets are changing very rapidly. There are
these structural changes in the economy associated with the
Great Recession, and I think our education and training system
is not very nimble in this country.
So, for instance, employers will talk about they need
welders. There are tens of thousands of unemployed welders out
there, but they don't have the particular kind of skill that
those employers are looking for. And we do not have a very good
system to help those employers retrain, or retool the welders
who are out there, to get them to meet their specific skill
needs.
So I think both because of the general lack of supply
keeping up with demand, as well as this specificity problem,
this mismatch problem, I think it tends to be growing over
time.
Vice Chairman Brady. Thank you all very much. Mr. Chairman.
Chairman Casey. Thank you, Mr. Vice Chair. Senator
Klobuchar.
Senator Klobuchar. Well thank you very much, Chairman
Casey, and thank you, Vice Chairman Brady, for holding this
hearing today.
My State has hung in there during the economic downturn
because of manufacturing and companies like yours, Mr.
Wetherington. I remember that I noticed there was a marked
difference at the beginning of this year when I was back on the
weekends and they were running 24/7, a lot of companies with 1
to 200 employees, and that is partly why we are at a 6.6
percent unemployment rate. We will see what the shutdown does
to that, but 6.6 percent unemployment rate, and a lot of it has
to do with manufacturing.
And one of the things I have learned from visiting five or
six technical colleges in the last few months is just what I am
hearing today. And that is, that there is this mismatch. And in
fact some of them--Alexandria Tech, which is one of the best
ones in the country--has a 96 percent placement rate right now.
Yet we have students that are going and getting four-year
degrees that are unable to get jobs.
So there is clearly a devaluing, I think, in our system
right now of some of these two-year technical degrees. The math
and science preparation that you were talking about, I have a
bill with Senator Scott Brown called ``Innovate America'' that
is cosponsored by Senator Warner and Lamar Alexander, to number
one, double the STEM high schools, but number two, to look at
the kind of equipment we have at technical schools. And if
there is a way to make it easier with tax credits for
businesses to donate equipment so that they are being trained
on the top equipment.
I heard that exact story when I was in AgCo about the
welders. Dr. Holzer, AgCo has nearly 1,000 employees in
Jackson, Minnesota. They make agriculture equipment. And I
asked, you know, he said we can't find a welder in Minnesota
right now to fill this job.
So for anyone watching on C-Span, they need a welder in
Jackson, Minnesota. And they cited the reason as the nearby
technical school had stopped training in that area.
So my question is a more general one. I would just add one
little footnote, that I do agree that these rules, a lot of the
rules we are dealing with, I see it every day with medical
devices, have to be changed. We are no longer competing in a
vacuum in this country; we are competing against companies in
other countries in Europe, for example, that may have just as
safe a system but things go faster. Approvals get made quicker.
They have found a way to do it, and we are better than Europe
in other ways, as well. But I just think that we need to look
at our whole regulatory system and make it work better.
But I want to focus more on the training today. So my
question would be: This idea of when kids are in high school
and they want to go into--they are trying to decide what to go
into, how do you think we can better integrate our high schools
with the two-year degrees and get more kids focused on these
two-year degrees?
I know it works best on the community college level.
Rochester, Minnesota, they say, oh, we need 20 new nurses at
Mayo. So that community college trains those nurses. But how do
you think we can do it better?
I guess we'll start with you, Dr. Holzer.
Dr. Holzer. Senator, I think we have really devalued high-
quality career technical education in America, and I think that
is very unfortunate. What we used to call ``vocational
education'' is not necessarily what I have in mind.
What I am talking about is the career academies,
apprenticeships. What I envision is a system where the kids who
get that career technical education are not getting tracked out
of college. They should come out with college-ready skills out
of high school to prepare them for two-year or four-year. But
also some career-ready credentials right now. And the career
academies and high schools have been rigorously evaluated and
are very, very effective at doing that, and many apprenticeship
programs as well.
I think in our fear of tracking we have not effectively
developed that, and we have focused too narrowly on four-year
college as the necessary route for everybody.
I think the other thing, at the level of community
colleges, I think sometimes we have too little information
available to students at community college about what careers
are in high demand. In fact, I have learned some of this from
Ms. Furchtgott-Roth's papers with Lou Jacobson and others. Too
little information, too little career counseling is available.
And also, the incentives are not very strong on the
institutions to be responsive.
Now you think of most community colleges in the country,
they get the same subsidy per student from the state,
regardless of whether that student is getting technical
training or basket weaving. And maybe we need to realign the
incentives, as well as the information, to make sure that those
systems are better aligned with the demand side of the economy
in those states.
Senator Klobuchar. So you would do something where the
subsidy would be tied to, what, the graduating people that are
getting jobs?
Dr. Holzer. Right. And I think you need to be careful
because badly designed performance systems can do a lot of
harm.
Senator Klobuchar. We were just dealing with this with some
of the for-profit colleges. But how you do that is to direct
those subsidies to actually getting results.
Dr. Holzer. Looking at the placement rates, the earnings,
et cetera.
Senator Klobuchar. Okay. Does anyone want to add?
Mr. Painter. Senator, I would just add that in many places
dual enrollment, where a young person can be in high school and
can be taking college-level courses, has produced outstanding
results, where students are--I was at a meeting last week, and
someone was telling me about a project where the student
actually walked across the stage to get their associate's
degree before she walked across the stage later in the week to
get her high school diploma.
I think there are examples of that throughout the country.
I think one of the other things is that many Workforce Boards
throughout the country have developed great expertise around
labor market information, in part because they are pursuing
sector strategies.
They are now working with the PK through 12 system and into
the community colleges, and with them, so that students better
understand what is the labor market that is happening in their
region.
When I was in Pittsburgh, we actually did work with the
Career and Tech Center in Allegheny County to look at what are
the curricula that they are offering. What are the industries?
What are the skill sets that are being required across the
region to better align what it is they were doing, to what we
saw as the labor market needs.
So I would agree. I think in the reauthorization version
that we have seen, elevating the responsibility and charging,
directly charging the Workforce Boards to provide that kind of
labor market information and that kind of work with the PK-12
system is also a significant way that we can increase people's
understanding of what are the options and opportunities in
their regions.
Ms. Furchtgott-Roth. In our data from Florida where we
looked at low-performing C students, we saw that if they got an
AA or a community college degree in one of the health care
professions, or a similarly high-return field, they were
earning $45,000 a year after two years, or $60,000 after about
seven years--$45,000 when they got out after their degree.
But if these same students started on four-year degrees,
they were likely to drop out. And even at the end of the four-
year degree, their salary would not be as high.
So the question is: Why aren't more of these kids going to
these high-return fields? They need more advice. They need to
be told: If you do this degree, then you would be able to get
this job. They need advice on financial aid. And many of these
kids come from families that cannot give them advice, and they
don't have the proper guidance counselor.
If I could add one more point about the structural
situation, it used to be when home values were high it would be
easier for all these welders that Senator Klobuchar is talking
to on C-Span to move to Minnesota. But for some of them, their
homes have lost value, and it is much harder to sell houses
right now. So mobility, geographic mobility has declined, and
that is a structural problem.
Senator Klobuchar. Good point. Thank you.
Chairman Casey. Thank you, Senator Klobuchar. Congressman
Duffy.
Representative Duffy. Thank you, Senator. Quickly, I have
northwestern Wisconsin as my district. Our economy is based for
the most part on farming and manufacturing. So manufacturing is
a very significant part of what we do in central and northern
Wisconsin.
When I'm talking to our manufacturers, I hear a couple of
different things. I am hearing things about how there is a need
to find skilled labor. And there is an issue of finding skilled
labor that can address the needs that they have in their
industries.
In addition to the uncertainty that you have all
referenced, there is also the uncertainty that is coming from
Washington. I am hearing all of these concerns coming from
manufacturers and how this makes things more difficult for them
to expand, and grow, and hire.
Getting to the points that we are talking about today with
regard to education, if we were to point blame, if you want to
call it ``blame,'' on a certain sector, don't we want our
education institutions to look to the manufacturing base to say
what skills do you need? And then provide these educated kids
that are coming to their institutions with the proper
education? Where are we pointing the blame here, is basically
my question, if there's blame to be thrown around?
Mr. Holzer.
Dr. Holzer. I would rather not throw blame, but frankly, I
come from the world of higher education. It is not a system
that is oriented towards industry, towards meeting industry
needs. The liberal arts system, which often prepares
undergraduates for further graduate study--and there are things
to be said about that, because they get strong general skills--
but you might think that our two-year colleges, and actually
Wisconsin has one of the best technical college systems that is
well-oriented towards industry. But so many of our community
colleges do not think of themselves as institutions feeding
industries and the labor market. They think of themselves as
institutions of higher education, and their primary aspiration
is to feed the four-year system with students.
So I don't know if I would blame them, but again I would
prefer to see a set of incentives developed where they pay more
attention to the industries in their states. As Mr. Painter
said, the data are increasingly available, if people want to
look at it, and the incentives could perhaps be realigned to
encourage more of that.
Representative Duffy. And I've witnessed systems target
education toward industry. Specifically, North Central
Technical College in Wausau is one who reaches out to the
manufacturing base and says: What needs do you have? How can we
provide a program to our students that are going to meet the
needs of your business?
And I guess I don't know that we need to provide more
programs from government to encourage other institutions to
target education to industrial jobs. Hopefully they would look
at different states where technical colleges are successful and
try to modify their programs or like the programs that are
successful in other areas of the country.
Ms. Furchtgott-Roth. These community colleges can turn on a
dime. They don't have the tenured professors. If people sign up
for the courses, then frequently the courses are offered. But
if they don't sign up for the courses, then it is difficult for
community colleges to offer them. We need more information to
get to these students and to young people saying, ``If you want
to be a welder, that is going to pay $60,000 a year.'' I think
most kids don't know that.
There is, however, a problem with some community colleges
turning away applicants for high-return fields such as nursing.
They are overwhelmed with nursing students. And they cannot
meet that demand. And that would be something that they need to
look at.
Representative Duffy. And to that point, I hear some of my
manufacturers say: Listen, you are driving in a certain quality
of student into this field when we need some smarter, higher-
educated kids to come into manufacturing because they are high-
skill jobs.
I don't know if it is our high schools or our colleges not
driving some of the better-performing students into these
fields. Mr. Wetherington.
Mr. Wetherington. Yes. Your question was on blame. As a
manufacturer and engineer, I like to think about root cause.
Representative Duffy. There you go.
Mr. Wetherington. And I don't----
Representative Duffy. Much better.
Mr. Wetherington [continuing]. It's a very complex problem,
so I don't think there is one cause. But I am very encouraged
that the question was raised about the supply side into the
technical schools and the community colleges, and that being
high schools.
We have gotten to a metrics system, as Dr. Holzer
mentioned, a well-meaning metrics system that has driven our
high school administrators to be totally measured on the number
of students in GT programs, AP programs, and their performance
in getting kids into four-year colleges.
Congressman Lipinski raised Germany as an example earlier
today of a market that has not lost the skill set. They have
not lost the manufacturing base. In Germany, it is a very
desirable thing to go down that path of becoming a journeyman
technical person that works in the welding industry, the
electronics industry, the running CNC machines, being a tool
and die maker. We have gotten to where there has been a stigma
on the fact that, if you don't go to a four-year college, you
are a failure, and that is really I think very fundamental in
getting at the demand piece for what the junior colleges are
teaching.
If people are coming to them and wanting the trades, they
are going to offer that.
Representative Duffy. I yield back.
Chairman Casey. Thanks, Congressman. We will go to a second
round now.
I wanted to go back to Mr. Painter to focus on an issue
that I raised with regard to one of our community colleges,
Westmoreland County. The grant that they received is focused on
what is now basically a new industry in our state with the
Marcellus Shale gas extraction, which is leading to a lot of
job creation and really a new industry in addition to a new,
relatively new, or at least new to Pennsylvania in great
quantity, source of energy.
What you have is an emerging industry that is creating
jobs, but one of the concerns in the job creation area is that
it will be job creation but maybe not enough of a nexus to job
creation strategies that start with or have their origin in
what happens in a community college.
So this particular community college got a grant for a
pilot program. I wanted to ask you about that in terms of the
value of that, having a pilot program that is housed in a
particular community college that is tied to a specific
industry--in this case, hydraulic fracturing in the Marcellus
Shale Region.
What is your sense of that? And how do you think that works
as it relates to other communities and other pilot programs?
Mr. Painter. Let me say first that Westmoreland Community
College is a very familiar institution for me, having come from
Pittsburgh. Westmoreland Community College, along with the
Westmoreland Fayette Workforce Board and my former Board at
Three Rivers helped anchor an industry sector partnership
around energy that included Workforce Boards from western
Pennsylvania, eastern Ohio, and northern West Virginia.
So the grant was a collaborative effort of about six
community colleges from three states, and about seven Workforce
Boards from those same three states. So there was a lot of work
that preceded that grant application around understanding the
market, lots of employer engagement in terms of where were the
occupations inside the energy industry. The Marcellus Shale
Project, as you mentioned, is one that is emerging. Part of
what is happening in Westmoreland County is a very strong
partnership with Valerus, which is an oil and gas company out
of Texas that is working in the Marcellus Shale Region in
Pennsylvania. That is a project where the training is about
four months. It is very specific to that industry, so the
industry was involved in designing that curriculum that they
are working on.
To the broader partnership with the community colleges, it
is very essential. Community colleges are the favorite training
place for the workforce development system. In part, as was
mentioned earlier, they are very flexible; they can adapt
programming. We can look at industry-recognized certifications,
so they are a great partner for us to have in the system.
What we try to do at NAWB is to take those lessons that we
are seeing from those pilot projects and, through both our
annual forum and through workforceinvestmentworks.com, and
other sites, is to help people understand that those kinds of
promising practices are out there.
Westmoreland is not alone. Again, as I travel the country--
which I do about 25 weeks a year--there are examples of where
that has happened all over the country.
Chairman Casey. And I guess undergirding that kind of
decision where you have a grant funding that is provided to a
pilot program, what undergirds that I guess is a lot of
intensive engagement between and among not just community
colleges and employers but a lot of folks in a region. And you
described it in southwestern Pennsylvania, even going beyond
the state lines of southwestern Pennsylvania into other states.
Mr. Painter. It was, and part of that was, again, we
believe that the Boards are very critical. Because when it
takes a community looking at the different issues about having
people prepared for learning, Workforce Boards working with the
PK-12 system, working with community- and faith-based
organizations, so that the community understands: here is the
labor market we're in, and here is the potential. Workforce
Boards work closely with economic development to understand
where those investments are being made, so that again we look
at the labor market as we see it. But also Boards increasingly
are looking at the labor market to understand where are the
skills going in the industry sectors that drive our economy.
So we're closely working with economic development, closely
working with education.
Chairman Casey. Thanks very much. Vice Chairman Brady.
Vice Chairman Brady. Thank you, Chairman.
Is it cold in here, or is it me?
[Laughter.]
Chairman Casey. High level of air conditioning.
Vice Chairman Brady. I think we need to hand out Snuggies
here lately.
[Laughter.]
And they have sleeves, so we will be able to continue to
work. Is this Minnesota weather we've got here?
Senator Klobuchar. Budget cuts.
[Laughter.]
Vice Chairman Brady. I would like to thank the witnesses
for pandering to our state interests. We appreciate it a great
deal.
[Laughter.]
Vice Chairman Brady. Thank you for raising the issue of
energy manufacturing. It's a major part of our economy. And
while Washington likes to sort of play the blame game on U.S.
energy companies, the truth of the matter is that in a huge
part of the economy most of the work is done by independents--
you know, smaller companies that have a big impact on our
economy.
There is an industry, a manufacturing industry, where their
workers are aging out. There is a great demand, continued
demand, not just in the oil shale discoveries but in the
traditional oil and natural gas, where the broad range of
skills that are needed--not just the oil rig worker you're
thinking about--but from R&D to technical skills, geophysical
analysts, all that, really is remarkable. And we would miss a
bet if we don't apply some job training resources to moving
people into that field, which again is very high paying.
I wanted to ask each of you. Right now I am just not
convinced we are doing the job training the way we ought to.
The number of programs we have got, the eligibility
requirements, the bureaucracy of it, the fact I do not think it
is customer-driven like it ought to be, is a concern. I am
convinced we can do better.
I would like to ask each of you, we had 8\1/2\ million
people seek job-training services last year in America. About
half of them got jobs over the next--or will get jobs over the
next two years.
What is the one change we need to make in Washington to
make those programs more successful? I will start with you, Mr.
Painter. What is the one change you would make?
Mr. Painter. Thank you, Congressman. We would go back and
say that local, business-led Workforce Investment Boards who
are held responsible for strategically planning for the federal
and state investments in workforce, and who are afforded the
opportunity to have input into the planning for other funding,
and have the results come back to the Boards. So that we can
look at where the alignment and the coordination of these
resources are happening for the best interest of job seekers
and businesses in our regions.
Vice Chairman Brady. Can I tell you, at the local level,
having served on one of those Boards, the feeling is just the
opposite. You are living in deathly fear of not being within
the boxes that are required from Washington. And, you know, if
we can increase the amount that's generated from the local
level and the feeling that they have that ownership, I think
you're right that that would be helpful.
Mr. Wetherington.
Mr. Wetherington. Yes, I would say standardized, industry-
recognized, industry-developed job skills credentialing would
be very critical. So that not only do you get the customer's
voice in what is needed, but then as a manufacturer when I am
out in the job place looking to hire, I have got a
credentialing that helps me to know that this guy is not just a
welder. He is the welder I need for this job.
Vice Chairman Brady. Thank you. Thank you. Great idea.
Ms. Furchtgott-Roth. I would block-grant the funds and give
them to individual states. We in Washington cannot tell what
each of the 50 states need. They all have different needs. They
should be able to set up their own systems at the state, or at
the local level and figure out how to make the best use of the
funds.
Vice Chairman Brady. Thank you.
Dr. Holzer. I would also target grants to the states to
better integrate their education systems at the two-year and
four-year level, their workforce development with their
economic development.
There are a set of changes that can be made in WIA,
simplifying the performance measures and supervising these
industry credentials more. I don't think it can be done without
resources, frankly. I think the resources right now are too
low.
Vice Chairman Brady. On a scale of 1 to 10, with 10 being
employer-driven, locally driven job training programs, where do
we rate right now, would you guess? With 10 being what we ought
to be doing?
Mr. Wetherington. The need, or what we have?
Vice Chairman Brady. What we have today.
Mr. Wetherington. A 2 or a 3.
Vice Chairman Brady. Thank you. Yield back, Mr. Chairman.
Chairman Casey. Thank you, Vice Chairman Brady. Senator
Klobuchar.
Senator Klobuchar. Thank you very much. When I asked my
open-ended question, I know, Mr. Wetherington, you were just
dying to answer it. So if you wanted to add anything about this
idea of how you integrate better the high school system with
the technical colleges?
Mr. Wetherington. I have to admit that I hijacked
Congressman Duffy's question a little----
Senator Klobuchar. I heard.
Mr. Wetherington [continuing]. Bit to get my answer in.
Senator Klobuchar. Okay. Good.
Mr. Wetherington. But I do appreciate that you recognized
those ties between the starting earlier in that demand process.
Senator Klobuchar. Right. The other thing I wondered about,
if any of you had any comments about, I'll raise briefly the
equipment that these students train on. Because I have had
several of our companies talk about how, you know, they are two
or three years ahead. They end up donating sometimes, and how
we could better incentivize that.
And then secondly, this idea--which I found captivating--of
how the community colleges/technical colleges have changed how
they view the world. Because I have found the ones most
successful in our state, they literally view these businesses
as their customers. And so not only do they ask them where they
should be training, they actually go on site and train, or do
it by video with these rural manufacturing companies. And so
they train existing workforce on how to run the next computer
system that is running the new assembly line at the paper mill.
Because that was another thing I was struck by, by--I think was
it your testimony, Ms. Furchtgott-Roth? So I wondered if you
could comment on those two things: the equipment, and then also
how you get the technical colleges to better fit this model
that some of us have been talking about.
Mr. Wetherington. I can give a quick example. In my prior
life, I was with General Electric. We opened up a new plant,
and one of the things we did with the local community college
was actually invested in putting equipment into that facility
before we moved it into the plant.
We moved it into the community college so that we could do
job training there, and actually running eight-hour shifts. So
you even did work hardening, getting people ready to do that
job on a regular basis.
So I think it is an example of where there is a partnership
between the industry that needs the job, the local community
college, and even the suppliers of the technologies themselves
who are going to benefit from having end-users buy their
equipment working together at a local level to make sure that
they're firing rifle shots, not shotguns.
Ms. Furchtgott-Roth. And we unfortunately have a 75 percent
graduation rate in high schools. If we could take some of these
students who might otherwise drop out and put them into
community college-type programs in 11th and 12th grade, some of
them who might not want to study Excel spreadsheets in the
classroom might want to do it if they are thinking about
automobile parts on an assembly line. That might excite their
interest more.
But again there does seem to be a bias against having
students go into vocational education at that age. Even though
we are willing to let them drop out of high school----
Senator Klobuchar. Right.
Ms. Furchtgott-Roth [continuing]. We are not willing to set
up vocational education programs.
Senator Klobuchar. Didn't we use to have those? I mean, I
remember in high school----
Ms. Furchtgott-Roth. Yes, we used to----
Senator Klobuchar [continuing]. In public high school in
the suburbs, we had a number of kids that would go to votech
training in their junior and senior years. And back then it was
not nearly as technical and--based on what I've seen, it was
mostly about repairing cars and things. And obviously it has
gotten much more expansive than that.
And what happened? Did we stop doing that because we're
afraid of the tracking? Is that what----
Ms. Furchtgott-Roth. Exactly. We are afraid of the
tracking, but we do not seem to be afraid of 25 percent of high
school students dropping out.
Senator Klobuchar. No, it does not make any sense.
Ms. Furchtgott-Roth. It is a national tragedy.
Senator Klobuchar. I agree. Dr. Holzer.
Dr. Holzer. Senator, I agree with these comments. But you
asked about equipment, and what you often find is that, in some
of the high-demand fields like health technology, the equipment
is expensive, and the instructors are expensive, more so than
in a lot of the other fields.
So again it is a resource issue that community colleges,
who are very cash-constrained and facing a lot of different
pressures right now, they do not face the incentives, and they
do not have the resources to invest in the higher-cost
structures and the higher-cost equipment right now.
And again, students who are trying to take the health tech
classes, or the nursing classes, and the classes are
oversubscribed. The institutions do not have the resources or
the incentives to expand capacity in those areas because it is
expensive to do.
So again, unless we either provide more resources or create
a set of incentives for the community colleges to spend their
money that way, I don't think that they have a particular
interest in doing that. And so we have to look at the resource
needs and the incentives to invest in capacity in these areas.
Mr. Painter. Senator, I would simply say that I think part
of this issue is not even a federal issue. It is that community
colleges in many cases are funded under formulas of one-third
student/one-third local/one-third state, or some combination of
that. And in many cases, or in some cases what is reimbursed is
higher for academic than it is for what we are talking about
here today for workforce development skills.
So I think we have a long way to go to convince people of
the perception that this is not, you know, our fathers' votech;
this is in many cases a very sophisticated system that students
are running into. And I think you have examples of some schools
where they have kind of turned a corner by adding courses like
robotics, adding courses like engineering as part of not their
academic program, but as part of their vocational program, to
point out that these programs do require higher-level academic
skill sets.
And I think there has been good research that shows
students who come through those two years of vocational
education do very successfully when they go on to college. So I
think we need to tell people more of that. They need to hear
more of that.
Senator Klobuchar. Well they also can be successful with
their degree, I mean from what I've seen in some of these
places.
Mr. Painter. Absolutely. We work with a local high school
that did Cisco Certification, and those students graduated from
high school, no postsecondary, and successfully went into the
labor market.
Senator Klobuchar. Exactly. All right, thank you very much.
Chairman Casey. Thank you, Senator. Congressman.
Representative Duffy. Thank you, Senator. I think it is
pretty clear we are under immense competition from around the
world, right? India, China, Vietnam, Mexico. And we want to
maintain a great level of payment to our folks who are working
in our manufacturing industries.
Is it fair to say that the best way we do that is to make
sure that our manufacturing base is the most educated,
smartest, most productive base in the world? And if you look at
what we are doing here in America, as opposed to the previous
mention to Germany in the past and other industrialized nations
that have good-paying jobs, how are they doing it different
than we are? Are they more successful than we are in marrying
out the skilled labor force to the jobs market?
To anyone on the panel.
Dr. Holzer. Well I think Germany does have a system of a
strong apprenticeship system, a strong system of technical
education that is more industry-oriented. A couple of others,
as a matter of fact. I think frankly students coming out of the
equivalent of their K-12 system probably come out on average
with stronger basic skills. And you do need a solid base of
basic reading and writing skills to be able to handle some of
this more technical training.
So I think, especially if we look at the bottom quartile of
our students, they often do not have that base of solid--and
again I am not talking about algebra 2. Too many states have
worried about algebra 2. The issue is not algebra 2. It is
solid basics of reading, writing, and communicating. So I think
that is one area where we fall behind.
But, secondly, some of these places like Germany are not
scared of having a strong technical system at the secondary and
post-secondary level, a strong apprenticeship system, and they
are not so narrowly focusing on higher ed the way we do here.
Representative Duffy. Do you guys agree with that?
Ms. Furchtgott-Roth. Well I would also like to say that we
have many regulations here that they do not have in some of
these other countries. And if we look at where manufacturing is
increasing, in China, you know that if Boeing had moved its
plant to China then the NLRB would not have been able to go and
close it down.
Foreign companies are drilling for oil right over our side
of the line off the coast of Florida. There is a Sino-Cuban oil
drilling operation. China is importing our coal. We exported
about 80 million tons of coal last year. China is buying our
corn. And they do not have many, many of these regulations that
our manufacturers have to comply with.
We need to think about making our country the most
business-friendly place to operate.
Representative Duffy. And to that point, there was a recent
study that came out of the National Association of
Manufacturers that indicated that it is 18 percent more
expensive to manufacture in America, even after you take out
the labor costs. And I think that goes to your point that our
regulation side is so much higher than other parts of the
world.
And that does not mean that we do not want to have clean
air and clean water, but when it is so much greater than other
countries it creates a drag. Is that fair to say?
Ms. Furchtgott-Roth. Yes, that is absolutely right. And
Boeing, for example, is going to have to go through two years
of litigation to find out whether it will be able to keep its
plant in South Carolina. The Kauffman Foundation just brought
out a 400-page volume called Rules for Growth, showing
different ways that litigation is reducing our GDP growth, the
ways that that can change relatively costlessly to enable us to
create more high-growth companies.
Representative Duffy. And I think you made the point
earlier where if Boeing was going to leave Washington State and
go to China, the NLRB cannot do anything about it.
Ms. Furchtgott-Roth. Exactly. And Boeing would not be
involved in two years of litigation, costing millions of
dollars.
Representative Duffy. But they moved to one of the other 49
states, and here they are tied up in two years of litigation.
And I find it interesting that we do not see businesses leaving
right-to-work states, like Georgia, Tennessee, South Carolina,
and Texas, and going to our heavily unionized states. We
actually see the reverse happening. We see, you know, the
heavily unionized states seeing a loss of their manufacturing
base going to right-to-work states because it seems to be more
competitive. Is that a fair statement?
Ms. Furchtgott-Roth. Yes. That is a fact. The 2010 Census
shows the movement of Americans also, not just jobs, but
Americans following jobs from the unionized states to the
right-to-work states. That is why right-to-work states are
going to be picking up more Congressional seats.
Dr. Holzer. I have to disagree. Let's be honest. We have
the private-sector workforce unionization in the United States
now at 7 percent.
It has dropped from 35 percent back in the 1950s, and to
somehow argue that the 7 percent unionization rate is
responsible for declining manufacturing employment doesn't make
sense. Frankly if you compare it to Germany, we all agree that
Germany has been much more successful at maintaining its
manufacturing base and the rate of unionization there is much
higher.
Many of the regulations protecting workers in Germany are
higher than here, so I think sometimes we are whipping a horse
that's already dead--not completely dead, but that has shrunk
dramatically in size.
And I think if you look at the pressure American
manufacturing is under compared to the trends in unionization,
they move in fairly opposite directions.
Representative Duffy. Can I just have 30 more seconds?
Chairman Casey. Yes.
Representative Duffy. If you look at the facts, though, we
are seeing our manufacturing base leave the Michigans, New
Yorks, Ohios, and Pennsylvanias and truly are going to right-
to-work states. If it is not the union issue, what do you
attribute that to?
Dr. Holzer. I think those manufacturers may prefer--yes, so
we are having a shell game. And when you set up a situation
like that, sure, they would prefer the lower costs. But when
you do a fair analysis across countries, we have all lauded the
wonderful German system. Germany has higher rates of
unionization than the United States and does not have
particularly lower regulations.
So I think, frankly, you know, we can talk about the Boeing
case, but that is a tiny part. That is one case. We have lost
millions and millions of manufacturing jobs, and I do not think
we can attribute that nationwide--not a shifting from Michigan
to South Carolina--nationwide, and I simply do not think we can
blame that on unionization.
Representative Duffy. But is it one case that has a truly
chilling effect on the whole manufacturing industry as a whole,
as a test case, that manufacturers have to consider where they
set up shop because of this new rule?
Dr. Holzer. Again, I would argue when you look at the long
decline in manufacturing in the United States, at a time when
unions have been declining, you simply cannot explain the
decline in manufacturing employment with the trends in
unionization. It simply does not work.
Mr. Wetherington. But it is a bit like handing a man who is
drowning a 100-pound weight. It certainly is not helping the
process. And I think the issues of regulatory predictability,
more than anything else, is really the key for manufacturing.
Manufacturers are resilient. We can figure out how to get
it done, but we need to know what the landscape is going to be.
But with constantly shifting regulatory landscape,
manufacturers are hesitant to invest in growth here.
Representative Duffy. Thank you. I would yield back.
Chairman Casey. Thanks, Congressman. Sometimes it is good
to let the time go by a little bit. That was a good debate, and
I would put myself in Dr. Holzer's side of that debate, for the
record, if anyone would be surprised to know.
Dr. Holzer, I wanted to go back to a point you made
earlier. I do not have a sense of what you would say about this
link I will make, or this connection I will make. You talked
before about we often have trouble with linking or coordinating
programs. And one of the urgent problems we have in the country
now is not just unemployment, more than 14 million people out
of work, but the long-term number is above six, I am told,
somewhere in the 44 percent of those unemployed.
In other words, long-term out of work six months or longer.
So it is a horrific problem and a nightmare for individual
workers and their family. And one of the casualties of that of
course are children.
Do you have any thoughts you have on making that kind of a
link or coordination where you have strategies, workforce
strategies, to get people into the workforce, or job creation
incentives to get people to find a job? Sometimes it's not
coordinated well with other aspects of either federal or state
government investment.
I am thinking about Head Start, or programs like that. Is
there a way to, or should we figure out or strategize in a way
so that you are linking programs that will help a child with
programs that are focused on the long-term unemployed of a
particular adult in that family? Any thoughts you have on that?
Dr. Holzer. I am not sure how those need to be coordinated.
I agree with you that children in the families where the heads
of the households that have become permanently dislocated from
their jobs, those children do often suffer. And there is strong
research evidence that shows that their own educational
attainment suffers later. The stress on the family hurts them.
So I think we need to be mindful of that and to have a set
of supports in the schools for those children. There is a
separate issue about what we do for their long-term unemployed
parents, and they are going to have a harder time getting back
in the workforce.
I think, until job creation picks up a little bit and we
have a better sense of where the growth is going to be, we have
to sort of help the local Workforce Boards and the local one-
stops to again better anticipate where those jobs are going to
be and see where they can help place some of these long-term
unemployed--depending on the skill sets that they themselves
bring in. So it is a little hard to predict that in advance
right now, but I think it is something that the Workforce
Boards and the one-stops have to be cognizant of that it is
going to be an important issue, just given the numbers you
cited.
Chairman Casey. Well I am grateful. I know we are out of
time, and we are little bit over--not too much over--but I want
to thank each of our witnesses for your testimony. As I
mentioned before, your full testimony will be made part of the
record. And of course if you wanted to supplement it with
further testimony or information, you can certainly do that.
The record will be open as well for members of the
Committee to submit questions. We will try not to burden you
with too many extra questions that you answer in writing, but
if members of the Committee want to submit either testimony--I
should say statements, or questions, we can do that. And unless
my staff tells me I have not done anything or I missed
something, we will stand adjourned. Thank you very much.
[Whereupon, at 12:02 p.m., the committee was adjourned.]
SUBMISSIONS FOR THE RECORD
Prepared Statement of Representative Daniel Lipinski
Chairman Casey, Vice Chairman Brady, members of the committee,
thank you for inviting me to testify at today's hearing.
Americans need jobs. This fact was emphasized once again last
Friday with the release of June's unemployment numbers. And Americans
are asking: ``Where are these jobs going to come from?'' While some
believe America can no longer compete in manufacturing, I say robust
job creation can and must come from manufacturing--from what we think
of as traditional manufacturing, such as Northstar Aerospace in Bedford
Park, Illinois, that makes parts for the Apache helicopter, to Advanced
Diamond Technologies in Romeoville, Illinois, that makes coatings for
artificial heart valves. Manufacturing in all its forms is critical for
America's economic future and for our national defense.
So how do we get there? One piece is clearly workforce training. It
is simply not the case that when a manufacturer is ready to create a
new position there will be an American ready to start the job. I
constantly hear from manufacturers in my district, which has a long and
proud history of small manufacturers, that they are having an
increasingly difficult time finding qualified workers. This is true for
all types of manufacturing--from steel to nanotechnology. If there is
no qualified worker, there is no new job.
This dynamic creates the need for a two-pronged approach to worker
training and workforce development: one that is focused on improving
our K-12 education system so that students have the necessary basic
skills for the jobs of today and tomorrow and the other focused on
posthigh school training and retraining that improve the skill sets of
workers.
One way to identify and devote the necessary resources for the
nation's manufacturing workforce is through the development of a
national manufacturing strategy, something that this committee explored
in a hearing last month. HR 1366, my National Manufacturing Strategy
Act, would require government and private sector stakeholders to assess
the current state of American manufacturing, look at future
technologies and economic challenges, and develop a plan for keeping
America's industry competitive. Manufacturing strategies can work in
high-wage free market democracies; just ask Germany which runs a robust
trade surplus.
But of course, we cannot await a national strategy to address the
workforce needs that our nation currently faces.
In grades K-12, students must be better educated in Science,
Technology, Engineering, and Math, commonly known as the STEM fields.
We all have heard countless times how American students are falling
behind others around the world. Provisions of the America COMPETES Act,
along with its reauthorization which I helped author and pass last
year, seek to improve STEM ed by calling for a wide range of
initiatives, including better teacher training and hands-on learning at
National Laboratories, to boost interest and improve education in STEM
fields at all levels. Private industry has also gotten involved. Abbott
Labs has invested more than $25 million over the last 5 years to
support programs from early elementary to college that advance STEM
education. In classrooms, museums, and after-school programs, these
investments are tailored to build a workforce prepared for the
increasingly technical job market.
At the posthigh school level, training and retraining initiatives
can produce workers capable of filling the growing number of highly
technical manufacturing jobs. In June, President Obama expanded the
Skills for America's Future program to increase partnerships between
manufacturing companies and community colleges. This initiative will
establish a standardized credentialing system, certifying community
college students with industry-recognized credentials and making it
easier for employers to find potential employees.
The America COMPETES Act reauthorization also included a provision
to implement grants aimed at expanding education and training in
advanced manufacturing at community colleges and requires Manufacturing
Extension Partnership Centers to inform colleges of the skill areas
manufacturers need so students are prepared to join the workforce upon
graduation.
American industry has also been a leader and innovator when it
comes to workforce development at the posthigh school level. One
example is the Steelworker for the Future initiative, a public-private
partnership including ArcelorMittal, the United Steelworkers, and
community colleges, which will pay for students to receive the
technical training necessary to fill highly skilled positions
throughout the nation. Not only does this program develop the skills
necessary for sustaining the increasingly high-tech steel workforce, it
also helps grow interest in manufacturing jobs.
But we cannot rely on the private sector alone to make the
investments and develop the programs that will ensure that the United
States has the skilled workforce our economy needs. Through smart
investments, incentives, and well-designed programs, we must continue
to support workers gaining, sustaining, and improving the skills
necessary to support American manufacturing success.
I am convinced that if we do not make a concerted effort to produce
the workforce needed by manufacturers that it will mean nothing less
than giving up on much of the middle class, throwing in the towel on
``Made in the USA,'' and accepting that everything we buy--even
equipment needed for national security--will be made somewhere else. We
cannot allow this to happen.
__________
Prepared Statement of Representative Kevin Brady, Vice Chairman, Joint
Economic Committee
I am pleased that Chairman Casey convened this hearing on job
training and manufacturing.
Manufacturing in the United States has changed dramatically over
the last 60 years. Low-tech, labor-intensive goods such as apparel,
shoes, sporting goods, and toys that were once made in America are now
imported, while U.S. manufacturers export high-tech, capital-intensive
goods to the rest of the world.
Computer-driven machinery has replaced routine labor in
manufacturing. This has boosted productivity growth, averaging 2.9
percent a year. What took 1,000 workers to manufacture in 1950 now
takes only 184 workers. Consequently, manufacturing jobs as a share of
total nonfarm jobs have declined from 30.6 percent in 1950 to 8.9
percent in 2010.
Six decades ago, a high school dropout with no special skills could
get a job on an assembly line, work hard, and over time enter the
middle class. Today, a job in manufacturing demands special skills and
may even require a college degree.
The changing nature of manufacturing demonstrates the importance of
job training for the success of both America's manufacturers and their
workers. Congress enacted the Workforce Investment Act in 1998 to
consolidate the federal government's fragmented job training system
into a coherent one-stop system that could serve the needs of employers
and workers.
However, the Government Accountability Office (GAO) found
continuing fragmentation, overlap, and potential duplication in job
training programs run by multiple federal agencies. For fiscal year
2009, the GAO found 47 federally funded job training programs
administered across nine agencies. Almost all of those programs overlap
with other programs in the provision of similar services but with
differences in eligibility, objectives, and service delivery.
In addition to costly duplication, federal job training programs do
not necessarily serve their purpose well either for those seeking jobs
or workers seeking retraining. Job training programs that work best are
employer-driven, not bureaucracy-driven. Manufacturers know what skills
employees need to succeed better than bureaucrats.
The Senate will soon be reconsidering the Workforce Investment Act.
Congress has an opportunity to consolidate and reform existing federal
job training programs and to improve their value for U.S. taxpayers. I
urge Republicans and Democrats in both Houses of Congress to seize this
opportunity.
However, the best job training programs are meaningless if there
are no jobs available for their graduates. The Employment Situation
Report for June, which was released last Friday, confirms that the
economic policies of President Obama and Congressional Democrats are
failing to revive our moribund economy and create jobs--manufacturing
or otherwise.
By the Obama Administration's own standards, its stimulus plan has
failed to create jobs. According to the June report, the United States
still has 6.5 million fewer payroll jobs than promised, and June's
unemployment rate of 9.2 percent is far above the promised 6.7 percent.
History demonstrates that business investment in new buildings,
equipment, and software, not federal spending, drives the creation of
new payroll jobs. U.S. businesses are sitting on nearly $2 trillion
that they could invest here at home to create jobs for American
workers, but they are refusing to do so.
Why does American capital seem to be ``on strike''? The answer is
that the Administration's economic policies keep businesses guessing
what onerous burdens await them. As several Texas businessmen have told
me, ``Predicting market conditions is what we do for a living, but
predicting what the President and Congress may do--forget it!''
It now is widely understood that excessive federal spending, budget
deficits, and debt accumulation mortgage our economic future and
increase uncertainty over the size and form of future tax increases.
However, we also have a regulatory explosion under President Obama that
thwarts business expansion and increases uncertainty.
Here are just a few examples of regulatory excesses that discourage
job creation:
The State Department's failure to issue a construction
permit for the Keystone XL pipeline from Canada, a project estimated to
create over 13,000 high-wage manufacturing and construction jobs in
2011-2012 across the country, stimulating significant additional
economic activity.
The Administration's moratorium on and subsequent slow
rolling of permits for deep-water oil exploration and development;
The EPA's proposed regulations on greenhouse gas
emissions; and
The National Labor Relations Board's unprecedented
actions against Boeing for locating one of its manufacturing facilities
in South Carolina.
While solving our fiscal problems requires congressional action,
President Obama could end his regulatory onslaught on American business
on his own and without delay. If President Obama is serious about
relieving unemployment, he should act now to reverse his
Administration's confidence-shattering, job-destroying regulatory
policies.
I look forward to hearing the testimony of today's witnesses.
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Prepared Statement of Representative Michael C. Burgess, M.D.
Thank you Mr. Chairman for the recognition. I'm glad to be here
today to discuss this important subject.
America needs a strong manufacturing sector. We have seen across
the South new factories arise, built by foreign companies such as BMW,
Mercedes, Hyundai, and Thyssen Krupp. We need more of this advanced,
higher-paying manufacturing work. But we need to encourage more
American companies like Boeing, who want to operate in the U.S., to
expand by getting the government out of their way. We also need to
encourage other American manufacturers like Caterpillar to expand in
America and not overseas. Finally, we should ensure that smaller
manufacturing companies can thrive in America as well.
My state of Texas is a right-to-work state, and we see employers
and employees moving there from all over the country. Last month, in
the USA Today, it was announced that Texas now has the second largest
economy of any state in the country, overtaking New York. Texas GDP is
now almost as large as the economy of Canada or Spain. This didn't
happen overnight either. Texas was able to accomplish this because of
no individual income tax, low taxes overall, and right-to-work laws so
that employers and employees aren't compelled to join unions when they
don't want to. In other words, this economic growth hasn't been the
result of strong-arm tactics but flexibility.
Every day when you drive around North Texas you see licenses plates
from California. And trust me, they aren't just there to sightsee.
Rather, people are moving in droves to a place that is welcoming for
jobs and companies. If we want to increase our manufacturing base as a
nation, we need similar approaches elsewhere. The service sector is
important and is a huge part of our economy. But manufacturing creates
a tangible product that you can be proud of and also lets you exploit
your comparative advantage. In America we have an entrepreneurial base
that no other country does. Combined with an educated workforce, we can
maintain and grow a strong manufacturing sector. But a better education
system, flexibility for employers and employees, plus job friendly
governments surrounding our entrepreneurs will be the determining
factors to America remaining a manufacturing power. Of these three
important factors, the topic we will be discussing today is training
for workers. I hope to hear from today's panelists about how training
and education can improve our manufacturing industry.