WIRED to the WIRED to the Innovation Innovation EconomyEconomy

Third Annual Southeastern WorkKeys ConferenceThird Annual Southeastern WorkKeys ConferenceNorth Charleston, South CarolinaNorth Charleston, South Carolina

February 2, 2007February 2, 2007Helen N. ParkerHelen N. Parker

Regional AdministratorRegional Administrator

Overview:

Workforce system and its evolution.

Defining today’s innovation economy.

WIRED Initiative and talent development – a driver of regional economic growth.

1930s – The Birth of the Workforce System

U.S. Employment Service & Unemployment Insurance Program were created to assist unemployed workers.

The economy of the day was industrial with: – Interchangeable labor– Cyclical layoff and hiring patterns– Work that required just a High School diploma.

70 years later, the Employment Service remains virtually unchanged.

1960s to 1990s – Expansion into Job Training

An ever-growing job training system was built: – The Manpower Development and Training Act

(MDTA) - 1962.– The Comprehensive Employment and Training Act

(CETA) – 1973– The Job Training Partnership Act

(JTPA) - 1982

Had little private sector involvement.

Separate from Employment Service.

1998 Workforce Investment Act

The Workforce Investment Act (WIA):– Streamline service delivery through One-Stop

Career Centers;– Strengthen performance accountability;– Promote universal access to services;– Create business-led state and local boards;– Promote individual choice.

Strong bi-partisan support.

Workforce Investment System Spending

Department FY06 Appropriation

Labor $9.89 billion

Education $4.40 billion

HHS $701 million

HUD $49.5 million

Total $15.04 billion

Evolution of the Economy

When the workforce system was first created:– U.S. was an industrial economy – Labor was virtually interchangeable

Now in a knowledge economy – specialized skills are needed.– 90% of the fastest growing jobs require education

and training past high school.– 63% of high wage, high growth jobs in the next

decade will require a bachelor’s degree; only 28% of the population has a bachelor’s degree.

Evolution of the Economy

2.7%3.7%4.5%5.0%8.5%Unemploy-ment Rate

$1243$812$767$660$479Average Weekly

Earnings

72338017787-129Employment Growth

(thousands)

4-Year Degree

and Higher

Assoc. Degree

Some College

High School Grad

Less than High

School

Source: BLS Current Population Survey 2004

Innovation Economy

Economic development must establish the conditions for innovation.CoC’s report Innovate America identified three requirements for innovation:– Infrastructure (transportation, technology)– Investment (availability of capital)– Talent

Conditions should be maximized at the regional level – forces of the economy combine to spur growth.

Innovation Defined

Innovation resides at the intersection of invention

and insight, leading to the creation of social and

economic value.

National Innovation Initiative

Creating an Innovation Environment

What is the Innovation Economy?

Jobs! 5-15% of U.S. firms create 2/3 of net new jobs.

Innovation. Entrepreneurs account for more than half of all technological innovation.

Prosperity. 1/3 of difference in national growth rates is due to entrepreneurship.

Presence. 11% of US adult population is trying to start a business.

The Rise of the Entrepreneurial ClassThe Rise of the Entrepreneurial Class

U.S. Entrepreneurial Activity

600-700,000 new companies each year– “GAZELLES”

• 5% of new companies• 2/3 all new innovations• 2/3 all new jobs

The ability to garner the required resources and overcome all impediments by seizing new business

opportunities defines entrepreneurship.

Why Talent Matters

Factors Rated “Very Important” in Site Selection*

1. Availability of Skilled Labor 58.5%2. Highway Accessibility 57.0%3. State & Local Incentives 54.8%4. Tax Incentives 54.3%5. Corporate Tax Rate 49.5%6. Availability of High-Speed Internet 49.4%

* 2005 Area Development Corporate Survey

Economic Development

Workforce development is more than training effectively for current jobs. Successful workforce investment leads to the creation of new jobs. Talent is an asset, bringing new businesses and industries into communities.

Economic development is also experiencing a transformation. Tax breaks and incentive packages are no longer enough.

Workforce Innovation in Regional Economic Development

WIRED is focusing on the talent development part of building a regional economy.

The Goal:– Expand employment and advancement

opportunities for workers while simultaneously catalyzing the creation of high-skill, high-wage jobs.

Employment and Training Administration

United States Department of Labor

WIRED Initiative Selected and Second Generation Regions

Regional Economies Second Generation Regions Combined

WIRED in Action

Resources to the First Generation Regions:– $15 million over 3 years

– Technical assistance provided by 3 organizations.

• Council on Competitiveness• New Economy Strategies• Council for Adult and Experiential Learning

– Data tool that incorporates economic, research & development, investment, and real-time job information.

• Picture of regional economy and economic assets.

WIRED in Action

Activities in support of WIRED Regions:– Senior ETA Managers and Emerging ETA Leaders

assigned to each region to guide and assist.

– WIRED Academies focusing on issues with nationally recognized speakers.

– Connections to USDA, Commerce, and other Federal agencies to identify, understand, access, and leverage additional resources.

– ETA Issue Area Teams to gather information and identify resources on issues common to WIRED regions (e.g., small business development, investment capital, etc.)

WIRED in Action

Regional Activities:– Formation of a broad-based regional leadership

team

– Assessment of region-wide assets and strengths, risks and weaknesses.

– Development of a comprehensive implementation plan for the region identifying how WIRED and other resources support regional economic goals and strategies.

The Second Generation Region

Strategy for the Second Generation Regions:– Assign ETA Emerging Leaders to each region.

– Provide WIRED materials and products.

– Participate in the WIRED Academies.

– Identify existing and potential resources.

– Support a regional assessment and development of a regional implementation plan.

– $5 million over 3 years (announced in January)

The Goals

1. Establish and build a regional identity across political jurisdictions.

2. Leverage and align public and private investments.

3. Transform the regional economy through innovative and effective talent development.

Create and implement a regional strategy that will:

Workforce System Transformation Principles

The workforce system must operate as a talent development system; it can no longer be defined as a job training system. Its goal is an educated workforce on a U.S or global standard.Workforce system formula funds must be transformed, providing the opportunity for post-secondary education for lifelong learning opportunities aligned with the region’s talent development strategy.

Workforce System Transformation Principles

The workforce system can no longer operate as an array of siloed programs and services.Workforce investment boards must be structured and operate on a regional basis and be composed of regional strategic partners who drive investments, aligning spending with a regional economic vision for talent development.

Workforce System Transformation Principles

Economic and workforce development regions must be aligned, and these regions should adopt common and innovative policies across the workforce, education, and economic development systems and structures that can support talent development and the regional economy.

60 Day Comment Period60 Day Comment PeriodDue: February 20, 2007Due: February 20, 2007

Notice of Proposed Notice of Proposed Rule Making (NPRM)Rule Making (NPRM)

Streamlined Governance

NPRM makes it easier for local workforce investment areas to engage in regional planning activities.

Eliminates the requirement for separate local plans for those areas engaged in regional planning.`

Streamlined Governance

There are currently 3,256 One-Stop Career Centers.

The NPRM strengthens the state board’s role in developing and reviewing statewide policies for the One-Stop system.

This includes the authority to develop criteria and certifications for One-Stop Career Centers.

Streamlined Governance

Parallel WIA and WP system result in duplication of physical structures as well as services.NPRM gives states and local areas the flexibility to dedicate WIA funding to training.

WIA Core Services

Job Search AssessmentLabor Market InformationPlacement

WP Services

Job Search AssessmentLabor Market InformationPlacement

Increased Access to Training

Many local areas have instituted mandatory time periods for participation in core and intensive services.

The NPRM clarifies that an individual does not need to go through layers of services in order to access training.

The provision of training and other services can be provided sequentially, concurrently or in whatever order makes sense for the individual.

Increased Access to Training

The NPRM allows Governors maximum flexibility within the law to establish methods of applying for and maintaining the eligibility of providers on a state-approved list of eligible training providers.86 waiver requests have been received on the eligible training provider issue.For example, Minnesota indicated that without a waiver, training providers would have likely opted out of the system.

Increased Access to Training

NPRM allows 16 and 17 year olds to receive Individual Training Accounts.

23 states have received waivers allowing them to issue ITAs for youth. This allows them to enhance delivery of occupational skills training and increase customer choice for youth.

Increased State Flexibility

Provides all governors with the option of using non-merit-staff employees to provide Wagner-Peyser funded employment services.Three states – Massachusetts, Michigan and Colorado – currently have authority to use non-merit-staff employees to perform these functions.These three states are performing successfully based on performance outcomes and the absence of stakeholder or customer complaints.

Streamlined GovernanceRequest for Comment

Many state and local boards have become so large and unwieldy that the boards’ ability to perform their duties is hampered. This problem could be ameliorated by eliminating regulatory language requiring “two or more” representatives of certain groups on these boards.

For example, many state boards have over 50 members.

Increased Access to TrainingRequest for Comment

NPRM seeks comments on the definition of administrative costs. There is evidence that program funds are being used for what would normally be considered administrative costs. For example:– Facility and Utility Costs– State and Local Boards Costs– Information Systems– Report Preparation– Removal of Architectural Barriers

Questions?