The New American High School Conference

Investing in People "Good for Us as a Nation," Says Secretary of Labor

by Robert Reich, U.S. Secretary of Labor

I am amazed, sometimes, that people are amazed that the Department of Labor and the Department of Education are working so closely together. It strikes me as very natural, and I think part of that is because Dick Riley is so committed to some of these issues that have to do not just with education but with education in a larger context. And also because we can't conceive of how you could talk about education and not talk about work. It just seems inconceivable.

I also want to commend all of the people who are here. The fact that this effort to map a new American high school has sixty-five cosponsors, ranging from the National Alliance of Business and the U.S. Conference of Mayors to the AFL/CIO and the National Education Association, shows that developing the best-educated, the best-trained workforce and population is in the interests not only of educators and, obviously, parents and students, but also business and labor and community groups and policymakers, generally speaking.

I also want to commend Charlotte Frank, the Vice President of Research and Development at McGraw Hill Companies, a firm that has been a longtime supporter of excellence and innovation in education, David Stern, the Director of the National Center for Research in Vocational Education. David, in particular, has articulated the challenge in ways that very much resonate with the way I have been thinking about it. Work and learning are becoming increasingly inseparable, he said. The traditional distinction between academic and vocational education is becoming obsolete.

Let me put a lot of that, or a little bit of that, into some context for you, because the American economy right now, as you may know, is doing exceedingly well. We haven't had this combination of low unemployment, at 5.4 percent, and low inflation in almost 30 years--8,500,000 new jobs added to the American economy in the last three years. And, we are, by the end of this year, seeing a budget deficit that is half of what it was three and one-half years ago. So there is a lot to be thankful for.

There is also a challenge ahead, however. It is not all just good news. It is all not just rosy news. There is a challenge ahead, and that challenge has to do with making sure that all Americans participate and have a chance to participate in this good economy.

Now many of you will know what I am about to say. But I will say it, anyway, and for those of you who don't know it, you ought to ponder this. Because, for many years, particularly since the late 1970s, the American economy has been splitting between a few at the top who are doing better and better and better, the top 20 percent is actually not doing badly, and a large number of people who are treading water. Now in the first few decades after the Second World War, the rising tide really did lift all boats. When John F. Kennedy talked about the rising tide lifting all boats, it really was a growing economy, wherever you were in the income spectrum--if you were in the bottom fifth, if you were top fifth, wherever you were, you saw your income double between 1950 and 1978 in real inflation adjusted terms. But since 1979, we have had a very different kind of economic structure. Instead of the rising tide lifting all boats since 1979, the rising tide has been lifting the yachts, but a lot of the rowboats in the middle, where most people are, have been taking on water. And the little rafts and dinghies at the other end have been sinking.

We are now the most unequal in terms of distribution of income of any industrialized nation, and we are surging toward greater inequality at the fastest pace of any industrialized nation.

The economy, overall, is terrific, but, if you are in the bottom fifth, it is not so terrific. There is job mobility, obviously. People at the bottom fifth are moving up. Some people at top are moving down. Some people from the middle are moving down, and there is movement, but there is not more mobility than there was in the l980's; in fact, if anything, there is less mobility. And, if you lose your job in this economy, you are unlikely to get another job that pays as well with as good a set of benefits.

Why is this all happening? Why is it that we had an economy in the first couple of decades after the Second World War in which the rising tide lifted everybody, and now we have an economy in which there is so much dispersion? A lot of this has to do with the fact of technology and, also, globalization. And what does that mean? It means essentially that if you are well educated, if you have the right skills, if you have the right problem-solving skills, technology is your friend. But if you don't have the right problem-solving skills, technology is your enemy.

Average wages have been going up in this country. Average wages have been going up. But, every time you hear somebody talk about averages, in this economy, watch your wallet, because the average doesn't tell the most interesting and most important story. The basketball player, Shaquille O'Neal and I have an average height of 6'1". You have to look behind the averages and find out, once again, what's happening and why. Technology is splitting the workforce between those who have the skills to utilize it and those who don't. If you have the skills to utilize new technologies, and I've seen this around the country, those information technologies add value to what you are doing. You are more and more valuable. If you don't, the technology is taking away your jobs. We used to have a lot of telephone operators in this country. Now we have automated switching equipment. We used to have a lot of bank tellers. I don't know how many of you have tried to find a bank teller recently, but now we have a lot of automated teller machines. And you can go right on through the service economy. It's not just the manufacturing economy. I think, sometimes, we tended to pay too much attention to international trade. Yes, international trade is driving this, and there is a great academic dispute right now among people and researchers who are trying to tell whether it's technology or globalization. But you can't separate the two, because globalization is driving firms to invest more in technology, to become more competitive.

Education is becoming the fault line that is dividing the winners from the losers in this economy, to a far greater extent than ever before. Just look at the difference in earnings with people of college degrees and people with high school degrees. If you had a college degree in 1979, you were earning around 40 percent more than somebody with a high school degree. Now, if you have a college degree, you are earning over 80 percent more than somebody with a high school degree. A few years of post-high school can make a big difference.

Not everybody has to have a college degree, and this is something that I want to emphasize. And many of you know this. If you have the right skills, you can also get ahead. I have been around this country and seen so many community colleges that are the great unsung heroes of this revolution, this transformation of the work force. And the school-to-work movement, apprenticeships, internships, co-ops--ways in which in high school young people can spend at least part of their time in a work setting with a mentor who is working with a teacher and that teacher applying academic education in ways that the young person can see the relationship between academic education and the real world of work--has been so valuable to so many people. Not long ago, a young woman came up to me, sixteen years old--she was in danger of dropping out of high school, but she got into a school-to-work program and was so excited by the relationship between what she was learning academically and what she was doing. In this particular week, she was working on building a homeless shelter, and I saw her at the work site, and I met the person who was working with her at the work site, and I met her teacher. And she said to me, this young woman who was in danger of dropping out, she said to me something that I don't believe anyone has ever said to anybody before. Certainly nobody has ever said it to me. Certainly nobody had ever said it without even introducing themselves. She said, with a big smile on her face, "Mr. Secretary, I love geometry." And I asked her why. And she said, "Because I am learning geometry in the morning, and I'm applying it. I can see the relationship--I understand it better." "I understand it better." Again, taking down that wall between academic and vocational education, creating for young people the sense that what is happening in the classroom is really related to the world outside the classroom in a very meaningful way. I don't mean only in dollars-and-cents ways. Obviously, there is much more to education than preparing for a good job. We are preparing whole people. We are preparing citizens. We are preparing people to have meaningful lives and to help themselves have meaningful lives. But, the school-to-work programs are helping young people learn academically, and that is what I find so exciting about them. And many of you are engaged in this kind of activity.

I am concerned about the direction that the country is heading with regard to inequality. Let me ask you for a show of hands. Let's assume that I could offer you a deal, and I want to know how many of you would accept the following deal. And I want you to be honest about the deal and whether you will accept the deal. Suppose I could say to you, "You have a choice either between the current economy, with all the good news and all the problems it has, the current economy, or I will offer you a deal in which the top fifth of income earners get a 25 percent raise and the bottom fifth get a 10 percent raise." Now the net result is more inequality than we have today, but everybody is better off. Do you understand my hypothetical deal I'm offering you today, vote for a 25 percent raise for people at the top and a 10 percent raise for the people at the bottom? More inequality, but everybody is better off. Be honest. How many like that deal? Put up your hands. Have the courage of your convictions. Hands high in the air. This is a learning experiment here. OK. There are twenty-eight. How many of you don't like that deal? That's interesting. Sixty-three. You see I was in a school-to-work arithmetic program.

All right, those of you who like the deal, let me give you a slight variation. Those of you who like the deal, let's assume that the top fifth goes up 25 percent, the same raise, but at the bottom, the bottom fifth gets no increase at all. Of those of you who liked the first deal, how many of you like the second deal--still economic growth? Put up your hands, proudly, if you like the second deal. Nobody likes the second deal.

Well here's the third and final deal I will give you. The top goes up 25 percent. The bottom fifth goes down 10 percent. If you didn't like the second deal, I doubt that anybody here is going to like the third deal. The third deal is what has happened to the American economy since the late 1970s. My concern is that we are creating a political climate in which a lot of people understand the third deal. And they say to themselves, this is not what we want. And, instead, we may vote for policies that actually hobble economic growth, hobble development, hobble the possibility that we can grow together, because we don't feel like the net result is going to be helpful to most of us. We're bearing the downside cost of economic growth, the downside insecurities, but none of the upside gains.

You see, investing in people is good for us politically. It means we have the conditions for economic growth. It's good for us as a nation because it means that we are growing together. And I think that one of the issues at stake here, beyond what you are doing in terms of the new American high school--one of the issues at stake has to do with whether we in the future are going to be only an economy in which the primary things that link us together are the transactions we do with one another, or are we going to continue to be a society in which we have responsibilities, in which we are members, and in which we are concerned about everybody having a chance through hard work at getting ahead? And a lot of you are nodding your heads, yes, which means that I am in the wrong place. Every time I am in any place where people are nodding agreement, I feel like, "No, I don't need to be talking to these people. These people are already in the business. I ought to be talking to other people who don't understand intuitively what I am talking about."

I want to congratulate you for what you are doing, and for the pioneering roles that many of you are taking. You are the heroes of this drama. You are on the front lines. If we are going to grow together again as a society, it seems to me it is only because of the efforts of people like you to create learning environments that work for young people, that that is ever going to be happening. And I want to thank you for making the American dream possible for so many, many young people.

Questions From The Audience

Q: Let's, and I realize that this is a false assumption, let's say that you had true mobility from entry-level to higher-level wages and jobs. Isn't it possible that we may very well have an economy now where wages will remain consistently quite low, despite [the House's recent] efforts to increase the minimum wage? So, in a sense, we are permanently entering a situation where low-budget entry wages do not rise? High-level wages do. And that disparity increases. So the real issue becomes not necessarily trying to equalize the wage structure, which may be very difficult, but rather to deal with the issue of mobility over time as people grow and mature and learn into those jobs?

RR: Well, let me be more explicit perhaps. I think that the earned income tax credit expansion and a minimum wage hike are important with regard to a segment of the workforce that is otherwise going to have an extremely difficult time staying out of poverty even though they're working very hard. But, in addition, we have got to provide lifelong learning opportunities for people, so that they can continuously improve their skills. If they don't have the right skills, they can get the right skills. If they are already on the job, employers have every incentive to upgrade those skills. If they lose a job, they can move from job to job and get new skills if necessary. And they know what skills they need to get.

We're working on a variety of levels and programs. They are all designed with one common denominator, and that is to remove from government civil servants the authority and power to decide who needs what kind of training, and to empower individuals throughout their lifetimes through low interest loans, through skill grants with regard to loss of job if they want to get additional skills, through a $10,000 per family per year tax break for education and job training, and also through something the President announced last week which did not get very much attention in the press, a tax break for businesses who want to provide tuition assistance for their employees, and for small businesses, a tax credit toward tuition assistance for employees.

All of these ways, it seems to me, low-interest loans and skill grants and tax breaks, enable people to educate themselves to have the resources to continuously educate themselves through their lifetimes. I do not see any longer an economy in which, at the age of 18 or the age of 22 or the age of 26 you can say, 'There, I'm finished with education. Now I'm ready to do the same thing over and over and over again in my life.' Education does not end. It cannot end. There is no such thing as graduation. There is no such thing as commencement. Every speaker at every graduation ceremony ought to be saying, 'There is no such thing as graduation. You are not graduating. Sorry to tell you.' And we've all got to make sure that there are opportunities. I've seen it around the country. This is why I emphasize the role of community colleges, because they are doing a very good job. They need help, and many people need a lot of help with this transformation from an old economy in which you do the same thing over and over and over again, into a new economy in which you have to continuously upgrade your skills.

What does this mean for high schools? You've probably covered this many times over, but from the standpoint of the Secretary of Labor, and what I have seen around the country, one of the most important things that the school can do is to provide people and equip people with the ability to learn through their lifetimes. Lifelong learning skills, critical-thinking skills, working-in-groups skills, communication skills, the kind of computer skills that enable people simply to learn through the computer. Those are the things that are going to be invaluable to the workforce of the future. If they don't have it, they are in trouble. If they drop out of high school, don't even finish high school, they are on a trajectory that is a very dangerous trajectory for them and for society.

Q: So as students move up through the educational system with work experiences in high school, they do a better job and go directly to college, some directly and some after a period of work--and now we hear from employers that a BA degree is inadequate--that people getting bachelors degrees can't read or can't think or perform, etc. So what are the implications for your Baccalaureate-granting institutions? What sort of changes do you see for fourŠyear institutions, generally, even [for] the students that are well prepared?

RR: I think that four year and two year institutions are all going to become lifelong learning centers. They are rapidly becoming lifelong learning centers. Again, we are in the habit of thinking about education in terms of degrees and in periods of time reserved for young people in which you go through a course. It's a very industrial revolution-machine age view of education. It is a conveyor belt. You start at point A. You go through and get an extra coating of paint added to your machine. If you don't pass an exam, you go back to the earlier point. It's a product defect. You get prepared. And then you get to the end of the conveyor belt and you go off and you are a product. And you can produce. That machineŠage view of education is becoming increasingly irrelevant to what I see in the workplace.

Q: I just have a more specific question about the adequacy of the Bachelor's degree in itself. Let's assume that it should lead to lifelong learning. A lot of employers are saying that as a measure of skill, it is not an adequate measure anymore. I just wanted your opinion on the adequacy of Bachelor's degree.

RR: If a Bachelor's degree is centered on the advancement of lifelong learning skills, then it can be enormously helpful. Many employers are now using BA degrees basically as a sorting device. If somebody has a BA, the likelihood is that they are the kind of person that can engage in lifelong learning. They are the kind of person that at least has minimally adequate skills to do all sorts of problem solving. It is a very crude proxy used by employers to make sure that employees do have what is needed. But it is the only proxy that many employers have available.

One thing we do have as a nation, and we are already pursuing very quietly, is national voluntary skill standards, so that young people who may not have a BA, may not be able to afford it, may not be able to have that kind of proxy for employers, at least have a way of signaling to employers that they have mastered a certain area of competence. Not that they will never learn again, but quite the contrary, that they have the basic building blocks for learning in that area of technology or occupational specialty.

Q: How do we expand the bills now under consideration to look at one's long-term career interests and needs instead of very short-term?

RR: One frustrating aspect of working on the career bill or the Work Force Development bill as it's called on the sad side, is that there is an insistence on the part of some people to simply turn this money into block grants to the states, with the assumption which I think is very questionable, that state civil servants are better able than federal civil servants how to utilize federal taxpayer money [in deciding] to help people get the right skills. It's a very odd set of assumptions.

What we really need to do, and we have been up and down the ladder of Federalism with regard to job training for 30 years--Manpower Development System, CETA, Job Training Partnership--a lot of this works. Some of it doesn't work. But we have made major reforms. But instead of going up and down the ladder of Federalism, that is, how much the federal government can do, how much the state government, how much should local governments do, ideally, we ought to be empowering people by giving them first-class information about what jobs are out there and what skills are needed and which institutions are doing the best job of getting placement in various jobs and providing skills and also giving people skill grants, the equivalent of vouchers. They can go to the local community college. They can get the skills they need, when they need it, on the terms that they need it. We set up a market system.

Now I have been locked in debates with Republicans who tell me, "No, we want to do block grants." And I say, "No, let's do a market system." And they say, "No, we've got to do block grants." And I say, "Why do you trust government so much?" It is an odd position to be in, but I do believe a market system will enable someone to develop for themselves a lifelong learning program. And it will be a much better investment in our society's resources and the future of productivity and the success of our workers.

Q: How do we think of this as a nationwide goal and problem, rather than just as a state problem?

RR: I think that we do that by empowering individuals. We simply change the frame of the debate. We say it's not a question of the federal government or the state government running it, it is really a matter of giving resources and good information to people so that they can make good decisions for themselves. Get it out from under this whole question of which level of government runs this thing. And to the extent that any of you--you know I as a federal official am barred from making any overtures to any member of Congress--but let your voices be heard on this and other issues.

Again, I thank you for all of the work that you are doing, and you wouldn't be here if you weren't so vitally concerned about the issues that I am concerned about. Because I've read the material, I've seen what you're doing. It is breathtaking. It's exciting. It is on the right track. And, more power to you. Thank you.

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