June 20, 2011    Volume 18, No. 10

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President's Jobs Council Says Workers Are The Reason They're Jobless: It Tells Obama That More Training Will Cut The Unemployment Rate


By Richard McCormack

A good portion of unemployment in the United States is being caused by workers themselves, according to President Obama's Jobs and Competitiveness Council headed by General Electric CEO Jeffrey Immelt. The problem is not so much the shortage of jobs, but a shortage of trained workers, engineers and skilled foreign immigrants who could fill the few jobs that might exist, Jobs Council members told President Obama on June 13.

This is especially true in the manufacturing sector, which has lost 5 million jobs over the past decade. The Jobs and Competitiveness Council's remedy for this problem: increase training in CNC machining and advanced production. The Council's plan would generate a grand total of 2,000 jobs in the first year. It is estimated that the country needs to generate 21 million jobs to get to full employment.

"We urge the creation of a nationwide jobs training pilot program geared towards advanced manufacturing," Darlene Miller, President and CEO of Permac Industries, told President Obama at the second public meeting of his Jobs Council. "It would include two, eight-week training sessions with private partnerships of companies that seek employees with these types of skills: foundations in technical math, computer-aided machining and design, CNC machining and manufacturing processes."

The Jobs and Competitiveness Council is recommending that the federal government start a pilot project with technical colleges nationwide. If the pilot program spreads to a half a dozen states, then the Jobs Council says the number of jobs created in the second year would be 4,000.

The group also asked that the federal tax code be changed to allow training of advanced manufacturing workers be a depreciable expense under Section 179 of the tax code. "Currently, equipment can be treated on a deductible basis, but improving our human capital is just as important to the tax code, " Miller told the President. If the tax code were changed, then the private sector would get even more involved in creating specialized manufacturing training programs.

Another jobs prescription presented to Obama during the meeting was increasing immigration of foreigners with graduate degrees and Ph.Ds. The Obama administration was asked to adopt a "premium processing" system for educated foreigners so that they could quickly receive Green Cards. The administration should also support legislation that would staple a Green Card to every foreigner receiving a Ph.D. in the sciences and engineering from a U.S. university. "The impact on jobs is big," said Paul Otellini, President and CEO of Intel Corp. "Every one of these [foreign] people we can bring into the workforce -- their skill sets, patents, new companies -- creates five jobs around them, so for every one we bring in we get five jobs. This is a big deal."

Obama responded: "I'm with you, but I want to emphasize the point because it gets posed as immigrants taking jobs: If we have an immigrant engineer coming here and starting a company, that is creating jobs. If we have an immigrant engineer providing a skill in short supply and a business locates here instead of China or India, that is creating jobs. But my biggest priority is to make sure our kids start studying engineering. So the whole STEM-engineering [structure] is something we have to ramp up."

Otellini told Obama that only 14 percent of U.S. undergraduates are enrolled in STEM degree majors and that 40 percent drop out after their first year. He said the Jobs Council is going to recommend that the University of Michigan be held up as an example of an institution that retains 98 percent of the freshmen who start engineering. The university does this through a "high-touch mentorship program" a internship program and a "jobs reach-out program," said Otellini. "So we are going to steal that. And we are recruiting a number of schools that have significant kinds of problems but not the solution that Michigan has."

The goal is to increase the number of U.S. engineers by 10,000 a year over the next several years. (There are currently 120,000 graduates a year in engineering.) But that increase is "not enough," said Otellini. "We have a five-x deficit, so we have to more than triple the number of graduates over the next 10 years to come anywhere close to fixing this, even if we fix immigration," he said.

Obama responded: "If we can get this snowball rolling, it can build exponentially. Part of this is changing our culture and me using the bully pulpit to talk about why this is so important. Young people who during the 90s and the last decade went into high finance -- who could have profitably went into engineering -- [did so because it] was sexy as an occupation. I want the pocket protector to be the next appeal."

There was no discussion on how to create more jobs for American engineers, computer scientists, programmers and other technology specialists who are currently unemployed.

There were other jobs proposals from the Council, which says it wants to be responsible for creating one million new jobs within two years. "We wanted to find low-hanging fruit areas where the private sector or the executive branch could accelerate short-term job creation without the need for major legislation from Congress or actions that would require a long runway," said Ken Chenault, chairman and CEO of American Express.

Jobs in travel and tourism represent an area of "low-hanging fruit." The administration can speed up the process of granting foreigners travel visas, and the government should start a program that promotes the country as a tourist destination. "This will position the travel industry for further growth and create hundreds of thousands of jobs in the U.S.," said Chenault.

The construction sector could create 114,000 jobs over the next two years if the federal government embraced the "Better Buildings Initiative." The program could save American businesses $40 billion a year in energy expenditures by adopting new technologies and renovating their commercial and industrial buildings. Again, the jobs will be created by getting more people trained on how to install energy-saving techniques in buildings, said the Council. Community colleges need to start training "building energy professionals to support the need for clean energy technologies and renovations," said Penny Pritzker, President and CEO of Pritzker Realty Group and former co-chair of the 2009 Presidential Inaugural Committee. The Jobs Council commends the Department of Energy and the National Institute of Standards and Technology for creating a $1.5-million competitive grants program for community colleges to train such workers. "This will fulfill your commitment to launch a new Commercial Building Technology Extension Partnership," Pritzker told President Obama. Added Immelt: "It's low-hanging fruit that can be privately financed and we'll stick on it to get it done."

Another one of the Council's ideas for creating jobs in America: make it easier to permit a project in the country. "The Recovery Act [exposed] many challenges of the permitting process," which can take years to get a new production facility approved for construction, said Matthew Rose, Chairman and CEO of BNSF Railway. Obama replied: "Shovel ready was not as shovel ready as we expected."

The Jobs Council will benchmark the permitting process in China, India, Canada and Australia. "This is not at all about eliminating the review process, it's about speeding up the process," said Rose. "It can have significant impact on jobs." The council asked the President to put in place a centralized data repository for all projects that are seeking permits through federal regulatory agencies. They want the feds to keep the information in the database current and make it available to the public. Federal agencies would be asked to speed up all of their reviews, especially for projects that would create jobs. The Jobs Council wants the federal government to defer to the states if the states and the federal government have similar permitting reviews. Finally, permit litigation needs to be amended so that the opportunity to challenge projects is shortened.

Obama told the Jobs Council that Apple CEO Steve Jobs told him that he could start building a factory in China "and people can start working in the factory as the upper floors were still being constructed."

Immelt told Obama that the Jobs Council would be investigating three new areas for job creation over the next 90 days: the use of private financing for infrastructure projects; family and small business financing; and trying to attract more foreign direct investment in the United States. "The United States has closed the gap in terms of a cost standpoint versus India and China from a manufacturing and software standpoint," Immelt said. "We will reach out broadly and see if there are ways to get more foreign direct investment and for companies to locate key jobs here."

At the end of the one-hour and 20-minute event, Obama said he was "enormously impressed by the presentations and I promise you we are going to act on a range of these recommendations. . . As soon as you have something put together, I want it on my desk. I want the relevant Cabinet people to meet with me so we can implement it as quickly as possible.

"We have gone through a difficult time and every time I look at the data and the formidable challenges that are before us, I am always struck by the fact that these are all solvable problems. There are not areas where we don't have good ideas and don't know what to do. If you look at the reporting that has been out there over the last week or two [about the unexpectedly low job numbers for the month of May], it's important for us not to be Pollyannaish and pretend like we have fully recovered because there are a lot of people still hurting out there. But it's important to remember that we have enormous assets and everything that is required to make these structural adjustments to make sure we are competitive. It doesn't require radical changes. It requires some common-sense approaches to problems. . . There is no reason why the 21st century can't be the American century just like the 20th century was. You can amplify that probably even more effectively than I can because when I say it, well, you know, I'm an elected official, I'm the President, he's supposed to say that, so it gets discounted."

The Jobs and Competitiveness Council's Ideas for Spurring Employment

  • Energy Retrofitting (through training workers at community colleges)
  • Graduate 10,000 More Engineers
  • Build Workforce Skills in Advanced Manufacturing (through training more workers at community colleges)
  • Healthcare Workforce Development (through training more workers at community college)
  • Leverage EB-5 Visa Program (for entrepreneurs by granting these visas to 10,000 people per year as opposed to the current level of 2,000)
  • SBA Loans "One-Stop Shops" (for potential borrowers)
  • Promote Small Business Exports (through an aggregator service)
  • Establish Mechanisms to Attract More Foreign Direct Investment (by creating a coherent national strategy for investment promotion)
  • Federal Agency Supplier Financing (to allow federal agencies to partner with banks to offer small business suppliers financing based on invoices)
  • Accelerating Demand for U.S. Travel and Tourism (by making it easier for foreigners to visit)

(Source documents: http://www.jobs-council.com/docs/JC_Ideas_FactSheet.pdf . . . and http://www.jobs-council.com/docs/JC_Framing_v2.pdf.)

Jobs and Competitiveness Council Subcommittee Members

Entrepreneurship

  • Steve Case, Chairman and CEO, Revolution; Chairman, Startup America Partnership
  • John Doerr, Partner, Kleiner Perkins Caufield & Byers
  • Dick Parsons, Chairman, Citigroup
  • Sheryl Sandberg, Chief Operating Officer, Facebook
  • Robert Wolf, Chairman, UBS Americas
  • Austan Goolsbee, Chair of the Council of Economic Advisers

Innovation and Biotechnology Sector

  • Mark Gallogly, Cofounder and Managing Principal, Centerbridge Partners
  • A.G. Lafley, Former Chairman and CEO, Procter & Gamble
  • Eric Lander, Director, Broad Institute of MIT and Harvard; Co-Chair, PCAST
  • Antonio Perez, Chairman and CEO, Eastman Kodak Corp.
  • Valerie Jarrett, Senior Advisor to the President
  • Mike Strautmanis, Counselor to the Senior Advisor for Strategic Engagement

Energy Innovation and Smartgrid

  • Jeffrey Immelt, Chairman and CEO of GE
  • Lewis Hay, Chairman and CEO of NextEra Energy
  • Gary Kelly, Chairman, President, and CEO of Southwest Airlines
  • Brian Roberts, Chairman and CEO of Comcast
  • Secretary of Commerce Gary Locke

Workforce Training and Skills

  • Roger Ferguson, President and CEO of TIAA-CREF
  • Joseph Hansen, International President of UFCW
  • Monica Lozano, CEO of impreMEDIA
  • Darlene Miller, Pres. and CEO of Permac Industries
  • Penny Pritzker, CEO of Pritzker Realty Group
  • Melody Barnes, Dir. of the Domestic Policy Council
  • Don Graves, Department of Treasury

Manufacturing

  • Ellen Kullman, Chair and CEO, DuPont
  • Paul Otellini, President and CEO, Intel Corporation
  • Matt Rose, Chairman and CEO, BNSF Railway
  • Laura Tyson, S.K. and Angela Chan Professor of Global Management, Haas School of Business, UC Berkeley
  • Fred Hochberg, Chairman and President, Export-Import Bank of the United States
  • Karen Mills, Administrator, SBA


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