| U.S. Assistant Secretary of Commerce David A. Sampson - 32nd Annual New Mexico First Town Hall Dinner Thursday, April 15, 2004 | | Governor Denish, thank you for that introduction and thank you all for allowing me this opportunity to talk with you about America's economic outlook. Governor Denish and I were actually together last September when I was in Albuquerque to address the Central New Mexico Regional Competitiveness Summit. I want to thank New Mexico First for hosting this event. The Department of Commerce appreciates your leadership in the field of growing an entrepreneurial economy. You have an important role to play in shaping the policies that will keep New Mexico's and America's economy strong.
As I travel across the nation to meet with economic development, business and government leaders, it is clear to me that economic development is a top agenda item for almost everyone. And while visiting communities throughout our nation, questions about "outsourcing" or the loss of jobs abound. Let's be clear, the loss of any job is regrettable and we need to stay focused on those individuals that are going through one of the most painful periods in their lives.
Economic transition points are always hard for companies, communities and workers. We know there are workers who have been impacted and we are helping those who are hurting. The Bush Administration is taking action to help workers who have lost their jobs get the training and assistance they need to prepare for new careers.
The President's "Jobs for the 21st Century Initiative" will prepare our economy and workforce for new challenges by expanding access to post-secondary education and fostering job-training partnerships between community colleges and employers in industries with the most demand for skilled workers.
Specifically, the President's FY 2005 budget commits significant resources to help displaced workers find jobs. The budget proposes $23 billion for job training and employment assistance, $250 million in proposed funding targeted to community colleges to train workers for industries that are creating the most new jobs and $1 billion for training and cash benefits for workers dislocated by increased imports or shifts in production outside of the United States.
The worst thing we could do, however, is to pursue a course of economic isolationism. Economic isolationism will lead to economic stagnation. By erecting trade barriers, we would slow our economic growth and cause even more workers to lose their jobs. Engaging in the worldwide economy is necessary for economic growth and job security. Twenty-five percent of our economy is trade related. One in five jobs are export related and those jobs pay higher wages than non-export related jobs. Foreign owned companies that are located in America employ 6.4 million Americans. Additionally, the Commerce Department reported recently that more work is insourced to the United States by foreign businesses than is outsourced by American businesses to foreign nations. In fact, the value of work insourced to the United States was $131 billion, compared to $77 billion outsourced, a $53 billion surplus in trade of private services with the rest of the world. If we continue to engage the worldwide economy through free and fair trade, more of those jobs will be created here.
American firms have built the strongest, most dynamic economy in the world and fortunately, the stimulus of the 2001, 2002 and 2003 tax cuts softened the blow from the recent recession and set the stage for vigorous economic growth going forward. In 2003, the U.S. economy expanded at a pace of 4.3 percent. However, without the President's tax relief and ironically today just happens to be tax day, real GDP would be 3.5 to 4.0 percent lower, 3 million more people would be out of work, and the unemployment rate would be 1.6 percentage points higher in 2004, according to an analysis done by the Treasury Department.
Several indicators show that the economy is recovering from the shocks this economy has faced over the past few years. Just look at the last 12 months.
• 308,000 new jobs were created in March – the largest monthly increase since April 2000 – and 759,000 jobs have been added over the last 7 months
• A year ago, the unemployment rate was 6.3%. Today it stands at 5.7%. That’s lower than the average of the 1970s, the 1980s and the 1990s.
• Disposable personal income is up +4.4%.
• Small business confidence is at a 20-year high.
• The equity markets added $4 trillion in new wealth last year.
• Retail sales in March rose 1.8 percent, well above market expectations; this means that overall consumer spending will have posted a strong gain in the first quarter of 2004
• Manufacturing Activity is rising
• And confidence among chief executives has jumped to a 20-year high and hiring intentions were the strongest on record according to a Conference Board Survey.
Responding to industry's challenges and creating the conditions for economic growth.
So what is the Bush Administration doing to help the American businesses? Our goal has been to develop a strategy to ensure that government is addressing the challenges facing America's industries and fostering an environment that promotes a dynamic and thriving national economy.At the Department of Commerce, we developed Manufacturing in America. Manufacturing in America is the most comprehensive government study of manufacturing since in the modern era. This report focuses on critical domestic issues that manufacturers believe deserve immediate attention and their concerns regarding international competition. Although focused on manufacturers, the report highlights challenges and proposed solutions that apply to the economy as whole.A report alone is not enough, however. The report is simply a beginning. The Bush Administration is making progress on implementing the recommendations that manufacturers told us would improve prosperity and create jobs throughout the American economy, in all industries and all sectors. What are the conclusions and priorities that emerged? Let me briefly highlight five.
1. Innovation and investment create high-wage jobs and improve our standard of living.
Americans understand that innovation is the key to prosperity. They recognize the need for continuing investment in research and development (R&D) of new products to remain ahead of the competition. The U.S. leads the world in innovation. Investments in technology create new industries and careers in U.S. firms that introduce products, create jobs, and spur economic growth. America's competitive edge flows directly from innovation and rising productivity.
Job creation is increasingly dependent on innovation. The U.S. private sector spends $193 billion on R&D, while the federal government is investing more than ever in research by spending a record $126 billion this year and a proposed $132 billion in fiscal year 2005, a 42 percent increase of 2001. Today's labs are generating the industries of tomorrow.Business leaders seek a continued commitment to R&D and to ensure that the government reinforces, rather than creates obstacles to, the process of bringing innovations to the marketplace. That's why the Administration continues to support the unique capabilities of national labs and universities, including establishing cooperative research programs for the benefit of small and medium-sized businesses. In addition, the Bush Administration is promoting manufacturing technology transfer to ensure that the benefits of R&D are diffused broadly throughout the manufacturing sector, particularly to small and medium enterprises.
New Mexico plays a particularly important role in the innovation economy. Home to Sandia and Los Alamos, New Mexico serves as an innovation incubator for our national economy, creating employment opportunities not only here in New Mexico but across America as well.Additionally, New Mexico State University, right here in Las Cruces, and the University of New Mexico, in Albuquerque, are wonderful resources for the state's economy. New Mexico's higher education institutions provide the knowledge capitol to support the state's small businesses and national laboratories. New Mexico's economy, and more broadly the American economy is driven by small businesses as small businesses represent more than 99 percent of all employers. It is the university infrastructure that drives research, the foundation of knowledge and the transfer of resources that allow small businesses to grow and prosper.2. There is no substitute for educating and training American workers.
There are fundamental and structural changes under way in our economy. One of the causes is the rising productivity flowing from innovation. Business leaders express serious concerns about whether the U.S. is adequately preparing the next generation for the demands of an increasingly high-tech workplace. They make clear that advanced labor skills are one of the decisive factors determining our nation’s ability to compete in the global economy.According the U.S. Bureau of Labor Statistics, the average American changes jobs 10 times and switches careers 3 times over the course of a lifetime. This unprecedented dynamism requires a shared commitment to building new skills and the ability to adapt to employment markets around the country. President Bush believes that we must invest in education and reform our current job training system. Americans who want to enter or re-enter the workforce must be equipped to do so, and they should be able to look to the extensive national network of Federal training programs and partnerships as an effective means to those jobs.
Last December I visited with President Della Warrior, of the Institute of American Indian Arts, Dr. Sharon Caballero, of New Mexico Highlands University and Dr. Diana Natalicio, of the University of Texas El Paso, an institution that serves many of Las Cruces future leaders. While visiting, I shared with them this Administration's commitment to university-led economic development. New Mexico is rich in educational resources and educational leaders who share a commitment to growing the economy and creating prosperity throughout the region.
3. American industry and workers need government to match their efforts to compete.President Bush is committed to creating an environment where American businesses and in particular, small businesses, can flourish. Under the President's economic plan, entrepreneurs will be able to devote more resources to developing products and hiring more employees.A cornerstone of the President's plan is to reduce the spiraling costs of health care, litigation, energy and unnecessary regulation that extinguish businesses' ability to hire new people and increase production. It is the steady accumulation of multiple burdens that has had the most severe impact on the competitive environment in which our American businesses operate.While our businesses have tightened their belts and raised their productivity in an effort to succeed in the marketplace, they have seen that advantage and their hard-won productivity gains eroded by higher energy costs, medical and pension costs, tort, excessive taxation and regulation. External overhead costs add approximately 22 percent to U.S. manufacturers’ labor costs (nearly $5 per hour worked) relative to their major foreign competitors. Small businesses, the sector of our economy that drives job creation and represents a majority of American jobs, are particularly hindered by these indirect costs, affecting their ability to hire and grow. America must have a comprehensive energy plan, tort reform legislation and a reformed health care system, if New Mexico's and all of America's small businesses are going to succeed in the worldwide economy.
Government policies can help get our fundamental costs in line to assist our companies to continue to succeed in the worldwide economy. The problems slowing our potential were a long time in the making. They won’t be solved with a single report or a short burst of attention. It takes sustained effort, determination, and a willingness to fight for responsible policies. That's the only way to solve the problems hampering America's growth.
4. Global Opportunity on a Level Playing FieldTrade represents unprecedented opportunity for our workers and our future. Americans welcome trade, but will not tolerate unfair trade practices.The last time America attempted to withdraw from the world economically, the U.S. and the global economy suffered through the Depression. Our business leaders understand that their future growth depends on a global market and that their access to export markets depends on a willingness to engage foreign competitors here, 95 percent of market growth potential for American manufacturers is outside of the United States. And they do not shrink from the task.U.S. companies and workers demand a level playing field internationally. This government will maintain our efforts to eliminate tariff and non-tariff barriers to our exports through negotiation with our trading partners. The U.S. must vigorously enforce existing trade rules and U.S. trade laws. Since 2001, the Department of Commerce has initiated 138 new antidumping and countervailing duty investigations, resulting in 57 new orders placed on unfairly traded imports. The goal is simply to ensure that everyone is subject to the same rules of the game.
5. Working with the World Benefits EveryoneBefore I conclude, I need to address a topic that has been much in the news: the impact of international competition on job creation. In addition to trading products, American workers now compete in a worldwide labor market. In fact, foreign companies employ 6.4 million Americans and on the flip side 97 percent of all U.S. exporters are small and medium sized businesses, the same businesses that make up much of New Mexico's economy.Foreign direct investment in the U.S. totaled $82 billion in 2003, over twice the amount from the previous year. Increased foreign investment means more factories, more research & development and more jobs for Americans through companies based abroad. These accounts for hundreds of thousands of good jobs created, including more than 700,000 in California, almost 500,000 in New York, more than 425,000 in Texas, and more than 300,000 each in Illinois and Florida.Each one of those 6.4 million jobs is at risk if this country begins to engage in the isolationism that would cause us to close down global labor markets. America cannot turn back from a worldwide marketplace of goods and services. Engagement with the world adds jobs and growth, while a policy of economic isolation destroys them.
It is important to have the facts: according to the Bureau of Labor Statistics, only one percent of layoffs are due to outsourcing, with another two percent due to import competition.President Bush's top economic priority is to spur job creation in the United States. He will not be satisfied until every American who is looking for work can find a job. He is also very clear about the kind of economic policies we need to pursue to create the conditions for economic growth and job creation.
Make no mistakes, the United States is the strongest and most versatile economy in the world, with no other nation coming close. The prediction of American economic decline in the 1980s and early 1990s turned out to be flat wrong.Even after experiencing devastating, unprecedented shocks to our economy during the past three years September 11th, corporate scandals and the War on Terrorism – the U.S. economy is strong and getting stronger everyday.
Why? It is because America has a genius for reinventing itself. We have the most flexible economy in the history of the world. The result is a constantly rejuvenating economy.
President Bush is dedicated to pursuing economic policies where American companies and American workers have the freedom to succeed. If American companies remake themselves and successfully meet their customers’ needs, they will create long-term economic growth and new American jobs. As we do, we must protect the flexibility and productivity that have made the U.S. economy the envy of the world and American workers the most prosperous in history.On one final note before I go, I spend a significant portion of my time traveling throughout our nation and one major reason I travel to communities throughout America is to announce EDA investments. Over the last decade the Economic Development Administration has been a strong partner with New Mexico’s communities. EDA has invested nearly $23 million in New Mexico projects since 2000, helping to create and save over 3,500 jobs and leveraging over $400 million in private investments.Today, I am pleased to announce a $850,000 EDA grant to the City of Las Cruces. This federal grant will help Las Cruces construct infrastructure improvements to the West Mesa Industrial Park.
And so, if Mayor Mattiace and Jim Ericson (Las Cruces City Manager) would join me; on behalf of President Bush, I am pleased to present this EDA check for $850,000.
Thank you again for having me here today.
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