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Remarks by Dr. Judith Rodin at Economist ‘World in 2012 Festival’

Welcome to today’s luncheon panel discussion—”The Great Mismatch.” I would like to thank “The Economist” for organizing this conference and thank Matthew Bishop for providing us with an opportunity to explore a topic that is not only extraordinarily timely in this upcoming presidential election year, but also one that has such critical implications for the long-term economic resilience of the US … jobs.

Just a few weeks ago in Miami, the major league baseball team—the Marlins—held a job fair to fill the positions created by the construction of their new stadium. Most of the openings were for ticket agents, security guards and concession stand operators. And in scenes that have been repeated at job fairs all over the country, the organizers were completely overwhelmed by the crush of applicants.

Many of the prospective employees spent the night in the parking lot to be there when the doors opened at 10am. By noon, the stadium’s janitorial services subcontractor had collected 500 resumes for 250 positions.

Perhaps we shouldn’t be surprised by this—unemployment in Florida is now at 10.6 percent. Yet northwest of Miami, in Tampa, there are tech firms with high-wage, high-skill software engineering jobs that are remaining vacant for months on end because the pool of workers with the necessary skills is just too small.

It is not just tech jobs either. In Chicago an aviation-parts manufacturer has 600 job openings for skilled trade jobs like welders and maintenance mechanicsThe company’s CEO says the shortage of qualified workers forced him to pass up business and to delay starting a third shift at a plant.

Those are real life examples of the Great Mismatch, which is one dimension of the employment crisis brought on by the Great Recession. This recession has revealed how our economy has fundamentally changed, and these structural changes were developing well before 2008. We know what the problems are, yet our elected leaders in Washington can’t agree—or won’t agree—on what to do about them.

The Marlins job fair was in Florida, a state where 27 electoral votes will be awarded next November—votes that President Obama only narrowly won in 2008. Yet despite the importance of Florida and other swing electoral states, Many of the solutions to our unemployment crisis—including the Great Mismatch—will have to come from elsewhere.

Some have argued that not only politics but the extent of the crisis is what’s causing inaction in Washington. But even in the depths of the depression, President Roosevelt led the nation into the New Deal in the spirit of what he called “bold, persistent experimentation”.

He said, “It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.

Today politicians in Washington are not only unwilling to compromise. They are risk averse. And yet we once again desperately need bold and persistent experimentation.

But it is a mistake to confuse the state of inaction in our nation’s capital with that of the country as a whole.

Or to confuse the vitality of our federal government with that of our federal republic. The spirit of American innovation is alive and well.

So rather than focus on the dysfunction of Washington, I’d like to share with you some examples of bold and persistent experimentation to get people back to work.

One small example: in Newark, Mayor Corey Booker has created a new “office of re-entry” to put those leaving prison back to work. Despite the challenges of working with this population, the program has less than ten percent recidivism rate, and 75 percent of the participants in the program who have been placed in jobs have kept them for six months or more.

I mention that Newark program because it is emblematic of the kind of bold and persistent local experimentation that we are trying to catalyze at the Rockefeller Foundation.

We stopped looking for a one-size fits all solution but if you come across one please let me know.

What we are focused on instead is incubating a spirit of creative problem solving and innovation to foster broad bottom-up movements that harness the skills and intellect of leaders who will go on to become the job creators

We are investing to spur bold and persistent experimentation in three ways: first; to rebuild our nation’s infrastructure; second, toreduce energy costs, reduce dependence on non-renewable sources of energy, and create “green jobs”; and third, to reconfigure our metropolitan areas to become new engines of job growth.

Let’s start with infrastructure.

Until recently, there really was no bold and persistent experimentation in the transportation infrastructure arena. The mentality could be described by the adage “more is better”. More funding to add more lanes to more highways that leads to more sprawl, more congestion and more pollution.

At Rockefeller, we are trying to turn the mentality to “smarter is better”, spurring the smart growth movement.

That means making investments in infrastructure that produce better and more varied transportation options, powered by varied and sometimes renewable sources of energy, that in turn create new construction jobs in the short-term, which help prepare us for national competitiveness and economic prosperity over the long-haul.

Date show that investments in mass transportation generate 31 percent more jobs per dollar than new construction of roads and bridges. And as a study conducted by our grantee Smart Growth America showed, public transportation projects supported by Recovery Act dollars produced 70 percent more jobs per dollar than road projects.

And keep in mind, these “smarter” investments produce high quality, high wage jobs which provide more work at living wages. This reverses a trend of flat median wages and shrinking benefits that threatens to squeeze more people out of the middle class.

Rockefeller supports a broad range of advocacy groups—Building America’s Future and Transportation for America, to name two –to make the case to the public and the politicians for bold and persistent experimentation in transportation infrastructure investment that can create these kinds of jobs.

And we are also going outside the Beltway—right to where the work is being done.

In Georgia, for example, we are working with the Livable Communities Coalition to muster public support for a 1 percent increase in the Atlanta metro area sales tax to raise funds for infrastructure, 52 percent of which will go to mass transit in the country’s most congested metropolitan area. For anyone who has sat in traffic on the Perimeter Interstate 285 you can appreciate how badly this is needed!

We are working with the City of Chicago to develop plans for the nation’s first gold standard bus rapid transit system.

And we have found similar local innovation in our second area of focus, which is funding bold and persistent experimentation in the “green-collar” economy.

When “green jobs” became a buzzword at the start of the Great Recession, hopes were high that they could provide a “win-win”—increasing employment while making the economy more energy-efficient and resilient. It turned out that green jobs were not a quick fix, and the media and politicians have been quick to cry foul.

But we have learned from our hundred year history that there are no quick fixes to complex problems. We have chosen to fund bold and persistent experimentation to create green jobs because we believe the long-term payoff is substantial.

Our focus is on providing catalytic support to the sectors of the green economy that reach unemployed, underemployed and vulnerable workers in particular.

What does that mean?

Instead of paying to put people to work, we are using our resources to knock down the barriers that bar entry into energy efficiency, water infrastructure and waste management sectors.

Let me give you an example. Our grantee Clean Energy Works Oregon is taking a successful 500-home retrofit pilot project that employed over 400 people, and expanding it statewide.

Over the two-year life of the project, the group’s goal is to create or retain 1,300 jobs, while retrofitting millions of square feet of residential and commercial space.

This will reduce carbon dioxide emissions by 200,000 metric tons.

All of these jobs are at family-supporting wages with 30 percent of them explicitly targeted to economically disadvantaged local workers.

Another example is our support of the Los Angeles Alliance for a New Economy, a group that has identified Los Angeles’ inefficient and expensive recycling system as an opportunity for job growth.

They developed a plan to create a franchise system for handling waste and recycling in Los Angeles that would both boost recycling rates and strengthen environmental and labor standards, all the while creating safe, quality jobs for vulnerable workers.

We think this work in LA can serve as a national model for reforms in other cities.

The third job-creating area I’d like to highlight today is our partnership with the Brookings Institution to revitalize the economic model for urban areas in this country. Cities and metros tend to concentrate creativity and innovation, two of our nation’s most important resources. It is also where 84 percent of Americans live and 91 percent of U.S. GDP is generated. The goal of the program is simple—bold and persistent experimentation to help metro areas grow their economies in ways that stimulate exports and lower carbon emissions. We are joined on this journey by a new group of leaders that we’ve dubbed the Pragmatic Caucus, who are acting decisively to grow jobs in the near term and retool their metropolitan economies for the long-haul.

The Pragmatic Caucus has thrown out the old regional economic model of the 90’s where one US region competed with another to attract new industries by giving tax breaks and other expensive financial incentives. Today the competition is between metro regions with similar assets on different ends of the globe. Here the focus is on the macro level of adjusting the great mismatch by helping each region assess their assets and then fit their economic development plans to their unique competitiveness capacity.

Interestingly we have found that the largest barrier to domestic companies taking advantage of increased opportunities for global trade is often psychological.

Small and medium sized companies have what one local leader called “export phobia.” So we are helping to show companies that it is worth taking the risk to think globally, and how to compete successfully.

And it is worth the risk: every $1 billion in exports supports roughly 5,800 jobs. Those jobs pay on average more than comparable positions in non-exporting industries.

Aware of this evidence, members of the Pragmatic Caucus are guiding entire regions of the country to compete with foreign metros.

They are moving from consumption-based economies of the past to more resilient, production-based economies of the future.

Cities like Miami and Chicago, and states such as Michigan are restructuring and modernizing their air, rail and sea freight hubs to position themselves for an economy where growth is driven by global rather than just domestic demand.

In the Puget Sound region, the newly formed Washington State’s Clean Energy Partnership is helping develop energy-efficient technologies industries, creating an ecosystem that includes both large and small businesses. And it is opening a new shared lab to test products and designs before they go to market.

We need a new playbook to get the nation’s economy going again, and to resolve the great mismatch. Members of the Pragmatic Caucus have already begun to write it.

They are showing that the best strategies for growth are local and regional, collaborative and innovative.

The new growth model offers the promise of more jobs (to resolve America’s employment deficit), better jobs (to make work pay) and more accessible jobs (to ensure low-income employees can get to work).

So to recall FDR, we are seeing today’s “bold and persistent experimentation”

Is it enough? Certainly not.

But it is a great start.

I look forward to hearing today’s discussion for ideas on what more we can do.