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Joe Sestak, Text of Plenary Speech
Thank you Steve Snell, and The South Central Assembly, for hosting this event.
Today, I want to speak about the future for our communities, as I learned during my 31 years of naval service, by simply stating, pragmatically:
“Here’s where we are
Here’s what I think we have to do based on the facts, and
Here’s measurable benchmarks that we need to hit.”
However, I am not presently a designated leader -- as I was in command, and even in Congress – so what is unfortunately missing, as it seems to be in every area of public life today, is the last part of pragmatic leadership …
Which is “ and if we don’t hit those benchmarks, hold me accountable.”
I believe that it is the lack of such accountable leadership that is at the root of the mess we are talking about moving beyond today … and more than any specific policy mentioned in today’s Assembly, restoring the trust of the American People by rigorous pragmatism … based on the facts, accountability and results … is what is needed to retain our American Exceptionalism in a pretty challenging, but exciting, future.
And with that said, first, HERE’S WHERE I THINK WE ARE:
In the 30 years leading up to the recession, Pennsylvania’s workforce aged as we became one of the oldest states in the Union … for a reason.
During those three decades, our job growth was half the nation’s average. The reason was small businesses, which normally create 80% of all new jobs, because Pennsylvania’s small business growth was also about half of the nation’s average.
With half the small business growth, we have half the job growth -- and our youth depart to seek more plentiful jobs elsewhere … and our remaining workforce ages.
It’s why our population growth was only 5% during those 30 years, but the nation’s was 7 times that. It really is all about small business’s!
The eight counties represented in South Central Pennsylvania have actually fared better in some regards than Pennsylvania as a whole, but still less than the national averages: because of a 50% increase in small businesses in the eight surrounding counties, there was a 50% increase in jobs in thirty years … with a population growth of 25% … 5 -times better than PA as a whole.
The positives helping to create this environment include an attractive mixture of rural and metropolitan;
both an agriculture and a transportation location, as evidenced by the trade and transportation industries development of warehousing and trucking facilities;
and from tourism to health, government to manufacturing, and services to construction, no one industry dominates, as people come to work and live, and some to live but work elsewhere.
But the challenges, while improved upon, remain:
South Central Pennsylvania is definitely “graying” … thirty years ago, those between 20 and 44 were 36% of the population; today, there are 5 percentage points fewer.
The average age has increased by 8.5 years, and 20% are now over 60 –and it was just 16% a few decades ago.
Second, education levels have increased significantly (8.5%), with 1/5 of the region now possessing a bachelor’s degree – but still below the 28% nationwide, and in PA (27%).
Less youth, with less young educated minds, may hold the region back as it attempts to recover from the recession.
It is a more racially diverse (95% - 87%) region, with household median income overall better that Pennsylvania’s average but:
The median household income has actually fallen $4800 since 1989 … more than PA as a whole ($1200) and the U.S. ($2721).
And those who have fallen below the poverty line have increase 11%
So, second, HERE’S WHAT I THINK WE HAVE TO DO BASED ON THESE FACTS
And I will try to do so paralleling a few of the Assembly’s eight workshop sessions … the first being Local Government & Municipal Services:
I understand the tremendous value from small local governments that are easily accessible, responsive and close to the people … I see it every day in Delaware County, such as Rutledge with 800 citizens, each having its own police force, services and July 4 parade.
But if we are to advance and compete over the next 20 years, Pennsylvania’s governmental fragmentation cannot continue to inhibit regional planning and economic development because of communities divided based upon boundaries that are increasingly arbitrary as lifestyles and populations have grown, contracted or shifted.
The facts of “Where we are today” demand it because of:
Stagnant or declining tax bases
The need for better use of government services, eliminating service delivery that is unnecessarily duplicative and inefficient.
For promoting future economic development
And to stabilize core cities, helping to strengthen suburban areas that increasingly experience the same problems as their urban neighbors and hindering the metropolitan’s overall economic development.
Metro-York was one example of this awhile back.
I understand the cultural and societal barriers local leaders face in overcoming arbitrary boundaries in order for their communities to better adapt to changing marketplaces and social changes. It’s evident in the almost futile efforts in the Lehigh Valley as well as the past Metro-York struggles right here. But even with local leadership, and a cooperative approach, county and local governments also often lack the necessary legal tools to provide efficient and cost effective services, locally and regionally, and to achieve the development and conservation goals they have for their communities in order to:
Right-size services that make better financial sense, or
Enable tax base and revenue sharing to reduce fiscal disparities.
And therefore, there are proposals around that can help do this, such as:
Amending the Intergovernmental Cooperation Law to enable municipalities to reconcile conflicts among municipalities’ governing codes
Amending the County Code to provide legal authority for counties to provide basic municipal services, including police services.
Adopting a Regional Police Services Act to provide a clearer path for creating regional police agencies
Identifying means by which local governments can implement revenue sharing and tax base sharing arrangements.
And providing incentives for regional cooperation by tying state grant eligibility to regional cooperation efforts, and allowing greater flexibility in taxation for communities engaged in regional cooperation.
Otherwise, our local governments will continue to face formidable obstacles in doing what the private sector does each day – adapt.
Speaking of the private sector, there is no more important concept for a community’s finished product than “time to market”, assuredly a focus of the Workshop on Infrastructure & Transportation.
Nearby Lebanon County is actually the birthplace of turnpikes, when, at the turn of the last century, its farming community led a campaign to build turnpikes connecting their farms to markets in Lancaster, Philadelphia and Reading.
So, South Central Pennsylvania has long recognized the importance of transportation … and paying for it … but not with an agreement on how, even though:
Although almost half or our roads are in poor or mediocre condition
And half of our bridges are “structurally deficient or functionally obsolete” -- the worst in the nation
And this duty is principally ours, as the federal government does only 40% of the funding for new roads, and 10% for their maintenance – we have to do the rest here in Pennsylvania, both state and local.
We also need to keep in mind that over 50% of all local, state and federal government infrastructure spending is on water supply and wastewater treatment systems, mass transit and rail and aviation – not roads.
So in paying … we best first focus on historically-low yields available for financing projects.
And then in also pursuing Private –Public Partnerships, with two aspects in mind
That private investors favor projects and bonds that are backed by dedicated revenue streams. You can see that by private ventures’ 4- times larger investment this year in water and sewer facilities, than in toll roads, highways and streets during the same period. So let’s focus them there.
And private investors are also very eager to gain control of public assets, although a number are increasingly being shown to be a bad deal for the public.
In short, the potential is high but with huge pitfalls if not done right, as California has found in buying out private companies, as even countries like France are doing.
Perhaps partial – not sole -- private ownership is part of the answer, as wholly-owned entities miss targets on expanding and upgrading networks and, at times, excessive tariff increases.
Meanwhile, Infrastructure Banks show potential if given more flexibility for private investors…but they are unfortunately a pittance as presently run, seen in Pennsylvania’s having only loaned $132 million in 13 years … and rarely has enough applications for its annual $30 million allocation!
Finally, gas taxes and user fees pay only about 50% of our highway costs…the rest coming from elsewhere.
So Washington State’s experience where long-standing accountability and trust issues were addressed by establishing and publicizing quantifiable benchmarks for measuring performance, bears mention.
Their focus on accountability allowed state officials to win support of a gas revenue increase – as what had been rare became common as benchmarks were established for the public to see, and citizens in turn could ensure their dollar invested gave them fair return.
This is all of importance, because neither Pennsylvania’s local governance nor its transportation is ready for the next twenty years of economic competition, as China spends 9% of its GDP, and the EU 5%, on transportation infrastructure … to our 1.7%.
A last infrastructure issue: broadband access
With Act 183’s calls for universal broadband coverage by 2015, $29 million of stimulus money was designated to rural Pennsylvanians to construct the broadband “backbone” that providers can then build the last mile to consumer’s homes.
South-Central Pennsylvania counties now score moderate or high in the FCC’s connectivity grades.
This is important because the lack of broadband access not only limits the options for businesses in the state, but also directly contributes to youth migration because they have come to expect it.
For our small businesses to compete in an increasingly global network -- whether selling farm produce or specialty dog biscuits -- requires completing the investment for universal access … at least by our nation’s 2020 goal, if not Pennsylvania’s 2015 one.
But access does not mean “adoption”. Studies in Ohio in demographic areas similar to South-Central Pennsylvania show that affordability for a household that have had a $4800 reduction since 20 years ago in their annual real income – as over half the households have here -- can make that problematic … adding to our economic challenge, without investment.
Let me pause here, and let you know how I was impacted by my experience in the U.S. Navy as I introduce the next three subjects.
On the aircraft carrier in the Battle Group I commanded during the Afghanistan War, the average age of the 5,000 sailors on the carrier was 19 ½, and they were terrific. They ran the nuclear reactor that powered the ship, and repaired the aircraft prior to the pilot getting in … who never asked a word, just saluted as he or she was catapulted into the night, confident that all had been fixed.
But we invested in those youth – and then held them accountable.
When I joined up, only 1 of my 5 Chiefs had graduated from high school, as we fired missiles 25 miles. But by the time of Afghanistan, the Navy would not promote you unless you had earned an associate’s college degree, often in a technology. It was a career-long spectrum of training, as we jammed satellites by cyberspace warfare so the Taliban could not communicate, and launched tomahawk missiles into a land-locked country 1000 miles away.
I am similarly convinced by my experience that our national security begins at home … in our education security, as I am sure the Workshop on Saving Cities and Schools is discussing. But we don’t do it just for the individual citizen … we do it for the dividend it gives us, the Commonwealth … which is also the only reason we do it in the Service.
It’s as the Governor of Pennsylvania in 1694 said when he established the first public school in the Americas, directing all would attend, and the rich would pay a “reasonable fee”, and the poor would attend for free … so all could contribute to the commonwealth.
But as the Metro-York initiatives laid out – for a distressed city that is just five square miles in the heart of an otherwise growing county, that had lost 2 percent of its population -- its schools downward trajectory was an anchor on the region’s overall economic development , an educational depression that needed to be addressed not just as a matter of funding … although it is critical.
And not just in York … magnet schools, charter schools, choice programs, incentive scholarships, intensive-oversight programs for those at-risk, merit pay … it will take a wide variety of approaches …
Because a region whose core cities are failing cannot thrive in the next 20 years … for as John F. Kennedy said, “We neglect our cities to our peril, for to neglect our cities is to neglect America.”
Take Philadelphia, where 27% of African-American males graduate from High School … and only 33% of white males. In Aker Shipyard, beginning to thrive again – which was the old Philadelphia Shipyard where my father worked – they are importing 180 welders from outside Pennsylvania, because they cannot get the skilled workforce in the metropolitan area.
For when I had the welders in the early 70’s in the Navy, you flipped your helmet, lite the arc and laid the bead. Today, you need to sit at computer and design the bead, to run the machine that lays it down – you have to know computer science and mathematics.
The pace and the change of economic development has so dramatically changed to where people are expected to hold an average of 8 jobs during their working lives, making not just the foundation of learning critical, but also the continuing acquisition of new skills a paramount need for anyone-- and for us, everyone. It is the creation of a culture of lifelong learning that is being motivated not by traditional academic institutions, but by businesses themselves -- if they are to be able to innovate, in order to survive, in such a newly competitive global environment.
As the Senior Vice President at McGraw-Hill Education put it, “What the high school diploma means now [in the U.S.] is that you live in a family stable enough to keep you in high school for 12 years, and nothing else. It doesn’t even mean you can work at McDonald’s. We keep saying it’s important to graduate high school. But it’s not even ‘table stakes.’ [Today] We need stackable, portable credentials.”
It is why community colleges, and other technical-type post-secondary institutions, are so vital to our future, and that they be tied to business’s needs. Yet, we only have twelve in Pennsylvania -- and only four of those in our rural counties … which is unfortunate, if we are to retrain, retain and attract the needed workforce there.
And it’s why the largest community college in the nation is within the U.S. Air Force … who gets it … and therefore shaped its education system for its mission – as we must.
Due to time, as I ease into the Workshop of Community Health Care, I will combine it with that of Economic Development -- while also using it as an example of how critical an initial, and a continuing, education is for our citizens.
In the military, we not only provide an educational opportunity, but also health care, for our servicemembers and their families -- not because of any socialist leanings, but because we want our warriors to be ready, healthy, and productive warriors … and also so they are not risk-averse, and depart the service if their families aren’t covered, in order to get coverage elsewhere. In short, we do it only for the pragmatic dividend that it accrues for our nation.
It’s why I am also convinced that our national security begins at home … in health security. As the Institute of Medicine points, our economy is less secure because we lose up to $150 billion a year in GDP productivity from the under-insured and the uninsured citizens in our workforce. But like transportation, the harsh debate is how to pay for it ….
In the meantime, before the Affordable Care Act takes potentially takes full effect, in the past four years, 1.5% of Pennsylvanians have lost their health coverage.
In fact, 162 PA citizens lose their coverage each day … equivalent to the entire population of York or Harrisburg before the end of this year.
And small business’s – which create 80% of all new jobs – pay 18% higher premiums than large companies pay.
But similar to why regional groupings and cooperation of our small, local governments can provide for efficiencies, so the new health insurance exchanges will permit small business’s to pool their buying power and reduce administrative costs
Reducing premiums 1-4%
But we also should look at health services as a stalking horse for other industries -- such as technology and energy/environment -- in terms of economic growth for Pennsylvania
Health services is already in the top 3 industries within every county … and 13% of all new Pennsylvania jobs created in the next 8 years will be in health -- growing at twice the rate of all other occupations.
The problem is that we are already creating more skilled jobs than we can fill in healthcare … and the demand will only skyrocket in the future.
Our challenge in solving this skill mismatch is different than when President Eisenhower answered a similar call for a more educated workforce, and created the federal student loan program: our human capital is older and less prepared for the emerging skills coming into demand
First, of all 50 states, we are third with the highest percentage of workforce with only a High School or GED degree.
And second, at 5.6%, we have a smaller percentage than 45 other states of adults 25-54 that are enrolled in any type of post-secondary institution.
Again, this is why institutions like community colleges become vital for the continuing acquisition of skills. But this also has to be a private – public venture.
Almost half of the companies that enter into health care training partnerships with local government agencies have no self-training program, making it harder to leverage each other.
Which is also why the workshops of Housing and Agriculture are also inextricably tied in with South-Central Pennsylvania’s future.
It’s not just that nearly 40% of the median household wealth was wiped out by the recession’s collapse in home prices – a shuddering statistic for those who thought they might be near retirement.
But the impact upon the mobility of our workforce may be a determinig factor in the rise of our long-term unemployment, while potentially doing permanent damage to the structure of what had been up to now a fairly resilient part of our labor market.
For instance, employers say there is presently a skill mismatch for 3.5 available million jobs in America, such as in healthcare.
Part of this may well be “house lock” as a brake on employment, as the unemployed with a home mortgage “under water” find it harder than usual to move.
Which is why there is a growing focus on trying to obviate the “moral hazard” of principle reduction for home mortgages, not only to restart the critical housing construction industry, but to help prevent permanent damage to long-term unemployment, the kind that most corrodes skills and saps the will to work….while stagnating local economies associated with property because of the low velocity of circulating money.
Similarly, agriculture in South-Central Pennsylvania has a gap between job demand and job skills
Not necessarily resulting in an unemployed workforce, but an under employed or underutilized workforce which can be the most damaging to efficiency.
Again, education is the key with this older workforce, and perhaps Research & Development, as both combined may help address part of the fact that Pennsylvania is at 74% of the national expected yield of 150 bushels per acre.
We have other issues to address but not the time, such as 1 in 2 new graduates is either unemployed or underemployed; or the need for a risk capital and entrepreneurial infrastructure for the collaboration and access to financing that so many of our small business’s need to start and expand – efforts enhanced with tax incentives for the real creators of new jobs as opposed to established large firms; as well as returning to when we used to be able to do big things quickly … from putting a man on the moon, to building the Empire State Building in 1 year and 45 days.
This is a competitiveness issue, and regulations can be “clearer and more efficiently implemented”, not just rolled back, to help this. For a problem with many regulations are their ambiguity and uneven enforcements, qualities that directly contribute to delay and business risk.
But as I end, I thought I might use an issue from the Energy and Environment Workshop in returning to the subject of our American Exceptionalism, with which I began … and was really threaded throughout my remarks.
I saw in the military America’s character: an extraordinary alliance between our rugged individualism and our common efforts for a common mission. I was taken by how everyone in the military wanted to be all they could be as an individual, and we invested in their having a fair opportunity to do so, from training to health care. But we also held that investment accountable as they joined together for the common good, the security of America.
I similar believe that our national security begins at home, in economic security, education security, and health security, and that we must hold our investments from education and infrastructure to health care and energy much more accountable for the return on that investment. But if we do not ensure together a fair opportunity for our youth through education, or for our small businesses through access to modern infrastructure, then the unparalleled environment for individual opportunity which ensures our American Exceptionalism will be threatened.
For it is the establishment of our individual, equal right for this opportunity, as well as the use of our collective resources to build the ladders for individuals to climb and succeed, that our American Dream is founded upon. For when you achieve your American Dream, you do it with us.
Which is why, for example, I believe in an individual company’s right to drill the Marcellus Shale, balanced with our Commonwealth’s interest in sharing in the rewards of our resources – not unlike the other top 14 natural gas producing states which have a reasonable excise tax
For after all, we must also pay for the education of the workers, and the transportation of the trucks, of the individual companies … for those programs we just discussed require fiscal discipline. And as you can tell, it is by this alliance of our rugged individualism and our common enterprise that I assessed today’s issues, balanced upon fiscal accountability.
Thank you very much for listening. I appreciate this opportunity to continue to learn.
Today, I want to speak about the future for our communities, as I learned during my 31 years of naval service, by simply stating, pragmatically:
“Here’s where we are
Here’s what I think we have to do based on the facts, and
Here’s measurable benchmarks that we need to hit.”
However, I am not presently a designated leader -- as I was in command, and even in Congress – so what is unfortunately missing, as it seems to be in every area of public life today, is the last part of pragmatic leadership …
Which is “ and if we don’t hit those benchmarks, hold me accountable.”
I believe that it is the lack of such accountable leadership that is at the root of the mess we are talking about moving beyond today … and more than any specific policy mentioned in today’s Assembly, restoring the trust of the American People by rigorous pragmatism … based on the facts, accountability and results … is what is needed to retain our American Exceptionalism in a pretty challenging, but exciting, future.
And with that said, first, HERE’S WHERE I THINK WE ARE:
In the 30 years leading up to the recession, Pennsylvania’s workforce aged as we became one of the oldest states in the Union … for a reason.
During those three decades, our job growth was half the nation’s average. The reason was small businesses, which normally create 80% of all new jobs, because Pennsylvania’s small business growth was also about half of the nation’s average.
With half the small business growth, we have half the job growth -- and our youth depart to seek more plentiful jobs elsewhere … and our remaining workforce ages.
It’s why our population growth was only 5% during those 30 years, but the nation’s was 7 times that. It really is all about small business’s!
The eight counties represented in South Central Pennsylvania have actually fared better in some regards than Pennsylvania as a whole, but still less than the national averages: because of a 50% increase in small businesses in the eight surrounding counties, there was a 50% increase in jobs in thirty years … with a population growth of 25% … 5 -times better than PA as a whole.
The positives helping to create this environment include an attractive mixture of rural and metropolitan;
both an agriculture and a transportation location, as evidenced by the trade and transportation industries development of warehousing and trucking facilities;
and from tourism to health, government to manufacturing, and services to construction, no one industry dominates, as people come to work and live, and some to live but work elsewhere.
But the challenges, while improved upon, remain:
South Central Pennsylvania is definitely “graying” … thirty years ago, those between 20 and 44 were 36% of the population; today, there are 5 percentage points fewer.
The average age has increased by 8.5 years, and 20% are now over 60 –and it was just 16% a few decades ago.
Second, education levels have increased significantly (8.5%), with 1/5 of the region now possessing a bachelor’s degree – but still below the 28% nationwide, and in PA (27%).
Less youth, with less young educated minds, may hold the region back as it attempts to recover from the recession.
It is a more racially diverse (95% - 87%) region, with household median income overall better that Pennsylvania’s average but:
The median household income has actually fallen $4800 since 1989 … more than PA as a whole ($1200) and the U.S. ($2721).
And those who have fallen below the poverty line have increase 11%
So, second, HERE’S WHAT I THINK WE HAVE TO DO BASED ON THESE FACTS
And I will try to do so paralleling a few of the Assembly’s eight workshop sessions … the first being Local Government & Municipal Services:
I understand the tremendous value from small local governments that are easily accessible, responsive and close to the people … I see it every day in Delaware County, such as Rutledge with 800 citizens, each having its own police force, services and July 4 parade.
But if we are to advance and compete over the next 20 years, Pennsylvania’s governmental fragmentation cannot continue to inhibit regional planning and economic development because of communities divided based upon boundaries that are increasingly arbitrary as lifestyles and populations have grown, contracted or shifted.
The facts of “Where we are today” demand it because of:
Stagnant or declining tax bases
The need for better use of government services, eliminating service delivery that is unnecessarily duplicative and inefficient.
For promoting future economic development
And to stabilize core cities, helping to strengthen suburban areas that increasingly experience the same problems as their urban neighbors and hindering the metropolitan’s overall economic development.
Metro-York was one example of this awhile back.
I understand the cultural and societal barriers local leaders face in overcoming arbitrary boundaries in order for their communities to better adapt to changing marketplaces and social changes. It’s evident in the almost futile efforts in the Lehigh Valley as well as the past Metro-York struggles right here. But even with local leadership, and a cooperative approach, county and local governments also often lack the necessary legal tools to provide efficient and cost effective services, locally and regionally, and to achieve the development and conservation goals they have for their communities in order to:
Right-size services that make better financial sense, or
Enable tax base and revenue sharing to reduce fiscal disparities.
And therefore, there are proposals around that can help do this, such as:
Amending the Intergovernmental Cooperation Law to enable municipalities to reconcile conflicts among municipalities’ governing codes
Amending the County Code to provide legal authority for counties to provide basic municipal services, including police services.
Adopting a Regional Police Services Act to provide a clearer path for creating regional police agencies
Identifying means by which local governments can implement revenue sharing and tax base sharing arrangements.
And providing incentives for regional cooperation by tying state grant eligibility to regional cooperation efforts, and allowing greater flexibility in taxation for communities engaged in regional cooperation.
Otherwise, our local governments will continue to face formidable obstacles in doing what the private sector does each day – adapt.
Speaking of the private sector, there is no more important concept for a community’s finished product than “time to market”, assuredly a focus of the Workshop on Infrastructure & Transportation.
Nearby Lebanon County is actually the birthplace of turnpikes, when, at the turn of the last century, its farming community led a campaign to build turnpikes connecting their farms to markets in Lancaster, Philadelphia and Reading.
So, South Central Pennsylvania has long recognized the importance of transportation … and paying for it … but not with an agreement on how, even though:
Although almost half or our roads are in poor or mediocre condition
And half of our bridges are “structurally deficient or functionally obsolete” -- the worst in the nation
And this duty is principally ours, as the federal government does only 40% of the funding for new roads, and 10% for their maintenance – we have to do the rest here in Pennsylvania, both state and local.
We also need to keep in mind that over 50% of all local, state and federal government infrastructure spending is on water supply and wastewater treatment systems, mass transit and rail and aviation – not roads.
So in paying … we best first focus on historically-low yields available for financing projects.
And then in also pursuing Private –Public Partnerships, with two aspects in mind
That private investors favor projects and bonds that are backed by dedicated revenue streams. You can see that by private ventures’ 4- times larger investment this year in water and sewer facilities, than in toll roads, highways and streets during the same period. So let’s focus them there.
And private investors are also very eager to gain control of public assets, although a number are increasingly being shown to be a bad deal for the public.
In short, the potential is high but with huge pitfalls if not done right, as California has found in buying out private companies, as even countries like France are doing.
Perhaps partial – not sole -- private ownership is part of the answer, as wholly-owned entities miss targets on expanding and upgrading networks and, at times, excessive tariff increases.
Meanwhile, Infrastructure Banks show potential if given more flexibility for private investors…but they are unfortunately a pittance as presently run, seen in Pennsylvania’s having only loaned $132 million in 13 years … and rarely has enough applications for its annual $30 million allocation!
Finally, gas taxes and user fees pay only about 50% of our highway costs…the rest coming from elsewhere.
So Washington State’s experience where long-standing accountability and trust issues were addressed by establishing and publicizing quantifiable benchmarks for measuring performance, bears mention.
Their focus on accountability allowed state officials to win support of a gas revenue increase – as what had been rare became common as benchmarks were established for the public to see, and citizens in turn could ensure their dollar invested gave them fair return.
This is all of importance, because neither Pennsylvania’s local governance nor its transportation is ready for the next twenty years of economic competition, as China spends 9% of its GDP, and the EU 5%, on transportation infrastructure … to our 1.7%.
A last infrastructure issue: broadband access
With Act 183’s calls for universal broadband coverage by 2015, $29 million of stimulus money was designated to rural Pennsylvanians to construct the broadband “backbone” that providers can then build the last mile to consumer’s homes.
South-Central Pennsylvania counties now score moderate or high in the FCC’s connectivity grades.
This is important because the lack of broadband access not only limits the options for businesses in the state, but also directly contributes to youth migration because they have come to expect it.
For our small businesses to compete in an increasingly global network -- whether selling farm produce or specialty dog biscuits -- requires completing the investment for universal access … at least by our nation’s 2020 goal, if not Pennsylvania’s 2015 one.
But access does not mean “adoption”. Studies in Ohio in demographic areas similar to South-Central Pennsylvania show that affordability for a household that have had a $4800 reduction since 20 years ago in their annual real income – as over half the households have here -- can make that problematic … adding to our economic challenge, without investment.
Let me pause here, and let you know how I was impacted by my experience in the U.S. Navy as I introduce the next three subjects.
On the aircraft carrier in the Battle Group I commanded during the Afghanistan War, the average age of the 5,000 sailors on the carrier was 19 ½, and they were terrific. They ran the nuclear reactor that powered the ship, and repaired the aircraft prior to the pilot getting in … who never asked a word, just saluted as he or she was catapulted into the night, confident that all had been fixed.
But we invested in those youth – and then held them accountable.
When I joined up, only 1 of my 5 Chiefs had graduated from high school, as we fired missiles 25 miles. But by the time of Afghanistan, the Navy would not promote you unless you had earned an associate’s college degree, often in a technology. It was a career-long spectrum of training, as we jammed satellites by cyberspace warfare so the Taliban could not communicate, and launched tomahawk missiles into a land-locked country 1000 miles away.
I am similarly convinced by my experience that our national security begins at home … in our education security, as I am sure the Workshop on Saving Cities and Schools is discussing. But we don’t do it just for the individual citizen … we do it for the dividend it gives us, the Commonwealth … which is also the only reason we do it in the Service.
It’s as the Governor of Pennsylvania in 1694 said when he established the first public school in the Americas, directing all would attend, and the rich would pay a “reasonable fee”, and the poor would attend for free … so all could contribute to the commonwealth.
But as the Metro-York initiatives laid out – for a distressed city that is just five square miles in the heart of an otherwise growing county, that had lost 2 percent of its population -- its schools downward trajectory was an anchor on the region’s overall economic development , an educational depression that needed to be addressed not just as a matter of funding … although it is critical.
And not just in York … magnet schools, charter schools, choice programs, incentive scholarships, intensive-oversight programs for those at-risk, merit pay … it will take a wide variety of approaches …
Because a region whose core cities are failing cannot thrive in the next 20 years … for as John F. Kennedy said, “We neglect our cities to our peril, for to neglect our cities is to neglect America.”
Take Philadelphia, where 27% of African-American males graduate from High School … and only 33% of white males. In Aker Shipyard, beginning to thrive again – which was the old Philadelphia Shipyard where my father worked – they are importing 180 welders from outside Pennsylvania, because they cannot get the skilled workforce in the metropolitan area.
For when I had the welders in the early 70’s in the Navy, you flipped your helmet, lite the arc and laid the bead. Today, you need to sit at computer and design the bead, to run the machine that lays it down – you have to know computer science and mathematics.
The pace and the change of economic development has so dramatically changed to where people are expected to hold an average of 8 jobs during their working lives, making not just the foundation of learning critical, but also the continuing acquisition of new skills a paramount need for anyone-- and for us, everyone. It is the creation of a culture of lifelong learning that is being motivated not by traditional academic institutions, but by businesses themselves -- if they are to be able to innovate, in order to survive, in such a newly competitive global environment.
As the Senior Vice President at McGraw-Hill Education put it, “What the high school diploma means now [in the U.S.] is that you live in a family stable enough to keep you in high school for 12 years, and nothing else. It doesn’t even mean you can work at McDonald’s. We keep saying it’s important to graduate high school. But it’s not even ‘table stakes.’ [Today] We need stackable, portable credentials.”
It is why community colleges, and other technical-type post-secondary institutions, are so vital to our future, and that they be tied to business’s needs. Yet, we only have twelve in Pennsylvania -- and only four of those in our rural counties … which is unfortunate, if we are to retrain, retain and attract the needed workforce there.
And it’s why the largest community college in the nation is within the U.S. Air Force … who gets it … and therefore shaped its education system for its mission – as we must.
Due to time, as I ease into the Workshop of Community Health Care, I will combine it with that of Economic Development -- while also using it as an example of how critical an initial, and a continuing, education is for our citizens.
In the military, we not only provide an educational opportunity, but also health care, for our servicemembers and their families -- not because of any socialist leanings, but because we want our warriors to be ready, healthy, and productive warriors … and also so they are not risk-averse, and depart the service if their families aren’t covered, in order to get coverage elsewhere. In short, we do it only for the pragmatic dividend that it accrues for our nation.
It’s why I am also convinced that our national security begins at home … in health security. As the Institute of Medicine points, our economy is less secure because we lose up to $150 billion a year in GDP productivity from the under-insured and the uninsured citizens in our workforce. But like transportation, the harsh debate is how to pay for it ….
In the meantime, before the Affordable Care Act takes potentially takes full effect, in the past four years, 1.5% of Pennsylvanians have lost their health coverage.
In fact, 162 PA citizens lose their coverage each day … equivalent to the entire population of York or Harrisburg before the end of this year.
And small business’s – which create 80% of all new jobs – pay 18% higher premiums than large companies pay.
But similar to why regional groupings and cooperation of our small, local governments can provide for efficiencies, so the new health insurance exchanges will permit small business’s to pool their buying power and reduce administrative costs
Reducing premiums 1-4%
But we also should look at health services as a stalking horse for other industries -- such as technology and energy/environment -- in terms of economic growth for Pennsylvania
Health services is already in the top 3 industries within every county … and 13% of all new Pennsylvania jobs created in the next 8 years will be in health -- growing at twice the rate of all other occupations.
The problem is that we are already creating more skilled jobs than we can fill in healthcare … and the demand will only skyrocket in the future.
Our challenge in solving this skill mismatch is different than when President Eisenhower answered a similar call for a more educated workforce, and created the federal student loan program: our human capital is older and less prepared for the emerging skills coming into demand
First, of all 50 states, we are third with the highest percentage of workforce with only a High School or GED degree.
And second, at 5.6%, we have a smaller percentage than 45 other states of adults 25-54 that are enrolled in any type of post-secondary institution.
Again, this is why institutions like community colleges become vital for the continuing acquisition of skills. But this also has to be a private – public venture.
Almost half of the companies that enter into health care training partnerships with local government agencies have no self-training program, making it harder to leverage each other.
Which is also why the workshops of Housing and Agriculture are also inextricably tied in with South-Central Pennsylvania’s future.
It’s not just that nearly 40% of the median household wealth was wiped out by the recession’s collapse in home prices – a shuddering statistic for those who thought they might be near retirement.
But the impact upon the mobility of our workforce may be a determinig factor in the rise of our long-term unemployment, while potentially doing permanent damage to the structure of what had been up to now a fairly resilient part of our labor market.
For instance, employers say there is presently a skill mismatch for 3.5 available million jobs in America, such as in healthcare.
Part of this may well be “house lock” as a brake on employment, as the unemployed with a home mortgage “under water” find it harder than usual to move.
Which is why there is a growing focus on trying to obviate the “moral hazard” of principle reduction for home mortgages, not only to restart the critical housing construction industry, but to help prevent permanent damage to long-term unemployment, the kind that most corrodes skills and saps the will to work….while stagnating local economies associated with property because of the low velocity of circulating money.
Similarly, agriculture in South-Central Pennsylvania has a gap between job demand and job skills
Not necessarily resulting in an unemployed workforce, but an under employed or underutilized workforce which can be the most damaging to efficiency.
Again, education is the key with this older workforce, and perhaps Research & Development, as both combined may help address part of the fact that Pennsylvania is at 74% of the national expected yield of 150 bushels per acre.
We have other issues to address but not the time, such as 1 in 2 new graduates is either unemployed or underemployed; or the need for a risk capital and entrepreneurial infrastructure for the collaboration and access to financing that so many of our small business’s need to start and expand – efforts enhanced with tax incentives for the real creators of new jobs as opposed to established large firms; as well as returning to when we used to be able to do big things quickly … from putting a man on the moon, to building the Empire State Building in 1 year and 45 days.
This is a competitiveness issue, and regulations can be “clearer and more efficiently implemented”, not just rolled back, to help this. For a problem with many regulations are their ambiguity and uneven enforcements, qualities that directly contribute to delay and business risk.
But as I end, I thought I might use an issue from the Energy and Environment Workshop in returning to the subject of our American Exceptionalism, with which I began … and was really threaded throughout my remarks.
I saw in the military America’s character: an extraordinary alliance between our rugged individualism and our common efforts for a common mission. I was taken by how everyone in the military wanted to be all they could be as an individual, and we invested in their having a fair opportunity to do so, from training to health care. But we also held that investment accountable as they joined together for the common good, the security of America.
I similar believe that our national security begins at home, in economic security, education security, and health security, and that we must hold our investments from education and infrastructure to health care and energy much more accountable for the return on that investment. But if we do not ensure together a fair opportunity for our youth through education, or for our small businesses through access to modern infrastructure, then the unparalleled environment for individual opportunity which ensures our American Exceptionalism will be threatened.
For it is the establishment of our individual, equal right for this opportunity, as well as the use of our collective resources to build the ladders for individuals to climb and succeed, that our American Dream is founded upon. For when you achieve your American Dream, you do it with us.
Which is why, for example, I believe in an individual company’s right to drill the Marcellus Shale, balanced with our Commonwealth’s interest in sharing in the rewards of our resources – not unlike the other top 14 natural gas producing states which have a reasonable excise tax
For after all, we must also pay for the education of the workers, and the transportation of the trucks, of the individual companies … for those programs we just discussed require fiscal discipline. And as you can tell, it is by this alliance of our rugged individualism and our common enterprise that I assessed today’s issues, balanced upon fiscal accountability.
Thank you very much for listening. I appreciate this opportunity to continue to learn.
