Chairman McKeon and Members of the Subcommittee:

I am pleased to have been invited to testify today on behalf of the United States Chamber of Commerce on the issue of improving adult education for the 21st century, and I commend the subcommittee for holding this hearing because as outlined in my testimony, finding qualified workers has consistently been identified as a priority and ongoing challenge for chamber members. The U.S. Chamber is the world’s largest business federation, representing more than three million businesses and organizations of every size, sector and region. I am the executive director of the Center for Workforce Preparation (CWP), a nonprofit affiliate of the U.S. Chamber. In speaking on behalf of the Chamber and CWP, I bring to bear a perspective that comes from several years of working with state, local and metropolitan chambers, whose members are overwhelmingly small and mid-sized businesses where much of this nation’s future job growth will occur. In addition, as my biography indicates, I also have served as the chief education and workforce staff to this committee from 1979 through 1991.

The Center for Workforce Preparation partners with chambers in their local communities so that they can help their business members secure the quality workforce they need to be competitive in a 21st century economy. When asked, chambers consistently say that workforce development is a high priority issue for the businesses in their communities. CWP helps them increase their capacity to become workforce leaders and connect with the already existing resources in their communities to help employers hire, train, retain and advance workers in a highly competitive marketplace.

I would like to cover four points in my remarks – a skilled workforce is an important issue for employers; a skilled workforce has bottom-line implications for business; provide an example of a company that has made lifelong learning a key element of its corporate culture; and finally discuss the role that local chambers play in helping employers find solutions to these workforce concerns.

Over the past several years, CWP has conducted three employer surveys. In all three surveys, employers confirmed that the issue they are most concerned about when it comes to remaining competitive is the skill levels of their workforce. Out of 1800 employers who participated in the April 2001 survey, 68 percent said that they had a significant problem in recruiting qualified employees and 78 percent said it was because applicants had the wrong skills, poor skills or no skills at all. In January 2002, data from a survey of over 1500 employers, confirmed similar results – 73 percent experienced very or somewhat severe conditions when trying to hire qualified workers, and 70 percent said that the workers had poor, wrong or no skills to meet businesses’ needs.

The third CWP survey, conducted this January of 3700 employers from 80 communities across 34 states, found that just over 50 percent said it was "very hard or hard" to find workers with the skills that they need. One out of eight employers said that applicants needed assistance with training of basic skills – reading, writing, math and communications. What these results indicate is that even in a slow economy employers are having difficulty finding skilled workers.

In every industry sector, businesses large and small face many of the same challenges, including recruiting, training, retaining and advancing employees. Business quality, productivity and profitability depend on qualified workers who can perform on the job today and adapt to the new demands of tomorrow. Unfortunately, many American workers do not have the basic skills required to excel in modern workplaces. According to the Hudson Institute, 60 percent of all jobs in the 21st century will require skills that only 20 percent of the current workforce has.

Employers pay the price. People who are not "up to the job" mask their lack of skills, make costly errors and reduce efficiency. The workforce issues that plague employers – including high turnover, poor performance and low morale – may be symptomatic of a serious, underlying problem of workforce literacy.

Moreover, without employer intervention, the problem is likely to get worse. Workplaces are changing dramatically in response to an increasingly competitive business environment. To stay ahead, employers are reorganizing their workplaces to deliver their products and services better, faster and less expensively. They are collapsing the production process to allow teams of people to work together and take on greater responsibilities.

In these more flexible workplaces, even front-line employees perform work that used to be done by managers or specialists, including planning, budgeting, supervising, troubleshooting, and working directly with customers. Compared with more traditional workplaces, today’s factories, offices, retail establishments and other workplaces have fewer managers and flatter hierarchies. They also require employees with higher and more varied skills. These realities are intensifying, not going away. With business success riding on workforce competence, workplace literacy is an urgent business issue that demands employers’ attention.

In 2000, an American Management Association (AMA) survey of mid-sized and larger businesses found that 38 percent of job applicants taking employer-administered tests lacked the reading and math skills needed in the jobs for which they applied. This percentage was double the rate of 19 percent in 1996, just four years earlier. The AMA attributes this increase to the rapidly rising reading and math skill requirements in the workplace.

The skills deficit among American workers will continue to be a critical issue for business, regardless of the ups and downs in the U.S. economy. Workforce projections show that as older workers retire and the demographics shift, there simply will not be enough skilled workers to meet employer demands. This is a long-term problem that requires a long-range commitment to improve workforce skills.

The definition of literacy has changed over time and will continue to change. One hundred years ago, "literacy" was defined simply as the ability to write your name. In the new high-tech, highly competitive 21^st century workplace, literacy means the ability to read, write, compute and solve problems, communicate, listen, and perform basic tasks. The National Institute for Literacy finds that almost 50 percent of American adults have low literacy skills making it difficult for them to do many of the tasks required to carry out work and family responsibilities.

Beyond the foundation skills of basic literacy – reading, writing and arithmetic – the meaning of workplace literacy has expanded as workplaces have changed. Technology has had a particularly profound impact on today’s workplace skills requirements. New technologies, information, and competition will make today’s state-of-the-art products and processes obsolete tomorrow. It has been estimated that jobs will be wholly restructured every seven years. Few working Americans will be able to remain competitive in their existing jobs without continually learning new skills.

Three challenges face employers, policymakers and individuals in this new environment. First, as more immigrants enter the workforce speaking multiple languages, employers will continue to face the issue of communication barriers. Second, while it is generally acknowledged that most jobs require some postsecondary education, increasing numbers of young adults who are entering the workforce lack high school credentials. Third, employed workers do not have the advanced literacy skills necessary to remain competitive and productive in today’s workplace.

CWP surveys confirm that employers, especially small and mid-sized, recognize that a well-trained, well-educated workforce is critical to success. Faced with continuing workforce shortages, however, companies are pressed to hire people whose skills do not match the job skills required. There are compelling business reasons for companies, state and local chambers of commerce, and educators to work together to improve workforce skills.

Employers overwhelmingly report increased profits and other bottom-line benefits when their employees gain the basic skills that enable them to work more effectively, according to a 1999 report by The Conference Board, Turning Skills Into Profit: Economic Benefits of Workplace Education Programs. Workplace education programs that increase basic skills, such as reading and mathematics, foster positive attitudes among employees.

Improving workforce skills creates people who work smarter and better, with increased productivity and profitability for their companies. This means that employees, working with the same resources, materials and equipment, are able to work faster and more efficiently. It also means that they can perform tasks with less effort or, conversely, do a better job with the same effort.

With workplace training, employees get along better with colleagues and managers, and cope with change in the workplace more effectively. In addition, they become more willing and able to learn job-specific skills and take greater responsibility for producing quality work and problem solving. The direct economic benefits of workplace education programs – including productivity, profitability, reduced time on task, reduced error rates, improved health and safety records, reduced waste, and increased customer and employee retention – are important and measurable results. The indirect economic benefits – such as improved quality of work, better team performance, more positive attitudes and increased flexibility – are less tangible and more difficult to measure. Still, employers recognize that these intangibles contribute enormously to organizational performance.

Despite the substantial and increasing need for improving workplace literacy – and the bottom-line business benefits of training workers – there are relatively few workplace education programs. The reason may be that employers simply don’t know where to begin, and do not know what resources are available in their communities to help them. Small and mid-sized employers find themselves without the staff that would enable them to take advantage of these resources, and often do not want to become entangled in publicly funded programs because of government reporting and paperwork requirements.

I would like to share with you one example of an employer who has for years taken an active interest in promoting the literacy of his workforce. Larry Leibenow, the chairman of the U.S. Chamber of Commerce’s Board of Directors and CEO of Quaker Fabric Corporation, established an in-house learning center where Quaker employees can learn basic reading and math skills, and earn their high school equivalency certificates. They can learn supervisory, problem-solving, critical thinking and computer skills, and how to operate new machines, all without ever having to leave their place of work. The Learning Center has allowed Quaker Fabric Corporation to hire and retain good employees, and it has also allowed employees to meet their career development expectations.

Quaker’s Learning Center also helps the company further its corporate culture objectives. The center’s course list includes programs specifically intended to encourage full participation in the company by individuals from diverse backgrounds and cultural heritages. This explains why many of the classes taught at the center are conducted in more than one language, and why English and foreign language training in general is a high priority. Mr. Liebenow is committed to creating a culture of lifelong learning through the center because students for life make for a more skilled workforce, a stronger company, and a better community.

On February 26, 2003, the Mayor of Fall River, community agencies such as the Fall River School Department and the YMCA, and Quaker Fabric Corporation came together to announce a major push to improve reading skills for both parents and children through an Even Start grant. As part of this announcement, the Mayor said that a changing economy means that the average worker needs more education than workers of the last generation. He added that Quaker Fabric has been a leader and role model on this issue for the public sector, and has conducted English as a second language classes for its workers for years.

All too often programs such as the one at Quaker Fabric are dependent on the person in the leadership position to make them happen. The Center for Workforce Preparation believes that for small and mid-sized businesses, chambers can serve in that leadership capacity and bring together the right public-private community partners to address the workforce challenge of too few skilled workers. CWP works with chambers to provide them the resources, materials and information they need to become workforce development leaders.

For example, in April 2002, CWP released A Chamber Guide to Workplace Literacy: Higher Skills – Bottom Line Results. The information contained in this toolkit makes a strong case for businesses and other community stakeholders to become advocates for workplace education programs and community initiatives to assist adult learners in gaining the basic skills they need to become productive workers. It also identifies the community resources available and heightens awareness of the negative impact of illiteracy in the workplace. The toolkit provides fact sheets, a PowerPoint presentation, examples of successful programs, and potential resources to support employers. Chambers can use these resources with their business members to mobilize community literacy efforts.

Our literacy toolkit is but one illustration of the work CWP does with its partners, such as the U.S. Departments of Labor and Education, The Ford and Annie E. Casey Foundations, Verizon, Virginia Commonwealth University and the National Institute for Literacy. CWP’s work is distinctive in that its information is presented from the employer point of view, not from the perspective of the program participant. Employers are interested in programs that provide business services, understand the business culture, respond to business needs, serve employers as customers, add value, and help to create a pipeline for skilled workers. If the public workforce system helps small and mid-sized businesses hire smarter, reduce turnover costs and train for the skills they need, they will have greater confidence in working with and using its services.

CWP is working to build those relationships, to help employers understand how to access the services already available in their communities, and to create the links with work support services that can help employers retain and advance entry-level workers. In addition, CWP partners with state, local and metropolitan chambers to identify underutilized populations, such as individuals with disabilities, as sources of qualified skilled workers for the employers in their communities.

The role chambers play in communities is vital to creating this necessary link between employer needs and the publicly funded workforce system. The more robust these relationships are, the more likely that key community partners will be interested in working together to create an effective workforce system. The focus is on dual customers – employers and participants – not dual systems. It is CWP’s mission to help chambers build workforce development partnerships so that employers and communities benefit.

In closing, let me emphasize that workforce development, especially as it relates to the skills of the workforce, is critically important to the competitiveness of our economy. Small and mid-sized employers define the lack of skills as the key issue they face in hiring and retaining workers. Because this is such a pervasive concern, it is a core issue that needs to be resolved. There is a role that government can play in providing greater awareness of and access to programs to improve literacy and build basic skills for all workers and employers. These essential skills should be part of the core services offered through one-stop career centers and related workforce development programs and providers, and should not be available only as part of intensive services once a person has failed to secure work or retain a job. Workforce Investment Boards should assure availability of essential adult basic education and literacy skills training as part of the criteria used when certifying one-stop service centers.

Adult basic education is a mandated partner in the one-stop career system. The intent was to create greater connections to programs preparing people for the workplace. Literacy and basic skills training are foundation skills for workforce development and as such should include measurable outcomes that lead to meaningful, successful employment. These outcomes need to be more directly linked to the skills needed in the 21^st century workplace. For example, Equip for the Future, a National Institute for Literacy initiative, is working with states and adult literacy programs to develop a work-readiness credential that defines, measures, and certifies mastery of the knowledge and skills required in the workplace. Such initiatives should be encouraged in collaboration with workforce investment boards to develop measurable outcomes related to workforce participation.

I thank the Chairman and this subcommittee for this opportunity and welcome questions at the appropriate time.