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Enabling the Common Good: Workforce & Technology Development

  • Date: 07/22/2000
  • Author: Dr. Luis M. Proenza (President, The University of Akron)
  • Location: Leadership Ohio - Lakeside Holiday Inn, Cleveland, Ohio
  • Good morning, Ladies and Gentlemen. I am pleased to be with you today, and I thank you for your warm welcome.

    Let me begin by acknowledging the important work of Leadership Ohio.

    Like any organization, a community's strength and ability to grow are only as sound as its leadership. As participants in Leadership Ohio, you represent a broad spectrum of community advocacy and are well prepared to engage and advance the common good.

    By your program, I see that you are tackling some of the tough problems, which we must address if we are to advance Ohio's economic opportunities.

    Indeed the Regional Business Council has as its top three priorities - workforce development, technology development, and expansion of air service.

    Yesterday, you discussed the airport issue, traveled to the Ohio Aerospace Institute, and visited the Federal Reserve Bank of Cleveland.

    This morning, I have been asked to speak with you about Workforce Development - the number one issue for business and industry across our nation and around the world!

    And I will approach the subject in three ways: First, by providing you a context in the sense of how this theme fits into history, politics, and the shape of today's economy; second, by providing a statewide review that relates to some challenges we have to address; and third, by noting the relationship between workforce development and new technology development, innovation, and economic growth.

    That is a large bite to take, so I trust we will have a lively discussion in the next hour!

    So first - for the context of the issue:

    History has taught us that to improve our lot as a society, we must make use of our collective wisdom, and that we must make use of our accumulated and emerging knowledge - rather than to rely on mere opinions or on the pretense of authority.

    I suggest to you that, as a society, there is one indisputable lesson we must remember:

    And that is, that in creating a government, we make a covenant with ourselves, wherein we promise to create a better future by investing in those things that advance the common good.

    This is a covenant that must be constantly renewed and progressively adjusted as we continue to learn and advance our knowledge.

    As a society, we have come to agree over time that those things that add value for the common good are three in number, namely investments in education, research, and infrastructure.

    You may well ask about why I do not list health among these primary elements of the common good, but I argue that improvements in health, while vital to our common well-being, are derived from basic investments in education, research and infrastructure. Moreover, those three fundamentals are among the few things that economists do agree on.

    Throughout the world, where democratic ideals are practiced and where free markets operate, the creative progress of our society relies on our ability to use the combined knowledge of our citizenry.

    And if we, as a society, could ensure that our government remained focused on these three things, we would be true to our covenant and to the common good.

    However, you and I know that it is not easy for governments to deliver on ideals.

    Although peace and prosperity are goals for every government, they are fragile commodities.

    Indeed, even after this remarkable century of progress, world news tells us about ethnic warfare in Eastern Europe, starvation and sickness in many third world countries, and economic upheavals in various world markets.

    Societies, it seems, are slow to learn that prosperity is often a prerequisite to peace, and that knowledge and its dissemination are the common elements that drive economic and societal progress.

    And, as we stand at the threshold of the 21st Century, it is important to realize that successful economic development requires successful workforce development.

    That is, it depends on the successive and progressive education of talented men and women so as to be better prepared than the previous generation.

    And successful economic development also requires progressive and new technological innovations that will improve the competitiveness of existing industries, as well as lead to the creation of new industries.

    And both are prerequisites to the creation of new wealth and to economic expansion.

    As you have learned, I am sure, high school is just the first stop on the road to a lifetime of learning.

    In his recent speech to the National Governor's Association, Federal Reserve Board Chairman Alan Greenspan said that, "The heyday when a high school or college education would serve a graduate for a lifetime is gone. Today's (graduates) expect to have many jobs and to use a wide range of skills over their working lives."
    (July 11, 2000)

    In other words, in today's knowledge-based economy, higher education is society's infrastructure.

    Higher education is that internal system that, like the tiny pieces of a fine watch, is the basis for what makes our society tick.

    Higher education gives individuals the basis for generating the ideas and technologies that enable both personal and economic progress.

    Higher education creates knowledgeable individuals who can apply their analytical and problem-solving skills to shape our industries and our society.

    So, if our state is to become a leader in science and technology as Ohio Governor Bob Taft has called for, it should follow that our state would value the very mechanism that would allow us to achieve prosperity, by making higher education a priority.

    Yet, Ohio has long been near the bottom among states in its per capita expenditures for higher education.

    Part of that reason, according to Michael P. Summers, chairman of Governor Taft's Workforce Policy Board, is our past success in the old blue-collar economy.

    As our paradigms shift, and they are shifting, those with the most invested in the status quo are the last to change. And, so invested are they that some have failed to see that there is no further status in the quo.

    Our failure to adapt to the shifting paradigm has slowly but surely lowered Ohio's per capita income, lowered the percentage of educated people, and created a less-than-competitive economy.

    Indeed, 40 years ago, Ohio ranked 5th in per capita income, whereas today it is 22nd - below the national average - and still dropping.

    My colleague, Dr. William Kirwan, president of The Ohio State University, spoke to this issue in a recent speech to the Columbus Metropolitan Club.
    (July 12, 2000)

    He noted that Ohio's national leadership in the Old Economy is not carrying over to the new Information Age Economy. Ohio is currently ranked as the 32nd state in the nation in the creation of high-tech jobs, 29th in the number of high-growth companies, 29th in venture capital investment, and 28th in Internet use.

    By contrast, the state of Georgia is this year ranked 1st in high-tech job creation and 5th in venture capital investments.

    For me, there is a personal irony in that 20 years ago, I was literally advising the Governor of Georgia to emulate Ohio, whereas today, I find myself telling Governor Taft to emulate Georgia. That is how much Georgia has done in the ensuing 20 years.

    Is it any wonder that our best and brightest students are going elsewhere?

    In the past decade, according to the U.S. Census, Ohio has lost a net 123,000 people in the prime working ages of 18 to 44.
    (Ohio Department of Development, Director C. Lee Johnson, as reported in the Plain Dealer, Cleveland, Ohio, July 10, 2000)

    And furthermore, according to the Ohio Board of Regents, Ohio has an "educational deficit" of some 250,000 graduates. That is, our state would need to add that many college graduates just to come up to the national average.

    A July 12 editorial in The (Cleveland) Plain Dealer stated it best: "...some are still whistling, 'Don't Worry, Be Happy.' Well, the time to get worried is right now. Other...states are passing us by. Without a sense of urgency, the middle of the road could mean the end of the road..."
    ("Knowledge Is the Key," The Plain Dealer, Cleveland, Ohio, July 12, 2000, Page 8-B)

    So how is it that we have allowed this to happen? And how is it that we have failed to advance the common good?

    First, as far back as the 1970s, with the support of then-Governor James Rhodes, the Ohio Board of Regents, espoused the societal value of public higher education and intended that no Ohio student would ever pay more than 30 percent of the cost. That is, the people of Ohio recognized that in order to advance the common good, the state should underwrite 70 percent of the cost of attending Ohio's public colleges and universities.

    Yet, these efforts were not sustained, and promises made were not promises kept.

    In the ensuing years, funding shortfalls and other disincentives have pushed the student share of a college education to more than 50 percent.

    That may not sound bad - after all, splitting the cost with our students would seem like a fair bargain - not bad, except when you consider that the national average is at 20 percent and remember that our state had promised to hold student costs at 30 percent.

    Unfortunately, shortfalls in state funding increase the cost of tuition. In fact, tuition at public colleges in Ohio is roughly $1,000 per year more than the national average. And, studies show that higher tuition can mean lower enrollment, which results in a less educated workforce.

    No, our students are not getting a fair bargain. Rather, they are paying more than they bargained for.

    But that is not all . . .

    That is not all, because over these last 20 years, it also seems that we have forgotten that the very purpose of our government is to make an investment in the future.

    Indeed, we seldom refer to higher education in the same breath with investment. Rather, the state's appropriation to higher education has been called an "instructional subsidy."

    That is grossly misleading, because a subsidy suggests an obligatory gesture no different from other entitlements in the state budget.

    Studies at The University of Akron show a clear return on investment for monies spent on higher education.

    The most recent figures (1997) show that Ohioans with a Bachelor's degree earn nearly twice as much as individuals with only a high school diploma.

    With their higher incomes, students will pay back to the state $1.84 in inflation-adjusted dollars - just in additional taxes - for every dollar the state invests in higher education!

    That is a nearly two-to-one return on investment, and by anyone's accounting, that is an excellent return on investment!

    But there is more, because there are additional returns of as much as 60 percent per year resulting from enhanced research and from a higher-quality workforce.

    And there are yet other social and economic benefits to be counted - including savings from the many costs often associated with the lack of education, including unemployment, welfare, and crime.

    So, I ask you: Why would our state continue to use a pejorative term (subsidy is not a "good thing" in today's competitive marketplace)?

    Why when in so doing so, Ohio not only communicates its ignorance of the facts, but worse, it dooms Ohio to a self-imposed state of economic mediocrity?

    But no matter what we call it, the current investment in our future falls well short of what's needed, and we must find ways to make it easier for everyone to receive a postsecondary education.

    With other states charging an average of only 20 percent of the cost of public higher education, it is clear that Ohio has created a huge disincentive for its students and a tremendous disservice to our economic future.

    By contrast, there is a burst of competitive resurgence occurring in other states, including many around us, and that suggests that Ohio will be forced to play catch-up before it can become a leader in the high stakes of economic development.

    States like Georgia and California, for example, are fundamentally providing free access to higher education for talented students.

    Georgia's Hope Scholarship Program is a prime example. Every high school student graduating with at least a B average in their academic subjects gets free tuition, free mandatory fees, and a book allowance to attend any public college or university in the state.

    Students who keep the B average continue to receive these scholarship benefits through all four years of college.

    And other examples abound, whether in Indiana, or in Michigan, or in many other states.

    The lesson is that other states already know what Ohio yet needs to learn - in today's economy, knowledge is our most coveted natural resource. Other states recognize that higher education is a good investment, and they have made higher education the infrastructure of their new economy.

    And other countries are also moving ahead.

    In 1983, Terrell Bell, then-Secretary of Education, released a report entitled, A Nation at Risk, prepared by the National Commission on Excellence in Education. It warned that for the first time in its history, the United States could well graduate a generation that was less well prepared than its parents.

    And in equally powerful language, it noted that, "If an unfriendly power had attempted to impose on America the mediocre educational performance that exists today, we might well have viewed it as an act of war."
    ("A Nation At Risk: The Imperative for Educational Reform," National Commission on Excellence in Education, April 1983)

    Indeed, the latest report from the Organization for Economic Cooperation and Development notes that the world dominance that the United States has enjoyed during this past century is being eclipsed by the achievements of other countries.
    (Education at a Glance - OECD Indicators, 2000 Edition, Organization for Economic Cooperation and Development Centre for Educational Research and Innovation)

    Thus, the U.S., which was the first nation to have compulsory secondary education, now lags 22 other countries in the percentage of its population that completes secondary education.

    The U.S. now also lags in higher education. Indeed, the dramatic increase in college graduates that was spurred on by the G.I. Bill and made the U.S. an economic powerhouse has now been overshadowed by three countries.

    Today, Britain, Denmark, and the Netherlands all boast of a higher percentage of their population participating in higher education.

    In this global, competitive environment, other states, and increasingly other countries, enjoy success because of their ability to create and sustain new wealth. And the key to that success has been a more highly educated populace.

    As I stated earlier, economic development requires workforce development. However, just as important - if not more so - is the significance of technology development.

    In fact, without new technology development, there would be no new wealth, no new enterprises, and no need for the workforce.

    Indeed, economists agree that research, best defined as the production of new knowledge, as occurs daily on our campuses, is the most direct avenue for generating new wealth.

    When that new knowledge is quantified in a market environment, it creates fuller employment, capital formation, growing profits, and surpluses for reinvestment.

    Just think of it - microelectronics, the dominant industry in today's economy, did not begin until 1947 with the development of the transistor. And biotechnology, which is today a trillion-dollar industry, began only 30 years ago, in 1970, with a seminal discovery in a University of California laboratory.

    Yet, there are positive signs in Ohio.

    Governor Taft has understood this new environment and has begun to take the lead by proposing several initiatives. His creation of a Technology Action Fund is a case in point.

    And I am proud to say that The University of Akron, in collaboration with Case Western Reserve University and the Akron Incubator Facility, was one of the first recipients of the Governor's new program, and we are now working to enhance the commercialization of new polymer technologies in our region.

    And right here in Cleveland, a partnership between Case Western and the Cleveland Clinic, supported by NORTECH, is launching a biomedical technology initiative, with Bill Sanford's leadership.

    While these initiatives are an important start, they are only a start.

    There is much more that we must all do in Ohio, lest our state fail to capture its fair share of economic progress, lest Ohio not even be able to catch up or come close to the progress made by other states.

    Moving forward is not necessarily progress, if your competition is still passing you by.

    Just yesterday (July 21), McKinsey and Company facilitated a discussion in Columbus to encourage Ohio to create the kind of science and technology investments that have catalyzed economic expansion in other states.

    And that is imperative, because science and technology will continue to play an increasingly important role in our future, and we in Ohio must be prepared and equipped to effectively compete in that fast-changing marketplace.

    As I said at the outset, investing in our future means investing in education, research and infrastructure. That is the covenant we make with ourselves in creating a government dedicated to advancing the common good.

    So it is time that we work together to restructure our priorities. It is time that we renew the covenant, and that we restate our promise.

    Promises made should be promises kept.

    Lessons learned, should be lessons applied.

    Only then can we enable the common good.

    Ohioans deserve no less!


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