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As promised, President Barack Obama focused his State of the Union address on strengthening the U.S. economy and job market. During the hour-long speech on Feb. 12, 2013, to a joint session of Congress, Obama touched on several key issues that could have a profound effect on HR practitioners throughout the United States.
Raising the federal minimum wage to $9 per hour over the next three years and creating high-tech manufacturing training hubs around the country were two of the newest and possibly boldest HR-related proposals that the president rolled out in his speech. While the president has long been an advocate of narrowing the gap between lower- and higher-income workers, the speech marked the first time that Obama called directly for a minimum-wage increase. The president also briefly mentioned the need to pass the Paycheck Fairness Act to guarantee wage equality for women.
The federal minimum wage was last increased to $7.25 in 2009, President Obama’s first year in office. However, the increase had been passed during the presidency of Obama’s predecessor, George W. Bush. Obama proposed that the wage be increased to $9 per hour by the end of 2015, and then linked to annual cost-of-living increases.
“This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead,” Obama said. “Working folks shouldn’t have to wait year after year for the minimum wage to go up while CEO pay has never been higher. So here’s an idea that Gov. Romney and I actually agreed on last year: Let’s tie the minimum wage to the cost of living, so that it finally becomes a wage you can live on.”
His minimum wage proposal was immediately criticized by Republican leaders and some business analysts, who said that the move would hamper economic growth and drastically reduce job growth nationwide.
An Economic Plan
The president began his address by discussing the challenges of forging a budget deal with Congress and avoiding $1 trillion in budget cuts set to take effect on March 1—also known on Capitol Hill as “the sequester.” Obama implored Congress to pass a plan to reduce the deficit and avoid massive budget cuts, so that legislators could focus on what really mattered—strengthening the nation’s fragile economy.
“Deficit reduction alone is not an economic plan,” Obama said. “A growing economy that creates good middle-class jobs must be the north star that guides our efforts.”
Many of the president’s proposals rehashed ideas that he had outlined and pushed for in previous State of the Union addresses. He discussed the need to rebuild the nation’s infrastructure and to get people back to work by repairing the nation’s bridges and highways. And he promised that during his second term his administration would focus on strengthening the U.S. manufacturing industry. He said that his administration would emphasize the pressing need to “equip workers with the job skills” U.S. employers need to remain globally competitive.
Training, Education Initiatives
As part of the administration’s job-training initiatives, the president proposed spending an estimated $1 billion to build “manufacturing institutes” at which government agencies, such as the departments of Defense and Energy, collaborate with private-sector business groups and employers to prepare workers for the challenges of the new economy.
He pointed to a manufacturing innovation institute that was launched in 2012 in Youngstown, Ohio, as a model for this new initiative. He discussed how the training hub was created in a closed warehouse that had been renovated into a “state-of-the-art” training laboratory where workers were learning about three-dimensional printing techniques.
“This has the potential to revolutionize the way we make almost everything,” the president said. “There’s no reason this can’t happen in other towns.”
The president then announced that his administration was committing to launching three more of these manufacturing hubs, where businesses will partner with government agencies in an effort to turn regions in the U.S. that are struggling in the economic recovery into “global centers of high-tech jobs.” He asked Congress to appropriate funding to create a nationwide network of 15 manufacturing and training hubs.
The president called for improvements to the U.S. education system and said these efforts had to start at the earliest possible age. He proposed providing access to high-quality preschool programs for all U.S. families. He claimed that every $1 invested in high-quality early childhood education would save the U.S. economy more than $7 in future years.
“Most middle-class parents can’t afford a few hundred bucks a week for a private preschool. And for poor kids who need help the most, this lack of access to preschool education can shadow them for the rest of their lives,” he said. “So tonight, I propose working with states to make high-quality preschool available to every single child in America.”
The president then outlined his vision for reforming high school education in the United States. He pointed to Germany as a model and discussed how the largest economy in Europe has invested and focused on graduating high school students with an equivalent of a technical degree from a U.S. community college.
“So those German kids, they’re ready for a job when they graduate high school,” he said. “They’ve been trained for the jobs that are there.”
The president described the success of the P-Tech high school in Brooklyn, N.Y., developed through a partnership with New York City Public Schools, the City University of New York and IBM. Students graduate from P-Tech with a high school diploma and an associate’s degree in computer science or engineering.
Obama outlined the need for employers, educational institutions and government agencies to work together to develop programs that provide students the skills they need to enter the U.S. workforce.
“We’ll reward schools that develop new partnerships with colleges and employers, and create classes that focus on science, technology, engineering and math—the skills today’s employers are looking for to fill the jobs that are there right now and will be there in the future,” he said.
Comprehensive immigration reform is another key element to ensuring that U.S. employers can find and hire the qualified workers they need, Obama explained. The president applauded recent bi-partisan efforts in both houses of Congress to draft immigration reform legislation. He said that the time was right to pass a comprehensive reform bill and that he would immediately sign the legislation into law when Congress passes it.
“Real reform means fixing the legal immigration system to cut waiting periods and attracting the highly skilled entrepreneurs and engineers that will help create jobs and grow our economy,” he said.
Business groups supported the president’s stand on immigration reform, saying the changes are long overdue.
“Manufacturers welcomed the president’s remarks on immigration reform and STEM [science, technology, engineering and math] education, which show a true commitment to developing the skilled workforce desperately needed,” said Jay Timmons, president and CEO of the National Association of Manufacturers, in a written statement. “Comprehensive immigration reform, expanded trade and efforts to reduce the skills gap are all laudatory and needed. However, there are many more difficult issues that must be tackled.”
Timmons and other business leaders were cautious about the president’s agenda and said that government initiatives to improve the economy and job market had to be balanced with sensible tax reforms and cost-cutting measures.
“The president’s return to a focus on jobs and growth is overdue and we welcome his call for immigration reform and trade expansion,” said Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, in a written statement. “The question is whether the totality of his agenda is designed to grow our economy or simply to grow the government. More spending, higher taxes, and massive federal rule-making will not put Americans back to work or stop the slide of middle-class incomes.”
Bill Leonard is senior writer for SHRM.
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