Reich to IT: Dont Fear Globalization

Former U.S. Secretary of Labor Robert Reich says education is must for global competition, and tells IT leaders that globalization is not a threat.

DALLAS—Education is our most important weapon in fending off the challenge of the global economy, according to former U.S. Secretary of Labor Robert Reich.

With world labor markets supplying low-cost employees in a number of fields, including IT, U.S. IT professionals will have to ratchet up their education and training to add value on top of that cheap labor, Reich told 600 of the nations top IT executives at the annual Society for Information Management SIMposium here on September 18.

"Its all about human capital and education. We need to invest in education and our children," Reich told the gathering of senior IT leaders from a broad spectrum of industries.

Reich, whose duties as labor secretary included stumping for the Clinton administrations NAFTA (North American Free Trade Agreement), said the global economy is a good thing and not to be feared.

"The rising tide will lift us regardless of where the headquarters of the global company is," said Reich. "NAFTA did not result in a gain or loss of jobs—just a new allocation of jobs. What matters is the value that we are able to add to a global supply chain."

He said that technology advances, not globalization, are eroding manufacturing jobs worldwide, even in China.

"China is losing manufacturing jobs because its becoming more efficient. Because of technology, theyre becoming more productive. Old state-run factories are being closed.

In the United States, the same principle applies, Reich added. "Its not globalizing thats taking away jobs. Even if we built a wall around the country, we would still be losing manufacturing jobs," he said.

Despite Reichs optimistic message on global trade, he acknowledged growing disparity in wages between the highest-paid and lowest-paid U. S. workers.

"Median wages are going nowhere," he told the audience. The way to narrow the gap, he said, is, once again, increased training and education for lower-paid workers.

"When manufacturing jobs go away, people can do other things. But they need education in order to avoid service economy jobs," he said.

He said that China, despite its booming economy, will soon face a rapidly aging population, thanks to the countrys one baby per family policy.

But Chinas productivity is increasing rapidly, which should help the country deal with the problem. The U.S. faces a similar conundrum as the large generation of baby boomers begins to retire, placing a burden on the following generation in funding Medicare.

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With Medical costs spiraling out of control, Reich exhorted the IT audience to apply their skills to streamline the system. "IT—you —please rescue the American health care system," he implored.

Among other topics, Reich addressed the question of illegal immigration.

"In the short term, they are pushing down the wages of U.S. citizens, but over two generations, they will put in more value than they will take out. Ambition and drive are the biggest predictors of success."

Reich described the current economic recovery as a mild one, having created some 6 million jobs. He compared it to the economic prosperity of the 1990s, in which he said 22 million jobs were created.

Looking at what some are calling storm clouds on the horizon of the economy, he said he believes there is less than a 50-50 chance of a recession taking hold this year.

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