Presentation toTHE NGA WORKFORCE DEVELOPMENT POLICY

FORUM:

INNOVATION MATTERS!INNOVATION MATTERS!BUILDING COMPETITIVE BUILDING COMPETITIVE ADVANTAGE IN STATESADVANTAGE IN STATES

Rob AtkinsonVice President and Director,

Technology and New Economy Project

Progressive Policy Institutewww.ppionline.org

Waves of Innovation Waves of Innovation Drive Cycles of Drive Cycles of

Growth and ChangeGrowth and Change

Robert D. Atkinson, The Past and Future of America’s Economy: How Waves of

Innovation Drive Cycles of Growth, (Northampton, MA: Edward Elgar, 2005)

Periods in AmericanPeriods in AmericanEconomic HistoryEconomic History

_____________________________________________

Period Years

_____________________________________________

Mercantile/craft 1840s to 1890s

Factory-based industrial 1890s to 1940s

Corporate mass production 1940s to 1990s

Entrepreneurial, knowledge-based 1990s to – ??

The New Economy’s The New Economy’s Information Information

Technology System is Technology System is Driving Two Big Driving Two Big

Economic Waves That Economic Waves That Will Have Significant Will Have Significant

Impacts on the Impacts on the Workforce and Labor Workforce and Labor

MarketsMarkets

The WaveThe Wave

The WaveThe Wave

The New Economy’s The New Economy’s Productivity BoomProductivity Boom

Manufacturing Services 1979-90 2.6% 0.4%

1990–96 3.5% 0.2%

1996–20025.0% 1.7%

So what does all this mean?So what does all this mean?

1) 1) New Competitive New Competitive Challenges: Is it déjà Challenges: Is it déjà vu all over again?vu all over again?

Total Income Growth By Total Income Growth By Region, 1969-2003Region, 1969-2003

0

2

4

6

8

10

12

14

16

18

NE ME GL PL SE SW MT PC

2) The New Bifurcated 2) The New Bifurcated Labor MarketLabor Market

Jobs Are Shifting From This…Jobs Are Shifting From This…

To This…To This…

……And To This.And To This.

The Disappearing Middle The Disappearing Middle JobJob

-200,000

0

200,000

400,000

600,000

800,000

job change99-02

1 2 3 4 5

Wage quintile

Employment Change by Employment Change by Wage and Skill Level, 1999-Wage and Skill Level, 1999-

20022002

-200000

-100000

0

100000

200000

300000

400000

500000

higher wage middle wage lower wage

low skill

medium skill

high skill

And It’s Expected to And It’s Expected to ContinueContinue

0

5

10

15

20

25

1,000s of jobs2002-2012

46K andabove

34K to46K

25K to34K

20K to25K

0 to 20K

Occupational Mix of Jobs Occupational Mix of Jobs Likely to be Offshored by Likely to be Offshored by

20152015Income Quintile # of Jobs Share

$46K 1,095,4003 21.3% $33.5 to $46 426,200 16.1%$25 to $33.5 1,059,900 33.4%$20,5 to $25 584,200 18.4%$14.9 to $20.6 10,600 0.3%

Total 3,176,300

What Should States Do?What Should States Do?

1. Make sure you are the “Boston” of the New Economy, not the “Upstate New York”.

What Should States Do?What Should States Do?

1. Make sure you are the “Boston” of the New Economy, not the “Upstate New York”.

2.2. Address the growing labor Address the growing labor market bifurcation by making market bifurcation by making the workforce development the workforce development system an agent to foster high-system an agent to foster high-performance workplace performance workplace innovation.innovation.

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