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Education's impact on economic competitiveness : hearing before the Subcommittee on Education, Arts, and Humanities of the Committee on Labor and Human Resources, United States Senate, One Hundred Fourth Congress, first session ... February 2, 1995 online

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me steps beyond the role, and that is the delicate balance that I
think Mr. Gorman was referring to.

Senator Kennedy. Mr. Chairman, I just have one other area, and
that is about your sense within the business community about the
importance of this priority. I think all of us know that there are
at least 10 politicians out there right now making speeches about
the importance of education and children — we do a lot of talking
about it, but we do not do as much serious work on it as we should.

Given the demography — most of the bond issues, for example,
carried years ago in California never missed, until about 15 years
ago — ^you cannot pass one now — in terms of education. True, Dade
County passed an important one, probably the last major one, 6 or
7 years ago. And those are expenditures, obviously, and we know
the problems with that.

But given the demography, what is happening out in the commu-
nities? You are in touch with the extensions of your companies and
corporations and are out talking with the business community.
How involved do you think they will be in this next period of time,
let us say until the end of the century, in terms of really
prioritizing education? Are they really worked up about it? Is this
something that is increasingly a matter of concern to them? Are
they becoming more engaged in it? What can you tell us just about
your own groups, both here and out in the States?

Mr. Gorman. Well, allow me to say that at the Business Round-
table last year's annual meeting, we devoted over half of the time
to education, because we believe it is that critically important, in
addition to all the other issues we are looking at.

I report at every, single Business Roundtaole meeting on the ac-
tivities of the task forces around the country. We have 25 CEOs
who join us on our task force from around the country. We have


at least one CEO heading the effort in every, single State of the
200-member Business Roundtable.

Is it universally a passion for all of business? No. Is it increas-
ingly a passion for much of business? Yes. We recognize how criti-
cally tied to the quality of life, our very society, but particularly to
our international competitiveness. We have got to get at that prob-
lem to serve us well down the road.

And I think, yes, in the Business Roundtable context, each of our
companies committed 10 years, regardless of who was the chair-
man of the board — we committed our company to 10 years of com-
mitment. Now, 10 years may not be enough, but it is a good start,
and we are 5 years into that now, and making some real progress
in a number of key States. We ask regularly the RAND Corpora-
tion to review our work from an independent objective standpoint.
Their key finding is we are making a significant difference. And
where these coalitions are led, they are being led by business in

Senator Kennedy. Mr. Wurtzel, finally, let me ask you — one of
the recommendations in America's Choice was about the continuing
training programs in corporations, and that there be the skill
standards, or both enhanced academic as well as skill standards in
schools, and tied into the business communities. And your support
for those programs was very important in getting the legislation
passed. But one of the recommendations was about the importance
of continuing training programs. I guess most of the very best —
however you want to define it — but a number of companies and cor-
porations continue those training programs, but of course not near-
ly at the par of many companies and corporations in other coun-
tries, and even at the risk of losing trained personnel to competi-

Different countries follow different regimes to get continuing
training programs. How do you think we can encourage continuing
training and continuing education at the corporate level, recogniz-
ing that people are going to turn over — we know everyone who en-
ters the job market will eventually have seven or eight different
jobs over the course of their careers, many in a company or a cor-
poration perhaps like yours, but anyway, they are going to be mov-
ing — they are either going to be moving up or moving out.

Could you just briefly comment about what is happening and
what can be done to encourage that?

Mr. Wurtzel. I think Goals 2000 took an important step last
year in the creation of the Skill Standards Board, which I am
honor to say the President appointed me to serve on the National
Skill Standards Board. I think if we can set, on a volimtary basis,
standards for various job classifications across an industry — ideal-
ly, across a number of industries — that then sends a clear signal
to the workers about what they need to know to be a welder or an
x-ray technician or an expediter of one kind or another; it sends a
clear signal to the education community, whether it is community
college or privately-funded or privately-owned education institu-
tions, as to what training is required; it sends a clear message to
businesses as to what they need to do with their existing work
force to bring them up to voluntary national standards, so that a


welder at TRW knows as much as a welder at General Motors. I
think that is the first step.

The second step — which is pending, I believe, in this Congress,
at least conceptually if not as a bill — is to take the 30 or 40 mis-
cellaneous job training programs that have been added and
carbunkled together over the years and eliminate them as inde-
pendent programs and combine them as a single, flexible, national
system for training people who are out of work, regardless of
whether it is because of air pollution or coal mine shutdowns or
whatever it may be.

Mr. Gorman. If I could add two points to that, Senator Kennedy,
it turns out that business already spends more by far on training
than the Federal Government spends on education and training;
and indeed, huge amounts are spent. That is point number one.

Second, we are all finding that increased training and pure edu-
cation, even, matter a lot when it comes to productivity. The more
we train, the more we educate and empower our workers, the more
highly productive they are. We are finding a clear-cut and direct
connection there. So global competition alone will cause American
business to train and educate more.

Senator Kennedy. Well, I believe you, and you are the master,
the bottom-line person on that. But I do not know what it takes
to get others to look at it quite that way. I mean, you are a leader,
both of you are leaders, in this. And tne question is how we can
get others to do it. Maybe they will just pick it up, but in the mean-
time, in terms of the national interest, we have some distance to
go. But hopefully, your example will lead the way, and we will look
for ways of trying to encourage movement in that direction. Thank
you, Mr. Chairman.

Senator Jeffords. We will now receive a statement from Senator
Dodd for the record.

[The prepared statement of Senator Dodd follows:]

Prepared Statement of Senator Dodd

Mr. Chairman. I would first like to compliment you on calling
this hearing. As we debate intelligent ways to reduce Federal
spending, a hearing focusing on the economic importance of edu-
cation could not be more timely.

Mr. Chairman, education funding is a subject you and I together
have spent a great deal of time on — both in this committee, in the
Budget committee and on the Senate floor. While our efforts have
not always been successful, I think we have raised awareness
about the importance of education as a long-term investment in the
strength of our economy. I hope that this hearing can help build
on this record.

As you well know, education is important for many reasons. Edu-
cation enhances the quality of each of our lives and betters whole
communities. For millions of individual Americans, it has provided
a way up the ladder of economic opportunity. Education also drives
economic growth in our country. It is, I believe, one of the wisest
investments we make with American tax dollars.

The returns on this investment are improving all the time, as we
target Federal dollars to areas of real need. During the last Con-
gress, we amassed an incredible record of achievement in edu-


cation. We revisited and improved existing programs, like the Title
I program for disadvantaged children by targeting these dollars to
needier communities and strengthening overall quality, we adopted
the Goals 2000 Act to provide new, flexible resources to states and
communities as they work to improve their schools. We enacted the
School to work act to assist students in the transition out of school.

We provided states and communities with access to new Federal
resources to address the problem of school violence. The Direct
Loan program simplified the student loan system and lowered costs
to American taxpayers substantially. We expanded and improved
the Head Start program so that quality will remain high and more
young children will nave access to this successful program.

We must not back off from these commitments, which help bring
the promise of education and the American dream within reach for
millions of American families. Not only would a retreat on edu-
cation go against our best nature, but it would also be foolish eco-

America cannot hope to remain strong without an educated citi-
zenry. This statement is even more true today. With the economy
growing increasingly global, our Nation's greatest economic asset is
our people. And the best way to cultivate that asset is through edu-

In this regard, I look forward to hearing from all of our panelists
about their ideas on education and its relation to the economy. I
am particularly looking forward to hearing from Mr. Joseph L.
Dionne, the Chairman and CEO of McGraw-Hill, who is a resident
of Connecticut.

Thank you.

Senator Jeffords. Just to follow up on the last question, I think
the figures show that business spends about $25 billion a year on
remedial education. Obviously, that has to be the function of the
school systems, and you ought not to be burdened with that. Then
there is an additional $200 billion a year, I believe, spent in skill

Do you have any thumbnail estimate or any guess what percent-
age of that education and training ought to he handled by our
schools, or how much of it is related to specific business activities
which could not be generalized under the high standards that are
being established? In other words, are our schools really deficient
in teaching basic skills?

Mr. WuRTZEL. Oh, there is no question about that. I cannot give
vou details, but Motorola — conceptually, that is, in round num-
bers — wants to start a plant using fairly sophisticated machinery
to produce an electronics product. The example I have seen is that
in this country, they have to take an entry work force and train
them for 6 or 8 or 10 weeks, just to get them to the point where
they can begin to read the manuals and operate the equipment.

In Japan or other well-educated countries, they call on the work
force, give them the new manuals, send them home to study them,
and they come back in a week, ready to go to work.

Obviously, Motorola, in deciding where to place new plants — or
IBM or Seamans, and whether they are American -owned or for-
eign-owned does not matter — if you are going to have to invest 6
or 8 or 10 weeks of remedial instruction just to get people to the


point where they can operate equipment, that is an obviously addi-
tional burden that causes both American companies and foreign
companies to make the decision to invest in new plants where they
have a work force that is ready to learn, as compared to a work
force here that needs to be brought up to the point that they are
ready to learn the particular skill or application.

It is a devastating comment on our education system.

Senator Jeffords. That is a very, very devastating comment,
and it alerts us to how critical it is that we continue our edu-
cational agenda.

Mr. Gorman.

Mr. Gorman. There is a far more insidious issue here and set of
characteristics at play. In our school systems, we regularly con-
vince more and more kids that they cannot learn, that they are stu-
pid, that they are not like other kids.

We have a plant in North Carolina where we established a pro-
gram with one instructor, individual computer stalls, where our
workers go to be educated — not to be trained in any particular
skill, but in English, in arithmetic, in history, and the like. They
can learn at their own pace; it is purely voluntary, but the instruc-
tor helps teach them how to go about it. We find that the self-es-
teem of the worker is increased dramatically as a result, and they
say, "Hey, I can learn," and "Gosh, I am learning."

We then empower them to think for themselves, instead of treat-
ing them like extensions of the machines they tend, and our pro-
ductivity has gone up dramatically, and our quality has gone up
dramatically, with not one, single ounce of training there; it is sim-
ply education, which leads to self-esteem, which leads to satisfac-
tion in terms of a job well-done.

Senator Jeffords. Thank you.

I want to thank you again. This is critically important, and I am
going to do everything I can to improve the public awareness about
these problems, whether it be at the national level, with summits,
conferees and hearings. So I would appreciate, and I know I will
get, the cooperation of both your organizations and yourselves, and
I deeply appreciate your testimony.

I would just alert you that there are two other reauthorizations
coming up. One, Mr. Wurtzel, I am sure you are aware of, and that
is that we will be reauthorizing special education or IDEA this
year. That will not be in this subcommittee, but I will be watching
that very carefully because it has raised some very difficult ques-
tions as to the present methodology utilized.

Second, we will also be reauthorizing the Perkins Vocational
Education Act at the end of the year, where many of these issues
will become critical again. So we look forward to your leadership
and the support of your organizations to help us through this pe-

Thank you very much for very excellent testimony.

Mr. Gorman. Thank you.

Mr. Wurtzel. The business community wants to commend you.
Senator, for your leadership in holding these hearings and focusing
the Nation on these issues.

Senator Jeffords. Thank you.


On our next panel, we will hear from Joseph Dionne and Gov-
ernor Thomas Kean. Mr. Dionne is chairman and chief executive
officer of McGraw-Hill. He also serves on a number of charitable
and educational boards, including Hofstra University, the Con-
ference Board, and Advanced Network and Services, Incorporated.

The Honorable Tom Kean has devoted much of his career to edu-
cation as the distinguished Governor of New Jersey. He launched
a number of education reform initiatives, and presently, he is help-
ing Drew University become one of the premier liberal arts schools
in the country. Governor Kean is also chairman of Educate Amer-
ica and a board member of the Carnegie Corporation.

I want to thank you both for being here. I would point out that
we are also having a meeting of the Budget Committee this morn-
ing, and unfortunately, almost all of my members are also on that
committee, and their priority, similar to all of ours, is protecting
the budget.

Senator Dodd in particular, Mr. Dionne, wanted me to tell you
he wished he could be here; but he is a vigorous defender of edu-
cation, and the Budget Committee makes the first decisions on how
we are going to allocate resources.

But I assure you they will be aware of your testimony, and I look
forward to listening to you with great interest.

Mr. Dionne?


Mr. Dionne. Thank you. Senator. I can assure you that in our
shop, it would be the same priority.

Good morning, Chairman Jeffords. On behalf of McGraw-Hill, I
welcome the opportunity to participate with my distinguished col-
league and share my perspectives on the importance of education
to the economic security of this Nation,

I commend you for showing the leadership to help focus national
attention on tnis very important issue. I am here today as a busi-
ness leader, personally and professionally, who has been committed
for decades to serving and helping to improve our Nation's edu-
cation system.

I have taught in the Nation's public schools; I have been a school
administrator; I have taught in its universities, and I am a trustee.
I serve as chairman of McGraw Hill, which was founded in 1988.
McGraw-Hill is a $3 billion leading multimedia publishing and in-
formation services company, serving global markets in education,
business, industry, the professions and Government.

As a knowledge company, we have a significant interest in edu-
cation, serving K-12, vocational, higher education and lifelong
learning. As a co7*poration, we have a heritage of supporting the
principles of strong education policy.

As a member of the Business Roundtable's Education Task Force
and the Association of American Publishers, we have worked for
education reform at the K-12 level as well.

Additionally, each year, we at McGraw-Hill present the Harold
W. McGraw, Jr. Prize in Education to honor individuals who have


positively influenced the field of American education. Winners of
this award in the past include Senator Pell, who serves as ranking
minority member on this subcommittee, and Secretary of Education
Richard Reilly for his work as Grovernor of South Carolina; and I
am delighted that Senator Pell is with us this morning.

Further, I am pleased to serve as co-chair with former Governor
Thomas Kean on the Commission on National Investment in High-
er Education, and Governor Kean will be discussing the commis-
sion in greater detail in a few moments.

I commend to your attention and respectfully submit for the
hearing record a paper on "Investing in Higher Education: An Ar-
gument for Restructuring," prepared by Judith Eaton, president of
the Council for Aid to Education. It serves a valuable role in pro-
viding a benchmark for the commission's discussions.

But I am here today also as a consumer of the end product of
our higher education system — our employees. McGraw-Hill depends
on this Nation's educational system to provide us with employees
who have the skills, intellectual rigor and creative thought proc-
esses to keep us ahead of the competition. Without that intellectual
capital, we cannot compete effectively. It goes to the very core of
how we survive and thrive as a Nation, and we as business leaders
are here to help meet this challenge.

Most people believe that business is the engine that drives our
society. I believe it is not. Education is the engine of growth that
allows the economy to perform, and it is even more so the case as
we enter the information age.

If the United States is to maintain its competitive edge in the
global economy, we must address the current crisis in higher edu-
cation, and do it now. It is incumbent upon us as citizens, edu-
cators, business executives and Grovemment officials to work to-
gether objectively to assess the situation, identify practical, equi-
table solutions, and facilitate their implementation.

Our education system, envied around the world, is based on the
very precepts of this Nation: Freedom, openness, egalitarianism,
ana equal access. Unfortunately, the course that the higher edu-
cation system is following today and the economic pressures that
are coming to bear threaten that heritage and, more importantly,
our future.

We have so much to be proud of, but we have much more to do
as we face this crucial turning point. The hearing today is an im-
portant step.

My colleagues and I have lessons to share from the business com-
munity. The last decade has seen corporate America facing many
of the same challenges that today affect higher education. We were
called upon to examine our processes and operations, reengineer to
improve productivity and quality and to reduce costs.

Our focus here, as well, in higher education should be on access,
quality and cost. We need to foster reengineering of the higher edu-
cation process, just as we have done in the private sector, to main-
tain our competitiveness. In order to ensure that new education
funds are spent wisely, we need to evaluate how we are spending
the current $200 billion in higher education money and how to
strengthen the return on investment of the nearly $2 billion a vear
that corporate American contributes. And we need to do so without


impinging on the academic freedom of our Nation's colleges and

I have not come today with solutions. Rather, as we look out at
the landscape of higher education, I want to raise a few issues for
your consideration.

The restructuring of education is a classic example of supply and
demand. Right now, the demand for education is far outstripping
the supply of resources available to satisfy that demand. To bal-
ance this equation, we need to either reduce the demand, which
may happen as fewer and fewer students can afford the prospect
of higher education, or increase the resources we are able to bring
to the problem.

One answer is to lower cost by reexamining the productivity and
efficiency of the administration of higher education. Essen tiallv,
with successful restructuring, administrative productivity should
increase, leading to a decrease in operating costs and ultimately to
greater accessibility.

To begin, we must evaluate how efficiently we are using the dol-
lars we already have. I would go so far as to say not nearly effi-
ciently enough.

One area where there is a strong similarity between corporate
America and the administration of universities is the "silo" deci-
sionmaking where individual departments can make autonomous
decisions and run as seperate entities. This is often not the most
efficient way to operate, as corporate America discovered in the
1980's when it reengineered itself and became more horizontal.

There are economies of scale to be gained and resources to be
maximized when universities and operate as a whole and not as
the sum of the parts. This has been an amazingly resilient commu-
nity of higher education. For over 200 years, it has proven to be
very adaptable, and it has really accommodated increasing de-
mands dramatically — only one in 10 went through college by World
War II, and 5 in 10 today. But the institution must fundamentally
re-think its organizational structure.

As if internal pressures were not enough, the efficiency of univer-
sity administrations is further threatened by Government regula-
tions. One example, as Vartan Gregorian, the president of Brown
University, has pointed out is the 7,000 individual items governing
financial aid arising from Title IV alone. To quote Dr. Gregorian,
"Whether intended or not, the impact of thousands of regulations
is to homogenize and bureaucratize our institutions and dampen
the creative spirit of our universities. Worse, many regulations
command compliance but do not provide the means, further com-
promising an institution's already limited financial resources and
academic priorities."

I encourage you to work with the higher education community to
explore which regulations are most essential, streamline them, and
eliminate the unnecessary ones.

We must also invest in the infrastructure of our academic build-
ings. Significant investments in new technologies, computers and
smart laos will be wasted if physical structures are crumbling and
wiring is insufficient. I noticed by this morning's headlines that we
had better speak up now, otherwise it will all go to the elementary
and high schools of the Nation.


There exists an opportunity here for the Government to assist.
Through accounting incentives, there should be a means to encour-
age investment in the maintenance and updating of our edu-
cational facilities. I think that would be a worthwhile step.

Equal access for all students who wish to attend college is criti-
cal. But we need to make sure that the high school students are
adequately prepared to enter college and that entrance to college
is based on ability, not affluence. We should expect that the grad-
uating student, the future worker, has the skill sets required to

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Online LibraryArts United States. Congress. Senate. Committee on LaboEducation's impact on economic competitiveness : hearing before the Subcommittee on Education, Arts, and Humanities of the Committee on Labor and Human Resources, United States Senate, One Hundred Fourth Congress, first session ... February 2, 1995 → online text (page 4 of 15)