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Roundtable Participants (clockwise): Charles Hawkins - Senior Manager, Human Resources Department, Lifeway Melissa Rivers - Director of Regionalism Memphis Regional Chamber James Neeley - Tennessee Commissioner of Labor and Workforce Development Mike Ragsdale - Knox County Mayor

In early March, during the Engineering Excellence Awards hosted by the American Council of Engineering Companies, University of Tennessee President John Petersen put it plainly: "We don't generate enough scientists and engineers for the needs of the country," he said. Petersen quoted stats showing that only 22% of Tennesseans have a B.A. Degree, 5% below the national average, which puts the state 43rd in the nation. It's a variant on a common refrain heard from business leaders throughout the state—Tennessee needs to cultivate a highly educated, homegrown workforce. BusinessTN sat down with some experts to explore this pressing issue.

BTN—Which area of of Tennessee is the most challenging when it comes to workforce development?

James Neeley —When I look at the state as a whole, I see the energy sector right now in East Tennessee as one of the most challenging.

Mike Ragsdale —I had a meeting with three of the other large urban county mayors in November, and one of our first stops was at TVA. John Long, the chief administrative officer there, emphasized what the commissioner just said. If we're going to meet our power needs in the future, we need skilled labor: welders, pipe fitters, plumbers and electricians. These are high-paying jobs, and these workers need the same academic base as those who seek a college degree, which compounds the situation even more. In Knox County, based on the last figures I saw, we had the lowest unemployment rate in the state, so it's a little bit of a dichotomy. We need more skilled laborers, but we have very low unemployment.

BTN—What are the ways of addressing this challenge?

Neeley —The state has formed partnerships with TVA and the construction industry to bring more welders online, because when TVA opens up the Watts Bar nuclear facility near Spring City, for example, they're going to need 400 welders just at that particular site. We're putting incumbent worker training money in those proposals—one going on in Nashville and the one we're working on for Chattanooga. We've talked about bringing in trailers that have the upgraded welding booths available, so we can double the size of classes for TVA. That's just one example of the partnerships coming into play.

BTN—According to the first phase of the Memphis Regional Economic Development and Workforce Study conducted by the Wadley-Donovan Group, the local labor force is "unskilled, under-educated, unmotivated and apparently content with its own mediocrity." How can this be addressed?

Melissa Rivers —That's not the case with our study. When we did it in 2006, our study demonstrated that 59% of our population was not satisfied with their current skills and wanted to upgrade them. We have a very large number of under-employed population, according to our regional study, which covers 52 counties in the Tri-State area. We had just over 500,000 people who are under- or unemployed, our hidden workforce. Combining them with the willingness of 59% of our population with the desire to upgrade their skills, I think that reflects positively on West Tennessee.

BTN—And what about the rest of that population that may not be willing to upgrade their skills? That seems to be the biggest challenge.

Rivers —I don't think it's like you've got 59% who say they are willing to upgrade their skills and then 41% who are not. They may not have answered that question or may be happy where they are. They may have a great job and feel like they are on the right path.

Neeley —Part of the hidden group are the individuals who do not have a GED and therefore are just really locked in place with no advancement. During the last fiscal year, the state of Tennessee offered free GEDs to anyone who does not have a GED. The state pays for their testing. As a result, we've seen the increase to almost 7,000 from where we were previously at.

Ragsdale —Here's another interesting point. Currently, only 63 out of every 100 ninth graders will graduate from high school. Out of the same 100, only 17 will graduate from college in a six-year period. This means we're sending far too many of our children into the workplace without the skills they need to succeed, and as a result we are having older workers go back and get GEDs and do the retraining. We can do a much better job of educating our children on the front end.

Rivers —Absolutely true. We're working on a grant with the Department of Labor where we're looking at STEM (science, technology, engineering and math). We project between 2004 and 2014 there will be 50,868 jobs in the STEM area. Currently, our graduation data indicates that there are only 3,246 degrees in the period between 2004 and 2006 in those areas. So that really shows that we have a great demand for a higher set of skills, but we're just not producing. I agree with the mayor: Our graduation rate needs to improve and those kids that are graduating, their skills need to be workforce-ready, or market-ready.

Charlie Hawkins —In the Nashville Labor Market Opportunities study that was just released last month, we saw that we only have about 23% of our students in two-year advanced training, which addresses a lot of the technical skills that the commissioner was talking about. I believe nationally that's about 40%, so we're seeing a real gap in that area.

Ragsdale —STEM is a critically important area. In our meeting with Dr. Thomas Zacharia of Oak Ridge National Lab, he made this point very clearly: they will have jobs available. He specifically mentioned engineers, physicists, chemists, researchers. So our challenge is not just to look at skilled labor, although that's critically important. Our challenge is to look at these technology-based jobs that we have the opportunity to grow in Tennessee, perhaps more than any other state in the country. When we look at Oak Ridge National Lab, the Spallation Neutron Source, and many other things that we have going on in our state, I hope we don't lose sight of that.

BTN—Insurer UNUM of Chattanooga is opening an Irish IT unit because of the shortage of IT workers. The company couldn't recruit enough people locally, and said that three out of 10 UNUM IT professionals are over age 50 at present. Healthways chief Tom Cigarran sounded an IT talent shortage alarm, as well. What is the biggest flaw in this area?

Ragsdale —We set the bar too low. I agree with the governor's approach—we need to raise the standards in public education. I mentioned the statistics previously of how many of our children were failing. In Knox County, our board of education has adopted a philosophy that 90% of our students will earn a regular high school diploma, 90% of them will take a regular ACT and 90% of that group will score 21 or above. It's daunting, but we need to move toward it, and move toward it quickly. We have to look at public education through the university level. The governor's pre-kindergarten initiative is already making a very positive impact in our community. We've taken it a step further and developed a birth-to-kindergarten program with many different facets to it. We believe that if kids get off to a good start, they are going to finish well.

Rivers —Early education and early intervention is key. And we're doing some things in that area with our People First initiative here in Memphis. We identified our target industries, and that is clearly part of our Memphis Fast-Forward plan and other initiatives that we have going on. We're recruiting and pursuing jobs in the target industries because we feel very strongly that a part of our struggle is the lack of understanding of what's available to [the young people] in the marketplace. We're developing initiatives around career exposure and career exploration, aligning with our target industries in the local school system, so that local students are exposed to those opportunities, understand the pathway to those opportunities and what they can expect on the outside of that.

BTN—Several business executives have mentioned that companies are reluctant to locate their operations beyond urban areas of the state due to a rampant crystal meth problem. What role does it play in workforce development?

Neeley —The governor created his Jobs Cabinet early on when he was elected, and I sat on that Jobs Cabinet along with other individuals who deal with some part of economic development. If there has been a problem with that, it's never come up at the table. The first eight or nine reasons why an industry looks into a specific area are adequate workforce environment, family needs, how much care and attention a community is given. In fact, in Tennessee we have had great success with the meth—relative to the fact of them being able to make it, purchase it, sell it and distribute across Tennessee—because of the legislation that was passed where we pulled a lot of stuff off the counter. To me, [meth] is not an issue that's going to hurt economic development in Tennessee.

Hawkins —We just moved a distribution center in the last two years to Lebanon, just east of Nashville, and have been pulling workers from farther east, from some rural counties, and have not seen a problem with that at all.

Rivers —Same in West Tennessee, it has not been an issue for us.

Ragsdale —Hasn't been an issue in Knox County or East Tennessee, either.

BTN—Let's talk about the immigrant workforce. Take the Electrolux plant that expanded in 2004 and laid off 400 workers soon after because many of them were suspected to be in the country illegally. What is the best policy that you've seen that can address migrant workers in the state?

Neeley —The best program is for the federal government to establish a national policy. They still have control of that issue. It's very limited what any state can do. You've seen where Oklahoma went to great extent to fine employers relative to hiring illegal immigrants. Last year in Tennessee, they passed a bill where an employer who hires illegals could eventually lose his or her business license. But the complaints in Tennessee have to be filed by an elected official, or a governmental official, and that is a major problem when you start thinking in terms of shutting a plant down because there are illegal immigrants in it. I'm not supporting an illegal immigrant workforce, but you've got to think through more and more to where the finality does not hurt everybody in the community when a problem like this exists.

Ragsdale —We need a federal policy, and until that happens you'll see us continue to struggle at the local and state level. Great example: Granger County. If you took all of their illegal immigrants who harvest their tomato crop right now, I think they might find themselves in a situation that would be difficult, if not impossible, to manage. I'm sure it's true with other businesses. However, if you're going to have a country it's got to have borders. So I believe the federal government has failed local and state government when it comes to this issue.

BTN—How many years do you think the auto manufacturing industry will continue to be strong in America? After it moved from Detroit to the South, the next step may be Mexico. Is there a plan to address that in 20, 30, 50 years?

Ragsdale —We've gone through several shifts in this country as it relates to economic development. First, most companies wanted to locate next to the transportation arteries, the interstate highway systems, waterways or rail. Then we went through a period when everyone wanted free land or major tax breaks. Now we're moving toward a situation where jobs will chase the workforce. So if we have a strong workforce, a strong labor pool, we'll do well in the future. That's the challenge across our state, and really across our country. If we have a solid workforce that can do the task assigned to them, then we'll be okay.

Neeley —Saturn is back up after retooling its plant—the future looks bright there. And even think of the Nashville glass plant that manufactures glass for the auto industry. It survived. There's an individual from Oklahoma who's going to buy all those glass plants, and will be an independent contractor, which will afford him the opportunity to make glass for Nissan, Kia, Saturn, Mercedes and everybody. So we're seeing that downsizing of some of the corporations. I think the auto industry is going to be strong for some time.

BTN—Commissioner, how has the workers' compensation reform of 2004 affected the state of Tennessee? Has it actually helped to keep businesses here?

Neeley —With the General Assembly, we've created a level playing field. In the last three years, we saved the industry $269 million in premium cost on workers' comp. We've also noticed that the awards are level and more predictable, and our mediation process is working. It's grown tremendously.

BTN—As the nation may be heading towards recession, how do you think our state will stack up?

Neeley —I would predict anywhere from 1% to 1.5% growth in this fiscal year. All of our economists, even [UT-Knoxville's] Bill Fox, say that we're not going to go into a recession, but we're not going to have a lot of fast growth. Our unemployment rate is 5.3%. We've always been right at or right below the national average. Tennessee is going to be slow, but I don't think we're going to go down as far as some other areas before we make an upturn toward the end of the year.

Ragsdale —I believe we shouldn't listen to many of the national pundits. [We should] take it upon ourselves to continue to grow our economy. We need to have strong education that consistently emphasizes birth-to-kindergarten education through the university level. We have to embrace and expand our apprenticeship programs. That means management, labor and educators have to hold hands and move forward together. Also, we have to look at these issues as regional and state issues. I just can't look at what's going on in Knox County and be satisfied with that, because too many of our folks drive to and from Oak Ridge every day. More counties, more cities have collaborative efforts. If we can do this across our state, it's going to afford us advantages that other areas quite simply just don't have.

Neeley —Today, the average shopping and work patterns are about 65-75 miles, a lot more than in years past. Just put that measurement in your community and you can see exactly the point the mayor just made.

BTN—Many thanks to everyone for an excellent conversation.

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