alan greenspan : the growing need for skills in the 21st century remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the us department of labor 21st century workforce summit, held in washington, dc on 20 june 2001. * * * i am pleased to have the opportunity to be part of today ’ s 21st century workforce summit and appreciate the hospitality of secretary chao and the department of labor. the past decade or so has been marked by a remarkable surge in technological innovation and business efficiency. this period of rapid innovation has brought with it enormous opportunities to enhance living standards for a large majority of americans. our ability to take full advantage of these opportunities depends crucially on how well we as a nation can integrate these new technologies into our society. in my remarks today, i would like to offer some perspective on the challenges created by the interaction of new technologies with the skills of the american workforce, and how the educational system has in the past and can in the future respond to these challenges. the process of innovation is, of course, never ending. over the past 100 years, for example, the rate of increase of the gross domestic product of the united states, adjusted for price change, has averaged around 3 percent per year. yet only a fraction of that increase represents growth in the tonnage of physical materials – particularly oil, coal, wood, raw chemicals – and increases in the amount of manual labor employed in the production process. the remainder represents new value - adding insights into how to rearrange physical materials and labor inputs to better serve human needs – in short, the conceptual content of the gdp. the inexorably rising share of the nation ’ s output that is conceptual appears to have accelerated following world war ii with the insights that led to the development of the transistor, microprocessor, laser, and fiber optic technologies. by the 1990s, these and other critical innovations had fostered an enormous new capacity to capture, analyze, and disseminate information and had begun to alter significantly how we do business and create economic value, often in ways that were not foreseeable even a decade ago. indeed, it is the proliferation of information technology throughout the economy that makes the current period so special. the types of skills needed to interact with the new methods of adding value associated with this diffusion of information technologies are complex. one obviously needs a core of highly skilled workers to push the frontier of technology forward and to make the newer

conference in chicago, we have been hearing a range of perspectives not only from academic experts, but also from representatives of consumer, labor, community, business, and other groups. we are drawing on these insights as we assess how best to achieve and maintain maximum employment and price stability. in july, we began discussing topics associated with the review at regularly scheduled fomc meetings. we will continue reporting on our discussions in the minutes of fomc meetings and will share our conclusions with the public when we complete the review later this year. 5 thank you very much for your time and attention. i look forward to the conversation and the question - and - answer session to follow. 1 these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. i am grateful to brian doyle of the federal reserve board staff for his assistance in preparing this text. 2 the most recent summary of economic projections is an addendum to the minutes of the december 2019 fomc meeting. see board of governors of the federal reserve system ( 2020 ), “ minutes of the federal open market committee, december 10 – 11, 2019, ” press release, january 3. 3 see the statement regarding monetary policy implementation and balance sheet normalization, which is available on the board ’ s website at www. federalreserve. gov / newsevents / pressreleases / monetary20190130c. htm. also see the balance sheet normalization principles and plans, available on the board ’ s website at www. federalreserve. gov / newsevents / pressreleases / monetary20190320c. htm. 4 see the statement regarding monetary policy implementation, which can be found on the board ’ s website at www. federalreserve. gov / newsevents / pressreleases / monetary20191011a. htm. 5 information about the review and the events associated with it is available on the board ’ s website at www. federalreserve. gov / monetarypolicy / review - of - monetary - policy - strategy - tools - and - communications. htm. 2 / 2 bis central bankers'speeches