Remarks by Peter Scher
School-to-Work Transition Congress, Berlin, Germany
April 26, 2017
Today is an important day to participate in this School-to-Work Transition Congress here in Berlin. This large and very impressive group — government officials, business philanthropic and nonprofit leaders — working together on improving cooperation and coordination to create better career pathways and opportunities for more young people.
My colleagues and I are pleased to launch our annual JPMorgan Chase Corporate Responsibility Report today, which focuses on just that, the critical need for more collaboration among the public, the private and the not-for-profit sector — the cooperation needed to solve so many of the challenges facing so many of our communities around the world, chief among them, the desperate need for more economic opportunity for more people.
All of us in this room devote a lot of time and energy to addressing these critical challenges. So it’s often easy to lose sight of the enormous progress made — and which continues to be made — for humanity.
The world is a far better place than it was when many of us were born:
- Global GDP has doubled over the past 15 years.
- More than 1 billion people have been lifted out of extreme poverty just in the last two decades.
- Food security is dramatically improving — a major driver of improving human health — the number of undernourished people around the world is falling, due to a combination of scientific advancements in crop breeding.
- Vaccines have almost entirely eliminated most infectious diseases in many parts of the world — polio, smallpox, measles, mumps, diphtheria, rubella. Malaria has been eradicated in many parts of the globe and deaths have declined significantly in Africa and Southeast Asia over the last decade.
- Technological advancements — from the internet to smart phones — have transformed our lives and the way we do business — the way we connect with each other. As the father of two teenage boys, I can say sometimes for better, sometimes, not so much.
For nearly six decades, this great political experiment called the European Union has been a force for peace, stability and economic prosperity.
We should never lose sight of that progress.
Yet, the reality of the matter is — despite that tremendous progress — there are still far too many parts of society that are not benefitting — far too many people being shut out of the rewards of a growing economy. The frustration and disillusionment that follow have had deep and far reaching impacts. We are seeing this across the world — here in Europe, in the United States, in Asia and Latin America. We’re seeing it every day in our politics and our policies.
This isn’t a new problem — 2,400 years ago Aristotle taught us a fundamental truth — a strong, confident middle class is essential to political stability. Today, however, we have anything but that. So many of our fellow citizens are feeling left out, angry and betrayed by the institutions they thought were there to protect them.
In the United States, middle class incomes have fallen by 4 percent since 2000 — it’s 9 percent for low-income families. Our JPMorgan Chase Institute research found that households up and down the income ladder experience tremendous income volatility and that volatility is on the rise.
Here in Europe the middle class shrank by almost two and a-half percent just between 2004 and 2011, and the drop has continued since. We’re seeing this challenge all over the globe.
While these may not be new problems, they require new solutions — they require new and more collaborative approaches.
Government and nonprofit organizations cannot solve this challenge alone. The business sector has a growing responsibility to be part of the solution.
David Rockefeller, a former CEO of my company, and one of the world’s great philanthropists, who passed away just a few weeks ago at the age of 101, articulated this point nearly 20 years ago when he said:
David Rockefeller, former CEO of JPMorgan Chase
When economies suffer, when people aren’t working, when entrepreneurs cannot form and expand their companies, business suffers as well. At JPMorgan Chase, we see creating greater economic opportunity as an imperative for all of us. This is not simply a moral responsibility or something we think we should do for social good. We recognize that it’s in our own self-interest to help solve these challenges. We cannot — no business can — outgrow the economy of our communities.
Recognizing this imperative and the pressing need to do more, during the past five years, JPMorgan Chase has undertaken significant long-term initiatives to do its part. While we deployed approximately $250 million toward these efforts in 2016 — we know that money alone won’t solve our challenges.
We have too often seen well-intentioned money — both public and private — fail to result in long-term impact. We need to strengthen the underlying systems and organizations that are working to deliver change.
"Work the problem" has become our mantra. This means understanding the social or economic challenge we are trying to address and looking within our firm, and among the relationships we have, to deploy the right type of capabilities needed to make a positive impact.
Over the past five years, we have developed and refined a model that is informed by data and based on evidence about some of most effective ways to drive inclusive economic growth.
Our efforts focus on four fundamental pillars of opportunity:
- Small business expansion;
- Financial health;
- Neighborhood revitalization; and, the focus of today’s conversation,
- Workforce development– arming people with the skills needed to succeed.
The need to help more people, particularly young people, acquire the skills they need to succeed in an increasingly competitive global economy could not be more evident.
In Germany, in the very near future, 13 million baby boomers will reach statutory retirement — that is 30 percent of the working population. In the United States, more than 10,000 baby boomers retire every day. While 4 million American jobs go unfilled, nearly 5 million young people are detached from both school and work. A recent study of young workers in New York City found that they are earning 20 percent less than the generation before them and are increasingly working in low-wage industries.
Preparing young people for higher-wage jobs in growing industries is critical to the success of our communities. It is critical to building tomorrow’s economy.
We looked at this challenge in the communities where we operate around the world, examined the data, worked on getting smarter about the problem, brought in people with real expertise, and three years ago, we launched New Skills at Work. Through this $250 million, five-year global initiative — which, we believe is the largest private sector initiative of its kind — we are working to build a stronger workforce system that invests in the skills that both employers and workers need.
In the past three years, we have worked in more than 36 countries, including over 70 cities in the United States — providing data and analysis on labor market challenges; identifying growing sectors and middle-skill occupations; and developing strategies to better train people for the jobs being created.
To further bolster this initiative, last year we launched New Skills for Youth, an additional $75 million investment to transform how cities around the globe prepare young people for jobs and careers. Our aim is to dramatically improve access to skills training in high school. Through this initiative, 44 out of our 50 U.S. states participated in some part of this program — the key element is a requirement that all of the relevant leadership (political, education, business) all be at the table..
As Jamie Dimon, JPMorgan Chase’s Chairman and CEO states in his recent annual letter to shareholders, Germany’s apprenticeship model has been a great example and an inspiration of the kind of effective approach we need to replicate — an approach that gives young people a real shot at economic opportunity. Over the past few years, we have been leveraging what we’ve learned and the programs we’ve invested in here in Germany and are applying many of those lessons in the United States and other cities around the world.
We have brought city and state leaders to Germany to learn more about what successful apprenticeship models look like. This past March — in partnership with the Siemens Foundation and the National Governors Association — we hosted a tour of the Swiss and German apprenticeship system for three U.S. governors. Governors Daugaard of South Carolina, Fallin of Oklahoma and Bevin of Kentucky brought their top state policy, education and business leaders to experience Germany’s dual education system firsthand. They spent three days learning from employers, training providers and government administrators and are now developing plans to expand the use of apprenticeship in their states.
We are now supporting apprenticeship models in cities across the United States that leverage flexible, accelerated training programs to more quickly respond to the changing needs of employers and connect workers to high-demand jobs in technology. For instance: we are supporting Apprenti — a tech-sector intermediary in Washington state that works with coding “bootcamps” to prepare disadvantaged and nontraditional workers for apprenticeships with some of the country’s top technology employers.
Our efforts focus on developing and expanding innovative apprenticeship models and career-focused programs that give high school students the skills, education and experience needed to pursue long-term careers in growing sectors. We’re expanding these programs in the United States, the United Kingdom, South Africa, Thailand, Philippines, Indonesia and India. Earlier this week, I was in the U.K. reviewing the innovative apprenticeship models in which we are investing.
We’ve also taken the model to Detroit — a city in the United States, which — in a matter of decades, went from one of America’s most prosperous cities, due to the expansion of the auto industry, to one of its most distressed. Detroit’s population fell 63 percent since 1950 — dropping from 1.8 million to 700,000.
In 2014, JPMorgan launched our most comprehensive initiative to date — investing $100 million to support and accelerate the city’s recovery. There will be no more important measure of Detroit’s comeback than whether it creates economic opportunity for its residents. Thus, a big part of our investment is dedicated toward strengthening the city’s workforce system.
We spent a lot of time undertaking research to examine the dynamics of Detroit’s workforce system, identified where we could strengthen the city’s workforce infrastructure, and sectors projected to create the most middle-skill opportunities. We brought in some of our most talented colleagues from JPMorgan Chase locations around the world to work with some of the leading nonprofits in the workforce space to help strength their capacity.
The Greening of Detroit — a nonprofit that provides workforce training for available jobs in forestry, agriculture and landscaping — is a good example of our comprehensive efforts to strengthen the city’s workforce system. Through funding from our New Skills at Work initiative, we’re helping The Greening to expand its proven demand-driven program to help connect more Detroit residents with jobs. We also sent a team of top performing JPMorgan Chase employees to lend their expertise to help the nonprofit develop a business plan to strengthen and expand its programs.
We’ve brought a full range of our firm’s capabilities to address challenges facing the city and create the conditions for economic growth and opportunity. In addition to our investment, we leveraged our data on consumer and small business spending; our expertise in developing lending programs for small businesses; and the skills of so many of our colleagues from around the world. It’s truly been a firmwide effort.
Today, there are clear signs of progress. The unemployment rate is down to 10.4 percent from about 28 percent in 2009. At the end of 2016, 11,000 more residents were working than at the start of the year. The city’s employment growth is outpacing overall U.S. growth. Small business growth in Detroit is now outpacing most cities around the United States. Blighted properties are being cleaned-up and renovated. There is a sense of optimism once again.
There’s still much more work to do to create more opportunity for more people — but Detroit is a very powerful example of how investing in skills and jobs can be critical to shaping the future growth of cities.
What we are seeing in Detroit and other cities around the globe is that the common element of success is genuine collaboration among all relevant players. Not just talk and sound bites, but political leadership, education leadership, nonprofit leadership, and employers coming together and developing comprehensive strategies that focus on the specific needs and challenges in their communities.
This is why gatherings like this Congress here today are so important. We need to share lessons learned on what works and importantly, what does not work. We all have a valuable contribution to make. But to make a real impact requires us all to think beyond traditional roles. We need a comprehensive and integrated approach. We need to bring our full range of capabilities to the table to strengthen the underlying systems needed to deliver sustainable change.
Let us leverage such gatherings to foster greater collaboration across all sectors to solve our challenges and create greater economic opportunity.
Thank you all for the work you are doing and for allowing us to participate today.
Learn more about our model for impact in the JPMorgan Chase Corporate Responsibility Report.
About the author:
Peter Scher is Chairman of the Washington, D.C. region for JPMorgan Chase & Co., serving as the firm’s senior executive in the region. In addition, he serves as the Global Head of Corporate Responsibility. Scher oversees Global Government Relations and Public Policy, Global Philanthropy, the Office of Nonprofit Engagement, and the offices of Sustainable Finance. He is Chairman of the JPMorgan Chase Foundation, one of the largest corporate foundations in the United States. Scher led the development of several of the firm’s major initiatives including the Global Cities Initiative, New Skills at Work, Invested in Detroit and the Global Health Investment Fund. Prior to joining JPMorgan Chase in 2008, Scher was the Managing Partner of the Washington, D.C. office of Mayer Brown LLP and earlier served as the Chairman of the firm's Government and Global Trade Practice.
Scher spent nearly a decade in public service. Nominated by President Clinton, he was confirmed by the United States Senate as U.S. Special Trade Ambassador and served as one of the lead U.S. negotiators on China's entry into the World Trade Organization. He previously served as the Chief of Staff for the U.S. Trade Representative and the U.S. Department of Commerce, staff director for the Senate Committee on Environment and Public Works and Chief of Staff to former U.S. Senator Max Baucus. Scher is active in civic and political activities, serving on the Board of Trustees for American University and the Brookings Institution and the Board of Directors of the Economic Club of Washington, D.C. He is a member of the Council on Foreign Relations and the Atlantic Council task force on EuroGrowth. In 2009, Scher was appointed by the White House to serve as U.S. Representative to the Asia Pacific Economic Cooperation Forum (APEC) Business Advisory Council.