Presentation to THE NGA WORKFORCE DEVELOPMENT POLICY FORUM: INNOVATION MATTERS! BUILDING COMPETITIVE ADVANTAGE IN STATES Rob Atkinson Vice President and Director, Technology and New Economy Project Progressive Policy Institute

Waves of Innovation Drive Cycles of Growth and Change Waves of Innovation Drive Cycles of Growth 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 American Economic 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 Information Technology System is Driving Two Big Economic Waves That Will Have Significant Impacts on the Workforce and Labor Markets

The Wave

The New Economy’s Productivity Boom Manufacturing Services %0.4% 1990–963.5% 0.2% 1996– %1.7%

So what does all this mean? 1) New Competitive Challenges: Is it déjà vu all over again?

Total Income Growth By Region,

2) The New Bifurcated Labor Market

Jobs Are Shifting From This…

To This…

…And To This.

The Disappearing Middle Job

Employment Change by Wage and Skill Level,

And It’s Expected to Continue

Occupational Mix of Jobs Likely to be Offshored by 2015 Income Quintile# of Jobs Share $46K1,095, % $33.5 to $46 426, % $25 to $33.5 1,059, % $20,5 to $25 584, % $14.9 to $ , % Total 3,176,300

What Should States Do?   Make sure you are the “Boston” of the New Economy, not the “Upstate New York”.

What Should States Do?   Make sure you are the “Boston” of the New Economy, not the “Upstate New York”.  Address the growing labor market bifurcation by making the workforce development system an agent to foster high-performance workplace innovation.