MCALLEN, RGV – A great way to improve workforce development is for business leaders to spend one lunch hour a week in school reading to kids.

That’s the view of Robert S. Kaplan, president and CEO of the Federal Reserve Bank of Dallas.

Kaplan gave his views on improving literacy among students and the importance of workforce training at the recent Border Economic Development and Entrepreneurship Symposium. Hosted by the Dallas Fed, UT-Rio Grande Valley’s Robert C. Vackar College of Business & Entrepreneurship, and McAllen Chamber of Commerce, the event took place at the Embassy Suites in McAllen.

Kaplan took questions from Marie T. Mora, associate vice provost for faculty diversity at UTRGV, and from those in the audience. He also held a news conference with reporters.

Kaplan said the first non-profit board he ever joined, in the early 1990s, was called Everybody Wins. Under the program, Kaplan took dozens of work colleagues to local schools on the lower east side of Manhattan to read to seven or eight year olds.

“It was a pretty simple program to help early childhood literacy,” Kaplan told the audience. “It is a program that is pretty executable. It can be done locally. Rather than wait for studies, let’s just do this. It does not take an hour a week. Pick a school that is near to where you work. Do it every week or every two weeks. This is something business leaders can do.”

In an interview with reporters later, Kaplan expanded on his idea to improve literacy. “Local business people, go read to a child during your lunch hour, the younger the better. Especially high risks. It is the most important thing you can do,” Kaplan said.

Asked about the importance of financial literacy, Kaplan said literacy in general is the most important area to focus on.

“Yes, financial literacy in this country needs to get better. My fear is bigger, that too many kids are starting first grade behind. All the studies show if start first grade behind, you never catch up. The trends I see on literacy generally, I am alarmed by them. I do not think we should be waiting for somebody else to fix this. Let’s do this ourselves. It has got to be done locally. We can raise our hand and do it and that would be our No. 1 priority.”

In answer to a question from UTRGV’s Mora that tied workforce development to childhood literacy, Kaplan pointed out that he once lived in Asia.

“The headline is we have to improve educational attainment levels in the United States for starters. I just met with one of the governors of the Korean central bank and in preparation for the meeting I refreshed a lot of my work on Korea. There are some structural differences between Korea and the United States but workforce productivity is dramatically higher. Then you go a level deeper and look at the educational attainment level of the Korean workforce. Dramatically higher than in the United States,” Kaplan said.

“It helps explain, at least to some extent, why their workforce is much more productive. And, oh, by the way, they have a worse aging population and slower workforce growth issue than we do because their workforce is even older than ours. Yet, they are managing to combat it to some extent through dramatically better educational attainment. Examples like that tell me, I view if positively, there is a big opportunity in the United States to improve this. But it should be a national top priority, though. If you want to grow GDP in the years ahead, this is one of the things we have got to do better. And I think it is a big opportunity.”

Kaplan said the issue is not just for the federal government to fix.

“This is a huge opportunity. Oh, by the way, some of it can be addressed by government, but it needs to be addressed by us, business people, community leaders. We talked about this, reading to a child, that has got to be done here. A lot of it has to be done locally. It may not take any government money. It may take philanthropic money and people volunteering. We have got to do all of the above. It has got to be talked about more. I don’t think people are connecting the fact that doing that will lead to higher GDP.”

Specifically dealing with workforce development, Kaplan noted the aging workforce of the United States and referenced two of the major drivers of the nation’s economy.

“GDP is made up of two things, growth in the labor force and improvements in productivity. You need one or the other or both if you are going to grow GDP. I will throw in, immigrants and their children have made up over half the workforce growth in the United States, based on our research, over the last 20 years and it is a pretty good bet in the next 20 years, immigrants and their children will make up more than that. The reason it is a pretty easy statement to make is the native born workforce is going to decline. The rate of growth is going to be negative. I am not sticking my neck out to say it is going to be more than 50 percent. That is one issue. The other issue is we need to get people in the workforce and we need to have them productive,” Kaplan said.

Kaplan said the United State is “lagging” when it comes to educational attainment. He said the figures for early childhood literacy and college readiness were nowhere near as good as they need to be, noting that nearly half of college students are not graduating inside six years.

Another major factor at play in the economy, Kaplan said, is technology-enabled disruption. “Technology replacing people, consumers have much more ability to use technology to buy goods and services. What we are seeing is, if you’ve got a college education, you are pretty able to maneuver this, not that you will not have to change jobs, but you can maneuver it. If you have got a high school education or less, though, everything I see shows you are likely seeing your job restructured or eliminated. Unless you get retrained, your productivity is going to go down.”

So, two trends occurring in the U.S. economy, a slowing workforce growth and a slowing of productivity growth “helps explain why GDP growth is more sluggish in the U.S. than it has been historically,” Kaplan said.

Kaplan pointed out that 45 percent of all new jobs are referred to as “middle-skilled jobs.” These would include pipe-fitters, automotive technicians, registered nurses, IT specialists, etc.

“The thing that is different about those jobs today than 15 years ago is they take more than a high school education and they take a lot more training,” Kaplan said. “We believe that if we are going to be grow GDP we’ve got to improve college readiness and early childhood literacy. But, we’ve got to beef up middle-skills training and that is an easy thing to say, not so easy to do. It requires local junior colleges going out and interviewing businesses in their community and then backward integrating into offering curriculum that fits those jobs.”

There are some good examples of this happening, Kaplan said, citing the work of El Paso Community College, Dallas Community College, and the college in Odessa.

“I think most junior colleges and educational institutions in this country are lagging and we’ve got to get better. And as technology-enabled disruption accelerates, the rate at which we are getting better isn’t matching the rate at which the need exists. You ever hear the skills gap in the United States? I have seen various estimates, certainly, potentially in the millions of jobs that are open in the U.S. and companies cannot find workers. I just looked at the most recent survey which we just did at the Dallas Fed for this district and half of the companies said they cannot find workers. That is totally consistent with the small business survey nationwide that said nearly half of all small businesses have more open skills jobs than they can find workers.”

In conclusion, Kaplan said workforce development is central to getting people into the workforce and making them more productive. He said this would result in the U.S. having a higher GDP and all the benefits that come with higher prosperity. “But we are behind in this country. We lag other countries and we have got to make a national effort, and it has got to be done locally, to catch up,” Kaplan said.

Asked by Mora how Texas is doing, Kaplan said: “I can point to, anecdotally, great jobs. While I see more signs for optimism here than I do in other states in the country, we are behind. And we’ve got to catch up. But for Texas, the same issue, early childhood literacy, got to catch up, college readiness, we are behind, we have got to catch up, workforce development, we have got to catch up, and I would say, if you asked me, which is the biggest issue in the states, I could talk about infrastructure, I could talk about the high number of uninsured, but this (workforce training) would probably be at the top of the list in terms of a driver that we have got the ability to address, that would make this state more economically prosperous.”