Introduction

Workforce readiness and development initiatives are all over the news.

In July 2018, Congress demonstrated support across the political aisle when it reauthorized the Carl D. Perkins Career and Technical Education Act, the main source of federal funding for improving secondary and postsecondary career and technical education (CTE) programs. There has long been a kind of stigma around vocational training, but as Governor Raimondo of Rhode Island explains in this WSJ article about big companies connecting with high school students through vocational training, “‘no matter what neighborhood you’re from, you deserve a chance to get a job.'”As part of this effort, Governor Raimondo “…has redirected funds from lower-performing training programs toward newer ones in information technology, engineering and welding.”

Meanwhile, the Office of Management and Budget even considered combining “the U.S. Department of Education and the U.S. Department of Labor into a single agency focused on workforce readiness and career development” (EdWeek).

Workforce readiness has the White House’s attention, taking to the airwaves to promote programs such as P-Tech (Pathways in Technology). P-Tech creates a seamless path for high school students to acquire the academic, technical, and workplace skills that employers need.

Work has long been a key component in the formula for Americans’ pursuit of happiness, which is one of the promises outlined in the Declaration of Independence.  

In correspondence that dates back to 1786, founding fathers James Madison and James Monroe alluded to the importance of people fulfilling their physical needs, in addition to moral and emotional dimensions. This is according to research by Texas A&M political scientist James R. Rogers, who points out that happiness in the public discourse of the time “meant prosperity or, perhaps better, well-being in the broader sense.”

Arthur Brooks writes in this New York Times editorial, “the secret to happiness through work is earned success.” A number of studies support this claim, including the General Social Survey finding that “nearly three-quarters of Americans wouldn’t quit their jobs even if a financial windfall enabled them to live in luxury for the rest of their lives.”

The idea of work is ingrained in American culture. But there is a widening gap between the number of job openings and those qualified to fill them, which threatens the continued growth of the economy and also denies people the opportunity to experience their own earned success.  This brief will look at the current state of workforce readiness in the U.S. and what can be done so all Americans are prepared to experience earned success as part of their pursuit of happiness.

 

The Current State of the Nation's Workforce

The nature of work has changed, and the days of earning a living with the same occupation for 40 years seem to be over. From the sharing economy to the Internet of Things (IoT), innovation and technology is driving fast-paced changes; lists such as “15 popular jobs that didn’t exist 20 years ago” are fairly common today. Though technology evolves and creates new jobs, robots and self-serve stations are also replacing people. A recent Oxford University study found that 47% of jobs in America could become automated over the next two decades (The Economist).

Current statistics about the workforce

As of June 2019, 62.9% of the population participates in the workforce (U.S. Bureau of Labor Statistics).

A June 2018 Federal Reserve report noted most of the 12 Federal Reserve Districts across the country “cited on-going labor market tightness and challenges finding qualified workers across skills and sectors, which, in some instances, was described as constraining growth. Several Districts noted elevated demand for manufacturing and construction labor.” One year later, the June 2019 report encountered the same dilemma: “stronger employment growth continued to be constrained by tight labor markets, with Districts citing shortages of both high- and low-skill workers.”

While a tight labor market also means wages should rise to the benefit of current workers, this can also mean lost business opportunities, which are what truly drive growth in the economy. This CNN snapshot shows how the labor shortage is hitting the nation in a variety of industries, from manufacturing and retail to food service/hospitality and trucking.

Some key facts regarding workforce readiness:

  • As of May 2019, there were 7.3 million unfilled jobs in the U.S. (Bureau of Labor Statistics).
  • The U.S. economic growth rate reached 3.1% in the first quarter of 2019
  • As of June 2019, according to the Bureau of Labor Statistics:
    • The total number of Americans not in the workforce is just under 95 million (this also includes retirees and others who do not currently want to work).
    • Of this figure, 3.4 million want a job but did not search for one in the past year
    • 425,000 are discouraged over job prospects.
    • Close to two hundred thousand are unavailable to work because they have family responsibilities or are in school.
    • All told, nearly 23 million Americans between the ages of 25 and 54 are not counted in the labor force though they are considered to be in the sweet spot of their working careers –post-high school training/education and pre-retirement (USNews).
  • Around 83% of US manufacturers cannot find the skilled workforce they need — a situation that may result in about 3.4 million open positions by 2025.


 

 

Large employers are increasingly having a hard time finding skilled workers to fill their job vacancies, and small businesses are struggling to compete with these larger business in this tight labor market.

Workforce readiness programs don’t become high-profile priorities unless something is driving them.  In this case, the economic data above are driving policymakers to address this burgeoning mismatch in job openings and the skilled workforce available, and these influencers are stepping up to take action.

 

What is the Policy Approach to a Stronger Workforce?

How are policymakers working to address the unemployment and job opening challenges?

Reauthorizing the Carl D. Perkins Career and Technical Education Act in July 2018 was one such effort. Sen. Bob Casey (D-PA) and Sen. Mike Enzi (R-WY) authored the bill. According to Industry Week, programs associated with the bill will:

  • Align career and technical education programs to the needs of local labor markets.
  • Encourage stronger engagement between local employers and educational institutions.
  • Increase work-based learning opportunities.
  • Improve accountability and data transparency.

Programs to incentivize employers to create new job opportunities, particularly in distressed communities, and promote efforts to train workers with the skills they need to fill available jobs are also a current priority for policymakers – and private enterprise:

  • Opportunity Zones program created in the tax bill that passed in late 2017 was designed to create a tax incentive for economic opportunities in distressed communities.
  • Social-impact-bonds: “Through these bonds, state and local governments place a value on a specific outcome—it could be anything from helping the homeless to reducing recidivism. Investors fund and evaluate these programs, and they are repaid only if the program works, only if it gets results. Both the risk and the reward is shifted to the private sector.”
  • Matching skills training to job openings for K-12 students, in programs such as P-Tech and Electric Boat, and also for mid- to late-career workers.

The programs are centered on the private sector’s role in developing the workforce it needs to succeed, and relate specifically to the Americans in four categories struggling to find their place in our nation’s workforce today:

  1. People living in distressed communities (urban, rural, industrial)
  2. Young Americans graduating from high-school 
  3. Our older population of workers aged approximately 55-to-75 years old
  4. Vulnerable individuals with various degrees of employability such as people with physical disabilities, people with intellectual disabilities, veterans, refugees, people on reentry from jail, and people suffering drug addiction or mental illness.

 

 

How Do We Measure the State of Our Workforce?

The Labor Force Participation Rate is an important metric to fully understand the dynamics of the American workforce.

As outlined in the The Policy Circle’s Economic Growth brief, the labor force participation rate measures the working-age (16-64) population of the economy – those who are working and those who are actively looking for work. The labor force participation rate, which is still close to its 38-year low of 62.4 percent in September 2015, was at 62.9% as of June 2019. A low labor participation rate is not necessarily a positive indication. It means more potentially productive workers are sitting on the sidelines.

Historically, this participation rate has ranged between 62-67%. According to TradingEconomics.com, it has averaged “62.99 percent from 1950 until 2018, reaching an all time high of 67.30 percent in January of 2000 and a record low of 58.10 percent in December of 1954.”

As of May 2019, Alaska had the highest unemployment rate at 6.4%. You can view the latest state-by-state unemployment rates here from Bureau of Labor Statistics Data. And since labor force participation rates vary by zip code, some efforts to address employment rates have focused on distressed communities, be they urban centers or rural communities.

The St. Louis Fed provides some potential explanations for the declining workforce participation, noting “that the overall aging of the working-age population is the clearest trend, and more education implies people spending more time in school, which means they start careers later in life.”

Economists have also discussed other theories as to why prime age workers are sitting on the sidelines: “Some have borne the brunt of declining demand for low- and middle-skill jobs as automation and globalization displace jobs, some are victims of the opioid epidemic and some are believed to have simply moved back in with their parents.” 

See the dramatic labor participation decline in the chart below.

Economists break down the labor force into categories to understand who is working more or less and why. This Congressional Budget Office Report outlines seven ‘Factors Affecting the Labor Force Participation of People Ages 25 to 54.’ Some of the categories include:

  • Gender – Men have a higher workforce participation rate than women
  • Education – The more education, the higher the participation
  • Race and Ethnicity – Black men have had lower participation rates than other men; Hispanic women had lower rates than white and black women
  • Disability – People with disabilities generally have a lower participation rate

Labor Force Participation and Young Workers

According to Measure of America’s 2019 report, even though the Youth Disconnection Rate has consistently declined for the last five years, there are still 4.5 million young people ages 16 to 24 (about one in nine) who are neither working nor in school, mainly due to
“caregiving responsibilities, a criminal record, an absence of education credentials, limited English proficiency, and undocumented status.” Other key findings note disparities in:

  • Location: Young people living in rural areas have the highest rate of youth disconnection, almost 20%, compared to urban (12.9%) and suburban youth 11.3%)
  • Illness or disability: Disconnected young people are more than three times as likely to have a disability than connected young people 
  • Ethnicity: Asian youth have the lowest rate of disconnection (6.6%) while Native American youth have the highest (25.8%). White (9.2%), Latino (13.7), and black (17.2%) fall in between.

First Jobs/Career Paths

First jobs can have an important impact on employment prospects later on in a person’s life. According to the Aspen Institute, “Research has shown that youth unemployment can have lasting consequences – repressed wages, decreased upward mobility, and lessened productivity over a person’s work life.”

But does it really matter what your first job is?  That’s up for debate. This article offers three reasons as to why your first job “is the most important one you’ll ever have.” On the other hand, the entrepreneur Jodi Glickman encourages young people instead to treat their first job as an opportunity to learn, earn, and contribute. Check out her TED Talk, “Why You Should Stop Searching for Work You Love.”

In the wake of the economic recession of 2008, young people today are up against a number of obstacles in the search for gainful employment starting with entry-level jobs. Some of these challenges are:

  • There are fewer entry level jobs.  A byproduct of the Great Recession is that many of these positions are disappearing. The Wall Street Journal reports, “companies bruised by the recession have stayed lean by automating and outsourcing core functions while slashing training budgets and payrolls. But in an effort to cut costs, some companies also have cut entry-level jobs that serve as a crucial first step on the path to a professional career … These developments may be making it more difficult for some young adults to gain a foothold in the labor market, economists say.”
  • Schools are not preparing students adequately. In this NPR interview, Glassdoor employer trends analyst Scott Dobroski noted “there is still a large disconnect between what academic universities have to offer to prepare students for the real world.” As an example, he pointed to “data science jobs,” which “are in high demand as companies try to figure out ways to target and grow their audience,” although “up until a few years ago, data science wasn’t even a major or something that people could learn” in college.
  • Hiring practices change with shifting market demands. This 2017 Washington Post piece offers some added insight into “why getting a good job is so much harder for today’s college graduates,” pointing to changes in the hiring process (and the size and type of companies recruiting on campuses). Employers now expect new hires to show up with skills which used to be acquired on the job or through employee training, and the fact that technology and globalization have disrupted many major industries — “entire industries are disappearing almost overnight, and legacy companies are quickly changing course” — makes it difficult for colleges to equip graduates with the skills needed for an ever-changing job market.

On the other hand, some of these changes may in fact benefit millennials, allowing them to forge non-traditional careers. A recent Forbes profile of a new lifestyle platform called Find Your Grind — which aims to help people “identify their passion” and “design a career around it” — explained that “the dominance of digital media paired with the rise of entrepreneurship has empowered today’s do-it-yourself generation to design the careers they want. With technology continuing to disrupt industries, redefine business models and eliminate barriers to entry, millennials are moving away from traditional career paths and shattering traditional ways of thinking, further clearing the canvas for Gen Z.”

Other opportunities for younger workers are increasingly more open attitudes regarding career paths — a career may start with a vocational certificate but could end with a PhD. More students are choosing technical and vocational paths, delaying or possibly choosing not to attend college, and finding solid employment opportunities. Interestingly, in this Wall Street Journal article, it is the parents who were most concerned about their son’s choice to enroll in a welding program.

Participation of our more Advanced Workers

Many in our more experienced population of workers are enjoying retirement. Others continue to work, either because they want to, or they have to, out of financial necessity. 

According to a CNBC news report, “The fastest-growing segment of the American workforce is employees age 65 and older.”

For example, a New York Times article highlighting Uber and Lyft noted, “As the population ages and more baby boomers challenge traditional retirement norms, the number of older workers should continue to rise. Uber, which surveyed drivers in 2014 and 2015, found that nearly one-fourth of its drivers were 50 or older.”

These more experienced members of the workforce can also be an invaluable source of information for younger generations. It is worth exploring how society can pull from mentors that have gone before us and tap into that knowledge capital from the aging population to inspire the younger generation. What action can we take to remain connected and create opportunities for the older generations to share their know-how with others, to innovate, and just possibly spark something new? The Policy Circle’s Aging in the 21st Century brief explores this topic further. 

Labor Force Participation and Distressed Communities

Distressed communities in our country don’t fit one stereotype, but rather encompass urban centers, rural communities and former industrial hot spots. These communities typically experience lower workforce participation levels.  One commonality among struggling communities that impacts workforce participation is education levels.

According to Economic Innovation Group’s 2018 Distressed Communities Index:

  • 50 million Americans live in economically distressed communities.
  • The average state has 14.5% of its population in a distressed community, but the majority of Americans living in distressed communities reside in the South 
  • In distressed populations, 21.9% of adults do not have high school diplomas, and 41.5% of prime-age adults are not working.  
  • Based on current trends, distressed zip codes are projected to never fully recover from the Great Recession; they lost business establishments and saw weakening labor force during the recovery period.

See the map below for percentage of state populations living in distress.

 

Chicago’s South Side and West Side are urban centers known across the nation as distressed communities. Based off 2015 Census data analyzed by the Brookings Institution, “African-Americans make up 29 percent of Chicago’s population and account for 52 percent of the city’s unemployed, with 40 percent of those not in the labor force – meaning people who are not working and not looking for work.” (Chicago Tribune)

In many of these distressed communities – be they rural, industrial or urban – we have seen a sense of despair set in. This Time article explains that employment “…is a daily connection to coworkers and customers. It is the knowledge that you are wanted and useful. Even the most tedious job gives us a place in the world. Unemployment makes us question why we are here.” Without it, statistics show an increase in drug use and suicide rates.

The Opportunity Zone initiative that passed as part of the 2017 tax reform bill attempts to drive opportunity into these communities. The effort charged the Governors of each state to list up to 25% of their census tracts that meet “distressed community” specifications as an opportunity zone. The “low-income census tracts are places with an individual poverty rate of at least 20 percent and median family income no greater than 80 percent of the area median” (Economic Innovation Group).

The Wisconsin Housing and Economic Development Authority (WHEDA) is the Wisconsin state-level agency providing updates on Opportunity Zones in their state. Look up the local coverage in your state.

The benefit of being designated as an Opportunity Zone is now investors have a tax incentive to invest in that community. The tax incentive looks like this: If Susie sold her shares of Amazon stock for a gain of $1 million, she now owes $230,000 in capital gains tax. Now, instead of paying that tax today, she can invest that $1 million into an Opportunity Zone and she will benefit from a deferred payment of that tax. The longer she keeps her investment there, she will also benefit from a reduction in the capital gains tax owed. On top of that, whatever gains she sees from her new investment in that Opportunity Zone will not incur capital gains taxes at all.

For a real life example of how one company can make a positive impact in a distressed community, watch this panel featuring Ed Monser, CEO of Emerson Electric, a manufacturing company headquartered in Ferguson, Missouri. Beginning at minute 10:40 in this Kemp Forum on Expanding Opportunity video, Ed tells a moving story about waking up one morning and realizing that he can and should be doing more to help the distressed parts of the community where his company is headquartered. The ‘Ferguson Forward’ initiative has included a commitment of $300,000 a year for five years to the University of Missouri-St. Louis’ Opportunity Scholars Program for science, technology, engineering and math (STEM) students who are minorities or whose parents didn’t attend or graduate college. But the real story is the personal relationships and involvement and first jobs for Ferguson residents, and all of the lessons learned along the way that changed lives.

Those exiting the prison system also represent an untapped source of labor who typically have challenges finding employment, which is key to avoiding recidivism. As outlined in The Policy Circle’s brief on Poverty, programs such as Hope for Prisoners offers mentoring and skills training for ex-offenders that help prepare them for employment. According to this UNLV study of 522 graduates of the program, 64% found stable employment. Of those employed, 25% found employment within 17 days of the training course. Only 6% of these 522 individuals were re-incarcerated during the 18-month study period.

Prison reform initiatives led by theWhite House are also looking at ways to move job training programs inside prison facilities. The Trump Administration’s fiscal year 2020 budget includes funding for reentry programs, inmate education, occupational training programs, and “a Pell grant pilot program to help eligible incarcerated Americans pursue postsecondary education.” The First Step Act, signed into law by President Trump in December 2018, includes the reauthorization of the Second Chance Act’s “transitional jobs strategy” meant to provide activities “that promote skill development, remove barriers to employment” and provide “job retention, re-employment services, and continuing and vocational education” for participants. 

Yet another front in the efforts to encourage work is the issue of work requirements for various government entitlement programs. These editorials offer arguments on different sides of this debate. You can read them here and here.  

 

 

What You Can Do

As Ed Monser demonstrates, each of us has a role to play in creating opportunity for people to experience earned success and fully participate in society. Even on a one-by-one basis, never underestimate the impact you can have on one person’s life.

In your own world, you can be a conduit to connect people to jobs. Look for information sessions and learn the players in the world of Opportunity Zones and Social Impact Bonds. Once you know your facts, follow a business and make sure those efforts are creating deep and lasting ownership of a career path and an equity stake in the success of their community.

Women can serves as mentors to one other. In distressed communities, connections that foster empowerment are particularly crucial. Establish a relationship with businesses in a distressed community and hire them for services that you need. Help them navigate the world of starting a business, growing and innovating. Never underestimate the impact you have to positively influence the direction of someone’s life.

There are also many school-based programs in need of mentors and role models to keep low-income and at-risk students in school and connected with programs that will eventually help them find employment but also impart valuable life skills.  

Not all people see employment opportunities in the same light. Take Uber, for example. Some assess that part-time jobs like driving for Uber or Lyft traps people in a job that doesn’t provide health insurance. Others look at Uber and the sharing economy in the context of leveraging the assets you already own, breaking down regulations and opening up opportunities. Strike up a conversation with your next Uber or Lyft driver and see what they think.  

As you achieve your goals, remember to pull others up with you. Help people find their sources of earned success.

 

Innovative Solutions and Perspectives

Allison Grealis – President, Women in Manufacturing

Allison presented at the 2018 Policy Circle Summit. She discussed the role of associations, using the example of the manufacturing industry where women make up a much lighter proportion of the field than other industries. In such an environment, the need for women to empower other women stands out. Allison provided tips on how to connect and build a network, and also how to empower others to enter into the field to grow and change it for the better.

Read Allison’s bio here.

 

Antonio Ortiz – President, Cristo Rey Jesuit High School

The Cristo Rey Network seeks “to transform urban America and break the cycle of poverty one student at a time.” Antonio spoke at the 2018 Policy Circle Summit about the importance of first jobs for high school students that lead to careers. In this model, companies create opportunities for a real job experience with real work. Here’s a snapshot of the innovative solution and best practices Antonio shared: Companies pay around $36,000 to have a high school student work in a full time job. The job is carried out by 4 students: a Freshman, Sophomore, Junior, and Senior. Each works at the job one day a week and they alternate on Mondays. In return, each student earns $9,000. Tuition to attend Cristo Rey is $12,000. Through this structure, students gain real world work experience that helps them step into a job that is a pathway to a career when they graduate, and the (mostly low income) students earn the income they need to be able to afford a quality education.

Read Antonio’s bio here.

Krissy DeAlejandro – Executive Director, tnAchieves

The mission of Tennessee Achieves, or tnAchieves, “is to increase higher education opportunities for Tennessee high school students by providing last-dollar scholarships with mentor guidance.” What this generally looks like is a full ride technical scholarship to colleges that guarantee job placement after graduation. Through the program, a student ends up paying a percentage of their salary towards tuition so they have “skin in the game” and stay on track with the classes and skills that will lead to a job.  This also motivates the colleges to offer courses that will lead to a career.

Colorado is another state that has implemented innovate private-public partnerships to connect youth to career opportunities.

Read Krissy’s bio here.

Mario Kratsch

Vice President, German American Chamber of Commerce (GACC) Midwest

Germany pioneered the apprenticeship program. Mario is passionate about creating career pathways for American workers. To accomplish this, Mario helps lead a German / American apprenticeship program. In this model, companies create a job in an apprenticeship form and then hire employees that they pay to train. The company partners with a community college to provide a certification that is recognized by an industry. Currently over 70 U.S.-based companies collaborate to provide skill development training and certification programs for very technical jobs to make this model a success. The mindset is one of building a workforce with technical skills who aren’t full-fledged engineers. The challenge is this: ensuring more technical colleges are working hand-in-hand with industry. And in working together, they can make sure each program builds a skill-set marketable beyond one company. What can we learn from this German model? How do we make sure our state-level Education Boards partner with industry to define standards and create programs that not only meet demand, but also create careers?

Read Mario’s bio here.

Mark Feinour – Executive Director of the Support Services group at Bank of America.  

Bank of America is leading the way in celebrating intellectual disabilities as a gift, as a way to say: “Define us by our actions. Cherish us for our personalities. Reward us for our accomplishments.” The Bank of America Support Services division is an in-house marketing and fulfillment operation with 300 employees that has been employing individuals with intellectual disabilities for over 25 years.

While government programs exist for employing workers with disabilities,  Bank of America is not taking tax credits for these positions have the same entry level salary ($15 an hour) and benefits as any other employee at Bank of America. Each of us can use those lenses to look at the work we do – is there a way for me to create a job for someone with a different ability? Mark’s playbook is helping other organizations do it.  This type of initiative needs a champion who wants to make it a priority. It started with one person at Bank of America. The Chairman of Bank of America’s board decided to create a  job for his neighbor with down syndrome whose family worried about his future as a productive member of the community. It started with just a few employees.

Read Mark’s bio here.

Strada Education Network℠ improves lives by catalyzing more direct and promising pathways between education and employment. Strada engages partners across education, nonprofits, business and government to focus relentlessly on students’ success throughout all phases of their working lives.  

Its three-pronged approach addresses critical college to career challenges through strategic philanthropy, research and insights, and mission-aligned affiliates with the goal of strengthening America’s pathways between education and employment. Details about their approaches and resources are available here.

Other initiatives to look into:
In 2017, the U.S. Chamber of Commerce Foundation launched the Talent Pipeline Management Initiative, and now hosts a conference, 2018 Talent Forward for enterprise solutions to closing the gap. For example, Ariel Corporation in Mount Vernon, Ohio, created its own Blue Chip training program and organizes career fairs for 7th graders and their families to inspire them to pursue highly technical vocational careers.

 

 

Questions for Discussion

Sharing

  • When thinking about the issue of workforce readiness, what “lens of care” do I wear?
  • How do I understand the goal and vision and priorities for workforce readiness in the communities that I care about and for our state?

Exploring

  • How do we make sure programs like Opportunity Zones and Social Impact Bonds create deep and lasting impact in distressed communities?
  • What mentoring opportunities or exist around me?
  • What local programs and internships need championing?

Expanding Influence 

  • What can I do at our local high school, my company, in my community to connect youth and other adults to new career pathways?
  • What public boards promote collaboration between college and industry to create career pathways?
  • How can I interact with my elected representatives on this issue at the local, state and federal level? Look into the committees that your representatives sit on.
  • What can I do in my local association, or chamber of commerce to reward companies that create internship and apprenticeship programs?

 

8/2018

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