Tuesday, July 25 2017
By Jim Damicis, Senior Vice President, Camoin Associates
What is causing this skills gap and related inability for businesses to find workers with the appropriate skills and training? While there is not one easy answer, several factors, which are highlighted below, are commonly identified based on research, analysis, and on-the-ground reporting.
While there is much data and information supporting these trends, one measure that is especially useful in demonstrating the overall health of the U.S. workforce is the labor force participation rate. Per the U.S. Bureau of Labor Statistics, “the labor force participation rate is the percentage of the population that is either employed or unemployed (that is, either working or actively seeking work).”1 Since 2007, the labor force participation rate has fallen from 66 to 63 percent in the U.S. (see Figure 1).
A falling labor force participation rate presents a challenge for future economic growth and prosperity. Yes, new jobs have been added to the economy since the recession, and yes, the unemployment rate has dropped in turn, but the overall measure of the readily-available workforce as demonstrated by the participation rate has declined and remains at a ten-year low. To improve the national labor force participation rate, economic development and workforce partners must aim to bring more people into the labor system as either employed or actively seeking work, through multiple methods.
How big is the skills gap as an issue and why is it imperative that we address these issues? Mark Lautman in his 2012 book, When the Boomers Bail answers this well:
Meeting the Challenge for Economic and Workforce Development
Take an Integrated, Holistic Approach to Economic, Workforce, and Community Development
This approach is supported and even mandated by The Federal Workforce Innovation and Opportunity Act (WIOA). WIOA was passed into law on July 22, 2014 “to help job seekers access employment, education, training, and support services to succeed in the labor market and to match employers with the skilled workers they need to compete in the global economy.”3 Funding for workforce and economic development is directly tied to meeting WIOA objectives, which include regional collaboration to meet worker and employer needs within an aligned and integrated system.
Once we establish that workforce development is economic development, it is a logical next step to establish the factors that attract and support workers is therefore critical to economic development. These factors include compensation, benefits, advancement opportunities, and work environment, which are mostly controlled or limited by their employer, as well as their education and training opportunities. They also include housing, transportation, and quality of place, which can be directly impacted by communities and regions through investments in infrastructure, land-use policies and regulations, and planning. Finally, they include health and human services to provide social well-being within the community, so that people can be supported in entering and remaining in the workforce. Two examples of taking an integrated approach are Career Lattices and Community Schools.
In other words, workers must be supported both by the company and the wider system of support services (including education and training, social services, transportation, and housing) to continually evolve as productive, valued workers throughout the course of their working life. This means integrating and working collaboratively with regional and local services providers across all these sectors to create implementable and effective strategies.
Community schools combine social services and healthcare resources with expanded learning opportunities to reduce chronic absenteeism, increase student engagement, and ultimately improve test scores and increase graduation rates. This general framework has been refined and adapted by communities across the country to ensure that low income students not only have access to the educational resources they need to succeed, but also the social services that may be needed to ensure they are fed, clothed, and safe and treated with the health services needed to ensure they are physically and mentally prepared to succeed in school. Creating this new learning framework typically requires a realignment of existing resources and new partnerships with existing providers, rather than the development of new organizations or service providers.
Community schools also focus on offering engaging instructions that goes beyond the classroom. Lessons learned in school are applied to student volunteer work and enhanced through partnerships with community organizations, higher education institutions, and employers. These partnerships with employers and higher education often take the form of Career Academies, which combine a traditional school curriculum with occupational skills training and work experiences related to an important industry in the community. By incorporating tangible applications of learning into the school curriculum, students tend to be more engaged and graduate better-prepared to enter a field with strong wages and a strong future or continue their education at community colleges or four-year universities. Detailed case studies and national models for community schools are available through the Coalition for Community Schools (www.CommunitySchools.org).
Integrate the “Create a Job” Approach by Supporting Self-Employment and Startups into Economic and Workforce Development Strategies
Using self-employment data from the Bureau of Labor Statistics and Bureau of Economic Analysis, self-employment represented 6.4 percent of total employment in the U.S. in 2017 (See Figure 2).7 In some industries, like agriculture, business and personal services, real estate, arts and entertainment, and professional and technical services, the concentration of self-employment is particularly high.
Recognizing this very issue, the Northeast Workforce Development Board (NWDB) included support for self-employed workers as a core focus area within its strategic plan.8 As indicated in the plan:
In another scenario, some self-employed professionals may be looking for full-time wage work. They can serve as consultants until they find more permanent employment. Meeting the need to support these professionals is one of the primary purposes of the Lehigh Valley Professionals in the Lehigh Valley region of Pennsylvania. Through “a forum-style support group helping professionals improve their ability to get hired by networking and exchanging ideas, learning strategies to market themselves and land jobs, and access volunteer opportunities to hone skills and demonstrate value.” They also serve regional employers by serving as a “no fee recruitment resource for companies and recruiters seeking high caliber professionals and consultants of all disciplines.”9 Through this self-organized network, the Lehigh Valley Professionals are helping reduce the “skills gap” and increase the supply of skilled workers.
Within many regions and communities, start-up support networks have emerged and grown. These provide another networked, peer approach to help grow and support entrepreneurs, and in doing so, support economic and workforce development. Start-up Portland10 and the Maine Startup and Create Week11 are two examples of local efforts that have had much success.
Develop Collaborative Partnerships Among Employers, Education, and Service Providers to Leverage Emerging and Growing Industries as Well as Meet Replacement Demand
Another example of a collaborative partnership can be seen in the Atlanta Regional Workforce Development Board Plan13, where the region is using targeted sector partnerships within the growing Digital Entertainment and Media Sector to train youth and adult career seekers to meet labor demand. For youth, Hearts to Nourish Hope, Prevention Plus and the Clayton County Public Schools are all using Continuing Education opportunities at Clayton State University for sector preparation. CTAE Career Pathways in Clayton County Public Schools is developing connections with the sector to be supported by youth program work experiences. For adults, “Clayton State currently offers the only non-credit comprehensive film crew training program in the country. Because it is non-credit, the six-month program does not require a high school diploma or GED for admission, and is therefore well-suited for young people who are not necessarily college-bound as well as for adults who are changing careers.”14,15
And while aligning training and education with growing and emerging sectors offers opportunities in geographic regions experiencing growth, some areas of the country are experiencing little to no growth and even decline. In northern Maine, the rural economy has been impacted, not only by the recession, but also by major paper mill and related business closures. In such cases, workforce development is still critical and collaborative partnerships among employers, education, and service providers is needed to meet replacement demand. Replacement demand is the demand for workers to fill positions created by persons retiring or otherwise leaving the workforce. This can be a significant level of demand depending on a region’s socio-demographics.
Through Maine's Northeastern Workforce Development Board’s 2017 Strategic Plan16, the organization recognized the importance of replacement demand to workforce and economic development. The report acknowledges that:
They have since then developed strategies and programs to help fill that demand by increasing labor force participation, training and education. Specific efforts include:
Fortunately, we are beginning to have a better understanding of the issue and emerging models and practices to help address them.
2 “When the Boomers Bail” by Mark Lautman, 2012, www.marklautman.com/about-3
4 “You’ve Heard of a Career Ladder, but What’s a Career Lattice?” by Victoria Storrs, 2017, www.camoinassociates.com/careerlattice
6 For more information on community schools see “Career Pathways Start in K-12: Improving Career Readiness for Low Income Students”, by the Economic Development Navigator, November 14, 2016, www.camoinassociates.com/career-pathways-start-k-12-improving-career-readiness-low-income-students
7 Extracted by Camoin Associates through EMSI, June 2017
14 “Five Reasons Why Film is Here to Stay in Georgia” by Barton Bond, http://clayton.edu/Film/Five-Reasons-Why-Film-is-Here-to-Stay-in-Georgia
20 “Vision needed to weather economic storm” by Chen Jia, http://www.chinadaily.com.cn/regional/2012-09/12/content_17545132.htm
Bio: Jim Damicis, Senior Vice President, Camoin Associates has more than 25 years of experience in public policy research and analysis to lead decision making. Prior to merging with Camoin Associates, Jim built PolicyOne Research into a leading research and analysis firm in Maine serving private and public clients throughout the Northeast. Jim serves as a member of the International Economic Development Council’s (IEDC) Economic Development Research Partners (EDRP) program and has served on numerous local and regional economic and community development organization boards and initiatives. Through his work with Communities of the Future and the World Future Society, he is a national leader in preparing the profession, communities, and regions for an emerging economic future.