In a US labor market where employers struggle to find qualified workers – especially in key sectors of the economy – what programs and policies work best to generate such workers?
I have been part of a bipartisan group of researchers and analysts convened by the American Enterprise Institute, the Brookings Institution, and the Harvard Kennedy School’s Project on Workforce to answer this question. Our group – the Workforce Futures Initiative – has reached some useful conclusions about how our nation can improve workforce development system.
On the plus side: federal spending on workforce development – including the Workforce Innovation and Opportunity Act (WIOA) system – improves disadvantaged worker outcomes. But these improvements are quite modest. Small benefits at low levels of funding discourage higher levels of investment by Congress; yet without additional funding, it is unlikely we’ll see substantial improvement. At the same time, students and workers lack other options to finance training—for instance, Pell grants for training at community colleges do not cover non-credit or shorter-term training efforts.
Greater public investment in workforce development programs is needed. But these additional investments should be targeted toward programs and practices that have proven successful and can be scaled, or that provide information that is critical to diagnose the needs of a rapidly changing labor market. Examples which deserve more financial support include:
1) sectoral employment programs;
2) job counseling and supportive services;
3) improvements to data systems to better track program performance and improve our understanding of changing skill demands; and
4) pilot programs to test ways of increasing system flexibility and innovation.
Sectoral employment programs substantially improve employment and wage outcomes for workers. These programs are distinctive in their focus on high-growth sectors of the economy such as information technology, health care, and advanced manufacturing. The programs are run by community colleges or other providers (like Per Scholas, Year Up, and other well-known examples). The federal government should substantially increase investment in these programs, focusing on replication and scaling of programs with track records of success. For our most disadvantaged students and workers, who sometimes have difficulty qualifying for participation in these programs, additional supports and “on-ramp” programs should be considered.
The “connective tissue” of supportive services are a critical determinant of such success. Education, training, and employment systems are decentralized, and the bewildering array of options can overwhelm students who are juggling busy lives on top of their training needs. Barriers such as transportation, childcare, and mental health services often cause program participants to exit programs early. Students also need guidance about what kinds of jobs are available in their regional economies that provide good pay, and what kinds of training are needed to get them.
The evidence shows that counseling and supportive services, both of which are integral to the sectoral strategies mentioned above, substantially increase program completion and labor market success. Investments in support services for post-secondary training participants such as community college students and displaced workers can yield high returns.
A third critical need is for innovation in the nation’s workforce data infrastructure. Workers are pressured by technological change and automation, which makes it critical to modernize our education and training systems to keep up with change. We need better information about which jobs are growing and which programs are effective at developing needed skills. For example, a non-profit called the Coleridge Initiative works with a range of government agencies to ensure that high-quality labor market data are available to inform users of education and workforce programs; more public support is needed for such efforts
Harry Holzer Forbes Magazine
I am an economist specializing in labor market analysis.