By Jim Damicis, Senior Vice President, Camoin Associates
What keeps you up at night? When I ask that to business leaders in the context of economic and business growth, the answer is often “finding and retaining skilled and talented workers.” Within my work as an economic development consultant I have interviewed thousands of business leaders across multiple settings: rural to urban, small to large, tourism to high tech, and workforce issues consistently rank at the top of the list. Is this surprising? While it is true that there is an ample number of people searching for a better job, or even a job in general, a serious talent and skills gap exists, making it challenging for employers to find the right individual for a specific position. If this skills gap is not rectified by economic development, workforce, and educational partners, it will stifle economic growth and prosperity at all levels.
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.
- The recent recession and slow recovery – which started around 2007 and led to significant job loss followed by a slow recovery. Not only were jobs lost, but new jobs that were in-demand coming out of the recovery often required different skills from the old jobs that were lost.
- Technology and economic transformation – including the integration in all sectors with digital technology, automation, the emerging potential of artificial intelligence, the Internet of Things, cyber security, and big data analytics.
- The education system- which faces challenges in a range of sectors including, lack of funding to meet ever-changing employer demands, unequal outcomes across the system, and a disconnect with knowledge and skills demanded by the economy as existing education and workforce systems fail to act quickly enough to meet needs for both short-term, on-demand and adaptive learning as well as lifelong learning and training.
- Demographics – the transition from a workforce driven by the Baby Boomers age cohort, who are beginning to exit the workforce, in favor of the rising influence of Millennials in the workforce.
- Domestic policy – Concerns over immigration and its impact on the economy in terms of acquiring workers in various industries including: farming, agribusiness, tourism and information technology.
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:
“As the industrialized world recovers from the great recession, we face an even graver economic threat. A structural shortage of qualified workers is creating a zero-sum labor market that is forcing communities to steal talent from each other, to survive and grow. The cause of this impending economic disaster: a baby boom generation who didn’t have enough kids to replace themselves, and an education system that has failed to properly prepare students for the new demands of today’s market. Any community unable to attract and hold talent will join a growing number of economically doomed places where economic development is impossible.”2
Meeting the Challenge for Economic and Workforce Development
Economic development and workforce systems are complex, and as such, no one set of solutions or strategies will “fix the system” overnight. In fact, more so than a fix, the challenge will likely require transformation to a new understanding of the system demanding entirely new strategies and actions. In the meantime, and to help with this transition, there are steps that can be taken today in economic and workforce development to build capacities for transformation. While there are certainly other methods that are not listed here, I would like to hone in on a select few that I feel are particularly beneficial, along with examples that are at the cross-section of economic and workforce development.
Take an Integrated, Holistic Approach to Economic, Workforce, and Community Development
Once treated by some as separate service and focus areas, it is now, more than ever, apparent that workforce development is economic development. Therefore, it is critical that service providers, businesses, educators, and advocates in workforce and economic development work together to develop and implement effective programs and services within a customer-focused, outcomes-based system. And, since workforce is more so a regional issue, as workers commute to and from work locations within labor force markets that are regional based on work, housing, transportation, and locational preferences, a systems approach must also include deep collaboration among communities within a geographic region.
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 a March 2017 Economic Development Navigator Article, my Camoin Associates colleague Victoria Storrs provided an informative overview on the topic of the Career Lattice.4 Career Lattices were coined by Cathy Benko and Molly Anderson, human resources professionals at Deloitte in their 2010 book, The Corporate Lattice: Achieving High Performance in the Changing World of Work.5 As Victoria explains the premise of a Career Lattice:
“The essential concept of a corporate lattice is the rejection of linear approaches to career development. The upward-climbing ‘corporate ladder,’ is replaced by a more fluid ‘lattice,’ where lateral or even downward moves that focus on learning and growing can have as much value as upward movement. These ideas are now widely seen in workforce and career development, where they can help workers and employers identify resources and opportunities that may have been invisible in a linear approach.”
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 offer another specific example to an integrated, holistic approach.6 Community schools are based on the premise that communities cannot allow a single potential worker to graduate without a diploma and skills needed to participate fully in the workforce – doing so could have long-term negative impacts on economic growth and dynamism as employers move elsewhere to find the skilled workers they need. This creates challenges as students from low income areas are continually at risk of not graduating from high school and/or not continuing and succeeding in higher education and training. To address this challenge, some schools have turned to the community schools model.
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
Self-employment and startups represent a significant part of our national economy, and in some sectors, combine to stand out as a “targeted sector” for economic development. They are therefore an important part of generating workforce supply and demand.
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.
Being innovative, entrepreneurial, and resourceful typically go together with creating a start-up business or sustaining self-employment. This creates jobs, and for many is a path to entering the workforce (including recent immigrants). Oftentimes, self-employed people go in and out of wage jobs as personal and economic conditions change. But sustaining self-employment or creating a start-up can be very challenging, requiring technical, financial, and personal support. It is important the economic and workforce development system provides access to these services to provide adequate support.
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:
“Most businesses in the region are small, with 82 percent having fewer than 10 employees and a mere one percent having 100 or more employees. Additionally, there is an estimated 11,633 self-employed persons in the region, representing eight percent of total jobs, making self-employment a group among the top five industry sector groupings in terms of size. Therefore, regional workforce strategies will include partnerships and collaborations for provision of technical assistance, information, programs, and services to support entrepreneurship and business/job creation.”
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
Understanding employment demand among growing and emerging industries requires regular communications and networks among businesses, educators and service providers. It also requires analysis of data. The Spokane Area Workforce Development Council (SAWDC) laid the groundwork for workforce strategies that would best lead to jobs in emerging and growing sectors by conducting thorough analysis of workforce supply and demand and the developing industry roadmaps. These roadmaps were completed for the targeted sectors of Finance and Insurance; Healthcare; Manufacturing; Professional, Scientific, and Technical Services; and Transportation and Warehousing.12 To help people plan their training and education to enter into and advance within these industries, SAWDC also created an online career pathways tool to connect students and job seekers with the appropriate course and certification offerings at the Community Colleges of Spokane (http://wdcspokane.com/pathway-planning-guide).
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:
“Replacement Demand will drive workforce demand over the next ten years, and as a result will be an important focus of regional workforce strategies. In 2016, there were a total of 146,348 jobs in the Northeastern Workforce Development Board (NWDB) region. Over the next ten years the NWDB region is projected to experience a one percent annual decrease in total employment. However, there will still be a need for workforce development resulting from replacement demand (demand resulting from retirements and persons leaving the workforce) which will create the need to fill 37,454 jobs over the course of the next ten years.”
They have since then developed strategies and programs to help fill that demand by increasing labor force participation, training and education. Specific efforts include:
- Work Ready Certification through the St. John Valley Adult and Community Education Collaborative (MSAD #27 and Madawaska).17
- ED2GO through Eastern Aroostook Adult and Community Education, which offers more than 360 instructor-led online courses across multiple skill areas and may be used for professional continuing education units or in addition to campus courses for high school completions.18
- TechHire – is a program to recruit, assess, train, and place young adults and underserved individuals into Maine’s IT industry. Participants take part in training and work experiences tailored to their career goals using a customized track approach. All tracks are driven by employer demand and provide opportunities to obtain the specific competencies or experiences.19
Rapid economic and demographic change aside, understanding the skills gap and integrating people into the workforce in valued, meaningful ways has been an issue since the industrial revolution. Rapid change as we move from an industrial economy to a networked economy driven by new capacities in digital technologies makes the challenge more significant and more important to address quickly. As stated by Klaus Swab, Founder and Chairman of the World Economic Forum:
“As we move from an age of mass production to an age of networked innovation, competitive advantage will increasingly be determined by innovative ideas and social collaboration, and so the task of creating our future economy rests on our ability to nurture talent.”20
Fortunately, we are beginning to have a better understanding of the issue and emerging models and practices to help address them.
1 “Topics at a Glance: Labor Force Participation” by Bureau of Labor Statistics, www.bls.gov/bls/cps_fact_sheets/lfp_mock.htm
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.