Article

Job Training: Cultivating the Middle-Skill Workforce

Published

15th July 2013

I relocated to Harlem in the summer of 2011, and upon moving in promptly called the cable company. It turned out the cable installer had grown up in a public-housing complex just a few blocks north of my apartment. He’d completed an apprenticeship program several years earlier, and as we chatted it was clear he was acutely aware of how lucky he was. He had a steady income and decent pay—a rarity among his friends—and he owed it to a cousin who had stumbled upon the training program. A happy coincidence, but one that highlights a major weakness in today’s middle-skill training efforts.

Broadly defined, “middle-skill” jobs are those that require more than a high-school diploma but less than a bachelor’s degree—including occupations as diverse as electricians, police officers, radiologic technicians, paralegals, and cable installers.

Although middle-skill jobs as a share of overall employment have shrunk, they still make up 48 percent of all employment in the country today—nearly 70 million jobs. Further, wage gains in these occupations often outpace national averages—with annual salaries in some categories topping $70,000. Finally, many of the middle-skill industries—welding, speech therapy, plumbing, and a whole host of others—are not easily outsourced, offering job security in addition to income gains. Simply put, these are good jobs.

So while we have to generate an estimated 21 million jobs by 2020 to return to full employment, the United States also needs to address the looming shortfall in skilled workers—an estimated three million by 2018. If we take advantage of the moment by building a robust middle-skill education and training architecture, we may be able to speed the recovery and rebuild the core of a sustainable middle class.

The decades-long decline of unionization weakened the training architecture for middle-skill workers; the funding and number of U.S. apprenticeship programs (which often relied on union infrastructure) decreased by 36 percent over the past 15 years. Further, private-sector investment in training is constrained by a range of market failures, in addition to legitimate concerns that training investments cannot be recouped if workers subsequently move to competitors.

The good news is that we have a blueprint for a comprehensive U.S. middle-skill training architecture. Examples abound: In the utility sector (in which up to 60 percent of the workforce will need to be replaced in the next ten years), it is the Center for Energy Workforce Development, a collaboration launched in 2006 between multiple utilities and unions to create a pipeline of technicians. In Kentucky, it is Metropolitan College, launched in 1998 by UPS, the state, the city of Louisville, and several community colleges to train around 2,000 students each year for UPS air-hub operations. In health care, it is the initiative sponsored by Kaiser Permanente and its unions, which offers more than 50 training programs across the health-care field with a 95 percent retention rate of the registered nurses it trains. These programs, whether centered around a region, an industry cluster, or a community college, share some common features: linking training to specific hiring needs; providing financial support for students (especially adult learners); and focusing on post-training placement.

The problem isn’t the lack of ideas. It’s scale. While every state has some kind of skills initiative, none of these efforts has the capacity to address the anticipated 2018 shortfall. The Obama Administration has taken several steps, including the launch of Skills for America’s Future, a public-private initiative to facilitate partnerships among employers and community colleges nationwide. And the Department of Labor is granting $2 billion over four years to finance expansion of community-college training programs.

However, it is the Administration’s more recent proposal that could be transformative. The $8 billion “Community College to Career Fund” would be co-administered by the Departments of Education and Labor to establish partnerships between community colleges and businesses to train two million workers.

Like many ideas in Washington these days, the fund proposal has fallen by the wayside, yet another victim of the near-absolute preoccupation with fiscal austerity. In theory, this idea should have strong bipartisan support—last time I checked, it’s pretty good politics to be in favor of facilitating work. However, recent disagreements over reform of the Workforce Reinvestment Act, currently the primary workforce-training program at the federal level, suggest philosophy is trumping action at least in the short term.

For now, we must rely on initiatives that do not require significant federal funding—with the support of state and local government, the private sector, unions, and philanthropy to pick up the slack. Here are three ideas that don’t need federal action and can help make progress while we agitate for action in Washington:

Accelerate common standards. Workforce development experts have long identified the need for a national transferable and stackable certification system. A stackable certification—the kind that has become standard for companies like Microsoft, Oracle, and Cisco—provides a clearly defined system of industry-recognized competencies tied to job opportunities and career advancement. More recently, a range of industry associations, educational institutions, and states have developed such skills-certification systems. But we now may be suffering from too much of a good thing. Workers and employers struggle to make sense of the 700,000 different certificates available nationally. A logical fix is to simplify and streamline training by industry sector. The National Governors Association could take the lead on this, borrowing the idea of the common core standards initiative in the K-12 arena. By making the credentialing challenge a major priority, it could corral the multitude of stakeholders across industries and states—and do so quickly.

Apprenticeship investment fund. Union membership is at a 97-year low. Yet over the last few years the annual Manpower Inc. talent shortage survey shows that the skilled trades are the hardest employment sector to fill. Although the AFL-CIO and Change to Win-affiliated unions sponsor apprenticeship programs across the country, such efforts should be scaled up further. To take advantage of the current union talent on the cusp of retirement, a union-financed National Apprentice Investment Fund could focus on expanding such programs in every sector facing shortages. This could be modeled roughly after the Employer Investment Fund structure used in the United Kingdom’s film and other industries to facilitate employer involvement in skills training. A percentage of union dues (possibly allowing partial repayment from employers and dues from new union members) could be used as a financing source.

An X Prize for data integration. We need to use twenty-first-century IT tools to meet the challenge of matching workers with training opportunities and potential employers. The lack of transparency surrounding educational and employment data is puzzling. I can find a dim sum restaurant in Boise, Idaho in two seconds, but somehow a national jobs database is elusive. Philanthropists should challenge the tech industry to develop a simple, national, searchable database of available jobs, requirements, and credentialing opportunities (the latter with user rankings a la Yelp). In the ideal world, users would complete a simple checklist of current skills that would yield a list of available jobs and certifications that match. Once that is built, we then need to challenge our best minds and leading tech companies—Google, Facebook, Amazon—to deploy it creatively on a national basis.

There is no real substitute for the federal government in bringing public policy ideas to scale. But we cannot wait for Washington to get its act together. The United States has a window of opportunity right now to build a stronger national architecture for middle-skill training. If we move with national purpose, we could have a “three-fer”: addressing looming shortages in critical skills; moving low-skill workers up the economic ladder; and helping to reduce poverty and spur growth. If we act now, we can ensure the future cable guy doesn’t have to rely on a savvy cousin to find a path to the middle class.

Overview

Strategic advantage in a volatile world

The Firm

Nader Mousavizadeh and David Claydon founded Macro Advisory Partners in 2013 to provide a global client base with a competitive advantage in a complex world. Driven by a belief in the value of independent, long-term strategic counsel, MAP's co-founders created a firm that delivers actionable macro strategies to decision-makers in business, finance and government.

A volatile and fragmenting global landscape requires an integrated understanding of the political and economic drivers of change. Drawing on MAP's unique network, the firm’s partners — including Mona Sutphen and John Sawers — create tailored and innovative macro solutions mapped to the specific exposures, risks and opportunities facing the firm’s clients.

MAP's London and New York-based team of partners, directors and associates is supported by a Global Advisory Board and a group of Senior Advisors drawn from leadership positions in the worlds of business, finance, politics, diplomacy and technology.

Partners
Global Advisory Board
  • Kofi Annan

    Chairman, The Kofi Annan Foundation
    Kofi Annan was the seventh Secretary-General of the United Nations (1997 to 2006), and now serves as Chairman of The Kofi Annan Foundation.
  • William Burns

    President, Carnegie Endowment
    Ambassador Burns is President of the Carnegie Endowment for International Peace, and was the 17th United States Deputy Secretary of State.
  • Mala Gaonkar

    Co-portfolio Manager, Lone Pine Capital
    Mala Gaonkar is Co-portfolio Manager at Lone Pine Capital, and a former consultant at the World Bank.
  • Vikram Mehta

    Chairman, Brookings India
    Vikram Mehta is Executive Chairman of Brookings India and former Chairman of the Shell Group of Companies in India.
  • David Miliband

    President, IRC
    David Miliband is President and CEO of the International Rescue Committee, following a distinguished political career in the United Kingdom.
  • Vali Nasr

    Dean, SAIS
    Dr Vali Nasr is Dean of the Paul H. Nitze School of Advanced International Studies of Johns Hopkins University.

Concept

Macro Advisory Partners provides corporate, investor and sovereign clients with the strategic insights to navigate the intersection of global markets, geopolitics and policy.

In a world defined by volatility and uncertainty — and an abundance of information, yet scarcity of insight — we identify the strategic implications for decision-makers tasked with maximising opportunity and minimising risk. The Archipelago World is characterised by fragmenting markets, populist politics, policy unpredictability, revolutionary technology, and weaponised arenas of finance, regulation and cyber.  The implications of this environment are dramatic and lasting. To help our clients anticipate and navigate these shifts in the macro landscape, we bring together deep on-the-ground analysis with long-term strategic judgement tailored to our clients' specific interests, exposures and concerns.

For today's global investor and business leader, macro is just as disruptive a factor as technology. Our advice — delivered by the firm's partners through trusted, personal, long-term and dynamic client engagements — is drawn from the policy expertise and connectivity of our global network, supported by advanced data analytics. The firm's Global Advisory Board and a team of Senior Advisors with backgrounds in diplomacy, macro intelligence, investment strategy, academia and industry, support our partners with the judgements that enable us to provide clients with relevant, actionable and investable macro solutions.

Principles

A culture of partnership defines our firm — among the individuals we have attracted to our endeavour, and with the clients whose long-term interests we view as our own. Our team brings to our work a diverse range of global business, finance and government experiences that enable us not only to interpret a changing macro environment for our clients, but also to design specific solutions that enhance their performance and prospects.

The principles of independence, integrity and intelligence define our culture. Our clients include the world's leading technology, consumer, energy and financial services institutions. Our commitment to them — and to our people — is to deliver on our founding aim of building the world's leading macro advisory firm.

Portfolio

  • Engagement

    Middle East Market Expansion

    Facing a fragmenting market and changing regulation, a global financial services company uses MAP's advice to enhance its performance and footprint in the Middle East.
  • Engagement

    Managing a Complex Portfolio in a Volatile World

    MAP provides ongoing and ad-hoc advisory services to a significant investor client, which manages a complex portfolio of equity, credit, interest rate, commodity and foreign exchange exposures.
  • Engagement

    China Market Strategy

    A global consumer goods company achieves success in China with support from MAP's distinctive macro insights.

Contact

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