1

ROY VANDERFORDCENTER OF WORKFORCE INNOVATIONS

RVA N D E R F O R D @ I N N OVAT I V E W O R K F O R C E . C O M

Convergence of Workforce Development, Economic

Development & Education

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The World Wants a Good Job

Gallup organization has studied human nature & behavior for over 70 years

Jim Clifton, CEO of Gallup, author of The Coming Jobs War, cites the “10 demands” that America must master to win the jobs war

Conclusions based on literally trillions of combinations of data & opinions worldwide

Job creation is the new currency of all world leaders

The will of the world is first and foremost to have a good job

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Gallup’s 10 Demands

1. The biggest problem facing the world is an inadequate supply of good jobs.

2. Jobs creation can only be accomplished in cities.

3. There are 3 key energy sources of job creation in America: our top 100 cities, our top 100 universities, & our 10,000 local “tribal leaders.”

4. Entrepreneurship is more important than innovation.

5. America cannot outrun its healthcare costs.

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Gallup’s 10 Demands (cont.)

6. We must fix the dropout rate – 1/3 of public school students drop out – ½ of minorities.

7. We must double our number of engaged employees – only 28% of U.S. workforce meets standard.

8. Jobs occur where customers appear – we must understand global customers better than anyone else.

9. Every economy rides on the backs of small & medium-sized businesses.

10. So go exports, so goes the coming jobs war.

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Do We Need More Jobs or More Skills?

Nature of the “skills gap” is hot topic at the moment

Peter Cappelli, Wharton School, & author of Why Good People Can’t Get Jobs, says “If you can’t get the right person for the job, chances are you’re a bad manager and maybe a little cheap”

Martin Scaglione, President of ACT Workforce Development Division, states “there is not enough talent coming through the system to meet the demand for jobs at the middle-skill level, and there is an over-abundance of low-skilled workers”

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Workforce Development & Education Convergence of Interests

Skills certification – the common language for communicating with each other, and with employers

Remediation – contextualized with occupational skills

Transferability & stack-ability of credits – industry certifications, dual credit, prior learning assessments

STEM – core “polytech” base for employers, with additional education & training provided by employer

Self-employment & entrepreneurship – not enough jobs for laid-off workers

12th to 13th year transitions – assumption that all students need post-secondary education in some form

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Attention-Getting Statistics

70+% of all high school grads pursue some form of additional education within 2 years of graduation – most fail to obtain credentials

83% of companies report moderate to serious shortages of skilled workers – 69% expect shortage to grow in next 3-5 years

86% of Americans view the “trades” as essential for our prosperity –but only 1 in 3 parents would encourage child to pursue a trade

19.5% unemployment rate for bachelors degree in clinical psychology – 16% for high school dropout

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A Few Thoughts on Solutions

Focus on hard-wiring the high school grad to a 13th year of education & call it college

If an applicant for a 4-year school doesn’t meet entry standards, don’t let them in (yet)

Sell students on social status of technical & “middle skill” jobs – not just the economics

Differentiate ROI for types of degrees – not just advise to get a college degree

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More Thoughts

Student spending own money can purchase anything (even Russian Literature) – if spending public money, career plan should be required

Employers need to be more specific about skills they need – many require college degrees for jobs that don’t require them

Don’t approve large student/parent loans for those who don’t have the ability to pay off the loan – we are moving down same path as housing market

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Thank You

Questions/Answers

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Kim ZeuliFederal Reserve Bank of Richmond

October 23, 2012

Long-Term Unemployment and Workforce Development

Findings from a Federal Reserve Initiative

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Disclaimer

The views expressed in this presentation are the views of the

speaker and do not necessarily reflect the views of the Federal Reserve Bank of Richmond or the Federal Reserve

System.

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Initiative Goals

Gather information that complements or enhances employment data.

Develop a deeper understanding of factors that create long-term unemployment.

Identify promising workforce development solutions.

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Initiative Overview

Information collected through forums held throughout the country. Small focus groups and listening sessions. Larger sessions with formal agendas focusing on a

particular demographic or employment sector.

Participants included local employers and organizations providing workforce development services.

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Employment Outlook:A Disaggregated View

17Source: Bureau of Labor Statistics

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Unemployment Rate in the United States

This recession is different.

We have not experienced a significant drop in unemployment during recovery as we have had in previous recessions.

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Unemployment Rate by Age GroupsNot all age groups have felt the recession equally.

Younger groups have noticeably higher unemployment rates than older groups.

One in every four young adults has been unemployed in recent years.

2001

2003

2005

2007

2009

2011

0.00

5.00

10.00

15.00

20.00

25.00

30.00

16-19 yrs20-24 yrs25-34 yrs35-44 yrs45-54 yrs55 and over

un

em

plo

ymen

t r

ate

Source: Bureau of Labor Statistics

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2001

2003

2005

2007

2009

2011

0.0

2.0

4.0

6.0

8.0

10.0

12.0

urate-murate-w

Source: Bureau of Labor Statistics

Unemployment Rate by GenderWe heard a lot about men vs. women (so-called ‘man-cession’).

Jobs in fields where men are disproportionately represented have been hit harder.

The gap has started to converge as the unemployment rate has started to decline in recent months.

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Recovery by Gender

Women, who fared better than men in the recession, have not done as well in the recovery.

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The unemployment rate has almost doubled for every race since the beginning of the recession.

For all races other than black, the unemployment rate has begun to decline.

2001

2003

2005

2007

2009

2011

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

whiteblackasianhispanic

Un

em

plo

ymen

t ra

te

Source: Bureau of Labor Statistics

Unemployment Rate by Race

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Recovery by Race and Ethnicity

Steady but uneven gains in employment for all groups of workers.

Hispanics and Asians are experiencing a faster rate of growth in jobs than other groups.

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Unemployment Rate by Educational Attainment

The unemployment rate for those with a bachelor’s degree or greater currently stands around 4%.

Unemployment rate for those who have not completed high school is over 14%.

The unemployment rate for each level of educational attainment has stabilized or started to go down recently. 20

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1102468

10121416

less than highschool diplomahigh school graduate, no collegeless than bachelor's degreecollege graduates

un

em

plo

ymen

t r

ate

Source: Bureau of Labor Statistics

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Labor Force Participation Survey and Interviews:

Summary of Results

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Overview

To better understand formal and informal labor force participation of low-education/ low-wage individuals in the Southeast.

Labor Force Participation Survey and Interviews

What did we do? Interviews (10) and survey (143 respondents) of

employment/training and social service providers in all states of the 6th District.

What were we looking for? Employment barriers for individuals with a high

school diploma or less who would typically fill low wage jobs. Approximately one-third of the U.S. workforce has a

high school diploma or less. Low-education occupations largely fall into the

following categories: Construction and Extraction; Installation, Maintenance, and Repair; Food Services; Production; Transportation and Material Moving.

Low wage job = $39,821 or less annual household income for a family of four (about $3,300 per month).

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Main barriers to finding employment

• Skills mismatch/lack of skills.

• No jobs available.• Lack of soft skills.

Drug tests and background checks were considered relatively minor barriers.

No jobs available in the area where the applicants live or where applicants can access with transportation options.

Existing job vacancies require experience, skills, and/or certification that individuals do not have.

Individuals do not have the social skills, appearance, and/or attitude required by employers.

Submitting job applications require technological skills or access to technology that individuals do not have.

Individuals can’t pass a drug test.

Individuals can’t pass a background check (such as driving record or credit check).

Wages for potential jobs are not as good as unemployment benefits.

Unemployment compensation is providing sufficient support to continue looking for more desirable jobs.

Some aspect of the available jobs is undesirable, such as shifts, weekends, overtime, travel, environment, schedule changes, heavy lifting, or other conditions. Please describe.

64%

77%

55%

36%

33%

39%

24%

19%

23%

28%

21%

35%

52%

44%

46%

38%

34%

34%

6%

2%

8%

12%

14%

10%

33%

35%

29%

Insignif-icant Barrier

Minor Barrier

28Main reasons for dropping out of job search

• Potential earnings not able to pay for child and elderly care.

• Discouragement.

Returning to school and seeking training were not as important to this group.

Currently pursuing training or certification.

Currently pursuing college or technical school degree.

Looking for a long time but could not find the right job and gave up.

Receive unemployment compensation that is sufficient to cover their financial needs.

Potential earnings cannot cover costs of child care or elder care.

0% 10% 20% 30% 40% 50% 60%

35%

41%

13%

22%

8%

40%

35%

28%

35%

31%

17%

17%

51%

32%

57%

Very impor-tant reasonSomewhat important reasonNot an important reason

Turning to the informal sector52% agree that the underground economy increased during the recession and recovery.

Main reasons:

o Fewer barriers to entry (no job application, interview, etc.).

o Preference for cash payments.

o Individuals have worked in this sector for a long time (culture, language, network).

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“Mainstreaming” earnings are too low and there is no incentive to file or report income.

Individuals have worked in the underground economy for a long time (culture, language, networks).

Reporting income is too complicated or difficult to do.

Individuals prefer to receive cash payments (no bank accounts).

Fewer barriers to entry (no job application, interview, etc.).

Retired from “mainstream” workforce, but seeking more flexible employment.

Other. Please explain.

11%

4%

32%

6%

10%

28%

3%

31%

40%

30%

31%

23%

32%

8%

33%

35%

14%

44%

48%

11%

35%

Very important reason Somewhat important reason

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Round Tables: What We Heard

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Labor Force Supply Chain Issues: Fragmentation of Workforce System

Lack of coordination between array of workforce training programs and funding. Providers of government-funded employment and training

services are hampered by the fact that there are more than 40 separate federal programs with separate funding streams and eligibility criteria (New Jersey).

Lack of alignment between K-12 education, technical and community colleges, workforce agencies, employers, and social services networks. “Systems disconnect” between educational and workforce

programs (Baltimore, MD).

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Labor Force Supply Chain Issues: Disconnect Between Education and Labor

Market

Grade school curriculums typically focus on higher education and not job skills. While employers must take responsibility for communicating

their labor needs, educators must be responsible for designing systems nimble enough to respond to workforce demands (San Antonio, TX).

Communities have seen cutbacks in vocational training and a push toward making all students “college ready.” People perceive a lack of respect in the community for jobs

such as plumbers and electricians. As a result, many secondary schools have subordinated vocational training to college preparatory tracks (Dyersburg, TN).

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Employment Barriers: Job Skills

Applicants lack hard skills required to fill vacant positions in growing sectors. Shortage of local candidates with critical thinking and problem-

solving skills to fill the jobs in the digital media sector (New Orleans, LA).

Applicants lack the hard skills required to fill healthcare positions, particularly the computer knowledge to work with health care systems (Elkins, WV).

The healthcare sector will likely be demanding the greatest numbers of workers over the next ten years but clearly there is no sufficient supply of trained workers to fulfill these jobs (Birmingham, AL).

Applicants also often lack soft skills such as professional conduct.

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Employment Barriers: Transportation

Logistics are a major hurdle for the chronically unemployed, the urban poor, and individuals with disabilities. Public transportation schedules heavily targeted to rush hours do not

work for swing or night shifts workers, or workers who may have early report times (Baltimore MD).

Transportation is also a significant obstacle to employment for residents of rural communities and small towns. Long travel times lead to significant expenditures on support

networks such as babysitters (Elkins, WV).

Delays lead people to miss work or spend more time than can be justified to commute to their jobs.

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Employment Barriers: Employer Risks

Long-term unemployment in itself decreases an individual’s likelihood of landing a job. Employers perceive risks in hiring those who have been

unemployed for a long time and are therefore less willing to hire them (Kansas City, MO).

Participants differentiated between individuals who had lost a job due to layoffs during the recession and those hard to employ because of life situations (e.g. criminal history). People with criminal backgrounds face hiring practices

that are inconsistent across industries (Baltimore, MD).

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Employment Barriers: Disincentives

The unemployed face trade-offs between public assistance and low wage jobs. “Cliff effect” – an increase in wages leads to a sharp

reduction in income-tested public benefits, especially childcare subsidies (Omaha, NE).

Public assistance create disincentives for people to fill entry-level positions. Employees even request a part-time schedule or reduced hours in order to retain government benefits (Elkins, WV).

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Sector-Specific Issues: Manufacturing

“Broken supply chain” Community’s workforce development pipeline is not equipped to meet

demand for specific skilled labor, such as welders and technicians (Mobile, AL).

Cities that experienced significant and widespread manufacturing layoffs continue to suffer from high rates of persistent unemployment. Workers have had difficulty adjusting and retooling after the decline of

their traditional industry – textiles (Eden, NC).

Community and technical colleges cannot always keep up with labor demand. Difficult to get retrained after a layoff as many educators have trouble

accommodating student demand (Eden, NC).

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Sector-Specific Issues: Healthcare

Major growth industry; experienced robust growth throughout the last three recessions.

Yet, positions are going unfilled. Workers lack requisite hard and soft skills. For example, employers have trouble with

employees disobeying company policies and protocols that are essential in a healthcare environment (Elkins, WV).

Training is inadequate or inappropriate. Despite a high demand for nurses, there is a lack of available nursing educators to meet the

need (Memphis, TN). Credentials are not standardized, leading to difficulties placing workers with the “wrong”

skills. There is a steady stream of individuals being certified as Licensed Practical Nurses (LPNs); however, the local healthcare sector places a higher value on trained nursing certifications other than the LPN (Baltimore, MD).

Rural healthcare facilities have a particularly difficult challenge in filling vacancies. Rural communities compete with each other on a regular basis for nurses and technicians

(Elkins, WV).

Thank You!