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The future of American innovation depends on a skilled workforce, and its alignment with the needs of employers.
By James Peyser, a senior advisor to the nonprofit organization America Achieves.
Somewhere in America right now, a proposal request for a major medical equipment parts order is sitting on the desk of the CEO—the kind that could turn her medium-sized family manufacturing business into an industry force. As he looks out over the shop floor with its state-of-the-art equipment and experienced senior operators, he knows that he has the space and machinery to put in a competitive bid. What he doesn’t have are the skilled workers to fulfill the order.
This story of missed opportunity is happening across the country. And the problem will only get worse as our workforce ages, and as recent policy initiatives and bipartisan investments seek to revive America’s manufacturing base, restore critical domestic supply chains, and strengthen innovation and global competitiveness.
Amid that push, it’s important to note a potentially destructive shortfall: the lack of trained, skilled workers to fill the jobs that are needed to revive U.S. manufacturing, as well as our local, state, and national economies. That misalignment threatens to severely limit the potential for robust economic growth and the expansion of family-sustaining careers—especially in areas that have been overlooked for too long by Washington and Wall Street.
To close that gap, municipalities, regions, and states—and the businesses and educational institutions that call those places home—will need to collaborate in ways they’ve never done before, and may not even know how to do. Equally important, as a result, are the supporting institutions that serve as go-betweens for companies in need and workers. Organizations and systems will need to be established and funded, aiming to ensure that every American has a clear path to a good job and that employers are able to tap into fresh pools of newly skilled talent.
Evidence of the lack of investment in these types of workforce pathways is all around us. 70% of employers say they’re having difficulty filling the vacancies they have today. In manufacturing, projections indicate a demand for close to 4 million new workers through 2033 due to business growth and retirements but warn that fully half of those jobs will go unfilled due to a lack of qualified candidates with the requisite skills. And these projections are before considering a potential expansion in domestic manufacturing.
The workforce gap in manufacturing is seen in other related fields. The trillions of dollars slated for investment in infrastructure, energy, and housing over the next decade have the potential to overwhelm the aging workforce in the building trades and related industries.
To be sure, some of the gaps in skills are related to America’s lagging production of engineers and computer scientists. For example, the Semiconductor Industry Association estimates that close to 60% of the jobs being created in its sector over the next five years are at risk of going unfilled, many of which require bachelor’s degrees or higher in STEM fields. But while this fact drives headlines, often unremarked is that nearly 40% of the new jobs in this industry can and should be staffed by technicians with occupational certificates or associate’s degrees—not a four-year college degree. And the industry’s growth potential can’t be met without them.
While often pursuing different strategies, Republicans and Democrats consider restoring and strengthening America’s industrial capacity and workforce a critical issue and, in some instances, they have come together to deliver change. Notably, the CHIPS and Science Act, which passed the Senate on a 68-33 vote. While the main focus of the bill was to subsidize the expansion of domestic semiconductor manufacturing, it also included funding for the Tech Hubs initiative to stimulate the development of place-based innovation centers, especially in regions that have been losing manufacturing jobs due to a lack of public and private investment and outdated workforce systems.
Similarly, last year Congress overwhelmingly reauthorized the Economic Development Administration for the first time in 20 years, including provisions to establish a new state-led scholarship fund for evidence-based job training programs.
As America seeks to revitalize manufacturing, the federal government can play an important role in helping to develop the necessary talent pipelines to support high-growth sectors—including those required by a potential industrial rebirth. This support for workforce training can take a number of forms, from incorporating specific workforce initiatives into economic development grants—a longstanding federal mechanism for local community support—to incentivizing the expansion of STEM pathways, especially for high-quality, non-degree training programs.
But federal incentives, programs and funding can only go so far in addressing the practical and often very local challenges of workforce development, which require close coordination of multiple employers, education and training providers, and public agencies. Managing these relationships and aligning the many competing interests and programs is ultimately a ground war, not an aerial campaign.
This limitation begs the question: who is charged with ensuring workers are trained for the critical jobs employers—and the future of American manufacturing and industry—need?
The existing state and local K-12, post-secondary, and workforce training systems were not designed to provide the supply of talent that employers need in today’s economy, let alone the increased demand for new skills that will come with a resurgent industrial base. Right now, America lacks any semblance of a coherent system of connecting workers and employers at all. Public and private education and training programs are generally disconnected from one another, both across and within their respective silos. Even more important, their relationships with employers tend to be weak, ad hoc, and short-lived, thanks to the high degree of fragmentation within education and lack of sustained strategic focus.
Part of the issue stems from a deeply harmful focus on the wrong metrics for success. Enrollment and course credits dominate these entities’ attention, rather than delivering successful employment, career advancement, and earnings growth for the people they serve. This myopia is driven by the financial incentives for training and education providers, which are weighted heavily toward tuition payments and public or private grants, rather than outcomes or employer contracts. By paying for success instead of seat time, education and training providers will be forced to sharpen their customer focus, both in terms of students and employers.
Equally important, many lower-income workers find themselves priced out of the very programs meant to get them into the game to begin with. These offerings often have their own high tuition and fees—just like the programs they aim to replace—and they typically carry the same logistical challenges and out-of-pocket expenses. Not to mention the opportunity cost of lost wages.
That’s all set against the backdrop of an economy where it’s harder for a family to just get by than ever. According to American Compass’s Cost-of-Thriving Index, a measure of how much a typical worker would need to work to support a family of four, it now takes 62 weeks to provide the quality of life that 40 weeks did 40 years ago. (That’s more than a year, if you’re counting).
Not all the systemic weaknesses are on the supply side of the equation. Too many employers cling to hiring and promotion practices that rely on narrow relationship networks and college degrees, rather than proactively finding people who have the skills to do the job, regardless of their credentials or who they happen to know. At the same time, too few are willing to commit to long-term partnerships with education and training providers for paid internships or apprenticeships that enable under-represented, under-credentialed workers to build professional networks and gain access to practical on-the-job learning opportunities.
The need is clearly urgent, at what could be a major inflection point in the industrial history of our country. And, given the worker gap, the challenge can seem daunting. But these pressures create enormous opportunities to develop and scale new approaches to effectively address the needs of workers and employers. Already, some regional partnerships are pointing the way to innovative and inspiring solutions.
Organizations like America Achieves, where I’m a senior advisor, are working with state and local leaders to develop workforce systems focused on strategic industries with pathways to good jobs in collaboration with emerging place-based intermediary organizations that connect the dots among the many disparate players and programs in order to match supply and demand in local labor markets.
A prime example of a high-functioning workforce intermediary is Ascend Indiana, an initiative of The Central Indiana Corporate Partnership. Ascend works directly with a broad cross-section of employers, from manufacturing to life sciences, facilities maintenance to the military, to identify critical staffing needs. At the same time, it partners with education and training providers to ensure they are offering programs that are tightly aligned to skill-based requirements.
Through one-on-one career coaching sessions, work-based learning opportunities, and a job-matching platform, Ascend connects employers with program graduates, as well as other qualified candidates, to provide reliable talent for businesses across Indiana. And when programs don’t exist to meet industry needs, Ascend steps in to work with employers and providers to build new programs that lead directly to jobs. Since its founding in 2016, Ascend has helped train and place over 6,000 workers.
Organizations like Ascend are delivering compelling results, but they need to be supported, replicated, and taken to scale at the state level. While these efforts should be employer driven, leadership from governors is essential. Not only can they be the most powerful cheerleaders for the cause, no one else can integrate data systems, mobilize public resources, and align incentives across state agencies to meet present and future talent needs. That’s especially important for those without a college degree.
The American economy is facing tremendous challenges. The international economic system is in flux in response to the rise of China as a world power and the cumulative impact of globalization and accelerating technological advancement. Wealth and income indices here at home are at record levels, but many of our foundational industries have been hollowed out and many of our communities have been left behind. The effects can be seen not just in jobs reports and increasing income inequality, but in a growing sense of disenchantment with American institutions and the American dream itself.
Notwithstanding the manifest problems, this is a moment of great potential. There is a growing consensus on both sides of the aisle that we need to support the critical sectors of our economy, most notably manufacturing. And there are emerging organizations rising to the challenge by developing and scaling evidence-informed programs to build the skilled workforce we need. The only thing missing is the sense of urgency and resolve to match our commitment to reinvest in our critical industries with an equal commitment to reinvest in our people.