The Opportunity Movement

Devoted to closing the Opportunity Divide

Category Archives: Workforce Development

To Create Jobs, Create a Skilled Workforce

This week I had the opportunity to share my thoughts with Big Ideas for Jobs, a research project promoting practical, sustainable, and scalable job creation ideas. Here’s what I had to say; you can also read the original post on the Big Ideas for Jobs website.

Each year, millions of jobs are created for workers with the right skills to fill them. These jobs are permanent, family-sustaining and unlikely to be outsourced. While it’s important to talk about “creating” new jobs within our nation, it’s also crucial that we fill the ones that already exist. The skills that these jobs require will be in-demand by employers long after any short-term job-creation program comes to a halt.

Even amidst high unemployment, our economy is suffering from an increasing shortage of skilled workers. 30 percent of all U.S. employers had vacancies that remained open for at least six months in 2011, despite an unemployment rate that exceeded 9 percent. To simply stop the skills gap from growing wider, we will need to produce 22 million new workers with post-secondary credentials – not necessarily a four-year degree, but some sort of training beyond high school – by 2018. At the present rate of growth, we will fall short of that number by at least three million.

It’s little wonder why: America’s one-year certificate programs (on average) graduate less than one third of their students within two years. The consequences of the divide between our students and our employers are dire. More than 6.7 million young people in this country are out of school and out of work, and together they will cost our economy more than $437 billion over the next five years, further straining our budget deficits and diverting money from other investments that promote growth in our economy.

We as a country can do something about this. Some of the most innovative community colleges and workforce training programs in the market today work closely with local employers to identify current and future positions of need. They then use their resources to offer targeted training to help prepare students for immediately available jobs.

This is what we do at my organization, Year Up. Each year we train over one thousand eager young people from the wrong side of what we call the “Opportunity Divide,” and then introduce them to businesses with jobs to fill. Our outcomes are not only impressive, but proven: More than 84 percent of our graduates are employed or in college full-time within four months of graduation, and those working earn an average wage of $15/hour ($30,000/year for salaried employees). Aside from helping U.S. companies grow, these young adults become experienced, valuable professionals. And our students’ success is contagious; not only do they become new role models and sources of inspiration to their peers, but local businesses can benefit directly from the increased purchasing power they bring back to their neighborhoods.

Just imagine the impact we could have by bringing our young people and our businesses together on a larger scale. They could power the economy for decades to come, and create millions of quality jobs in the process.

Rather than merely seeking to create new, low-skilled jobs, we need to create a sustainable education and workforce training system that prepares young people to fill the high-quality jobs that are being created every day. That’s not a partisan idea – it’s what our businesses and our young people need.

16% vs 84%

The numbers are shocking.  A study highlighted in the New York Times this week revealed that only 16% of recent high school graduates not enrolled in college are working full-time.  An additional 22% are working part-time (often because they can’t find full-time work) and most believed they would be unable to get good jobs without further education, inaccessible for many.

Where does that leave us?  It leaves us with an unforgivably high percentage of young adults who lack a path to economic self-sufficiency, and whose talent is going to waste.  And with such low odds for this generation of young people, the message to the next generation is clear: if you don’t plan – or can’t afford – to go to college after high school, don’t expect much for yourself.

This wasted potential seems especially frustrating when you consider how avoidable it is.  There are many jobs in this country that do not require four-year college degrees, and many that require them even though they are unnecessary.  With some additional training, through a vocational program or through an employer, many of these young adults could not only fill those jobs, but excel in them.

Take, as an example, Samantha Lewis, a graduate of Year Up Bay Area.  Before she started the program, Samantha, a 22-year-old high school graduate with no college degree, was unemployed and homeless.  Her talent and hard work during the program ultimately earned her a permanent position at Wells Fargo – a position for which her supervisor had previously been seeking a candidate with a college degree and 10 years of experience. 

Compare the 16% in the New York Times with the 84% of Year Up graduates (also high school graduates without college degrees) employed or attending college full-time within 4 months of completing the program.  The second number should show you that these young adults have the talent and motivation to succeed in the workplace and build meaningful careers.  What they lack is the opportunity to do so.  It is critical that we make these opportunities accessible to them – for these young adults, these companies, and our nation as a whole. 

Peter Drucker was right about higher education

60%. That’s the percentage of German high school graduates who choose vocational over academic education.  
 
7.8%.  That’s the unemployment rate for German youth.  Compare that to Spain, Greece, or America, where almost half of those under the age of 25 are unemployed.  7.8%!
 
I’m going to go out on a limb and suggest that there might be a link here.  In Germany and several other Northern European countries, choosing a vocational path after high school does not consign one to the ranks of a second class citizen.  Rather, it is what the majority of youth do, and it is considered a viable, enterprising post-high school path.  It would also appear that this choice has been a good one in terms of employment.  NPR’s “Morning Edition” ran a fascinating piece on this topic last week and concluded that the German model may present a compelling answer to the growing skills gap that we see all over our knowledge-based economy.
 
Here in America, we still have a decidedly dim view of vocational education, based on the perception that lower performing, often minority kids are getting “tracked” into low quality vocational schools at early ages, thus creating a dual class economy of educational winners and losers.  In my humble opinion, this holdover view from the 70s and 80s is outdated and just plain wrong.  Contrary to popular belief (as reported by the ERIC Clearinghouse on Adult, Career, and Vocational Education):

  • Vocational education students enter postsecondary education at about the same rate as all high school graduates (Kober and Rentner 2000; Stone 1993)
  • Vocational graduates are more likely to be employed and earn more than their non-vocational counterparts, particularly vocational graduates who worked part time during high school (Stone 1993)

Indeed, the knee-jerk negative reaction that so many people have to the words “vocational education” stands at odds with the values many of them actually hold.  A 1997 Washington State Workforce Training and Education Board survey (cited by ERIC) revealed that almost 9 of 10 respondents agreed that high schools should provide some kind of career preparation to every student before graduation, 3 of 4 said that career education should start before high school, and 96 percent favored education for every student that provided a strong academic foundation, hands-on learning experience, and an opportunity to practice what he or she has learned in a work-based setting.  That data doesn’t square with the negative reaction that people have of voc-ed, does it?
 
I think we are on the cusp of a massive wave of post-secondary education reform.  As writer and management consultant Peter Drucker told me in 1997, “Don’t take four-year college for granted.” Boy, was he right.  A combination of changing workforce needs, technical innovation, runaway college costs and flat or declining real wages for most people will challenge the “college-for-all” rhetoric that so many of us now see as the only path to success in America.  We are about to observe the creation and acceptance of multiple enterprising pathways into the mainstream economy.   It will happen whether we like it or not, and I predict it will serve to increase both opportunity and mobility for millions of youth in this nation.

Note: If you want to go deeper here, my friend Nancy Hoffman provides an insightful lens on this topic in her book, “Schooling in the Workplace” (http://www.hepg.org/hep/book/148).

1+1=1.2 Trillion

For years, Year Up has understood that the return on its investment in young adults was not purely measured by the incremental income that our graduates are able to earn and the taxes they will pay.  Surely, the avoidance of negative costs (social welfare, prisons, lost productivity, etc.) is also something we should include in answering the question, “What is the value of Year Up?”  However, much as we tried, we were not able to obtain accurate and convincing data to quantify the savings to society by enabling a “disconnected” young adult to gain access to a livable wage job and a post-secondary education.  We did not want to cite “soft” data that could be questioned, ultimately weakening the proof of our model.  We were content to rest purely on the external causality study conducted by Economic Mobility Corporation, which concluded that Year Up raises the wages of those who go through the program by 30% compared to control group.

Imagine the smiles across our faces at Year Up when we read the article in the Atlantic about the cost of jobless youth to taxpayers.  I almost ripped the cover page of the magazine trying to find the article in question.  The numbers are eye-popping!  Each jobless youth costs taxpayers $14,000 per year, costing us more than $437 billion over the next five years and $1.2 trillion over their lifetime.  Have a read through the article and the data – the claims are justifiable and coherent, and the implications are massive. In a time when we have to get our economy back on track and reduce the debt burden that exists in our nation, we can save ourselves half a trillion dollars, AND do something to reduce economic inequality. Sound too good to be true?  It isn’t.

The fact is that we will pay for rising numbers of disconnected young adults in our nation whether we like it or not.  The only question is how you want to invest your money. You can do it on the front end by providing people with access, opportunity and support to realize their potential and enable them to become taxpayers and productive citizens; or on the back end in lost taxes and productivity, higher social welfare costs and higher costs for the criminal justice system. The choice is ours to make, and it is a real choice.

David Brooks talks about this choice in his recent article about Charles Murray’s new book, Coming Apart, and ends by correctly encouraging the top 20% to spend some more time with the bottom 30%. Brooks is encouraging us to look ahead and to recognize that the current path down which we are going hurts our long-term economy, increases our level of inequality and reduces mobility.  Ultimately, it poses a threat to our civil society, and tears at the very fabric of our democracy.

The good news is that we can do better – putting our youth to work is better for our democracy and better for our economy.  One and one can equal three, and in this case it might just equal a trillion!

The “Try Before You Buy” Job Creation Model

Ask any political candidate what the US can do today to create more jobs, and he or she will likely suggest solutions such as implement a job-creation tax credit, create an infrastructure bank, or fully fund the AmeriCorps program. Sure, these fixes will lead to job creation in the medium term, but what can our country do to ensure jobs are available now?

Let’s take a step back. There’s no argument that unemployment is a major problem in the United States today. According to the Bureau of Labor Statistics, nearly 14 million people are unemployed; this amounts to just over 9 percent of the entire US population. Any job hunter will tell you about the frustration they face in searching for a position that matches their skills and provides an income, as well as benefits, job security, and room for growth. Listen a bit closer, however, and you will also hear frustration from hiring managers at top American companies about the lack of talent they are finding in the candidate pool: there are 3 million job vacancies in the United States today; filling them today would decrease unemployment by a few percentage points! Clearly, we have a problem in the labor exchange market that needs to be fixed, and fixed now.

What we could do immediately is offer $10,000 to any employer with one of those three million vacancies. The money could then be used to pay the wages of an unemployed person for three months, giving time to train that person in a skill the employer needs. At the end of three months, the employer could choose whether or not they want to hire the individual. Call it a “try before you buy” model, or a risk-free hiring process.

One program that is already implementing a version of this is Georgia Work Ready. It is the only program of its kind to be conducted through a partnership between a state government and a state chamber of commerce. Work Ready provides a skills assessment and certification for job seekers and a job-profiling system for businesses. By identifying both the needs of business and the available skills of Georgia’s workforce, the state can more effectively generate the right talent for the right jobs. In 2010 alone, more than 14,000 Georgians found work using their Georgia Work Ready certificate.

This model is promising. If other states followed suit, we would find ourselves with a better prepared workforce, fewer job vacancies, and more marketable talent with better paths for success, not to mention greater efficiency in the hiring process for companies. This would lead to a stronger economy over the long run and help the US to better compete in the global economy.

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