Center for Workforce and Economic Opportunity

By Alexander Ruder

There are promising approaches to help workers acquire skills and credentials valued by the labor market that address training and employment challenges, particularly among low-income individuals, minorities, and nontraditional students. On November 9, 2018, at the Federal Reserve Bank of New York, three expert panels discussed some of these approaches as part of the launch of the three-volume book Investing in America's Workforce: Improving Outcomes for Workers and Employers. This section discusses the first panel on volume 1, "Investing in Workers," which builds on the theme that workers—particularly disadvantaged workers—are assets. Carl Van Horn of the Heldrich Center moderated the discussion and was joined by Maurice A. Jones of Local Initiatives Support Corporation (LISC), Wilson Finch of the Council for Adult and Experiential Learning (CAEL), Todd Greene of the Atlanta University Center Consortium, and Marc Morial of the National Urban League.¹

(L–R): Carl Van Horn of the Heldrich Center, Marc Morial of the National Urban League, Todd Greene of the Atlanta University Center Consortium, Wilson Finch of the Council for Adult and Experiential Learning, and Maurice A. Jones of the Local Initiatives Support Corporation discuss investing in workers at the Investing in America’s Workforce book launch.

A holistic approach to training and employment
Panelists began by discussing the existing mismatch in the labor market: while businesses have growing demand for workers to fill middle-skill positions, there is a disproportionate number of individuals in low- and moderate-income communities who are under- or unemployed, but also lack the skills and credentials necessary to meet this demand. LISC's Maurice A. Jones discussed the success of a three-pronged approach of financial literacy, development of soft and hard skills, and case work-like support for everything from housing to transportation to tax preparation. Coaches help their clients find training and employment, but as part of a more holistic process: they continue working with individuals one-on-one beyond the job training phase, supporting people to stick to their goals and connecting them with a range of supports. The model also includes training tailored to specific local growth industries in need of workers and connects employers to those newly skilled employees. Van Horn recognized the success of LISC, but he asked how such a comprehensive and costly model could be taken to scale. According to Jones, the LISC model relies on the effort of a team of preexisting organizations that already invest in workers; this team approach reduces the cost to any one program and allows the model to be cost-effective and scalable.

The role of historically black colleges and universities
The discussion then turned to the role historically black colleges and universities (HBCUs) have in preparing individuals, particularly African Americans, for the workforce. Todd Greene spoke about the historical and contemporary importance of HBCUs; these institutions provide academic and technical-oriented education to prepare students for workforce success. While some observers question the relevance of HBCUs, evidence supports that these graduates enjoy greater success in the labor market relative to other graduates. Unfortunately, small endowments, decreasing enrollment, and issues with governance models have, in some cases, created additional challenges for these institutions. The unique preparation provided by HBCUs strengthen the case for investment. Greene, drawing from the HBCU-focused section in Investing in America's Workforce, discussed how improvements in university governance, the development of a pipeline of students through K-12 partnerships, and supportive financial services to increase graduation rates can together strengthen HBCUs themselves and improve student academic and labor market outcomes.

Adult workers as adult learners
Continuing on the themes of labor market mismatch and higher education, Wilson Finch noted that the pipeline of "traditional" college students (full-time, first-time students who are 18 to 22) is declining. Higher education institutions, typically designed to support the traditional student, need to reorient efforts toward supporting adult learners. Adult workers currently in the workforce are a valuable asset; through policies such as nonformal learning, prior learning assessments, and competency-based education, adults can acquire the skills and credentials needed to move into middle- and higher-skill jobs. Finch concluded with a startling statistic: in some states, the number of adults without a college degree is equal to the number of all public K-12 students. To Finch, this statistic illustrates the scale of the opportunity to invest in adult workers.

Policy and program implications
For Marc Morial, the panel raised at least three issues he sees as necessary to future development of a successful workforce system. First, community-based organizations are essential because they offer many of the supportive services that higher education institutions do not typically provide. Second, organizations and individuals must adapt to a model of lifelong learning so youth and adults have continual access to training opportunities and can adapt to changes in the broader economy. Third, policymakers must take successful programs to scale rather than continuing to invest in single, small-scale pilot programs. To Morial, policymakers have more evidence than ever on what works; the challenge now is to make the investments to expand these successful models. Morial also cited the comparatively high unemployment rate of African Americans, calling for more emphasis on racial equity in workforce development research and practice.

Van Horn concluded the panel by stating that the discussion and research in Investing in America's Workforce: Improving Outcomes for Workers and Employers were published at an opportune moment. The tight labor market creates an environment favorable to innovators who can expand or replicate successful programs or develop new approaches to strengthen America's workforce development system.

Investing in America's Workforce
This publication is part of the Investing in America's Workforce initiative, which aims to show how well-structured and effective policy and programs translate into better outcomes and opportunities for individuals, businesses, and communities. For further insights from these and other authors on best practices in workforce development, download individual chapters or the complete volumes of Investing in America's Workforce: Improving Outcomes for Workers and Employers.

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¹ Carl Van Horn is distinguished professor of public policy and director of the Heldrich Center for Workforce Development at Rutgers University, Maurice A. Jones is president and CEO of the Local Initiatives Support Corporation, Wilson Finch is director of higher education services, workforce and economic development at the Council for Adult and Experiential Learning, Todd Greene is executive director of the Atlanta University Center Consortium, and Marc Morial is CEO of the National Urban League. Jones, Finch, and Greene wrote chapters in Volume 1 and Van Horn wrote a chapter in Volume 3 of Investing in America's Workforce: Improving Outcomes for Workers and Employers. Both Van Horn and Greene are coeditors of the three-volume publication.

By Mels de Zeeuw

It was difficult to miss 2018 headlines about the strength of the economy and labor market in the United States: solid economic growth, record low unemployment, soaring consumer and business confidence, and employers increasingly experiencing difficulty hiring workers. However, to paraphrase Jeffrey Fuhrer, executive vice president and senior policy adviser at the Federal Reserve Bank of Boston, the glowing macro-level statistics fail to paint a complete picture of the U.S. economy.

In particular, Fuhrer pointed out that many employers provide workers with low compensation and limited benefits, so employees must rely on the social safety net for support, creating costs borne by all. While he emphasized the importance of this safety net, Fuhrer noted that fewer employers now take responsibility for employee well-being, and suggested that policy interventions could well be necessary to change this trajectory.

(L–R): Jeffrey Fuhrer of the Federal Reserve Bank of Boston, Susan Crandall of the Center for Social Policy at UMass Boston, Teófilo Reyes of the Restaurant Opportunities Center United and Goldman School of Public Policy, UC-Berkeley, Donna Fabiani of the Opportunity Finance Network, and Fred Dedrick of the National Fund for Workforce Solutions discuss investing in work at the Investing in America’s Workforce book launch.

On November 9, 2018, a panel of experts gathered at the New York Fed to discuss changing these norms and improving the quality of jobs in the workforce. The panel was part of the launch of Investing in America's Workforce: Improving Outcomes for Workers and Employers. Fuhrer moderated the panel on volume 2, "Investing in Work." The panelists included Susan Crandall of the University of Massachusetts Boston, Teófilo Reyes of Restaurant Opportunities Center United, Donna Fabiani of Opportunity Finance Network, and Fred Dedrick of the National Fund for Workforce Solutions.¹

Solutions to job segregation
Susan Crandall voiced concern over the ubiquity of low-quality jobs, and she believes there is increasingly segregation between low-skill and higher-skill jobs. Companies frequently contract out work, which predominantly affects lower-skill jobs such as in food services, back-end office work, or janitorial positions. Women and minorities disproportionally staff these jobs. Crandall is encouraged by a younger generation that is more focused on this topic and wants to support firms that pursue creating value for their community, workers, and the environment, besides boosting their profitability, sometimes referred to as "triple bottom line companies." Additionally, various Silicon Valley companies are now setting higher standards for their contract workers.

Crandall highlighted several solutions that may improve the well-being of workers in low-quality jobs, including the creation of B corporations with built-in corporate responsibility. B corps are for-profit businesses that have received a certification for meeting certain accountability, transparency, social sustainability, and environmental standards. She also discussed increasing minimum wage, employee ownership, and profit sharing programs and implementing open-book management systems. Taken together, these solutions can benefit employers through reduced turnover, higher profits, and improved productivity, and they can benefit employees by boosting their wages and business acumen.

Implementation of such approaches and changing employer norms can happen, for instance, by building such programs into the Workforce Innovation and Opportunity Act (WIOA), through employer investment, philanthropic support, tax credits, and by expanding state training funds. However, care should be taken that interventions account for the disparate needs of different industries, and that workers are not negatively affected by a benefits cliff effect, such that their loss in government assistance is greater than their gain in household income.

Raising wages
Teófilo Reyes advocated for the removal of the subminimum wage for tipped workers, the majority of whom work in the food-services industry. He pointed to surveys of employers that showed that wages are most important for the retention of workers. Notably, there are lower poverty rates and reduced dependence on government assistance among the 19 percent of food-service employees who work in the seven states that do not allow this subminimum wage structure.

Reyes argued that a combination of a power imbalance between workers and employers as well as significant competitive pressures in the restaurant industry necessitates policy intervention to improve wage regulations for tipped workers. He offered an increase in the minimum wage, tax incentives, and policies aimed at reducing business rental costs as potential solutions.

The role of community development financial Institutions
Donna Fabiani believes business owner commitment is a key driver to ensure workers have access to quality jobs. However, businesses need to understand how they may benefit from offering certain improvements to job quality, and receive guidance on how to make such changes. Boosting the quality of jobs is particularly important to employees in gentrifying communities, as it can allow these workers to remain in place. Community development financial institutions (CDFIs) across the country have begun adopting various approaches to promote quality jobs. Some CDFIs educate business owners on low-cost ways to create better jobs, such as by offering more flexible scheduling. Others incentivize employers by offering interest rate reductions or deferred payments on business loans when an employer introduces changes that improve job quality.

Fabiani sees a growing movement of socially responsible investment and consumption that makes it more attractive for businesses to improve the quality of the jobs they offer. She notes the growing recognition of B corporations. While she is encouraged by CDFIs' work with small businesses and the success of their job quality products and services, she believes the public sector could offer tax incentives to support these efforts. It is also important for philanthropy to understand this issue and financially support the promotion of quality jobs.

Changing norms
Fred Dedrick argued that the current strong economy should change the relationship between employees and employers. Since the labor market is so tight, a situation that is unlikely to change given retirements and current immigration trends, businesses should want to be viewed as a quality employer in order to attract and retain workers. However, the current system is not working as well for people of color, resulting in significant disparities in labor market outcomes, like wages and unemployment status. Given the current tight labor market, this is the right time to address this differential, by having conversations with employers so they recruit a more diverse workforce.

Long term, however, the power balance between worker and employer has shifted, given decreased unionization rates, the increased importance of shareholder value, and the rise of contingent worker arrangements. The workforce system can play an important role addressing this imbalance by partnering with businesses to identify their turnover costs. Employers could see how investments in job quality might increase worker retention and, in turn, support their bottom line. To effect such change, it is important to identify industry champions that can show how they have benefited and convince other companies to follow suit.

Investing in America's Workforce
This publication is part of the Investing in America's Workforce initiative, which aims to show how well-structured and effective policy and programs translate into better outcomes and opportunities for individuals, businesses, and communities. For further insights from these and other authors on best practices in workforce development, download individual chapters or the complete volumes of Investing in America's Workforce: Improving Outcomes for Workers and Employers.

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¹ Susan Crandall is the director of the Center for Social Policy at the University of Massachusetts Boston. Teófilo Reyes is the research director at the Restaurant Opportunities Center United and a visiting scholar at the Goldman School of Public Policy, UC-Berkeley. Donna Fabiani is the executive vice president at the Opportunity Finance Network (OFN), and Fred Dedrick is the president and CEO at the National Fund for Workforce Solutions. Crandall, Reyes, and Fabiani wrote chapters in Volume 2 of Investing in America’s Workforce: Improving Outcomes for Workers and Employers.

By Ann Carpenter

Workforce development encompasses a wide variety of publicly and privately funded activities, from development of soft skills such as computer literacy to certification in a specific field. The vast majority of resources come from the private sector, predominantly employers. However, training and services for underserved, low-income populations are disproportionately supported through public resources such as Workforce Innovation and Opportunity Act (WIOA) funding and other federal, state, and local programs.

Given the importance of public dollars to fill gaps in the workforce development system, political buy-in is critical. According to Jim Tankersley of the New York Times, workforce development appears to elicit the bipartisan support that could be fruitful in today's divided government.

(L–R): Jim Tankersley of the New York Times, Chauncy Lennon of the Lumina Foundation, Lauren Eyster of the Urban Institute, Andy Van Kleunen of National Skills Coalition, and Jane Oates of WorkingNation discuss investing in systems for employment opportunity at the Investing in America’s Workforce book launch.

Tankersley moderated a November 9 panel at the launch of the book Investing in America's Workforce: Improving Outcomes for Workers and Employers at the New York Fed. The panelists included Lauren Eyster of the Urban Institute, Chauncy Lennon of Lumina Foundation, Jane Oates of WorkingNation, and Andy Van Kleunen of National Skills Coalition.¹ The panel focused on themes from volume 3, "Investing in Systems for Employment Opportunity," including strategies for policymakers to guide public resources for workforce development efforts.

The role of the public workforce system
Eyster described the public workforce system as a sort of test bed for new ideas, imbued with several decades of experimentation, learning, evolution, and significant investment. Public workforce development providers can learn from and better connect to partners such as nonprofits, community colleges, and employers. Lessons learned should be shared by stakeholders, for example, through the National Governors Association and other interest groups. However, smaller programs by nature have limited budgets and may not be able to innovate. According to Oates, philanthropy is often better suited to assume the risk associated with experimentation than the public sector.

Technology creating opportunities
The panel highlighted the necessary role of technology in the future of workforce development. Automation and job destruction dominate headlines, yet technology also creates opportunities to serve more people in new ways, including new training methods, tools for intermediaries such as assessment systems, and job matching functionality. Lennon invoked Mark Granovetter's "The Strength of Weak Ties" in outlining another potential boon—the ability to network with a wider array of acquaintances while seeking a job.² However, lack of access to a reliable internet connection is a problem for around 20 percent of the population, particularly rural, lower-income individuals.³

Engaging those often left out
Unfortunately, many unemployed and underemployed individuals have become disillusioned by the workforce development system that they find confusing, unworkable, or unable to deliver on its promises. It is difficult to reengage such adults, and equity is a concern, as racial and ethnic minority populations are often among the disenfranchised. Support services, such as transportation and child care, are necessary to increase the effectiveness of workforce training programs and make them more accessible to all. In addition to minority populations, Oates emphasized the workforce system should better engage incumbent workers and older adults.

According to Oates, the book's third volume, "Investing in Systems for Employment Opportunity," is particularly important in that the discussion of systems and systemic problems can be thorny and is often avoided. Van Kleunen poignantly reminded the audience that we are complacent to think that the United States will always have a strong economy and skilled workforce, relative to international competition. Therefore, continued investment in the public workforce system is crucial to provide greater economic resilience and mobility for individuals and to thrive as a nation. As noted by Tankersley, this may be an opportune moment to do so.

Investing in America's Workforce
This publication is part of the Investing in America's Workforce initiative, which aims to show how well-structured and effective policy and programs translate into better outcomes and opportunities for individuals, businesses, and communities. For further insights from these and other authors on best practices in workforce development, download individual chapters or the complete volumes of Investing in America's Workforce: Improving Outcomes for Workers and Employers.

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¹ Lauren Eyster is a senior fellow at the Urban Institute, Chauncy Lennon is vice president at the Lumina Foundation, Jane Oates is president of WorkingNation, and Andy Van Kleunen is CEO of National Skills Coalition. Eyster, Lennon, and Van Kleunen all authored chapters in Volume 3 of Investing in America's Workforce: Improving Outcomes for Workers and Employers.

² Granovetter, Mark S. (1973). The Strength of Weak Ties. American Journal of Sociology, 1360-1380.

³ Barton, Jordana (2018). Preparing Workers for the Digital Economy. In Investing in America's Workforce: Improving Outcomes for Workers and Employers.