Let's Get Serious About Our Nation's Human Capital

7/31/2019 Let's Get Serious About Our Nation's Human Capital

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Lets Get Serious About OurNations Human CapitalA Plan to Reorm the U.S. Workorce Training System

Stephen Steigleder and Louis Soares June 2012

www.americanprogress.o


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Lets Get Serious About OurNations Human CapitalA Plan to Reorm the U.S. Workorce Training System

Stephen Steigleder and Louis Soares June 2012


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Introduction and summar | www.americanprogress.

Introduction and summary

Te Grea ecession rapidly acceleraed wo long-erm challenges acing

American workers. Te rs challenge is ha middle-class jobs are increasingly ou

o reach or workers who lack educaion and skills raining beyond high school.

Income and unemploymen daa make ha clear enough.

Te second challenge is ha nding a job is no longer as easy as opening he classi-

ed ads or going o monser.com. odays labor marke requires peer and proessional

neworks and a beter undersanding o he opporuniies available in our moderneconomy. Tis lesson applies o workers a all educaion levelsbu i is paricularly

acue or low-skill workers, who are more likely o rely on public resources.

Pu ogeher, hese challenges underscore why workers wih low levels o human

capialsuch as educaion, skills, and peer and proessional neworksare

exremely disadvanaged in heir eors o achieve upward mobiliy in an increas-

ingly knowledge-based economy.

Workforce training is part of the solution

Hisorically we have solved hese challenges by expanding our ederal invesmen

in possecondary educaion. As a resul o successul ederal iniiaives such as he

Morrill Land Gran Acswhich esablished land-gran colleges across our naion

over he course o he pas 150 yearsand invesmens such as he G.I. Bill and he

Pell Gran program, possecondary educaion is generally considered o be he mos

eecive vehicle in hisory or building a srong middle class and a skilled workorce.

Bu possecondary educaion is no limied o a our-year bachelors degree. AsPresiden Barack Obama oulined in his American Graduaion Iniiaive,1 possec-

ondary educaion includes many orms o educaion and raining, including:


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2 Center or American Progress | Lets Get Serious About Our Nations Human Capital

Communiy collegesVocaional raining egisered appreniceships

Each o hese opions oers he poenial or increased economic mobiliy and

access o a sable middle-class livelihood.

Arguably he mos underuilized roue o achieving a valuable possecondary edu-

caion is hrough our naions workorce raining and counseling sysem. Our adul

workorce includes 80 million o 90 million ull-ime workers who lack sucien

skills, human capial, or personal ineres o pursue a bachelors degree.2 Many o

hese adul workers would bene rom a high-qualiy hybrid workorce program

ha combines he educaional rigor o possecondary educaion wih he exibil-

iy and labor-marke ocus o workorce raining. Such a hybrid program or adul

workers is mos eecively implemened hrough he workorce sysem.

I is also increasingly imporan o our economy o boos educaional atainmen

among aduls. Economiss predic a growing shorage o skilled workers ha canno

be lled hrough he radiional educaion pipeline. According o he Aspen Insiue,

or insance, wo-hirds o our expeced workorce in 2020 is already beyond our

elemenary and secondary educaion sysems.3 In oher words, i will no be enough

o solve he problems in our elemenary and secondary educaion sysems since wo-

hirds o our workorce will be unaeced by hose changesi is equally crucial o

boos he educaion and raining o adul workers who are currenly aged 25 o 55.

For hese adul workers, he workorce sysem needs o provide a dependable

way o atain a possecondary educaion. I should oer a more exible opion or

adul workers o acquire associaes degrees, echnical cericaes, and indusry-

recognized credenials wih documened value in he labor marke. Is ime or

he workorce sysem o ake is place alongside preschool, kindergaren, elemen-

ary school, high school, and radiional our-year college as an insiuion or

promoing educaion and developing human capial hroughou our lives.

The existing workforce system is out of date

Unorunaely our workorce sysem is no meeing is poenial o help adul

workers build heir human capial. I is excessively ocused insead on providing

shor-erm crisis inervenion o unemployed workers. Te core services mos


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ofen provided o unemployed workerssuch as basic labor marke inormaion

and job search assisancedo litle o boos he underlying human capial o

hese workers, who need he skills, credenials, and neworking capabiliies ha

should serve as he oundaion or heir uure economic mobiliy.

Tis is because he mos recen congressional updae o he workorce sysemwas in 1998 hrough he Workorce Invesmen Ac under subsanially dieren

economic circumsances. A ha ime our economy was experiencing signican

economic growh and across-he-board wage gains. Te unemploymen rae sood

a 4.5 percen. Privae employers waned a workorce sysem ha provided basic

work readiness skills so ha millions o workers could immediaely ener he labor

orce. Congress hus chose o design a sysem around work-rs policieso

help workers ake advanage o pleniul job opporuniies and high wages

insead o human capial developmen policies.

Almos 15 years laer our economy has undergone signican changes. Ourprimary labor marke challenge is no longer he need o connec millions o low-

skill workers wih pleniul job openings in a booming economy. Insead, our

new challenge is o develop millions o low-skill workers ino a highly skilled

workorce ha will coninue o drive economic growh and upward mobiliy or

decades o come. And he message rom he privae secor is clear: Employers

are now looking or skilled workers wih hands-on experience who are ready o

make an immediae conribuion in he workplace.

Te realiy is ha our curren workorce sysemand is emphasis on work-rs

policiesis woeully ou o dae. Among he workorce sysems dening eaures

are is ailure o help workers build human capial, is chronic underunding in

comparison o he economic challenge, and is sysemic complexiy spanning

muliple cabine deparmens and numerous agencies. Te workorce sysem is

badly in need o reorm.

Getting serious about human capital

In his paper we propose a plan o overhaul and reorm he workorce rainingand counseling sysem. Our plan drasically simplies his sysem in an eor o

highligh is mos imporan missionhuman capial developmen.


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Our plan is guided by ve basic principles:

1. Mos workers need some ype o educaion or skills raining beyond high school.

2. Te workorce sysem should prioriize raining parnerships leading o

degrees, cericaes, and credenials.

3. Te workorce sysem should provide proessional career navigaion services oall workers seeking assisance o help hem build human capial over ime.

4. Te exising workorce sysem is chronically underunded.

5. Te exising workorce sysem is unnecessarily complex.

We embrace views rom boh sidessupporive and criicalin an eor o

bridge he longsanding impasse ha is blocking reorm and modernizaion o he

workorce sysem.

Te purpose o our plan is o shif he op prioriy o he workorce sysem o

long-erm raining and human capial developmen. Tis is a deparure romhe exising sysems overemphasis on shor-erm job search aciviies and rapid

re-employmen a any cos. In realiy, however, i should no be a conroversial

change in policy since legislaors across he poliical specrum have acknowledged

he need or a more skilled workorce. Tere is a general consensus among expers

ha placing long-erm human capial developmen a he cener o he workorce

sysem will be muually benecial or workers, employers, and our naions long-

erm economic growh. Now i is a mater o designing a new sysem o accom-

plish hose broadly recognized goals.

Our plan resrucures he workorce sysem according o he premise ha workers

should receive educaion, raining, and career-planning services based on heir

unique human capial needs. Under our proposal, individuals would enroll in

college-level raining, career pahways, or conexualized basic educaion depend-

ing on a sandard assessmen o heir skills and need or suppor servicesas

opposed o he curren sysem ha deermines an individuals eligibiliy or ser-

vices according o a poenially unrelaed lis o legislaive crieria. Our proposal o

accomplish his shif in eligibiliy and implemenaion is briey oulined below.

o ocus on building long-erm human capial, we propose resrucuring much ohe exising workorce raining and counseling sysem ino wo disinc agencies

wih independen budges. Tese agencies are designed o address he wo core

compeencies o he workorce sysemworkorce raining and career services.

We believe ha separaing hese core compeencies will creae a dedicaed und-

Our planrestructures the

workorce system

according to

the premise that

workers should

receive education,

training, and

career-planning

services based

on their unique

human capital

needs.


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ing sream or each aciviy, hereby increasing ransparency abou how unds

are being spen and wheher hose unds are achieving resuls. (A his poin, i

is worh noing ha our proposal arges only adul-serving programs and does

no address workorce raining programs ocused on youh, including Job Corps,

YouhBuild, and WIA Youh.)

Te rs agency, which we would call he Workorce Invesmen Bank, would be

responsible or developing an addiional 2.5 million skilled workers annually

leading o an addiional 1 million credenials. Tese workers would complee

educaion and raining programs hrough:

Secor parnerships egisered appreniceships Learn and earn raining models Career pahways Conexualized educaion and raining programs

Programs would be implemened wih privae-secor parners and linked o pro-

jeced job openings in high-growh regional indusries. Paricipans would earn

associaes degrees, echnical cericaes, and indusry-recognized credenials.

Te second agency, which we would call he Career Navigaion Sysem, would

be responsible or upgrading our naionwide sysem o exising One Sop Career

Ceners o ensure ha long-erm career navigaion servicesincluding skills assess-

mens, career counseling, and individual case managemenare available o all

workers seeking assisance. I would also develop a more inegraed sel-help sysem

or individuals o rack heir human capial invesmen hrough online porolios.

o mainain saeguards or vulnerable populaions, we sugges esablishing sric

requiremens so ha all saes, regions, and raining parnerships repor disag-

gregaed daa by sex, race, ehniciy, socioeconomic saus, disabiliy, and English-

language prociency. esuls should be inegraed ino longiudinal daa ses,

including boh educaion and workorce raining programs. In addiion, regions

should be required o develop perormance-based unding incenives o reward

programs ha help disadvanaged populaions o complee raining programs.

I is imporan o noe, however, ha our proposal does no resor o combin-

ing all workorce programs ino a monolihic block gran. In our plan, reorm is

predicaed on a core objecivedeveloping human capialand all policy recom-


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mendaions ow rom his core objecive. In a block-gran proposal, by conras,

reorm is based on a dieren goalholding down coss.

Obviously hese approaches are very dieren. On one hand, our plan begins

wih he premise ha workers need o increase heir educaion and skills, which

leads us o creae wo agencies dedicaed o workorce raining and proessionalcareer services, respecively. On he oher hand, plans o consolidae he work-

orce sysem ino a block gran begin wih he premise ha our sysem spends oo

much money on workorce raining, which leads o proposals o cap unding. Our

approach is a means o develop a more skilled workorce; a block-gran approach

is a means o manage long-erm sagnaion.4

We believe our more houghul approach, combined wih a commimen o ully

und a reormed workorce sysem, is a beter way o address he serious chal-

lenges acing our workers, our business communiy, and he long-erm compei-

iveness o our economy.

Te ollowing secions oer a brie overview o our proposed new agencies.

Workforce Investment Bank

Te Workorce Invesmen Bank would ocus exclusively on developing more han

2.5 million skilled adul workers a all levels and would be unded a $10 billion a

year. I would include hree programs:

College for Working Adults would help 1.5 million college-ready adul workers

o enroll in communiy college, echnical college, and regisered appreniceship

programs leading o associaes degrees and echnical cericaes.

Career Pathways for Working Adults would help 1 million low-skill adul workers

o enroll in career pahway programs, inegraed basic educaion and skills pro-

grams, or preappreniceship programs ha lead o indusry-recognized credenials.

Targeted Communities Workforce Investment Fund would help 150,000 disad-vanaged workers in specic communiiessuch as Naive Americans, migran

armworkers, and ex-oenderswho do no have access o radiional work-

orce raining and counseling programs. Tis program would also und coordi-

naed oureach eors o miliary veerans.


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Te Workorce Invesmen Bank would be overseen by he Deparmen o

Educaion, hereby emphasizing he programs ocus on possecondary creden-

ials. Te majoriy o unds would be allocaed o regional auhoriies, which

would be responsible or developing, implemening, and overseeing public-privae

raining parnerships in heir regions. Tese regional auhoriies would, in urn,

be held accounable o he Workorce Invesmen Bank hrough perormancemeasures ha would rack boh progression and compleion o possecondary

credenial-bearing courses o sudy.

Wih regard o vulnerable populaions, perormance measures would ensure

ha public-privae raining parnerships are working wih he hardes-o-serve

groups and are being rewarded or working wih aduls who ace muliple barri-

ers o employmen.

Career Navigation System

Te Career Navigaion Sysem would be responsible or combining labor marke

inormaion and career services or all adul workers seeking assisance. Tis new

sysem would be unded a $2.25 billion a year and would redene universal services

o include comprehensive skills assessmens, individual career counseling, case

managemen, and prevocaional raining services. All job seekers would be assised

in creaing an online career developmen accoun, or a Career GPS, o aciliae

long-erm career planning and communicaion wih employers. Tis sysem would

coninue o oer basic services such as job-search assisance and work-es assess-

mens or unemploymen insurance as par o is comprehensive services.

Te Career Navigaion Sysem should be overseen by he Deparmen o Labor,

hereby emphasizing he programs mission o deliver high-qualiy career services.

Te sysem would be based on he exising nework o 2,800 One Sop Career

Ceners and also would creae connecions o Educaional Opporuniy Ceners

locaed on communiy college campuses. Te Deparmen o Labor would suppor

hese bricks-and-morar ceners by developing and mainaining online ools and

inrasrucure ha would be available o all career navigaion ceners, as well as pro-

viding echnical assisance o develop he skills o proessionals who provide careerservices.


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Regional authorities

Evidence suggess ha skilled workers, invesors, and inrasrucure end o come

ogeher a he regional levelcrossing poliical boundariesas opposed o he

local or sae level. Bu he exising workorce sysem is managed locally by more

han 600 workorce invesmen boards. We believe his prolieraion o local admin-israive bodies conribues o he overall complexiy o he workorce sysem.

Our reorm plan suppors a regional governance srucure or he Workorce

Invesmen Banksubsiuing regional auhoriies or local workorce inves-

men boards. egional auhoriies should cu he number o adminisraive

bodies in halreducing he number o abou 300. More imporanly, i would

align workorce developmen aciviies wih naural labor markes and economic

growh models, which would improve coordinaion and eeciveness.

Tese regional auhoriies would ac as scal agens or he Workorce InvesmenBank and would ake he leadership role in developing raining parnerships. By

combining muliple unding sreams and emphasizing human capial develop-

men, regional auhoriies would become primary sakeholders in he educaion

and raining sysemsable o bring ogeher workers, employers, educaion and

raining providers, and public ocials o implemen long-erm economic develop-

men plans or heir regions.

egional auhoriies would coninue o be led by privae-secor business leaders,

wih addiional experise coming rom secor expers, workorce sysem proes-

sionals, local eleced ocials, communiy college and echnical college repre-

senaives, and labor represenaives. Teir eors would ocus on developing

parnerships beween communiy colleges and indusry secors leading o associ-

aes degrees and credenials; expanding he use o regisered appreniceships; sup-

poring learn and earn raining models; and using career pahways sraegies and

conexualized basic skills programs o help low-skill workers earn credenials. In

addiion, regional auhoriies would be responsible or overseeing implemenaion

and daa reporing o raining programs o ensure qualiy and resuls.


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Budgeting for a workforce system that solves our challenges

Our proposed budge or a reormed workorce sysem is designed o address

he challenges conroning American workers in he modern, innovaion-based

economy. Our economy is already suering a shorage o skilled workers, and i

is only geting worse. Closing ha gap will require new prioriiesoulined inhe preceding secionsand he resources o develop an addiional 1 million

skilled workers annually.

Our redesigned workorce sysem is inended o enroll more han 2.5 million

workers in long-erm educaion and raining programs leading o associaes

degrees, echnical cericaes, and indusry-recognized credenials, along wih

universal access o career navigaion services. Te increased enrollmen in educa-

ion and raining programs should resul in more han 1 million credenials earned

annually. Te Workorce Invesmen Bank would suppor:

One million workers raining in secor parnerships One million workers raining in career pahways and conexualized programs Hal a million workers raining in regisered appreniceships

o ensure a sucien level o unding o rain an addiional 2.5 million workers

while expanding access o career navigaion services, we combine workorce pro-

grams currenly managed by he deparmens o Labor, Educaion, Agriculure,

and he Inerior, along wih he Lieime Learning ax Credi, and direc hose

resources o our new workorce sysem. Bu simply reorganizing exising unds

will no be enough o resolve our looming shorage o skilled workers. Tereore

we incorporae a pending proposal rom he Obama adminisraionhe

Communiy College o Career Fundino our reorm plan as well.5 (see able 1

on nex page)


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TABLE 1

Reorming the American workorce system

Our plan takes more than 20 ederal workorce system programs and streamlines them into two agencies

to improve our nations human capital and job-creation capabilities (dollars in millions)

Current workorce programs Proposed workorce system

Discretionary spending

Department o Labor Department o Education

Employment Service $702 Workorce Investment Bank

Oce o Apprenticeship $28 College or Working Adults $4,500

WIA Adult Program $771 Career Pathways or Working Adults $5,000

WIA Dislocated Worker Program $1,008 Innovation and Evaluationnon-add (10%)

WIA Innovation Fund $50 Targeted Communities Training Fund $500

Reintegration o ex-oenders $80

Indian and Native American programs $48 Department o Labor

Migrant and seasonal armworkers $84 Career navigation system

Veterans Employment and Training Service $265 Career navigation centers $2,225

Women in Apprenticeship $1

Pilots, demonstrations and research $7 Total $12,225

Workorce Data Quality Initiative $6

Evaluation $10

Department o Education

Adult Education $607

Perkins Career and Technical Education* $350

Tribal Vocational/Technical Institutions $8

Hawaiian Career and Technical Education -

Projects with industry -

Incarcerated individuals -

Employment opportunity centers $50

Department o Interior

Indian Employment Assistance -

United Tribes Technical College -

Department o Justice

Second Chance Act Prisoner Reentry Initiative -

Department o Agriculture

Supplemental Nutrition Assistance Program $381

Employment and training


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Introduction and summar | www.americanprogress.o

O course, we recognize ha such a signican overhaul o he workorce sysem will

be dicul o enacserious reorm is never easy. Bu we also know i is possible.

A recen opinion piece in Te New York imes demonsraes ha poliical ideology

should no be a barrier o reorming he workorce sysem. wo leading econo-

missDean Baker, a liberal, and Mark Hasset, a conservaivejoined orces o

highligh he human and economic coss o long-erm unemploymen. Tey lised a

number o impacs o long-erm unemploymenincluding higher raes o suicide,

higher incidence o serious illness, and uure earnings losses o children whose par-

ens experienced job lossesand issued a call or serious policies o resolve he crisis.

According o Baker and Hasset, A policy package ha as a whole should appeal

o he lef and he righ should spend money o help expand public and privae

raining programs wih proven rack records.6

We couldn agree more. Increasing suppor or job raining ha builds human

capial and leads o sable middle-class employmen is a wise invesmen ha

should appeal o policymakers across he ideological specrum. Te only remain-

ing quesion is how o do i.

In he pages ha ollow, his repor presens our plan o overhaul and reorm heederal workorce sysem. We sar by highlighing he looming shorage o skilled

workers and he imporance o possecondary educaion and raining o develop-

ing a skilled workorce. We hen discuss he deciencies in he curren workorce

sysem ha are prevening i rom ocusing on human capial developmen.

Finally, we ouline in deail our plan o reorm he workorce sysem.

Current workorce programs Proposed workorce system

Mandatory spending

H-1B Grants $125

Trade Adjustment AssistanceTraining $575

Trade Adjustment Assistance Community $500

College and Career Training Grants (TAACCCT)

Tax code

Lietime Learning Tax Credit $3,900

Administration proposal

Community College to Career Fund $2,667

Total 2012 $12,223

Source: Consolidated Appropriations Act, 2012; President Obamas fscal year 2013 budget proposal or existing programs; and authorscalculations or the new workorce system.


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Human capital | www.americanprogress.o

Human capital

o se he oundaion or our reorm plan, we need o dene wo erms: human

capial and human capial invesmen. For our purposes, human capial is he

knowledge, skills, abiliies, and neworks ha a worker uses o add value in dier-

en workplaces.7

Human capial invesmen is he dieren ways ha workers build heir own

human capial. Tese ways include work experience, ormal educaion and skills

raining, skills assessmen, nework building wihin indusries, and researchingoccupaions and labor-marke rends. Tere is also evidence ha building ones

sock o human capial works a lo like compound ineres does wih savingsa

small oundaion can build up nicely i you add o i incremenally.8

Wih hese deniions in place, les ake a look a some o he challenges acing he

naion regarding human capialor more precisely, he shorage o human capial.

The problems we need to solve

A shortage of skilled workers

According o he Georgeown Universiy Cener on Educaion and he

Workorce, nearly wo-hirds o jobs will require some possecondary educaion

or skills raining by 2018. On one end o he specrum, ha means developing

highly skilled workers such as engineers, docors, and echnology enrepreneurs.

Bu only one-hird o he workorce will need a our-year bachelors degree or

advanced degree. An addiional one-hird o he workorce will need associaesdegrees or echnical cericaes o ll he growing number o middle-skill job

openings in he counry.9


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Bu our educaion sysem is alling shor. Georgeown researchers esimae ha

our economic needs will require an addiional 3 million workers wih associaes

degrees or higher and 5 million workers wih echnical cericaes and credenials

by 2018above and beyond our curren pace o developmen.10 For our pur-

poses, we ocus on middle-skill workers who end o have he ype o educaion

and skillsofen linked o associaes degrees, echnical cericaes, and creden-ialsha are developed a he communiy-college level. (see Figure 1)

Only 27 percen o American aduls beween

ages 25 and 54 have an associaes degree, ech-

nical cericae, or some ype o possecondary

rainingwhile 30 percen o jobs will require

ha level o educaion and skill wihin he nex

ew years. And approximaely 41 percen o

American aduls beween ages 25 and 54 have a

high school diploma or lesswhile only 37 per-cen o jobs will be available o hose workers

wihin he nex ew years.

As a resul, job opporuniies available o workers

wih only a high school educaion or less will sag-

nae. Bu opporuniies or workers wih associaes

degrees, echnical cericaes, or indusry creden-

ials will grow. o mainain our economic compe-

iiveness, we need o provide beter opporuniies

or workers o advance rom low-skill and middle-

skill jobs ino middle-skill and high-skill careers.

And ye despie his growing demand or skilled workers, as many as 75 million

aduls beween he ages o 25 and 54 do no have any possecondary educaion or

skills raining. Tese workers compee agains each oher or low-wage posiions

wih declining prospecs. Bu many o hese adul workers could improve heir

skills in a reasonable amoun o imei oered a exible program leading o

increased wagessince 37 million o hem already have a high school diploma or

GED, and an addiional 22 million o hem have spen some ime in a college pro-gram wihou earning an associaes degree or echnical cericae. Tis is a huge

pool o unapped poenialand we canno coninue o ignore i.11

FIGURE 1

The education gap

Educational attainment in 2010 versus projected distribution

o jobs by education level in 2018

Low-skill workers

Distribution of jobs and education level, 2018

0

10

20

30

40

50

Middle-skill workers High-skill workers

Educational attainment of U.S. population age 25 and over, 2010

Source: U.S. Census Bureau; Georgetown University Center on Education and the Workorce.


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Te disconnecion is obviousand he soluion is readily apparen. o close his

projeced shorall in middle-skill workers, we need o help an addiional 1 mil-

lion low-skill workers per year earn associaes degrees, echnical cericaes, or

indusry-recognized credenials.

Evidence shows, however, ha we underinves in educaion and raining or low-skill workers. In his bookGood Jobs America, noed Massachusets Insiue o

echnology proessor Paul Oserman illusraes his underinvesmen by showing

he dispariy in employer-provided raining invesmens. Beween 1995 and 2001,

he percenage o low-skill workers receiving employer-provided raining dropped

rom 22 percen o 20 percen, while he percenage o raining resources ha

wen o hose wih a bachelors degree increased rom 50 percen o 54 percen.12

Tis raining dierenial exacerbaes he divide by concenraing resources on

workers wih high levels o human capial a he expense o low-skill workers.

We believe i is shorsighed o underinves in raining programs or low-skillworkers while here will be millions o middle-skill job openings becoming avail-

able in he nex decade. Wihou an expansion o educaion and raining, our

exising workorce will no be able o ll hese middle-skill posiions, and innova-

ive employers will be unable o nd qualied workers here in he Unied Saes.

It isnt just about a credential

One way o develop his necessary human capial, as we have noed hus ar, is or-

mal educaion and raining. Classroom and academic sudies provide a oundaion

o knowledge, while possecondary credenials oer a useul signal o employers

ha a worker has specic skills, compeencies, and qualicaions.

Bu in addiion o credenials, employers are now demanding ha new hires

have hands-on experience as well. Call i a demand or experise. Employers are

increasingly seeking individuals wih boh echnical knowledge in heir eld and

pracical experience solving workplace problems.13 O course, employers have

always valued experience in more seasoned veerans; wha is changing is he

emphasis on applied problem-solving skills in newer workers.14

Tis rend is being driven by he auomaion o work processes, as well as he

compeiive pressure o reorganize work pracices on he ron line or an ever-


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changing consumer demand. Noed global compeiiveness exper and Harvard

Business School proessor Michael Porer describes he necessary skills his way:

competitive workers must have the ability to apply academic or technical knowl-

edge to solve real-world problems and to work eectively with other people as

customers, coworkers and supervisors.15

Te answer, in his case, is ha job raining programs need o combine academic

coursework and applied learning o develop skilled workers wih a oundaion o

knowledge and hands-on experience. In oher words, our workorce sysem needs o

evolve ino a hybrid model ha combines he educaional rigor o higher educaion

wih he exibiliy and labor-marke ocus o indusry-based workorce raining

resuling in possecondary degrees, cericaes, and indusry-recognized credenials.

A growing body o evidence suggess ha secor parnerships, career pahways,

and regisered appreniceship raining are he bes models or his ype o hybridworkorce raining sysem. Such a hybrid sysem also would oer he advanage o

signicanly increasing he prevalence o learn and earn raining models. Tese

models combine skills raining wih paid job experiences and are paricularly

benecial o workers who canno aord o drop ou o he labor marke o atend

school ull ime. Tey would also lead o an increase in access o conexualized

insrucion programs, which combine adul basic educaion and occupaional

raining so sudens learn basic lieracy and workplace skills a he same ime.

In many cases hese hybrid models would resemble a radiional appreniceship.

Paricipans would spli ime beween classroom learning, on-he-job raining,

and hands-on work aciviy. Te workorce sysem would cover academic and

raining coss, while employers would provide real-world experience, a angible

link o he labor marke, and compensaion or producive ime in he workplace.

In Germany, or example, more han hal o he adul workorce has received

credenials hrough heir dual sysem o vocaional educaion and raining. Te

dual sysem is a public-privae parnership ha enables paricipans o enroll

in wo-year o our-year raining programs ha combine classroom coursework

unded by he governmen wih on-he-job raining and paid work experience inhe privae secor. Approximaely 500,000 privae employersrepresening 350

dieren occupaions across a wide range o indusry secorsoer hese paid

workplace-based raining programs.


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Successul examples o public-privae parnerships have been prolieraing around

he Unied Saes or decades. Saes as diverse as Caliornia and Souh Carolina

have adoped secor sraegies as he soluion o heir economic developmen needs,

while privae rms such as Unied Parcel Service Inc. and Norhrop Grumman have

embraced he parnership model and invesed signican resources in developing a

skilled workorce. I is ime or ederal policymakers o cach up o regional innova-ion and updae he workorce sysem o reec our new economic realiies.


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25/80

Our workorce sstem is not meeting its potential | www.americanprogress.o

Our workforce system is not

meeting its potential

By any reasonable measure, however, our workorce sysem is no helping o develop

a sucien number o skilled workers. According o he Deparmen o Labor, ewer

han 200,000 aduls earn a degree, cericaion, or credenial each year hrough

Workorce Invesmen Ac programs. In his secion o our paper, we deail whas

wrong wih he exising sysem so ha we can make sure we do i beter.

Focus on work-first policy is shortsighted

Te mos obvious reason our workorce sysem is no developing more skilled

workers is ha possecondary educaion and raining is no is op prioriy. Te

workorce sysems op prioriy, insead, is o provide shor-erm re-employmen

services o unemployed workers.

Programs unded under he Workorce Invesmen Ac provide hree iers o ser-

vices: core services, inensive services, and workorce raining. Core services such as

resume assisance, job lisings, job search assisance, and workshops are oered o

all paricipans. Tese services are primarily mean o reurn unemployed workers o

any available job as quickly as possible. And while rapid re-employmen is a valuable

goaland appropriae or many paricipansi does litle o build human capial.

According o daa rom he Deparmen o Labor, he vas majoriy o job seekers

accessing he employmen service receive only core services.16 In addiion, he

majoriy o job seekers using Workorce Invesmen Ac Adul and Dislocaed

Worker programs are limied o core services.17 (see able 2 on nex page)


26/80


Inensive services, however, include skills assessmens, career counseling, and case

managemen. Tese services are imporan because hey begin o develop human

capial by emphasizing long-erm planning and career skills. Inensive services can

help a low-skill worker ideniy a career goal and deermine he necessary sepsi will ake o reach ha goal. Bu while hese services are crucial o developing

human capial, hey are available o less han one-hal o overall paricipans in he

workorce sysem.

Workorce raining, in conras, is he mos eecive sraegy used by our work-

orce sysem o build human capialespecially i raining leads o an associaes

degree, echnical cericae, or indusry-recognized credenial. Bu workorce

raining reaches he smalles number o paricipans in our workorce sysem. In

program year 2010 approximaely 3.1 million aduls received some level o service

rom he workorce sysem hrough he Workorce Invesmen Acs Dislocaed

Worker and Adul programs. O hose aduls receiving services, only 623,000or

20 percenreceived any level o workorce raining, and only 172,000or 5.6

percenearned a credenial.

The workforce system lacks suff ic ient funding to train mill ions

of workers

Te second reason our workorce sysem is underperorming is ha Congresshas allowed is budge o sagnae or he pas ew decades. A repor by he W.E.

Upjohn Insiue shows ha unding or he employmen service has decreased in

nominal dollars (no including inaion) since 1984.18 Teir graph, which weve

updaed o include he pas our years o congressional appropriaions, depics he

TABLE 2

Most workers using Workorce Investment Act programs only receive core services

WIA services, program year 2010

Total Core Intensive Training Credentials

Adult 1,824,257 1,057,662 (58%) 460,456 (25%) 306,139 (17%) 94,033 5.2%

Dislocated workers 1,196,242 569,581 (48%) 346,051 (29%) 280,610 (23%) 71,363 6.0%

National emergency grants 58,794 2,420 (4%) 20,389 (35%) 35,985 (61%) 6,929 11.8%

Total 3,079,293 1,629,663 (53%) 826,896 (27%) 622,734 (20%) 172,325 5.6%

Source: U.S. Department o Labor


27/80


hisorical budge o he employmen servicein comparison o unding levels

ha would be necessary o keep pace wih inaion. (see Figure 2)

Te simple realiy is ha ew

programs could be expeced

o mainain heir eecivenessor 30 years wih he same

nominal budge. ake he

Deparmen o Deense, which

operaed on $228 billion in

scal year 1984. Since hen

is budge has risen o more

han $700 billionmore han

ripling since is peak during

he Cold War.19 Any sugges-

ion ha our miliary couldmainain is curren srengh

and eeciveness on is 1984

budge is nonsense. Supporers

and criics alike would concede

ha many deense programs

would be eliminaedand

he srengh o our roops

reducedi he Penagon sill had a budge o $228 billion. Bu he workorce sys-

em is held o a dieren sandard. I is expeced o mainain is eeciveness over

30 years while working wih ewer nominal dollars han a generaion ago.

TeNew York imes also highlighed he ac ha he workorce sysem receives

signicanly less unding han i did a decade ago: A he peak in 2000, he ederal

governmen was spending more han $2.1 billion a year in odays dollars or rain-

ing programs aimed a dislocaed workers under he Workorce Invesmen Ac

bu now annual spending has receded o abou $1.2 billion20a cu o approxi-

maely 43 percen beore adjusing or inaion.

Congress has coninued o cu unding or workorce raining in recen years.Since he 2010 congressional elecions, Congress has cu 15 percen in discreion-

ary appropriaions or argeed workorce programs unded by he Deparmen o

Labor. (see able 3 on nex page)

FIGURE 2

Congress underunds our workorce system

Employment service unding, scal year 1984 to scal year 2012 (dollars in millio

0

$300

$600

$900

$1,200

$1,500

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 20

Adjusted funding

Actual funding

Source: W.E. Upjohn Institute or Employment Research


28/80


A relaed budge cu in he scal year 2011 appropriaions bill was he shor-

sighed decision o eliminae ederal suden aid or sudens wihou a high

school diploma or GED. Previously a suden could prove heir abiliy o bene

rom suden nancial aid, including Pell Grans, by compleing a leas six credis

o possecondary educaion. Alernaely, a suden could pass a ederally approved

exam o demonsrae enough prociency o bene rom college coursework. Bu

hose opions were eliminaed in 2011.

Tis cu will eliminae Pell Grans or approximaely 90,000 college sudens who

are disproporionaely Hispanic or black. Ta means an addiional 90,000 su-

dens who are rying o improve heir circumsances will be denied assisance or

pushed ino he workorce wihou needed skills or educaion. Te loss o access

o Pell Grans will only increase he srain on workorce raining programs.

I should go wihou saying ha cuting workorce programsespecially raining

undsis no a realisic or eecive sraegy or developing a skilled workorce.

Te mos likely oucome o urher budge cus is a permanen shorage o skilled

TABLE 3

Recent cuts to ederal workorce programs

Cuts by categories o jobs or programs (in millions)

Department / Agency FY 2010 FY 2012 Dierence % change

Department o Labor

WIA Adult Training $861.5 $770.9 -$90.6 -11%

WIA Youth Training $924.1 $825.9 -$98.2 -11%

WIA Dislocated Worker Training $1,183.8 $1,008.4 -$175.4 -15%

WIA Dislocated Worker National Reserve $229.2 $224.1 -$5.1 -2%

WIA Innovation Fund $0.0 $50.0 +$50.0 NA

Career Pathways $125.0 $0.0 -$125.0 -100%

Green Jobs $40.0 $0.0 -$40.0 -100%

Transitional Jobs $45.0 $0.0 -$45.0 -100%

Native Americans $52.8 $47.7 -$5.1 -10%

Migrant and Seasonal Farmworkers $84.6 $84.5 -$0.1 0%

Reintegration o Ex-oenders $93.5 $80.4 -$13.1 -14%

Total, ETA $3,639.5 $3,091.9 -$547.6 -15%

Source: Authors calculations based on the Consolidated Appropriations Act of 2010, Public Law 117, 111th Cong.; Consolidated AppropriationsAct of 2012, Public Law 74, 112th Cong.


29/80

workers, which would serve as a coninual drag on economic growh. For he

workorce sysem o become a successul parner in our educaion sysem, hese

shorsighed unding policies should be reversed.

The workforce system is unnecessarily complex

Finally, he hird reason he workorce sysem does no maximize is poenial is

because i is oo complex. Insead o a single sysem whose mission is o improve he

compeiiveness o our workorcewhich would ocus on increasing our naions

supply o skilled workershe

Workorce Invesmen Ac knis

ogeher a collecion o loosely

aliaed programs ha separae

paricipans according o cri-

eria unrelaed o heir humancapial needs.

Te Deparmen o Labors

Workorce Invesmen Ac

Adul Employmen program,

or example, is designed o

suppor employmen and

raining services or disadvan-

aged and low-skill aduls. Te

Deparmen o Educaions

Adul Educaion program, in

conras, is designed o sup-

por lieracy and skills raining

or disadvanaged and low-

skill aduls. Te Deparmen o Agriculures Supplemenal Nuriion Assisance

Program is designed o suppor employmen and raining services o recipiens o

ood samps, who are primarily disadvanaged and low-skill aduls. (see Figure 3)

Pu simply, he workorce sysem uses dieren unding sreams o serve similarpopulaions who should bene rom similar services. In some cases, ha prob-

ably means some paricipans who would bene rom skills raining are placed in

he Adul Educaion programor vice versadepending on availabiliy o unds.

Or more likely, a disadvanaged worker is orced o enroll in sequenial programs

FIGURE 3

Our workorce system is too complex

Multiple departments run employment programs to assist low-skill workers

Department of Labor

Workforce Investment Act

Adult Employment

and Training

Department of Education

Adult Education program

Department of Agriculture

Supplemental NutritionAssistance Program

employment and training

Employment, education

or job training services

Disadvantaged and

low-skilled adults

Source: Authors analysis



30/80


ha should be oered simulaneouslyincreasing he ime o compleion and

reducing he likelihood o persisence. (A relaed complexiy is ha perormance

measures are no consisen across hese programs. In he case o Adul Educaion

versus worker-raining programs, or insance, he ormer emphasizes educaional

oucomes while he later emphasizes employmen oucomes. A key elemen in

redesigning he sysem would be alignmen o perormance measures, bu haopic is beyond he scope o his paper.)

Te workorce sysem also has muliple programs o serve workers who are ready

o enroll in college-level educaion or echnical raining. One case in poin: Te

Deparmen o Labor is responsible or using ees raised hrough he H-1B visa

programwhich enables companies o bring skilled oreign workers o he Unied

Saeso educae and rain American workers in echnical occupaions and

indusries. In addiion, he Deparmen o Educaion unds he Perkins Career and

echnical Educaion program, which also is responsible or educaing and raining

sudens in echnical occupaions and indusries. Boh o hese programs und edu-caion and raining programs a he communiy college or echnical college level.

Unorunaely his complexiy has urned ino a polarizing issue. On he one

hand, criics cie he prolieraion o argeed employmen and raining programs

o sugges he sysem is inecien. Tese criics ocus heir atenion on separae

adminisraive procedures in each program ha lead o unnecessary barriers and

paperwork. On he oher hand, supporers o he workorce sysem sugges ha

combining all programs ino a block gran goes oo ar. I would eliminae sae-

guards or he naions mos vulnerable workers and would lead o creaming, a

sraegy ha aricially elevaes raining program oucomes by direcing services

o he paricipans who need he leas assisance.

Our own opinion is ha a good workorce sysem mus ensure ha vulnerable

communiies o workers coninue o be he ocal poin o employmen and rain-

ing services. A reormed workorce sysem mus collec disaggregaed daa by sex,

race, ehniciy, socioeconomic saus, disabiliy, and English-language prociency.

I mus also ocus on inegraing longiudinal daa beween educaion and work-

orce raining programs. And nally, i should adop perormance-based unding

incenives o reward programs ha help he mos disadvanaged individuals.

I is also imporan o noe ha complexiy is no he same as redundancy. Cuting

unds or workorce raining programs, wihou reinvesing hose unds in he

overall workorce sysem, would simply resul in millions o real individuals losing

access o crucial services. (see Box)


31/80


Tereore we believe he overall soluion involves increasing unding or he work-

orce sysem while sreamlining he number o programs in i. Ecien services will

come rom a simpler ederal sysem wih more overall resources whose undamenal

mission is ied o increasing he number o workers earning degrees, cericaes, and

credenials, while mainaining saeguards or he mos disadvanaged populaions.

Critics o the workorce system oten mistake complexity or duplica-

tion or redundancy. They cite the Government Accountability Oces

report on ederal workorce programs, which identies 47 programs

that oer some sort o employment or job-training services. These crit-

ics either misunderstand or miscommunicate the reports ndings.21

Government Accountability Oce Director Andrew Sherrill clari-

ed this point during oral testimony to the House Committee on

Education and the Workorce. His testimony stated that the oce did

not nd any duplication o services in its analysis o ederal job-train-

ing programs. Instead, he said it was more accurate to say that it iden-

tied multiple programs that oer similar job-search and job-training

services, but those services are provided to dierent individuals.22

The report, in act, accurately portrays this situation. The report

explains that, Even when programs overlap, they may have meaning-

ul dierences in their eligibility criteria or objectives, or they may

provide similar types o services in dierent ways.23 In other words,

eliminating unding or an overlapping workorce program wo

result in more ecient service deliveryinstead, it would resu

tangible loss o services or individuals who need them.

While it is important to reduce complexity in the workorce sys

tem, those arguments should not be used as a g lea to justiy

elimination o services. As the Government Accountability Oc

shown, there is no evidence that workorce programs are dupli

each others eorts. Critics should stop cherry-picking the repo

their attempts to undermine the workorce system.

We believe that streamlining the system will produce very mod

administrative savingswhich should be reinvested in targete

workorce programs to oer more opportunities to enroll in ed

tion and training. The value in reorming the system is not to p

short-term savings, which would be penny-wise and pound-o

but rather to reorient the workorce system toward programs t

build human capital and produce long-term benets.

Misinormation about workorce training is not helpul

Te Workorce Invesmen Ac o 1998 was enaced during a period o undamen-

al change in our economy. A he ime he combinaion o low unemploymen

and rapid economic growh convinced policymakers and employers o suppor

work-rs policies o reurn all workers o he labor marke insead o invesing

in long-erm human capial developmen.

Our economic environmen is much dieren now. Te labor marke increas-

ingly requires educaion and raining beyond he high school level; privae-secor

employers are looking or skilled workers who possess a combinaion o knowl-

edge and hands-on experience.


32/80


Congress needs o move away rom is penchan or ollowing he pah o leas

resisance on workorce issuesdemonsraed by decades o sagnan unding

and 14 years wihou reauhorizing he Workorce Invesmen Acand com-

mi o redesigning and supporing a reormed workorce sysem ha direcly

addresses our modern economic challenges.

Forunaely we know his is possible. In 1998 Congress se aside is parisan dier-

encesduring an elecion year wih looming impeachmen charges or hen-

Presiden Bill Clinon, no lessand worked ogeher o modernize he workorce

sysem. Te Workorce Invesmen Ac o 1998 passed wih large majoriies in he

Senae (91 o 7) and he House o epresenaives (343 o 60)boh conrolled

by epublicans a he imeand was signed ino law by Presiden Clinon.

Biparisan suppor was eviden as recenly as 2010, when he House o

epresenaives overwhelmingly passed he SECOS Ac (H.. 1855) o

expand suppor or secor parnershipsa promising sraegy o develop skilledworkers or muliple employers in he same high-growh indusry cluser. Te

SECOS Ac would auhorize grans o public-privae parnerships whose

raining programs were direcly linked o openings in he labor markeone o

he cenral sraegies included in our proposal as well. Te SECOS Ac had

so much suppor ha i passed on he suspension calendar, a parliamenary

procedure reserved or nonconroversial iems wih a leas wo-hirds suppor in

he House. I passed easily on a voice voe wih no objecions. Unorunaely his

example o biparisanship was shor-lived, as he popular bill never received a voe

in he Senae due o poliical acors unrelaed o he subsance o he bill.

Assuming ha members o Congress believe heir own rheoric abou he impor-

ance o workorce raining, his hisory o biparisan suppor suggess ha

srenghening our workorce sysem could be a rare opporuniy or genuine

biparisan reorm. In he remainder o his paper, we ouline our proposal or such

a reormed workorce sysem.


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Five principles to reorm the workorce sstem | www.americanprogress.o

Five principles to reform

the workforce system

We propose undamenally changing he prioriies o he workorce sysem. Bu i

will ake a clear ocus and a concered eor o shif he sysem away rom shor-

erm inervenions oward more inensive programs ha increase educaional

atainmen, occupaional skills, and overall human capial. Tereore we highligh

ve principles ha should guide a much-needed overhaul o he sysem.

1. Most workers need some type of education or training beyond high school

Income and employmen daa make i clear ha middle-class jobs increasinglyrequire a degree, cericae, credenial, or ormal on-he-job raining. Labor

economiss esimae ha nearly wo-hirds o jobs will require college-level educa-

ion or raining wihin he nex ew years.24

2. The workforce system should prioritize training partnerships leading to degrees,

certificates, and credentials

Te workorce sysem is nie. Tereore limied educaion and raining unds

should be used or wo purposes: o rain college-ready workers or careers in high-

growh indusries ha pay middle-class wages; and o suppor low-skill adul work-

ers hrough career pahways and inegraed basic educaion and skills raining.

3. The workforce system should provide professional career navigation services to

all workers seeking assistance to help them build human capital over time

Te labor marke is increasingly complex. Tereore all workersemployed,

recenly dislocaed, and he long-erm unemployeddeserve access o high-

qualiy career navigaion services, including skills assessmen, career counseling,

and job search assisance.

4. The existing workforce system is chronically underfundedTe workorce sysem needs o be an inegral parner in our educaion and rain-

ing sysem. Bu exising resources are no sucien o develop millions o skilled

workers each year. Te workorce sysem should be suppored a he unding level

necessary o mee our economic needs.


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5. The existing workforce system is unnecessarily complex

As criics requenly poin ou, he workorce sysem is spread across oo many

programs. Simpliying he sysem and emphasizing long-erm human capi-

al developmen would improve overall resuls and make he sysem more

cos-eecive.

Using hese ve basic principles, our plan redesigns he workorce sysem o pri-

oriize human capial developmen as he key o building a skilled workorce.


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A plan to reorm the workorce sstem | www.americanprogress.o

A plan to reform the

workforce system

A he ouse o his paper we idenied wo long-erm challenges acing American

workers. Te rs challenge is ha middle-class jobs increasingly require some ype

o educaion or raining beyond high school. Te second challenge is ha navigaing

an increasingly complex labor marke requires peer and proessional neworks and a

beter undersanding o he opporuniies available in our modern economy.

Pu simply, we believe he bes way o prepare workers or middle-class jobs and

he complex labor marke is o help hem build human capial hroughou heirlives. Building human capial will enable adul workers o acquire valuable work-

place skills and increase heir economic mobiliy over ime. Tereore, we have

redesigned he workorce sysem o ocus on wo missions:

1. Developing a compeiive workorce by raining an addiional 2.5 million

skilled workers annually hrough secor parnerships, regisered apprenice-

ships, learn and earn models, career pahways, and inegraed basic educaion

and skills raining. Tese long-erm raining programs would resul in more

han 1 million addiional degrees, cericaes, and credenials annually.

2. Upgrading career ceners o ensure ha long-erm career navigaion services

including skills assessmens and career counselingare available o all adul

workers seeking employmen services.

Our plan would separae he workorce sysems wo core compeenciesskills

developmen and career servicesino disinc ederal agencies. Tis separaion

would simpliy he sysem, hereby enabling each agency o concenrae on excel-

ling a is core compeency. Te separaion would also provide greaer ranspar-

ency in deermining how workorce unds are being spen and wheher hoseunds are achieving resuls.

We propose merging he workorce sysems myriad responsibiliies ino hese new

agencies. Te rs agency, he Workorce Invesmen Bank, would be responsible


36/80


or developing a compeiive workorce. Te second agency, he Career Navigaion

Sysem, would be responsible or expanding access o inensive services such as skills

assessmens, career counseling, and case managemenwhile coninuing o provide

assisance or job search, job reerral, and re-employmen services.

o ensure a sucien level o unding o educae and rain an addiional 2.5 mil-lion workers while expanding access o career navigaion services, we combine

workorce programs currenly managed by he deparmens o Labor, Educaion,

Agriculure, and he Inerior, along wih he Lieime Learning ax Credi, and

direc hose resources o our new workorce sysem. Bu we also recognize ha

reorganizing exising unds is insucien o address our looming shorage o

skilled workers. So we incorporae a recen proposal rom he Obama adminisra-

ionhe Communiy College o Career Fundino our reorm plan as well.

I is possible, unorunaely, ha opponens o he ederal workorce sysem will

embrace some o our ideas or resrucuring he sysem while ignoring (or rejec-ing) he need or more unds. Ta would be a misake. Simply resrucuring he

sysem ino a block gran will no produce savings large enough o educae and

rain millions o workers. Te poin o our proposal is no o save a ew dollars

in he shor erm bu raher o develop a compeiive workorce ha will expand

he middle class, improve economic mobiliy, and suppor economic growh or

anoher generaion o American workers.

In addiion o reorganizing he ederal srucure o he workorce sysem, our

plan ransers governance and oversigh responsibiliies o a modied sysem

o regional auhoriies ha would beter align wih naural labor markes and

regional economic developmen. egional auhoriies would be in charge o allo-

caing job raining unds, developing and implemening parnerships, minimizing

he adminisraive burden on parners, and overseeing programs o ensure qualiy.

Tey would, in urn, be held accounable o a redesigned perormance measure-

men sysem ha encourages progression and compleion o possecondary

credenials. Tese perormance measuremen sysems should be designed along

he lines o models emerging rom saes such as Washingon, wih is Suden

Achievemen Iniiaive, and rom he Complee o Compee Campaign, promul-gaed by he Naional Governors Associaion.25

We believe his proposal akes a houghul approach o reorganizing he workorce

sysem. I is designed around he core ene o building human capial hroughou


37/80


a workers lieimeaiming o rain anoher 2.5 million workers annuallyas

opposed o oher plans, which are shorsighedly designed around he primary goal

o reducing coss. Te ollowing secions urher ouline our proposal.

Designing a hybrid education and training system

One way ha working aduls can obain a college-level educaion is by enrolling

in a wo-year or our-year universiy program. Bu working aduls lead very busy

livesofen wih children and ull-ime jobsand very ew can aord o sop

working o become ull-ime college sudens. For hese individuals, he workorce

sysem should oer a more exible opion o obain a college-level educaion and

skills a heir own pace.

Te Workorce Invesmen Bank would ocus exclusively on providing opions

or adul workers a al l levels o acquire college-level skills and raining. Tawould include:

Helping college-ready adul workers rerain in communiy colleges, echnical

colleges, and regisered appreniceships o learn new skills being sough by high-

growh indusries in heir regions

Enrolling adul workers who need remedial coursework ino career pahway pro-

grams ha will evenually lead o possecondary credenials

Assising very low-skill aduls enroll in educaion and raining programs ha

provide adul basic educaion while simulaneously inroducing paricipans

o enry-level occupaional raining ha will help hem build a oundaion or

economic mobiliy

Tese examples illusrae he broad specrum o educaion and raining needs ha

exis across our adul workorce. In oher words, educaion and skills vary dra-

maically, which is why is imporan o redesign our workorce sysem wih he

specic purpose o addressing hose needsno creaing arbirary disincions

ha are unrelaed o building human capial.

As discussed earlier, we believe he workorce sysem needs o ransiion ino a

hybrid model ha combines he educaional rigor o higher educaion wih he

labor-marke ocus o workorce raining. A hybrid model would emphasize educa-

Education and s

vary dramaticallwhich is why

its important

to redesign

our workorce

system with the

specifc purpose

o addressing

those needsn

creating arbitrar

distinctions that

are unrelated to

building human

capital.


38/80


ion and raining programs wih boh an academic componen and an applied learn-

ing componenleading o an associaes degree, echnical cericae, or credenial.

Tese wo componens would produce workers who have he preerred combi-

naion o heoreical knowledge and hands-on experience necessary o secure a

middle-class career in our consanly evolving economy. Te Cener or AmericanProgress highlighed a ew o hese models in is issue brie or he Whie House

Summi on Communiy College in Ocober 2010.26 Te mos promising hybrid

models are lised below.

Sector partnerships

Tese programs are collaboraions beween raining providersypically commu-

niy colleges, echnical colleges, labor-managemen agreemens, or oher raining

providersand a group o businesses in he same indusry or service secor. Teprograms combine public and privae resources o creae alernaive educaion

and raining models inended o build a skilled workorce or a paricular indusry.

Registered apprenticeships

Tese programs are long-erm, ormal raining conracs beween an employee

and employer. During he course o a regisered appreniceship, apprenices are

employees enrolled in a srucured raining program ha alernaes beween on-

he-job raining, classroom raining, and hands-on work experience.

Learn and earn training models

Tis is a broad caegory consising o programs ha recognize he need or parici-

pans o earn an income while increasing heir skills. Examples include on-he-job

raining, paid inernships, and work-sudy programs, among ohers. egisered

appreniceship is also a learn and earn model. Programs can be work-place-

based wih a raining componen such as on-he-job raining or classroom-basedwih a workplace componen such as paid inernships and work-sudy.


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Career pathways

Tese programs oer clear sequences o coursework o move rom lower skill lev-

els all he way o associaes degrees or oher proessional credenials wih muliple

enry and exi poins along he way.

Contextualized instruction

Tese programs combine adul basic educaion wih occupaional raining so

sudens learn lieracy and workplace skills a he same ime.

I is imporan o noe ha all ve o hese hybrid raining models and parner-

ships would vary across dieren regions o he counry. Te srengh o he auo

indusry in he Midwes and he Souh, or example, has given rise o he Auo

Communiies Consorium, a raining parnership beween communiy collegesand he auo indusry in Michigan, Ohio, Indiana, Iowa, Illinois, Wisconsin,

Kenucky, and ennessee. Souh Carolinawih is ouris hubs o Hilon Head,

Kiawah, and Myrle Beach along he Alanic coashas developed regisered

appreniceships o rain new workers in he hospialiy indusry. In Seatle, a sa-

ing crisis a he Seatle-King Couny Hospial promped a public-privae parner-

ship o rain healh care workers.

Overall here is poenial or hybrid raining models and parnerships in a muliude

o secors, including energy, inormaion echnology, consrucion, advanced manu-

acuring, ransporaion, hospialiy and ourism, and healh care, among ohers.

Tese indusries oer uure job openings ha pay middle-class wages and include

career ladders or low-skill workers o improve heir circumsances as hey acquire

new skills and credenials. (see Box on nex page)

In he nex wo secions, we will ouline he conours o our proposed new agen-

cies, he Workorce Invesmen Bank and he Career Navigaion Sysem.


40/80


The Government Accountability Oce released a report earlier this

year documenting the success o 14 promising collaborations between

workorce systems and industry sectors. The study, called Innovative

Collaborations between Workorce Boards and Employers Helped

Meet Local Needs, reported that these collaborations led to increased

development o skilled workers and high placement rates in their elds

o training. The success o these collaborations also expanded the pool

o employers interested in partnering with the workorce system.27

According to the study:

[V]irtually all o these collaborations grew out o eorts to add

critical work needs o multiple employers, typically in a specifc

tor, rather than ocusing on individual employers. Additionally

partners in these initiatives made extra eort to understand an

work with employers so they could tailor services such as jobse

assessment, screening, and training to address specifc employ

needs. In all cases, the partnerships included workorce boards

employer, and education and training providers, and in some c

they also included local school districts, regional organizations

promoted economic development, state agencies, or labor un

Government Accountability Oice study oers evidence or training partnerships

The study ound six common actors that contributed to the successo these collaborations:

Focusing on urgent needs: According to the Government

Accountability Oce, virtually all o the initiatives ocused on

ways to supply workorce skills that were commonly needed by

multiple employers in a specic sector. In addition, collabora-

tions that spanned an entire sector instead o a single employer

led to an overall increase in skilled workersinstead o a

zero-sum game between companies competing or a scarcity o

qualied workers.

Leadership: The report highlighted the need or an honest broker

to build trust among competitors and to ocus on opportunities or

systemic change.

Leveraging resources: The study ound that all 14 partner-ships received cash or in-kind contributions rom participatin

employers.

Employer-responsive services: Some employers provided d

input into training curricula, and some training programs led

directly to industry-recognized credentials.

Minimizing administrative burden: Workorce system sta

handled administrative responsibilities, enabling other partn

ocus on training activities.

Demonstrating results: Training programs led to an increase

in skilled workers, high placement rates or participants, and

increased participation by employers in the workorce system

FIGURE 4

Why some training partnerships saw success

Certain actors acilitated collaboration between workorce systems and industry sectors

Focusing on

urgent needsLeadership

Leveraging

resources

Employer-

responsive

services

Minimizing

administrative

burden

Demonstrati

results

Factors that facilitated collaboration in selected initiatives

Source: GAO analysis o interviews.


41/80

Workorce Investment Bank | www.americanprogress.o

Workforce Investment Bank

Our reorm plan envisions a single agency, he Workorce Invesmen Bank,

unded a $10 billion annually, whose mission i would be o develop a skilled

workorce hrough his hybrid sysem o higher educaion and workorce raining.

Te sysem would emphasize raining programs ha combine academic knowl-

edge and applied learningmoving adul workers urher along an educaion and

raining coninuum hroughou heir lives.

Te program would prioriize all workers who have no ye earned some ype odegree or occupaional credenial beyond he high school level. Programs would

cover he ull specrum o educaion and raining needsincluding low-skill

workers wih muliple barriers o employmen; minimally skilled workers who

need remedial coursework; and college-ready workers who possess he skills o

enroll immediaely in a communiy college or echnical college program.

Te Workorce Invesmen Bank would need o include saeguards o guaranee

ha our mos vulnerable communiies o workers coninue o receive services. Te

sysem should require saes, regions, and parnerships o collec disaggregaed daa

by sex, race, ehniciy, socioeconomic saus, disabiliy, and English-language pro-

ciency. I should also ocus on inegraing longiudinal daa sysems across educaion

and workorce raining programs. A single sysem o perormance measures buil

around his level o daa collecion would ensure ha regional auhoriies are kep

accounable or building he human capial o all he workers hey serve.

Te Workorce Invesmen Bank should also adop perormance-based und-

ing incenives o reward programs ha help he mos disadvanaged individuals

o complee raining programs. For example, in ough Choices or ough imes,

he New Commission on he Skills o he American Workorce recommended aweighed ormula ha sars wih a base level o unding per individual enrolling in

a programand hen provides addiional unding or sudens wih more exen-

sive needs. We believe his ype o weighed suden unding or disadvanage

uplif policy should be a prerequisie or access o ederal unds.29


42/80


Te Workorce Invesmen Bank would have hree main programs:

College or Working Aduls Career Pahways or Working Aduls argeed Communiies Workorce Invesmen Fund

Les ake a look a each programand is associaed long-erm raining srae-

giesin urher deail in he remainder o his secion.

College for Working Adults

Te rs program, College or Working Aduls, would serve adul workers who are

ready or college-level educaion and raining. Paricipans would receive raining

hrough parnership-sponsored programs such as secor parnerships, regisered

appreniceships, and learn and earn models. Programs receiving public subsidieswould be required o lead o an associaes degree, echnical cericae, or indus-

ry-recognized credenial.

Te program would have an ambiious goal o enrolling 1.5 million adul workers in

educaion or raining programs annually. Such a subsanial increase in human capi-

al would help o eliminae our shorage o skilled workersleading o a sronger

middle class, increased economic mobiliy, and aser economic growh. Well now

deail how our proposed workorce raining sraegies would work in his program.

Sector partnerships

Arguably he cenerpiece o our hybrid workorce raining sysem would be a signi-

can expansion o secor parnerships. As he Cener or American Progress oulined

in a previous proposal, he purpose o hese parnerships is o develop alernae

pahways o possecondary credenials ha are explicily linked o he labor mar-

ke.30 Primary parners include educaion and raining providerssuch as commu-

niy colleges or echnical collegesand a group o businesses or an indusry secor.

Addiional parners can include labor organizaions, rade associaions, and heworkorce sysem. Parners conribue direc unding, human resources, aciliies,

equipmen, and experise o he programs. Our plan would suppor up o 1 million

adul workers enrolling in hese secor-based models annually.


43/80

Workorce Investment Bank | www.americanprogress.o

As we highlighed in our previous paper, one o he bes examples o he secor

parnership model is ound a Macomb Communiy College in Macomb Couny,

Michigan. An aricle inBusinessweek oulined he general ramework:

Because o its location, the college has long had a symbiotic relationship not only

with GMMacomb Community College President James Jacobs estimatesthat 40 percent o the designers there studied at Macombbut with most o the

local manuacturing sector, providing companies with graduates while draw-

ing on them or unding , aculty, and even state-o-the-art equipment. Haas

Automation, the countrys largest machine tool maker, supplies the college with

CNC mills and lathes. All o the Big Tree have outsourced training or their

own employees to the college over the years, collaborating to design curricula and

tests. Macomb has a deep amiliarity with the workorce needs o those compa-

nies and connections with the people who do the hiring. Te result is an inormal

system that quickly matches workers with the labor needs o companies.31

By parnering wih he auo indusry, Macomb Communiy College ensures ha

is academic credenials are direcly linked o curren job requiremens, and ha

graduaes are op conenders or immediae job openings in he indusry. Tis

ype o public-privae parnership is benecial or workers, employers, and he

regional economy. We believe he ederal governmen should redirec is inves-

men in workorce raining o replicae his model across he counry.

A relaed opion is o expand he role o echnical colleges. ennessee echnology

ceners, or example, oer no-rills echnical raining programs ha lead o middle

class jobs. ennessee has 27 echnology ceners oering echnical cericaions

and indusry-recognized credenials hrough more han 50 programsinclud-

ing healh care, inormaion echnology, advanced manuacuring, and a series

o radiional rades. Tese programs also serve a large porion o nonradiional

sudenshe average age is 32.

uiion is low, ranging rom $2,400 or a hree-rimeser program o $4,000 or a

ve-rimeser program, plus expenses or labs, books, and maerials. Bu success

is high. All 27 ceners repored graduaion raes above 50 percen or he pas ve

years, wih an average graduaion rae o 70 percen. Graduaes also do well incomparison o heir peers. In 2008 nearly 1,500 pracical nurses ook he licensure

exam, and 91 percen passedcompared o a naional average o 86 percen.


44/80


Moreover, raining slos a ennessee echnology ceners are closely aligned wih

exising demand or workers in a paricular occupaionleading o a sysemwide

placemen rae o 83 percen or sudens enering employmen in heir eld o

raining.32 Alhough programs are no ormally aligned wih a group o businesses or

an indusry secor, he sysem operaes on a similar philosophy and could serve as a

model or oher echnical colleges responsible or developing a skilled workorce.

Apprenticeship programs

Anoher promising college-level raining model is he regisered appreniceship

arguably he mos underuilized orm o possecondary educaion and workorce

raining in he counry. We believe here is subsanial room or growh in he

appreniceship model, paricularly in indusry secors ha have no radiionally

used i o rain heir workorce. Our plan calls or an addiional 500,000 appren-

ices across he counry.

egisered appreniceship is a paricularly successul raining model ha com-

bines an academic componen wih a hands-on componen. Academic insrucion

is ofen provided hrough a parnership wih he local communiy college or ech-

nical college and can resul in credi ha leads o an associaes degree. Srucured

Equally important, sector partnerships orged by the new Workorce

Investment Bank are intended to be transormative. Partnerships

should be established to address the long-term needs o the regional

workorce and regional employers. Programs should not be con-

strained by traditional requirements such as semester schedules or

seat-time conditions.

One policymaker who already is embracing sector partnerships as a

model or systemic change is the mayor o Chicago, Rahm Emanuel.

A recent article in The Economist reports:

Under a plan produced or the mayor in December last year, each o

the citys community colleges is to be tailored or training in a specic

sector o industry, such as health care, transport or logistics. Larg

numbers o these kinds o jobs are expected to be created locally

next decade. (In health care alone, the city expects 84,000 openin

in the Chicago area.) The mayor wants to make sure that local yo

people, rather than new arrivals rom outside the city, have a sho

these positions. Malcolm X College, or example, will get a $251 mcampus and its courses will be redesigned to match the needs o

new partners, such as the nearby Rush University Medical Center

Other regions have been pursuing similar strategies or years, w

means it is past time or the ederal government to catch up to

and regional innovation. The workorce system needs to place

support behind public-private partnerships and sector strategi

Engineering systemic change through sector partnerships


45/80

on-he-job raining is workplace-based and is overseen by experienced insrucors

provided by he sponsoring company or labor union.

Appreniceships include a minimum o 144 hours in he classroom alongside an

addiional 2,000 hours o ormal on-he-job raining or hands-on work experi-

ence. radiional appreniceships can las wo years o our years and can providea comparable amoun o raining on an annual basis. Upon compleing he pro-

gram an apprenice receives a naionally recognized cericaion in heir indusry.

According o he Deparmen o Labor, appreniceship compleers earn an average

saring salary o $50,000 and make as much as $225,000 more han comparable

job seekers in heir lieimes. (see box)

Many saes are rapidly learning he value o appreniceships. Since he creaion

o Appreniceship Carolina in 2007, Souh Carolina has quadrupled he size o is

regisered appreniceship program. Souh Carolina also achieved is success wih

a airly modes public invesmenby oering companies a $1,000 annual axcredi or each regisered apprenice. As Souh Carolina expanded is regisered

appreniceship program, i added appreniceships in a variey o secors, includ-

ing advanced manuacuring, consrucion, energy, healh care, ransporaion,

inormaion echnology, along wih ourism and hospialiy.

Bu here are only 400,000 regisered apprenices in he Unied Saesapproxi-

maely 0.25 percen o he overall labor orce. In comparison, beween one-hal

and wo-hirds o he German labor orce receives occupaional raining hrough

heir ormal appreniceship sysem. Germanys dual sysem o appreniceship sup-

pors 1.8 million apprenices and includes approximaely 500,000 privae com-

panies sponsoring appreniceship raining programs. I he Unied Saes raining

sysem reached a similar level o per-capia paricipaion, i would equal approxi-

maely 7 million appreniceships.

Oher counries are expanding he use o appreniceships, oo. Scoland has

doubled is Modern Appreniceship program over he pas ew years o approxi-

maely 1 percen o is overall labor orce. I he Unied Saes reached he same

per-capia level, i would mean 1.5 million apprenicesan increase o more han

1 million rom curren levels.

Our plan would more han double he curren appreniceship sysem. We believe

a ederal invesmen o $1 billion could lead o as many as an addiional 500,000

apprenices. Our plan would incorporae he Oce o Appreniceship wihin he

The U.S. Department o

lists six benets o regis

apprenticeships.

A paycheck: Apprent

hourly wagestypica

ing at 50 percent to 6

o their eventual proe

wages and progressiv

increasing throughou

duration o the progra

Hands-on career trai

Apprentices receive p

cal on-the-job trainin

wide variety o progra

as health care, inorm

technology, and adva

manuacturing.

An education: Appre

can earn college cred

an associates degree.

A career: Apprentices

their way to a successterm career with a com

salary and little or no

tional debt.

National industry cer

tion: Apprentices ear

certication that is po

and valuable anywhe

United States.

Recognizable partner

o the nations most re

nizable companies suc

CVS Caremark Corp./P

United Parcel Service I

and General Electric Co

registered apprentices

programs.34

The beneits oregisteredapprenticeship


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Workorce Invesmen Bank o work closely wih regional auhoriies o conduc

oureach o he privae secor, develop relaionships wih employers, and allo-

cae nancial aid o promoe regisered appreniceships. In addiion, he Oce

o Appreniceship would coninue o handle adminisraive responsibiliies and

provide echnical assisance o sponsoring companies or indusries.

Financial aid could ake wo orms. egional auhoriies could oer:

1. Scholarships o $1,000 o $3,000 per regisered apprenice o ose academic

coss or on-he-job raining coss. Te size o he scholarship would be linked

o he apprenices evenual proessional wage. As Souh Carolina has demon-

sraed hrough is $1,000 ax credi or regisered apprenices, a well-designed

subsidy wih minimal adminisraive burdens can be a successul incenive or

companies o inves in raining a skilled workorce.

2. Seed money or a small or medium-sized company o begin an apprenice-ship program. Sudies show ha as many as 95 percen o companies using he

appreniceship model are happy wih he resuls and coninue o suppor i.35

Alhough regisered appreniceships oer a ime-esed model or developing

skilled workers, many challenges sill remain. For insance, many indusries have

no embraced he model yeapproximaely hal o exising appreniceships are

linked o consrucion rades. On he one hand, consrucion rades are no a

likely source or uure expansion; on he oher hand, however, here is signican

room or expansion in high-growh indusries such as healh care, inormaion

echnology, and advanced manuacuring.

Learn and earn training models

Tis caegory includes raining programs ha recognize he need or paricipans

o earn an income while increa

Let's Get Serious About Our Nation's Human Capital

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