Business and foundations share a critical concern about the importance of skills for individuals, companies, and communities in today's dynamic global economy.
For years, innovative foundations such as the Mott, Ford, and Annie E. Casey foundations, the Lumina Foundation for Education, and leading community foundations have supported programs that assist low-income people and other adult learners to develop marketable skills. While skilled talent has always been important to employers, today the stakes are higher than ever. American business is competing aggressively for skilled employees. Increasing technological demands and shifting demographics mean that every employee is critically important to business competitiveness.
This commitment to skilled talent means that employers are increasingly becoming key partners and co-investors with foundations, government, educational, and community-based organizations to expand opportunities for skills acquisition. Our Business Champions Initiative at the Center for Workforce Success is addressing this challenge.
Nine key features are redefining the future with regard to skills for individuals, business, and communities.
1. The demand for skilled workers is growing. In our 2005 Skills Gap study (32 pages, PDF), manufacturers ranked a "high performance workforce" as most important to their business success, with new product innovation and low cost producer status ranking second and third. More than 80 percent of respondents to our study indicated the talent shortage is impacting their ability to serve customers. And manufacturing is not alone. From shop floors to emergency rooms to the platforms of oil rigs, American business simply can't find enough people with the right skills to do the job.
2. The characteristics of skilled workers are changing. Not only is demand for skilled workers increasing, it is shifting. As any parent with a college graduate living at home knows, career opportunities require more than the silver bullet of higher education. Increasingly, jobs demand a blending of technical skills and personal effectiveness skills. These "gold collar" workers, so named for their contributions to their companies and the economy — as well as for their personal earning ability — will continue to play a key role in producing the productivity gains that are fundamental to our ability to compete.
To understand the dynamics of this shift, look at how skilled workers matched with technology gains have transformed work at E.J. Ajax & Sons in Minneapolis. Founded three generations ago, E.J. Ajax makes metal brackets, latches, and other parts for household appliances and industry. Ten years ago, each employee produced six hundred parts per hour. Today, a single employee runs a group of complex machines resulting in production of between 10,000 to 15,000 parts per hour. Demand for workers with manual dexterity has been replaced by demand for employees with technical expertise, problem solving capacity, and the ability to learn quickly and continuously.
3. The supply of skilled workers is in decline. It's not just that jobs have changed; our labor market pool is much different nowadays. During the last two decades of the twentieth century, the supply of skilled workers swelled as the number of native-born workers in the United States with some education or training past high school increased by 138 percent. Today, growth in the native-born workforce has slowed to a trickle and we face a wave of retirements from our most educated and experienced workers.
4. Not a shortage of people, a shortage of people with skills. Employers tell us they get plenty of applications for job vacancies. We have no shortage of people — what we face is a shortage of people with the right skills. More than ninety million Americans have no post-secondary training or education. However, a significant portion of this group have assets to offer employers that are difficult to quantify such as good work habits, teamwork skills, and a desire to learn more and grow at the workplace.
5. Confusion about qualifications. Far too many adults who are interested in improving their skills are discouraged because they have been told that the only way to get ahead is to earn a four-year degree. Not only does this discourage adults who cannot afford to stop work to attend college, it is wrong. Many opportunities that require special skills and advanced learning do not require a four-year degree. Industry-recognized certifications and community college degrees are increasingly valued by employers. In a recent survey by AMA, manufacturers reported that while only 40 percent of employees with a high school degree are well prepared for work, 82 percent of employees with associate degrees or industry-based certifications are well prepared. These credentials provide two opportunities: access to jobs with good wages and benefits, and expanded access to additional educational benefits, including tuition reimbursement.
6. A growing role for community colleges. Community colleges are a key resource for closing America's skills gaps. Community colleges are producing the skilled workers America needs to compete globally and strengthen our economic vitality. They are working to respond with speed and flexibility to meet the needs of manufacturers and other employers, and they are providing pathways for success that lead to good jobs and ongoing educational opportunities for a broad range of youth and adults.
7. Increasing business investments in skills. The business focus on skilled workers is translating into new investments in human capital. A person with a two-year degree earns 22 percent more than someone with just a high school diploma. Moreover, employers spend approximately $100 billion a year on corporate training and development, with a growing portion of that focused on training entry-level workers in basic skills as well as technical skills. Employers want to make sure their investments matter.
8. Expanding participation in adult training and education. To get ahead in today's economy, low-wage and low-skilled workers are investing in themselves. Basic skills programs at community colleges are overflowing with students. But far too many adults who go back to school fail.
9. Solutions exist but have not been replicated. Everything we need to do to solve our problems has already been done somewhere in America. We don't need to invent the practices that work. We need to replicate them and bring them to scale.
A Time for New Partnerships
It's time for philanthropy and business leaders to explore a shared agenda that expands educational opportunities for adult learners and enables them to succeed in the global economy. There are some terrific opportunities for us to work together to build the skills of American workers, including:
- Making it easier for adults and youth to assess new skills and earn incremental credentials that expand their opportunities for increased wages and career advancement.
- Replicating what works. A business/foundation partnership can help get the word out to employers and communities on what's working and what it takes to produce results.
- Benchmarking results and rewarding what works.
- Educating leaders about the critical priority of workforce competitiveness.
No one sector can do this alone. The challenges are great, and our responses must be more innovative, efficient, and productive than ever before. I urge leaders in both sectors to join together to address common interests in expanding educational and career opportunities for adult learners. Let's get the job done.