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Why Can’t Workers Get the Skills They Need?

Upskilling is hard work.
Upskilling is hard work. (Photographer: Bloomberg/Bloomberg)

This is one of a series of interviews by Bloomberg Opinion columnists on how to solve the world’s most pressing policy challenges. It has been edited for length and clarity. Romesh Ratnesar: Even with a recession looming, the US labor market remains extremely strong, with unemployment at a five-decade low. At the same time, the rate of working-age Americans participating in the labor force is below pre-pandemic levels, despite a high number of job openings. One reason is that many low-income workers lack pathways to obtain the skills needed to move into good-paying jobs. You’re the co-authors of “Growing Fairly: How to Build Opportunity and Equity in Workforce Development.” Steve was mayor of Indianapolis and deputy mayor of New York City; Kate is a former executive vice president of the YMCA. How did each of you decide this was a policy area you wanted to spend time looking into?

Kate Markin Coleman, co-author, “Growing Fairly: How to Build Opportunity and Equity in Workforce Development”: I’m a Democrat and Steve is a Republican. As you can imagine, politics and policy are frequent topics of conversation in our household. And since at least 2019, one of those topics has been our shared concern about the impact of income inequality, the fact that we increasingly have a “two-sided” economy. So we made a decision that we wanted to look for policies and programs that had shown promise in getting more people into the pipeline, through the pipeline, and out of the pipeline and into good jobs.

RR: You began working on this book before the onset of the pandemic. A lot has changed since then. Are the problems related to skills shortages that you identified still as salient in today’s economy?

KC: When we started the book, there were more open positions than people available to fill those positions. At the same time, there were tens of millions of people looking for work or out of the workforce. To some extent, we’re in that situation on steroids today. Once again there are more open positions than people to fill those positions. And yet you have employers still saying, “We can’t find the right people.”

Stephen Goldsmith: Our joint conclusion is both that our underlying concerns about the labor market have been aggravated [by the pandemic] and the solutions made more important. How do you increase the skill levels of workers? How do you increase the productivity of workers? How do you provide the surrounding services, the wraparound services, to help people gain new skills? Covid exaggerated the problems we talk about but also helped us focus more on the solutions.

RR: For years, business leaders have lamented the gap between the skills employers say they’re looking for and the ones workers actually have. Why haven’t we made more progress in closing that gap?

SG: We set out to find solutions in this book. In many places, we found excellent programs that have been rigorously evaluated. That’s not the problem. The problem is that we’re responding in a highly fragmented way. There’s no true workforce development system in this country. There are dozens, if not hundreds, of federal programs. There’s $18 billion [in federal money] being spent every year. Local workforce investment boards have much of that money, but have very little actual authority. In local and state governments, economic development and workforce development are often separated. Non-profit organizations are often providing overlapping services. So we have problems in the way regional economies work. And those problems prevent us from getting to scale.

Another problem has to do with the currency of skills. We lecture employers on the need to hire by skills and not degrees. But we don’t have a common taxonomy of what those skills should be. If you’re an employer trying to hire someone, how do you recognize that the individual has that skill? We don’t have individualized, personal learning records; we don’t have certifications that measure skills. So while we can identify solutions, that’s not always enough to produce actual progress at a system level.

KC: Also, our definition of skills is insufficiently expansive to encompass the millions of people who are at the margin of the workforce. And as a result, workforce development policies often don’t involve some of the key players in the system.

RR: How so?

KC: For a lot of people, occupational skilling is not the starting point of entering the system. It’s the end point. It might be a homeless shelter, or a drug-counseling organization that helps stabilize someone sufficiently before they can even become a candidate for a pre-apprenticeship program or for a job training program. That’s what we mean when we say that thinking expansively about skills means thinking expansively about who participates in the system.

SG: There’s an interesting example in Indianapolis. One of Indiana’s leading medical device companies, Cook Medical, has opened up a plant in one of the most difficult neighborhoods in Indianapolis and they’re recruiting individuals from that neighborhood. But because the employer has little experience with actually recruiting and managing employees without sufficient first-level training, Goodwill is recruiting, training and employing the individuals in that neighborhood and placing them in Cook Medical. It’s a wonderful example of how a progressive employer can collaborate with a non-profit. They’re each doing what they’re good at and producing value that wasn’t there before.

RR: Let’s say you’re a worker who wants to gain new skills. Where do you go to find the information about the available jobs in your area and how to go about getting the skills you need to qualify for them?

SG: It’s a big problem. In many cities today, maybe with a couple exceptions, you can’t determine whether this training course, which costs you this amount of money, will get you that job, and what your salary will be. Even if you’re a smart and connected consumer, there is no market information that provides the clarity of specific steps you need to take. As a result, we’ve come to rely on two- and four-year colleges [to prepare workers], which are helpful to some, but not all, and aren’t available to everyone. They’re proxies, but they’re not good proxies. The system provides very little transparency, very little good information, and no user experience that helps people to understand their choices.

RR: You put a lot of emphasis on the critical role that local leaders, particularly mayors, can play in improving this system. Can you explain why?

SG: I often use a slide from my time as mayor of Indianapolis. On one side of the slide are all the cool things happening in the city: you know, it’s one of the top 10 places to start a business, a great place to be if you’re a young professional, high livability ratings. Then there’s the not-so-good side: economic segregation, manufacturing bases gone, mediocre-to-bad workforce participation, big increases in poverty. This is what we mean by a two-sided economy. And so what does leadership look like in this context? If we have unfilled jobs, then we have unfilled human potential. I think the role of the mayor or county executive is to call people together and say, This is the opportunity of multiple lifetimes. When else have we had so many open jobs, and so many people who need better jobs and the low workforce participation rate? This is a moment in time to call people together to make your communities a better place — one that’s fairer, more equitable and more economically prosperous.

RR: Given our political divides, are you optimistic that can happen?

SG: I’m generally optimistic about our ability to make changes, in part because we’ve identified many things that do work. The one thing that makes me not perfectly optimistic is that this requires governance changes. There is no natural leader of this cause. Each one of the players already has strong institutional support, from community colleges and four-year colleges to training programs, workforce investment boards, and the local chamber of commerce. The solutions are there and the need is there, but I’m a little bit cautious because there’s no natural organizational leader in the effort.

KC: The market conditions are favorable for these kinds of changes, namely the mismatch in the marketplace between job openings and people to fill those openings. We know that things need to be organized regionally and delivered collaboratively, based on a foundation of skills and transparency. But this stuff is hard work. Collaboration is hard work, because it causes people to have to give up part of what they have heretofore owned.

RR: The end of your book tracks the story of a woman named Iris, who you met while she was living in a homeless shelter outside Houston. Her experience underscores how, for people who are struggling, just having a little bit of an opportunity can really make transformative change. What does her story say about the challenges many Americans face in moving into stable, good-paying jobs and what’s needed to help them get there?   

SG:  It’s a perfect example. She’s living in a homeless shelter, but that’s just the beginning point of her journey. You can see her frustration when she walks out the door and sees her child being picked up by the school bus in front of the homeless shelter. She’s embarrassed, right? And she wants a better future. But she can’t get there from that homeless shelter. Then when she gets to the Wesley Community Center, she becomes surrounded by a support organization that helps teach her the skills she needs, helps her overcome the barriers in her life, helps her find a job and get training. Then in the end, you see this wonderful moment where she has a car and drops her child off at school.

This is almost a virtuous circle. She needed to get stabilized with housing; she needed to get the right skills; she needed help to overcome the barriers in her life. She got to the place where she wanted to be, but she couldn’t have gotten there without all of the above. The story shows that everyone presents themselves with a unique set of these challenges, and they need a whole set of responses and a coach to overcome them. And if we don’t appreciate the context in which folks, particularly those with less developed skills, present themselves, we’re not going to solve the problem.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Romesh Ratnesar is a member of the editorial board covering national security, education and immigration. A former senior State Department official in public diplomacy, he is author of “Tear Down This Wall: A City, a President, and the Speech That Ended the Cold War.”

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