More than 48 million Americans have filed new unemployment claims in the last 16 weeks, and states are projected to lose at least $200 billion in revenue, according to estimates from financial services company Moody’s. For the foreseeable future, states will struggle with competing priorities and significant budget cuts as they attempt to balance their budgets.
For many small business owners, a shortage of qualified employees on the market is not a new problem. However, for manufacturers, healthcare systems and construction employers, a continued decrease in new entrants into the workforce has tightened the pool of trained applicants. This issue has already forced small business owners to offer highly inflated salaries, knowing a return in value is near impossible. Unfortunately, the effects of a tight labor market now have very tangible consequences for businesses across multiple industries.
Perhaps, one of the most overlooked strategies in the public sector is research and evaluation. As states face hundreds of billions of dollars in lost revenue, they are preparing to make significant budget cuts. Evaluating job training providers, programs, and practices is critical so programs that are effective at solving important problems are not the ones that are cut and programs without evidence of success beyond anecdotes are the ones sustained.
In April, the U.S Bureau of Labor Statistics reported that job openings had reached an all-time high of 9.3 Million. In addition, NFIB’s Small Business Economic Trends survey released in April shed additional light on those industries hurt most by the growing labor shortage. The solution cannot simply be to hire more bodies. What other options does we have?
It's absolutely important to invest in workforce development. Workforce development matters. Organizational training itself is a benefit to prospective applicants. If 40% of employees who do not receive proper training leave their jobs in the first year and turnover costs equate to roughly 20% of an employee’s salary, isn’t the benefit of offering formal training a way to both attract and retain your employees while decreasing sunken costs? The benefits of employee training are numerous, and in a tight market, an employer advantage that also yields increased profit for a business is a good solution.
A two-generation approach considers the need of the parent and child holistically. Solutions are not isolated to simply helping a parent get a job. Rather, solutions are built around a framework that considers whether or not a child has access to services such as childcare or high-quality early childhood education. It also takes into consideration other barriers, such as a parent’s health and well-being, that could impact one’s success in a job.
Evaluating current resources are essential. Rather than focusing our efforts on the empty desks in our offices, we need to start first with filling those desks already inhabited with employees who offer expanded capacity. We will not know our team’s true ceiling until we challenge it. We are pivoting in the labor development market and we will continue to do so. So how do we stay relevant?
The pandemic is testing our limits, but we have to be clear and adapt collectively. Working on relationship pathways to work is essential. St. Louis Community College is working with community leaders in this effort. At the recent St. Louis Workforce Development Summit, suggestions on reviewing what is important to our community was discussed. We have to measure the content we use - is it effective? If it's effective, let's "rinse & repeat." If it's not, we need to review our strategy and create effective approaches.
In order to expand the pipeline for work, we need to diversify it. The first step is highlighting positive perceptions of high-skilled jobs. We need to promote treating people as people. Everyone wants purpose and a sense of belonging with the work they do and the community they live in. 2020 was the deepest recession post World War 2. Thankfully, we are well ahead of the last recovery. According to the Federal Reserve Bank, there are 94 unemployed people for every 100 job openings (US Bureau of Labor Statistics).
Dr. Art McCoy who leads STL.works for the St. Louis Regional Business Council said, "It takes a village to become a talent magnet. However, when the village is crazy, we need to dive in a little deeper to understand the root cause of the crazy." This needs to be addressed first before a healthy and strong pipeline can be created.
If we don't own the whole problem, how can we move forward? When we have relationships with people, this is how we can succeed. Spending time and paying attention go a long way. In order to be solutions-focused, it takes a team. It requires all of us to become a talent magnet. We have to engage with businesses, the community and organizations in order to achieve opportunity and improve the labor market. As we look ahead to the future of the labor force, it’s important to keep up with the ever-changing trends in employment. Understanding how these trends are shaping today’s workforce together can help us stay competitive in the years to come.
Some things to consider when building highly effective workforce pipelines:
- Actively engage local business
- Use labor market data to drive decisions
- Treat education like a job
- Connect people to careers
- Provide wrap-around student services
- Tap innovative funding sources
- Embrace evaluation
Not only are workers switching jobs frequently, they are finding that they may need to change careers entirely to keep up with the rapidly changing global economy. Technology has leapt ahead in fields ranging from medicine to manufacturing. Thirty years ago, 80% of American manufacturing jobs were unskilled; today just 12% fall under that definition. From cloud technologies to new emerging global markets, the types of jobs we obtain—and how we can retain them—continues to rapidly evolve.
The need for a dynamic workforce has never been greater. Workforce development matters. People are getting older, with certain industries facing a brain drain. Baby Boomers will leave behind openings for many middle-skill jobs that require some education beyond high school. Yet companies have cut their internal training budgets while demanding more skilled performance from their employees.
We all play a part. We need to make the power transfer by building the right pipeline and structure that makes that transfer happen correctly.