The Current U.S. Labor-Market Conundrum

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The Current U.S. Labor-Market Conundrum

Guest writer Edward Gordon has returned with his February Gordon Report: “The Current U.S. Labor-Market Conundrum.”

The February 2024 BLS jobs report showed a surge of 353,000 jobs added in January, more than double than what was predicted in economic surveys. This follows a gain of 330,00 jobs in December. Another surprise in this February report is that average hourly wages grew rather than holding steady. Over the past year they have grown 4.5 per cent. What factors may be behind these unexpected numbers?

 An average of 10,000 workers from the large baby-boomer population have been retiring each day. This year the average will grow as the baby-boomer retirements peak. This flood of retirees will continue until 2030. Therefore, this year and until the end of this decade, many job openings will arise from the need to replace retirees.

 In at least some sectors of the economy, it appears that employers are raising wages to find workers with the skills they need. Chief Economist Bill Dunkelberg of the NFIB (an association of small business owners) reported on their January survey, “owners continue to raise compensation to retain and attract workers with the skills and willingness to do the job, but hiring remains a struggle in a tight labor market.” So far, this strategy has not been very successful. In that same survey 39 percent of the respondents reported having unfilled job openings. Members of the Association of General Contractors also have high levels of unfilled jobs despite providing a wage premium of almost 19 percent over that of the average for private-sector production employees.

 In some cases, higher wages may attract people who have not been participating in the labor force to seek a job if the pay level would offset the costs of childcare, a long commute, or obtaining additional training. A recent Korn Ferry survey of job seekers, however, found that many applicants do not have the skills required for open jobs. In some case this is due to the development of new types of jobs with recently updated skill sets.

 The above data points to a current labor market with a significant skills-jobs mismatch. But the Training Industry Annual Survey of 2023 reported that business investment in employee training remained flat. Going forward, predictions are that companies will cut their training budgets. The irony is that one way or the other business will have to pay more to find skilled workers either through continuing to raise wages or by investing in more in-house or collaborative training programs.

 Edward E. Gordon is the founder and president of Imperial Consulting Corporation in Chicago. His firm’s clients have included companies of all sizes from small businesses to Fortune 500 corporations, U.S. government agencies, state governments, and professional/trade associations. He taught in higher education for 20 years and is the author of numerous books and articles. More information on his background can be found at  www.imperialcorp.com. As a professional speaker, he is available to provide customized presentations on contemporary workforce issues.

  We invite you to submit your questions or comments by email or calling us in Chicago at 312.664.5196.

Thank you for your continued interest in our publication.

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A Changing Mindset on Training: Activate the “Hidden Workforce”

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A Changing Mindset on Training: Activate the “Hidden Workforce”

Guest writer Ed Gordon comes back this week with valuable advice on employee development in, “A Changing Mindset on Training: Activate the ‘Hidden Workforce.'”

At long last, there are signs that companies are increasing employee training and participating in talent development programs. Why is this finally happening?

 A recent Federal Reserve program held in Chicago focused on how companies in four Midwestern states are partnering with their local communities to upskill younger entry-level workers. Companies from many businesses sectors are collaborating with K-12 and post-secondary institutions to offer both career information and educational programs aligned with current job requirements.

 This program also included a public high school graduate who told the audience how mentorships and a career exploration program interested him in pursuing a STEM career. He is now eager to begin post-secondary education that will qualify him for a career in information technology.

 A barrier that discourages publicly traded corporations from developing human capital is now being challenged. Arcane financial accounting rules currently classify employees of these companies as costs rather than assets. The Securities and Exchange Commission (SEC) is now considering proposals to require publicly listed companies to report spending on training and other human capital outlays. This may be a step toward moving the Financial Standards Accounting Board (FASB) to change accounting rules thereby giving companies the option of capitalizing and depreciating employee development as an investment, rather than expensing it as a cost that reduces earnings.

The Current U.S. Labor Market

Employer job training is also growing as an answer to the unprecedented demographic meltdown. Over this decade 10,000 workers are retiring each year (approximately 3.6 million workers annually). This will continue into the 2030s. Up to 66 percent of job openings are to replace these retirees.

 A recent National Federation of Independent Business survey reported that 42 percent of their members (companies with 500 or fewer workers) had vacancies they cannot fill. The number-one problem facing members of the Association of General Contractors is the shortage of skilled labor. Contractors are reporting that this is causing them to turn down new construction projects.

 In 2021 U.S. business experienced over 8 million job vacancies that resulted in a profit and productivity loss of over $1 trillion. By 2022 this had risen to over 12 million jobs and a $2 trillion loss. This trend seems to have abated somewhat this year. However, labor cost per unit rose to 6 percent in 2023. Average hourly earnings have increased 4.3 percent above last year as employers have raised wages to find qualified workers. Wage inflation is likely to continue unless businesses begin to enlarge the pool of skilled workers.

But where can this “hidden workforce” be found? According to U.S. Department of Labor reports, about 100 million Americans of working age are not participating in the labor force. Our research shows that at least 20 million of these workers have given up looking for employment because they lack some of the specific skills a job requires. They can fill such job vacancies if employers offer the job training needed to mobilize these skilled workers.

 As many other nations are dealing with a declining working-age population and significant skills shortages, it is important to develop all our own resources. There are hidden workers in our midst who could become productive employees if their skills are updated. Are U.S. businesses now beginning to realize that persistent job vacancies cost them more than it would to start entry-level skills training or to participate in community partnerships that are renewing local talent pipelines?

 Edward E. Gordon is the founder and president of Imperial Consulting Corporation in Chicago. His firm’s clients have included companies of all sizes from small businesses to Fortune 500 corporations, U.S. government agencies, state governments, and professional/trade associations. He taught in higher education for 20 years and is the author of numerous books and articles. More information on his background can be found at  www.imperialcorp.com. As a professional speaker, he is available to provide customized presentations on contemporary workforce issues.

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How to Repair America’s Talent Pipelines

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How to Repair America’s Talent Pipelines

In his May Report, Edward Gordon writes on the crucial topic of how to repair America’s talent pipelines.

Micron Technology Inc., based in Boise, Idaho, plans to invest $100 billion in a semiconductor-manufacturing campus in a suburb of Syracuse, New York. Once fully built this campus will employ 9,000 workers and possibly support 41,000 jobs for contractors and suppliers, Yet the highly skilled engineers and technicians needed for advanced chip manufacturing are in short supply across the United States. What steps are they and local community leaders taking for solving these critical talent shortages?

 Micron is seeking to develop a regional talent-creation pipeline through partnerships with K-12 schools and local colleges and universities. It is providing $10 million to local K-12 schools to bolster STEM education. Macron is cooperating with Onondaga Community College to develop a new degree program for chip technicians. Syracuse University is developing plans to increase enrollments in its undergraduate and graduate engineering programs.

The extent of Macron’s education partnerships is particularly notable. Education is a continuum. Even before the educational setbacks caused by COVID-19 restrictions, it was clear that K-12 education in the United States has not been providing a significant proportion of our students with the educational foundations needed for their future development The challenge we now face is that only about one-third of our high school graduates leave school with reading and math comprehension at the twelfth-grade level. These skill levels are needed for the successful completion of post-secondary certificates, apprenticeships, community college two-year degrees, or four-year degrees.

Cascading Challenges

It seems likely that Micron will be affected by other types of skilled worker shortages. Micron’s Syracuse area expansion plans were spurred by the federal incentives offered by the Chips Act that was signed by President Biden in August 2022. Other companies have announced plans to build semiconductor manufacturing facilities in Arizona, Texas, and Ohio. Chip manufacturing plants have highly exacting construction specifications requiring specialized training.

 At the same time, growing international tensions and supply chain disruptions precipitated by the COVID pandemic are leading to the in-shoring of all types of manufacturing to the United States. Construction spending for manufacturing projects was the highest on record last year and is expected to remain elevated as there is a considerable backlog of nonresidential projects across the United States. A major reason for construction delays is worker skills shortages. In a recent survey conducted by the Associated General Contractors of America, 80 percent of the respondent’s reported difficulty in finding qualified workers.

 Last year U.S. businesses lost $2 trillion in productivity and profit due to skills-jobs disconnects. We estimate that there are over twenty-seven million skilled and semi-skilled Americans who are not participating in today’s labor force. If their skills were updated through entry-level training, the impact on U.S. productivity would be substantial due to the magnitude of this hidden population.

 By 2030 Korn Ferry predicts that up to ninety million jobs worldwide could be unfilled. This could cost employers $8.5 trillion in profits. To meet the steeply escalating skill demands of the Fourth Industrial Revolution, more regions across the United States must develop a comprehensive approach to workforce development for a wide range of occupations in which employers and educational institutions cooperate in education and training programs that keep pace with technological advances.

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Inflation, Jobs, and Interest Rates

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Inflation, Jobs, and Interest Rates

Today, guest writer Edward E. Gordon takes on a topic that has been in the news for quite some time: Inflation, Jobs, and Interest Rates.

Latest news headlines report that stocks are crashing. The markets are focused on further interest rate increases as the Federal Reserve responds to inflation. But to what extent is inflation triggered by surging jobs hiring and a falling unemployment rate?

 Overall businesses are still experiencing great difficulty in hiring skilled workers. Massive retirements and COVID-19 are being identified as the main culprits. However, reports from research groups and trade/professional associations are identifying skilled worker deficits as the chief cause of workforce shortages and wage inflation. As Harvard economist Gabriel Chodorow-Reich stated, “companies will keep bidding up pay as they compete for employees.”

The McKinsey Global Institute report, “Rekindling US Productivity for a New Era,” (2/23) centers on the urgent need for worker training and education to fill the rising tide of vacant jobs across America. McKinsey’s research lends future credence to similar statements by the American Hospital Association, the Association of General Contractors, the National Federation of Independent Business, and many other organizations.

 The skills-jobs disconnect has only grown since the 1990s. Companies generally fail to recognize that investing in their employees’ continuing knowledge growth is a core business function. In fact as they continue to focus on cost-cutting, they are further losing ground as automation requires better skilled people. Data shows that this skills-jobs disconnect will persist at least until the 2030s. 

Is this the new normal? The longer businesses only circle these issues at 30,000 feet, the bigger the risk of the economy running out of the required skilled workers to keep it expanding.

What has to happen before this requirement is acknowledged by our business culture? We hope soon rather than after a major economic crisis.

 

LWS addition from Ron Slee:  Mike Rowe recently said that “if you don’t work with your hands or build something, your job is at risk of being replaced by artificial intelligence. The younger generations seek purpose in their work and expect that their employers will help them with continuing education and training. Or they leave.” 

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Talent Shortages and Inflation

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Talent Shortages and Inflation

Guest writer Ed Gordon gives readers an overview of American companies that offer training and professional development to their employees in this week’s blog post on “Talent Shortages and Inflation.”

About 20 to 25 percent of U.S. businesses provide training to their employees. This management commitment cuts across all types of businesses of all sizes. Here are some notable examples: 

Large
Airbus, Amazon, American Airlines, Boeing, CVS, KitchenAid, Lowe’s, Marriott, United Airlines
 

Medium
Abt(IL), Bell & Howell, Birmingham Water Works Board (AL), CCA, Global Partners, Cracker Barrel, Intermedia, Seattle Genetics (WA)
 

Small
LaSalle Network (IL), O’Shea Builders (IL), Pierce Manufacturing (WI), Pulse Technology (IL), Staub Manufacturing Solutions (OH)


Among the talent measures used by these companies is investing in entry-level job training often through partnering with local technical or community colleges. They also offer continuous employee development to increase productivity and profit, attract and retain talent, and raise employee commitment and satisfaction. In the short term, training creates a pipeline to fill vacant jobs. In the long term it helps to nurture talent for the innovation and leadership needed for success in the future.

 The Perils of Short-Termism

At the start of the 1990s about 40 percent of businesses offered employee training. This began to slip during the mid-1990s when many companies cut training as the trend in management strategy became maximizing short-term profit by cutting costs in areas deemed non-essential to the core function of a business. The idea was to cut your way to greatness. Wall Street rewarded those businesses that kept profits up quarter after quarter.

 A big reality check began in 2019. The cumulative effect of global crises (i.e., COVID-19, the Ukraine War, rising inflation, demographic change) has intensified the need to rebuild U.S. talent resilience. Yet this is fundamental socio-economic issue that is largely being ignored. Despite the changed skill demands of the Fourth Industrial Revolution, many still cling to the 20th-century perspective that only one-third of the labor force needs a better education and specialized career training. Technology has advanced; social perspectives remain largely unchanged.

 At the same time. the U.S. labor force is undergoing a profound generational change. The 76.4 million baby boomers born between 1946 and 1964 have caused big problems coming in and going out. They overwhelmed educational facilities and then flooded the job market causing over one percent annual growth in the labor force. Now they are retiring at an unprecedented rate. Between 2010 and 2020 over 28 million boomers retired; the remaining cohort will leave the workforce by 2030. Currently about one in four U.S. workers are boomers. This massive wave of retirements is generating a huge demand for workers to replace them.  Rising skills requirements are making this process more difficult.

 Today the official U.S. unemployment rate is very low, but the labor participation rate is more than one percent less than at the start of the pandemic. In my over 30 years as a workforce consultant, I have never seen so much skilled talent sitting on the sidelines. Perhaps as many as 20 million workers have the skills-base needed by many businesses and organizations. Yet these employers are not investing in training to give these workers the skills they may lack to obtain a precise fit for open positions.

 Central banks around the world are raising interest rates to control inflation. Demographics and acute skill shortages are among the factors stoking inflation as employers struggling to fill positions raise wage offers. Companies are likely to pass rising labor bills along to consumers in the form of higher prices. In the long-term, term how much will this continue to fuel inflation?  The United States is imperiling its future by ignoring education deficits in schools and training needs in workplaces. Short-term fixes including raising interest rates will not solve our nation’s long-term need to better prepare our citizens for the education and skill demands of advanced technologies.

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Why Job Vacancies Are Surging & Likely to Continue

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Why Job Vacancies Are Surging & Likely to Continue

Guest writer Ed Gordon continues to explore the aftermath of the great disruption with this week’s blog post “Why Job Vacancies Are Surging & Likely to Continue.”

As the labor market starts recovering from the severe disruptions caused by the COVID-19 pandemic, there are some reasons for hope and many reasons for concern. The labor participation rate which continues to remain 1.1 percent lower than before the pandemic’s start, may rise somewhat as normal schooling enables more women to return to the workforce and the fear of contracting COVID subsides. On the other hand, reports are showing that students at all levels have lost a year or more of learning and community college enrollments have declined at a time when job skill requirements are growing.  

The biggest and most persistent negative factor is the shrinkage of the U.S. working age population in this decade. The baby boomers who caused a huge surge in the working age population are retiring in droves and this will continue until 2030. As the U.S. birthrate declined precipitously starting in the 1970s, a much smaller cohort is now entering the workforce. Also, since 2017 fewer immigrants have been admitted to the United States.  

Current Job Vacancies Soar 

The rebound from the pandemic and the shrinking labor pool has caused the unemployment rate to plummet and job vacancies to soar. An estimated 10.7 to 12.5 million jobs are now unfilled. The Bureau of Labor Statistics June JOLTS Report showed high rates of job vacancies in many major businesses sectors: information 7.9 percent, health care 9.1 percent, education 8.4 percent, professional/business services 8.3 percent.  

The National Federation of Independent Business reported an all-time high of small businesses that cannot find qualified applicants for skilled positions. A January 2022 Fortune/Deloitte survey reported that 71 percent of CEOs expected that labor and skills shortages will significantly disrupt their business strategies over the course of this year.  

U.S. defense contractors have major staffing shortages. Their aging pool of high-skill specialized employees – particularly engineers with security clearances – is rapidly shrinking as they reach retirement age. These are also tough times for military recruiters. As of late June, only 40 percent of the 57,000 new recruits that the U.S. Army wants by September 30 had been enlisted. The Navy, Marine Corps, and even the Air Force are also having trouble finding personnel that meet their fitness and educational requirements.  

To retain workers and recruit new ones, many employers are raising salaries or offering special hiring bonuses. So far in 2022 the average increase in base pay in the United States is 4.8 percent. As there currently is a shortage of one million registered nurses in the United States, hospitals are offering an up to $40,000 signing bonus to nurses who sign a two-year contract. Walgreens Boots Alliance is offering signing bonuses of up to $75,000 to pharmacists who agree to stay in their jobs for a specified period.  

The Society for Human Resource Management reports that projections for 2023 indicate that salaries will increase from 4 to 5 percent driven by continuing shortages of skilled workers.  

Can We Enlarge the Labor Pool? 

As we cited earlier, the labor participation rate remains below pre-pandemic levels. As of June 2022, there were about 100 million American of working age that are currently not employed or looking for work. We estimate that about 21 million are deterred from seeking employment because they lack the skill requirements for vacant jobs but could gain them if provided with entry-level training. Many of the 5.6 million Americans currently listed as unemployed also are in the same position. Yet only 20 to 25 percent of American businesses have training and education programs. This includes both entry-level job training and upgrading the skills or knowledge of current employees. For every dollar our chief foreign competition invests in worker training, U.S. business contributes just 20 cents!  

Can Robotics and Artificial Intelligence Fill the Gap? 

Many industry analysts are saying robots will largely solve current worker shortages. Businesses are investing billions in robotics and AI. A Material Handling Institute survey found that their members plan to increase robotics in warehouses by 50 percent over the next five years. However, as nations such as Singapore that have successfully automated industrial facilities illustrate, this approach relies heavily on having a high-skill labor pool and providing retraining to workers whose jobs now require programing, monitoring, or repairing automated equipment.  

While AI software can now generate text and field telephone inquiries, it can’t go beyond the set of data with which it is programmed. It can’t solve cause-and-effect problems or learn about the world like a child. Advancements in AI and robotics will require HI (human intelligence), i.e., more knowledge workers. 

How to Expand the Knowledge Pool

Raising salaries will not generate more qualified employees, it will only increase job churn and fuel inflation. The Fourth Industrial Revolution requires a higher proportion of workers to be high-skilled, and their skills and knowledge need to be continually updated to keep pace with rapid technological change. Surveys indicate that most American workers want to work for employers that provide workers with opportunities to upgrade their capabilities. 

Cooperative options for providing training and education need far more support. Small businesses particularly can profit from participating in regional associations in which businesses, educational institutions, and training providers work together in developing programs that develop and retrain workers with in-demand job and career skills. 

Edward Gordon is available to provide customized presentations on talent and the current and future U.S. and global labor market. Please visit our website www.imperialcorp.com for more information or contact us by email at imperialcorp@juno.com or by calling 312.664.5196.

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The May Gordon Report: Hope, Jobs, Change

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The May Gordon Report: Hope, Jobs, Change

Guest writer Edward E. Gordon has returned with his report for the month of May: Hope, Jobs, Change.

What are the major roadblocks to changing the ways the United States develops its workforce? We recently sought some answers from other workforce development leaders who also seek major improvements in our education-to-employment systems. There is general agreement that there are new education and training programs that improve adult and student learning, but there are significant obstacles to effectively and comprehensively implementing them.

 Over the past 30 years regional public-private partnership hubs have been formed that integrate the wide variety of community resources needed to address skills-jobs disconnects and today’s vacant jobs crisis. But these pathways to a better educated workforce have only been supported by a comparative handful of enlightened community and business leaders. Why haven’t they been widely adopted throughout the United States?

 Storrs Hall in his book, Where Is My Flying Car, gives several cogent explanations of why people in general are very resistant to systemic change. When their money, power, or prestige are at risk, systemic change issues are often turned into personal turf wars. Hall calls this the “Machiavelli Effect.” As Machiavelli stated in his controversial 1532 treatise, The Prince, innovators are often opposed by “all those who have done well under the old conditions.”

 Hall asserts that bureaucracies today pose major obstacles to implementing systemic change. There are well-entrenched bureaucracies in business, education, unions, and government. He finds that bureaucrats often block changes because of a “failure of imagination.” They believe in their superior expertise. They automatically rule out the potential of untried but worthwhile solutions.

 Hall also contends that bureaucracies stifle change due to a “failure of nerve.” Solutions to current challenges gain significant support. Only the details of implementing them need to be worked out. But nothing ever happens! Bureaucrats succumb to the fear that the results of his process will be so good that their leadership will be threatened.

 Bureaucracies are powerful because they are able to use resource starvation and regulations to suppress systemic change. Furthermore, America today is split into warring factions that resist working together to combat threats to our prosperity and way of life. In its history the United States has faced formidable challenges and forged innovative solutions that moved the nation forward. What can we learn from the past?

 After travelling across the United States in 1831, Alexis de Tocqueville wrote Democracy in America in which he concluded that civic activism was America’s greatest strength. As the United States expanded in territory and population during the 19th and early 20th centuries, ordinary citizens banded together to form local governments and organizations to solve common problems and meet local needs. 

 Tax-supported public education is among the most prominent advancements resulting from civic activism. By 1918 spurred by the Progressive movement, all the then states in the United States had enacted this reform. The United States became the first nation in history to attempt to offer a basic education to everyone. The system was far from perfect, but for most of the 20th century it worked well for most citizens. But the technological demands of the Fourth Industrial Revolution have made this education-to-employment system obsolete.

 Why do we need a revival of civic activism today? There are at least 1.8 job openings for every unemployed worker. U.S. inflation has reached a 40 year high of 8.5 percent. Companies across all business sectors cannot find workers with the requisite skills to fill up to 13 million vacant jobs, thus threatening significant wage inflation. Unless significant efforts are begun to bridge the talent gap between current educational preparation and the rising skill needs of local/regional businesses, we believe that by 2030 the U.S. labor market will be in an even deeper crisis, perhaps triggering a popular backlash that could destabilize our nation.

 We contend that America’s participatory democracy offers viable solutions to this grave employment crisis. During the Progressive Era a broad spectrum of voluntary organizations were formed. Many of them focused on civic improvement, such as Chambers of Commerce and Rotary Clubs. Today they and other groups and agencies such as Workforce Development Boards, regional economic development organizations, sectoral business alliances, community colleges, K-12 educational agencies, parent organizations, and unions are serving as catalysts for initiating broader public-private partnerships to update regional education-to-employment systems. Your advocacy and support for such efforts in your communities are vitally important for their success.

 For a more comprehensive analysis of the causes and solutions for the current skills-jobs mismatch, see Job Shock: Moving Beyond the COVID-19 Employment Meltdown to a New Skilled Talent Decade

 

Edward E. Gordon is the president and founder of Imperial Consulting Corporation.

 We invite to submit your questions or comments by email or calling us in Chicago at 312.664.5196.

Thank you for your continued interest in our publication.

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The New Plague: Vacant Jobs

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The New Plague: Vacant Jobs

In tonight’s blog post, guest writer Edward Gordon shares the new plague taking hold in our economy: vacant jobs.

“Hiring Now” signs are sprouting across the United States. Businesses can’t fill the tidal wave of empty positions. Many are not new jobs but replacements for the unprecedented number of 79 million baby boomers retiring by 2030. The largest number reach age 65 in 2022. This will be a terrible year for recruiters.

As COVID-19 restrictions have eased, job openings have soared. Since October 2021, the number of vacant jobs reported in the U.S. Bureau of Labor Statistic’s monthly JOLTS report has remained at about 11 million. The latest report shows that jobs openings are high in many key industry sectors including:

  1. Construction                                                   380,000
  2. Manufacturing                                                855,000
  3. Transportation, Warehousing & Utilities        479,000
  4. Professional & Business Services                   2,065,000
  5. Education & Health Services                          2,129,000
  6. Retail Trade                                                     1,046,000
  7. Accommodation & Food Services                  1,497,000
  8. State & Local Government                             567, 000

However, many businesses for proprietary reasons or because of repeated failure to find qualified candidates, do not report their job openings. As a result, we estimate the current number of vacant jobs at between 12 to 13 million vacant positions.

People are reentering the workforce, but many lack essential educational qualifications or specific job skills.  Too many Americans graduate from high school or even college without “learning how to learn” or failing to attain the math or literacy levels needed for employment in today’s in-demand career areas. Meanwhile technological advances across all industry sectors demand continuous education and training updates.

After assessing the current job situation, a Wall Street Journal analyst predicts, “If employment keeps growing like it has, by this summer the jobs market will either be extraordinarily tight, or excruciatingly so.” (March 5-6, 2022)

There is some evidence that American businesses have finally begun to increase their investments in worker training and education. But to produce more educated and skilled workers, systemic change is needed. If regional efforts do not grow appreciatively over the remaining decade, job vacancies will rise substantially. Our current analysis predicts that by 2030 there will be over 95 million empty positions globally with up to 30 million U.S. vacant jobs. The resulting economic and social upheaval will have dire consequences overseas and across America.

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Building a New Skilled Talent Decade

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Building a New Skilled Talent Decade

Edward E. Gordon, the founder and president of Imperial Consulting Corporation in Chicago, has consulted with leaders in business, education, government, and non-profits for over 50 years. As a writer, researcher, speaker, and consultant he has helped shape policy and programs that advance talent development and regional economic growth. This week, he shares with us the history and the present needs involved in building a new skilled talent decade.

Gordon is the author or co-author of 20 books. His book, Future Jobs: Solving the Employment and Skills Crisis, is the culmination of his work as a visionary who applies a multi-disciplinary approach to today’s complex workforce needs and economic development issues. It won a 2015 Independent Publishers Award. An updated paperback edition was published in 2018.

Recently I spoke at a forum on my White Paper, “Job Shock: Moving Beyond the COVID-19 Employment Meltdown to a New Skilled Talent Decade,” at the Cliff Dwellers Club in Chicago. My presentation and responses to it can be viewed on YouTube at https://youtu.be/gnLBrOiMSYA. In my remarks, I pointed out that history was now repeating itself as workplace technology change is again shifting education and skills requirements.

PAST LABOR HISTORY

During the first decades of the 20th century, a titanic shift in the U.S. economy destabilized society. An industrial revolution triggered by spread of electricity and the growth of factories and offices required workers with at least a basic education in reading and mathematics. Many violently opposed the expansion of public education. Who needs a universal school system? Why educate children, women, and immigrants? You will only cause anarchy by giving them dangerous ideas! Anyway, these people are not trainable. We need them for cheap labor in our factories or on our farms!

As this debate raged across America, more people were persuaded that the expansion of education would benefit society. Starting at the regional and state levels, enlightened community leaders spearheaded the expansion of compulsory tax-supported primary and secondary education. By 1918, all of the then 48 states mandated this standard of public schooling backed by tough truancy laws. The United States was the first nation to attempt to provide a general education to all its citizens. It was a major contributor to the rise of the United States as a world power.

A NEW SKILLED JOB ERA

Another major industrial revolution began in the 1970s as computers and information technology began to be adopted in workplaces. By the beginning of the 21st century, personal computers, smartphones and the internet were everywhere. Automaton has eliminated many low-skill jobs and increased the demand for workers with higher math and reading skills and specialized career training. The seminal 1983 report, “A Nation at Risk,” raised the first red flag that the U.S. education-to-employment system had become obsolete and warned that America needed to provide more students and workers with enhanced education and training for higher-skilled/higher-wage jobs.

However, continuing national testing by the U.S. Department of Education commonly known as the Nation’s Report Card reports low levels of proficiency in math and reading particularly at the 12th-grade-level. Moreover, the COVID-19 pandemic has caused learning loses of up to a year particularly among lower-income students.

These deficiencies in our education-to employment system plus the 130 million American adults who the Barbara Bush foundation reported read at the 8th-grade level or less is building into a severe shortage of skilled labor. Surveys of employers are consistently reporting difficulties in finding qualified people to fill open positions. A September National Federation of Independent Business survey found that 51 percent of owners had job openings they could not fill, the third consecutive month in which record highs for unfilled jobs had been reached. Moreover, 62 percent of small employers seeking to hire had few or no qualified applicants. In July and August, the U.S. Bureau of Labor Statistics reported over 10 million job openings. The Federal Reserve Bank of Atlanta projected that the high number of unfilled jobs is costing U.S. businesses to lose $738 billion in revenue annually.

CAN WE DO IT AGAIN?

As the COVID-19 epidemic has severely disrupted schooling at all levels and caused labor market turmoil, there is the potential for forming broad coalitions to reform our nation’s education-to-employment pipeline. Parents and students are more aware of the importance of good educational preparation for the future, and many businesses are fighting for their very survival.

At present although the number of vacant jobs is high, there are millions of Americans who are unemployed or underemployed who do not precisely match the skills or experience companies are seeking for their open jobs and who therefore are excluded for consideration for them. A September Harvard/Accenture report estimates that there are over 27 million Americans whom they term “hidden workers.”

Our “Job Shock” research clearly shows that Regional Talent Innovation Networks (RETAINs) as public-private partnership hubs can effectively prepare more people for the higher-skilled/higher-wage jobs that are vacant across the United States. Their success hinges upon mobilizing a diversity of partners to engage in meaningful collaboration to close skills-jobs gaps. Cross sector coordination is key. The current barriers between businesses and educational institutions need to be broken down to allow the development of up-to-date career preparation options.

America has a long history of community civic engagement. Enlightened local leaders have periodically stepped forward to bolster our republic during times of crisis. Community engagement is again essential to move the United States forward into a new skilled talent decade.

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Job Shock: Part Six – The First Half

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Job Shock: Part Six – The First Half

Job Shock: Part Six – The First Half

Edward E. Gordon, the founder and president of Imperial Consulting Corporation in Chicago, has consulted with leaders in business, education, government, and non-profits for over 50 years. As a writer, researcher, speaker, and consultant he has helped shape policy and programs that advance talent development and regional economic growth. This week, he continues his blog series with Job Shock, Part Six – The First Half.

Gordon is the author or co-author of 20 books. His book, Future Jobs: Solving the Employment and Skills Crisis, is the culmination of his work as a visionary who applies a multi-disciplinary approach to today’s complex workforce needs and economic development issues. It won a 2015 Independent Publishers Award. An updated paperback edition was published in 2018.

Solving the Pandemic & 2030 Employment Meltdown

RETAIN Case Studies: Partnerships Rebuilding Local Employment Pipelines

The June Gordon Report provided an introduction to the general characteristics of regional public-private partnerships focusing on economic and workforce development or RETAINs. Across the United States RETAINs have many local brand names.  RETAINs bring together enlightened community leaders from many industry sectors. They cooperate in developing initiatives that provide career education and information to students and retrain incumbent workers to meet the skill demands of workplace technology changes. The goals of RETAINs are to strengthen local institutions and competitive companies while providing local residents with better job opportunities.

There are many paths to pursuing these objectives. Here are examples of RETAINs that are continuing to develop programs that address the talent challenges in their communities.

Manufacturing Renaissance, Chicago, Illinois
For the past 38 years Manufacturing Renaissance (MR) has been recognized as a leading expert, advocate and practitioner of policies and programs that support the manufacturing sector as a primary strategy for reducing poverty, expanding inclusion, and sustaining middle-class communities. MR has currently developed programs in three areas: Career Pathway Services, Policy and Advocacy, and Economic Development. Here is a snapshot of MR’s Career Pathway Services:

Manufacturing Connect. MC is a program designed to expose, inspire, prepare, and support youth and young adults to pursue career pathways in manufacturing.  MC is a community-based program serving in-school youth, ages 14-18, to provide high quality, career pathway programming including career exposure, technical training and work experiences to help young people start and keep good paying jobs in manufacturing.

Young Manufacturers Association. The YMA serves as both a network and a program for young adults, aged 18-29, who are pursuing careers in manufacturing, in-between jobs, in training or interested in starting a career in manufacturing. Through regular meetings and social events, they support one another as peers through training, transition into permanent employment, professional and life skills development, and balancing personal and work life dynamics. The YMA as a program provides services on an as-needed basis, including career coaching, wrap-around supports, employer liaison to help troubleshoot issues that come up at work, and technical training. Together, the YMA network and program are serving the untapped talent and potential that young adults specifically represent to their communities and their current or future employers.

Instructors Apprenticeship for Advanced Manufacturing. IAAM was developed in partnership with the Chicago Teachers Union Foundation and the National Institute for Metalworking Skills to train the next generation of great machining instructors to be technologically, culturally, and pedagogically competent in the machine shop classroom.

Career Pathway Services is not a traditional workforce development program. MR draws heavily from a youth development and social services orientation to engage youth and young adults who typically may not identify or seek out manufacturing as a pathway that can assist them in achieving their life goals. MR introduces young people to the sector, finds a variety of ways for them to relate to peers already in the sector to help illuminate what could be possible for their future. No matter what they ultimately choose, young people benefit from having a network of professional and social support, work experiences, technical and professionalism skills. For those who enroll in our training program and choose to pursue a career-track job in manufacturing we support them as much as possible through training, job placement and beyond to help ensure their success.

MR is expanding its reach in Cook County and showing the way for other RETAINs to begin similar efforts. It illustrates that for a RETAIN to be successful there must be strong cooperation among educational entities, the business community, unions. government agencies, and non-profit partners.

High School Inc., Santa Ana, California

The initial impetus for the creation of the High School Inc. Academies Foundation came from local business leaders in the Santa Ana Chamber of Commerce. Starting in 2003, members of the Chamber of Commerce held discussions with school districts officials on how to raise student achievement. The result was a partnership involving the Chamber, the Foundation and the Santa Ana Unified School District. An official “Memorandum of Understanding was signed by all three partners in May of 2006. This agreement outlined the responsibilities of each partner for the development and operation of the High School Inc. program.

The first six High School Inc. Academies began in 2007 on the campus of Santa Ana Valley High School in the Santa Ana Unified School District. The district’s Career Technical Education (CTE) department conducts monthly meetings with High School Inc.’s staff to maintain the continuity and effectiveness of the academies.

At Valley High School the High School Inc. Academies merge both academic and technical skills through Project Based Learning (PBL), competitions, mentorships, and business internships. Because of the success of the High School Inc. academies, there has been considerable growth in the school district’s creation of career pathways in business and industry sectors. These pathways start as early as sixth grade in the school district’s intermediate schools and send students into the waiting High School Inc. Academies.

The number of Valley high school students categorized as “socioeconomically disadvantaged” in 2008 was 80 percent. However, with the help of talented teachers and staff members, and the existence of High School Inc., Valley High School has raised the level of achievement for all Valley high school students.

Mary Tran, Executive Director of High School Inc. reports that the six High School Inc. Academies have grown from an enrollment of 96 students at its start in 2007 to over 1,572 students in 2019. The Academies boast a 98% high school graduation rate. In the past year there have been 160 professional internships for seniors. The number of students receiving “Industry Certifications” after a minimum of two years in the program was 511, with over 319 students participating in business/industry themed competitions. Students in the 2018-2019 received over 950 hours of volunteer time from business and industry representatives. The program has received numerous awards and recognitions including the prestigious “Golden Bell Award” given to High School Inc. in 2014 by the California School Board Association.

Jack E. Oakes, an officer on the Board of Directors for High School Inc., says “High School Inc.’s development has produced the realization that, before students can be College and Career Ready, they must be ‘Achievement Ready.’ Students reach this new level of preparedness by being motivated to strive at or beyond their potential. The High School Inc. model ensures that students are Achievement Ready before they graduate and pursue higher education and careers. The reforms at Valley High School embrace the mission of High School Inc. ‘to empower youth and strengthen communities through education and business partnerships.’”

Summing Up
Each organization profiled here has continued to evolve to meet the challenges posed by technological, economic, and workforce shifts. The COVID-19 pandemic has disrupted American life at many levels. It opens up new opportunities for many communities to use the RETAIN model as their first step toward a more knowledgeable workforce and the better paying jobs of the Fourth Industrial Revolution.

The last segment of “Job Shock” will focus on why the 2020s will be a crucial decade for building a skilled workforce. As the nation emerges from COVID-19 shutdowns, the disconnect between needed skills and available jobs is gaining increasing attention. The time has arrived for RETAINs to take the lead in rebuilding education-to-employment pipelines in communities across the United States.

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.