UV Letters

Aug 12, 2016 BACK

Retraining and Reskilling to Avoid Dystopia

Volume VI, #17

I was 15 when I first understood the importance of training. I’d been hired at a Toronto Baskin Robbins and after a few weeks was deemed a sufficiently reliable scooper that franchise owner Mr. Pirani gladly accepted my offer to refer two of my younger brothers for employment.

Aaron was hired a few months later. I learned from Aaron – and separately from Mr. Pirani – that following careful observation it was determined that Aaron was scooping too big. Mr. Pirani showed Aaron a proper serving and gave him a warning. Then one shift, a particularly generous scoop of Mint Chocolate Chip proved Aaron’s undoing: Mr. Pirani terminated Aaron for scooping too big. In his defense, Aaron claimed he was merely trying to give customers (especially kids) “exceptional value for their dollar.”

It must have been a tight labor market, because Mr. Pirani went ahead and hired our step-brother Kevin. Kevin quickly became a Pirani favorite and rose through the ranks – perhaps too quickly. For on Kevin’s first closing shift, he did a thorough job cleaning and an equally thorough job shutting off all the switches – including the switch for the freezer. The next day, Mr. Pirani awoke to over $800 of melted ice cream.

A couple of weeks ago I was back in Toronto swapping this story and others with my 101-year-old grandmother, Estelle Craig. Her favorite topic of conversation these days is Donald Trump. How could someone like Trump become the nominee of a major political party? I explained that while there’s ample blame to go around, the ultimate cause seemed to be anger on the part of working class whites. Most Trump supporters have not earned the sine qua non of today’s labor market (i.e., postsecondary education), do not work in knowledge-intensive sectors of the economy and do not live in the fastest-growing regions. They’re dissatisfied and dislocated and they’re not going to take it anymore; Donald Trump is the embodiment of their anger. To which my grandmother responded? “But aren’t we going to see self-driving cars in a few years? What will happen when another 3 million workers lose their jobs as truck drivers, delivery drivers and taxi drivers? If you think Trump is bad, just you wait.”

There’s a lot to admire about my grandmother: endurance, humor, politics, common sense. And she’s on the money here even before considering the millions of other workers whom technology will disintermediate (not to mention millions more jobs that will be offshored unless Trump builds walls that extend to cyberspace). Studies project anywhere from 10 to 47% of current jobs are at risk of being eliminated by technology. While most dislocated workers currently remain in their own (increasingly impoverished) communities, in time many will opt to relocate. What’s at stake, it seems to me, is whether America begins to look more like Brazil and other emerging markets, with “favelas” housing dislocated workers seeking to scrape by on the margins of growing cities. Trump’s proposed Mexican wall could look quaint compared to the structures that would be built to wall off economically unproductive workers from economically productive America.

As I noted in June, it now seems clear that leaving the economy prostrate to global forces while failing to retrain, reskill and perhaps relocate workers who have been left behind is no longer a sustainable approach. This is particularly true given the private sector’s gradual disinvestment in training and skill development over the past two generations. The “Home Depot” model of hiring that now prevails (i.e., perfect part for each opening, or don’t buy it) has shifted primary responsibility to the publicly funded workforce development system.

An effective workforce development system needs to do two things. First, make sure that postsecondary education and training programs for high-growth industries are accessible for all Americans – meaning convenient, affordable (which does not have to mean free), and where even the least privileged students are set up for success (which would be new and different). And second, helping direct workers to the right retraining and reskilling programs (and ultimately into jobs). The rise of Trump would seem to indicate that, in Trump’s own inimitable form:

***

Following FDR’s Works Progress Administration, which was wound up during World War II, there was little to no government involvement in retraining until 1962 when President Kennedy passed the Manpower Development & Training Act. MDTA was a limited federally-run program that was succeeded over the next 20 years by two programs, each increasing funding and devolving operating responsibility to states and municipalities. In 1998, federal workforce development was codified in the Workforce Investment Act (WIA) – updated in 2014 as the Workforce Innovation and Opportunity Act (WIOA) – creating a national network of one-stop centers emphasizing quick progression to employment. WIA/WIOA was funded and administered through Workforce Investment Boards (WIBs): state and local authorities recognized by the Department of Labor.

If you’re not intimately familiar with WIBs, there’s a good reason. Federal workforce law has emphasized serving those with the most significant barriers to employment, often connecting them to low-skilled jobs as quickly as possible – a “first job any job” approach. A WIB’s ability to support first-time job seekers, recent grads, or dislocated workers who need new skills is constrained by these requirements. Ultimately, the level of retraining and reskilling accomplished through WIB-managed services is minimal.

When WIBs do add value to job seekers, it’s almost entirely through in-person counseling and workshops. While WIOA has pushed WIBs to add more online self-service resources (e.g., resume construction, career exploration, training identification), usage levels are abysmal, driven primarily by poor user experience and interface design.

For their part, employers have two reasons to engage with their local WIBs. First, if they have a need for a significant number of low-skill workers. Or second, for charitable purposes. For example, while Boeing is represented on the Seattle-King County WIB board, it’s not Boeing human resources, but rather Boeing’s Director of Global Corporate Citizenship. While WIOA requires that WIB boards have an employer majority, the local employers adding the most mid- to high-paying jobs are conspicuously absent; precious few employers in knowledge and high-growth industries view WIBs as relevant to their talent development needs.

***

It should be a national priority to avoid my grandmother’s “worse than Trump” dystopia. I may be Canadian by birth, so not naturally averse to central planning. But I’ve been here for a quarter century – more than long enough to understand that our history of fighting colonialism and communism explains the balkanization of our workforce development system, and that not even Secretary of Labor Bernie Sanders will be successful in putting Humpty Dumpty together again.

But what’s needed here is not a federal takeover of workforce development. Injecting a stream of higher skilled workers into the current system could do the trick. Here’s how: If every new college graduate registered with the local WIB, employers adding large numbers of good jobs would be likely to engage. The result could turn the vicious cycle characterizing today’s WIBs into a virtuous one: better employers attracting higher skilled candidates, in turn attracting better employers.

There seems to be consensus that there’s a major economic need to establish platforms that connect job seekers to jobs. A few weeks ago, we published a market map in EdSurge showing 50+ companies attacking this opportunity. Each and every one of these companies is deploying technology that could help WIBs attract higher skilled workers to the top of the funnel, help employers better describe the competencies they need to hire for, and match.

If the Department of Labor is unable to prescribe digital platforms for WIBs, then states must do so – ideally selecting a common commercial platform like Portfolium – an ePortfolio-based competency marketplace that over 50 universities and state systems have adopted in the past year. This is happening in some states, including Washington which just launched a platform powered by Monster.com. But we need to go further to match workers with specific and transferable skills and abilities to the employers that need them. The technology to power competency marketplaces is here. What’s missing is scale on both the candidate and employer side. WIBs that can utilize technology to attract more diversely prepared candidates could easily become the first competency marketplaces of scale, with the potential to direct thousands of displaced, dislocated workers to meaningful retraining and reskilling opportunities, helping America avoid dystopia.

And those WIBs that don’t? Well, they can continue directing these same workers to jobs at Baskin Robbins. But they’ll have to answer to my grandmother.

Sincere thanks to Katherine Mahoney, Program Administrator at the Washington State Board for Community and Technical Colleges, for her assistance with this piece.

University Ventures (UV) is the premier investment firm focused exclusively on the global higher education sector. UV pursues a differentiated strategy of 'innovation from within'. By partnering with top-tier universities and colleges, and then strategically directing private capital to develop programs of exceptional quality that address major economic and social needs, UV is setting new standards for student outcomes and advancing the development of the next generation of colleges and universities on a global scale.

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1. About That College Earnings Premium… Bloomberg report by Shahien Nasiripour demonstrating many students are generating little if any return from bachelors degrees. For about a quarter of bachelor’s degree holders, wages are no higher than those received by the typical high school graduate… The recent rise of the so-called college earnings premium—the gap between what bachelor’s degree recipients earn vs. high school diploma holders—is entirely due to falling pay for high school graduates. Read more 2. We Learned It From You, For-Profits. Hechinger Report article by Jon Marcus on the trend of private non-profit colleges turning to online lead-generation strategies that previously had been the sole domain of for-profit schools. The move to more aggressive strategies like these comes after four and a half years of overall enrollment declines at U.S. universities and colleges. And while private, nonprofit schools have managed to maintain a fairly level number of students, they’re finding that harder and more expensive to do. Read more 3. Treating All Borrowers Like Children LinkedIn column by Carlo Salerno on how student lending must evolve to fit a very different market than the one for which the federal student loan program was created over 50 years ago. Though the program's stayed the same the consumers it serves haven't. The percentage of college students today that are not the straight-out-of-high-school students the system was built for back in the 1960s is both large and getting larger. Who are these people? They're adults and they work and, importantly, they also have demonstrable credit histories. Read more