Uncertainty-Not Just Skills Gap-Slows Economy, Experts Testify

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Experts representing industry, government and educational communities supplied testimony about what they are doing to remedy the workforce skills gap and improve the country’s educational system during a Feb. 5, 2013, hearing held by the U.S. House Committee on Education and the Workforce.

The witnesses also testified that the federal government could do more to quell economic uncertainty and accelerate job growth and to make it easier for states to align their education systems with labor-market needs.

“Those who complete their education are finding a difficult academic climate has been replaced by an even more difficult job market,” said committee chairman John Kline, R-Minn., during the hearing Challenges and Opportunities Facing America's Schools and Workplaces. “No one questions the ability of the American people to rise above these tough times. …The question is whether their elected government can do so, as well.”

Jared Bernstein, Ph.D., senior fellow at the Center on Budget and Policy Priorities in Washington, D.C., said recent budget cuts are threatening the educational support that is critical to maintaining a productive workforce.

“From the perspective of working families, the current economy is highly imbalanced,” he observed. “Middle- and low-wage workers continue to fall behind. Education has often been put forth as a policy solution to the problem of stagnant earnings and inequality, and for good reason. There is a significant wage premium for workers with higher levels of education, one that has grown considerably over time.”

But Bernstein said it would be a mistake to think that higher educational attainment alone would help ameliorate the economic squeeze that so many families face. “The supply of labor, even of so-called skilled labor, is not what’s holding back job growth right now. Inadequate labor demand—not enough jobs to meet the supply of workers—has been, by far, the more pressing factor in recent years.”

Bernstein said that Congress needs to remain cognizant of the impact of “forthcoming budgetary constraints on programs that help support education, both at the federal and subfederal levels,” as well as the effect that continuing economic uncertainty is having on job creation.

“It is extremely hard to see how careening from crisis to crisis—from fiscal cliff to debt ceiling to sequester—supports the private-sector need for both a well-educated labor force on the supply side and a stable climate of demand for the goods and services they produce.”

Jay Timmons, president and CEO of the National Association of Manufacturers (NAM), said there are specific challenges in labor policy, workforce development and immigration that make it difficult to keep U.S. manufacturing a leading economic driver.

“To retain that strength, we need to address the fact that it is now 20 percent more expensive to manufacture in the United States compared to our competitors, and that figure excludes the cost of labor,” he explained. “The current National Labor Relations Board and the Department of Labor continue to churn out troubling regulations and case decisions, often overturning decades of established and accepted labor practice.”

Not only government regulations but a serious shortage of skilled laborers is hampering the manufacturing sector, Timmons said.

“Our most recent Skills Gap survey identified approximately 600,000 positions going unfilled due to the lack of qualified applicants,” he testified. “In fact, 82 percent of manufacturers reported a moderate-to-serious shortage in skilled production labor.”

“The only way to address this monumental challenge and support the economic recovery,” Timmons advised, “is to align education, economic development, workforce and business agendas to work in concert and develop the talent necessary for success in the global economy.”

The broken immigration system also is making it more difficult to hire the right person with the right skills at the right time, he testified. “Put simply, we need to raise the caps on the number of green cards and visas and create a functional system for hiring employees in order for reform to be a workable solution for manufacturers.”

States Leading Education-Reform Efforts

Utah Gov. Gary Herbert and Virginia Secretary of Education Laura Fornash discussed how their states align their educational requirements with current labor-market demands and suggested that Congress consider policies that could help more Americans access the training and education necessary to compete in the 21st-century workforce.

“Utah achieves [its] success because we focus on growing the economy and investing in education,” Herbert testified. “Those two priorities are inextricably linked.”

He cited a comprehensive study by Georgetown University's Center on Education and Workforce that reported that two-thirds of the jobs in Utah will require some form of post-secondary education by the year 2020. But, the governor noted, only 43 percent of Utah’s workforce meets this education standard. So the state, which has been named by Forbes magazine as the best state for business and careers for the third year in a row, is pursuing three major initiatives to build a strong economy.

“We have proactively engaged all major stakeholders and leaders on every front, including education and business, to unite behind and commit to our goal of [having] 66 percent of the workforce [meet that postsecondary-education standard] by 2020.”
Utah’s second initiative emphasized STEM education throughout its entire K-16 system, focusing on science, technology, engineering and math “because that is where the jobs will be,” he added.
Finally, Utah is expanding its Spanish, French and Chinese dual-immersion education programs, he reported. These programs teach students cultural literacy, preparing them for a global economy.

“Our multilingual students become a key part of our workforce,” he said, “and that attracts business to our state. Utah’s economy is growing at more than twice the national average. Our unemployment rate is 5.2 percent, far below the national average of 7.8 percent.”
Despite the state’s success, Herbert said federal policies complicate Utah’s ability to expand its workforce and align it with market demands.

“If states are to optimize alignment between our future educational outcomes and the labor demands of the market, it is essential that Congress now provide states maximum flexibility to implement programs and tailor solutions in the way we see fit.”

State Budget Cuts Affecting Education Reforms

Secretary Fornash said that Virginia is working to lower college costs and increase transparency around higher-education outcomes.

“We are raising standards, focusing on literacy, strengthening our high-school-diploma requirements and ensuring access to dual-enrollment classes through the local community colleges, which leads to credentials that transfer to our public and private four-year institutions,” she testified.

Fornash said that in March 2010, Virginia Gov. Bob McDonnell formed a commission of business, education and community leaders to help develop the Virginia Higher Education Opportunity Act of 2011, or the “Top Jobs for the 21st Century” higher-education legislation, designed to make college more accessible and affordable for students.

“Our goal of 100,000 new degrees over the next 15 years, with a focus on STEM-H degrees, [has been] supported by more than $350 million [of state funding] over the last three years.”

These degrees include those in the science, technology, engineering, math and health fields.

Virginia has adopted a points-based performance funding model to incentivize institutions in a variety of areas, including:

  • Increased acquisition of associate’s and bachelor’s degrees, especially among underrepresented populations.
  • Growth of STEM-H degree recipients.
  • Accelerated time-to-degree programs.

Virginia is one of only a handful of states to release wage-outcomes data on college graduates, down to the level of individual major and institution, Fornash testified. By August 2013, the Commonwealth will include within these reports associated statistics on education debt, also down to the specifics of major and institution.

“For the first time, students and families will be able to use specific information about the full costs, associated debt and early-career wages to make informed choices about postsecondary education.”

Theresa Minton-Eversole is an online editor/manager for SHRM. To read the original article on shrm.org, please click here.