CDPS Convenes Thought Leaders on Workforce Development

March 30, 2015

Stemming from the Industrial Cities Initiative, which explored the economies of former Seventh District manufacturing hub cities over 50 years, the Chicago Fed's Community Development and Policy Studies (CDPS) has placed a continued focus on workforce development and its relevancy for marginalized populations. Among various events and publications, a 2013 edition of ProfitWise News and Views highlighted community college efforts to partner with major employers to train workers for unfilled positions (Community Colleges and Industry: How Partnerships Address the Skills Gap). And in 2014, an entire edition of ProfitWise News and Views explored leading workforce development practices (From Classroom to Career: An Overview of Current Workforce Development Trends, Issues and Initiatives).

On February 19, 2015, CDPS and the Northern Illinois University Center for Governmental Studies (CGS) co-hosted a one-day conference entitled “Future Focus: Preparing for Workforce 2020.” The event brought together over 100 researchers, workforce intermediaries, financial institutions, and municipal leaders to discuss workforce development–challenges and successes–locally, regionally (specifically in Illinois, Indiana, and Wisconsin), and nationally.

The conference opened with remarks by the Vice President and department head for CDPS, Alicia Williams, who touched on the ways CDPS supports Fed mandates, and linked bank investments in workforce programs to potential for CRA credit. She further highlighted the workforce related findings of a long-term CDPS project called the Industrial Cities Initiative (ICI). This project focused on Midwest cities that were once manufacturing centers but shifted to a more diverse and in some cases struggling economies. ICI was motivated by questions about why some Midwest cities outperform other cities with comparable histories and manufacturing legacies.

Daniel Sullivan, Executive Vice President and Director of Research at the Federal Reserve Bank of Chicago, then provided an economic overview that included his perspectives on both the structural and cyclical problems in the labor force. Both issues impact the ability of workers to find jobs, whereas most references to skills gaps focus only on the structural aspects. Certain segments of the U.S. labor force lack strong job skills, he noted, but this problem is longstanding and did not emerge in 2008. The fact that even some well-qualified workers struggle to find employment also indicates the changing employment landscape has outpaced growth. Sullivan stated that, due in part to the Fed’s accommodative monetary policy decisions since 2008, some economists project that full employment of the current workforce is not too far away.

Peter Cappelli, Professor of Management and Director, Center for Human Resources, Wharton School of the University of Pennsylvania, was the conference keynote speaker. His findings on worker skills and employment have received national attention, as he challenges the common assertion that (broadly speaking) workers lack needed skills. Dr. Cappelli asked the audience "why employers continue to complain about not finding the candidates they want?" His presentation then centered on dispelling what he perceived to be myths surrounding: (1) traditional graduate and undergraduate curricula; (2) the skills gap/the failing of K-12 schools and the lack of science, technology, engineering, and mathematics (STEM) programs; (3) and the notion that today's positions simply require more skills than people have. While all of these factors could reasonably contribute to the problem of matching workers to open positions, Cappelli closed by explaining the real gap as that most employers lack the ability to truly manage their own talent and therefore cannot plan or train for future workforce needs given all the uncertainty in the market. Cappelli suggested that employers should be more realistic about hiring, wages, and about developing versus (primarily) recruiting talent. He contends that employers should focus on talent management rather than working to populate a just-in-time workforce, which he described as a highly inefficient process.

The day's first panel, "Using data to identify future workforce needs,"; discussed the impact of changing workforce needs due to industry sophistication. The panel commented on this along with the pending "grey tsunami" that will hit as the baby boom generation begins to exit the workforce. These trends will significantly affect the availability of workers in the future, in both urban and rural communities. As a result, federal, state, and local agencies are closely monitoring workforce trends to better address the changing skills needed and the training required to produce high quality workers. The session described efforts underway by several agencies to improve education efforts and better understand the gaps between the supply and demand for workers. In light of the expected changes in the new federal Workforce Innovation and Opportunity Act, panelists highlighted the need for enhanced data portals and other aggregation methods to improve decision making in meeting employer needs.

Three breakout sessions in the afternoon focused on workforce trends and effective practices in: (1) attracting and retaining talent; (2) upgrading skills of the under-qualified; and (3) overcoming barriers to employment.

The panel on "attracting and retaining talent" covered three topics spanning various levels of workforce preparation. Comments were offered on trends and opportunities in higher education. Other remarks centered on the important role that immigrants play in filling jobs ranging from highly specialized technical occupations to seasonal agricultural workers. The panel also included a socio-psychological context for understanding the aspirations and work ethic of "millennials," the cohort that will soon dominate the American workforce.

The panel on "upgrading the skills of the under-qualified" covered an array of topics from preparing low-skilled workers for more advanced work to apprenticeships for high-skilled manufacturing work. The panel offered practical examples for the ways in which the workforce system helps meet employer needs and provides meaningful employment opportunities for workers.

The third panel "overcoming barriers to employment" addressed concerns heard from employers: (1) "I can't find skilled workers" (2) "I can't keep skilled workers" and (3) "why won't workers show up?" Collectively, however, the panel laid out a larger challenge -- one of a worker quantity shortage -- and the need to tap into the "the chronically unemployed." Further, the panelists identified many barriers certain workers face that employers seldom appreciate: lack of reliable and efficient transportation, inconsistent available working hours, and basic employability screening. To reduce such barriers, panelists suggested a better coordination between employers, service organizations, training providers, and the workers themselves.

The day concluded with an interactive session on strategic opportunities for strengthening workforce systems to promote collaboration. The twin aims of this session were for participants to leave with: (a) ideas for strategies they can implement to strengthen local and regional workforce systems; and (b) new contacts with peers in the region with whom they can collaborate. Groups were asked to respond to the following four questions:

  1. What opportunities to better address the skills gap came out of the presentations that apply to your local workforce development system?
  2. How can local workforce agencies better engage employers to address the skills gap?
  3. What two things you (and your agency) can do to meet potential workforce development changes in your region?
  4. Would your organization like to learn more and possibly participate in a broader regional collaborative?

In sum, by discussing exemplary programs addressing the perceived skills gap both locally as well as nationally, CDPS along with CGS encouraged stronger alliances amongst participants in hopes of having a better understanding and tools with which to address current and future workforce needs. Please visit the Future Focus: Preparing for Workforce 2020 website for a detailed agenda and links to the presentations from the conference.

The views expressed in this post are our own and do not reflect those of the Federal Reserve Bank of Chicago or the Federal Reserve System.


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