How to boost workplace skills

A highly trained workforce is a public good, crucial not only to the prosperity of workers themselves, but also to the strength of the entire economy. And, as with most public goods, the United States has been underinvesting in it for decades, leaving many American workers without the skills they need to get well-paying jobs.

Fortunately, there are signs of improvement. As the American labor market tightens and a growing chorus of companies complains that they cannot find skilled workers, innovative partnerships between governments, employers, and educational institutions are beginning to fill the void.

Governments bear the primary responsibility for funding workforce training. But effective programs require more than just money; they need employers and educators who can identify the necessary skills, create the structures to teach them, and match trained workers with available jobs. To be successful in achieving these goals, training programs must keep pace with rapid changes in technology and the consequent evolution in the labor market.

In short, workforce training requires both more investment and more innovation through new kinds of public-private partnerships, degree-granting institutions, and approaches to life-long learning and re-skilling. Innovative approaches can pop up almost anywhere, and government has a critical role to play in promoting them: rigorously evaluating programs, scaling up those that work, and withdrawing funding from those that do not.

In the US, community colleges provide the first step toward a good job for millions of Americans. These institutions are especially important for students from less-advantaged backgrounds and for displaced workers seeking new opportunities. Around the country, community colleges are working with businesses and experimenting with ways to provide practical training for high-demand occupations and to fill specialized needs.

Recognizing their importance, President Barack Obama has proposed making two years of community college tuition-free. The proposal would benefit the roughly nine million students attending community college at least half-time, making steady progress, and maintaining passing grades.

By one careful reckoning, community colleges are an extremely good investment. For every dollar a student pays or gives up to attend school, his or her future income rises by about $4.80. For taxpayers, the lifetime return on investment is better than six to one.

Community colleges are a classic example of how US states operate as “laboratories of democracy.” Obama based his proposal in part on the free-tuition programs launched by Tennessee and the city of Chicago. Drawing on the success of the Tennessee Tech Program, he has also proposed a $200-million federal fund to expand community college programs based on their effectiveness, which is to be measured by employer partnerships, work-based learning opportunities, and student graduation and job placement rates. Similarly, California, which boasts a long tradition of excellence in public higher education, recently introduced a $50 million fund to foster innovative approaches in the sector, with an emphasis on public-private collaborations that have demonstrated their ability to deliver the skills that employers need.

Community colleges are just one part of the rapidly changing training landscape. The purpose of higher education is evolving. In addition to traditional tertiary education, training institutions are offering targeted modules, certified by professional industry groups. The Obama administration, for example, cooperated with an arm of the National Association of Manufacturers to launch a manufacturing skills certification system based on standards established by industry groups. That program is now operating at 163 colleges and institutes.

Numerous collaborations among the public sector, non-profit philanthropies, and businesses are offering innovations in worker education. For example, Western Governors University, a nonprofit online institution, offers accredited college-degree programs in teaching, nursing, health-care informatics, and business. It gets financial support from more than 20 corporations and philanthropies, including the Gates Foundation, along with $10 million from the US Department of Education. Advancement is based not on how long students sit in a classroom, but on their competence in the topics they are studying. The cost for six months, regardless of how many courses a person takes, is $2,890 (including books and a mentor) – a bargain, compared to most state universities.

The Nanodegree program at AT&T (where I am a board member) is another example. The program, a collaboration between AT&T and Udacity, a for-profit provider of online courses, offers courses and mini-degrees in specialized fields such as front-end website development. The program is a component of AT&T’s in-house training program, but it is open to anyone with a broadband connection. A typical course, the content of which is designed by AT&T and other high-tech companies, costs about $200 a month and takes 6-12 months to complete. AT&T offers scholarships through partner non-profit institutions and provides paid internships for up to 100 graduates.

LearnUp, a San Francisco startup that has attracted funding from some of the biggest venture capital firms in Silicon Valley, establishes partnerships with employers to offer online training modules that connect job seekers to specific jobs, primarily entry-level positions that do not require college degrees. Employers foot the bill, with the expectation that LearnUp will help them recruit higher-quality applicants. And, indeed, once candidates have completed the training, LearnUp helps them to secure interviews with prospective employers, which already includes several large companies. The California community college system is already working with LearnUp to give students access to the skills required to fill available local jobs.

As these examples illustrate, though workforce training is a public good, no single institution or arm of government has all of the answers concerning how best to provide it. Collaboration among government agencies, companies and trade associations, educational institutions, and non-profits can give birth to effective strategies that can be scaled with public funding. Only by working together will they be able to identify the best recipes for success.

This article is published in collaboration with Project Syndicate. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Laura Tyson, a former chair of the US President’s Council of Economic Advisers, is a professor at the Haas School of Business at the University of California. Lenny Mendonca is a former director of McKinsey & Company.

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