Why Today’s Economy is Turning Economic Developers into Skills Promoters
By Chris Engle, Principal
Across the country, economic developers grapple every day with the challenge of convincing people to stay in their community, relocate, or develop themselves into the workers our companies need. With today’s unemployment rate at its lowest in decades, retain/attract strategies can feel like a zero-sum game, that my win is your loss. Companies too bristle at the high rates of churn they see in the local workforce. More must be done to increase the size of the workforce pie.
The best answer, the “win-win” solution, is to prioritize first a “develop” strategy for your community. Smart economic developers help assemble technical workforce training for growing or expanding companies, particularly as part of an RFP process. But more must be done; we have to ensure our local education systems delivers the full range of skills needed by the local economy.
How do we do this? We must find new fervor to preach the benefits of graduating from high school and college. We must bring companies closer to educators, students, and parents to clarify which skills and occupations are most needed. We must use labor demand forecasts to guide colleges and universities to fill local job demand with intention. And, we must encourage students to consider the job market as much as they consider their “career passions.”
Today’s low unemployment is caused by numerous factors that can be identified and quantified. Low levels of labor participation are one culprit. Despite a decade of job creation, labor participation rates are still lower than their pre-recession peak. If we had a rate seen in 2009 (1% higher than today), we’d have 17 million more people available to fill jobs in the US. In one mid-sized metro client of ours, we estimated 10,000 people were missing from their workforce.
Another even more significant cause of labor shortage is the lack of alignment between new graduates’ skills and labor demand. Too many students graduate with degrees of marginal value in today’s job market, putting them in low-wage jobs that don’t use the education they are indebted for (aka underemployment). In one economically diverse client community, we estimated than nearly 40% of graduates get degrees in fields with limited to zero local job demand. Will they find jobs that use their education? Unlikely. Will they relocate for jobs or be underemployed? Very likely. Also consider this example: 70% of Psychology Bachelor’s graduates in the US don’t continue on to get their master’s or PhD, which is required to practice Psychology. While some graduates will get jobs in related fields, like social work, this is but one example of a pipeline of workers that could get redirected into other, high-paying fields.
At Avalanche Consulting, we’ve been working for many years on how to best measure the “supply-demand gap” in a local community’s education pipeline, calculating the extent to which graduates are either undersupplied or oversupplied in specific fields. While “What Color is Your Parachute” worked well in the past (bless Richard Bolles, who died at 90 years of age in 2017), we now need to look at the “flavor and temperature” of job demand where students plan to live. University graduates may relocate for jobs, but most community college graduates stay where they graduate. As economic developers, we may know their job prospects better than they do, or even their career counselors.
We’ll continue to publish information and guidance on how to tap into your discouraged, underemployed, or mis-aligned workforce. In our most recent survey of economic developers from across the US, over 50% said they were involved in some activities to either develop, attract or retain talent for their community. Thank you for all that you are currently doing to improve the quality of the US workforce and by extension the competitiveness of US industry.