Nuts and Bolts: A New Ecosystem for Workforce Development

Many long-term shifts in our economy – declining real wages, concentration of job growth in low-wage sectors, diminishing worker rights, growing contingent workforce and an increasing number of people facing uncertainty and instability of work – have taken a toll on U.S. workers, particularly those at the lower end of the wage scale.

At Heron, we believe that the first step toward rebuilding a more inclusive economy is to invest in the healthy growth of enterprises – and thereby, increase employment.  A secondary but also instrumental group of players are supply side actors – enterprises organized to connect willing workers to jobs and improve the quality and opportunity of those jobs. Such actors include intermediary enterprises focused on job training, placement and advancement, and worker advocacy and policy change. All play critical roles in the workforce development ecosystem, but need to do a better job of responding to the rapidly changing economy.

Empirical studies have shown that the most successful efforts to build the workforce development ecosystem rely on close collaboration between demand and supply-side actors.  After all, employers know what jobs they need to fill, so are the best positioned to advise on how workforce interventions can accommodate that demand.  Moreover, the federal budget for employment and training initiatives has been halved since the 1980s, so workforce development initiatives are looking to be as efficient as possible and are turning to employers to help solve the structural challenges in our economy.  Therefore, the initiatives are looking to be strongly targeted for success.  These trends have driven a shift from what has historically been a disconnected workforce ecosystem to a more collaborative approach, where employers are more integrally involved in workforce interventions.

We believe that this collaborative approach to workforce development can offer better solutions to address the challenges faced by our economic system. Examples of successful collaborative efforts include:

• Sectoral strategies are viewed as an effective mechanism for improving the quality and availability of jobs in a particular sector through job training and placement services, as conveyed in the 2010 Public/Private Ventures’ Sectoral Employment Study. [1] Bronx-based Per Scholas, for example, is focused on providing job training for computer technicians – a sector with job growth potential for middle-skills workers.
• Employer-driven industry partnerships, such as the 35 local workforce partnerships of The National Fund for Workforce Solutions, aim to identify sources of demand for jobs in a specific locality and adapt workforce strategies to meet that demand. By incorporating the needs of diverse stakeholders – including businesses, funder collaboratives, and government agencies – into workforce strategies – the goal is to arrive at a solution that causes lasting impact for all players involved. Such industry partnerships have been instrumental in creating innovative approaches to educating, training, and credentialing jobseekers to meet the needs of the local workforce.
• Direct employer engagement in career development of frontline employeeshas proven to not only be good for employees, but also positively impact the company’s bottom line. Many of Hitachi’s Pioneer Employers, for example, have shown that investments in human capital development tend to pay off through employee retention, increased productivity, and improved ability to adapt production to address shifts in consumer demand—resulting in growth and stability of revenues from new market segments.
• Worker advocacy and policy initiatives can also happen in partnership with employers that support minimum wage increases and fight for worker rights. However, some sectors have more difficulty in making the case in partnership with employers, and in such instances, there is great need for worker advocacy and policy interventions. A promising new approach is Paraprofessional Healthcare Institute (PHI) and the Aspen Institute’s Workforce Strategies Initiative’s work to “build ladders and raise the floor”for low-wage workers in the United States. This research offers solutions to help low wage workers facing meager wages, unpredictable work hours, and lack of employee benefits.

Heron is interested in identifying more supply- and demand-side organizations that are working to blur the unecessary and unproductive demarcation of responsibilities between employers and supply-side workforce interventions.  We are looking for those enterprises – for-profit or nonprofit –   that can make the case for mutual benefits for low-wage workers and our economy as a whole.  We will continue to search for such enterprises and when identified, determine how capital can play a role in scaling their impact.