Taking a Private Route out of the Workforce Crisis

Last month the Portland Tribune devoted a whole supplementary magazine to the discussion of the development of the future workforce in Oregon, warning of an approaching workforce crisis. It is estimated that the state’s economy will create 250,000 new jobs over the next decade, and another 400,000 jobs soon will open up as Baby Boomers begin retiring. There are currently 20,000 unfilled jobs in the Portland area. But employers are already having a tough time finding qualified candidates to replace retirees and to fill new positions.

Is nothing being done to expand the entire skilled workforce?

The fact is, more than 80 agencies and organizations spend $150 million per year (95.4% of which is publicly funded) to provide workforce development services in Multnomah and Washington counties. While these are the most densely populated counties in Oregon, this $150 million is spent in addition to the yearly $5 billion—plus in public funds spent on the state’s public schools. Despite the fact that about $10,000 are spent per student per year in Oregon public schools, nearly 70% of all incoming community college freshmen require corrective classes before they can take normal college courses.

There seems to be a clear disconnect between workers’ abilities and the available jobs in Portland. This makes us think carefully about three broad questions. First, what do employers expect from the workforce training system? Second, is a centralized, publicly financed regional workforce training system a good answer to the need for better skills? Third, is it relevant to look at innovative training models to prepare future workers effectively?

Employers expect job trainers to focus on skill development, including “soft skills” like being able to work in a team. The fast-changing economy requires workers not only to be skilled, but also to be adaptable and ready to compete. Businesses today realize that what keeps them ahead of others is their ability to learn and adapt faster than their competitors.

Worksystems Inc., a nonprofit that distributes federal money designated for workforce development in Multnomah and Washington counties, is working on a common resource database that will integrate relevant information and connect workers with jobs; but that is not enough to stimulate effective workforce development.

Public job training systems are a maze of complicated bureaucracy and regulations. They tend to do too much. They not only provide training, but also other support services like childcare and housing, which often leads to “mission creep” and weakens their effectiveness in providing core training services. Public money also has a lot of regulative strings attached, preventing service providers from experimenting with new training models.

It is important to understand that the roles of the public and private sectors (nonprofits and businesses) are changing radically. Social innovations once stimulated by the public sector are increasingly led by business and expanded through the market. The kind of workforce training required today can be best imparted by business operators, not government bureaucrats. Thus, employers should be encouraged to lead workforce-training initiatives.

For example, Manpower Inc., a Canada-based world leader in the employment services industry, partnered with the U.S. Department of Labor in 2003. They successfully carried out their TechReach program in many North American states and connected many unemployed individuals to high-wage technical careers. As a business model it is both effective and economical.

It is also vital to improve high school curricula. If schools perform their task well, there is no need to invest heavily in work training after school. Increased focus on STEM (Science, Technology, Engineering and Mathematics) skills, along with compulsory internship programs woven into the high school syllabus, can do wonders to motivate future workers. Unfortunately, public school bureaucracies are not designed to execute these innovative tactics efficiently or to evaluate the outcome scientifically.

Public/Private Ventures, a national “action-tank” that researches initiatives to strengthen workforce development performance, has found that “networking” among workforce training participants is also very important in motivating and retaining new workers. The upcoming NW Youth Careers Expo on May 8, 2008 at the Oregon Convention Center will provide a great opportunity to do that. Job training agencies also should introduce their current participants to some of their successful alumni who have begun stable careers.

The challenge for workforce professionals is to find the right fit between employers and job seekers. Employers are open to creative solutions and need the workforce system to break out of the traditional social-service-driven thinking. Coming up with innovative workforce solutions is an ongoing effort rather than a one-time endeavor because manufacturing and service industries are continuously advancing technologically.

It is time to think about how to do more with less. Instead of complaining about the shrinking public funding for workforce development, social and business entrepreneurs in Portland should brainstorm creative training models to prepare the future workforce. A national Workforce Innovations conference will take place in New Orleans July 15-17, 2008. Leaders around the country from workforce development agencies (both government and private), businesses, education and community-based organizations plan to explore new training strategies. Oregonians who work in workforce development-related fields may find their new ideas to be a good starting point in avoiding the upcoming workforce crisis.

Sreya Sarkar is a policy analyst at Cascade Policy Institute, Oregon’s free market think tank.