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We Need to 'Re-Wire' the Labor Market

Words by 3p Contributor
Investment & Markets
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By Byron Auguste and Tyra Mariani

How do we ensure that motivated Americans get the skills they need to find meaningful work, to thrive in the workplace, and to move forward in our job market?

We need to ask deeper questions about our labor market’s role in upward mobility (or immobility), because the way we assess unemployment and underemployment doesn’t tell the full story of the U.S. economy’s loss of dynamism in the past 15 years. For example, how many people are engaged by the work they do, and see a career path ahead of them? Who can clearly say: If I make the extra effort to do X, I can learn Y, and then be hired or promoted into job Z? How many can confidently quit their current job to take a better one?

Too many Americans lack that confidence, because when it comes to work, they are “stuck” without a way to translate their best efforts into economic progress. This situation undermines U.S. economic dynamism and growth, because human capital  —  the most valuable asset on America’s economic balance sheet  —  is not realizing its full value.

Right now our job market works best for those Americans who follow conventional paths to four-year college degrees and who have the social capital and mentorship that encourages employers to take a chance on hiring, training and advancing them. It works poorly for the growing number of people whose journeys are less linear or gilded, including the 35 million people with “some college” but no degree, mid-career industry switchers, un-credentialed workers who mastered their skills on the job, full-time parents re-entering the workforce, the long-term unemployed, skilled immigrants, and young people reaching for the first rungs on the career ladder.

With U.S. job openings at their highest levels in at least 15 years, how can so many American workers find themselves so stuck? It seems like a paradox, but a few statistics and recent human-resource analytics research offer some clues.

In the United States, voluntary job changes  —  quitting to seek a better job  —  are down by 28 percent since 2000. While only 19 percent of administrative assistants have four-year college degrees, consulting firm Burning Glass found that almost two-thirds of new assistant jobs require a four-year degree just to be considered. Less educated workers receive only half the formal on-the-job training that more educated workers receive. Employers are only half as likely to grant an interview to a long-term unemployed candidate when compared to someone more recently employed with identical education, skills and experience  —  yet, an Evolv study of 20,000 hires found that this distinction made no difference in likely job performance.

What these startling data  —  and the dysfunctions they reveal  —  all have in common is an origin on the “demand” side of the U.S. labor market:  how employers recruit, hire, train and promote. Yet most policies that aim to improve employment outcomes focus on the “supply side”  —  education and job training. These efforts are important, but they can’t “close the skills gap” without demand-side reforms. We need smarter employer practices and the partnerships and public policies to support them.

Re-wiring the demand side of U.S. labor market is the goal of Opportunity@Work, our civic enterprise based at New America. Employers are now experiencing a classic market failure, in which hiring and training practices are inadvertently limiting the collective talent pipeline and creating “skills mismatches” with economy-wide ripple effects. These mismatches are a key reason why nearly half of U.S. employers report difficulty hiring employees who have the skills their companies need to compete.

While focusing on the demand side, we aren’t overlooking the many employers who are already investing in workforce skills by partnering with educators or unions to shape vocational training curricula or offering apprenticeships or other work-based learning. Some are also innovating more inclusive ways to identify talent. There are now many pockets of success to emulate, but adopting these strategies remains too slow, costly and complex  —  as each one invents (or re-invents) its own approach.

Re-wiring the U.S. labor market at scale will require more than replicating best practices. We need to build a flexible, dynamic and common “operating system” for the labor market that employers, educators, workers and job-seekers can plug into as a tool to better align their own investments with each other’s priorities, recognize potential and respond to market needs. If achieved at scale, such alignment would result in higher-value education and training programs; more inclusive and better-matched pools of candidates to hire; and a more engaged and productive workforce.

With such a broad goal in our sights, we’re starting with information technology jobs, which constitute 12 percent of today’s open jobs  —  over 680,000 of them – in the U.S. As part of the TechHire Initiative President Barack Obama launched in March 2015, we have created a learning network for 35 communities from Wilmington to Chattanooga to Albuquerque. This network will help align employers to hire for middle-class IT jobs based on competence and readiness, rather than pedigree.

When President Obama announced TechHire he said, “If you can do the job, you should get the job.” LaShana Lewis could do the job, but after being unable to get a job interview for the IT work that was her passion, she worked as a bus driver and in customer support for over a decade. Today, Lewis is a systems engineer at MasterCard, after being matched by hiring on-ramp LaunchCode, a TechHire partner in St. Louis that connects non-traditional job seekers to job openings.

Opportunity@Work will be part of the movement to realize the full capabilities of our country’s leading institutions of technology, education and training, business services, and workforce development to enable employers to institute “hire when ready” practices in communities nationwide, to reach millions of Americans who could learn and excel at jobs that employers struggle to fill. Talent like Lewis' should never be invisible. Bringing potential like hers out into the open is essential to bringing America’s founding promise of opportunity through work into the 21st century.

Image credit: Flickr/Steve Wilson

Byron Auguste is the Co-Founder & MD of @OpptyatWork, ex- Deputy Director of @WhiteHouse NEC, ex-Director of @McKinsey, co-founder @HopeStreetGroup, and featured speaker at the upcoming Closing The Gap: Solutions For An Inclusive Economy".

3p Contributor

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