Cracking the Unemployment Puzzle: Why Sector Initiatives Matter

In recent years American workers have reluctantly gained a forced familiarity with the discouraging new vocabulary of these hazardous economic times. "Skills mismatch," "hiring freeze," "outsourcing," "underemployment" and other such words and phrases have become watchwords for a workforce that in less than a generation has tumbled from productivity and job security to declining wages and widespread job insecurity. In the last five years these workers have taken it on the chin like no other generation before them, with layoffs at their peak pushing some 14 million people into unemployment lines, many of them without the education or credentials to make an easy return.

It comes as welcome news, then, as unemployment this month fell below 8 percent for the first time in four years, workers, educators, private employers and governments are stepping up the pace of collaborations that are showing the kind of success the economy sorely needs. This week in a gathering in Jackson, Mississippi called the Pathways to Prosperity Conference, health care, energy and manufacturing executives, four-year college and community college officials, regional and state economic development officials, workforce investment board leaders, economists, philanthropists and non-profit executives are gathering to share strategies for job growth and increasing opportunities for job-seekers and workers. This conference, entitled Sector Initiatives in the Mid-South, brings together proponents of "sector initiatives," the state-of-the-art workforce development strategy that has proven to be effective in both bad and good economic times for satisfying company hiring needs, raising the level of worker skills and pay, and providing regional industries and markets with the steady stream of trained workers they require to raise productivity.

For any job hunter or potential employer who has ever endured the hit-and-miss randomness of traditional job fairs, sector initiatives bring a much needed logic and organization to the process of connecting workers and work. Sector initiatives operate on a simple but effective principle: engage educators, job trainers, government and private industry collaboratively to train workers to fill specific jobs in specific industries that have jobs that need filling. This week's Jackson gathering showcases some striking successes, including the ongoing collaboration between Volkswagen USA and the Tennessee Technology Center at Chattanooga State Community College. Located at VW's new Chattanooga facility, this unique collaboration features a jointly created Automotive Mechatronics program. There, students bound for careers in the auto industry learn metal-working, pneumatics, electronics, motor controls, hydraulics and other vital industrial skills. That curriculum is topped off with four semesters of paid on-the-job training.

The program, modeled as a sector initiative and championed by Volkswagen executive Ilker Subasi and Chattanooga State's Ralph Gwaltney, coordinator of its Automotive Mechatronics program, took in its first 20 students in 2010 and has added 20 new students each year. Training is divided between the classroom and the plant. According to Subasi and Gwaltney, the program fits both of their needs precisely; Gwaltney places students on track to skilled jobs that bring benefits and good pay, and Subasi receives a steady flow of trainees with polished skills fulfilling roles and functions that he needs to make his auto plant hum smoothly. VW's plant expects to employ 1,500 workers, produce 150,000 automobiles per year, and will eventually hire an additional 2,000 workers.

Pathways to Prosperity also convenes other sector leaders from all across the mid-South, including Alabama, Arkansas, Louisiana, and Mississippi, states with growing industrial bases but also places where unemployment has regularly hovered above the national average. Among the members present are the National Marine Education Consortium, the Delta Regional Authority, Southern Growth Policies Board, Arkansas Association of Two-Year Colleges, Arkansas Department of Workforce Services, Foundation for the Mid-South, Louisiana Association of Community Action Partnerships, Mississippi Community College Board, Mississippi Department of Employment Security, Mississippi Development Authority, and the Mississippi State Workforce Investment Board. Among the key sectors highlighted in the two day conference are manufacturing, energy, health care, and construction.

In sessions dedicated to key industries, the energy forum will focus on training such as the new Instrumentation and Controls Academy at Mississippi Gulf Coast Community College, a 4,672 square foot training facility decked out with $2 million of equipment to train students for careers in process technology and related energy industry work. During the Business Champions for Sector Initiatives plenary, Chris Masingill, Chairman of Delta Regional Authority and John Lotshaw, Chairman of the National Marine Education Consortium will speak on leadership roles businesses take in providing support to and investing in sector initiatives.

According to conference organizer Jack Mills, Director of the National Network of Sector partners and a Program Director at the Insight Center for Community Economic Development, which developed the sector approach, raising the profile of sector initiatives' success couldn't be more timely in a national economy that is in many ways still trying to find its footing after the Great Recession. "In today's difficult economic times, sector initiatives provide an effective strategy," Mills said. "They can meet an industry's workforce needs while moving job seekers and workers into and up career paths, improving job quality, assisting employers to create good jobs, and increasing employment diversity and equity." Starting in the late 1990s, the National Network of Sector Partners has now grown into a nationwide initiative.

To be sure, the challenges faced by workforce development organizations of all types remain formidable, particularly as larger numbers of students -- the workforce of tomorrow -- drop out of high school or do not receive the training they'll need to compete in a rapidly specializing workforce. But providing information and resources to those working in the sector field is the best way to increase the quality and capacity of sector initiatives that exist, and increase the number of new sector initiatives coming on line in the next decade. For low-income workers in particular, many of whom have trouble getting traction in this increasingly tough job market, research shows that industry-focused training raises paychecks by 29 percent or higher in the year after they complete their training. They also remain on the job longer than workers who do not come out of sector pipelines. Similarly, of 6,300 employers surveyed, 84 percent reported that the workers they hired through sector initiatives helped their firms boost production.

A key example is the Mississippi Corridor Consortium (MCC), organized and operated by four north Mississippi community colleges. MCC trains area residents for advanced manufacturing jobs in fast-growing, high-paying industries such as auto manufacturing and aerospace technology. In 2009 the MCC received $7.4 million in grants and trained 32,000 people. 79 percent of unemployed workers who were trained got jobs and 85 percent of their employers who trained them, retained them. Finding talent is a perennial employer headache. Through sector work, large mid-South region employers such as Toyota and American Eurocopter have met their hiring and skill development needs.

When Pathways to Prosperity winds down, sector initiative participants will scatter back to their respective regions across the mid-South, bringing with them crucial lessons on successes, failures and lessons learned, and supportive policies. They will spread their wisdom around an employment market that still needs all the help it can get.

David E. Thigpen is VP for Policy and Strategic Advancement at the Insight Center.