Job Creation: Focus On Programs, Not Politics

This election year we'd all get rich if we earned a nickel each time a presidential hopeful vilified some culprit or another for costing jobs. "Inept" government, "greedy" corporations, and "disruptive" unions top the list. And different audiences dictate just what the campaigners promote as the panacea for job growth: higher taxes, lower taxes, deregulation, more regulation, job training... all are constant refrains.

What's the reality beyond the rhetoric? First, let's make sure we're focused on the two biggest pressures on joblessness and job generation: the would-be new entrants (16- to 24-year-olds) lacking the necessary skills and experience to land gainful employment, and the post-55-year-old, mature workers intent on remaining in the labor market or scrambling to get back in.

Statistics tell the story. Grey labor is the single largest cohort of the labor force, and it's growing exponentially. It will make up 90 percent of the increase in the labor market between 2008 and 2018, with significant numbers of older Americans spurred by the need for supplemental income, given the bleak financial future they face in retirement. And recent college grads are saddled with much more than their own remedial needs. Students today borrow twice what they did only a decade ago, after adjusting for inflation. They need paychecks and promising futures.

Fusing these two bookends of the workforce, so that they complement each other instead of competing for the same scarce opportunities, is critical to economic security.

Despite nagging unemployment, American manufacturers are desperate for skilled talent. Manpower Group says more than half of the organizations it polled have trouble filling positions. Forty percent of respondents to a Kauffman Foundation entrepreneur survey cited the lack of qualified workers as "the biggest obstacle standing in the way of continued growth." And numbers from Deloitte indicate that U.S. manufacturing firms have upward of 600,000 skilled positions open, because they cannot find the people they need to do the job.

As our latest Competitiveness Index warned, many of these are middle-skills jobs that fall somewhere between vocational awards and an associate's degree. These are nuclear technicians, electricians, hydraulic systems workers, and the rich ecosystem of people who make and run what we use everyday, from life-saving tubing hook-ups in hospital rooms to the bridges we cross. These are not jobs that can be offshored; they must be filled right here.

Consider just one industry that cuts across every sector, skill level, and income base: welding. While the U.S. Department of Labor forecasts an outlook that's bright, with faster-than-average job generation, the American Welding Society says the future is practically blinding: hundreds of thousands of welding positions are and will continue to open over the next several years.

Strategic partnerships can help meet this demand. And there are some innovative prototypes, such as the new project by the Council on Competitiveness and United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry to help newly returning and older military veterans skill up for the manufacturing workforce. A key component: mentoring and cross training between new entrants and greyer talent. These short-term apprenticeships accelerate welding training, equip trainees with marketable credentials, and position their "graduates" on a career ladder for powerful job prospects, where they can gain more skills and greater income. (Welder salaries start at $30,000 a year and can eventually earn more than $100,000 annually.) The program is a boon to manufacturers seeking talent that they can successfully slip into openings without incurring productivity losses associated with gaps in human capital.

It's going to take more intergenerational efforts like this to make a difference. We need momentum.

Here's the way ahead:

  • Start with vocational schools and community colleges. These "applied learning" institutions receive a lot of attention these days. The best put their students on realistic career paths, by offering just-in-time training (in classrooms, at the job site, and online) that lead directly to work. The most effective modular learning opportunities cultivate strong interest in manufacturing and service-sector occupations where talent gaps exist. But to boost their ROI, educators must respond to the current demands and anticipate labor-market needs of employers; put a premium on science, technology, engineering, and math (STEM) skills; and track their own success in preparing and placing students in jobs.

  • Local companies: Engage students. Draw upon and reward current workers or recent retirees hailing from architecture, the trades, manufacturing, utilities, energy, food production, health care, and beyond to mentor students on campus or in the workplace. A good model, Junior Achievement, the world's largest after-school mentoring organization dedicated to financial literacy, work readiness, and entrepreneurship, puts increasing emphasis on cultivating interest in STEM fields.
  • Use existing talent to leverage new talent. Rehire or retain mature workers to mentor new entrants and transfer knowledge, hone company-specific skills, oversee output and bring trainees up to speed, quickly. If the numbers are correct about the overall slowing of workforce growth in the U.S. and our economy relies on fewer workers to sustain growth and support retirees, then our workers must increase their productivity, and fast.
  • Tweak tax and regulatory regimes. Maximize the economics of an aging workforce by lifting taxes that penalize social security recipients for earnings; expand Small Business Administration (SBA) loans to mature entrepreneurs; and offer tax incentives to companies including mature entrepreneurs in their supplier network.
  • Whoever sits in the Oval Office this time next year should have a well-conceived national skills agenda, informed by strong data and exemplars that clearly demonstrate what works. But in the interim, we need practical solutions. Let's leave the platitudes to the politicians.

    This post is part of the HBR Insight Center on American Competitiveness.