Partnerships to Strengthen the U.S. Labor Force

Nov032016

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Photo of Edison State Community College in Columbus, Ohio. Edison is preparing students, starting in middle school, for the skills needed to work in the American economy.
Photo of Edison State Community College in Columbus, Ohio. Edison is preparing students, starting in middle school, for the skills needed to work in the American economy.

The U.S. economy is now in its eighth year of economic expansion. On average, the economy has grown at an annualized rate of 2 percent these past seven years. Thanks to many economic policies implemented since the financial crisis, the economy is on solid footing and is now enjoying the fourth longest period of expansion on record dating back to the mid-1800s. Extending the length of this expansion is very important since uninterrupted economic growth tends to lock in improvements in the nation’s standard of living, avoiding recession setbacks, particularly on the job and income front.  

The housing market is mending, with home prices rising 5 percent during the last year, consumer borrowing costs have come down, and inflation remains well contained.  All of these factors combine to provide a positive backdrop for U.S. consumers and businesses.

The gains since 2008-09 are particularly noteworthy in the improving labor market.  Businesses have added 15.1 million jobs since early 2010.  Employment has grown 1.7 percent in the last 12 months and the unemployment rate is 5.0 percent, one-half the rate seen in the aftermath of the financial crisis.  Unemployment insurance claims – those needing insurance due to a layoff or job loss – are at historic lows.  At the same time, there are near record high levels of job openings.  The most recent data released by the Bureau of Labor Statistics (BLS) shows that there are 5.4 million job openings.  BLS estimates that there are 1.4 unemployed workers for every job opening, down from more than six workers for every open position during the recession in 2008-09. 

Even with this near record high level of job openings and low unemployment rate, there are millions more Americans who would like a job or are working part-time and would prefer full-time employment.  For example, in September, 5.9 million people were working part-time because they could not find a full-time job, slack work or due to business conditions, and another 5.8 million persons were not in the labor force (meaning that they were not working or actively looking for work).

Given the record 79 straight months of job growth, more workers are finding jobs and more companies are finding workers.  Still, by some measures our labor market is less dynamic than it was prior to the Great Recession.  For example, we can look at churn in the labor market (the sum of hires and separations as a share of employment) to gauge the fluidity of that market.  In August, hires and separations totaled about 7.0 percent of non-farm employment, compared to 7.5 percent in the years before the Great Recession.

Why is our labor market not more robust given the fact that job openings are near record levels, and millions of people want a job or a better job? Skills shortages certainly play a role today, and they could continue to play a role in the future without the right training policies in government and by business.  One such policy is the administration’s Job-Driven Training Principles, which guide federal investments in workforce training by requiring, for example, that training grant recipients engage employers up front to determine local hiring heeds and leverage regional partnerships to engage public and private entities.  Since the administration introduced these principles in July 2014, more than $1.5 billion in competitive job-training grants have been awarded. The BLS projects that the strongest growing occupations during the next several years will be in healthcare, social assistance positions and technical occupations using computing and mathematical skills, and accounting. A recent Conference Board study highlighted healthcare jobs as an occupation at especially high risk of shortages because of the rapidly growing demand for workers. Skilled trades jobs also are at risk because of the coming wave of retirements, declining interest among youth in those jobs, and an educational system here in the United States that has not proven to be equipped to add to this labor force.

I recently traveled to Rowan County, North Carolina for the 2016 Manufacturing Day and saw this skills challenge in action.  The North Carolina Manufacturing Institute, led by a faculty team at Rowan-Cabarrus Community College and local manufacturers, are working to train high school graduates as quickly as possible to fill needed workers in these local facilities.  They are working hard to close the manufacturing skills gap through workforce training and certification. 

Another innovative program was launched seven years ago in central Ohio called EPIC.  Honda’s Development Center in Marysville, Ohio, is partnering with Marysville Early College High School and Columbus State Community College to train students to work in high-tech manufacturing jobs.  Collaboration and a pipeline of talent are keys to success in both of these innovative programs.

These are exactly the types of partnerships that the Department of Commerce is looking to facilitate and promote through our “Skills for Business” initiative.  Partnerships across the federal government, working together as one team, can insure that our training programs meet the needs of businesses and help to create the jobs of the 21st century.  Our professional experts in upskilling are partnering with leaders in industry, education, workforce and economic development to leverage the connections between jobs needed, skills made, and jobs filled.  Seamlessly building talent and making a better world for all Americans is the goal of this great initiative.

This blog is a part of a monthly series highlighting the contributions of the Commerce Department’s agencies to the Open for Business Agenda. This month’s focus is on Skills for Business.

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Last updated: 2016-12-09 11:22

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