Every few years, I review literature on productivity and automation. As a data scientist working in large enterprises, I have a front row seat to an emerging skillset that fits into our digital economy. As a former educator, I have a specific bias towards skill and capability development. These reviews are an attempt to understand some of the prevailing economic forces today, and identify the best next steps forward for creating opportunity for all. This article highlights the challenges of matchmaking and credentialing when introducing new skills to a workplace.
Firms want modern capabilities, but the “what” and “how” is ambiguous
As the roles required to succeed in the economy evolve, it will be important for workers to update and adapt their skills. There are concerns that, collectively our labor force will not be able to keep up with the potential demand, and that the resulting “skills gap” could cost the US economy $2.5T over the next decade. For the first time in recent memory, in May, August, and September 2018, the TechServe Alliance, the national trade association of technology staffing and services companies, reported no tech job growth in the U.S. According to TechServe Alliance CEO Mark Roberts, “this is totally a supply side phenomenon. There are simply not enough qualified workers to meet demand.”
These challenges are exacerbated by a lack of dynamism in the economy - which I have explored in this article. There is poor diffusion of new knowledge, further leaving middle-market companies behind. In addition, insufficient support for development reduces firms’ competitiveness. For example, many middle market firms thus find it difficult to create a “deeper bench” – while 55% of middle market firms have an ongoing training system, 45% do not. In addition, 61% of middle market firms do not have systems in place for internal career advancement. And only 30% of firms partner with educational or training organizations, “despite the fact that such partnerships could help companies bolster the capabilities of their internal HR staff.”
Firms know there is a need to modernize, but do not have a clear path forward. Ambiguity about the future, paired with a clear need for change and innovation, is perhaps a defining characteristic of conversations on the future of the workforce.
The “skills gap” is in part an “information gap”
One reason for the ambiguity is an information gap between employers, workers, and educational institutions. While employers presumably know which skills they value in an employee, workers themselves and educational institutions have less up-to-date knowledge, and their response lags behind the changing demand. Lacking incisive data, workers and educational institutions are separated from employers by an information gap that makes it difficult to prepare the workforce with the skills employers seek. Coordination among these parties will be crucial for addressing America’s reskilling challenge.
Credentialing workers for job functions that have existed for only a few years is challenging, as is determining certification equivalencies. As an example, in April 2016, the WSJ performed a review of aggregator sites with the dean of Macomb Community College, which has traditionally served Michigan’s auto industry (Sussman and Korn 2018). According to the authors, “When the school’s engineering dean examined thousands of local job listings, he learned manufacturers used dozens of job titles for the same mix of skills Macomb calls mechatronics—a combination of mechanics, electronics and programming.”
This overwhelming variety of postsecondary programs from which to choose creates risk for individuals to identify a program that will set them up for employment. A 2017 report from the Georgetown Center on Education and the Workforce explains that the “variety of postsecondary credentials available has multiplied rapidly in recent years, including degrees, certificates, certifications, licenses, and badges and other microcredentials.” The authors note that this “ecosystem of postsecondary credentials is complex, fragmented, and multilayered.”
This all being said, proper investments in reskilling can have a large payoff. In an evaluation of the health insurer Cigna’s tuition reimbursement program, it was found that “every dollar the company puts into the program is returned and generates an additional $1.29 in savings.” Similarly, an analysis of Discover Financial Service’s reimbursement program by Lumina found that Discover “reaps $1.44 in savings for every dollar spent on tuition assistance for employees.”
Key challenge: More transparency between employers, schools, and prospective hires
While generally acknowledged as an ongoing challenge, work is being done to facilitate transparency in job hiring and skills. The leaders of multiple agencies of the federal government have worked on creating a common definition and metrics around career pathways, state and local governments have worked collaboratively to support implementation, and national foundations have funded experimentation to move this concept from a lofty vision to a tangible reality. Job posting aggregators (e.g., Glassdoor) market their capabilities toward local economic and workforce development clients, including community colleges and community development organizations.
As an example of a promising private-public partnership, CyberSeek is a unique organization attempting to address a skills gap. If successful, the project would result in increased awareness of the career opportunities in cybersecurity, by geography and specific skill requirement. This transparency could result in a better-directed labor supply, which would help both employers and workers.