Over the past decade, a set of workforce development policies and strategies has emerged to meet the needs of both businesses and low-wage, low skilled workers. In some cases, the results have been nothing less than remarkable: employers are finding a well-trained competitive workforce while at the same time workers are being placed in jobs that can sustain their families.
The opportunity exists to spread this workforce intermediary approach, as this Assembly has named it, to a wider array of existing institutions in order to achieve greater impact. Achieving this impact will not be easy. Employers and job training providers simply adopting “promising workforce practices” won’t get the job done.
The challenge ahead is about transforming workforce development practices in a variety of institutional settings, such as community colleges, workforce boards, labor unions, employer associations, and community organizations. It is about creating and sustaining entrepreneurial organizations that have the commitment and capacity for innovation and to build partnerships, learn, change directions, and relentlessly pursue results.
Transforming workforce development practices, however, will only occur if there is top-level leadership committed to this agenda. Public and private workforce development resources must lay the groundwork to support the pursuit and achievement of substantial results.
The report of this American Assembly provides hope and, most importantly, direction for a broad spectrum of workforce practitioners, business organizations, and advocates who are ready to take on this challenge. Given the current and impending workforce crises that threaten the future of America’s families and businesses, the time is right.
We are proud to have supported and participated in this important civic dialogue. But this is just the beginning. We look forward to working in collaboration with our workforce development colleagues to advance this critical agenda in the months and years to come.
The 102nd American Assembly
At the close of their discussions, the participants in the 102nd American Assembly on “Achieving Worker Success and Business Prosperity: The New Role for Workforce Intermediaries,” at Arden House, Harriman, New York, February 6-9, 2003 reviewed as a group the following statement. The statement represents general agreement; however, no one was asked to sign it. Furthermore, it should be understood that not everyone agreed with all of it.
As the 21st century begins, the prosperity of the United States depends increasingly on the strength of its workforce. The world is becoming one economy, and nations that fully utilize their workers are more likely to thrive than those that do not.
There is a crisis emerging in America: workforce. The future worker shortage in the United States, the lack of worker skills, the increasing wage gaps, the disjointed public programs, and the absence of business participation all contribute to the crisis. But most importantly, it is the failure of our nation to recognize and respond to these challenges that presents the greatest risk.
Over the past twenty years, a dramatic increase in the size and skill of America’s labor force has driven its economic growth. Baby boomers were in their prime employment years, and large numbers of women entered the labor force. New workers emerged far more educated than those they replaced. The number of college-educated workers more than doubled.
These trends have ended. More than one third of the nation’s current workforce lack the basic skills needed to succeed in today’s labor market. During the next twenty years, the American workforce is expected to grow by only half of its earlier pace: there will be no growth of native-born workers in their prime working years; the percentage of the labor force composed of four-year college graduates is predicted to stagnate over the next two decades; the number of workers with two-year degrees and skill certificates will fall far short of the economy’s needs.
These labor force trends are exacerbated by globalizing competition and accelerating technological requirements in both domestic and export sectors. Taken together, these trends will lead to severe consequences for the vibrancy of the American economy and businesses. Problems on the horizon include:
- Unfilled jobs and productivity;
- Skill shortages;
- A decrease in regional economic competitiveness for some of the nation’s cities and rural communities;
- A loss of jobs to overseas workers.
However, these problems can create opportunities to better involve overlooked labor market pools in the United States.
A strong economy depends on labor force growth and increased productivity. But if the nation’s labor force does not grow, then we must find ways to increase the productivity of all American workers to meet the demands of future jobs.
Today, U.S. tax dollars support workforce development through a fragmented and under-funded patchwork system. In many communities, employers indicate that the workforce development system does not meet their needs and their engagement in workforce development programs has been superficial; publicly funded workforce programs have been constrained by funding that follows individual personal eligibility and political boundaries rather than regional economies; and systems improvements have proved elusive. As a result, employers still struggle to find workers who can help their businesses succeed, and workers still struggle to find and keep jobs that can sustain their families.
A new strategy -- what this Assembly calls a “workforce intermediary” strategy -- seeks to help workers advance, help businesses fi ll critical job shortages, and, ultimately, change systems to bolster regional and national economic development. This approach does not require creating a new category of organization or overhauling public systems but it does require the transformation of existing policies and programs so that they are more adaptable to the local labor markets. It challenges existing organizations and systems to redefine whom they serve and how they do business through the forging of new partnerships and building the capacity to do so.
Workforce intermediary approaches are practiced by a variety of organizations -- including community colleges, federally mandated Workforce Investment Boards (WIBs), state and local government agencies, unions, employer organizations, community development corporations, community development financial institutions, faith-based organizations, and community-based organizations. Groups using workforce intermediary approaches have these goals:
- To bring workers into the American mainstream. Success for these organizations means that workers are employed in jobs that offer the promise of financial stability.
- To increase business efficiency and productivity. They are equally concerned with serving employers’ needs and helping businesses become increasingly productive. They realize that business and worker success are interdependent.
- To enhance regional competitiveness. These groups understand that the health of regional economies affects the ability to advance workers and strengthen business.
This intermediary approach is results-driven, entrepreneurial and flexible, trusted by employers and workers, and collaborative.
A Promising Start
More and more organizations in places as diverse as Wiscasset, Maine and San Francisco are showing encouraging results by using workforce intermediary approaches to help workers and business. But what exactly are these practices?
This approach arose in response to some of the limitations of the present workforce system. The current system is characterized by single customer focus on job applicants; a lack of knowledge of employers and their needs; a focus on limited employability training and initial placement and little post-placement retention and advancement services; and the fragmentation of the workforce community and its funding streams.
The “workforce intermediary” approach has several common characteristics. At their core, workforce intermediaries:
- Pursue a “dual customer approach” by serving businesses looking for qualified workers, and by serving job-seekers and workers looking to advance their careers;
- Organize multiple partners and funding streams around common goals, bringing together businesses, labor unions, educational institutions, social service agencies, and other providers to design and implement programs and policies to improve labor market outcomes;
- Provide or broker labor market services that go beyond recruitment and referral by understanding the special needs -- and gaining the trust -- of firms and industries;
- Reduce turnover and increase economic mobility for workers by assuring continued support and opportunities to upgrade skills;
- Achieve results with innovative approaches and solutions to workforce problems;
- Improve outcomes for firms and their workers by catalyzing improvements in public systems and business employment practices.
Business organizations, labor supported programs, nonprofit community organizations, the public workforce investment system, and community colleges all can pursue workforce intermediary strategies. The number of such efforts has risen from a handful in the early 1990s to several hundred today. Although they approach their tasks in different ways, successful intermediary organizations bring together key partners and functions to advance careers for all workers -- recognizing the special needs of low-skilled, low-wage workers -- increase business productivity, and improve regional competitiveness. (For descriptions of groups that perform workforce intermediary functions, go to http://www.opportunitiesatwork.org.)
“There aren’t too many programs for people like me who have worked all their lives and never had a chance to move up… You need training in this world to survive and stride forward, and this program gives people that chance. I see a career path that’s open to many new things” -- Worker
“We have found that partnerships allow us to save money on a cost-per-hire basis. Our partners are actually pre-screening candidates for us and pre-training them.” -- Employer
The workforce intermediary approach promises to improve the economic well being of job seekers, workers, and their families. Outcomes, where they have been measured, are positive especially when compared to the impacts of other more traditional workforce development activities.
Early research indicates that businesses reap economic benefits from partnering with workforce intermediary organizations. These benefits include:
- Access to new sources of job applicants;
- Reduced recruitment costs;
- Higher retention rates compared to traditional hires;
- Increased productivity;
- Tax credit savings;
- An enhanced reputation within the community;
By attending to business concerns and increasing productivity, workforce intermediary organizations also bolster regional competitiveness. For example, in New York City, the Garment Industry Development Corporation introduced production changes that enabled area firms to increase profits while maintaining decent wages and benefit packages.
What Types of Organizations Use Intermediary Approaches?
More than 200 organizations in thirty-nine states responded to a recent survey that described their use of workforce intermediary approaches. Most organizations participating in the survey are just a few years old, but two-thirds of them each serve more than 500 job seekers and workers annually.
While workforce intermediary organizations take many forms, not every education, training, or economic development entity plays this role. Efforts that are single-purpose in character -- attend to one particular activity or attend to the needs of a single employer -- do not meet the workforce intermediary definition. The power of the workforce intermediary approach is its multifaceted nature, and its potential impact goes beyond the sum of its component parts.
Indeed, many public workforce development agencies -- including local Workforce Investment Boards (WIBs), economic development agencies and community colleges-act as workforce intermediaries. More often, however, workforce intermediary efforts work to complement these public systems by expanding their reach through new partnerships and adding depth in industry sectors.
Consistent with the mission of the public workforce development systems, workforce intermediary efforts seek to:
- Expand economic opportunity for workers and job-seekers and enhance the competitiveness of firms and regions by identifying the needs of a variety of stakeholders;
- Invite firms, civic institutions and leaders to address these needs;
- Integrate services and funding streams in ways that enhance effectiveness;
- Leverage new resources;
- Engage in systematic and rigorous assessment of outcomes.
A Call To Action
A workforce intermediary strategy seeks to help workers advance, businesses fi ll critical job shortages, and ultimately boost regional and national economic growth and productivity. Such ambitious goals require a “high impact” strategy, one that results in quality services to a greater share of workers and employers and meaningful changes to local and regional labor markets. The challenge is to get beyond what one Assembly participant called “pockets of unreplicable greatness” to a wider scale.
This strategy is an important response to the larger workforce crisis confronting this nation.
The severity of the impending workforce crisis requires nothing less than a major transformation in how the workforce system and workforce organizations go about their business. This change will require that intermediary functions and practices should be widely adopted by thousands of existing organizations -- Workforce Investment Boards, community colleges, employer associations, labor programs, community development venture capital funds and community-based organizations. New partnerships between these groups can increase effectiveness in serving employers.
To accomplish this transformation, the system will require:
- An understanding that workforce development is as much an economic policy as a social policy;
- New policies that increase the accountability and impact of programs;
- Decisions by funders to create incentives for the use of dual-customer approaches;
- A venture capital orientation on the part of funders, rewarding adaptive capacity and good results over sustained periods;
- Increasing research that demonstrates what works;
- Timely data on local labor markets for mapping labor supply and demand and career opportunities, and identifying job training opportunities and gaps and evaluating the effectiveness of workforce policies and investments;
- Leadership across employer associations, labor groups, community organizations, and community colleges with entrepreneurial vision and the skills to manage these “double bottom line” endeavors, and
- Cross-sector sharing of information and most effective practices that advance workers in the American mainstream, increase business productivity, and enhance regional competitiveness.
Implementing the workforce intermediary approach is itself a challenge. For example, finding common ground between business and worker/jobseeker interests is a challenge. At times, these two perspectives have been assumed to be in opposition. However, finding the intersection between these two is essential in order to ensure business productivity, worker advancement, and regional competitiveness in the new skills economy. In addition, intermediary organizations operate in a fragmented policy and institutional environment and must often negotiate new roles and relationships while sidestepping destructive turf battles. This requires trust, credibility, and influence -- as well as careful diplomacy.
Further, the intermediary approach often faces all the challenges of an emerging business venture. Financial instability, limited resources, strained leadership, and the risks of taking success to scale must be successfully managed.
Many organizations have struggled with the constantly changing landscape of public workforce funding. Public funds have been cut and strict eligibility requirements, short-term timelines, and disparate performance measures have negatively affected outcomes. In general, some level of funding has been available for recruiting and training, but limited funding has been available to help businesses retain new workers and to help workers advance to higher quality jobs. In addition, there is no dedicated public funding for research and planning efforts that bring together stakeholders within specific industries to implement long-term strategies that address changing skill standards and related business needs. More and smarter funding is needed.
Workforce intermediary organizations and employer partners need flexible capital to create innovations in the public or private sector. Several states have created bond financing tools and investment tax strategies to support efforts of intermediary organizations to meet skill shortage demands and wage advancement goals. Other intermediary organizations have created blended financing strategies that include public funding and revenue-generating businesses. Based on the experience of these intermediary organizations, flexible financing options are needed to expand the impact of these strategies as well as support their efforts to increase capacity.
In addition to financial challenges, a variety of environmental forces constrain the emerging workforce intermediary efforts. A sometimes rigid policy environment and long-standing practices limit the acceptance of this new approach. Furthermore, slow decision making, inappropriate outcome measures, and cumbersome rules impede the attainment of positive outcomes for workers, firms, and regions.