Old Assumptions, New Realities: Ensuring Economic Security for Working Families in the 21st Century

3. Workforce Development and Public Policy: Addressing New Realities in Low-Skill Labor Markets

CHAPTER 33 WORKFORCE DEVELOPMENT AND PUBLIC POLICY: ADDRESSING NEW REALITIES IN LOW-SKILL LABOR MARKETS MICHAEL A. STOLL Over the four decades since 1970, significant economic and social transformations have changed the economic opportunities of and rewards from work for those with limited education, especially if they live in poor, urban, or minority communities. Over this period, good jobs that required only a basic education began to disappear, leaving many unable to find work and form strong labor-market attachment, thus raising the economic cost of having a limited education. Many of these jobs have been replaced by ones that require different sets of skills, and their geographic locations have shifted as well. More often than not, these changing job-skill requirements demand more, not less, investment in schooling and training, and require better job-matching assistance to lessen new frictions in labor markets that limit job access and skill accumulation. Are current assumptions about problems in the labor market or policy approaches to the challenges of less-educated workers appropriate for the new realities of the changing labor market? What is required in education and job training to keep up with these new realities of differing and potentially increasing 71 3 skill demands as well as additional frictions in labor markets that limit this access? These and other related questions provide the backdrop for this chapter . More directly, these labor-market trends imply the need to scrutinize policy approaches aimed at enhancing the employment and earnings of those with limited education both in and out of school. The need to do so is more important than ever because of the severe economic recession that has driven unemployment rates to thirty-year highs, particularly in minority communities. The ability of the growing ranks of jobless to secure work in this period of high unemployment will partly depend on their ability to gain new or additional skills and credentials that maximize employment opportunities. Many believe past workforce development efforts have not been up to the challenge of enhancing outcomes, given new realities of the labor market. Although not all the critics are right in this respect, certainly such programs can be improved either by improving program design or by taking into account the variety of the challenges faced by less-educated workers in the labor market. In particular, new realities in job requirements call for more general problem-solving skills that can be applied to a variety of different job and skill settings. This approach begs for the integration of work-based knowledge into education and training curriculums with active learning in an applied setting. Shifts in the location of employment away from concentrations of less-educated workers, as well as persistent discrimination on the basis of such characteristics as race or ex-offender status, imply the need for training programs that not only advance skills but also integrate regional approaches to employment and counteract the effects of discrimination in low-skill markets. A major approach the United States has taken to address the potential skill deficits or mismatches of less-educated workers is through workforce development. Of course, there are many other approaches, such as increasing college-going, that can accomplish these goals as well and perhaps more effectively, but we do not focus on these approaches here. Policy efforts focusing on the demand side of the labor market such as through minimumwage legislation, wage subsidies, or employer tax credits could also improve the employment and wages of less-educated workers. These, too, are beyond the scope of this chapter, but Paul Osterman (this volume , chapter 4) explores these questions in greater detail. This chapter focuses on workforce development efforts that use supply-side approaches to improve the labor-market performance of low-skill workers in and out of high school, especially racial and ethnic minorities. 72 Old Assumptions, New Realities To accomplish this, the chapter first considers employment and wage trends for less-educated workers, understood here as those with a high school diploma or less. Then, it revisits past in-school and out-of-school workforce development approaches to enhance skills and link workers to jobs by focusing on vocational education and more general employment and training programs . The limited success of these efforts can be attributed to a number of factors, but lack of relevance of the training and detachment from employers are chief concerns. Next, the chapter examines current programs and practices in employment...