Wanted: New Ideas for Jobs Debate

Bob Giloth and Bruce Katz
Bruce Katz Founding Director of the Nowak Metro Finance Lab - Drexel University

September 24, 2004

Jobs always matter during presidential elections. This year, that’s even more true, given that the economy has yet to fully regain the momentum it lost in the recession of 2001.

Although we have seen significant job growth over the past several months, there remain over eight million Americans still out of work, or about 5.4 percent of the working-age population. Unemployment rates are higher in 36 states than they were three years ago, and 85 of the largest 100 metropolitan areas are not back to their pre-recession employment rates. In total, America has lost about 1 million jobs since the peak of the last business cycle in March 2001.

Not surprisingly both candidates have job growth at the core of their campaign platforms. Sen. Kerry, for example, is pledging to halt the job drain to cheaper labor markets abroad with a new manufacturing jobs tax credit and by putting an end to a tax break that allows companies to defer U.S. taxes on foreign income.

President Bush is also working through the tax code, but instead is pledging to speed up 2001 tax cuts and to promote new legislation that would cut dividend and capital gains taxes.

Although the means are quite different, both candidates promise that their plans will create millions of new jobs.

What’s left unsaid, however, is that millions of jobs go unfilled in this country for lack of qualified hires.

The U.S. Department of Labor recently estimated that more than half of the new generation of American workers leaves school without the basic skills necessary to qualify for a good job. Even those currently working are at risk of losing their jobs because they lack necessary skills. A recent report published by the American Assembly at Columbia University, for instance, found that more than one-third of the nation’s current workforce is under-skilled.

So in addition to creating new jobs, preparing workers for the millions of jobs that already exist presents another path that deserves attention.

As recently as July 2004 there were over 3.19 million unfilled job opportunities in America, a number that only modestly changed in the preceding months. If filled, these new jobs could immediately reduce the number of unemployed people by about 39 percent.

So what to do? One promising solution to bridging the skills gap can be found in a growing group of organizations—workforce intermediaries—that have sprouted up in metropolitan areas across America. Acting as a liaison between the needs of employers and employees, these organizations help businesses and job opportunities grow by acting as entrepreneurs to develop the workforce.

Workforce intermediary organizations are diverse—sometimes led by business partnerships, labor organizations, non-profit organizations, and federally supported workforce boards. But in all cases there is a new energy and commitment to address both employer needs for a skilled and competent workforce and worker needs for a good job that will sustain their family.

Although workforce intermediaries are few in number, they already have achieved notable success at bridging this gap between employers and employees.

In Wisconsin, for example, 125 firms and 100,000 workers have formed a workforce intermediary partnership to cooperatively address current skill shortages and to plan for future labor market modernization. As a result of this partnership, employers in manufacturing, building and construction, healthcare and other industries are investing over $25 million per year to upgrade the skill sets of 6,000 current employees. The partnership has also extended job training for prospective employees that has enabled 2,000 jobseekers to find entry-level jobs that pay nearly two times the minimum wage.

In Cleveland, the Greater Cleveland Growth Association, one of the nation’s largest metropolitan chambers of commerce, identified the workforce needs of companies and then worked with various groups to design and deliver appropriate training. These intermediary efforts included partnerships with Cuyahoga Community College and other organizations that, over three-year year period, equipped over 2000 individuals with skills needed by employers and landed them well-paying jobs.

Successful workforce intermediaries require most of all a commitment by local employers and job training providers. But there is an important role for government as well. Employment and training dollars can be used to support successful workforce intermediary efforts and to address the massive imbalance that has developed between the number of people applying for community colleges and the number of available teachers and classrooms. More than 175,000 prospective students were turned down last year in California alone.

With less than two months left before Election Day, our presidential candidates have plenty of time to tell voters how they plan to better prepare American workers for jobs. Without this broader focus, the winner of the upcoming election will not only have to contend with millions of unemployed Americans, but also a growing number of American businesses unable to find qualified applicants for new jobs.