The specter of labor market disruption driven by advanced automation technologies raises concern that the US workforce will be both underprepared and inflexible in the face of these changes. While this alarm is not new, the COVID-19 pandemic may be bringing these predictions to the present much faster than originally expected. For example, businesses are adopting policies that minimize human contact both between their employees and with their consumers. These include support for employees working remotely on a more permanent basis, contactless customer service and delivery, robotic warehouse management and order fulfillment, and automated food service. Observing these changes, in combination with increasingly sophisticated artificial intelligence (AI) that will enable technology to do a broader set of tasks, it’s clear that many workers will need to bring a suite of new skills to the labor market to be competitive. The question facing employers, researchers, and policymakers is how do we prepare these workers – both existing and future entrants – for this new labor market?
IS EXPANDING COLLEGE ENROLLMENT THE SOLUTION?
The immediate response may seem straightforward: if we need more skilled workers, we should work to expand access to 4-year colleges. And on the surface, this makes sense. A college education, whether in the liberal arts or in STEM fields, supplies a broad set of in-demand skills; it is also still considered the primary gateway to a good job, high income, and social prestige.
Nonresident Fellow - Economic Studies
Research Analyst - Center on Children and Families
A growing contingent is increasingly skeptical that further expansion of traditional academic pathways alone is an efficient solution. Often citing the increasing expense, they ask: is college still worth it for most? Most white-collar professionals (such as the authors) will undoubtably say yes. Yet, especially among those from families with fewer resources, this calculus is increasingly unclear. College graduates certainly earn more, on average, than their counterparts who hold only a high school diploma. And, for better or worse, almost all high-prestige occupations in the U.S. require a college degree. However, the high cost of a 4-year education muddles this comparison. Graduates often leave school with large amounts of debt. Worse, the many students who don’t graduate leave with debt and, lacking formal credentials, few pathways to employment with pay high enough to service that debt.
Moreover, it is becoming increasingly apparent that even a college degree may not be sufficient insurance from labor market volatility. Technological change is transforming the skill needs of employers. And it is not clear that colleges and universities are supplying workers with the requisite skills or ongoing learning options to satisfy this demand. As noted in the World Economic Forum, “42% of core skills required to perform existing jobs are expected to change” over the next two years. This trend is among those feeding a growing anxiety about the labor market; as a recent survey suggests, 44% of young people worry that there won’t be demand for their skills and knowledge in the future. Furthermore, even if schools were to overhaul their curricula, those already in the workforce would still need retraining to keep up with technological change. While there are some initiatives in place, none are at the scale needed for the number of workers at risk.
This disconnect can be largely attributed to different emphasis placed on skill acquisition within the traditional classroom and more applied settings as argued by our colleague Annelies Goger. Traditional academic programs typically focus on what economists would generally refer to as general human capital— critical thinking, comprehension, and fundamental writing and math skills. By contrast, firm- or job-specific human capital development often occurs in an applied setting, allowing for more hands-on and problem-specific skill learning. Of course, as she notes in her piece, there are large differences in skills demanded across firms, and ability and interest differences across individuals. As a result, we should move away from one-dimensional approaches to education and training. Given projected skills gaps and worker displacement, policymakers should focus on finding cost-effective methods that ensure opportunities for learning are available to all workers, but it is not clear that attempting to send everyone to a traditional 4-year college is a viable or optimal policy option. Of course, there have always been alternative options such as vocational programs within community colleges and vocational schools aimed at training nursing assistants, medical technicians, and machinists. Moreover, the success of these programs varies substantially across occupation types in terms of providing sufficient pay and pathways to advancement.
PRIVATE SECTOR TRAINING AND CERTIFICATION
Many firms, increasingly cognizant of these talent pipeline shortages, have moved toward supplying workers with the training they need to fit the new tasks and jobs emerging from technological change. In some cases, this is taking place in-house. The multinational consulting firm Accenture, for example, has pledged as much as one billion dollars a year for retraining. Amazon similarly announced a $700 million investment in upskilling workers in 2020. In addition, a number of firms including IBM have created apprenticeships to train future tech workers, some of whom are in non-technical positions like sales, allowing interested workers to learn new skills without forgoing their salary or removing the degree requirements from their job listings altogether.
Possibly most interesting, some companies are moving to develop alternative education programs that can potentially provide both employer-specific skills for jobs typically filled by traditional 4-year college graduates, and an industry-recognized credential within an affordable certificate program. These programs seek to pair workers who do not necessarily have the desire nor the resources for the traditional college experience with the skills they need to compete in the modern economy, and they may be a viable mechanism to reskill displaced workers who must switch careers and start at an entry level in a new field.
Google Career Certificates, originally announced by Google last summer, represents a potentially promising program in this space. Specifically, the program provides the opportunity for prospective students to take flexible classes and receive credentials via Coursera, an online education platform. The program offers certifications and training for in-demand occupations including Data Analysts and Project Managers. Google expects to hire some program-completers and offers tools to connect them with other employers. While it is unlikely that everyone who trains will get a job through the platform, this certificate program is likely to provide two valuable features in the competitive labor market: marketable skills and a credential with a recognizable imprimatur. There is also early confidence in the program’s quality, as companies across industries including Walmart, Intel, and Bank of America have pledged to consider graduates holding these certificates.
While expanding new certification programs may help workers remain competitive, there are many challenges companies and policymakers are likely to face. The recent proliferation of certification programs may benefit the workers who use the program their employer offers to signal new competencies, but without any regulation on the quality or content of private certifications, it is difficult for another employer to evaluate the program’s merit. Similarly, private credentialling may be an option to help workers get hired for a position requiring a particular set of technical skills, but a one-time certification may not be enough to give workers a shot at moving up the ladder in their organization. Resource-constrained small businesses may struggle even more to compete for high-potential workers, especially if larger companies that host their own certification programs exploit their ability to gather information on learners. Even if not, there is good reason to focus on equity in the way education programs connect students to employers.
The private sector is starting to offer great opportunity to some workers, but without careful consideration of equity and mobility (perhaps through government regulation), patchwork certification programs may not be the silver bullet solution many workers are hoping for. But combined with more traditional 4-year and community college routes, they can serve as an important tool to ensure workers have pathways to keeping their skills up to date. This form of private credentialing is an important feature of the training landscape for non-college-educated workers seeking to signal their skills and ability to prospective employers.
POLICY CAN HELP
Policymakers should support expanding the portfolio of educational and training options for students and transitioning workers. In–house training and alternative certification programs such those promoted by Google have the potential to avoid some of the mistakes that plagued earlier government training initiatives, by connecting the curricula directly to private-sector needs. Appropriately designed programs that support students and workers may be effective and require a much smaller investment than sending workers back to school for a 4-year degree.
Some ways policymakers can support these initiatives:
- Provide funding and other incentives to educational institutions to partner and help develop similar alternative certification programs that will be connected to employer needs. Programs like WorkAdvance and related organizations are interesting models that might be worth expanding.
- Make and expand the generosity of federal and state tax credits available to firms providing retraining and upskilling programs for workers at risk of displacement.
- Support apprenticeships and other on-the-job training programs that offer a combination of work-based learning for employer-specific skills and related classroom education for foundational skills.
- Set up mechanisms to evaluate and research the extent to which these programs achieve equity, quality, and innovation goals vis-à-vis traditional higher education and whether they actually provide the flexibility and agile workforce that employers need (in the absence of education in broader foundational or theoretical skills).
Given the expected labor market disruption, possibly accelerated by COVID-19, it will be important to have multiple pathways available to ensure workers get the education and training they need to remain competitive for good jobs.