Business Leaders to Congress: U.S. Needs to Invest More in Workforce Development

The U.S. is lagging behind on its investments in workforce development and needs to do more to cut back on a nationwide skills gap, a panel of experts told lawmakers Thursday.

There are roughly 10 million unfilled jobs that require “in-demand skills,” Burgess Owens, R-Utah, chair of the House Education and the Workforce’s Subcommittee on Higher Education and Workforce Development, said at a Thursday hearing.

“Without swift action, the skills gap is in danger of becoming the skills canyon,” Owens said, adding that work-based learning should be a “focal point in the law.”

“When it comes to skills development, employers must be in the driver’s seat,” he said.

U.S. Rep. Frederica Wilson, D-Florida, highlighted the strong job market and underscored the need for workforce development to take advantage of continued job growth.

“Our investment in workforce development falls short of where it needs to be to stay competitive in the global economy,” Wilson said, emphasizing the need to help historically underserved communities and assist job seekers with needs like transportation and childcare.

Investing in workforce development programs, ramping up data collection, and giving local workforce development boards more flexibility is key to closing that skills gap, a panel of experts told lawmakers.

Employers and government officials need to work closely together and focus on relevant skills training, Lydia Logan, vice president for global education and workforce development at IBM, told committee members. Logan said workers also need better data transparency around program effectiveness and earnings.

“Our nation’s workforce education systems are not equipped to meet the market demands of the modern digital economy, and there is no silver bullet to fix that,” Logan said.

Harry Holzer, the John LaFarge Jr. SJ professor of public policy at Georgetown University, said U.S. workforce training funding levels are very low compared to other countries — and to the level the U.S. invested in the past.

The U.S. spends less than one-tenth of 1% of its gross domestic product on workforce training, Holzer said, a number that is “vastly lower as a percent of GDP (gross domestic product) than almost all other industrial countries.”

“Only about a half-a-billion dollars right now are being spent on actual training for about 220,000 people per year,” Holzer said. “Each one gets a little over $2,000 on average. Compare that to the Pell program. Pell Grants provide almost $7,000 per year at this point and serve 6 million people. There’s a great imbalance.”

Investing in workforce training, Holzer said, would lead to better jobs for millions.

“Many millions of Americans without any postsecondary education or training credentials would have higher productivity and higher earnings if they received more training, and many millions vacant skilled jobs would be able to be more easily filled,” Holzer said.

John Pallasch, founder and CEO of One Workforce Solutions who was formerly the assistant secretary for employment and training at the U.S. Department of Labor, said there needs to be targeted changes and clarifications to the 2014 Workforce Innovation and Opportunity Act (WIOA).

Holding local, state, and federal workforce programs accountable is key to ensuring effective training, Pallasch said. Congress needs to “provide more rigorous oversight” to ensure that the Department of Labor is furthering skills development, he said.

“We must look across the broader workforce system and understand how poor leadership, outdated technology, incomplete data, and a disjointed patchwork of federal workforce programs allows too many in the system to do what they have always done, which for decades, employers have told us is simply not enough,” Pallasch said.

Pallasch said federal data shows just 34.6% of adults who receive WIOA skills development are placed in a job relevant to that skills development. That percentage is 34.2% for dislocated workers and only 20.8% for youth, Pallasch said.

Bruce Ferguson, CEO of CareerSource Northeast Florida, added that federal programs are often overly bureaucratic and cumbersome for employers. He urged lawmakers to keep WIOA requirements simple and help companies develop apprenticeships and work-based learning opportunities.

“Too often our system and regulatory bodies turn what should be a simple and concise application and agreement into an overly complex process, resulting in employers turning away from our services,” Ferguson said.

Short-term Pell Grants would also help to boost workforce training, Logan said.

“We know that many people are not going to brick-and-mortar institutions,” Logan said. “They may be learning online; they may not be seeking a degree, and they may not need a degree in order to gain employment. We need to make sure that there are quality opportunities for them to gain the skills they need. And short-term Pell would help to close that gap. It’s part of the larger ecosystem.”

Holzer added that there needs to be significant safeguards on any short-term Pell Grant expansion.

“There’s a lot of very ineffective programs, and I’m sorry to say that at most for-profit providers, on average, those programs don’t have value,” Holzer said. “Not all, but some. So we need good accountability for that money.”

Some lawmakers expressed concern over the way artificial intelligence (AI) will affect jobs in the near future. IBM CEO Arvind Krishna said this month that the tech giant could replace thousands of jobs with AI — and U.S. Rep. Jim Banks, R-Indiana, questioned how employers would deal with that rapidly developing technology.

Logan compared AI to past technology booms, like the internet and automation, and said employers and officials alike need to train workers in how to leverage AI in their roles.

“It’s really about how we use it,” Logan said. “We need to make sure people have the skills they need in order to leverage AI.”