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09.10

By Edward E. Gordon

In October 2007, the world began experiencing a financial market collapse. The Financial Times estimates that since the beginning of the 2009 U.S. stimulus program, about 400,000 public service jobs have been added to the economy, but about 2.7 million private-sector jobs were lost. As a result, the U.S. unemployment rate has remained stubbornly high.¹

In testifying before the Senate Banking Committee on 21 July 2010, Federal Reserve Chairman Ben Bernanke stated that, “This is the worst labor market, the worst episode since the Great Depression.” He further indicated that with 8.5 million jobs lost, he expects the unemployment rate to remain at a still-high 7 to 7.5 percent at the close of 2012 . “For a long-term viability in international competitiveness, I think we need to be seriously concerned,” he added.²

Writer and economist Richard Florida believes that America faces an increasingly jobless future. He argues that the United States is failing to create enough better-paying jobs, especially for less-talented people who lack college or specific post-secondary career and skill preparation.³

A root cause, states former International Monetary Fund and now University of Chicago economist Raghuram Rajan, is that successive American administrations chose cheap credit as a SOP for these less-skilled workers. They now see themselves being left behind by other more-talented people in the globalized world economy.⁴

Their jobs dilemma also has been triggered by a seismic skills shift now playing out across global labor markets. Today, all employment sectors have entered an advanced technology “cyber-mental age” that has replaced many low-skill/semi-skilled middle jobs with advanced technological systems. These advanced technologies spreading across almost every business sector require fewer workers, but they must be highly skilled.

The economic dilemma the United States faces is that to pay for its record deficit spending and remain competitive, private sector job growth is critical. Yet  Federal Reserve data (June 2010) indicate nonfinancial corporations are currently holding $1.84 trillion in cash, a record high. Companies are becoming “more inwardly oriented,” asserts PIMCO CEO Mohamed A. El-Erian. This “self-assurance” mindset suppresses hiring due to economic and political uncertainty.⁵ Recently, there are signs that some corporate leaders at Caterpillar, United Technologies, and others are dipping into this cash hoard to invest in new technologies and begin hiring/training the people who can use them.⁶

A recent New York Times front-page story, “Jobs Go Begging as Gap Is Exposed in Worker Skills,” (2 July  2010) called attention to the fact that despite a pool of 14 to 15 million available U.S. workers, many jobs are unfilled because of a lack of qualified talent.⁷  The U.S. Bureau of Labor Statistics reported 2.6 million unfilled jobs in May 2010. Many of these are STEM jobs (science, technology, engineering, and math-related jobs) in healthcare, aerospace, advanced metalwork, advanced precision manufacturing, advanced engine repair/maintenance, scientific laboratory occupations, information technology manufacturing, and computer-related design, manufacturing, and maintenance. This list will greatly lengthen over the next decade as a torrent of skilled baby-boomer talent retires. Economist Anthony Carnevale estimated that by 2020 there will be a U.S. labor shortage of at least 20 million workers, mainly triggered by insufficient numbers of incoming workers with post-secondary education and training.⁸ Other knowledgeable estimates range from 12 to 24 million potential U.S. vacant jobs. The 2010 McKinsey Global Survey, “Five Forces Reshaping the Global Economy,” indicates that executives in Europe, North America, India, and China have significant levels of concern about “recruiting the right kind of talent.”  A first-quarter 2010 Manpower Inc. survey of employers in 36 nations found that 31 percent reported difficulty filling skilled positions.⁹

America’s economy is in danger of losing what has always been our greatest competitive advantage: our genius for innovation,” says John C. Lechleiter, chairman, president, and CEO of Eli Lilly and Company. He cites a recent study by the International Technology and Information Foundation that ranked the United States 40th out of 40 nations in “the rate of change in innovative capacity” over the past decade.¹⁰ He sees the solution’s “most important elements are the seeds of innovation which equate to talented people and their ideas . . . a priceless resource, but one that is woefully underdeveloped in this country.”¹¹

U.S. business needs to better engage its employees and potential workers though quality education and training that will develop their future innovative talent. Without it, many businesses will disappear due to an inability to fill essential positions, and many American workers will face jobless futures.

A move to address these issues is gaining momentum in the U.S. business community. The movement  is based on three essential Ts: Technology + Talent + Teamwork =  Jobs & Business Competitiveness. Broad public-private partnerships are emerging in the Americas, Europe and Asia that are investing in new talent preparation systems for developing technologies. The goal is to create more talented people at higher skill levels who will be able to better support a developed nation’s competitive businesses, and be high-wage earners. Since the 1990s, numerous umbrella community-based organizations (CBOs) are using teamwork to build broad, interconnected networks of partners to bridge the talent gap between current educational preparation and the rising talent needs of local/regional businesses.¹²

Santa Ana, California; Fargo, North Dakota; Philadelphia, Chicago, and Danville, Illinois all have something in common. They all are sites of local CBOs that are truly talent and job gateways to the future. These CBOs are creating new open education-to-employment systems. Local businesses large and small are beginning to understand that this human resource issue – talent creation – is far too large and complex for any one organization to master by itself.

A CBO is a non-profit organization acting as an intermediary agency that builds a functioning network among partners. The CBO does not duplicate already available services, but seeks to leverage them into new combinations. It forms a neutral community space, not owned by any one group. Even though every community has a variety of talent resources, usually they are not connected into a clear and coherent working network.

Two principal talent issues that have emerged are the redevelopment of the current workforce and K-16 career-education-information programs for students. In the short-term, redevelopment of the current workforce through training programs for employed or unemployed persons involves:

• Businesses identifying the skills needed in a current vacant job or a proposed future position.

• Businesses partnering with local educational institutions or private vendors to develop those skills in the classroom in conjunction with hands-on training at the worksite.

Long-term development of a workforce pipeline involves establishing and maintaining career education and information programs throughout a region’s elementary and secondary schools, as well as partnering with post-secondary institutions to build programs offering career certificates and degrees that are aligned to current and future skill requirements. Students and parents must be provided with a much more detailed understanding of the nature of current jobs and careers and their salary ranges, the educational requirements for them, and local current/future employment opportunities.

Teamwork among all the regional CBO partners is essential for building this broad functional network. CBOs fill in the identified service holes without duplicating existing services. This teamwork successfully orchestrates culture change by harmonizing the attitudes and expectations of the partners on what is “doable” throughout the region.

“Technology is easy to develop,” states Dean Kamen, best known as the inventor of the Segway scooter, “developing a new attitude, moving the culture is the difficult part.”¹³

Time is needed to update older workers’ skills. Time will be required to develop and achieve the successful operation of new regional career education pipelines linking businesses and local schools and colleges. The past 30 years of so-called education “reforms” have demonstrated that incremental change won’t work.

The business community needs a clear understanding of what a new talent preparation system will look like before investing time and effort to participate in establishing it. The figure below illustrates the author’s proposed model.

(click to enlarge graphic)

Internally, a company can optimize its talent pool by:

• Offering training and education to develop in-house talent.

• Hiring people who possess the required aptitudes and innate talent and then provide the further training and education that is needed.

• Providing cross-training to employees to encourage flexibility and job mobility.

A front-page New York Times story bemoaned the failure of generic job training financed by the federal Workforce Investment Act. Many who receive such training are subsequently unable to find employment, as their training does not match local job vacancies. Yet the same article profiled HIRED, a public-private partnership program in the Minneapolis-St. Paul area.¹⁴ As an education and talent-creating system, it blends public and private funding to introduce workers into good-paying jobs within the aerospace and medical device industries. At Hennepin Technical College’s Workfast program, workers receive classroom education in programming Swiss machining equipment for slicing metal into highly precise parts. Local machine shops then combine this instruction with their own internal training at the worksite. HIRED is the umbrella organization that makes this process possible.

The sort of teamwork exemplified by HIRED is now essential for transforming regional job/talent cultural perspectives. CBOs across the United States represent a stable force for long-term change. They also are scrappy and entrepreneurial in their efforts to cobble together breakthrough programs and effective funding. CBOs will have to explore many new talent creation options to put unemployed Americans back to work, and to fill jobs that will be vacated by retiring baby boomers over the next decade.

1. “US Job Creation,” The Lex Column, Financial Times, July 16, 2010, p. 10

2. Don Lee and Walter Hamilton, “Fed Chief: Expect Jobs to be Gone,” Chicago Tribune, July 22, 2010, p. 29.

3. Richard Florida, “America Needs to Make Its Bad Jobs Better,” Financial Times, July 6, 2010, p. 11.

4. Raghuram Rajam, Fault Lines: How Hidden Fractures Still Threaten the World Economy (Princeton, NJ: Princeton University Press, 2010), 260-265.

5. Mohamed A. Ed-Erian, “The Real Tragedy of Persistent Unemployment,” Wall Street Journal, July 9, 2010, p. A15.

6. Dana Mattioli, “CEOs Get Ready to Tap Cash Piles,” Wall Street Journal, July 20, 2010, B1.

7. Motoko Rich, “Jobs Go Begging as Gap Is Exposed in Worker Skills,” New York Times, July 2, 2010, p. A!.

8. Tony Carnevale, “The Coming Labor and Skills Shortage,” T+D, January 2005, p. 38-41.

9. “Five Forces Reshaping the Global Economy: McKinsey Global Survey Results,” McKinsey Quarterly, May 2010, p.4-5; “2010 Talent Shortage Survey Results,” Manpower, Inc., June 2010, p. 2-19.

10. Robert D. Atkinson, and Scot M. Andes, “The Atlantic Century: Benchmarking EU and U.S. Innovation and Competitiveness,” The Information Technology and Innovation Foundation, February 2009.

11. John C. Lechleiter, “America’s Growing Innovation Gap,” Wall Street Journal, July 9, 2010, p.A17.

12. Edward E. Gordon, “Using Community-Based Organizations to Close the Talent Gap,” Employment Relations Today, Winter 2010, p.13-23.

13. “Mr. Segway’s Difficult Path,” The Economist Technology Quarterly, 12 June 2010, p.25-26.

14. Peter S. Goodman, “After Job Training, Still Scrambling for a Job,” New York Times,  19 July 2010. p. 1, 14.

Edward E. Gordon is a researcher and author of books on the world’s workforce including Winning the Global Talent Showdown: How Businesses and Communities Can Partner to Rebuild the Jobs Pipeline,  The 2010 Meltdown: Solving the Impending Jobs Crisis, Skill Wars: Winning the Battle for Productivity and Profit, and  FutureWork. He is the president of Imperial Consulting Corporation in Chicago and Palm Desert, California.

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