OLMIS

by Brenda Turner, Katharine Williams
Published Aug-16-2012

Educational Attainment of Oregon's Workers On-The-Job Training and Professional Development Oregon's Workforce and Education Systems Conclusions

Employment growth following the recession has been painfully slow in almost every industry. The unemployment rate for teens and young adults has reached record levels, and baby boomers are delaying retirement. Hearing all that, one might assume that jobs are scarce - and they are. But there are still many vacancies going unfilled, as discussed in Key Workforce Challenge: Businesses Struggling to Find Qualified Workers, the previous article in the Key Workforce Challenge article series.

There are many factors that affect the balance of workforce supply and demand: migration patterns, retirement trends, and industry growth, as well as the focus of this article - training and educational attainment. To help minimize the gap between the skills and training sought by employers and those held by job seekers, it is essential that workforce-related training be tailored towards the actual needs of businesses. Connecting training to workforce needs is one of Oregon's key workforce challenges.

The Employment Department projects nearly one-third of Oregon's job openings through 2020 will require workers with postsecondary training, college, or advanced degrees. But just having the degree is not enough to land these jobs. Workers also need to have the right skill set, which is formed by a mix of education, related work experience, and other training.

To remain competitive, especially in the current economic climate, many workers are going back to school or taking some sort of training to refresh or supplement their skills. Enrollment levels at Oregon's community colleges and universities have continued to climb since the start of the recession, while the share of Oregonians age 25 and over with "some college or Associate degree" increased 2.6 percentage points between 2007 and 2010 (Graph 1).

Graph 2 adds context to Graph 1 by showing the level of education needed to meet the projected employment demand. Looking at the minimum education requirement, or the level generally necessary to meet the minimum entry requirement for an occupation, one-third of job openings between 2010 and 2020 will require a postsecondary or higher degree. If we apply the competitive education level for all occupations, or the education level that would help job seekers be more competitive in the labor market for a particular occupation, six out of every 10 job openings over the 10-year period are projected to require at least postsecondary training. During times of rapid economic growth, employers tend to look for the minimum education level among job seekers. When the economy is slow, with fewer job openings and many job seekers trying to fill those openings, employers tend to look for the competitive education level when hiring.

Overall, Oregon's population has roughly the right education levels to meet businesses' job needs (Graph 2).

However, simply having enough people with degrees does not imply there are enough of the right types of degrees. New graduates face an extremely tough job market. The Oregon Employment Department's most recent job vacancy survey revealed that the unemployed outnumbered available jobs by a ratio of six-to-one in the fall of 2011. Given the current economic climate, college graduates who chose the "right" degree are more likely to find jobs.

Unemployment rates among graduates with degrees in some of the most popular majors in the U.S. were estimated by Georgetown University. Those with health care and related degrees are generally less likely to be unemployed than those with liberal arts degrees (Table 1). Much less common degrees like science, engineering, math, and technology had extremely low jobless rates over the 2009-2010 period: physical science comes in at 2.5 percent, while math and computer science clocks in at 3.5 percent.

How do Oregon graduates measure up when it comes to field of study? Oregon's education and training system handed out 57,000 awards in 2009-2010, up from 52,000 over the 2007-2008 school year. The largest single group of awards were in fields relating directly to business (Table 2). Health care and related programs ranked in second place, making up about 16 percent of all awards earned, including certificates as well as degrees. Roughly one out of seven educational awards earned over the 2009-2010 school year was in a field relating to science, engineering, math, or technology (STEM).

Looking at the number of awards is one way to determine the supply piece of the workforce puzzle, although it's certainly not a comprehensive measure. There's no guarantee that Oregon-schooled workers will stay in the state, just as there is no way of knowing how many new workers with each educational background will move here. But it's still a good basic gauge of worker supply.

Much of the responsibility to prepare for the working world rests on workers themselves, but employers also contribute by providing on-the-job training. While professional development is still offered by many businesses, it is becoming more of a perk than an essential program for new hires and incumbent workers.

A recent report by Rutgers University's John J. Heldrich Center for Workforce Development discusses how the responsibility for career management and training has moved from employer to employee over the past couple of decades: "Apprenticeships and management training programs are disappearing at an alarming rate and most companies in this highly competitive job market make it clear that new employees must come prepared to 'add value' from day one."

More confirmation on the lack of workplace training comes from a recent Wall Street Journal article by talent and performance management researcher Dr. Peter Cappelli. He argues that employers are requiring job candidates to have far more work experience than they used to, and that the hotly debated skills shortage is actually more of a training shortage: "There are plenty of people out there who could step into jobs with just a bit of training - even recent graduates who don't have much job experience?The shortage of opportunities to learn on the job helps explain the phenomenon of people queuing up for unpaid internships, in some cases even paying to get access to a situation where they can work for free to get access to valuable on-the-job experience."

Although there are many factors that affect workplace productivity, training is a significant one. The American Society for Training and Development estimates in their 2011 State of the Industry Report that U.S. organizations spent $171.5 billion on employee learning and development in 2010. This translates to an investment of $1,228 per employee, up from an inflation-adjusted $1,100 in 2009. The number of learning hours per employee held steady at 32, however, reflecting a real increase in the cost of training and development.

Rising costs are one reason why employers may cut down on training. Another reason is that in a tough economy, people want to retain a competitive edge and are thus more likely to invest their own money in training and career development. The ability of workers to move from job to job also has an impact. Today's workers have access to many more job announcements, as well as alternative working arrangements like telecommuting, than previous generations. In contrast, the average worker of yesteryear held onto a couple of jobs over the course of a lifetime and probably wasn't as willing to relocate for a new position or able to commute long distances. Employers are also reaping the benefits of an increasingly flexible workforce. Today's average company has a considerably larger pool of applicants from which to hire, and more resources with which to screen and recruit those applicants.

These structural labor market changes are adversely affecting training programs. Workers have become more likely to change jobs, just as companies have become better equipped to handle turnover by hiring more qualified replacements. As a result, employers have less incentive to provide training. The National Longitudinal Survey of Youth, a panel of individuals that has been repeatedly surveyed since 1979, found that participants held an average of 11 jobs between the ages of 18 and 44. Is it worth it to train employees who might only stay 2.4 years in a job, especially if there are more qualified applicants knocking at the door?

The potential economic benefits employers receive from training their employees are high: increased quality of work, higher employee retention, and more workplace innovation, to name a few. Even if budgets are tight, businesses can still find ways to upgrade the skills of their current workforce. Some types of workplace training can be subsidized by public entities and funded by grants through workforce investment boards and other economic development organizations. Alternative options include training a staff member who will pass that knowledge on to other employees ("train the trainer" programs) and cross-training workers to learn new skills through job rotations.

The effort to match Oregon's education and training to the state's current and future jobs is one of the primary challenges facing the Oregon Workforce Investment Board (OWIB), as well as the state's broader education system. OWIB, made up of private and public sector members, coordinates and helps prioritize the efforts of more than a dozen workforce development programs.

Across the state, Local Workforce Investment Boards (LWIBs) support the priorities laid down by the OWIB, as they bring together representatives from businesses, government, education, and economic development organizations. They coordinate education, training, and employment services within their regions, serving youth, adults, individuals with disabilities, dislocated workers, veterans, older workers, and others.

OWIB and the LWIBs are currently implementing a new strategic plan, one goal of which specifically focuses on the match between workforce training and the needs of businesses: "Oregonians have the skills they need to fill current and emerging high-wage, high-demand jobs."

One strategy to accomplish this is the identification and implementation of sector strategies - "employer-driven partnerships to meet the needs of key industries within a regional labor market."

The Employment Department's Workforce and Economic Research Division contributes to the planning and operational efforts of Oregon's workforce systems by providing labor market information at the state and local levels, conducting surveys to help identify businesses' specific occupational and skill needs, and projecting future demand for skilled workers.

Using these data, OED developed an occupational prioritization method (summarized in the report Training Oregonians?for the Right Jobs) to help inform workforce investment boards, community colleges, and other invested parties as they develop education and training programs. These programs are additionally informed by business feedback, as colleges partner with local companies to create new courses and improve existing ones.

Employers also support schools by donating materials or equipment, assisting with course development, providing internships or professional development for faculty, and providing scholarships or other financial support. Intel, for example, has worked with Portland State University's College of Engineering to support STEM educational initiatives, fund scholarships, provide faculty training, and offer student internships.

Research staff at OED also work with leadership of various LWIBs, to assist in their efforts to identify key sectors, in various regions of the state, which will become the focus of future strategies.

Collaboration between workers, the workforce system, and employers is essential to meeting business needs. Workers obtaining a higher level of educational attainment ensure they remain competitive, while workforce development organizations partner with businesses to help employees gain new skills. Employers also do their part to close the supply gap by providing employees with on-the-job training and career development programs. Connecting these efforts to workforce needs is one of Oregon's key workforce challenges.