Wed, Mar 31, 2021

Middle skill jobs as a strategic imperative

GeoTech Cues by Jan Jaro

China Economy & Business Future of Work United States and Canada

PRIMORYE TERRITORY, RUSSIA - MARCH 30, 2021: A worker in a Kamov Ka-62 assembly shop at the Progress Arsenyev Aviation Company in the town of Arsenyev. The Progress Arsenyev Aviation Company, a subsidiary of the Russian Helicopters, part of Russia’s Rostec State Corporation, is one of the oldest aircraft manufacturers in Primorye Territory; the company specializes in the production of Kamov Ka-52 Alligator attack helicopters and Ka-62 multipurpose civilian helicopters. Yuri Smityuk/TASS.No use Russia.

In the past decade, American policymakers have become increasingly wary of the balance of power with China. Under the Obama administration, American foreign policy pivoted towards East Asia with a series of bilateral and multilateral trade proposals and security deals with South Korea, Japan, Australia, Vietnam, and other potential regional counterweights to China. Domestically, President Obama launched manufacturing institutes and artificial intelligence strategies aimed at increasing R&D and coordinating national resources for high-end technological innovation, initiatives with clear implications for a burgeoning US-China rivalry. President Trump put an even finer point on the issue, introducing a series of tariffs to protect American manufacturing and enacting an executive order to maintain AI leadership in the face of Chinese competition. Given the growing bipartisan consensus on the strategic and economic challenges posed by China, Biden is likely to maintain the course or escalate trade, defense, and economic priorities set by his two predecessors.

While policymakers have rightly called attention to several “winner takes all” technologies – quantum computing, artificial intelligence, and biotechnology, to name a few – economic competitiveness is broader than just the top-end innovation generated by leading tech companies and highly educated workers. National vitality depends on a deep base of manufacturing and service capabilities that enable cutting edge technologies to proliferate into the broader economy. A well-coordinated “strategic industries” policy can combine broadly shared economic prosperity and national competitiveness by creating good-paying jobs while strengthening industries and capabilities essential to American global leadership. Despite these linkages, the United States has not yet developed a clear, unified approach to industrial policy, national security, and workforce development. This is a missed opportunity to translate strategic government spending into positive economic spillovers for “middle-skill” workers: bipartisan support already exists for each of those three pillars; what’s needed is a coordinated approach to funneling federal, state, and local resources to target sectors and jobs.

Policy framework for strategic jobs

To identify areas of policy synergy, consider the following criteria for jobs that should attract government funding and policy support:

  1. Essential to economic growth: roles that are frequently employed in high-growth industries, or else required to improve the future general productivity of businesses.
  2. Necessary to protect American national interests: jobs that have clear national security implications, especially as it pertains to economic competition.
  3. Middle-skilled but high-paying roles that do not require college degrees: while higher educational attainment is generally desirable, it is not a suitable nor affordable option for all individuals, and many roles can or should support workers who have alternative credentials.
  4. High current job shortages: demand for roles far exceeds current labor supply.

Over the last few years, employers consistently struggled to fill high-skilled roles in healthcare and STEM fields, a trend that has only become more acute due to the pandemic and immigration restrictions. However, the United States also has significant middle-skill job shortages: in 2016, the Society of Human Resources Management (SHRM), an industry association for human resources, reported significant shortages in skilled trades, telecom, healthcare, and environmental technicians, and IT and computer specialists. These gaps continue to persist during the pandemic, and shortages are especially acute for mid-size businesses between 50 – 250 employees that form the backbone of the American economy.

Source: “The New Talent Landscape” (SHRM)

Given these talent shortages and the “strategic jobs” framework laid out above, the federal government should support large-scale expansion of three critical job families:

  1. Cybersecurity: In 2016, the Department of Homeland Security estimated that cyber theft costs the United States upwards of $100 billion every year. Attackers include state actors such as Iran, Russia, North Korea, and China, who is thought to have accelerated the development of its J-31 stealth strike fighter by stealing IP from the F-35. Despite the clear national imperative for additional cybersecurity talent, America suffers from a major talent shortage: according to ISC(2), a leading certification of cybersecurity skills, the cybersecurity talent gap in the United States is over 350,000 professionals. Cyber jobs pay $83,000 on average with higher pay for individuals holding cyber security certifications such as the CISSP. Moreover, these roles do not necessarily require a college degree, making it an appealing pathway to economic mobility.
  2. IT and Software development: Digitization is essential to every business today, from consumer goods companies selling customized products online to healthcare companies providing telehealth services and banks giving their customers a smoother experience. It is also increasingly essential to providing government services as well as defense: the present and future of combat is predicated on quick dissemination of information and precision strikes, often in the digital space, that minimize damage and keep troops out of harms’ way. Nevertheless, the United States has an IT and software development shortfall of 1 million professionals with a particularly acute shortage in the federal government, where half the IT workforce will be over the retirement age of 61 by 2030. Part of the problem is that many postings require bachelor’s degrees in computer science, even though many of these roles could be more than adequately filled by individuals with alternative certifications such as a coding bootcamp program. While graduating additional STEM and CS degrees is highly desirable, non-degree programs and apprenticeships can provide excellent training for high-paying jobs that address the urgent shortfall. 
  3. Skilled trades: A broad bucket that includes technicians, electricians, and carpenters, these occupations have generally been sidelined as more Americans have sought higher education. Nevertheless, these trades are essential to improving America’s physical and digital infrastructure, operating the factories of the future, and ensuring the integrity of the country’s supply chain. Traditionally considered “middle-skill” jobs, skilled trades have been historically served by vocational programs but are experiencing massive shortages: for example, 70% of construction companies are experiencing difficulty hiring even though salaries start in the $55,000 range. Moreover, these roles are increasingly prone to “degree inflation”: according to a Harvard Business School report, 67% of openings for production worker supervisors require a college degree even though just 16% of current supervisors hold one. Additional support for alternative, work-based training programs will provide excellent signals of ability, promote access to middle-class jobs, and develop a highly trained workforce for strategic sectors.     

The value of apprenticeships

While recent discourse around higher education has been chiefly concerned with cancelling student debt, the key underlying driver is the spiraling cost of college: tuition at four-year universities has risen by 37% in the last decade alone, far outpacing inflation and leaving students with an average debt load of $27,000 by graduation. To alleviate the strain, policymakers have increasingly recognized the potential of non-degree training, particularly apprenticeships, which mix on-the-job training with targeted academic skills acquisition. Apprenticeships, which typically last between a few months and 2 years, enable an individual in a high school or tertiary education program to work with an employer, earning a wage while developing skills that may lead to a permanent position or enhance future employability. President Obama spent $260 million on apprenticeship training, while the Trump administration spent $1 billion. Biden’s campaign platform was even more ambitious, calling for $50 billion to support programs that lead directly to “ready to be filled” jobs

Nevertheless, apprenticeships in America remain vastly underutilized compared to some of our peer economies. In Germany, 1.3 million adults are enrolled in apprenticeship programs across 330 occupations. By contrast, the U.S. has roughly half as many apprentices despite enrolling 7.5 times as many college students. Unlike their European counterparts, American families and high schools historically rejected apprenticeships as second-tier options, while American employers have been reticent to invest in individuals who might depart for competitors. 

However, attitudes seem to be warming towards apprenticeships. Staffing agency Addeco found that 89% of employers believe that corporate apprenticeship programs would alleviate skills gaps. Companies are starting to take action: recently, a consortium of blue-chip employers led by Accenture and Aon launched a technology-focused apprenticeship program in Chicago with the goal of reaching 1,000 apprentices by the end of 2020. Apprenticeships have clear momentum and strong applicability to critical, strategic jobs, and federal, state, and local officials should capitalize on the opportunity to create a coherent strategy.

Policy recommendations

In order to maximize the potential of apprenticeship programs in key strategic areas, the Biden administration should focus on funding and coordinating resources, defining standards, and convening employers and higher education providers, including private sector providers who demonstrate strong outcomes. To achieve this, the Biden administration should focus on the following policies: 

Policy 1: The Department of Education should lead the creation of a national strategy for increasing apprenticeships and blended work-learn programs in key roles and industries, signaling to state and local governments that apprenticeships, especially in key functions and industries, will be a high priority.

  • Although the Department of Education will lead the “Strategic Apprenticeships” task force, it should adopt a “whole of government” approach and cooperate with the Department of Labor and the Department of Defense to create a unified strategy. Coordinating policy across several departments will ensure that appropriate standards are put into place (including those for jobs directly related to defense and security) and that individuals going through apprenticeship programs have pipelines to meaningful, well-paying jobs after graduating.
  • Where necessary, the task force should create standards for apprenticeship programs that qualify for federal funding. The Registered Apprenticeship Program provides a repository of federally or state validated apprenticeships. However, occupations in cybersecurity and software development have not yet been approved for apprenticeship programs. The task force should work with industry certifications and associations, such as the ISC(2) and ISSA, to develop skill acquisition standards that will form the backbone of new apprenticeship programs.
  • To ensure that students have multiple pathways to acquire additional education and credentials, the federal government should create a set of competency-based work and learning standards that equate on-the-job activities with classroom time, creating clear requirements for students in apprenticeships who want to later receive an associate’s or bachelor’s degree. While this applies to all apprenticeships (and is a defining feature of the very successful Swiss and German systems), creating federal learning standards for technology and manufacturing roles will improve the appeal of apprenticeship programs in strategic sectors while giving individuals a path to higher credentials and higher pay roles.
  • At the state and local levels, elected officials should work with local chambers of commerce, community colleges, universities, and alternative education providers such as coding bootcamps to translate learning standards into apprenticeship opportunities, course credit, and pathways to an associate’s or bachelor’s degree. Where possible, local officials should also engage with nonprofits to provide wrap-around supports such as career coaching, which have been shown to improve persistence and outcomes.

Policy 2: Congress should commit federal funds for apprenticeships in cyber, software engineering, and advanced trades (“apprenticeships for the future”). These funds can be part of a matching program or can be targeted towards specific hubs of talent (e.g., Tampa).

  • President Obama’s and President Trump’s increased funding for apprenticeship programs demonstrates broad bipartisan appeal for apprenticeships. This can be paired with the increasing bipartisan consensus on China, thereby linking job creation in key industries with national security. The Jumpstart Our Businesses by Supporting Students Act of 2019, which was eventually brought to the Senate floor by Tim Kaine (D-VA) and Rob Portman (R-OH), called for Pell Grants to be used for certain short-term learning programs. New legislation can go one step further by adding funding for short-term programs in “strategic roles.”  
  • In addition, funding policies can take into account other economic and social and racial justice priorities. For instance, funds could be earmarked for historically black colleges and universities (HBCUs) to work with employers to create apprenticeship programs in target industries. Expanding apprenticeships with HBCUs would advance Biden’s racial justice agenda while providing a strong economic vehicle that meaningfully raises living standards and supports local businesses, laying the foundation for strong bipartisan support.

Policy 3: In addition to providing further funding and guidance for universities and community colleges that support apprenticeship programs, the federal government should also facilitate and regulate new forms of short-form education, including bootcamp programs and certificates, that provide high-quality and affordable training options for strategic jobs.

  • The Department of Education can set up an innovation fund dedicated to alternative higher education, with a particular eye towards cyber, information technology, and skilled trades. This creates a win-win situation: in addition to developing education providers that solve key job shortages, the Department of Education will be in a position to capture essential learnings about the efficacy of different forms of instruction and delivery, enabling them to innovate on a policy level at a much quicker pace.
  • To ensure that funding is only provided to high-quality education providers, the Department of Education should reinstate the Gainful Employment Rule, which stipulated that any programs whose typical graduates’ debts exceeded 8 percent of their total income of 20 percent of their discretionary income would lose access to federal financial aid. While the specific amounts could be adjusted, the Gainful Employment Rule will help protect students from predatory practices while ensuring that federal funds are not wasted on high-cost programs.
  • In addition, the federal government should require all alternative education providers to publish “outcomes reports” which detail graduation rates, job-finding rates, and average starting salaries. The Council on Integrity in Results Reporting (CIRR) has published a framework that is considered the gold standard in the coding bootcamp space. Similar to the new College Scorecard for Title IV institutions, the Department of Education should go one step further and mandate that all alternative education providers adopt a reporting structure for outcomes. 

Conclusion

The rise of China, along with COVID-19 and domestic issues such as income inequality, are beginning to push America’s limits. While there is no silver bullet solution, a well-designed strategic jobs policy that focuses on roles of the future with national security implications – cyber, IT and software development, and skilled trades – can strengthen our economy, provide quality jobs, and protect American interests. The Biden administration would be wise to work with a growing bipartisan consensus on the intersection of defense and workforce development, providing hope and opportunity for a country desperate for both.