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Improving outcomes for workers and employers

A Federal Reserve System initiative on workforce development

January 3, 2018


Ben Horowitz Senior Policy Analyst, Community Development and Engagement
Improving outcomes for workers and employers

Investing in America’s Workforce, an initiative of the Federal Reserve System’s Community Development function, highlights successful workforce efforts and key issues facing workforce development. Resources include a report based on 52 listening sessions across the country, videos and presentations from an October conference in Austin, Texas, and a forthcoming book on workforce development topics. The initiative highlights the role workforce development efforts can play in supporting labor force productivity and economic development.

The listening session report and conference both raise a number of key workforce development issues as well as strategies to address them.

Funders and providers are developing alternative avenues for financing in an era of decreasing workforce investment. After adjusting for inflation, the federal government has sent 43 percent less money to states through the Workforce Innovation and Opportunity Act since 2001. That’s part of a longer-term decrease in federal funding for workforce efforts stretching back to the 1980s. The decrease has been paralleled in the private sector, according to author Rick Wartzmann. In Austin, he presented compelling evidence that employers significantly reduced training opportunities for employees over the past few generations.

To bring new resources to their communities, some workforce-oriented organizations have turned to pay-for-performance contracts. Others are finding capital and providing support for employee-ownership or co-operative models. At the conference, a handful of large employers talked about their efforts to buck the disinvestment trend by partnering with community colleges and high schools. Municipal government officials talked about their efforts to finance workforce interventions at the local level.

Access to new sources of capital can be a powerful tool, but one listening session attendee highlighted the cost of relying on private capital: “Ten jobs could’ve been funded with the interest that [a workforce development organization is paying on their private loan].”

All workforce development is local. Many successful workforce initiatives are designed to serve specific communities with programs adaptable to individuals’ strengths. Some people may thrive once they gain convenient access to college classes on the job site or through distance learning. Others might need high-quality care for their children and an affordable place to live before they can succeed at work.

Relationships among governments, nonprofits, and businesses increase the likelihood that workforce programming will achieve its end goal of connecting individuals with the appropriate supports, training, and employment opportunities. Without an intentional focus on collaboration, opportunities to improve may fall by the wayside. A regional workforce initiative in Atlanta found that only 30 percent of about 200 workforce organizations had a relationship with a local employer.

This disconnect can lead workforce efforts to begin on the wrong foot. “I think a lot of times in the public workforce arena, we begin assuming we know what the business needs for training. And we use our best knowledge that we can to develop that training, and then we oftentimes create a mismatch with the business community in terms of value,” reflected one listening session attendee.

Advancements in workforce development policy need to address issues of racial and gender equity. Some of the most successful workforce initiatives in the nation’s history, like the G.I. Bill and certain labor laws, have excluded women and non-white workers. More recently, research from the Fed and other institutions has highlighted the persistent barriers faced by people of color in the labor market.

Contemporary evidence and the historical legacy of unequal access to opportunity were woven throughout multiple panels and presentations at the conference. Some presenters argued that it was a primary barrier to a more robust, successful workforce development system.

“The problem is not a failure to invent good strategies,” said Angela Glover Blackwell, CEO of PolicyLink, during the conference’s closing plenary. “This country is going to continue to place itself in a downward spiral if it doesn’t come to grips with [issues of race and ethnicity]. The happy story is [if] we get it right for the very people who are being left behind, we get it right for the nation.”

Ben Horowitz
Senior Policy Analyst, Community Development and Engagement
Ben Horowitz writes about policies and programs impacting affordable housing, early childhood development, and investments in low- and moderate-income communities.