PREFACE

Shift to a Knowledge Economy

The economy has changed quickly and significantly in recent decades. However, our understanding and response to the shifting economic context is still rooted in the mid–20th century. In the 1950s and 1960s, it was possible to sustain a career and support a family with semi-skilled factory work. But today, even if that factory worker has specialized skills to troubleshoot an automated assembly line, there are fewer and fewer well-paying manufacturing jobs available.

In the past 50 years, the United States economy has dramatically decreased dependence on manufacturing. In 1960, manufacturing was responsible for roughly one-quarter of the gross domestic product (GDP). Today, manufacturing has decreased to 10% of GDP (Exhibits P-1 and P-2). During the same time period, professional services increased from 6% of GDP to nearly 20%. Professional services include the legal field, business consulting, and scientific and technical consulting—all fields that require considerable education. The shift from an industrial economy to a knowledge economy has implications for workforce availability and readiness.

In the contemporary knowledge economy, individuals and companies alike are constantly adjusting to new tools, new strategies, and new norms. Regardless of the field, one can no longer escape the need to adapt and apply new skills at an ever-increasing rate of change. Today, even assembly lines are complex, high-tech operations and essential employees continuously train to keep up with computer-driven systems.

Despite the labor shift in the economy over the last decades, nearly half of the current workforce has no education beyond high school (Exhibits P-3 and P-4). Even with years of schooling beyond high school and preparatory training for entry into a field, workers in all occupations are now expected to take on increasingly more skilled positions throughout the trajectory of their careers. So, whether to maintain a job or reenter the workforce, continuous retraining for new skills is critical for occupational readiness and success. Lifelong learning is an essential component of the new economy.

Exhibit P-1.   Value-added to GDP by sector, 1960.

Source: U.S. Department of Commerce, Bureau of Economic Analysis.

Exhibit P-2.   Value-added to GDP by sector, 2010.

Source: U.S. Department of Commerce, Bureau of Economic Analysis.

Exhibit P-3.   1960 Educational Attainment, U.S. citizens 25 and older.

Source: U.S. Census data, 1960.

Exhibit P-4.   2010 Educational Attainment, U.S. Citizens 25 and older.

Source: U.S. Census data, 2010.

New Skills for a New Economy

The global economic crisis that began in 2008 hit hardest among workers with the least education.¹ As the country recovers from the downturn in the economy, there are too many workers sitting on the sidelines looking for a suitable job in the new economy. This is no longer a problem for just the individual; it has become a problem for the entire nation. Society can no longer afford a labor market where roughly half of the workforce has only basic skills. As a society, we are not providing the support to improve competence and provide mastery.

The economic crisis underscores a decades-old discussion of the so-called skills gap.² The skills gap is an issue not only for youths entering the workforce, but also for workers dislocated by the recession. The recession provided stark reminders that the current education and job-training programs in the United States do not foster the skills required for work and citizenship in the 21st century.

In the past, the 3 R’s (reading, writing, and arithmetic)—combined with on-the-job training—were adequate for a stable, lifelong career. Today, the knowledge economy requires the 4 C’s: communication, collaboration, critical thinking, and creativity (Exhibit P-5). In fact, a recent survey of employers indicated that a lack of technical skills is not the biggest problem when they recruit younger workers. The skills gap is not primarily about traditional technical and academic skills, but rather about productive and responsible habits and dispositions toward work.³ Younger workers, in particular, have not been prepared for the collaborative and dynamic nature of work in the knowledge economy, and the 4 C’s are the foundation of success.*

Unlike earlier economic eras, basic literacy and numeracy are no longer even a minimum foundation for success at work. Content knowledge is less important because it can be accessed so easily through digital environments. In the new economy, workers need to be able to think critically about available information, apply it in new and creative ways, collaborate with a team of coworkers to bring each person’s skills to bear on the challenges at hand, and, finally, communicate what the team has accomplished and why it is important. A system of lifelong learning not only facilitates learning the 4 C’s but also fosters the ability to adapt to fluid situations. It cultivates the habits of self-motivated learners—eager to expand their understanding of their world to better participate in society and the economy.

Exhibit P-5.   Four C’s.

The second decade of the 21st century provides daunting challenges as the world economy recovers from the recession that began in 2008. We are not recovering to the economy that made the United States a world power in the 20th century. Although the world and the economic system have irrevocably changed, our workforce is primarily ready for the semi-skilled work of the mid–20th century. Now that the global economy is based on technology and the ability to adapt quickly, too many individuals in the United States cannot find work that supports the high quality of life at the center of the American Dream.

Although education and training provide strong benefits directly to individual workers, the benefits to employers and society are equally important. Hiring talent is expensive. The cost includes not only the resources devoted to the job search, such as paying the human resources staff or a recruiting firm and buying advertisements in appropriate places read by qualified applications, but also the productivity lost as a position remains vacant.⁵ Replacing talent is estimated to cost between 30% and 45% of the base salary of the position.⁶ Employers pay dearly to hire talent, but the cost of training is generally recouped in higher productivity from new employees. For instance, multiyear employer-sponsored apprenticeship programs begin to cover the cost of investment in the last year of a 3-year program when the apprentices earn a training wage but are able to function as productive employees. When they are converted to regular employees, they are much more productive than people hired directly into the positions.⁷

Not only do employers and individuals pay a high price for limited investments in lifelong learning and training, but the U.S. economy and our society stagnate in a world where geographic borders are increasingly meaningless. Companies easily relocate to countries with lower wages or to countries that make solid investments in lifelong learning. Reliance on old models of education and training is dangerous for an economy struggling to expand. Public policy must better integrate education and workforce development in order to maintain a strong pathway from school to training to successful employment and full participation in society. Across sectors and types of organizations, we must work together to prepare every citizen for life and work in the knowledge economy.

Partnerships for Systemic Change

Research indicates that organizational partnerships are essential to developing and maintaining successful programs and initiatives that support lifelong learning. Effective systems of lifelong learning engage three distinct types of organizations: education providers, employers, and agencies to coordinate the initiative. It may not matter which type of organization takes the lead in creating supports for lifelong learning, but each has a part in a successful system of lifelong learning.

School systems, postsecondary institutions, community organizations, and employers all have a strong role to play in providing systematic supports so that individuals can continue developing skills and knowledge to stay abreast of changes in society and the economy. The foundation of such a system remains prekindergarten to grade 12 (PK-12) of schooling, but it must become a system that fosters the engagement and life skills necessary for children to develop into adults who are motivated to continue learning throughout their lives. In order to develop active, self-motivated learners, schools must embed learning in authentic tasks or projects that simulate real-world experience.

In high school and college, work-based placements enable students to apply classroom knowledge while gaining an awareness of different careers. At the same time, employers become familiar with potential employees, and can groom them for future positions. In turn, adult learners need support from their employers to maintain the skills and credentials to further their own careers and also benefit the organization’s mission. Employers need to know that the education system ensures that employees have the proper certification in a trade or profession and that they can stay current with ever-changing technical skills.

Education institutions and employers provide crucial learning opportunities but, with a tight focus on their organizational missions, they may have little time for the logistics of partnering. Research indicates that successful systems of lifelong learning include a coordinating agency⁸ to facilitate the partnerships between education providers and employers. Employers and educators who already have jobs may not have time to develop and sustain the business–education partnership. Rather than draining resources of educational institutions or employers, a coordinating agency can take the lead in developing standards for education and training, resolving logistical issues in placing learners in workplace settings, and providing incentives for partnering.

In addition to highlighting shifts in the U.S. economy and the skills gap, this book provides an overview of the evolution of the formal system of education, identifies supports for workforce development in the United States, and documents the slow pace of change that resulted in the skills gap. The skills gap is further illustrated by current data about adult skills from global competitors. The core of the book is composed of examples of programs and policies that demonstrate how to best support lifelong learning. One section illustrates each of the types of organizations. The sections begin with the executive perspective—an interview with the leader of an exemplary program. (See Exhibit 6 for a summary of each interview.) The sections include case studies that detail programs and initiatives that support lifelong learning. The conclusion offers recommendations for creating and sustaining an effective system of lifelong learning.

The programs and initiatives discussed in this book represent a variety of organizations involved with education and workforce development, including educational institutions, employers, and agencies that coordinate partnerships between them. They include private companies, nonprofit organizations, and public agencies. They operate on different scales: regional, state, national, and global (Exhibit P-7). These cases represent a range of programs and initiatives and can offer lessons to all types of organizations interested in improving education and workforce development in the United States.*

Exhibit P-6.   Executive perspectives.

Exhibit P-7.   Case studies.

Education Providers

Employers

Coordinating Agencies

In addition to the case studies of exemplary programs, the interviews highlight best practice approaches and recommendations from executives who have provided oversight of world-class programs. The executive perspectives are featured at the beginning of each of the three sections that profile the cases (educational providers, employers, and coordinating agencies).

Lessons Learned

This book’s exemplars of lifelong learning programs promote reflection on the support and the policy changes that might help the United States leverage existing resources into a new, more effective system. After presenting the cases, this book discusses how the United States might align and coordinate existing policies and programs in the PK-12 education system, in higher education, in workforce development, and in corporate training. It also analyzes gaps in the four components of an effective system of support for lifelong learning, and examines how to promote partnerships to support ongoing learning.

The following research questions (as well as others) are addressed:

• How has the workforce readiness and development model evolved throughout this country’s history? What have been the key historical drivers of influence?

• Why is the current relationship between workforce skill needs and education/training largely ineffective for contemporary labor demands?

• What are the components of an effective system of lifelong learning in support of continual workforce readiness?

• What are some exemplars of successful local, regional, and national lifelong learning and development systems?

   What are the implications (opportunities for and barriers to lifelong learning) influencing shifts in educational policy and practice?

• How can we incubate more relevant coordinated support from community and workforce development agencies to generate more effective initiatives that can be expanded or replicated to serve a wider population?

• How can organizations and employers better inform, support, and leverage (1) educational providers that are formally preparing the next generation of workers, and (2) coordinating agencies that have the capacity to provide further training needs and to maintain skill relevance and placement demands in the workforce in the new economy.

Reflecting on lessons learned from these exemplars, we offer suggestions for leaders who work for or with educational institutions, coordinating agencies, and employers. These lessons emphasize the importance of working across sectors.

We invite you to reach beyond your specific field to create a system that can support schooling for youth and ongoing learning opportunities for adult workers. Perhaps this book will prompt reflection on the general disconnect between education, work, and the lack of lifelong supports for learning. At a minimum, we hope to ignite a conversation about how organizations can partner to develop the infrastructure of an effective system of lifelong learning.

Notes

1. Mitchell, J. (2013). Government Job Losses Hit the Young, the Less Educated, and Women the Hardest. Washington, DC: Urban Institute. http://www.urban.org/UploadedPDF/412756-Government-Job-Losses-Hit-the-Young-the-Less-Educated-and-Women-the-Hardest.pdf.

2. Secretary’s Commission on Achieving Necessary Skills. (1991). What Work Requires of Schools: A SCANS Report for America 2000. Washington, DC: U.S. Department of Labor; Grubb, N. & Lazerson, M. (2004). The Education Gospel: The Economic Power of Schooling, Cambridge, MA: Harvard University Press.

3. Capelli, P. (2012). Why Good People Can’t Get Jobs: The Skills Gap and What Companies Can Do About It. Philadelphia: Wharton Digital Press.

4. Ruhm, C. (1997). “Is High School Employment Consumption or Investment?” Journal of Labor Economics, 15 (October): 735–776; Mroz, T. & Savage, T. (2006). “The Long-Term Effects of Youth Unemployment.” Journal of Human Resources, 41 (Spring): 259–293.

5. Capelli, Why Good People Can’t Get Jobs; Destiny Solutions. (2012). Lifelong Education and the Labor Market. Toronto, Canada: EvoLLLution http://www.evolllution.com/research/

6. Destiny Solutions, Lifelong Education and Labor Market Needs.

7. Lerman, R. (2014) “The Role of Apprenticeship Systems in Rebuilding the Middle Class,” paper presented at the International Conference of the Association of Policy Analysis and Management (APPAM): “The Decline of the Middle Classes Around the World?” Segovia, Spain: APPAM.

8. Hoffman, N. & Litow, S. (2011). Schooling in the Workplace: How Six of the World’s Best Vocational Education Systems Prepare Young People for Jobs and Life. Cambridge, MA: Harvard University Press; Mourshed, M., Farrell, D., & Barton, D. (2012). Education to Employment: Designing Systems that Work. London: McKinsey Center for Government, McKinsey & Company.

* Younger workers may be caught in a vicious cycle: Because of the downturn in the economy, they were not able to find part-time employment when they were in high school or college. Youth employment appears to be a good predictor of future earnings and employment. Individuals who gain work experience while in high school and college tend to earn more as adults and are less likely to be unemployed. This may be because any kind of job experience is likely to develop the “soft” job skills that employers report are in short supply among new graduates.⁴

* In order to develop the case studies, we first interviewed officials leading the programs or agencies, or implementing the policies discussed in the book. Cases were drafted by program leaders themselves to best reflect the perspective of the field. As such, the cases are presented in different formats reflecting the diversity of the programs.