In introductory economics courses, students are taught a basic production model in which outputs are produced by a combination of two inputs: capital and labor. Though undeniably simplistic, this model captures the fundamental optimization problem faced by companies. Namely, in order to succeed, firms must not only acquire the necessary physical capital—office space, equipment, access to appropriate infrastructure, etc.—they must pair that physical capital with an appropriately skilled, educated and sized workforce.
As we’ve noted elsewhere, it’s increasingly the latter that is threatening the success and dampening the prospects of companies nationwide. A recent study from HR firm Randstad US, for instance, found that a lack of skilled or qualified workers was the second greatest problem reported by U.S. employers. In other words, communities all across the country are struggling to be “workforce ready.” But what exactly is workforce readiness?
The definition of workforce ready is, at its most basic level, roughly analogous to a project being “shovel ready” in regards to site and infrastructure characteristics. It means that if a company decided to expand or relocate its operations to a community, the local labor conditions are such that they would be able to hire an adequate work force within a reasonably short period of time.
Unlike shovel ready classifications, however, workforce readiness is by definition a human resources issue. As such, the questions involved can be vastly more complex than they are for physical site selection. Is the current local workforce capable of meeting the company’s needs? If not, is it feasible / cost effective to recruit outside talent? Is the local quality of life sufficient to retain skilled labor for an extended period of time? Is there a sufficient pipeline in place to train and educate the next generation of labor? Employers don’t just look at workforce readiness as a static issue relevant to a single point in time; they consider their future needs and aspirations as well, and thus all of those questions—and more—may need to be answered before they’re ready to commit.
With such a tall list of requirements needing to be satisfied in order to be truly workforce ready, the prospect of getting to that point might be intimidating for many communities. After all, the U.S. governments Standard Occupational Classification system lists more than 8,000 in individual job types. How can any one community ensure that they’re community has a workforce ready to fill each and every one of those roles? The short answer is, they can’t.
And that is why it is so important to integrate workforce readiness initiatives into a broader economic development strategy. Workforce readiness is not about drawing up some initiatives or programs out of the blue and then hoping for the best. It is about interacting with current and future employers to identify how the current labor pool is and isn’t meeting their needs, and then designing policy to bridge those shortfalls and build upon what is already being done well.
Key to this process is a comprehensive target industry analysis. By identifying which industries already have strong roots in the community, workforce development professionals are given an excellent framework around which to build a plan for workforce readiness. As with workforce readiness, though, a target industry analysis should not be static. It should look not only at industries already present in the community, but also try to identify industries that should be present but aren’t, as well as cast a future eye towards the niche and up-and-coming sectors that will shape the future economy.
Now, not every workforce readiness initiative necessarily needs to be begin with a target industry analysis or identifying specific skills gaps. The ACT Workforce Ready Communities (WRC) certification provides an excellent starting point for state, county, and local leaders who might feel overwhelmed by the challenge of building a workforce readiness strategy from scratch. With its focus on ensuring that a suitable number of current, transitioning, and new workers possess the baseline level skills required for success in any position across any industry, the WRC certification is a nationally-recognized workforce readiness tool that can be used by communities all across the country. Such a certification serves as proof that a community is going in the right direction, and can go a long way towards convincing a potential future employer that might be on the edge.
Of course, in industries where niche or advanced skills are a must, a more tailored approach might be required. Consider the State of Illinois. When legislatures realized thousands of high-paying manufacturing jobs were going unfilled in their state, they designed a bill to ensure the Illinois Department of Workforce Development works directly with employers to identify the shortcomings of the local talent. This feedback will then be incorporated into new and revised workforce development programs. By their own admission, these reforms are not a panacea, and they are coming later than would have been ideal. But in an age where automation and outsourcing are rapidly altering the labor needs of domestic businesses, workforce readiness is truly an issue where the adage “better late than never” certainly holds true.
If you’re interested in seeing how AngelouEconomics can help you assess and prepare your workforce, take a look at our work in Lincoln, Nebraska: https://www.angeloueconomics.com/our-work/case-studies/lincoln-nebraska