This is the first in a new series of reports on the state of workforce training and development in the United States. This field has become a significant economic engine for the U.S. economy. U.S. organizations spend over $100 billion annually on direct investment in training and development. The Association for Talent Development (ATD) predicts sustained investment growth in adult training and development, including gains in employment for training professionals of about 11% through 2034, outstripping other business occupations.
My report will cover the entire universe of workforce development, which includes a broad swath of organizations occupying this space. These include: federal and state agencies that fund workforce development, employer-sponsored training for their employees, and educational institutions, most particularly, community colleges, which are the largest workforce training providers in the nation. Although the entire system is large and growing, it is highly fragmented with little oversight and uneven quality. Limited access and lack of coordination mean millions of American workers are left out of any meaningful development opportunities beyond their own ambition.
Indeed, the U.S. workforce development philosophy is predicated on individual choice and responsibility. Americans are expected to chart their own career paths and make the personal choices and sacrifices required to achieve their own version of the American dream. While government and industry are willing to provide some financial and structural support, the onus is on the individual to acquire the skills needed to find sustainable employment in the U.S. $14 trillion economy.
Current State of U.S. Workforce Development
So far this decade, workforce development has experienced the largest existential threat in its history and then recovered to embrace new ways to address critical skill gaps in the nation’s workforce. The COVID-19 pandemic of 2020 caused all in-person learning to grind to a halt for over a year. Training had to quickly move online or cease to function. This led to very uneven results. Some businesses were able to seamlessly move their training to virtual classes and asynchronous e-learning, while others struggled to do so or simply halted all new workforce development. Industries that already embraced e-learning, such as high tech, had an easier time during this crisis than those that relied on traditional instructor-led training. Technical skills training suffered the most, since it depends on in-person skill practice that was difficult, if not impossible, to simulate online.
Today, a new hybrid model of training delivery has emerged that seeks to draw from the best of all modes to provide adult learners with the training they need in ways that are convenient for busy adults. Much basic knowledge is now obtained through e-learning self-study and on-the-job training rather than formal classrooms. When adults attend instructor-led training now, the focus has shifted to developing skills that can best be acquired through repetitive practice and human interaction.
While online learning has broadened the reach of training, extending learning to many new populations and leveraging scarce expertise, it has also put even more burden on participants to navigate the learning landscape on their own. Those with the skills to self-direct their learning are thriving with a wide range of knowledge available at a mouse click, but many other adults lack the basic metacognitive skills and motivation to undertake significant learning endeavors on their own. The result has been an even wider divide between those in-the-know and know-nots, whose minimal skills cause them to sink to the bottom of the labor pool, stuck in minimum wage, entry-level jobs without hope for advancement.
Career Pathways Shifting
The traditional path to a rewarding career was to attend college after high school, obtain at least a bachelor’s degree and enter the workforce in a profession of one’s own choosing. The most ambitious sought graduate degrees to further distinguish themselves as experts in their chosen fields. This career model encouraged half of high school graduates to seek a college education. Those who did not pursue a traditional college education could also take advantage of many post-secondary certificates and certifications that gave them marketable job skills. Many trades relied on apprenticeships to fill their ranks.
This system began to break down in the 1980s. As more people obtained college degrees, the number of jobs requiring those degrees began to plummet. Corporations pursued decades-long efforts to shed workers through mergers, downsizing and outsourcing. Good paying factory jobs disappeared as manufacturing went offshore in search of cheaper labor. Free trade agreements made global trade the preferred method to make money. Automation replaced millions of manual laborers and reduced the required number of support personnel. Meanwhile, the cost of a college education skyrocketed and mountains of student debt made the college proposition a loser for many.
Over the past decade, in response to the struggling labor market and inability of employers to find the qualified workers they need, a new model has emerged. Some have labeled this structural shift “skills-first hiring.” Employers are less impressed with degrees and credentials and more interested in finding people with the specific job skills they seek. This has led to a decline in the dominance of the 4-year degree as the entry point to good jobs. In its place, we have witnessed growth in industry certifications, short-term stackable credentials and trade and technical apprenticeships and internships. Since the end of the COVID pandemic, skilled trades now rival or outperform degree holders in some labor markets and often earn more than college graduates.
Rise of Employer-driven Training
An essential element of the skills-first hiring philosophy is the notion that employers should drive workforce training rather than the traditional approach of putting educational institutions in charge. This change began with the Workforce Innovation and Opportunity Act (WIOA), which Obama signed into law in 2014. The law fundamentally changed workforce training in the U.S. Rather than simply funding training programs, as past federal programs had done, WIOA shifted the system toward a more employer-driven, integrated, and outcomes-focused model. Over the past 12 years, WIOA has transformed workforce training from a fragmented, program-centered system into a more integrated, employer-driven, performance-based system designed to connect training directly to employment and regional economic demand. This included the creation of Workforce Investment Boards (WIB) throughout the country to bring together key stakeholders who decide how to spend the federal training dollars within their communities.
A key outcome has been the development of sector partnerships that align training directly with industries who have job openings that are difficult to fill. Most notably, the following industries have enjoyed strong sector partnerships with local WIBs:
- Healthcare
- High Tech Manufacturing
- Information Technology
- Construction
Employers who join sector partnerships increasingly co-design curriculum and hire directly from the ranks of program graduates. This has resulted in training becoming demand-driven rather than education-driven. Employers report a better alignment between what people are learning and the skills they require of the future workforce.
In forthcoming reports, I will show how employer-driven training is transforming the entire landscape of workforce development.
