Adjusting to a Post-Coronavirus Economy Requires Just Transitional Workforce Strategies
The crush of layoffs and business closures caused by the COVID-19 pandemic has wreaked havoc for workers who were already facing a structurally vulnerable workforce and employment system. The combined magnitude of the current public health, economic, and political crises provides an opportunity for bold and robust interventions that will make the United States a more resilient country moving forward. Any massive job creation push to achieve a just transition to economic recovery must ensure access to better jobs for all workers and should also require a different workforce approach to worker training and labor force adjustment. Expanding workshare, subsidized employment, national service, and labor-management training partnership programs into the workforce ecosystem has the potential to build cohesion in a fragmented job training system and support a successful economic recovery.
Thus far, Congress has enacted emergency paid sick days and family leave and enhanced unemployment insurance to provide workers across the country with relief. While these measures have improved certain working conditions, they have only provided, at best, a baseline of protections that workers need to survive in the near term. Already, these temporary measures are proving insufficient, and it is clear that simply patching up the labor market’s weak spots is not enough. To make sure that these temporary protective measures become permanent, Congress must also strengthen worker protections and enact structural solutions that address underlying issues of poor job quality. Unfortunately, the link between training service delivery and quality jobs needed to build resiliency is plainly weak. Accordingly, the rules and routines embodied in traditional workforce development strategies must be reconceptualized.
Indeed, federal job training programs have remained a popular go-to policy for solving skills gaps, a problem that employers tend to frame as a hiring priority. In response, the Workforce Innovation and Opportunity Act (WIOA)—the federal law currently governing workforce development—stresses that training services must be linked to in-demand employment opportunities. However, according to recent Bureau of Labor Statistics figures—which rank the occupations projected to see the most job growth in the next decade—nearly half of the jobs listed pay less than $30,000 per year, and the majority of these occupations often lack benefits such as health care and paid leave. Focusing on skills training programs to fill open jobs that are considered “in demand” by employers—without also guaranteeing workers pay increases, access to basic employment benefits, predictable work hours, and other workforce protections—may inadvertently serve to perpetuate an uneven economy overreliant on bad jobs.
WIOA requires workforce development programs to track skills training participation rates using various metrics. State and local workforce development boards, which oversee the implementation of WIOA, are held accountable to six common performance measures, of which three directly result in labor-market outcomes. For each participant that exits a WIOA program, the public workforce system tracks their entered employment, job retention, and earnings data. However, this is an insufficient proxy for quality employment. While these performance measures together capture training output, they do not account for whether job attainment is matched to decent working conditions.
Of the roughly 640,000 workers who received employment and training services through the WIOA Adult program in 2018, more than 70 percent of participants were employed, and more than 60 percent earned a credential one year after exiting the program. In addition, median earnings for these workers were $6,170 in the second fiscal quarter after completing the program, which amounts to about $25,000 per year. In comparison, the real median personal income for all workers was $33,706 that year. In a 2017 gold-standard evaluation of the Workforce Investment Act—WIOA’s predecessor—Mathematica Policy Research (MPR) found a positive relationship between program participation and completion and credential attainment. At the same time, however, MPR also noted the workforce intervention yielded little or no earning gains. Together, these outcomes suggest that even if a job seeker finishes an employment and training program and earns a credential, they are likely no better off in the labor market—which begs the question about labor market inequality and declining job quality.
The experiences of the frontline workforce during the pandemic—including fast food workers, social workers, cleaners, retail associates, transit workers, home health aides, and other workers who are now deemed essential—highlights the reality of a workforce policy approach that makes decent pay and benefits, workplace safety, and union rights difficult to achieve without fundamental change. The economic fallout of the pandemic demonstrates why workers need unqualified assurances that the jobs that they go back to, or the new ones they seek out, will have better working conditions than from before the COVID-19 pandemic. If the U.S. economy is to achieve an inclusive recovery and stay resilient, policymakers must re-engineer a workforce response designed to protect workers against low wages and poor working conditions.
Put differently, workforce development should not only provide employment and training services but also play a role in influencing how labor markets increase standards for wages and benefits, provide health and safety protections, and improve job quality overall. Because the delivery of job search, job training, and job matching is inherently mediated by the social nature of employment relationships, the workforce problems the pandemic has brought to light stem not from the skillsets of workers but from the structural factors resulting in widespread poor job quality. In order to reenvision workforce development beyond conventional skills training practices, workforce systems should be designed to reward coordination with entities to develop or carry out an array of innovative interventions that explicitly improve job quality, such as portable benefit and wage board structures, targeted hiring, and fair chance policies.
Existing workforce interventions such as layoff aversion and shared work strategies should also be ramped up to match the current scale of accelerating layoffs. In particular, worksharing—also called short-time compensation—is an alternative approach to traditional unemployment compensation programs. Workshare programs are designed to help employers manage business cycles and seasonal adjustments while helping to spare their workers the hardships of full unemployment. Currently, 27 states and Washington, D.C., have operational worksharing programs where workers with reduced hours received prorated unemployment benefits to supplement their paycheck. Recently passed legislation would provide 100 percent federal reimbursement of some state worksharing-related payments, funding to start up new worksharing programs, and resources for technical assistance in strengthening existing shared work programs. Additionally, cities and states should utilize WIOA funding to establish a layoff aversion program that identifies firms at risk of layoffs and delivers financial restructuring and other turnaround professional services.
The Pennsylvania approach
Many shutdowns can be averted with sufficient early warning, coupled with well-organized and expedient business turnaround efforts. At the state level, the commonwealth of Pennsylvania’s layoff aversion and shared work programs, commissioned and overseen by the Department of Labor and Industry, is designed to keep hundreds of workers on the job. In partnership with Pennsylvania, the Strategic Early Warning Network (SEWN) program operated by the Steel Valley Authority (SVA) has intervened with 1,300 small- to medium-sized manufacturers over the past three decades, averting or deferring the loss of 31,000 good jobs. The SVA’s five offices continue to provide a multifaceted crisis response to SMEs across the state today. Shared work allows eligible companies to cut their workforce hours from 20 percent to 40 percent per week. Through unemployment compensation, workers whose hours were cut would be able to receive about 50 percent of their unemployment insurance benefit that is covered by the commonwealth of Pennsylvania throughout the duration of the furlough or shutdown.
Any future federal workforce responses to COVID-19 should similarly look to SVA’s job-saving and layoff aversion mission as a first line of defense, as well as other employment and training strategies motivated by the need to improve job quality.
Other interventions that directly connect training with work include transitional workforce strategies such as subsidized employment initiatives and national service compacts that provide job seekers, especially those with limited work histories, with pathways to employment. Subsidized job programs are publicly funded and, if effectively targeted, have proven responsive to economic slowdowns. During the Great Recession, states were allowed to dedicate resources for transitional jobs programs that combined subsidized employment with training and support services, resulting in about 280,000 individuals placed into jobs in 40 states. While these subsidized jobs programs significantly increased employment during the last recession, especially for individuals who were chronically underemployed or unemployed, these efforts only met a fraction of the overall need.
Similarly, national service is another workforce intervention that has the potential to keep individuals, especially younger adults and those newly entering an uncertain labor market, engaged in the workforce. National service opportunities provide individuals with a term of public service or community work that could last up to one year or more. Participants earn a stipend and receive health insurance, gain job experience that can lead to industry-recognized credentials, and are awarded scholarship money to further their education. The country’s history with national service dates back to the 1930s, when President Franklin Roosevelt created the Civilian Conservation Corps, among other jobs initiatives, that altogether succeeded in putting 3 million unemployed men to work building parks, bridges, airports, and other public facilities that remain in use today.
Recognizing the need for better job quality and equity-driven workforce strategies, labor-management partnerships that bring together worker organizations and multiple employers is also a proven workforce development model that both increase individuals’ skill development and improve quality of employment within an industry. These partnerships create economies of scale by ensuring employers need not worry about competitors poaching their workers who have received quality training. In addition to skills development through training benefits, workers can expand their career networks and build up work experience on jobs that provide supports including access to child care, health care, and paid leave; a safe workplace; and membership in a union to safeguard rights and address workplace concerns.
As communities continue to grapple with the pandemic, the coronavirus-fueled recession will only continue to exacerbate economic insecurity. While workforce development policy itself is certainly not a panacea for recovery, workforce inequalities nonetheless must be addressed with structural solutions that improve access to better jobs before another economic or health crisis. Redesigning the workforce system and embedding a more robust set of interventions into the workforce and employment ecosystem will not only help springboard individuals back to work immediately but also improve the quality of jobs. While making the system better over the long term will require transformative change, this does not mean tearing down existing institutions entirely; adopting well-designed, short-term changes can achieve a substantial and sustainable impact for workers across the country.
Livia Lam is a senior fellow and the director of Workforce Development at the Center for American Progress. Thomas Croft is the executive director of the Steel Valley Authority and managing director of Heartland Capital Strategies.