THE CRITICAL LINK BETWEEN WORKORCE DEVELOPMENT & ECONOMIC DEVELOPMENT

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RCG Economics and Dr. Alan Schlottmann, economist with The University of Nevada-Las Vegas (“UNLV”), recently published a “white paper” that assesses the opportunities for the Nevada System of Higher Education (“NSHE”) to increase its participation as a strategic partner in Nevada’s workforce development, job training and placement efforts in order to help create occupations that lead to a sustainable Nevada economy.

The issues presented in the white paper are part of an emerging discussion in state economic development policy circles, namely the role of job training dollars to promote and improve “internal” job growth among existing state employers. Concurrently, there is also the question of what restructuring is possible at the local level to promote enhanced employment opportunities for current residents through improved training efficiencies.

This discussion is occurring at an opportune time for the State and higher education given the focus on a sector (business clusters) strategy for training to promote economic diversification.

 The important links between higher education and economic diversification have been addressed in several recent reports.[1] Utilizing workforce training as part of these efforts broadens potential State strategies.

 A focus on enhancing the skills of the work force at existing companies is a significant shift in traditional economic development policy and thinking. Historically, most economic development has been focused on “external” or “new” growth. That is, how does a state “capture” a company in another state through relocation by financial and other inducements? Developing existing businesses has, of course, always been recognized as a valuable concept in general terms, but the implementation of specific polices to promote this effort has lagged relative to traditional economic development strategies.

 Thus, this white paper is focused on the notion of the “development” of existing companies in Nevada rather than economic growth per se (i.e., the relocation and attraction of out-of-state firms to Nevada). This distinction is more than semantics; it implies an attempt to utilize the strengths of the state’s business community and workforce as the basis for enhancing Nevada’s economic development potential.

 An important shift for higher education in the new training paradigm of State workforce initiatives is the ability to use training funds within an expanded concept of on-the-job training (“OJT”). Until now, state and federal training dollars have primarily focused on entry-level positions and basic job skills. Expanding OJT to include both technical skill enhancement and position upgrading through a “career ladder” allows higher education programs to be designed and funded as training programs directly for targeted business sectors. In general, training was traditionally in short-term training opportunities, such as basic skills required by, for example, the hospitality industry.

 Given the expansion of Nevada’s hospitality and construction sectors during boom times, these trainees could readily find a position. Now that an expanded concept of OJT is recognized as a “training activity”, it allows the conceptualization of new ways to use OJT for more technical and professional positions in support of targeted industry sectors to enhance the State’s economic development efforts. However, higher education needs to aggressively coordinate these new efforts with targeted business clusters.

 Due to the current economic situation, employers are unable to invest in sophisticated training programs that provide the needed skills in engineering, health care, manufacturing techniques or management. With new avenues for OJT, higher education can now become more of an active partner in designing advanced training. Advanced skill training within an expanded OJT program is a vehicle to incentivize employers, not only to upgrade existing employees, but also to hire those individuals with skill gaps that can be trained in lieu of “experience”, knowing that they will receive subsidized wages to provide firm-specific skills with a breadth and depth that has not occurred in the past.

Higher education can assist in designing these programs to assist with these initiatives. Rather than primarily investing in entry-level training opportunities which may not lead to a job, OJT, as a workforce development strategy in conjunction with higher education, can lead to relatively high wage paying jobs.

More importantly, a worker who upgrades his or her skills in engineering, health care, manufacturing techniques or management creates a “job opening” in the position that individual left. This allows another Nevada resident to fill the vacant position. In other words, training existing workers leads to a possible “two for one” employment opportunity for the State.

According to Higher educations can assist in providing these opportunities in providing enhanced “training for jobs”. However, this will require NSHE to develop new proposals for State and federal funding in a coordinated and more involved effort with the Workforce Investment Board. In addition, NSHE efforts may well involve program offerings that are not necessarily degree granting or traditional credit courses but an expanded role in certification.

Employers, nationwide and regionally, are having difficult times filling certain technical occupations with workers with the required skills. Fields like health care, information technology and advanced manufacturing have available jobs and solid career paths that are often not taken by members of the existing local workforce due to a lack of the necessary skills and qualifications. This highlights a positive aspect of the emerging workforce concepts for Nevada residents.

 Even with high unemployment, there has always been a “Catch -22’’ where many people apply for jobs but without the required skills. This leads to a public policy paradox where State employers recruit new employees from out-of-state; not helping Nevada’s  unemployment problems. Now a mechanism exists to directly tackle the skill mismatch.

It is clear that access to both higher education and OJT has become even more critical for employees to obtain the required skills and for businesses to remain competitive.[2] Related to the above is the increasing interest by state public workforce agencies during the last decade in the use of cluster-based strategies for workforce development as a way to more efficiently focus their limited resources, especially during challenging economic times[3].

 As presented in the white paper, several cities and states have worked with existing local employers to use training dollars to upgrade local worker skills. These efforts have been of particular note in Utah and North Carolina. The implementation strategies are designed
to attain the goal of creating quality job opportunities for existing members of the local labor force. Within the health care sector, some cities and regions have worked to utilize training dollars with existing employees to evolve nursing assistants into practical nurses, and then into enrollment in registered nursing degree programs at higher education institutions. This then allows the capture of the “two for one” employment change noted above.

These efforts are experimenting with new types of training to create strong linkages and interdependencies among industry and manufacturers, technical colleges and research institutions. In a general sense, this can be accomplished in four ways. Each requires an integrated State-industry-higher education partnership

  1. If an effective industry-higher education partnership can be established with well-defined programs for targeted economic clusters , providing increased dollars directly to higher education to design and implement programs in “hands-on” internship-based curricula can include training for traditional students and those “at work” in the industry.
  2. Industry sectors using training dollars to support employees with short-term educational courses developed in conjunction with higher education, or to utilize existing curriculum opportunities. Specifically, using “incumbent training waivers” for current employees allows the use of traditional training funds to provide skills for career advancement through career laddering for Nevadans in contrast to traditional training for primarily entry-level positions. This expanded OJT concept then creates new labor openings related to the vacated position.
  3. Leveraging workforce investment dollars with additional U.S. Department of Labor (“DOL”) grants designed to allow worker training. These include enrollment in degree programs or technical training at higher education institutions to avoid layoffs (for example, “layoff aversion”) due to increased job technical skill requirements.
  4. Using specialized training to overcome lack of required work experience of new job entrants that provides specialized skills unique to specific work situations.

However, all of these options require a level of stakeholder partnership and coordination that is generally much more integrated than traditional silo functions where stakeholders operated independently. The current economic situation provides an impetus to move in these directions.

The specifics of the strategic plan are then broadly implemented by the Nevada Department of Employment, Training, and Rehabilitation (“DETR”). The two major regional entities are the regional workforce investment boards in Southern Nevada and Northern Nevada. These are, respectively, known as Workforce Connections in Southern Nevada and Nevada Works in Northern Nevada. Nevada received allocated Workforce Investment Act (“WIA”) dollars of approximately $65 million over the last biennium with an ability to apply for additional DOL training dollars.

Moving forward, the expansion of Nevada’s existing training programs to the four avenues identified above could include:

  1. Implementation of the sector/business cluster strategy identified by the Governor’s Workforce Investment Board, where higher education is included as an integrating function given the broader definition of OJT. This would allow information technology, healthcare and manufacturing, which includes selected renewable technologies, to utilize higher education as an upward “ladder” for existing employees with other Nevada residents filling in the prior position.
  2. Development of higher education programs to expand in a formal manner plans for certified worker initiatives in manufacturing. These programs would implement in an aggressive manner the “Dream It, Do It” vision for Nevada manufacturing.[4]
  3. Utilize the best of existing administrative and organizational programs that offer short elective courses to current employers or basic training seminars to develop both broad and formal training opportunities within higher education.  Examples of existing programs include the work in health care of the College of Southern Nevada and the manufacturing industry connections of NIE (Nevada Industry Excellence) efforts. These programs could potentially be integrated with degree programs at the State’s research institutions.

We believe that these opportunities represent a considerable amount of new ground with respect to required planning, implementation and coordination among economic development agencies, industry, and higher education in Nevada. However, these steps have the ability to move the Nevada workforce and its businesses forward into a better future. Accordingly, they warrant the effort. Such an effort is the explicit policy outlined in the Governor’s Workforce Investment Board plan in Nevada’s New Workforce for Economic Prosperity: Strategic Plan Framework 2010-2014.[5]

 This new emphasis in Nevada on “internal” strategies reflects the national fact that the majority of job gains are “homegrown” and occur in locally headquartered businesses[6]. Research from the Public Policy Institute of California shows that, nationwide, job relocations at the state level accounted for only 1.9 percent of job gains and 2.0 percent of job losses (based on the 1992-2006 data). Thus, the main sources of job creation and job destruction (contraction of establishments) occur “locally”.

To download the entire white paper click here: https://rcg1.com/publications-presentations/

White Paper #5 will also posted on the UNLV site at: http://go.unlv.edu/budget/docs


[1] “Nevada’s New Workforce for Economic Prosperity: Strategic Planning
Framework, 2010-2014.”, January 2010 Also see the two separate reports titled “Higher Education and Economic Development: The Necessary Foundation” and “Education and State Economic Growth: The Fundamental Linkage” at Office of the President, UNLV, http://go.unlv.edu/budget/docs.

[2] U.S. Department of Labor, Employment and Training Administration’s Five-Year Pilot, Demonstration and Evaluation Strategic Plan for 2007-2012.

[3] Harper-Anderson, E. Measuring the Connection Between Workforce Development and Economic Development: Examining the Role of Sectors for Local Outcomes. Economic Development Quarterly, 22 (2). May 2008, 119-135.

[4] As noted at the Nevada Commission on Economic Development website (www.diversifynevada.com), this envisions an Endorsed Manufacturing Skills Certification System recognized by both The Manufacturing Institute and the National Association of Manufacturers. As pointed out by Ray Bacon, Executive Director of the Nevada Manufacturers Association, the new Nevada emphasis on innovative training for manufacturing is welcome.

[6] Kolko, J. “Business Relocation and Homegrown Jobs, 1992-2006”. Public Policy Institute of California. September 2010.