By Jennifer Burnett, CSG Program Manager, Fiscal and Economic Policy
One of the first stops President Obama made after his 2014 State of the Union address in January was a General Electric plant in Waukesha County, Wis., where he drove home a key part of his agenda—retraining workers as way to stimulate the economy and lower unemployment.
“What we need to do is look at where are the jobs and take a job-driven approach to training,” Obama told the audience. “That’s what you’re doing here in Wisconsin.”
General Electric’s job training efforts were a good backdrop for Obama’s speech. According to White House officials, the company has worked with state workforce programs to bring together employers, colleges, labor unions and other community-based groups to train workers in advanced manufacturing, construction and other industries.
That kind of innovation in training its workforce was borne of necessity.
A 2011 study by Deloitte for the Manufacturing Institute, found that American manufacturing companies cannot fill as many as 600,000 positions—or 5 percent of manufacturing jobs—due to a lack of qualified candidates. The survey, based on a nationally representative sample of 1,123 executives at manufacturing companies, found that 67 percent of manufacturers have a moderate to severe shortage of available qualified workers. In addition, 56 percent anticipate the shortage to increase in the next three to five years.
“These unfilled jobs are mainly in the skilled production category—positions such as machinists, operators, craft workers, distributors and technicians,” Emily DeRocco, president of the Manufacturing Institute, said in a press release. “Unfortunately, these jobs require the most training and are traditionally among the hardest manufacturing jobs to find existing talent to fill.”
Technological advancements, particularly in the manufacturing area, mean that workers need more specialized skills to both get and keep jobs. To get to those skilled workers, companies must make a decision: Look for new, qualified employees or retrain their current workforce.
‘Fast Forward’ Training
Several states are ahead of the federal government in stressing workforce retraining.
In 2013, Gov. Scott Walker signed Wisconsin Act 9, which created the Wisconsin Fast Forward initiative. The initiative allocates state funds to help companies train new and current employees, administered through a grant application program.
Once the law was signed, things moved quickly: Within six months, the Department of Workforce Development established the Office of Skills Development to administer the program, designed the grant program, developed applicable administrative rules and issued the first round of grant announcements in November 2013.
The parameters of the program were developed with input from a number of stakeholders.
“The first thing we did was that we met not just the workforce development systems, but with the economic development corporations, companies, the chambers of commerce, and the technical and community college systems so that we could hear from both the supply and the demand sides of the labor equation,” said Scott Jansen, administrator of the Wisconsin Department of Workforce Development, Division of Employment and Training.
While the state has and will continue to administer programs using federal funds, this is the first time Wisconsin has allocated money for these kinds of programs without federal funding assistance, according to Jansen. The first round of grants allocated $2.7 million; that amount will climb to more than $7 million in the next round, Jansen said. A total of $15 million has been authorized for the 2013–15 biennium.
The initial round of grants will focus on training workers in the manufacturing, construction and customer service sectors. Employers will play a key role in how the training programs are designed and administered. While the cost of training per employee factors into the scoring criteria during the grant evaluation process, the program doesn’t include a funding cap per employee. Employers can apply for up to $400,000 per year.
“The employers themselves can define where skills gaps or skills needs exist and where other types of training programs, technical education or otherwise, weren’t producing the skilled workers that they needed to either continue operations or expand their operations,” said Jansen.
“When we first approached Gov. Walker with this concept, he reiterated that he wanted an industry- and demand-driven training program where an industry or business partner would be the applicant,” said Jonathan Barry, deputy secretary of the Wisconsin Department of Workforce Development.
While employer input is essential to the program, developing ways for employers to collaborate with other partners is another key component.
“We encourage them and incentivize them through these grants to bring on program collaborators—it could be a technical college, it could be a workforce development board—to not only define the training but then deliver the training and put together the facilities to make that happen,” said Jansen.
In the first round, he said, more than 80 employers are participating with collaborative partners.
While state and federal training programs typically rely heavily on community colleges as partners with the private sector, Wisconsin’s grant program led to a more diverse set of collaborators.
“We thought that community and technical colleges would be the only collaborative partners, but we got some workforce development boards, some nonprofit agencies, groups like the Urban League as partners. We had trade unions that came in and partnered with employers around some of the construction skills,” said Jansen.
“That’s exactly what we wanted to see—put the grants out there and see what kind of collaborative relationships would come together,” said Barry.
One of the criticisms of federal training programs has been that they are not tracked closely enough for results. A 2011 Government Accountability Report found that, “due to the American Recovery and Reinvestment Act of 2009, both the number of—and funding for—federal employment and training programs have increased (since a 2003 report).” The report, however, goes on to say “little is known about the effectiveness of most programs.”
The architects of Wisconsin Fast Forward don’t want to run into the same problems federal programs have with ambiguous results. It has a plan to ensure its programs are doing what they are supposed to do.
“Ultimately, what we are going to do is track the people that go through training for two years though our (unemployment insurance) wage data so we can understand, not only did they get hired, but did they stick? And if they didn’t stick, did they get rehired by another employer?” said Jansen.
“In addition, we want to know—did they receive a wage increase as a result of having another skill to the benefit of the employer? We can put together those kinds of metrics to evaluate the effectiveness of what we are trying to incentivize,” said Jansen.
Training for the Future
Not too far from Wisconsin, Ohio launched an employer-driven training program in 2013—the Ohio Incumbent Workforce Training Voucher Program.
According to David Goodman, director of the Ohio Development Services Agency, the program provides grants to Ohio businesses looking to train their current workforce to prepare them for the jobs of the future.
“We need to keep pushing ahead to ensure that our job creators have the resources and skills they need to be competitive in a global economy, and that starts with our employees,” said Goodman.
On a reimbursement basis, the program provides direct financial assistance to offset a portion of an employer’s costs to upgrade the skills of its existing workforce. Eligible employers must demonstrate that, by receiving funding assistance through program, their business will “not only obtain a skilled workforce but will improve their company processes and competitiveness,” according to program materials.
“This training program helps get Ohio workers the assistance they need so their companies and the state of Ohio can continue to grow,” said Goodman. “The state is building stronger employees, therefore building a stronger workforce.”
The training program is funded from casino licensing fees and is growing. $20 million was allocated in the 2013 fiscal year and $30 million has been made available for the 2014 fiscal year. Another $30 million will be available in 2015. In tight budget times, making sure those dollars are being used appropriately is paramount.
Goodman said the Ohio Development Services Agency reviews company applications to make sure the businesses meet every requirement of the program.
“To assure accountability, the funding is distributed on a refundable basis,” he said. “Training must be completed and paid for before the company can request reimbursement.”
The program reimburses an employer for up to 50 percent of the eligible training costs, up to $4,000 per employee.
One of the program’s recipients, Banner Metals Group of Columbus, Ohio, used the training dollars for specialized training that has advanced their production.
“This training was an invaluable tool for our business,” C. Bronson Jones, vice president and general manager of Banner Metals Group, told the agency in a testimonial. “Without this assistance in funding, our training would not have happened.”
Superb Industries Inc. in Sugarcreek, Ohio, used the reimbursement to help finance the training cost related to a computer system upgrade. And Hartzell Industries in Piqua, Ohio, provided 28 employees with 23 different training areas.
“This program is exactly what companies need to take their expertise to the next level and remain competitive,” said Goodman.
Changing Federal Programs
While at the General Electric plant in Wisconsin, Obama announced an initiative to evaluate existing federal programs, putting Vice President Joe Biden in charge and stressing the need for looking to what states are doing. As part of the federal review of training programs, Obama said that Biden will reach out to local communities for ideas.
“Let’s find what local programs do best and duplicate it and expand it,” Obama said.
“Our economy’s changing,” Obama said. “Not all of today’s good jobs need a four-year degree. But the ones that don’t need a college degree do need some specialized training.”