States Focus on Keeping Jobs in U.S.
By Allison Boyd and Adam Henken, CSG Graduate Fellows
Alan C. Walker, secretary of the Pennsylvania Department of Community and Economic Development, knows the importance of connecting a good education with economic development.
“(N)othing is more critical to ensuring the economic strength of Pennsylvania and to securing good-paying jobs for Pennsylvanians than the development of a well-educated and trained workforce,” said Walker, who has been invited to speak at The Council of State Governments’ policy academy, “U.S. Workforce Development: Building Capacity at Home,” during the 2014 CSG National/CSG West Annual Conference in Anchorage, Alaska, in August.
Pennsylvania’s workforce development efforts target businesses that might move jobs overseas as well as global companies looking for a U.S. location. Insourcing is the practice of building facilities in the United States and hiring Americans rather than basing operations abroad, according to Investopedia. States have been successful in targeting insourcing and foreign direct investment.
According to the Organization for International Investment, the U.S. has 5.6 million insourced jobs supporting average annual salaries of $77,600 and a total annual payroll of $438 billion. This includes 2.1 million manufacturing jobs that pay an average salary of $84,300. And a survey of senior executives by management consulting firm A.T. Kearney ranked the U.S. as the best place for foreign investment, according to an article in The Wall Street Journal.
Pennsylvania has been a leader of insourcing and workforce development with 267,500 insourced jobs, including 108,300 manufacturing jobs, the fourth highest of any state, according to the Organization for International Investment. Last year, the Pennsylvania Department of Community and Economic Development reported international business programs in the state flipped $7.3 million in appropriations into $795 million in export sales, creating 7,000 jobs.
Walker attributes Pennsylvania’s success to its diversity of manufacturing.
“Unlike most other states, no one sector accounts for more than 5 percent of the total number of firms,” Walker said. “And we’re placing a heavy emphasis on connecting our educational assets and our manufacturers to integrate new technologies to increase efficiency and productivity.”
Many workforce development programs focus on educating and training American workers to increase their skills and abilities, or workforce capacity. Others try to ensure efficiency, economic growth and productivity.
Most states have undertaken some kind of insourcing incentive program to encourage companies to invest in their own employees and in the American economy rather than moving abroad.
Pennsylvania, for instance, will invest $450 million in workforce development initiatives in the current fiscal year and is investing in its transportation infrastructure to augment its advantageous “keystone location” that gives companies fast access to the Eastern coast.
“Combining this with all of our efforts to more strategically align education and training with job openings will place Pennsylvania a step ahead of the competition as a top-performing state and global leader,” Walker said.
Pennsylvania isn’t resting on its past success. Gov. Tom Corbett created the Governor’s Manufacturing Advisory Council focus on sustaining the future of manufacturing in Pennsylvania.
“Too often, government only looks at the growth and health of the economy and industries in two- or four-year terms,” Walker said. “In order to sustain long-term growth, you need to plan strategically.”
The council outlined 15 recommendations to help Pennsylvania remain competitive in the global economy in a 2012 report to the governor and state legislature.
“Less than two years later, we have made substantial progress or started to implement initiatives to address more than 90 percent of the (council’s) recommendation, but we still have more work to do,” Walker said.
For more information on the CSG policy academy, U.S. Workforce Development: Building Capacity at Home, contact Pam Goins, director, education policy, (859) 244-8142, firstname.lastname@example.org