Minnesota’s Economic News — W/E 7/1/22
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Why it’s time to hit reset on ‘vocational’ education. As Boomers retire, the number of unfilled jobs in Minnesota is expected to explode from 60,000 to as much as 280,000 in just five years.
For decades, Minnesotans have thought of our state as having one of the nation’s most dynamic economies. But this complacency is misplaced. Today, Minnesota faces an economic crisis that will pose a serious threat to our prosperity unless we act quickly.
The problem is a worker shortage that is forecast to balloon from the current 60,000 to between approximately 240,000 to 280,000 by the end of 2022. Most unfilled jobs will be skilled technical positions in sectors that make up the backbone of our economy, including manufacturing, construction, medical devices, health care, agriculture, energy and mining.
Absent sufficient improvements in productivity, this workforce shortfall will likely constrain state GDP growth by roughly $33 billion, reduce local tax revenue by about $2.2 billion, and lead to about $12 billion annually in unrealized personal income, according to Scott Peterson, board chair of RealTime Talent, a business-led cross-sector collaborative that uses data to improve the alignment of the workforce ecosystem in Minnesota. Not only will per capita income fall, but it will become much harder to attract new industries.
Our state faces a perfect storm in its talent development pipeline. In recent years, employers have struggled to find enough workers with in-demand technical skills. But now—as the exodus of retiring baby boomers begins—it’s becoming clear that relatively few young people are prepared (or desire) to take their places. Out-migration is exacerbat- ing the problem. Each year, domestically, 8,000 more workers leave Minnesota than migrate here. Including foreign immigrant workers, workforce growth is essentially flat.
Bruce Peterson, executive director of the Minnesota State Energy Center of Excellence, explains what all this means for his industry: “More than 40 percent of technical workers in the utility industry are eligible to retire in the next five years,” he says. “But if you take 40 percent of the people out of the power plants, how do you keep them running? None of us can function without electricity.”
The heart of the problem is a serious misalignment between labor force supply and demand. Today, about 50 percent of Minnesota high school graduates start on a four-year college road—often because they mistakenly believe a baccalaureate degree is vital for success. Yet only 22 percent of jobs in the state require a four-year degree or more, according to the Minnesota Department of Employment and Economic Development. As
a result, some who earn such a degree end up underemployed. Others drop out, without in-demand skills and saddled with student debt.
At the other end of the spectrum, many young people leave high school today without any post-secondary aspirations or marketable skills. They will find it hard to achieve a middle-class way of life. Meanwhile, ironically, financially rewarding jobs in in-demand industries are going begging.
Minnesota does have a number of advantages in confronting its workforce challenges. These include the nation’s third-highest workforce participation rate—69 percent—and a relatively high average education level. In addition, many organizations—including educational institutions, non-profits and state agencies—are taking steps to address our workforce development crisis. Unfortunately, coordination is lacking. We need a comprehensive workforce strategy whereby employers, educators, policymakers and nonprofits pull together to address our challenges.
But success will be elusive unless Minnesota’s employers take a strong leadership role, notes Peterson. Today, educators and state agencies strive to anticipate the skills that will be in greatest demand in the future, but they have generally lacked hard data and long-term forecasts from employers. Going forward, a comprehensive workforce plan must ensure that employers in key sectors like manufacturing, medical devices and construction clearly articulate their short and longer-term skills needs, so educators can more effectively translate these into programs and curricula that will produce the workforce Minnesota requires.
Efforts are underway to make that happen
Later in 2018, RealTime Talent, in collaboration with four major Minnesota business organizations, will release a statewide strategic plan to reignite our state’s talent engine and bring work- force demand and supply into closer equilibrium.
To help set the stage, on April 24, 2018, Center of the American Experiment will sponsor a forum on industry-education partnership featuring Kyle Hartung, director of Boston-based Pathways to Prosperity (PTP). (More on that below.)
What’s clear today is this: To succeed in the dual goal of solving our workforce crisis and ensuring a path to the middle class for all students, we must rethink how we deliver education at both the K-12 and post-secondary levels. In place of the cultural message that success requires a four-year college degree, we should encourage young people and their parents to think in terms of academic and career pathways that span grades 9 to 14. These should be framed as “career ladders,” and should include the diverse positions to which pathways can build five to ten years after post-secondary training is complete.
This new approach will require dropping the outdated language of “vocational education,” generally interpreted as second-best. Employers must also work to counter the image of manufacturing, energy, construction and similar fields as dirty and dangerous, and present them as the highly skilled and technically sophisticated enterprises they are.
Finally, we should ensure that young people know these in-demand careers can be financially rewarding. Center of the American Experiment’s September 2017 report entitled “No Four-Year Degree Required: A look at a selection of in-demand careers in Minnesota” can be a valuable resource here. The report, by labor economist Amanda Griffith, reveals that young people who choose alternatives to a four-year college—including two-year degrees, apprenticeships and occupational certificates—often have higher median lifetime earnings than four-year degree holders.
Work-based learning is key
Minnesota has much to learn from other states as it confronts its workforce challenges. One approach that is bearing fruit elsewhere is the concept of “work- based learning.”
Work-based learning, which integrates academic and workplace training, is a “sequenced and coordinated set of activities through which students gain increasing exposure to the world of work,” according to Pathways to Prosperity. It begins as “career awareness” in the middle grades, with guest speakers, robotics camps or field trips. In high school, students move on to “career exploration,” pursuing mentorships or job shadowing that connect to their emerging interests. The final stage, “career preparation,” takes place in high school or post-secondary, and includes compensated internships, apprenticeships or on-the-job training in specific occupations.
Successful models from other states
Colorado’s innovative approach to work- force development includes “CareerWise Colorado,” a non-profit, public-private partnership dedicated to “building the middle class by closing the skills gap through experiential learning.”
The initiative grew out of Gov. John Hickenlooper’s Business Experiential-Learning (BEL) Commission, composed of business and government leaders. The Commission’s mission is to develop a skilled talent pipeline for hard-to-fill positions in the state.
The Commission regards the following elements as central to effective work-based learning programs: 1) businesses view themselves as producers, not just consumers, of talent; 2) career education is competency-based, not course-based; and 3) career exploration begins as early as elementary and middle school.
CareerWise Colorado helps employers set up three-year, paid apprenticeships in skilled fields such as advanced manufacturing and information technology. Each week, participating high school students combine two to three days of classroom learning with two to three days of on-the-job training. They can also learn soft skills such as workplace expectations
and etiquette in a “professionalism boot camp.” Students earn credits toward high school graduation, as well as post-secondary credits or industry credentials. A third year of apprenticeship after high school prepares them to begin work immediately, or go on to complete a two-year or four-year post-secondary degree.
CareerWise Colorado’s work includes recruiting students for apprenticeships, training supervisors and apprentice-coaches, and leading outreach to statewide trade associations. The organization also advises employers and schools as they create career competencies and align goals.
CareerWise Colorado’s apprenticeship program began in 2017 with 250 students. As the program grows, additional career pathways will be added. By 2027, the goal is to have 20,000 young people—10 per- cent of students in their last two years of high school—involved in apprenticeships.
Kentucky is another state with an innovative work-based learning model. There, the grassroots “KY FAME” (Federation for Advanced Manufacturing Education) initiative was launched in 2008 by a handful of frustrated employers who resolved to “grow their own talent.”
The employers partnered with a nearby technical college to design a two-year Advanced Manufacturing Technician (AMT) program to meet their greatest skill need. Students in the dual-track, apprentice-style program include recent high school graduates, veterans and full-time workers seeking to improve their skills.
AMT students spend two days a week in college classes, and work for their employer-sponsor three days a week. Their course of study includes academic subjects like English and math; technical skills like pneumatics and welding; and soft skills like teamwork and timeliness.
Graduates earn an industry-recognized Associate of Applied Science degree, and most finish debt-free since employers usually pick up all costs while a student works. To date, about 250 Kentucky students have earned AMT degrees, and more than 650 are currently enrolled in FAME-endorsed programs.
Thanks to the KY FAME initiative’s resounding success, today the association has ten regional chapters and about 250 employer members throughout the state. Each chapter partners with a nearby community and technical college to customize the AMT program to meet its own members’ talent needs, and several have launched other dual-track training programs.
Beyond this, regional FAME chapters are now promoting manufacturing to local students in grades 8 through 12. In 2017, its employer members offered summer externships to 135 high school teachers of subjects like English and social studies. The goal was to acquaint teachers with 21st-century manufacturing, and equip them to encourage their students to explore a manufacturing career.
In Indiana, a post-secondary institution—Ivy Tech Community College—is leading the way in workforce development. With 45 campuses and site locations, Ivy Tech is the largest single-accredited statewide community college system in the nation.
Ivy Tech is a national leader in coordinating academic programs with on-the-job training, to ensure that experiential learning is valued and can lead to an academic certificate or degree. The goal is to make sure the institution is offering exactly what employers need, and that all credentials are “stackable,” that is, can be applied toward more advanced certificates or degrees.
For example, Ivy Tech collaborates with construction-trade unions to offer an Associate of Applied Science degree. This credential incorporates the on-the-job training required for a journey person’s card with the general education classes required for an associate’s degree. It is available to workers in 15 trades, from electricians and bricklayers to operating engineers and iron workers. The college offers a similar interdisciplinary associate’s degree in advanced manufacturing.
Ivy Tech works hard to attract more young people to skilled, high-demand careers. For example, the college is piloting three-to-five-day summer camps for 13- to 14-year-old middle-school students. Local employers provide pizza and T-shirts for the kids, and plan fun, engaging activities like using computer-assisted design and 3D printing to make a cup.
In Ivy Tech’s two-year pilot programs for high schools, students split their time between academic courses at school and a manufacturing lab at the college. The first year, they do job shadowing. The second year, they cycle through four businesses, doing “real work” for eight to 10 hours a week. They graduate from high school with a certificate or technical credential. from Ivy Tech that stacks into an associate’s degree.
Indiana policymakers have determined that 60 percent of their state’s workforce must have post-secondary credentials to be competitive in the future. Ivy Tech’s five-year plan requires the college to assess progress on two key goals: First, at least 80 percent of the institution’s programs in key economic sectors will be at equilibrium with the market to meet the needs of employers; and second, 80 percent of Ivy Tech graduates will be at or above Indiana’s median income one year after graduating.
Minnesota’s future plans
On April 24, 2018 Kyle Hartung of Pathways to prosperity will bring a national perspective on successful workforce development to Minnesota. His Center-sponsored presentation will be entitled “The Future Can’t Wait—The Imperative of Industry/Education Partnerships to Meet the Needs of the Future Workforce.” Hartung will discuss what’s at stake in getting workforce develop- ment right, and describe principles for effective design and implementation and hurdles to be overcome.
Created in 2012, PTP—a project of Jobs for the Future and the Harvard Graduate School of Education—has a network of 14 states and 60-plus regions. The organization collaborates with partner institutions on demonstra- tion projects around the country. Its expertise includes setting up grades 9 to 14 career pathways; aligning academic curricula and work-based learning; advising intermediary institutions; creating metrics and analytics to ensure alignment with employers’ real needs; and encouraging favorable public policies
In Minnesota, PTP has supported the Greater Twin Cities United Way’s (GTCUW) work in building regional infrastructure and capacity for the design, implementation, and scaling of 9-14+ college and career pathways in Minneapolis, St. Paul, Bloomington, White Bear Lake, and Burnsville. It has also coordinated with GTCUW to support a Bush Foundation grant to expand this work to Southwest and South Central Minnesota.
A state-wide workforce initiative for Minnesota
For the people of Minnesota, the best news is this: A ground-breaking statewide strategic workforce development plan is now in the works.
Commencing in early 2018, four major business roundtables—the Itasca Project, the Minnesota Business Partnership, the Minnesota Chamber of Commerce and Greater MSP—have been meeting under the auspices of convener RealTime Talent to devise a long-term strategic framework to enhance Minnesota’s economic growth.
The framework will include analytics, metrics and tools to identify short-and long-term workforce needs in key industry sectors. It will likely take the form of a five-year plan that will improve these sectors’ ability to coordinate their efforts across school districts, higher education institutions, state government agencies and philanthropy, to enable more effective cross-sector talent development solutions. Later in 2018, the business leaders involved anticipate holding public forums to engage key stakeholders in ac- tion planning. They will also potentially engage with state policymakers, heading into the 2019 legislative session.
“We’re not talking about some centrally planned economy,” emphasizes RealTime Talent’s Peterson. The purpose is “to strengthen coordinated efforts to support the talent market, including both small and large employers,” he says. The end goal is to better align business-led workforce efforts with existing initiatives to improve the attraction, retention and development of workforce talent.
“If you give decision-makers the information they need, they will act in their own best interests,” Peterson points out. “This should result in better alignment between the demand and supply of talent—driving more efficient use of human capital, creating better-paying jobs for all, stimulating more strategic philanthropic investments, and substantially accelerating Minnesota’s economic growth.”
Enhanced prosperity, more effective use of our young people’s talents, and a solid career route to middle-class status? All Minnesotans should be in favor of that.