Giving Compass' Take:

• Harry J. Holzer explains the importance of workforce development policy, and highlights available tools that the United States could leverage. 

• How is equity related to workforce development? How can funders help to enable both expanded access to higher education and greater availability of programs that facilitate upward mobility? 

• Read about the potential of tech apprenticeships. 

Workforce development policies, programs, and practices are critical to any effort to improve economic productivity, income mobility, and equity among American workers.

Productivity growth in the United States has mostly stagnated in the past five decades, except for the decade growth from the mid-1990s to the mid-2000s that is associated with the digital revolution. All else equal, rising productivity is associated with rising family incomes and workers’ earnings—though perhaps to a lesser extent in recent years than was true historically. And most economists believe that workers’ skills and education are key components of productivity growth (see, e.g., Baily 2015; Stansbury and Summers 2017).

Labor market inequality in the United States has also grown dramatically in the past four decades. Nowhere is this more evident than in the huge increase in earnings gaps between workers with bachelor’s degrees or higher and those with less education. The earnings gap between these groups roughly doubled between 1980 and 2000 and has remained very high since that time.

Individuals who obtain a bachelor’s or higher degree tend to do quite well in the U.S. labor market over their careers. This is true despite some early struggles they have with paying down student debt and obtaining their first well-paying jobs, especially if they enter the job market during a recession, such as the one the country is in now. Even though the real earnings of young college graduates have not grown much since 2000, the earnings of non-college-educated workers have stagnated over the past four decades, and have even declined among some groups, like non-college-educated men.

What has driven the growing divide between those with college degrees and those without who are increasingly being left behind? While many factors have contributed to stagnating earnings and rising inequality, there is no question that many workers without a bachelor’s degree in the United States have too few of the skills and credentials that employers seek and reward in the labor market.

Research suggests that well-paying jobs for workers who have a high school diploma or less have mostly disappeared. To obtain well-paying jobs that are generally in high demand—in fields like health care, advanced manufacturing, information technology, transportation, logistics, and many parts of the service sector—workers need at least some postsecondary education and training, and a range of skills, both general and occupation specific, that employers demand in such work. But too few Americans without a bachelor’s degree have such skills, especially in the most disadvantaged populations.