Giving Compass' Take:

• Marcus Casey shares three ways for policy to boost the economy by helping companies upskill their workers. 

• How can funders best support the development of skills at scale? What partnerships would best advance this work? 

• Read a workforce development guide for donors


As technology advances, gaps often emerge between corporate needs and worker skills. These gaps can lead to vacancies as companies have difficulty finding workers to fill these positions. Unless skills are upgraded, these vacancies can become persistent. For example, 40 percent of American employers say lack of skills is the main reason for entry-level job vacancies, and almost 60 percent complain that workers are not sufficiently prepared, even for entry-level jobs, according to McKinsey & Company.

The labor market is currently reasonably tight, with a relatively low unemployment rate and steady job growth. But persistent vacancies due to skill mismatches are an important problem for businesses, workers, and the overall economy.

Policymakers ought to use this opportunity to support and expand these initiatives by fostering public-private partnerships aimed at improving skill matches between employers and employees among firms of all sizes. Potential approaches include:

  • Making federal and state tax credits available to firms who provide systematic retraining and upskilling programs for workers at their firms who are at-risk of displacement due to technological change. As my colleague Isabel Sawhill notes in her recent book, The Forgotten Americans, such “active labor market policies” may be a key mechanism to equipping workers with in-demand skills and matching them to employers that need them.  Larger tax credits can be directed at smaller firms to ensure they have the incentive to participate as well.
  • Supporting the establishment and expansion of apprenticeship and other on-the-job training programs by providing tax credits and funds for firms to bring in additional expertise to help train workers. Research presented in a recent volume  published by the Hamilton Project at Brookings highlights how apprenticeships help provide alternative pathways to rewarding careers that do not rely on the  typical “academic-only” educational track.
  • Provide funding, personnel, and other incentives to local universities and community colleges to partner with local employers to revise or develop coursework and programs that are better connected to employer needs.

Read the full article about upskilling the workforce by Marcus Casey at Brookings.