A U.S. Chamber Of Commerce Foundation Special Report THE .

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FALL 2017a U.S. Chamber of Commerce Foundation Special ReportTHESKILLSGAPHOW TO TRAINTHE 21STCENTURYWORKFORCESIEMENS USAEurojobs,American-styleWALMARTFilling theManagementPipelineWEGMANSCuttingTurnoveror Bust!JPMORGANBetter JobsThroughResearch

On the coverTeya RichardsA Wegmans bakery manager, Richards graduated from theRochester supermarket chain’s signature training program.

CONTENTSTH E GAPWhy and howAmerican businessesare taking on theskills gap.TH E FUTU R EDrilling down withDeveloping talent isn’tSiemens USA, Walmart, just about additionalWegmans, andskills; it’s about theJPMorgan Chase.right skills.08CEO’S NOTEPLUSTom Donohue:Who should trainthe employees ofthe future?Terra Verde: Starting small.Job development withKansas, Kentucky,Consumers Energy, andGeneral Assembly.2628C O V E R P H O T O G R A P H B Y S H A N E L A V A L E T T E . T H I S P A G E P H O T O G R A P H C O U R T E S Y O F S I E M E N S E N E R G Y, I N C .02CAS E STU D I ESA ME RIC A W ORKING FORWA RDU.S. Chamber of Commerce Foundation1

These should be flush times for American business. Interest ratesare low. So are energy prices, give or take a weather-related spike.The stock markets continue to climb. The most aggressive rollbackto regulations in a generation is under way. It’s a great time toexpand. But all too often, those plans are running into a headwind.The problem? If you talk, like we did, to many executives innumerous industries and in businesses of all sizes, you’ll hearthat the biggest stumbling block to growth is a shortage ofskilled workers.Welcome toThe Skills Gap.I L L U S T R AT I O N B Y P O LY G R A P H .2U.S. Chamber of Commerce Foundation A M E R I C A W O R K I NG FORWA RD

A ME RIC A W ORKING FORWA RDU.S. Chamber of Commerce Foundation3

The extent of the problem can be measured in several ways, but all indicate a mismatchbetween supply and demand. One assessment, fromCareerBuilder, notes that while there are 7.5 millionunemployed people in the United States, two-thirdsof employers can’t find qualified candidates for openpositions. That same report says that 60 percent ofemployers have vacancies that last 12 weeks or longer.At the current pace, according to research by theGeorgetown University Center on Education and theWorkforce, more than 5 million positions could gounfilled by 2020. The cost to the economy? About 160 billion a year. That’s lost revenue. Lost wages.And lost opportunity.As the U.S. Chamber of Commerce Foundationstates bluntly in a recent report, “The skills gap is athreat to American growth and competitiveness.” Oras Charlie Schilling, vice president of enterprise atGeneral Assembly, which trains (and retrains)workers for digital careers, puts it: “We believe verystrongly that the skills gap is the defining social andeconomic justice issue of our time.”Businesses confront the skills gap when they arehiring and can’t find employees with the knowledgeand training needed for the jobs being offered. Butcontrary to popular belief, the skills gap is not just awage issue. It can’t be solved simply by offering moremoney and waiting for the job applicants to show up.That won’t happen if the skills aren’t there insufficient quantity in the first place.To better understand the skills gap, the U.S.Chamber Foundation contracted with Burning Glass4Technologies, a Boston data analytics firm, to dissectthe labor market and the challenges that employersface in finding workers.Central to the firm’s analysis is the finding that theskills gap is not a single fault line cutting across theentire economy. “Rather than one canyon,” BurningGlass writes, “the gap is much more akin to a seriesof potholes, tripping up some industries and avoidedby others.”For some jobs, such as advanced positions in healthcare, there are simply more openings than applicants,and the extensive training required makes it difficultto quickly meet demand. In middle-skills positions,Burning Glass says, the skills gap is more complex.The job requirements have changed, and there hasn’talways been clear communication of those changesto talent suppliers. In addition, the Great Recessionchanged hiring practices. Employers found that theycould often hire people with higher skills than in thepast because the applicant pool was so large. Thosehigher skill expectations have remained in place,creating a skills gap where one might not havepreviously existed.For example, the ratio of openings to workers foroffice and administrative support—a key middle-skillscategory—has swung from 0.95 openings per workerin 2012 to 1.05 in 2016, according to Burning Glass.There used to be 400,000 more workers than open ings. Now, it’s the opposite, a fact that may be tied toemployers changing the qualification requirementsfor these positions.The language of training and retraining has its ownvocabulary. Increasingly familiar terms includeupskilling (training current employees for morecomplex jobs), workforce development (investing inor partnering with educational systems that trainyour employees), and career readiness (getting futureemployees interested in potential careers anddeveloping the requisite skills long before they areready to go to work). These programs all lead to thesame conclusion. The skills gap can be closed withinnovation, persistence, and attention to the needsof business.In too many sectors, there is a chasm between whatworkers have been trained to do and what businessesnow need them to do. It’s a utility company that can’tfind powerline workers or a fabrication business thatis desperate for welders. Anecdotally, this chasm isfrustrating for companies. But collectively, it signalsdeeper problems, not just for the economy but forsociety as a whole. Middle-skills jobs pay middleclass wages and create stable middle-class societies.Lose one and you lose the others.“From the employer side, they need to grow theirbusiness and compete in the economy,” says SarahSteinberg, program officer for JPMorgan Chase’sNew Skills at Work initiative, which is funding deepU.S. Chamber of Commerce Foundation A M E R I C A W O R K I NG FORWA RD

research into labor markets and career readiness.“From the worker side, it’s important that morepeople get education and training to achieve amiddle-class lifestyle.”The skills gap didn’t appear overnight, and it’s notgoing to disappear quickly, either. What’s clear is thatbusinesses and employer groups are taking thelead in creating solutions. They are upskilling theirexisting workforces, often in partnership withinnovative schools. Take Partners Healthcare, forexample. The sprawling Massachusetts hospitaloperator joined with Southern New HampshireUniversity to retrain employees for patient-centeredcare and a stronger emphasis on teamwork.These types of collaborations are bearing fruit.Using a model developed by the U.S. Chamber ofCommerce Foundation, businesses are also adaptingbest practices from supply-chain managementto build robust talent pipelines. And they arewidening their net, creating a larger supply ofskilled workers by tapping underutilized pools ofpotential employees.Even long-established training programs aregetting a fresh look. The scope of apprenticeshipsis expanding and could receive a substantial boostfrom an executive order signed this summer byPresident Trump. Importantly, the president’sproposal is encouraging the private sector toplay the lead role in developing these new jobtraining programs.Labor markets are complex, and companies areusing data analytics to better understand movementsand trends in employment and training. Thesefindings can then be used to offer workers betterinformation about career choices and promotechanges in our current educational models thatemphasize credentials rather than degrees. CargillMeat Solutions, for example, recently worked withofficials in Kansas and Wichita State University toprovide employees an online course in logistics.The skills gap exists for many reasons, but muchof the problem comes down to workers not beingproperly informed—early and often—about the skillsthey need to get a good job. In addition, today’s jobs,whether in factories, stores, hospitals, or offices, aredifferent. Technology and automation have removedmuch of the brawn from the factory and many ofthe repetitive tasks from the cubicle. Yes, certainkinds of jobs have been eliminated, but equallyimportant is that the ones that remain have beenprofoundly changed. Machine operators need toknow how to make adjustments from a computerreadout. A logistics technician needs to respond tostreaming traffic reports. Teamwork and problemsolving (the soft skills) are essential. Even retail,often seen as low-skill work, has been transformed.Successful merchants, such as the highly regardedBY THE NUMBERSA SKILLS GAP SAMPLERWORKFORCE67%The percentage of employers who can’tfind qualified candidates60%The percentage of employers who havevacancies for twelve weeks or longerCOLLEGE11%The percentage of business leaders whosay they are confident college grads willbe prepared for the workplaceTECH/SCIENCE14XThe rise of tech and the demand for big data,has created a skills shortage. For example,In 2012, there were just 1,061 job postingsfor data scientists. By 2016, that had grown14-fold, to 14,653.HEALTH CARE1.04mThe number of skilled health care jobscurrently unfilledSOURCE: Burning Glass Technologies; Gallup; CareerBuilder;US Bureau of Labor Statistics.A ME RIC A W ORKING FORWA RDU.S. Chamber of Commerce Foundation5

CASE STUDYTHE SKILLS GAP INMANUFACTURINGThe lack of properly trained workers canstunt economic growth. Here’s one sectorthat’s struggling to fill its talent pipeline.FACTFACT6 out of 103.5 Million and, thus, it can take longer to findqualified employees. but 2 million of those positions will gounfilled due to the talent shortage.open skilled production positions remainunfilled due to the skills gap manufacturing jobs must be filled in thedecade from 2015 to 2025 TIME IT TAKES TO RECRUIT HIGHLY SKILLED WORKERSSkilled productionworkersEngineers, researchers,scientistsOther workers70 Days94 Days48 DaysWHY DOES THIS MATTER?SKILLS GAP BOOMEvery manufacturing job creates 2.5 newpositions in local goods and services and for every 1 invested in manufacturing,another 1.40 worth of value is created inother parts of the economy.THE GAPThe skillsexecutives saycurrentemployees lack.Unfilled jobs due to the skills gap:600Kvs.in 20112Mby 202570% 69 % 67% 60 %of executives saycurrent employeeslack tech/computer skillsof executives saycurrent employeeslack problemsolving skillsof executives saycurrent employeeslack basictechnical skillsof executives saycurrent employeeslack math skillsTHE IMPACT82% 78% 69 % 62% 48%of execs say theskills gap willadversely affecttheir ability tokeep up withdemandbelieve theywon’t be ableto implementnew techand increaseproductivitysay the talentshortagewill undercutcustomerservicecontendinnovation andthe developmentof new productswill be harmed.SOURCE: Deloitte/The Manufacturing Institute6U.S. Chamber of Commerce Foundation A M E R I C A W O R K I NG FORWA RDsay theskills deficitwill slowinternationalexpansion

super market chain Wegmans Food Markets, arefanatical about training their workers in the softskills of customer service.For years, there’s been a disconnect between whatbusinesses want new employees to know before theyshow up for work and what the applicant poolactually knows. Consider this recent Gallup poll: only11 percent of business leaders said they are confidentthat college graduates are well prepared for theworkplace, while a full 96 percent of chief academicofficers of colleges and universities report beingsomewhat or very confident that they are preparingstudents for success in the workplace.The skills gap cuts across many sectors, includingthose professions that require advanced degrees. Butfor many of these positions in the so-called middleskills sector, the gap can be linked to the decline invocational training. In the U.S. educational system,with its emphasis on attending college, this type of jobtraining has suffered. When it comes to technicaleducation, the United States is an outlier comparedwith other developed nations. According to 2013 datafrom the Department of Education, 46 percent of highschool students have taken at least one vocationalcourse. But only 19 percent of U.S. students concentrateon vocational studies, commonly called CTE or careerand technical education.More is needed, and business leaders also say they’rebest qualified to create programs with the highestvalue. “There’s a lot of discussion in Washington andthroughout the country in terms of federal programsand agencies that are trying to get at vocationaltraining,” says Judy Marks, the CEO of Siemens USA,which has a thriving apprenticeship program that haswon national recognition. “But we believe we’re bestat trying to define the skills we need.”Closing the skills gap involves two key components.Both address the overall supply of workers with thesemiddle-skills credentials. For people already in theworkforce—whether employed in lower-paying jobs,unemployed, or underemployed—there is a vital needfor training or retraining. Businesses are investing innew ways of training, often tightly focused oncredentials demonstrating that a person has the hardand soft skills to do the work. Many of these businessesare working with community colleges and privatesector companies to design courses that bypass theconventional associate’s or bachelor’s degree.There is also a more concerted effort to increaseawareness of and interest in these good middle-skillsjobs among young people—a stepped-up version ofcareer day. It’s a recognition that the days when ayoung person went to work at a factory because hisfather or mother worked there are over.Business leaders have always been concernedabout finding skilled workers. But what’s shifted inrecent years is the growing recognition that industrymust be more assertive in leading the changes and inclearly defining what it needs and what it doesn’tneed when it comes to training workers.The U.S. Chamber of Commerce Foundation is alsoplaying a leadership role here. Their Talent PipelineManagement Academy has spread to more than 60communities in 17 states. And their Center forEducation and Workforce is focused on theintersection of education reforms and workforcedevelopment. It’s also working to strengthen theentire pipeline through the K-12 system withconsistent engagement with schools.The public sector has a role to play, too. Butbusiness organizations are positioned to take theleadership and push for fundamental changes intraining. The goal? Giving American workers theskills to obtain good jobs, build stable lives, and helpcompanies prosper in the global economy.In the following pages, you’ll read about howbusinesses and the organizations that supportthem are tackling “the gap.” These stories arepowerful and transformative. The approaches vary,as you’d expect, but they share a commitment todemand-driven workforce development, both shortterm and long-term, as well as an understandingthat the best solutions to help businesses andworkers will come from businesses.“It’s important that more peopleget.training to achieve a middleclass lifestyle.”SARAH STEINBERGProgram Officer, New Skills atWork Initiative, JPMorgan ChaseA ME RIC A W ORKING FORWA RDU.S. Chamber of Commerce Foundation7

CASE STUDIESGood jobs are going unfilled becauseof the lack of trained candidates.Here’s how companies are takingmatters into their own hands.1. ApprenticeshipsSIEMENS USA2. UpskillingWALMART3. New OpportunitiesWEGMANS4. Career ReadinessJPMORGAN CHASESOLU8U.S. Chamber of Commerce Foundation

THELUTIONS

ApprenticeshipsSiemens USAThe challenge: finding enough skilled workers forits advanced manufacturing facilities in the States.The solution: a German-style apprenticeship programadapted to the U.S. market.Chad Robinson’s parents were surprised when he told them about his plans forlife after high school. He was among the top students in his class. At one point his planhad been to study engineering at a four-year university. Yet Robinson’s plans hadchanged. He was now going to learn how to be a machinist at Siemens Charlotte EnergyHub in North Carolina, where more than 1,500 people make turbines and powergenerators that are sold around the world. ¶ He would, in other words, be an apprentice.¶ It’s an intensive four-year commitment, attending classes at the local communitycollege while clocking in at Siemens USA, where he would be mentored and monitoredclosely by the company’s skilled workforce. Siemens’s apprenticeship program isparticularly robust. It provides three times more on-the-job training and more than 10times more college hours than are typically required by programs registered throughthe U.S. Department of Labor. Siemens covers tuition and even provides a paycheck. ¶And after graduation, the reward is clear: in addition to having no student debt, Robinsonwill begin a fulfilling job at Siemens with advancement potential and starting pay ofroughly 55,000 a year. ¶ “It’s been drilled into many young people that attending afour-year university is the only way to be successful,” Robinson says. “That’s not thecase. There are so many different pathways you can go.”10U.S. Chamber of Commerce Foundation A M E R I C A W O R K I NG FORWA RDP R E V I O U S P A G E P H O T O G R A P H B Y T O M G E N N A R A F O R C O N S U M E R S E N E R G Y. R I G H T P H O T O G R A P H B Y L O G A N C Y R U S .1

Roger CollinsApprentice Supervisor,Siemens CharlotteEnergy HubCharlotte, NC

ADVICETHEAPPRENTICE(SMALL BUSINESS EDITION)Apprenticeships aren’t just for bigcompanies or those that hire fortraditional skilled trades. Terra Verde, a60-person cybersecurity firm in Phoenix,started an apprentice program this year,with plans to expand. Edward Vasko,the company’s CEO, offers these tips forcompanies looking to find new sourcesof talent.Start SmallTerra Verde began with oneapprentice. It plans to sharplyexpand the program to about adozen in 2018, tweaking as it goesbased on early experiences.Know Your Talent NeedsTerra Verde adjusted its basicrequirements for apprentices afterrealizing that applicants needed toshow a higher level of skill andinterest in technology. It wantscandidates to have at least somecommunity college and a desire forcredentials rather than the drive topursue coursework for a traditionaldegree. “They don’t necessarilywant to take a liberal arts courseload; they really want to get intothe workforce,” Vasko says.Recruit. Recruit. Recruit.Terra Verde has begun extensiveoutreach programs, working withcommunity colleges and evenpublic schools to make sure itsapplicant pool is as wide and deepas possible.Investments to Determine GoalsThe state of Arizona pays for thecertification training, but TerraVerde pays for the salaries of theseworkers as they learn. “I think it’simportant that the candidatesunderstand the level of investmentin terms of skills, and of thecertification process,” Vaskso says.“My objective out of this is that wehave long-term, loyal employeeswho understand and execute ourmission flawlessly and are stillwith us 25 years from now.”12There’s also a lot to be said in favor of the pathway that Robinsonhas chosen by focusing on what are now called middle skills.Looking ahead, middle-skills positions in fields such as advancedmanufacturing, information technology, energy, and health carerepresent half of all anticipated job openings through 2022. Theyrequire education beyond high school yet less than a four-year degree,along with strong technical skills. And they pay well, with many jobsearning close to six figures or more.Employers are rediscovering apprenticeships as one way of closingthe skills gap. Most successful apprenticeships, however, have evolvedfrom the more informal work-learning arrangements of the past. Today’sapprenticeships are more

states bluntly in a recent report, “The skills gap is a threat to American growth and competitiveness.” Or as Charlie Schilling, vice president of enterprise at General Assembly, which trains (and retrains) workers for digital careers, puts it: “We believe very strongly that the skills gap is the defining social and

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STEP 4: Attach the chamber base to the stir plate using the Velcro adhesive. Place 5mm magnetic stir bar in the chamber. o Make sure the stir plate speed is set such that the stir bar is not bouncing inside the chamber. Cap chamber with the chamber top printed piece (Fig. 4). Figure 4: The image shows the OPN O 2 Electrode Chamber securely attached to a magnetic stir