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Fix the Workforce System to Aid the Jobs Recovery

Greater flexibility and freedom in the workforce system can improve the post-pandemic employment picture.
March 2, 2021
Featured Image
A healthcare worker walks at a Covid-19 vaccination drive-thru site at Hard Rock Stadium in Miami, Florida on February 22, 2021. - US President Joe Biden will lead a remembrance ceremony Monday to mark the dark milestone of 500,000 American Covid-19 deaths, but plans for easing the lockdown in Britain and a surge in vaccinations worldwide prompted growing optimism. (Photo by CHANDAN KHANNA / AFP) (Photo by CHANDAN KHANNA/AFP via Getty Images)

It is no secret that the COVID-19 pandemic has left some deep wounds in the American economy. Even as the economy recovers, millions of jobs that existed before the pandemic will not be making a comeback. And macroeconomic shifts—like the large-scale adoption of remote work, changes in consumer behavior that may be permanent, and increases in the automation of certain tasks—mean that many jobs simply won’t return.

We need creative approaches for helping to heal the job market and spark opportunity for those who are now, or will be soon, struggling to reenter the workforce. One bright spot is that the total number of available jobs surpassed pre-pandemic levels this January; jobs are available for Americans with the training and credentials needed to qualify for them in areas such as warehousing, construction, and delivery services, among others.

The Economic Insights Tracker created by Raj Chetty’s Opportunity Insights team demonstrates that the nation’s employment recovery is becoming increasingly unequal when comparing the rates of employment of high-wage workers with middle and low-wage workers. Workers making in excess of $60,000 per year have experienced rapid reemployment and even increases in total employment, whereas middle-wage workers are still below pre-pandemic numbers. Perhaps most concerning is that people making less than $27,000 per-year have seen a whopping 22 percent decrease in employment compared to pre-pandemic levels, and it is trending downward. This data suggests that our publicly funded workforce system—the American Jobs Centers (AJC), training, and supportive service programs funded through the federal Workforce Innovation and Opportunity Act (WIOA)—needs to prioritize middle- and low-wage workers to avoid the rolling tide of recovery from sinking damaged ships instead of lifting them all.

The solution to the present challenge is not as simple as redirecting unemployed Americans to AJCs or online job boards with open applications. Instead, we should be making strategic investments in workforce retraining and a redesign of the WIOA-funded workforce system in order to meet this demand for skills development. In our recent report on preparing for the post-pandemic workforce, we outlined a number of policies that would help increase the flexibility of WIOA services to make them more responsive to worker needs and a rapidly evolving, post-pandemic job market.

Other institutions are also rising to this challenge. The Federal Reserve Bank of Atlanta has developed a tool that visualizes the lifetime income determinations of a given occupation based upon the in-demand jobs in a given occupational cluster in a state. Although originally intended to help those who may have grown up in poverty and on government assistance to understand the value of investing in training for a career over a minimum wage job, this tool, or one like it, could be used as part of a job-training or career-exploration process to help displaced workers find new jobs at good wages. This kind of information, when overlaid with the expected length of training, paints a more vivid and actionable plan for someone who may be on the workforce sidelines and wants to explore a different career from the one he or she was forced to leave due to the pandemic. It is about maximizing worker choice in the given realities of the labor market.

Harvard University’s Skillbase website is another example. The site aims to address the skills gap that displaced workers may find themselves in when facing a labor market that may have changed substantially since the last time they were looking for work. Skillbase connects people with online, skill-enhancing resources. It can also serve as a place to start exploring an entirely new career in a different industry by learning key skills that such a change would require. The Commonwealth of Massachusetts is currently piloting Skillbase and Harvard’s Weiner Center, which oversees the project, is available to assist other states and localities interested in exploring the tool.

Rapid-retraining programs and the wraparound services required to ease “last-mile” obstacles to gainful participation in those programs—such as transportation—constitute another important pillar for reemploying Americans. AEI’s Reemployment Roadmap underscores the importance of providing workers with access to Personal Reemployment Accounts (similar to the existing Individual Training Accounts), that workers can use to fund training and education. PRAs differ from ITAs in that they would also be able to fund transportation, child care, or relocation costs that can help facilitate a return to work. These resources, combined with the tools and reforms noted above, constitute a new paradigm that would create a more worker-directed approach to gaining not just jobs, but careers with potential for long-term development and growth.

The pandemic has helped to make long-overdue reforms of the WIOA system almost unavoidable if we wish to give displaced workers the flexible assistance they need to restart careers. It is worth remembering that while millions of jobs have disappeared many millions more are being created. Through a new partnership between the federal, states, and local governments, we can finally put our public workforce programs where they belong, on the side of workers seeking new starts and fresh opportunities in our nation’s constantly changing economy.

Brent Orrell and Matt Leger

Brent Orrell is a resident fellow at the American Enterprise Institute. Matt Leger is a research analyst at the American Enterprise Institute.