Practitioner Perspectives: Workforce Development Challenges and Opportunities in the Eighth District

An earlier essay highlighted how structural barriers can impede people from fully participating in the workforce. Even a strong recovery from the 2020 COVID-19 recession and one of the best labor markets in recent history haven’t fully eliminated structural barriers for many workers.

To further understand how these barriers work, the Community Development department of the St. Louis Fed conducted 16 roundtables across the Eighth Federal Reserve District between May and July 2023.The Eighth District includes all of Arkansas, eastern Missouri, southern Illinois, southern Indiana, western Kentucky, western Tennessee and northern Mississippi. Community stakeholders deeply knowledgeable about local workforce challenges and opportunities—including employers, nonprofit leaders, workforce development boards, regional economic development corporations, and others—were invited to share their perspectives. In total, we engaged 168 participants from large metros to small towns across seven states.The largest metro was St. Louis, Mo., with a population of 2.8 million, and the smallest town was Dyersburg, Tenn., with a population of 36,000. This essay highlights some key findings and conclusions from this initiative.

Who Is Not Working?

To understand the employment barriers people are facing, we started the discussion with a simple question: Who is currently not working in your communities? Even in current economic conditions, in which there are more job openings than workers looking for jobs, some people were finding it hard to get or stay at a job. The table below shows, in no substantive order, who was not working, according to our participants, along with some potential reasons. The groups mentioned in the table are often referred to as vulnerable workersThe St. Louis Fed’s Institute for Economic Equity defines vulnerable groups as follows: young adults (ages 16-24), all adults with no more than a high school diploma, Black men and Black women, white women, and Latino men and Latina women. Other groups and communities that face structural hurdles to employment include out-of-school young adults, people with a disability, and American Indians and Alaska Natives.—those who continue to face barriers to labor force participation during economic expansion and are more sensitive to economic slowdowns.

Several other groups face barriers to work, according to our stakeholders. For example, older workers were noted as having a hard time rejoining the workforce. Employers may have misperceptions based on the applicant’s age, or the job seeker may have a hard time retraining to meet the employer’s needs. Similarly, those who have been underemployed for a long time often face a benefits cliff when they take work that raises their incomes above a certain threshold, abruptly resulting in diminished or a complete loss of public assistance. Immigrants and newcomers often face additional barriers, such as language, obtaining the proper documentation or a lack of knowledge and connections regarding the local job market.

A Trifecta of Barriers: Housing, Transportation and Child Care

Although several themes emerged across the 16 roundtables, problems with access to affordable housing, transportation and child care were consistently the most reported. Community experts also shared how these areas are interrelated and can compound the hurdles a worker faces. A person may have to live far from a job to be able to afford a house. But that leads to a more expensive and time-consuming commute. This reinforces the need for consistent, affordable child care, especially for workers with very young children.

For vulnerable workers, managing conflict and navigating the demands of work and life can be incredibly daunting. This could worsen any mental health issues they might have. Participants noted that a rise in mental health issues, especially depression and anxiety, was a significant barrier, one which is often made worse by lack of access to mental health care. Neither mental health nor access to mental health care is a new issue. But the COVID-19 pandemic seems to have exacerbated the situation and consequently the need to address it.

Finally, participants noted that many of the barriers vulnerable workers face in getting to work are the same as those they face in attending training or acquiring more education. So even when the economy is doing well and opportunities arise, some workers continue to face hurdles to employment.

What Are Communities Doing to Address These Barriers?

These structural barriers impact not only individual workers and their families but also the community’s productivity and thus economic growth. Roundtable participants observed that community-based organizations, in collaboration with government agencies and employers, pursue several strategies that may address these challenges. They include:

• Building partnerships with employers to create professional development opportunities for young people right out of high school
• Offering wraparound services to support vulnerable workers throughout recruitment, as well as post-hire, to address challenges for both the worker and the employer to maintain employment
• Offering rehabilitation and training programs for people reentering the workforce, including those who are justice-involved, older workers or immigrants
• Providing funding or resources to people in need so they can focus on doing the job or completing training

Creating Opportunities within the Workforce Development Ecosystem

Roundtable participants shared that local organizations and government agencies often work in silos. Developing opportunities to exchange information and to align goals and strategic direction could benefit the workforce development ecosystem.

A positive impact of the tighter labor market seems to be that employers have been more willing to shift their attitudes and even relax requirements, participants noted. For example, many employers are now willing to hire people who are involved in the justice system or to invest in apprenticeships for young adults. The tight labor market seems to have opened a window of opportunity to think creatively about programs, policies and partnerships meant to reduce barriers for the most vulnerable workers in our communities.

Roundtable participants also shared frustration at the lack of sustainable funding. Organizations based locally may often know what works; however, without adequate support, they cannot maintain or scale up their programs to reach those who need them the most. Adequately resourced organizations could have the potential to address these structural barriers, enhancing the productivity of a region’s workforce and, consequently, its overall economic growth.

Looking to the Eighth District’s Future Workforce

Roundtable participants from several communities, especially smaller ones, noted an aging population and a loss of talent as ongoing issues. These limit the pool of workers, making it harder for an employer to recruit. The loss of talent was driven mainly by young workers leaving for larger metros because of increasing prices of goods and services coupled with access to only lower-wage jobs.

Advancements through automation, information technology and artificial intelligence are expected to create both opportunities and challenges. For example, advanced manufacturing can create not only new jobs but good-paying jobs that don’t require a four-year college degree. However, technological change can move at a quick pace, and upskilling existing workers in a timely manner can be difficult.

Many participants pointed to the multiple generations that are currently in the workplace. This often leads to a mismatch between what employers and employees seek. Employers may want people who have all the right skills, including soft skills, and experience. Employees, on the other hand, may need flexible schedules and a caring employer who will invest in them. Aligning the expectations and the needs of both could be a significant cultural change in the coming years.

If the economy slows, reducing the number of available jobs, willingness to tackle these challenges may wane. However, if the labor market remains strong, addressing structural barriers in communities could help ensure a healthy pool of workers is ready to participate in and contribute to the economy.

Notes

1. The Eighth District includes all of Arkansas, eastern Missouri, southern Illinois, southern Indiana, western Kentucky, western Tennessee and northern Mississippi.
2. The largest metro was St. Louis, Mo., with a population of 2.8 million, and the smallest town was Dyersburg, Tenn., with a population of 36,000.
3. The St. Louis Fed’s Institute for Economic Equity defines vulnerable groups as follows: young adults (ages 16-24), all adults with no more than a high school diploma, Black men and Black women, white women, and Latino men and Latina women. Other groups and communities that face structural hurdles to employment include out-of-school young adults, people with a disability, and American Indians and Alaska Natives.
4. The discussion referred to young adults more generally and not specifically to young adults not enrolled in school and not in the labor force, often referred to as disconnected youth.
5. Whether gig work counts as “work” is beyond the scope of this essay. The roundtable participants’ perspective was that informal work arrangements were lucrative to young adults because of flexible hours and faster payments. For a deeper discussion of gig work and its impact on employment rates, refer to this working paper.