“Workforce development” is an essential component of community economic development in any economic climate, and certainly even more critical during the financial crises we’re experiencing today. Generally speaking, the term has come to describe a relatively wide range of activities, policies and programs employed by geographies to create, sustain and retain a viable workforce that can support current and future business and industry. Beyond this general understanding, it is difficult to gain a consensus as to the definition of workforce development, perhaps because each user of the term approaches it from a different perspective.
Educational institutions and public and private social service providers, for example, approach workforce development and develop programs from the perspective of the sustainable economic security of the individual. Communities and economic developers, on the other hand, approach workforce development from a different view—that which benefits the sustainable economic growth of a community or region. Still another group—employers—approach workforce development from an organizational perspective, focusing on the skills their business or industry needs to remain competitive in the global marketplace.
Dr. Robert Jacobs and Joshua D. Hawley, professors of Workforce Development and Education at Ohio State University sought to bring some continuity to the term by researching and ultimately developing a comprehensive definition. According to Jacobs and Hawley, “Workforce development is the coordination of public and private-sector policies and programs that provides individuals with the opportunity for a sustainable livelihood and helps organizations achieve exemplary goals, consistent with the societal context.”
Following are sample descriptions and activities of workforce development programs from each of the above perspectives, as well as a brief discussion of what perspective the Fed generally takes on workforce development and how the Eighth District community development team approaches the challenge.
The premise behind “individual centric” workforce development programs is that individuals will not be able to make substantive contributions to their respective societies without access to training and education. Organizations serving individuals recognize that in most instances meeting the basic needs of an individual through social safety nets is a necessary component to sustainable economic security. Therefore, workforce development from this perspective is defined as a combination of social services, community supports, job training and education that positions an individual for success in the workforce.
The Annie E. Casey Foundation recognized this in the 1990s when they launched their Jobs Initiative. The primary mission of the Annie E. Casey Foundation is to foster public policies, human-service reforms and community supports that more effectively meet the needs of today’s vulnerable children and families. In developing the program, the Foundation realized that changing the labor market prospects for disadvantaged workers would require strategies that cut across welfare, job training, education, human services and economic development systems. It called for strategies that both prepared the worker and created the conditions where that worker’s success was attainable.
Workforce development from the societal centric perspective is defined as initiatives that educate and train individuals to meet the needs of current and future business and industry in order to maintain a sustainable competitive economic environment. Whereas the previous example was driven by the needs of individuals, the initiatives in the societal perspective are driven by the economic development plan for an entire region or state.
Researchers for the National Center for Higher Education Management Systems argued in a 2007 study of all 50 states that state policymakers need to pay greater attention to the role of education—especially postsecondary education—in meeting state workforce and economic development goals. Using an array of data, the report highlighted the ways in which a state’s stock of human capital is depleted and replenished through education, migration and the aging of the workforce.
Postsecondary education is indeed an important part of the formula; however, states, regions and communities are realizing that postsecondary education does not just come with a set of letters attached, but encompasses a wide range of job training and educational offerings. In the Eighth District, the state of Arkansas has instituted and prioritized STEM (Science, Technology, Engineering and Math) education as both an economic development strategy and an effort to raise median household income.
Workforce development from the organizational centric perspective is defined as training programs that provide existing and potential workers with the skills to complete tasks needed by employers to let the organizations stay competitive in a global marketplace. Interestingly, while these initiatives in the past have focused on the needs of individual organizations, today sector strategies target a specific industry or cluster of occupations, working to develop a deep understanding of industry dynamics and the specific competitive situation and workforce needs of the industry’s employers within the region.
To understand best how many in the Federal Reserve view workforce development, one must first consider that the Fed, consistent with its broad-encompassing responsibilities, has both a macroeconomic and microeconomic vantage point. With this dual lens, many Fed community development professionals have, accordingly, a slightly broader definition of workforce development than other one-dimensional centric organizations. In the Eighth District, we loosely define workforce development as the services, programs, systems and networks that provide people with education, skill development and improved access for employment and advancement in the labor market in order to achieve overall maximum sustainable economic growth. Similar to Jacobs and Hawley, we view workforce development holistically. Here’s our thinking of how we arrived at this viewpoint:
The Fed’s macroeconomic focus best aligns with the interests and perspectives of organizations. The macroeconomic focus is part of, and consistent with, the Federal Reserve Act goals of monetary policy. These goals specify that the Board of Governors and the Federal Open Market Committee (FOMC) should seek “to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.” The act further states that stable prices in the long run are a precondition for maximum sustainable output growth and employment as well as moderate long-term interest rates. The FOMC strives to achieve these goals through monetary policy. To achieve maximum sustainable employment workers’ skills must match those demanded in the marketplace. Workforce development in the broad sense defined in this article provides the avenues for individuals to match their skills with those demanded in the marketplace.
The Fed’s microeconomic focus best aligns with societal and individual perspectives, and work in this area is conducted by the Federal Reserve Bank’s Community Affairs function. As a part of the Federal Reserve System, their mission is to support the System’s economic growth objectives by promoting community development and fair and impartial access to credit.
Under the community development umbrella, specifically, staff: encourage cooperation among community organizations, government agencies, financial institutions and other community development practitioners to their mutual benefit; sponsor forums such as conferences, workshops and trade fairs for the exchange of information, ideas and available resources among lenders, community groups and government officials; promote a better understanding by policymakers, community leaders and private-sector decision-makers of the processes and resources that support successful community; and produce and distribute materials that feature successful community development resources and techniques. (Read about specific workforce development initiatives in the Eighth District in this issue of Bridges.) Driven by their origin in the Community Reinvestment Act, which focuses on low- to moderate-income (LMI) individuals and geographies, community development staff participate in and support collaborative efforts at the state and community level that boosts opportunities and economic security of LMI individuals in a manner that provides mutual benefit to the individual and society.
The Federal Reserve Bank of St. Louis Community Development Department focuses their work in the Eighth District in three main areas: Asset building/preservation, community development finance and community stabilization/revitalization. This three-pronged approach creates a holistic strategy for sustainable community economic growth, individual economic security and community stability. Combining this body of work makes the Federal Reserve Bank System a vested stakeholder in the preparation of America’s workforce.
While the perspectives of participants in workforce development initiatives might vary, it’s important to note that the core objective—economic growth—remains ultimately quite compatible. First prompted by the federal Workforce Investment Act (WIA), states, regions and local governments have now come to the understanding that no one perspective is right or wrong. They understand that an ideal comprehensive strategy removes silos and creates synergies across the varied workforce development initiatives while still meeting individual, organizational and societal needs.
According to the Aspen Institute, a comprehensive approach to workforce development means substantial employer engagement, deep community connections, career advancement, human service supports, industry-driven education and training, and the connective tissue of networks. Building on the lessons learned from past efforts, the new workforce paradigm contains an array of job strategies, including sector and place-based employment strategies, adult education, and short- and long-term training programs that are customized to different employer and jobseeker groups.
Reconciling different sets of goals across many perspectives, including individual, organizational and societal, will become the defining feature of an integrated workforce development strategy.
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Fed in Print: An index of the economic research conducted by the Fed.
FedCommunities.org is a portal to community development resources from all 12 Federal Reserve Banks and the Federal Reserve Board of Governors.