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Conduct regional planning for human capital

Conduct regional planning for human capital

As the economic asset that least heeds jurisdictional boundaries, human capital is indispensable to regional prosperity.[1] Economic growth necessarily hinges on addressing common obstacles to residents’ long-term employability. Metropolitan Chicago is home to a well-educated and diverse workforce of nearly 5 million workers,[2] whose knowledge and ingenuity are why many businesses choose to operate here.[3] Yet our region must bridge the gaps between adults seeking to build a career and employers looking to build their workforce. Our education and workforce development investments must become more strategic and demand-driven in the face of uncertain future labor market shifts.

 

[GRAPHIC TO COME: A series of photos will show the diversity of the region’s residents and skilled occupations.]

 

Employment and demographic trends, demand for skills, and economic inequality are changing the demands placed on workers, as well as on adult education and training programs. Technological advancements are augmenting work in most occupations and at all skill levels, altering how workers use their time and conduct tasks.[4] Residents increasingly need to earn additional post-secondary training to enter the workforce and continuously enhance their skills over time to stay in the workforce.[5] Applicants increasingly need to demonstrate improved problem solving, literacy, numeracy, professional, and communication skills to be competitive in the job market.[6] Workers increasingly need to interact adeptly with technology to anticipate, identify, and resolve problems.[7]

 

These trends deepen concerns that technological advances, industry shifts, and other macro issues could exacerbate existing trends toward "job polarization." Since 1980, relative demand for labor has been concentrated in either low-skilled (e.g., personal services or food production) or high-skilled jobs (management and professional occupations), accompanied by an erosion of those in the middle.[8] In particular, technology has helped to automate or streamline many repetitive tasks, while augmenting higher skilled jobs. The profile of a middle-income job -- traditionally in middle-skilled construction, production, or clerical roles -- has shifted toward occupations that require more training.[9] Many workers in the Chicago region face the prospect of more training requirements for fewer middle-skill, middle-wage jobs in occupations dramatically different from those of the past. These economic realities have contributed to a decline in real median household income nationwide and a 4.9 percent decline in the Chicago metropolitan area during 1989-2016.[10]

 

Recent studies also show that economic mobility is declining for many Americans: Children’s prospects of eventually earning more than their parents have fallen in America from above 90 percent for those born in 1940 to near 50 percent for those born in the early 1980s.[11] In other words, fewer than half of millennials are likely to earn more than their parents. An analysis of economic data demonstrates that declines in economic mobility are more concentrated in the middle class, the industrial Midwest, and regions with higher existing levels of economic inequality, like Michigan and Illinois.[12] The cumulative effect of income inequality also hinders the growth and resilience of urban U.S. counties in the face of future economic uncertainty.[13] Between 2006-10, income inequality was one of the most effective ways of predicting a county’s risk of entering into recession.[14] Existing disparities -- particularly by race and ethnicity -- further erode the region’s human capital when all residents cannot fully contribute to and benefit from the regional economy. Instead, regions can experience more robust and longer periods of growth if residents have equitable access to economic opportunity.[15] Addressing these issues will require coordinated action on strategies across ON TO 2050.

 

The adult education and training systems provide essential knowledge and skills for workers to secure their own long-term employability as part of the region’s human capital. However, persistent administrative challenges and limited public funding can undermine the effectiveness of these systems. Emerging issues will require these systems to become more responsive and employers more engaged in addressing labor market needs on a regional scale. ON TO 2050 focuses on the critical role of high quality adult education and training in achieving the region’s economic goals, while acknowledging the vital importance of early childhood, primary, and secondary education.

 

In many ways, the Chicago region has been a national leader in reforming the public workforce system. The Workforce Innovation and Opportunity Act requires workforce boards to conduct state-level and regional strategic planning, as well as to strengthen and expand partnerships with the private sector. Some of the Act’s key reforms were based on strategies already underway in our region. To be resilient in the face of a rapidly changing global economy, metropolitan Chicago must build on related local and state efforts to improve unified workforce planning, partnership development, and integrated data systems. While these strategies focus on improved coordination, the importance of robust public investment in workforce development cannot be overstated.

 

The following describes strategies and associated actions to implement this recommendation.

Enhance coordination between industry and the workforce development system

Leaders from industry and the workforce development system should develop better ways to share information. Each makes significant investments affecting what the region’s labor supply has to offer and where the labor supply can be enhanced. Without adequate communication and collaboration, recurring misalignment can squander mutual benefits to businesses and workers. Broad, ongoing, and meaningful industry engagement provides the workforce system with real-time signals on employers’ needs and training opportunities. In turn, education and training programs can better prepare participants to solve problems adeptly, adopt new technologies, and operate in the evolving contexts that employers face. Such information should serve as a basis for collaboration and guide how limited resources are allocated in response to regional needs.

 

The region’s Workforce Investment Boards (WIBs) and their workforce development partners have set national best practices to address the substantial needs among low- and middle-skilled workers. For example, several regional partners including the Skills for Chicagoland’s Future and the Chicago Cook Workforce Partnership have developed strong demand-driven strategies and programs. Moving forward, they should continue to be key implementers for engaging industries. With the implementation of WIOA, employers have multiple specific ways to participate in workforce investments. These include sharing information with the region’s American Job Centers regarding job postings and leads, working with education and training providers to identify needed skill competencies and qualifications, and retaining job seekers in employment by helping to articulate and implement career pathways. In particular, employers and the workforce development system should collaborate to use candidates’ cross-sector skills and reduce procedural barriers to overlooked talent.

Enhance coordination among the region’s community colleges

Community colleges remain at the forefront of improving access to adult education and training opportunities, as well as maintaining a skilled regional workforce. In light of today’s economic realities, they face new calls to shorten the time to completion, infuse remedial education with skills training, and provide flexibility for students to balance work and school, while building long-term employability. Meeting these evolving needs will require community colleges and the State of Illinois to re-evaluate the current model for static district boundaries. Increasingly, these institutions must work together to share data, develop programming, prioritize uses of limited funding resources, and rationalize or coordinate specific educational programs across multiple districts. Such efforts are critical to pursuing other ON TO 2050 strategies, such as continuing to develop career pathways and adapting curricula to changing skills demand. Employers frequently cite inconsistency and fragmentation among community colleges as a barrier to effective partnerships.[16]

 

Community colleges have already taken steps to increase enrollment in career training across district boundaries. In response to limited public funding, all 39 community college districts in Illinois signed on to participate in the Comprehensive Agreement Regarding the Expansion of Educational Resources (CAREER Agreement). The agreement allows students to enroll in career and technical education programs offered at any other Illinois community college if their home district does not offer the program, while paying in-district resident tuition and fee rates. This cooperation is a prime example of strategies that improve the community college system's efficiency and responsiveness to shifting education and employment trends, while reducing unnecessary duplication.

Incorporate human capital priorities into sub-regional planning

The benefits and burdens of major job market shifts affect communities in different ways. Negative outcomes often accrue to places with limited capacity to foresee and respond to evolving workforce needs. These places also frequently have limited connections to adult education and training, employment opportunities, and other resources required in an increasingly competitive economy. Human capital is essential for achieving any local and regional growth goals, and therefore to any decisions about local land use, transportation, and economic development. Yet communities can vary widely in their capacity and technical expertise for human capital planning, which could consider industry and occupation trends, local job market changes, and the employment outcomes of local training programs.

 

Workforce development efforts achieve the most when workforce boards, training providers, employers, educators, service providers, and economic development agencies work together to leverage economic assets that extend across jurisdictional boundaries. Local and sub-regional plans should build on the strategic and operational planning already conducted by the region’s WIBs. These plans assess the area’s leading and emerging industries, employment and unemployment data, labor markets trends, and educational and skill levels of its workforce. However, residents face barriers to employment that go well beyond just education and training needs. Addressing the unique job market opportunities and challenges of local communities will require collaboration on a broad array of place-based strategies.

Improve access to education and employment opportunities that promote upward mobility

The regional transportation system’s primary purpose is to connect residents and businesses to opportunity. Yet some historical transportation investments and development patterns have prevented communities from sharing in new prosperity. Residents in EDAs have lower rates of vehicle ownership and frequently rely on public transit to connect them to resources for education and employment.[17] However, commutes from these areas to economic opportunities often require covering long distances or making multiple transfers.[18] For example, despite living in areas with relatively high transit availability, residents on the South and West sides of Chicago commute up to 58 hours more each year than the region’s average resident.[19] Such disparities illustrate the relative challenge of accessing job and training resources in the region, as well as additional drags on the productivity of the region’s human capital.[20]

 

For workers to advance economically, these communities need local economic growth and improved access to high quality transportation options that reliably connect them to opportunities for upward economic mobility. Transportation and land use planning should prioritize strategies that connect all residents and particularly those in EDAs to high quality education and employment. Such strategies are especially important given WIOA’s emphasis on serving populations with barriers to accessing or sustaining employment. Pursuing the region’s inclusive growth goals will require leveraging the transporation system  to connect residents to economic opportunities.

 

Local governments -- in partnership with economic development organizations, business associations, and chambers of commerce -- should encourage future economic growth and development to occur in already-developed areas with access to transit.

 

Transit agencies, local communities, and the private sector should work together to develop pilot projects that explore new methods of providing targeted, flexible, or on-demand services that connect EDAs to suburban job centers.

 

Transit agencies should explore and pilot new fare strategies, such as fare capping or low-income fares, which reduce fare burden on low income populations and social service providers."

 

Transit agencies should continue to make progress toward universal accessibility of stations.

 

CMAP should take a leadership role in identifying gaps in the transportation system for economically disconnected communities, articulating the individual, local, and regional growth benefits of making such transportation connections.

Footnotes

[1] Nicola Gennaioli, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer, “Human Capital and Regional Development,” The Quarterly Journal of Economics 128,1 (2013), pgs. 105-164.

[2] Chicago Metropolitan Agency for Planning analysis of Bureau of Labor Statistics data.

[3] Chicagoland Chamber of Commerce and Loyola University Chicago, Quinlan School of Business, The State of Small Business: 4th Annual Chicagoland Small Business Outlook Survey, 2018, https://www.chicagolandchamber.org/Portals/0/Small Business/2017_Chicagoland Small Business Survey_Infographic Brochure.pdf.

[4] Era Dabla-Norris, Si Guo, Vikram Haksar, Minsuk Kim, Kalpana Kochhar, Kevin Wiseman, and Aleksandra Zdzienicka, The new normal: A sector-level perspective on productivity trends in advanced economies, (International Monetary Fund, 2015).

[5] James Manyika, Michael Chui, Mehdi Miremadi, Jacques Bughin, Katy George, Paul Willmott, and Martin Dewhurst, A future that works: automation, employment, and productivity, (McKinsey Global Institute, 2017).

[6] World Economic Forum. “Skills Stability” The Future of Jobs: Employment, Skills and Workforce Strategies for the Fourth Industrial Revolution. January 2016.

[7] Melanie Arntz, Terry Gregory, and Ulrich Zierahn, "The risk of automation for jobs in OECD countries: A comparative analysis." OECD Social, Employment, and Migration Working Papers 189 (2016).

[8] Maximiliano Dvorkin and Hannah Shell, “Labor market polarization: How does the district compare with the nation?” The Regional Economist 2 (The Federal Reserve Bank of St. Louis, 2017).

[9] David Autor and David Dorn, "The growth of low-skill service jobs and the polarization of the U.S. labor market," The American Economic Review 103, no. 5 (2013): 1553-1597.

[10] Chicago Metropolitan Agency for Planning Regional Economic Indicators website, 2017, http://www.cmap.illinois.gov/programs/regional-economic-indicators/trends.

[11] Raj Chetty, David Grusky, Maximilian Hell, Nathaniel Hendren, Robert Manduca, and Jimmy Narang. “The fading American dream: Trends in absolute income mobility since 1940.” Science 356, no. 6336 (2017): 398-406.

[12] Chicago Metropolitan Agency for Planning analysis of data in Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez, "Where is the land of opportunity? The geography of intergenerational mobility in the United States," The Quarterly Journal of Economics 129, no. 4 (2014): 1553-1623.

[13] Randall Eberts, George Erickcek, and Jack Kleinhenz, “Dashboard Indicators for the Northeast Ohio Economy: Prepared for the Fund for Our Economic Future,” Federal Reserve Bank of Cleveland Working Paper (2006):20.

[14] Paul Lewin, Philip Watson, and Anna Brown, "Surviving the Great Recession: the influence of income inequality in US urban counties," Regional Studies (2017): 1-13.

[15]Andrew Berg and Jonathan Ostry, “Inequality and Unsustainable Growth: Two Sides of the Same Coin?” International Monetary Fund Staff Discussion Note (2011), http://dx.doi.org/10.5089/9781463926564.006.

[16]  ICCB Workforce Education Strategic Planning Project: Report on the Regional Forums, submitted by Maher & Maher to ICCB and DCEO. Available at https://www.iccb.org/iccb/wp-content/pdfs/workforce/ICCB_Summary_Report_on_Workforce_Strategic_Plan_Forums.pdf.

[17] Chicago Metropolitan Agency for Planning Policy Update, “Economically Disconnected Area clusters in the CMAP region,” 2018, http://www.cmap.illinois.gov/updates/all/-/asset_publisher/UIMfSLnFfMB6/content/economically-disconnnected-area-clusters-in-the-cmap-region.

[18] Chicago Metropolitan Agency for Planning Policy Update, “Travel patterns in Economically Disconnected Area clusters,” 2018, http://www.cmap.illinois.gov/updates/all/-/asset_publisher/UIMfSLnFfMB6/content/travel-patterns-in-economically-disconnected-area-clusters.

[19] Chicago Metropolitan Agency for Planning analysis of American Community Survey data, 5-year estimates, 2010-14.

[20] Elizabeth Kneebone and Natalie Holmes, “The growing distance between people and jobs in metropolitan America,” Brookings Institution (2015), https://www.brookings.edu/research/the-growing-distance-between-people-and-jobs-in-metropolitan-america/.





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