Grubb, W. N., Badway, N., Bell, D., Chi, B., King, C., Herr, J., Prince, H., Kazis, R., Hicks, L., & Taylor, J. C. (1999). Toward order from chaos: State efforts to reform workforce development systems (MDS-1249). Berkeley: National Center for Research in Vocational Education, University of California.

SECTION 4

THE COMPLEX ROLES OF EMPLOYERS

Policymakers at all levels as well as researchers have debated the appropriate roles for employers in workforce education and training programs for decades. However, many think that employers should play a larger role--as in the German-speaking countries, with their dual system of training--and nearly three decades of government efforts have tried to expand the roles of employers. President Lyndon B. Johnson launched the National Alliance of Business/Job Opportunities in the Business Sector (NAB/JOBS) program in 1968, imploring employers around the nation to make pledges to hire the economically disadvantaged. In 1972, NAB's then-President, William Woodward, offered the following observation on the tenth anniversary of the Manpower Development and Training Act of 1962:

The role of private industry in manpower policy is only at its beginning. We have come far from the day when employers just put a sign at the hiring gate when they wanted workers and then complained about the educational system if the men and women were not already trained and ready to go to work. We have come far from the day when we wanted to stand as far away from possible from government and as far away as possible from social problems. We have learned that we can work effectively with government and with local education and with community groups; we have learned that we have a major role in manpower programs. We have learned that we have a responsibility to work together in solving these problems. (Wolfbein, 1973, p. 131)

In 1977, President Jimmy Carter lent his support to an initiative from Secretary of Labor Ray Marshall to establish advisory private industry councils (PICs) chaired and dominated by business leaders in local labor markets.[25] PICs, together with the chief elected officials in their geographic areas, ultimately took on oversight, planning, and administrative responsibility for local job training programs, even as many of them lost the participation of top-level business leaders.

The problems of youth and their often difficult transitions from school to successful careers led to the passage of the School-to-Work Opportunities Act of 1994, which has attempted to develop work-based leaning opportunities to complement school-based programs. In addition, in 1997 President Bill Clinton resurrected the NAB/JOBS approach in order to get employers around the country to hire welfare recipients. All of these initiatives have paid much greater attention to developing opportunities for work-based learning, at the same time that there remains persistent concern that we have not yet fully "engaged" employers as much as we need to (King, McPherson, Long, & Norris, 1996; McPherson, Long, & Sim, 1997).

From our work in ten states, it is unclear whether real progress has been made in securing substantive involvement of employers in workforce development. Some states appear to have at least articulated more clearly the roles which employers shouldplay in their workforce systems--even if, aside from an exemplary project here or there, few have made any headway in implementing these roles systemwide. For the most part, however, we have observed quite traditional roles carved out for employers in these states. This section briefly characterizes the potential employer roles which state workforce development systems have identified, and then provides examples of the actual roles they play in practice. It concludes with several issues related to engaging employers in workforce development.

Possible Employer Roles

There are many possible roles for employers in state workforce development systems. They can be simultaneous rather than mutually exclusive. Some of the more common employer roles include the following (King et al., 1996; McPherson et al., 1997; U.S. Department of Labor, 1996):

Policymaking and Governance: An earlier and still common role for employers was participation in either shaping workforce policies or governing programs. This has ranged from serving on or chairing councils which were advisory in nature--like the early PICs and the Employment Service's local Employer Advisory Committees--to those that established workforce policy or that governed programs to some extent.
Identification of Training Occupations and Industries: Employers have advised workforce programs concerning the occupations and industries which should serve as the basis for training. Since local program operators generally can forecast growth occupations and industries (and wage levels) from existing data sets (often from State Occupational Information Coordinating Committees [SOICC]), employers are often consulted about "emerging" occupations, ones which by definition cannot be projected from existing information. For example, even in the early-to-mid-1990s, few programs would have considered offering training opportunities for "website developers" with their public training dollars; knowledgeable employers, however, might have identified such an occupation and advised local programs to begin pilot training efforts.
Identification of "Soft" Skills: In addition to identifying growth occupations and "hard" or technical skills, employers have also played a major role in the 1990s in identifying so-called "soft" skills needed in the labor market. The most widely known of these was the Secretary's Commission on Achieving Necessary Skills (SCANS) (1991), though others have dealt with the issue recently as well (e.g., Holzer, 1996; Stasz et al., 1993). SCANS surveyed employers to determine what employers really wanted from workers on the job in a series of key occupations, and identified key skills such as thinking skills (including problem solving and creating thinking) and personal qualities (like integrity and responsibility) in addition to basic cognitive skills. This led workforce programs to focus their training efforts on such competencies, in addition to specific occupational skills. States and some local programs have attempted to validate these skills with their own employer surveys.
Curriculum Development: Increasingly, acknowledging that employers know their own workforce needs better than outsiders ever can, some local programs have engaged them in developing training curricula. Such involvement can help to ensure that, once trained, a student or participant has a better chance of securing the job for which he or she has trained.
Standard Setting: More recently, employers have begun to play a role in setting skill standards (or performance standards, incentives, and sanctions) for local or state workforce development. Both the National and State Skill Standards Boards created by the Goals 2000: Educate America Act of 1994 offer examples of this particular role. Without some independent "benchmark" of the labor market's expectations, especially of employers who ultimately control jobs, training efforts might well meet their program standards, yet still be producing students who cannot be hired (Barnow & King, 1996).
Employers-as-Contractors or Service Providers: Employers are increasingly serving as training contractors and workforce service providers. This is not a new role, since Xerox, RCA, and other large companies have long served as Job Corps contractors, running residential training centers for severely disadvantaged youth. In addition, on-the-job training (OJT), customized training, and employer-based activities such as work experience and cooperative education all place employers in the role of trainers. Most states have established special training funds--typically financed with some combination of UI taxes and state general revenue--to support employer-based or other forms of customized training, often involving community and technical colleges. Moreover, many localities and states now are rapidly privatizing their workforce services, involving firms such as Lockheed Martin, Maximus, and others directly in service provision.
Employment: The final role listed here is the most obvious: Employers are the ultimate target of workforce development programs, since they employ their students. In some states, this role has been articulated clearly with employers considered the primary customer of workforce services. Others (King et al., 1996; McPherson et al., 1997) have suggested that employers might engage more fully in workforce development if they see their role as consumers of students from high-quality programs, including public schools, community and technical colleges, CBOs, and other training providers. Increasingly important worldwide, ISO 9000 requires producers, as well as their major suppliers of inputs, to ensure that their workforce is trained to certain standards in order for them to be certified as eligible to do business in and with European Union member nations (see Sheets, 1992).

In considering these potential roles, it is useful to distinguish between involvement versus true engagementof employers. Employer involvement is relatively easy to obtain, whether through some degree of participation in advisory committees, pledging to hire trainees, serving on a skill standards board, or other such activities. However, engagement tends to be substantive, all-encompassing, and ongoing (McPherson et al., 1997, p.4ff). Engagement is usually based on economic need rather than social welfare concerns, and results only when employers perceive direct benefits from the relationship. For there to be real engagement, employers must play a large enough role to engender a sense of ownership.

Varying State Policies and Practices

In the relatively active states we examined, the rhetoric of engagement far exceeds the reality, and the states are all over the map in terms of actual participation. There is a relatively clear demarcation between those states that emphasize building the human capital of workers--especially Oregon--and those which cater more to employers' needs and might be described as truly "employer-driven"--for example, Florida, Michigan, and North Carolina. The rest of the states fall somewhere between these poles, either because the weight they place on workers' and employers' needs is more balanced or because their employer-driven rhetoric has yet to be realized in practice. The states we examined have pursued various workforce development roles for employers, including the ones discussed below.

Policymaking/Governance

All these states are involving employers in shaping workforce policy, some more actively than others. They have established employer-chaired and employer-dominated Human Resource Investment Councils (HRICs) which have varying degrees of authority over their state's workforce services.

Several states exhibit high degrees of employer orientation in shaping their workforce policies. Nearly all of Florida's programs reflect a strong market- and employer-driven flavor, despite the concern that employers are not always fully prepared for this role. Florida's Jobs and Education Partnership features employers as part of a broad partnership guiding economic (and workforce) development statewide; moreover, the new business-dominated WAGES Boards for welfare-to-work services have primary responsibility for training and employer incentives. As one analyst suggested,

For the first time, business and industry are not just being asked to sit in an "advisory" capacity, but they are being asked to become decisionmakers for the future of Florida's workforce. Many of the business representatives do not have experience with social welfare or education/training issues or entitlements.

Michigan now places primary emphasis on serving the needs of the employer community in nearly all program aspects. Moreover, economic development takes precedence over workforce development strategically. Michigan's policies reflect a dominant business/employer influence, featuring tax-free Renaissance Zones as well as significant stress on customized training via its Economic Development Job Training Programs and the Youth Registered Apprenticeship Tax Credit initiative. As one observer noted,

The state believed strongly . . . that helping employers meant helping workers as well. By attracting greater numbers of new businesses, and by preventing established ones from moving away, more jobs would be created, and the state's economy bolstered.

North Carolina's workforce efforts, based in its extensive system of community colleges, have long been solidly employer-oriented, dating from 1958's New and Expanding Industries Act which provided state support for economic development through services to business and industry.

In other cases, however, states have articulated a role for employers, but have been unable to implement their visions. Oregon, despite pursuing a student-focused approach for the most part, relies on employer-dominated advisory committees for shaping state workforce policy. As part of its Key Industries program, it also has created industry associations to provide feedback on employer needs. Oregon has had difficulty maintaining substantive involvement by employers on its local and state advisory committees, however, in part due to the perception that they are largely "rubber stamps" for decisions made by program staff. One of the criticisms of Oklahoma's voluntary Workforce Quality Compact approach to workforce reform at the state level has been that employers have been totally excluded from the process, due to an expressed desire not to discourage them with government's slow pace.

Texas has clearly articulated the vision of a market- and employer-driven system. State legislation and subsequent policy documents characterize employers as one of the two primary customers, mandate their dominance in advisory and oversight committees, and require the provision of business services. Initially, Texas even turned to the private sector rather than government for executive leadership in the newly created Texas Workforce Commission (TWC), a choice which proved less than successful. Getting beyond the rhetoric to implement an employer-driven system and to provide an appropriate array of business services has proved difficult, however.

Identifying Market Needs

Most of our states also rely on employers or employer associations to identify growing and emerging occupational and industrial needs. Some of the more remarkable systems are exemplified by Florida, Oregon, and Texas. As part of its High-Skills/High-Wages (HS/HW) initiative, Florida conducts an annual Occupational Forecast Conference to identify emerging high-wage, high-growth industries and occupations requiring less than a baccalaureate degree. The results of this conference, along with the Performance-Based Incentive Funding component of the HS/HW initiative, drive work-related education and training offerings throughout the state. In addition, Orlando's Valencia Community College also convenes an annual President's Luncheon comprised of the CEOs of leading area employers. These CEOs are asked to work with the community college in conducting an "environmental scan" to describe major three- to five-year trends, identify current and projected workforce needs, suggest how the college can work with employers to meet their education and training needs, and recommend ways for the community college to proceed.

The Oregon Legislature designated 14 Key Industries to serve as the basis for a six-year state economic development strategy. The state's Economic Development Department administers the program, with regions allowed to decide which of the 14 industries to emphasize. A number of industry associations--for example, the Semiconductor Workforce Consortium of Oregon and Southwest Washington, and similar ones in plastics, manufactured homes, and food processing--were formed in response to the 14 Key Industries initiative, to organize and communicate industry needs to workforce providers as they define the jobs, skill competencies, skill requirements, and career ladders for potential employees.

Texas was one of the first states to move decisively in establishing a role for employers in this area. In the early to mid-1980s, the state crafted a State Labor Market Information Plan which called for the creation of a long list of Labor Market Information (LMI)-based tools for local program planners (and counselors) over a period of several years. This LMI Plan was carried out under the auspices of the Texas State Occupational Information Coordinating Committee (now part of the TWC). Over the years, information gathered from administrative data (e.g., the Occupational Employment Survey) as well as structured focus groups with employers have identified high-demand and emerging occupations which local programs must use as the basis for most of their training. Some areas of the state have been even more aggressive in using an enhanced version of these tools to determine what training to offer (King, Lawson, & Olson, 1995).

Curriculum Development

In many of our states, employers are assisting with or directly designing training curricula. This is especially true in those states which have fostered customized training and similar approaches to workforce development. States with extensive customized training offerings include Florida's Quick Response Training, Iowa's bond-funded program offered through community colleges, Michigan's $31 million Economic Development Job Training Programs, North Carolina with its heavy reliance on community colleges, and Texas through its Smart Jobs Fund for training grants direct to business. In many states, customized training tends to be geared towards more experienced, less disadvantaged workers, rather than the more disadvantaged ones. Some noteworthy examples include the following:

Valencia Community College in Orlando's use of the DACUM process for course development and design relies heavily on employer input.
Michigan's Trade Academies prepare eligible high school students for high-skill/high-wage jobs, integrating school with work-based learning designed by employers. Employers also finance a large portion of the operating costs for the state's academies.
Wisconsin has a Work Opportunity Tax Credit for firms which hire or train eligible workers. Wisconsin's Regional Training Partnership--a Milwaukee-based consortium of 22 charter firms and unions from the metalworking, machinery, electronic controls, and related industries which largely operates outside the state's workforce system funded by member firms' dues and local grants--involves employers in every stage of the training process, including training design.

Standard Setting

Curiously, few states have elaborated their emerging skill standards initiatives and the part employers might play in them. Wisconsin and Iowa have done so, while Texas and Oregon are also in the process of establishing explicit employer-based measures of performance, reflecting their view of employers as "customers" to be given some accountability responsibilities. Moreover, the states with the greatest employer orientation may well be responding to what they perceive to be employers' views of program mission, goals, and standards for performance. In many states, the heavy emphasis on "work first" and welfare reform has shaped the attitude toward less well-prepared students and participants.

Contractors/Service Provision

Finally, many of our study states are turning to employers as training contractors, directly involving them in the provision of workforce services. This role is most evident in the provision of customized training, often for more experienced and incumbent workers. Such training is being financed both via states' regular work-related education and job training programs, but it is also increasingly financed by special dedicated training funds as in Texas (featuring the Smart Jobs, Skills Development, and Self-Sufficiency Funds), Michigan, and Wisconsin, among others.

In addition, the private sector (e.g., Lockheed Martin, Maximus, and others) is playing an increasing role in providing pre-training and other services, such as assessment, counseling, information and referral services, and job search assistance, often serving as one-stop or career center operators. Private firms have also become major players in welfare-to-work service delivery.

Unresolved or Continuing Issues

This appears to be a time of significant change in the roles various actors play in emerging workforce systems. This is particularly true for employers in an era which emphasizes work over training. At this point, there are a number of unresolved or continuing issues surrounding the roles of employers:

With "work first" as a growing emphasis in some states, there remains a need to more directly address post-employment access to education and training opportunities. Few states have moved to do so, however; and many employers are reluctant to work with welfare populations.
There is now a wide gap in access to work-related education and training once workers are on the job. Workers higher up the occupational pecking order tend to have greater access to employer-financed training (Bassi, 1997; Cappelli, 1995; Carnevale & Goldstein, 1990). This gap may even be widening, and it exacerbates inequalities in earnings.
Finding the right blend of economic and workforce development policy has been difficult. Many states have not integrated their economic development efforts with workforce development. Their incentives (such as tax incentives) to lure employers into the state are often ineffective, and the subsidized training they provide employers as incentives often simply substitutes public funding for employer training (NCRVE and the Center for Labor Research and Education, 1994). These policies may be politically popular, particularly in an era when states are trying hard to meet the needs of employers, but they are often ill-considered.

The rhetoric of employer engagement still exceeds the reality in nearly all of our study states, and criticisms about weak linkages to employers made in the late 1990s are virtually the same ones made more than three decades ago. This raises the question of whether states really want substantial employer engagement in their workforce systems and whether employers are willing to participate--or whether, instead, they are simply having a hard time working out the best mechanisms for accomplishing such participation.

[25] The PIC concept was developed by Stan Arabis, an executive on loan to the DOL from what was then Sun Oil Company, based on practices in Chicago. This was itself an interesting illustration of ways to involve employers in publicly funded workforce efforts.

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SECTION 4 THE COMPLEX ROLES OF EMPLOYERS