Despite Economic Growth, Governors Worry About Skills Gap and Unemployment

At the winter meeting of the National Governors Association in Washington this weekend, the lack of proper workforce training was an overarching concern.
by | February 23, 2019 AT 3:00 PM
Utah Gov. Gary Herbert noted that the current economy is strong, and that the nation has weathered technological upheavals in the past. (AP/Jose Luis Magana)

Ten years since the end of the last recession, state leaders are generally feeling good about the economy. As the nation's governors gathered in Washington this weekend for the National Governors Association's winter meeting, they expressed confidence in America's fiscal climate -- at least as it stands right now. Job creation is strong, the stock market has recovered some of its losses from the end of last year and business confidence is high, though consumer confidence has softened.

"The economy is doing well," Utah GOP Gov. Gary Herbert said Saturday. "Most states feel that they've recovered."

But many remain concerned about longterm trends. At the convening of state leaders, the skills gap -- the gap between millions of available jobs and the lack of proper training or education among the unemployed -- was clearly a paramount concern.

Montana Democratic Gov. Steve Bullock, who has made "good jobs" the focus of his NGA chairmanship, said a witches' brew of technology and automation, globalization and middle class stagnation will continue to threaten the jobs and livelihoods of millions of Americans over the next decade.

"We need to equip workers with today's skills and promote lifelong learning," Bullock says. "As governors, we're well-positioned to bring together workers and employers and educational institutions. We must incentivize businesses to invest in workers, as they do in equipment."

The idea that governors should act as conveners was a common theme sounded by speakers on NGA panels. "You as governors sit at the fulcrum point in being able to change the opportunity sets for your states, bringing together colleges, employers, nonprofits and company" to address workforce development needs, said former U.S. Commerce Secretary Penny Pritzker.

Conversations and collaboration between schools, job trainers and the business community not only needs to happen, she told the governors, but must be constant and ongoing, because employer needs are constantly changing.

In an interview with Governing, Pritzker also stressed the need for governors to have a point person on staff to coordinate efforts among disparate agencies that oversee education, economic development and workforce development.

"You need a quarterback within your administration, because the reality is the departments don't naturally deal with each other," said Pritzker, who helped lead a task force on the future of work for the Council on Foreign Relations.

 

States Must Train Workforce for New Tech Realities 

Richard Haass, CFR's president, emphasized that more effective workforce training is not only essential to the nation's economic health, but its standing in the world. "If we don't get this right, we're going to suffer an epidemic of unemployment and chronic unemployment," he said. "If we institutionalize prolonged unemployment, I worry about the repercussions."

If inequality of income and opportunity continues, Haass suggested, the waves of populism and protest that have been seen in Europe and elsewhere will continue to grow.

"You ain't seen nothing yet," he said. "The amount of jobs that will be destroyed by new technology will be great."

New jobs will also be created by technology, he said, but the rapidity of change will make transitions difficult for millions of people. "Unless that skills gap is addressed," he said, "we are going to have massive social problems."

Governors including Herbert noted that the nation has experienced other waves of technological change and economic displacement, such as the Industrial Revolution during the 19th century. Most people were farmers when the nation was founded, but only about 1 percent of Americans still work in agriculture today. New jobs have long since taken up that slack.

But the pace of ongoing change in the economy is faster than the nation has seen before, Haass said. Artificial intelligence and its potential elimination of jobs across the economic spectrum -- "blue collar, white collar, every collar you can think of" -- is qualitatively different from disruptions of the past, he said.

"The reality is that the changes in our economy are faster than we've ever seen," said Gina Raimondo, the Democratic governor of Rhode Island. "Most of the jobs lost since the recession required just a high school degree. There are millions of open jobs, and people who want jobs, but they're not getting matched up because companies demand a four-year degree for some jobs that don't need them."

People need not only degrees, but often occupational licenses for many jobs. Bullock noted that in 1950, only 5 percent of jobs required some sort of professional license. Today, that figure is 29 percent.

"You need three licenses in New York to be a barber," Jamie Dimon, CEO of JPMorgan Chase, told the assembled governors. "Even if there are open jobs, people can't afford to move to fill them because of the requirements to do jobs they're already doing."

Dimon sounded mostly optimistic notes about the economy as a whole. He described growth since the recession as "anemic," but said that the nation retains a competitive advantage over rivals such as China thanks to the U.S. university system, an abundance of food and energy, and peaceful neighbors in Canada and Mexico. "This is the most prosperous economy the world has ever seen, and that probably will be true over the next 50 years, too," Dimon said.

But he said that complaints that low-income workers are underpaid and hurt by shifts in the economy are both fair and accurate. "It is true we're leaving behind a segment of society that doesn't have education."

States and localities have to take the lead in ensuring that workers have the education and training they need, Dimon said.

"It's more the federal government that's just crippling," he said. "I don't know how to make it work. What we're doing to ourselves is a disgrace."