Investing in America’s Workforce Volume 3 Investing in America’s Workforce Improving Outcomes for Workers and Employers Volume 3 Investing in Systems for Employment Opportunity Stuart Andreason Todd Greene Heath Prince Carl E. Van Horn Editors 2018 W.E. Upjohn Institute for Employment Research Kalamazoo, Michigan Library of Congress Cataloging-in-Publication Data Names: Van Horn, Carl E., editor. Title: Investing in America’s workforce : improving outcomes for workers and employers / Carl Van Horn [and three others], editors. Description: Kalamazoo, Michigan : W.E. Upjohn Institute for Employment Research, [2018] | Includes bibliographical references and index. Contents: Volume 1. Investing in workers — Volume 2. Investing in work — Volume 3. Investing in systems for employment opportunity. Identifiers: LCCN 2018044491 | ISBN 9780692163184 (vol. 3 : pbk. : alk. paper) Subjects: LCSH: Manpower policy—United States. | Manpower planning—United States. | Labor supply—Effect of education on—United States. | Human capital— United States. Classification: LCC HD6724 .l568 2018 | DDC331.12/0420973—dc23 LC record available at https://lccn.loc.gov/2018044491 © 2018 Federal Reserve Bank of Atlanta 1000 Peachtree Street Atlanta, GA 30309-4470 Editors: Stuart Andreason, Federal Reserve Bank of Atlanta Todd Greene, Atlanta University Center Consortium Heath Prince, The University of Texas at Austin Carl E. Van Horn, Rutgers University, The State University of New Jersey Contributing Editors: Ashley Bozarth Rob Grunewald Alexander Ruder Janet Boguslaw Richard A. Hobbie Jennifer Schramm Maureen Conway Kathy Krepcio Robb C. Sewell Stephen Crawford Karen Leone de Nie Chris Shannon Brian Dabson Emily Mitchell Steven Shepelwich Nancey Green Leigh Edison Reyes The facts, observations, and viewpoints expressed in this book are the sole responsibility of the authors. They do not necessarily represent positions of the Federal Reserve Bank of Atlanta, the Federal Reserve System, the John J. Heldrich Center for Workforce Development, the Ray Marshall Center for the Study of Human Resources, or the W.E. Upjohn Institute for Employment Research. Cover design by Andrew Giannelli and Gregory Famularo. Printed in the United States of America. Contents Introduction: Investing in Systems for Employment Opportunity 1 Stuart Andreason and Alexander Ruder Part 1: Financial Innovations in Workforce Development 1 Rebalancing the Risk: Innovation in Funding Human Capital 11 Development Heath Prince 2 Partnering with Banks in Workforce Development 17 Elizabeth Sobel Blum and Steven Shepelwich 3 Nimble Capital for an Agile Workforce 29 Keith Wardrip and Mels de Zeeuw 4 Outcomes-Oriented Contracting: Unlocking Economic 49 Opportunity for Low-Income Communities Celeste Richie 5 Improving Workforce Outcomes with Pay for Success 63 Nirav Shah 6 Financing Human Capital through Income-Contingent 75 Agreements Miguel Palacios Part 2: Government Investment in Workforce Development 7 Strategy and Capacity of Public Workforce Systems 89 Richard A. Hobbie 8 Results and Returns from Public Investments in Employment 99 and Training Demetra Smith Nightingale and Lauren Eyster 9 Research and Evidence-Building Capacity of State 113 Workforce Agencies Yvette Chocolaad and Stephen Wandner v 10 State Sector Strategies for Talent Pipeline Systems 125 Michael Bartlett and Martin Simon 11 Improving Outcomes for Workers and Employers through 139 Mayoral Leadership Kathy Amoroso and Evan Amoroso 12 Employer Engagement Policy: Shifting from Customers 153 to Partnerships Andy Van Kluenen Part 3: Investing in Technology 13 The Promise and Perils of the Future of Work 169 Carl E. Van Horn 14 Navigating the Future of Work: Can We Point Businesses, 175 Workers, and Social Institutions in the Same Direction? John Hagel, Jeff Schwartz, and Josh Bersin 15 From Want Ads to Mobile Apps: Realizing the Promise of 195 Technology in Labor Market Matching Chauncy Lennon and Sarah Steinberg 16 Personalized Education: From Curriculum to Career with 215 Cognitive Systems Michael King, Richard Cave, Mike Foden, and Matthew Stent 17 All Data Big and Small: Using Information to Guide 233 Workforce Development Rachel Zinn and Bryan Wilson 18 Preparing Workers for the Expanding Digital Economy 251 Jordana Barton Part 4: Investing in Skills and Credentials 19 Creative Solutions to the Credentialing Chaos 269 Stephen Crawford vi 20 Fixing the Credentialing Chaos: A National Tool and 277 State Application Ken Sauer and Stephen Crawford 21 Transforming Employer Signaling in the Talent Marketplace 297 Jason A. Tyszko 22 Building an Expanded Public-Private Data Infrastructure for 313 the Credentialing Marketplace Robert Sheets 23 Credentialing Entrepreneurs: How and Why 329 Alejandro Crawford Part 5: Investing in Regional Workforce Development Systems 24 Coordinating Regional Workforce Development Resources 353 Stuart Andreason 25 Cultivating Healthy Workforce Ecosystems 359 Tucker Plumlee 26 Examining Spatial Mismatch and Mobility in the 375 Workforce System Raphael Bostic and Ann Carpenter Appendix - Investing in America’s Workforce: Report on 391 Workforce Development Needs and Opportunities Noelle St.Clair Authors 431 vii Introduction Investing in Systems for Employment Opportunity Stuart Andreason and Alexander Ruder As the economy has changed over the past several decades, many different organizations have developed programs to support workers, help businesses enhance productivity and solve human resource chal- lenges, reemploy workers who have lost their jobs, and move people from precarious positions on public support to positions of employ- ment and self-sufficiency, among many other unique and targeted approaches to supporting employment and economic opportunity. Col- lectively, this array of programs and policies makes up the workforce development system, and more broadly a system that supports employ- ment opportunity. While many of the programs have been incredibly effective, businesses and job seekers report challenges in understand- ing and navigating the workforce development system. And, with many smaller organizations involved in the system, it is constantly evolving and changing; the sustainability of programs and policies also presents a challenge. Policies that support these efforts need to be updated and made more modern, given the quickly changing economy and labor market (Van Horn, Edwards, and Greene 2015). Chapters in this volume discuss promising practices in workforce development and policies and actions that elected officials can take to expand upon those successes. Central to these efforts is building stron- ger partnerships across regional workforce organizations and creating a foundation for stronger collective impact. Strong partnerships are likely better positioned to organize services that workers need to be available and ready to work, no matter their skill level—services like transporta- tion, housing, and child care, to name a few. In addition to policy and coordination, there are a number of changes to programmatic systems that could enhance the scope and scale of workforce development pro- grams—particularly in financing, technology, and credentialing. 1 2 Andreason and Ruder Financial investment in workforce development presents a num- ber of important considerations. New financial tools and models for contracting services in workforce development can structure funding toward paying for outcomes rather than outputs. Ultimately, workforce development programs need to ensure they are creating opportunities for job seekers and developing productive workers for firms—and there should be little dogma in the interventions that accomplish these goals. New financial tools can help organizations move toward this funding strategy and potentially engage new investors in workforce develop- ment. These models may help attract socially minded investors who are seeking returns and social benefits for communities of investment. This is an underutilized source of capital. These models also likely can help grant-making organizations and governments focus their giving on programs that are creating greater social benefits. Technology is changing the way workforce partners build data sys- tems to evaluate programs, deliver training, and inform stakeholders about various aspects of the labor market. Technology enhances the reach of workforce development programs to more people and helps expose workers and businesses to new ideas and models. Similarly, technological advances in data collection, data sharing across work- force system partners, and research capacity can help organizations evaluate the effectiveness of workforce development programs. Technology is not just allowing workforce partners to build data systems for evaluation and accountability, but also to use it as a learn- ing tool—to expand workforce programs to broader audiences, often in remote areas, and deliver new learning content quickly and efficiently. To support these new systems, organizations need to ensure equitable access to broadband Internet for individuals and businesses. As tech- nology becomes more ubiquitous in learning environments, commu- nities without fast and reliable broadband Internet will disadvantage businesses, learners, and community members. The infrastructure that supports technological utilization is critical. Related to new technology, several organizations have invested considerable effort to build systems that improve transparency of the large credentialing marketplace. Many educational institutions