We are often told that Americans are facing a skill crisis—one that will intensify in the coming years with greater adoption of digital technologies and a learn-to-code imperative. But this skill crisis is not due to inadequate educational systems or an unprepared generation of younger workers, as some would argue. The problem is that too few U.S. businesses share responsibility for skill development.
Many employers have been either unwilling or unable to invest sufficient resources into work-based learning and the creation of skill-rewarding career paths that extend economic opportunity to workers on the lowest rungs of the labor market. On the whole U.S. businesses do invest more resources in workforce training than U.S. federal or state agencies. But a highly uneven pattern of investment threatens to intensify economic disparity: on average, larger firms are more generous and consistent with workforce training than are their smaller counterparts. What makes this training imbalance especially troubling is that smaller businesses make up the vast majority of employer firms in the United States. And until the downturn caused by COVID-19, their numbers have been rising, as larger firms—whether by choice or due to investor pressure—outsource more functions to smaller suppliers or subcontractors.
Beyond firm size, there are other sources of training inequities that disproportionately affect low-wage workers. Paradoxically, most employers, regardless of size, limit support for skill development to employees who are already highly educated. The result is a bifurcated structure that further concentrates rewards at the top of the occupational hierarchy, with few opportunities for advancement reaching those at the bottom.
What are the economic consequences of this skills imbalance? What can be done to encourage employers—particularly smaller-sized firms—to accept greater responsibility for skill development and broaden its reach? And how can organizations that strive to improve working conditions and extend economic opportunity lend a helping hand? I think an essential component to the solution is learning to see skill as a problem of employment rather than of education—and of building institutions to make that vision a reality.
To anchor these issues, consider the case of Maddie Parlier, a woman from South Carolina profiled in a 2012 Atlantic essay by Adam Davidson. At the time, Maddie was a twenty-two-year-old single mother with only a high school degree, working an entry-level job at a small-sized automotive parts manufacturer. Her story sheds light on the “jobs crisis” facing the millions of low-income Americans trapped in dead-end, low-wage work—and often performing routine tasks that in the near future could easily be automated by a robot.
Common proposals to help workers like Maddie fall into three broad categories: higher education, minimum wage legislation, and workplace training and support. While education and wage legislation both have central roles to play in any policy program for workers, workplace training, we will see, is also essential—even though it often receives far less attention as a policy goal.
According to Davidson, Maddie’s fate—and by extension, that of all low-income individuals—is sealed by not having a college education (an associate’s degree or higher), that golden ticket into the middle class that remains out of reach for approximately half of the U.S. working-age population.
Prominent labor scholars and analysts have advanced proposals to address this problem. Some align closely with Davidson’s central tenet—that Maddie’s employment prospects will greatly improve if she quits her unfulfilling day job manufacturing specialized fuel injectors to instead pursue a college degree. As supporting evidence, Davidson offers the experience of Maddie’s coworker, Luke—another ambitious young employee with an associate’s degree in applied machining from a nearby community college. His degree not only guarantees Luke a better starting salary but also clears the path for occupational mobility and a higher, more secure position at the firm.
There are serious limits to this view of the problem, however. For one thing, there is the financial strain that often accompanies higher education. If Maddie left her job to pursue a degree, she would forgo her biweekly paycheck, making it harder to feed herself and her daughter and pay for child care, rent, and other household essentials. Though federal education funding and welfare payments could provide some temporary relief, they are risky without certainty regarding eventual job prospects. Would a college degree guarantee good employment and open the door to the middle class? What about her age (including the added years out of the labor market)? Or her responsibilities as a single mother? Or her inability to relocate or commute long hours? Do these and other factors foreclose long-term economic security even with more education?
This supply-side approach also ignores a major driver of income inequality: the low quality of entry-level jobs. Though more education might help Maddie get a better job elsewhere, it leaves the quality of her own bad job untouched—ready for another economically vulnerable applicant to assume. Any proposal to improve Maddie’s circumstances must improve the job itself, including changing how her contributions as a worker are recognized and rewarded.
Raising the Minimum Wage
An alternative proposal is legislation to raise Maddie’s minimum wage. Raising wages would obviously ripple through the low-wage labor market, benefiting Maddie and other undervalued workers. Projections by the Economic Policy Institute, a progressive-leaning think tank, reinforce this point: an increase in the federal minimum wage to $10.10 per hour would benefit upward of 17 million low-wage workers in the United States. If the rate were set at $15 per hour, an additional 15 million workers would experience a sizable earnings bump. These numbers would fall if legislation were limited to the state or local level, but they demonstrate the wide net that active labor market policy casts.
There is thus little doubt that a minimum wage hike could increase Maddie’s earnings potential. But could it also generate better career prospects for Maddie within the firm, allowing her to gain additional skills and higher wages? Scholars and activists who call for increased minimum and living wage standards contend that they would propel Maddie’s employer to introduce productivity-enhancing measures to offset some of the additional labor cost, making better use of employees’ underutilized talents. Whether this claim is right is a central question of the polarized debate over minimum wage legislation. Critics point out that Maddie’s employer might respond to a higher minimum wage in a less inclusive and supportive manner—perhaps adopting cost-cutting measures that would ultimately cost Maddie her job.
Recent studies find little to no job loss from a mandated wage increase, however, suggesting our economy could easily accommodate a universal raise. Especially compelling is a set of “border” studies that pairs neighboring jurisdictions with similar economic and industry characteristics, with one adopting a higher minimum wage standard. This work shows that raising the minimum wage standard does not cause significant or precipitous declines in overall employment. Follow-up studies find that employers that add new jobs after a higher wage ordinance has gone into effect either pass the increased cost on to their clients or adopt cost-saving measures to offset the mandated wage hike. Raising wages is therefore a promising option that could help improve earnings for low-wage workers.
Still, in light of Maddie’s precarious economic position, it is important to recognize that these results are simply averages. While a majority of employers in jurisdictions that have enacted higher wages continue to expand employment, others did not. Davidson’s interview with Maddie’s employer suggests that her boss was in the second camp: convinced that his small manufacturing company would struggle to absorb added labor costs, he was already pondering automation to replace entry-level workers. He is not alone. Interest in automation is growing. A recent study suggests that U.S. manufacturers may be particularly sensitive to higher minimum wages compared to their counterparts in place-bound service industries, such as retail and restaurants.
The upshot is that employers, even in manufacturing, can respond to higher wage requirements by shoring up entry-level jobs through upskilling workers or instead by replacing workers with technological alternatives. And this choice set highlights the limits of a blunt policy instrument, such as raising wages, in isolation. Back up action is needed to augment wage legislation. Reinforcing this point, scholars involved in path-breaking minimum and living wage research recognize that higher wage standards are only a starting place—and that more work is needed to translate those wage gains into better job opportunities.
Workplace Training and Support
This brings us to a third proposition: some combination of work-based change and institutional support.
Proposals in this vein include recommendations for job-site mentoring, meaning that front-line workers like Maddie would be paired with company engineers or product designers—including technical experts like her college-educated colleague Luke, who, according to Davidson, works separate from the entry-level workforce. Cross-functional mentoring allows for idea sharing and offers a channel for strengthening peer advocacy, such that higher-ranked workers could attest to the dependability and character of new coworkers and lobby for them to receive additional support and greater job security.
A related recommendation is for Maddie’s employer to provide dedicated time for group problem solving. This might involve employer-sponsored training: formal on-the-job structures augmented through off-site coursework. This option could easily be supported through a company-backed tuition reimbursement plan or a flexible work schedule that would enable Maddie to build on her foundational knowledge of high school math and science, subjects she enjoyed and excelled at as a student. Maddie’s employer could even create a federally registered apprenticeship program, partnering with a neighboring community college to align on-the-job learning with a technically relevant associate’s degree or industry-recognized vocational certificate.
These work-based learning opportunities could result in Maddie earning more as she develops new skills and be given the chance to move up the organizational ladder. We might even push the argument further and assume these workplace changes will result in an enduring employee-employer relationship that will simultaneously support higher productivity, process innovation, and career advancement—a win-win for Maddie and her employer.
Yet a closer look at the circumstances surrounding Maddie’s employer suggests it would be hard-pressed to implement many of these changes on their own, especially in light of a hypercompetitive auto parts market flooded with low-priced products imported from China. This difficult reality leads back to Davidson’s view: that social mobility is only possible if Maddie leaves her dead-end job to pursue a college degree. That is, unless we recognize the larger societal and economic inequities we create by letting firms off the hook for skill development, shifting too much of that burden to institutions of higher learning and the students they educate.
What can be done to redress this imbalance? We need a scalable solution that encourages employers to accept greater responsibility for skill development and to extend economic opportunity to workers on the lowest rungs of the U.S. labor market. Three principles help to map a course for institutional action.
The first involves situating skill development within a larger job quality framework. Skill development is not simply a precursor to accessing good jobs: it is what makes them good jobs. Quality employment gives workers access to learning opportunities and employer-sponsored training that can broaden career prospects, both within the firm and across associated industries. In this regard, training opportunities are not just a secondary consideration; they are as integral to job quality as high wages, comprehensive benefits, workplace autonomy, and job satisfaction.
Numerous writings have placed employer support for skill development on equal footing with family-supporting wages and other income-enhancing benefits. The International Labour Organization, an advocacy arm of the United Nations, has long associated skill development with “decent work.” Many scholars have done the same. It is imperative that workforce and labor advocates better leverage the power of skill to push U.S. businesses to improve the quality of the jobs they offer.
To help illustrate this possibility, consider a second principle: that skill confers shared value on workers and employers. Skill is not something that workers alone cherish. It holds value for both employers and employees. Workers seek out new skills to advance their careers but also to make their daily work lives more fulfilling. Employers recognize skill as essential for enhanced productivity and advancing product and process innovation. (This is manifest in the number of employers that are concerned about industry skill shortages.) A better-skilled workforce is a resource for employers to respond to emergent or unanticipated economic and technological challenges. More than just offering a promising solution to rising income inequality, then, skill improvements extend options for industry innovation and create the conditions for broad-reaching economic resilience.
Still, while workers and employers might share a positive association with skill, they do not always interpret it in the same way—for numerous reasons. At the most basic level, what exactly is “skill”? Is it just technical competency, narrowly construed, or does it encompass less tangible forms of cognition, creativity, and social capacity? Moreover, who is deemed skilled—and who has the power to make that determination? Are skills owned by individual workers, or are they part of a collective, tightly woven into the social fabric of everyday work?
These considerations bring us to a third principle: skill is an ambiguous and malleable concept. This ambiguity arises from different perspectives, experiences, and pressures facing workers and employers. Sometimes the resulting uncertainty can work against efforts to improve skill development at work. It can magnify employers’ fears that investments in on-the-job training will reward other firms if a newly trained worker accepts a job elsewhere. It can also create workplace friction that can undermine employers’ attempts to further extend work-based learning. Many scholars and workforce practitioners are uncomfortable with this uncertainty, so they seek greater clarity and precision through better skills assessment and measurement.
By contrast, I argue skill ambiguity is something we should embrace. Doing so can open the door for institutional action, allowing workforce advocates to cross the threshold into the firm and move employers through a skills-centered transformation to enhance the work experience of economically vulnerable workers and job seekers.
Indeed various types of worker-supporting institutions, from labor unions to workforce service providers, have used firm interest in skill as an opportunity to intervene at the firm level. They do so by building on the agreement among workers and employers that skill development is valuable for advancing economic opportunity and progress.
These institutions strengthen their worker advocacy role by harnessing—and sometimes heightening—uncertainty around skill. They can engage skill ambiguity to advance broader conceptions of expertise, advocating for lower-ranked workers who might otherwise be dismissed by their employers or coworkers as unskilled or underqualified. They can push employers to reinterpret skill investment as critical to future business success rather than as a liability or risk. They can extend negotiations around skill to influence thornier aspects of employment relations, such as negotiations over higher wages and more extensive worker benefits. And they can link employer investments in workforce skill to critical choices in technology adoption, guiding employers to implement new and improved technologies to enhance job quality and grow the business, expanding rather than cutting overall jobs. Uncertainty around skill thus offers a powerful resource that institutional actors can use to align the interests of workers and employers.
How can we leverage these principles to make much-needed change? A compelling model comes from workforce institutions that adopt a “dual-customer” approach, serving both job seekers and employers in order to enhance employment prospects through organizational expansion.
These institutions, commonly referred to as a workforce intermediaries, are diverse in their institutional origins and affiliations. Some are outgrowths of community-based nonprofit organizations. Others are extensions of well-established labor unions. Still others are branches of a county or state funded community college system. Despite their various affiliations, all help firms deepen their commitment to skill development by formalizing internal structures that recognize and reward work-based learning and occupational mobility.
Workforce intermediaries also link firms—and their front-line workers—to educational institutions, especially community and vocational colleges, that offer customized training and technical assistance to firms, along with portable credentials for workers. But this institutional partnership represents much more than the typical supply-side push for job seekers to rack up more credentials or degrees; workforce intermediaries tap these educational partners as a means to strengthen their influence over employers and to build an external path to reinforce skill development opportunities within firms.
In partnering with educational institutions to utilize existing course offerings and training expertise, these intermediaries help reduce employer training costs. This means that firms can spend internal resources on supporting employees’ career development through work-based learning. The result is a model that forges interdependencies between employers and educational institutions in order to create greater capacity to support skill development. Ultimately, an integrated institutional platform emerges that recognizes and reinforces skill development as a shared social responsibility.
We have many concrete case studies to learn from and build on. It is estimated that there are hundreds of workforce intermediaries in the United States—many more if we include new programs and initiatives embedded within publicly funded community colleges and high schools. While workforce intermediaries have long existed, their visibility increased in the early 1990s with a high-profile convening of progressive foundations, labor scholars, and practitioners. Since then, complementary efforts have been undertaken to expand the number of U.S. workforce intermediaries, aided by generous funding and support from philanthropic foundations and alliances—such as the Annie E. Casey Foundation, the Ford Foundation, and the National Fund for Workforce Solutions—as well as through such practitioner preparation programs as the Aspen Institute’s Sector Skills Academy. A rich body of scholarship on workforce intermediation also provides inspiring examples through in-depth case studies, demonstrating employment and wage gains through rigorous experimental and quasi-experimental analysis.
These intermediaries are not without their challenges. In their idealized form, they would be well positioned to increase economic opportunities for low-income workers and job seekers by influencing employer decision-making in hiring, wage-setting, and advancement. In reality, many practitioners within these intermediaries acknowledge the difficulties of persuading employers to make changes to existing organizational structures. This has led some intermediaries to double down on their provision of social services, including pre-employment training, offering a bundle of supports to low-income individuals and creating a safety net should their attempts to secure well-paying jobs fail. While these intermediaries do direct job seekers to “high-road” employers that provide quality jobs, they often struggle to take their work a step further to transform “bad jobs into good.”
Another challenge that prevents intermediaries from having greater impact is the dominant view is that technological change renders certain skill sets worthless and obsolete. In this “skills mismatch” framing, institutions are expected to step in only after firms have chosen new technologies and implementation is already underway. Employers assume that these institutions will be on call, prepared to update and refine workforce skills in response to industry’s adoption of new technology.
But it need not be this way. An alternative, more proactive and embedded approach is already in the works and yielding promising results, with far-reaching implications for entry-level and front-line workers. On the Las Vegas strip, the Culinary Workers Union engages its 57,000 casino working members in an annual technology survey, elevating the visibility of worker knowledge in new technology development and deployment. A state-funded technology center in upstate New York has partnered with front-line manufacturing workers to co-design a collaborative robot or co-bot. Building trades unions in northern California are partners in Factory-OS, a state of the art “prefab” construction facility, that combines pioneering robotics, in-house R&D, and advanced manufacturing methods. These unions help recruit and train the firms’ workforce, also advocating for wider adoption of manufactured solutions to address the region’s intractable affordable housing crisis.
These examples and others show it is possible to intervene earlier in the innovation process, positioning workforce skill as critical to technological decision-making from the start rather than as an afterthought. With more robust forms of intermediation, employers can learn there is value to having front-line workers continually participate in technological decisions and development. By extension, proposed technological changes can be subject to focused advocacy, especially in support of workers whose skill sets might appear tangential to innovation. Advocates can challenge this myopic perspective on worker equity grounds but also help employers realize worker exclusion is detrimental to future business success.
This alternative vision rejects the idea that technological change is predetermined and inevitable, refusing to relegate workforce institutions to the back seat. Instead it foregrounds new institutional alliances to rebalance the politics of skill, with renewed political focus not just on strengthening worker negotiations in the workplace but also on anchoring those gains to a broader, shared vision of inclusive innovation. In this unfolding future, power is not held by technology (or technologists) but lies in how institutional agents help technology designers, developers, and users—including employers—engage front-line workers in processes of innovation, including a reinterpretation of technological choices. What is most critical is an open and shared process of discovery, with front-line workers centrally involved in shaping new technologies and their applications.
This intersection of inclusion and innovation offers an opportunity for new forms of labor advocacy—one that treats skill development and innovation as two sides of the same coin. As advocates forge these new institutional partnerships, they must reconcile older labor traditions that focused on labor processes internal to a firm with more recent social and labor movements that seek to build worker mobilization and political power. They also must push back against the ever-popular assumption—one too happily advanced by technology futurists, influencers, and financiers in Silicon Valley and other high-tech hubs—that technological changes are inherently disruptive to jobs and damaging for less educated workers.
More than a critique of technological hubris, we need this counter-response to empower workforce institutions to elevate their influence over technology development and choice—and to go beyond the mere attempt to match skills to the latest technological fad. Strategies of skill reinterpretation must be amended to support the work of the future, promoting workers’ skills as crucial to technological progress by reestablishing skill development as a protected worker right.
Editors’ Note: This essay is adapted from the author’s new book Putting Skill to Work: How to Create Good Jobs in Uncertain Times.