BA 850
Sustainability Driven Innovation

Workforce Training and Development


Workforce Training and Development

A True Story

I'd like to take a moment to share an experience that I think frames the realities, challenges, and potential of workforce training.

I had been interviewing the owners of a family-owned, second generation machine shop located in a scenic, but somewhat downtrodden, part of Pennsylvania. Literally started in a garage by its founder, Bill Sr., it had grown into a 50 employee shop, tidily kept and loaded with modern CNC equipment, mills, and exotic alloys. Based on more than 40 years of reputation, the shop had more business than it could handle–much of it coming from major manufacturing plants on the East Coast who appreciated their attention to detail, honesty, and speed. He had a deep pride in what he had built, and loved telling people that everything you were wearing–everything in the room– had been created by something a machinist had made, be it a plastic die for molding a monitor casing or the cutters for the glass on your iPhone.

Bill Sr. was a grandfatherly figure who happened to drop in while I was talking to his son, who now managed the shop. We talked about the beginnings of the business, the failures and successes, but you could tell he was a bit reluctant to talk about something, that he was holding back a bit. So as we got further into the discussion, I asked him if there was something bothering him. He looked at his rather significant boots, and back up at me, and said, "I can't believe what's happening with the kids today." This bear of a man was visibly hurt.

He told me about his disappointment about the closure of both the metal shop at the local high school, and the local vocational technical school. He told me about trying to keep kids interested in the trades by taking days away from the shop to speak at the schools, and inviting classes to the shop. He said that when he spoke to the classes, he offered a full scholarship to Machinist School to anyone willing to raise their hand, and he guaranteed he would hire them the day after they graduated. It was not an exaggeration or a parable–it was a contract.

Not a single student raised their hand. Year after year.

He was hurt because "working with your hands" was so looked down upon these days... that college was pushed by high school counselors as the only option, even for kids who shouldn't be in college. He talked about seeing people unemployed or on drugs in the local town, and couldn't help feeling that it was a tragedy. He wanted to provide the area and its families with what he knew were stable, well-paying jobs. He gestured with his head to the gleaming, 1940s Bridgeport vertical mill in the corner of the shop. "See that? That's the machine I fed my family with for 10 years. That's the machine that built my reputation, that's the machine that started this business."

We talked a bit more, and you could tell he was getting upset and tears began to well at his eyes. I felt for him, so I wanted to change the conversation a bit. "So, out of curiosity, what would one of those Machine School graduates make that day after they graduated?"

He took a deep sighing breath. "Eighty thousand dollars. They would start at eighty."

Workforce Development and Sustainability

Workforce training and development is one of those initiatives that has yielded benefits in a range of ways: from providing a reliable, well-trained workforce for the organization (3P: Profit), to providing opportunity for advancement and stable employment for the employee (3P: People), to enriching communities by helping to provide stable employment and living wages. This is also another one of the facets of sustainability where a financial case can be clearly demonstrated, and can warm the hearts of even the most metric-driven CFOs and VPs of HR. The more specialized the skill needed by the organization, or higher the impact of losing an employee, the more workforce development and training becomes a compelling strategy for the sustainability of the organization. 

Let's examine the current realities of workforce training in America, contrast it to the workforce training development model in Europe, and then look at an example of an American workforce applying and adapting the European model to create a sustainable "win-win-win scenario" between an organization, employee, and local community.

Current Realities of the American Workforce

From the "Pathways to Prosperity Project," Harvard University Graduate School of Education (Symonds et al., 2011) (emphasis is mine):

The “forgotten half” challenge has deepened with the growing importance of post-secondary education to success in the labor market. In 1973, nearly a third of the nation’s 91 million workers were high-school dropouts, while another 40 percent had not progressed beyond a high school degree. Thus, people with a high-school education or less made up 72 percent of the nation’s workforce. In an economy in which manufacturing was still dominant, it was possible for those with less education but a strong work ethic to earn a middle class wage, as 60 percent of high school graduates did. In effect, a high school diploma was a passport to the American Dream for millions of Americans.

By 2007, this picture had changed beyond recognition. While the workforce had exploded nearly 70 percent to 154 million workers, those with a high school education or less had shrunk to just 41 percent of the workforce. Put another way, while the total number of jobs in America had grown by 63 million, the number of jobs held by people with no post-secondary education had actually fallen by some 2 million jobs. Thus, over the past third of a century, all of the net job growth in America has been generated by positions that require at least some post-secondary education.

graph from harvard study showing significant decrease of job availability for those without college degrees, 2007 vs 1973

Workers with at least some college have ballooned to 59 percent of the workforce, from just 28 percent in 1973. Over the same period, many high school dropouts and those with no more than a high school degree have fallen out of the middle class, even as those who have been to college, and especially those with bachelor’s and advanced degrees, have moved up. The lifetime earnings gap between those with a high school education and those with a college degree is now estimated to be nearly $1 million. And the differential has been widening. In 2008, median earnings of workers with bachelor’s degrees were 65 percent higher than those of high school graduates ($55,700 vs. $33,800). Similarly, workers with associate’s degrees earned 73 percent more than those who had not completed high school ($42,000 vs. $24,300).

Going forward, these trends will only intensify. Although labor market projections, like all economic forecasts, are inherently uncertain, we are struck by the work of the Center on Education and the Workforce at Georgetown University. The Center projects that the U.S. economy will create some 47 million job openings over the 10-year period ending in 2018. Nearly two-thirds of these jobs, in the Center’s estimation, will require that workers have at least some post-secondary education. This means, of course, that even in the second decade of the 21st century, there will still be job openings for people with just a high school degree, and even for high school dropouts. But the Center projects that applicants with no more than a high school degree will fill just 36 percent of the job openings, or just half the percentage of jobs they held in the early 1970s. Even if the Center has overestimated demand for post-secondary credentials, the long-term trend is undeniable.

The message is clear: in 21st century America, education beyond high school is the passport to the American Dream. But how much and what kind of post-secondary is really needed to prosper in the new American economy?

The Georgetown Center projects that 14 million job openings—nearly half of those that will be filled by workers with post-secondary education—will go to people with an associate’s degree or occupational certificate. Many of these will be in “middle-skill” occupations such as electrician, construction manager, dental hygienist, paralegal, and police officer. While these jobs may not be as prestigious as those filled by B.A. holders, they pay a significant premium over many jobs open to those with just a high school degree. More surprisingly, they pay more than many of the jobs held by those with a bachelor’s degree. In fact, 27 percent of people with post-secondary licenses or certificates—credentials short of an associate’s degree—earn more than the average bachelor’s degree recipient.

Demand for middle-skilled professionals is exploding in the nation’s hottest industry, healthcare, which has added over half a million jobs during the Great Recession. Openings for registered nurses and health technologists—positions that typically require an associate’s degree—are expected to grow by more than 1 million by 2018. There will also be exceptionally rapid growth in such healthcare support jobs as nursing aide, home health aide, and attendant. Though such positions are still open to high school graduates, they are increasingly filled by people with some post-secondary education or a certificate. Similarly, over half of massage therapists and dental assistants now have a post-secondary certificate.

There will also be a huge number of job openings in so-called blue-collar fields like construction, manufacturing, and natural resources, though many will simply replace retiring baby boomers. These fields will provide nearly 8 million job openings, 2.7 million of which will require a post-secondary credential. In commercial construction, manufacturing, mining, installation, and repair, this kind of post-secondary education—as opposed to a B.A.—is often the ticket to a well-paying and rewarding career.

The European Apprenticeship Model

From the "Pathways to Prosperity Project," Harvard University Graduate School of Education (Symonds et al., 2011), emphasis is mine:

If you look at the U.S. secondary education system through a comparative lens, one big difference becomes immediately apparent: most advanced nations place far more emphasis on vocational education than we do. Throughout northern and central Europe especially, vocational education and training is a mainstream system, the pathway helping most young people make the transition from adolescence to productive adulthood. In Austria, Denmark, Finland, Germany, the Netherlands, Norway, and Switzerland, after grade 9 or 10 between 40 and 70 percent of young people opt for an educational program that typically combines classroom and workplace learning over the next three years. This culminates in a diploma or certificate, a “qualification,” as it’s called, with real currency in the labor market. In virtually all of these countries, vocational education also provides a pathway into tertiary education for those who choose to take it.

Upper secondary vocational education (or VET, as it is generally known) varies significantly in structure from country to country, but there are two basic models. The first, usually referred to as apprenticeship or the dual system, has students spend three or four days in paid company-organized training at the workplace, with the other day or two in related academic work in the classroom. Germany has the oldest and best-known apprenticeship system, which offers programs leading to recognized qualifications in about 350 different occupations. Switzerland also has a very highly regarded apprenticeship system. A second group of countries have opted for a model in which vocational education is mostly provided in school-based programs, although they all incorporate at least some work-based learning. These countries typically introduce students to a broad cluster of occupations (e.g., health care or IT) before narrowing the focus of training in the third year.

From a U.S. perspective perhaps the most important distinction among these countries is the age at which students are separated into different tracks. Germany and Switzerland have separate middle or lower secondary schools based largely on the school’s assessment of a student’s academic potential. This is a practice we deplore, and it is no surprise that the students in the bottom track German middle schools fare the least well in the labor market. Finland and Denmark, on the other hand, keep all students in a common, untracked comprehensive school up through grade 9 or 10, at which point students and their families, not the school, decide which kind of upper secondary education they will pursue. We believe this model makes much more sense for the U.S. to consider, but it would mean that we would have to be willing to abandon our reliance on the various forms of tracking, subtle as well as overt, that pervade much of our education system through the elementary and middle school years.

Despite their highly unattractive early tracking practices, there is much to learn from the German and Swiss apprenticeship systems. In many ways, they exemplify the new 3 “R’s” of much U.S. secondary school reform: rigor, relevance, and relationships. Thanks to high standards, those who complete a VET program have qualifications roughly equivalent to Americans who have earned a technical degree from a community college. As such, they’re prepared for more advanced studies in institutions of higher education, such as polytechnics and universities of applied science. The German federal states, which regulate education, are now working to improve access for such students.

In all of these apprenticeship systems employer organizations play a major role. They take the lead in defining occupational qualifications, providing paid apprenticeships or other work-based learning opportunities and (in collaboration with educators and trade union partners) assessing student performance and awarding certificates. In Germany, for example, they pay about half of the expenses associated with the system, contributing roughly as much as the government. Why are they willing to make such a substantial investment? Simply put, German employers believe that the best way to get a highly qualified workforce is to invest in the development of young workers, participate directly in their training and socialization at the workplace, and then hire those who have proven themselves to be productive at the end of the apprenticeship period. An added incentive is that apprentices can be hired for less than the standard wage, and terminated easily if they don’t work out. As a result, some studies suggest that the work and other benefits contributed by apprentices more than offset the costs to employers. No wonder roughly a quarter of German and Swiss employers participate in the dual system.

Strategic Advantages of Workforce Development

In creating a stable flow of reliable, highly-trained employees for itself, BMW has managed to bring a significant practice of their German plants to the US: apprenticeships. Combining the best of the American and German training models, potential employees are paid to be trained for what could be their position at BMW. During this process, BMW has access to see how a prospective employee performs and learns, and the prospective employee is able to see how they like the position and fit, as well. Importantly, with its more than 4,000 apprentices, BMW addresses a significant identified risk to its business.

From the BMW Sustainable Value Report 2013:

Despite diverse challenging economic conditions for the global automotive industry, the BMW Group was able to achieve very good results in 2013. This is mainly due to the commitment, creativity and expertise of our employees. We want to continue to make every effort to attract and keep the best people. Apart from the fixed and variable salary components, we also offer our employees a wide range of social benefits. Our employees are deployed according to their individual strengths and talents, which they can continue to develop by taking advantage of targeted, future-focused further education and training programmes.

At the same time, we still face challenges ahead. In Germany and other Western industrialised nations in particular, skilled workers will become increasingly scarce in the medium term. Demographic change is also having a considerable effect on the age structure of our workforce. It is therefore essential that we position ourselves on all relevant labour markets as an attractive employer, for all target and age groups. To achieve this we offer an attractive working environment that takes particular account of age and life phases. We constantly develop the skills of our employees to meet our high commitment to innovation.

Please watch the following 5:26 piece PBS did on BMW's apprenticeship program in its Spartansburg, SC plant:

Video: BMW plant in S.C. imports German apprenticeship program (5:26)

Credit: PBS NewsWeek. "BMW plant in S.C. imports German apprenticeship program." YouTube. June 4, 2014.
Click here for a transcript of the BMW plant in S.C. imports German apprenticeship program video.

JUDY WOODRUFF: On Friday, we're going to get the latest snapshot from the federal government about the state of the job market. A separate payroll report issued today found private companies created almost 180,000 jobs in May fewer than in April. The unemployment rate remains very high for those under the age of 25. It's in the double digits, and at higher rates for teens without degrees.

The NewsHour's economics correspondent, Paul Solman, has a report about one program from an auto manufacturer that offers possibilities for some of those workers. It's part of his reporting on Making Sense of financial News.

PAUL SOLMAN: The BMW factory in Spartanburg, South Carolina, BMW's only US auto plant. Built 20 years ago, mainly for access to the American market, it's now the sole production facility for their popular X Model line of luxury crossover SUVs, 1,200 vehicles a day. But BMWs and the occasional Teutonic executive aren't the only German imports around here. There are also apprenticeships.

WERNER EIKENBUSCH: I actually grew up in Germany in a little village. And my daddy and my mom were of a blue collar background. So for them, college was not something that they had really envisioned for me.

PAUL SOLMAN: And so Werner Eikenbusch, BMW's head of workforce development for the Americas, left high school in 10th grade for an apprenticeship, combining on-the-job job training with vocational school.

WERNER EIKENBUSCH: This German dual system has a long history in Europe. I mean, it goes back hundreds of years, so it's really very much embedded. And it is actually a recognized, you could call it, educational pathway, that for whatever reason, did not make it over into the US.

PAUL SOLMAN: Eickenbusch later became an engineer, rose through BMW's ranks. A few years ago, unable to find enough skilled workers to fill jobs in the Spartanburg plant, he helped set up an apprenticeship program modeled on the ones back home.

At first it was far from an easy sell. For one thing, German apprenticeships are associated with unions, a no, no in this famously Right to Work state. For the record, the BMW plant is not unionized.

For another thing--

RYAN CHILDERS: There's a little bit of a stigma with going into a manufacturing type career.

PAUL SOLMAN: Ryan Childers, a former production worker himself now oversees the apprenticeship program. Where does the stigma come from, do you think?

RYAN CHILDERS: Maybe 30 years ago the textile industry or industries of that nature, a pretty dark environment to work in, dirty environment.

PAUL SOLMAN: Unlike modern auto plants. So Childers hit the recruiting road, and still does nearly every week, pitching the program at community colleges and high schools. At Greenville High School's career day, the main competition was the military, Wal-mart, and a small local chain of funeral homes. The BMW program looked pretty good to these seniors.

RYAN CHILDERS: It's $12.00 starting out it and goes up to $14.50.

WOMAN: See, I like that.

PAUL SOLMAN: Part-time work while getting an all expenses paid associate's degree at one of three area technical colleges with a near guarantee of a job and further education down the road.

STUDENT: You really got in touch with BMW, because I like the program they have.

STUDENT: You don't get too many jobs that start off about $12.00. That's great pay for kids our age.

PAUL SOLMAN: It was a similar pitch that got Amanda Echols' attention while attending a radiology program.

AMANDA ECHOLS: They pay for your college, first of all, so you will get a degree when you're done. You make good money while going to college. I just could not see anybody turning it down, really.

PAUL SOLMAN: But most people would turn it down.

AMANDA ECHOLS: I don't think they really understand what it is. I think when they hear manufacturing they think dirty, you know, sweaty, nasty. I mean, I keep my hands clean all day long. They don't get dirty at all.

PAUL SOLMAN: It's the robots that get dirty here. 1,400 of them rule the roost, making much of the plant seem on automatic pilot. But there are also 8,000 jobs for humans, starting at $15.00 an hour plus benefits.

BRIAN ORDONEZ: You get paid pretty good to be working on the line here.

PAUL SOLMAN: Apprentice Brian Ordonez hopes to make robotics his career. Thinks it's not so much a threat as an opportunity.

BRIAN ORDONEZ: You need a person to tell that robot what to do. And you need that person to fix it.

PAUL SOLMAN: Well, maybe you will have robots that fix the other robots.

BRIAN ORDONEZ: What robot are you going to have to fix that robot that's fixing the other robot? No, you need people. You need people to fix it.

PAUL SOLMAN: Well, for the next few years anyway. Since even the robots still need to wear protective sleeves in the paint shop, I suited up. Thank you, Dustin.

DUSTIN REID: You look just stunning.

PAUL SOLOMAN: Yeah. I've always wanted a white suit.

Dustin Reid may be sartorially indiscriminate, but he knows from dirty jobs. After high school and the Marines, he spent two years working in a scrap yard, then four as a supervisor in a poultry processing plant he'd just as soon forget.

DUSTIN REID: Manufacturing is really, really growing right now.

PAUL SOLMAN: But isn't the American dream to get a four year college degree and then get a good job?

DUSTIN REID: There's a lot of students nowadays that graduate with a four year degree and can't find work. But with this two year degree, I'm able to come and get a career for the rest of my life at a premier manufacturing company. Pretty much speaks for itself.

PAUL SOLMAN: Economist Bob Lerman, who tagged along with us in South Carolina, has been studying youth unemployment for decades. Right now, even college grads under age 25 have a 50% chance of being un or underemployed. And the long term prospects are much worse for the one third of young Americans without any college at all. Apprenticeships, Lerman thinks, provide a ray of hope.

BOB LERMAN: It's the most promising thing I've seen for the broad problem of youth that are not succeeding in a four year college.

BRAD NEESE: We talk all the time about people without jobs and jobs without people.

PAUL SOLMAN: Brad Neese runs Apprenticeship Carolina, a state funded office founded in 2007 that helps employers set up registered apprenticeship programs. To sweeten the pot, South Carolina offers a $1,000 per year tax credit per apprentice. But the companies bear most of the educational and training costs, which can run well over $50,000 a head.

BRAD NEESE: We've built this thing from 777 apprentices to over 10,000 now. When we started it we only had 90 companies. We now have 650 today. The reason we're growing is because the businesses are saying we need a pipeline of talent. We need to grow our own. We can no longer find talent in the open market.

PAUL SOLMAN: Even as US unemployment has remained stubbornly high, employers, especially in manufacturing, complain they can't find enough qualified workers. So Apprenticeship South Carolina helps tailor the State Technical College curriculum to each employer's needs, like this mechatronics program at Greenville Tech used by BMW and others. Do you worry at all that with industry so specifically running the show, it's somehow compromising the educational mission?

BRAD NEESE: So what if they're not reading Shakespeare? These guys want to work with their hands. They want to get into the theoretical knowledge, not of the iambic pentameter. They want to get into the theoretical knowledge of Ohm's law.

BRANDON RICHARDS: I'm more of a hands on person, not a sitting in a desk writing and looking at a computer screen.

PAUL SOLMAN: Brandon Richards is an apprentice at United Tool and Mold in Easley, which supplies BMW and other German companies, has modeled its new apprenticeship program on theirs.

JEREMY ARNETT: It starts out with a paid associates degree. And we also pay for their time while they sit-in the class. If their hourly rate at the shop is $10.00 an hour, then they're going to make that $10.00 an hour while they're sitting in school.

PAUL SOLMAN: A third generation tool and die maker, production manager Jeremy Arnett is a true believer in apprenticeships. When he started here 16 years ago--

JEREMY ARNETT: I didn't know the difference between a drill and a reamer and an [INAUDIBLE]. I see myself in those young kids. And all they want's an opportunity, but don't have the skill sets.

PAUL SOLMAN: But why, if apprenticeships are booming in the Palmetto state, are they lagging everywhere else? Down 40% nationwide in the last five years.

WERNER EIKENBUSCH: I think a lot of it has to do with really the mindset. Are you willing to think long term and invest on the front end? Because you're going to have the return on investment through the career of a successful and productive employee. It's just you have an upfront cost.

PAUL SOLMAN: Bob Lerman suggests another reason.

BOB LERMAN: Unless you allow everybody to do the same thing--

PAUL SOLMAN: Go to college, that is.

BOB LERMAN: Yes, go to college. You are reducing it equality. And people are very uncomfortable saying that my child will go to college but your child might not go to college. And then there are people who don't even start college. And what are their options? They're not very good.

PAUL SOLMAN: So perhaps apprenticeship should be one of them.

JUDY WOODRUFF: And Paul has more with BMW's Werner Eikenbusch who gives his unique perspective on management styles as a German working in the US. That's on Making Sense.

Five word summary - Employee, employer, community all win