Former Chief Economist for the U.S. Department of Labor, Professor of Public Policy at Georgetown

1Huddle Podcast Episode #124

On this episode of the Bring It In podcast, 1Huddle’s CEO and Founder, Sam Caucci, sat down with Harry Holzer, former Chief Economist for the U.S. Department of Labor, Professor of Public Policy at Georgetown, Senior Fellow in Economic Studies at the Brookings Institution. Harry focuses on the current landscape of workforce dynamics. He highlights the divide between companies that deeply invest in their workforce and those with a more transactional approach.

The conversation talks about challenges, such as limited funding for effective job training and the need for skills that are mobile and transferable. Harry emphasizes the societal responsibility to invest in individuals beyond immediate employer needs. This discussion also touches on the importance of creating a system for quick retooling and retraining, given anticipated shifts in job markets. Harry expresses hope for a future with such a system and emphasizes the need for high-quality jobs. This episode underscores the importance of adapting to workforce changes and fostering a learning environment that empowers individuals.

Audio available on Apple Podcasts, Google Podcasts, and Spotify.

TOP 3 HIGHLIGHTS

Below are some of the insights Harry shared during our chat, edited for length and clarity. You can find more Bring It In podcast episodes here.

• “We have to build a system where workers can plug into a relearning, retraining environment.”
• “There is a growing consensus that we need to move in the direction of what some people call skills based hiring. Rather than credentials based hiring.”
• “We want to build a system where I think employers help their employees do more of that rather than just letting them go.”

FULL TRANSCRIPTION

Sam Caucci: I guess to start off. Would you mind giving just a quick background to the audience on yourself?  

Harry Holzer: I am currently the John Lafarge professor of public policy at the McCourt School of Public Policy at Georgetown.

I’m also affiliated with Brookings, the Economic Studies Group, and the American Institutes for Research. I’m a former chief economist at the U. S. Department of Labor. And I’m a labor economist by training and spent roughly the last four decades studying low wage workers, less skilled workers, and what might help them. 

Sam: If you were to sum up the last four decades in just a few sentences, what does it look like in labor?  

Harry: Well, you know, I have chosen to focus on particular groups. I’ve done a lot of work on black youth and black men and the reasons for their low participation rates, low earnings rates.

I’ve covered everything from discrimination and affirmative action to skill building to how employers deal with criminal records and things like that. I have worked on high paying firms and why they choose to pay high and what impacts that has. And I focused on the rducation and workforce system, so I’ve covered a lot of issues in my time. Immigration, minimum wage issues, et cetera.  

Sam: Your recent article in Brookings titled “Should the Federal Government Spend More on Workforce Development?” for those that haven’t read it yet, I mean, could you give a quick background on it and why you wrote it?  

Harry: Sure. I was called to testify before the house subcommittee on higher education and workforce development.

That’s part of the house committee on education and labor. And I was making these arguments a major piece of legislation, the Workforce Innovation and Opportunity Act, often called WEOA, is up for reauthorization in the House. They’re trying to figure out what kind of bill they want to write. And so I addressed some basic issues, and I focused on the question of how the amount of funding in that entire package is so paltry relative to our needs relative to what we spent in the past relative to what other countries do.

I want to say, you know, we really need an injection of new resources there as well as some specific priorities, I think to focus on. 

Sam: You know, to that point, you said kind of we don’t spend enough that gets quoted at 0. 1 percent of GDP relative and that’s put in comparison. Other countries are spending as much as five times that.

But you also mentioned that what we’re doing may not necessarily be working. You mentioned kind of many employers feel federal job programs may be wasteful or ineffective. Can you talk more about that? 

Harry: Sure. I mean, so first of all, we’ve got to be careful about what we mean by workforce development programs?

Because one of the one of the unusual things in the American system is you have this body of legislation coming out of the Department of Labor and a set of institutions that they used to call one stop shops. Now they’re called American job centers.  A lot of that is distinct from the higher education system.

And you might say, well, higher education is different. Degree programs are different, but the lower end of higher ed, you know, especially community colleges and for profit schools  contain a lot of certificate programs, both for academic credit and not for credit that overlap with what we usually call job training.

So, we do have to be careful about exactly what we’re talking about. But if you focus on the, we owe a piece,  the evaluation evidence has been very mixed. There’s some studies, including 1 major one that I offer where the returns look decent for at least some pieces for the adult  training programs.

There’s also some evidence that the one stops are fairly effective. But I think we’re stuck in what you might call a low dollar, low impact equilibrium or situation where, on the one hand, the dollars are so small that the impacts just can’t be very good. Just isn’t enough for serious training. But as long as the evaluation impacts don’t look good, Congress is reluctant to put more resources.

So you’re stuck in this situation. I think that’s gonna be hard to get out of with relatively weak evidence based on relatively weak spending. There are other parts of that system that perform much better. Some parts of the community college system do better. And then we have the set of what we call sectoral training programs where workforce developers work hand in hand with key employers and industry groups in high demand, high wage industries to really get a sense of exactly what kind of training they want. To carefully provide that training, if they send really good people to the employers, and you know that the employers need very badly. 

Some of those programs are really outstanding and have long and lasting positive impacts. The problem is they’re all quite small.  And it would be expensive to scale them up.

And there’s lots of issues about what to do about workers that aren’t quite well prepared. So again, you know, there’s the federal, we owe a programs have a somewhat mixed track record. There’s other pieces of the system that look very bright. And the question is, can we, can we do more to build on the things that look effective?

Sam: So, I’ve been sitting on the Newark workforce board for two years now and I run a startup tech company. And wanting to get involved and engage in the community have been able to kind of learn a lot in observation. And one of the things that struck me about when I read your article, and finished reading it, there was this question of what can companies do?

You know, I mean, again, there’s the whole we owe a reauthorization and what happens, you know, on the public side. But as a private sector company, what would you say to me as a  talent leader, C level executive, CFO? 

What is my responsibility or opportunity that I should engage in to make sure that we’re, you know, playing our part in our communities to make sure that these programs are the most effective?

Harry: Well, you know, a company’s first interest is to generate profit. You know, especially if they’re a public company for their shareholders and if they’re not a public company for themselves.

And I get that we don’t expect them to do anything differently. And of course, a lot of companies, especially large companies have effective job training programs internally that they’ve devised, you know, career ladders and sometimes all kinds of work based learning and incumbent worker training that work quite well for them. 

But there’s clearly a set of industries where that’s not sufficient to meet their needs and the needs of the economy.  You know, especially these high demand– and we know what we know what these industries are, right? Healthcare, advanced manufacturing, transportation, logistics, IT and some others. 

So it’s helpful if  employers in those industries work with their industry association to develop these sector partnerships and perhaps to advocate for what would work better from their point of view.  And it would be nice if they– and again, I think some companies already do this very well, but some of the smaller companies have more difficulty with it.

They don’t quite know how to invest the dollars, where to find the talent, you know, and especially in a tight labor market like the one that we’ve had where you have these ongoing worker shortages. So companies that work with their industry associations and that let their local workforce boards, their state workforce boards, maybe speak on federal issues.

To generate more resources, but then to say, but this is what we would find most effective. You know and I don’t think  companies should call all the shots, right? Because again, companies are going to be looking from their own perspective at what works. You know, and for instance, a company today might need, I don’t know, 100 welders or machinists. 

Tomorrow, that might all get automated. You know, those investments might no longer be right. So we don’t want to look only from the company’s perspective, you know, and a lot of employers have a tendency to say, we don’t really care about credentials. We don’t care about degrees from community colleges, we need exactly this. 

But as a society, we also have to worry beyond the interest of that employer. We want workers to get training that is portable. If they leave that employer, even if they leave that industry. And that will enable them over time to build and to have strong careers. So the employers need to get more engaged, but we can’t rely.

And we need to, we need to try to meet their needs. And they will often talk about what their needs are in terms of incumbent worker training, and maybe some help with work based learning. Customized training, but that’s an important piece that can’t be the only piece and the only voice I think of who we pay attention to. But again, it’s very important, you know, and I do think a lot of the American employers  are skeptical of this entire system.

You know, there’s always a tension between–  historically these systems have been mostly oriented towards helping disadvantaged workers. And employers say, but I’m not in the business of helping disadvantaged workers I’m in the business of, you know, running my business and trying to generate profits and finding really highly skilled workers. 

And the sector based training programs the best of them have been very good at that, taking the employer perspective very seriously and trying to meet them where they are and to send them candidates that they need. Sometimes the employers might then have to step up to the table as well and generate your work based learning opportunities, you know, get involved with curriculum building, et cetera.

So employers are very important. They’re not the only voice, but they’re an important voice.  

Sam: Yeah, I mean, you mentioned that 50 percent of all Americans over 25 still have no post secondary education or training credential. 

Harry: That’s right.

Sam: I think that in what you just said a second ago about portability and maybe even stack ability, it feels like employers at times want– and I’m interested to hear your point of view on this, if there’s any data you’ve seen around it, but it feels like during COVID, HR teams got skinnied down a little bit in a lot of environments. You know, companies scaled back in certain areas, where do they scale back? Marketing and human resources.

And the labor shortage in some ways was because organizations didn’t have anybody at the controls, and they were bringing folks back into human resources while they were also trying to find talent. You know, And in finding talent, this challenge of workers being able to show the world what they know. I don’t know, I always struggle with the word low skilled and unskilled from a moral perspective, given that I think that if a society hasn’t allowed the worker to signal what they know on paper the same way a four year degree does, you know, can you really, can a company or can a society really call somebody unskilled? 

I don’t know what your thoughts are. 

Harry: I think that’s a very important issue. And this is always a question of information and how do you in fact signal to employers what you know. And when the information is very imperfect,  you fall back on a credential to sort of signal credential that people understand.

There’s also a separate problem of the sort of proliferation of credentials short of degrees in a lot of cases, and employers having no idea what they really mean, and workers have no idea. But we use credentials when the information’s imperfect. Now that has limitations, because not everybody can get a degree, and not everybody can get a credential.

So I think there is a growing consensus that we need to move in the direction of what some people call skills based hiring. Rather than credentials based hiring, to really spend a little more time finding out what workers know and what skills they bring to the table based on  whatever they’ve done in the education world, whatever they’ve done, what prior work experience they have, any other licensure they have, or, you know. But there’s a big question of how do you do that?

You know, how is it that, in fact, you pay less attention to those credentials and what information, how do you generate that information and how can the employer really test it, trust it, or test its validity. There’s some great work being done in that area. There’s an organization called Opportunity at Work that’s working with a bunch of companies to develop what they call “wallets”. 

Things that workers can do to show what they know. There’s a whole budding movement about what they call prior learning assessment by companies, but also by schools to try to give workers more credit when they walk in the door. So I think that while that movement is important, it makes sense that in a worker shortage environment, you’re seeing more of that, right?

I mean, in a recession, it’s an employer driven market and employers have their pick over workers, a surplus of workers. But now you’re in a labor shortage environment and companies just aren’t getting the candidates whom they really want, so they have to work a little harder to find out.

It’s in their interest to work a little harder. And I think it’s incumbent on all of us, including the public system, to try to help them do more of that.

Sam: Harry, appreciate you taking time. One final question for you. I ask folks, you know, given that we’re talking about the future of work, obviously the reauthorization of WIOA is really important as we think about creating a world where in a society where every worker can compete and have the opportunity to be successful.

What is your hope for the future of work? 

Harry: Well, you know, I think we’re going to be in a world where a lot of automation is going to go on. We’ve already had that kind of world. It’s probably going to grow. You know, I think the right way to think about artificial intelligence and robotics is that it’s going to automate specific tasks, not necessarily entire jobs, but specific tasks. 

Now, if those tasks are only 20, 30 percent of what a worker does, it might well be in the employer’s interest to help them pivot, pick up a few new responsibilities. If it’s 50 or 70 or 80 percent of what they do, there’s a much greater chance that they’re going to get laid off. We want to build a system where people can retool fairly quickly. Find, you know, if the tasks that they were able to perform are now automatable and better done by machines, how can they pivot towards skills that are complementary with the automation rather than being fully replaced by it?

You know, there are cliches around lifelong learning. But we have to sort of build a system where workers can plug into a relearning, retraining environment.  We want to build a system where I think employers help their employees do more of that rather than just letting them go. But we also want to build a system where it’s relatively easy for workers, number one, to get the information that they need about what skills they have, and where they can build on that.

And number two, figure out how to get the extra training. There’s a lot to be done. You know, I can imagine part of it is about retraining subsidies to employers. I can imagine some of it is about lifelong learning accounts. Some of it is about working with the community colleges and some of the private colleges to make themselves more effective.

And by the way, you know, online learning might play an increasingly important role in this. You know, online learning didn’t work so well during the pandemic, but it kind of stands to reason that you can automate some parts of learning, combine it with the human touch in the right places. And that could make all of the training more accessible to adults who need to work full time and you know, and provide for their families.

But that’s what I’m looking for a system where when automation occurs and when some of people’s tasks get automated,  people and businesses can more quickly pivot to what else these people know, help them learn something and in that kind of world,  everybody will benefit from the automation, not just the employers trying to improve their profit margins.

But that’s what I’m looking for down the road. And also to have high quality jobs. High quality jobs that pay more that require a higher level of skills where employers are willing to pay more for the talent and workforce development’s an important piece of that.

Sam: Harry, that’s great. Thank you for taking the time. Great to meet you. 

Harry: Same here, Sam. 

Topics Discussed: Future of Work, Workforce, Education, Jobs, Training, Skills