The U.S. economy is hitting all sorts of records: lowest unemployment in decades and longest consecutive job growth. The economy is so hot that firms claim they can’t fill open jobs fast enough and corporate profits are soaring.
Also reaching an all-time high: income and wealth inequality. So what gives?
Despite decades of stagnating wages and stalled-out compensation benefits, the fact that there are more job openings than unemployed people has become a commonly used proxy to illustrate why workers lack the right skills employers seek. Predicated on the “skills mismatch,” expanding individual training and credentialing programs have become the perceived silver-bullet solution to helping workers get ahead in a good economy.
The problem is, having a good job means more than just being matched to any job, and pushing workers to upskill won’t solve growing inequality.
Even when unemployment peaked at 10.1 percent during the Great Recession, fingers also pointed to worker’s skill sets as falling short against employers’ desire for certain qualifications. But upholding a skills narrative that places the onus of employment on the shoulders of workers not only lacks relevance for those facing the greatest barriers to employment, but also limits mobility and risks exacerbating an already record-high economic inequality.
To be clear, job outcomes that matter for workers include educational attainment. Research linking higher levels of education with higher earnings, better health and a longer life is well established. But because an individual’s ability to gain and maintain employment is also dependent on personal and social circumstances, systems that have a stake in both boosting workforce competitiveness and advancing equity must take into consideration these varying experiences.
Rather, determining employability additionally entails reconciling an individual’s interests and needs with employment conditions characterized by factors such as geographic location, personal preferences for compensation and work schedules, and social networking opportunities. Put differently, the persistent abundance of job openings could be the result of multiple labor mismatches — not only because workers have skill deficiencies.
Putting these complexities into context, it’s time for a bold shift away from the singular skills story to one in which employment risks and insecurities generated during economic change are shared equitably by everyone who has a stake in economic success. This means that all workers should be afforded the right to quality workforce training options and transition support into good jobs, regardless of whether they are new to the labor market, currently in a job, or considered a contingent employee.
The best way to do this would be to establish a dedicated trust fund to build and sustain resources for workforce and employment equity.
Rooted in joint cooperation and mutual benefit, representatives of workers, employers and the government would share responsibility in overseeing this trust designed to advance equitable employment opportunities as a key mechanism to building workforce competitiveness. Specifically, it would do away with old, ineffective workforce strategies by designing elements most essential to help measure how much structures and policies mitigate — or reinforce — employment bias, while also increasing understanding of how current job training and workplace practices keep many people from getting more education or increasing earnings. And critically, the trust would employ mechanisms that protect against discrimination in the labor market.
Here’s how it would work: By levying into a trust fund a miniscule tax (0.05 percent) on corporations with gross receipts of $250 million or more, the fund has the potential to finance billions of dollars into an equity-centered workforce system for workers who want a job or want to change jobs. Furthermore, it would be a trust fund that emphasizes the right to quality workforce training, to engage in inclusive employment strategies, and to be matched into good jobs that will increase in income and earnings over time.
And for those corporations sweating the tax, higher receipts and larger firms would be able to absorb this relatively tiny cost by investing in the future as all businesses adapt to a changing workplace.
Businesses would benefit through increases in productivity and decreases in turnover from affirmatively investing in all workers, and through these contributions they also play a critical role in sharing the responsibility of improving workplace standards. This would improve job quality and contribute towards building a more equitable and stable economic system — as opposed to merely training and matching workers to any job.
In the first three years, nearly $700 million from the National Housing Trust Fund has been allocated to the states to ensure access and affordability through the housing market. Taken in tandem with the Employment and Training Investment Assessment in Texas and the San Francisco Early Care and Education Commercial Rents Tax , it’s clear that there are a growing number of examples where policies that share responsibility and risks can lead to a combined return on investment.
When it comes to increasing levels of inequality, ensuring everyone the right to quality training and employment just might be the change needed to break this record.
Livia Lam is a senior fellow and director of Workforce Development at the Center for American Progress.