Monthly jobs reports have drawn applause for impressive top-line numbers, but a troubling pattern persists in the U.S. labor market. Even as unemployment remains at its lowest point in nearly two decades and unfilled jobs are at record highs, wage growth continues to lag.
There is a strikingly simple reason the current job market feels precarious: the fundamental social contract between employers and employees is broken.
Pension benefits, the heart of the decadeslong precedent in which workers came to expect employers would invest in their retirement, have eroded in recent years. Wage growth has not kept up with productivity growth. As a result, workers now shoulder both the costs of training to develop and maintain employable skills and the costs of retirement. These burdens have resulted in high student loan debt and insufficient retirement savings.
Simultaneously, employers remain hamstrung because of a lack of skilled workers and a growing skills gap, raising questions about who is responsible, practically and financially, for helping workers keep their skills sharp.
Employers and workers have been at a standoff, with businesses hesitant to invest in career training for workers who they feared would take their new employer-financed skills to a better-paying job elsewhere and employees reluctant to take on debt to pay for career education that didn't guarantee access to better-paying jobs. Meanwhile, both employers and employees have suffered — and with them, so has the nation's economy. According to a study from Korn Ferry, the skills shortage could create 85.2 million unfilled jobs and cost nearly $8.5 trillion across 20 major global economies.
Building a more robust infrastructure for learning new skills and lifelong learning has never been more important. A new report from the Organisation for Economic Co-operation and Development found that while 10 percent of U.S. jobs are at high risk of being wiped out by automation, another 28 percent will require worker retraining.
Now is the time to consider a new contract, one in which workers and businesses partner on education and skills training for their mutual benefit and higher education plays a more central role in helping to advance fulfilling, stable middle-class careers. Unlike the old contract, which focused on employers helping employees after they left the company or retired, a new contract should focus on business and workers sharing the responsibility — and the costs — of investing in lifelong learning.
At my organization, which works with businesses in many sectors, we are seeing growing willingness from employers to put skin in the game. Businesses are recognizing that closing the skills gap will require investments in their workers. Last year, total U.S. worker-training expenditures rose 32.5 percent to $90.6 billion, reflecting the serious dearth of skilled workers in industries ranging from nursing to manufacturing to software development.
Yet, a financial commitment is only the first step. Solving this problem requires innovative new models that break down the firewalls between the classroom and the office. Programs like apprenticeships and tuition reimbursement, which help workers "earn while they learn" and have been pioneered by leading corporations like Walmart, Starbucks and Siemens, should be part of the new contract.
We also must unlock the power of bringing educational and training curricula into companies in a robust way, to provide comprehensive, company-approved skills training to employees. At ECMC Group, we are investing in this model for its potential to transform the way in which our nation's workers attain and refresh the skills needed for the jobs of the present and the future.
Competitive global economy demands we view education holistically, as a lifelong process to ensure workers' skills are regularly updated.
Public expectations remain high: three-quarters of people agree that "a company can take specific actions that both increase profits and improve the economic and social conditions in the community where it operates." It's time for the U.S. business community to establish a new training contract with employees and, with the help of educational partners, rise to meet the challenge of strengthening the workforce for today and tomorrow.
Jeremy J. Wheaton is president and chief executive of Minneapolis-based ECMC Group, a nonprofit that helps students succeed through programs promoting financial education, college access and college completion. He is also the president and CEO of Zenith Education Group, a nonprofit provider of career school training.
