Everyone wants to train workers for “high-demand” jobs—but which exactly are those?
By: Pam Harder
Senior Managing Director, Virginia Economic Development Partnership
When it comes to talking about good jobs, the buzz words are endless. We read about “jobs for the future”, “in-demand jobs”, “good middle skills jobs”, “high-demand jobs”, “opportunity occupations”—the list goes on.
In times when our labor market is in upheaval, first widespread pandemic-related unemployment, now record-breaking labor shortages, everyone is trying to answer the same hard question. If I want to devote my limited federal, state, local dollars towards training individuals in my community for good jobs, which exactly are those jobs I should be focusing on? Especially in the wake of the unprecedented level of federal dollars coming down to states focused on economic recovery and post-pandemic economic growth, it’s a perfect time to step back and reflect on this.
How would you define a “high-demand job”?
It is a really hard question that might have very different answers depending on your vantage point.
As a parent, I’d want my child to choose a job that ideally pays enough for them to live a good life, offers stability, offers opportunities for professional advancement and growth over the years, doesn’t require crazy hours or unsustainable lifestyle choices, is intellectually engaging, and is ideally something they love doing that aligns with their interests and passions.
As a jobseeker, I’d want all of the above, but also would want to think about speed, cost, and non-monetary benefits. Maybe I’m newly unemployed and have bills to pay and would need the shortest, quickest, cheapest path to gainful re-employment that doesn’t break the bank and doesn’t take years of more schooling. If I had kids or elderly dependents to worry about, I’d also be optimizing for things like health insurance, paid time off, paid sick leave, retirement savings benefits, level of work/life balance, opportunities for flexible hours, and other factors that would give me the broader support network I’d need.
As a state economic development practitioner, I’d ideally want to train individuals for jobs that not only meets their individual and family’s needs as outlined above, but also that create positive spillover effects for a healthy, well-functioning economy. I’d want to focus training dollars on jobs that are likely to be in short supply, and also on jobs that align closely with the sectors we are trying to strengthen and grow in efforts to grow the overall economy. Not just wage levels, but also wage growth over time would also be a key factor, knowing that those wage earners will be paying a share of those in taxes to the state.
So, how do you balance all of those lenses and criteria, along with actually quantifying each with objective data sources, in order to come up with a definitive “answer” of what “high-demand occupations” actually are? In Virginia, the first step we took in Virginia was taking a close look at how other states have approached this question.
Different recipes, similar ingredients
Even before the Covid-19 pandemic, state governments have had to answer this question for decades. Through the Workforce Innovation and Opportunity Act (WIOA), states receive federal dollars to “help job seekers access employment, education, training, and support services to succeed in the labor market and to match employers with the skilled workers they need to compete in the global economy.” WIOA training dollars must be allocated towards high-demand occupations. States may also have state-funded reskilling / training programs, free or subsidized community college, scholarship programs, or other programs that are specifically geared towards high-demand occupations.
In our state benchmarking research, we looked across almost a dozen states, and found that each state has similar ingredients, but slightly different recipes for how they quantify and identify high-demand occupations. For example, In Kentucky, every job is put into a tier (1-5) based on a combination of how much it pays and how much it’s forecasted to grow. In New Jersey, the state first creates a “demand-side index” using total employment numbers, historical growth in total employment, long-term projected employment growth rate, and long-term projected job openings. It then compares that to a “supply-side index” calculated with two supply-focused (number of unemployment insurance claimants in each occupation, as well as number of reported graduates / completers in academic programs that likely feed into that occupation) to identify which occupations in New Jersey have a significant excess of demand over supply. In Pennsylvania, they use a similar set of inputs to create an initial list, including number of annual job openings and average wages, with region-specific thresholds, and then apply a series of filters to remove occupations from the list that have significant employment historical employment loss, have seen a nominal wage decline, or have very high occupational unemployment rates.
In Virginia, building on the great insights gleaned from others, we ultimately landed on a scoring methodology that boiled down to five key inputs, each scored, weighted, and aggregated to create Virginia’s 2021-2022 High-Demand Occupations List:
To what extent does the job offer good earnings right off the bat in Virginia? Quantified as: Entry-level wages (10th percentile, BLS data), tiered based on Virginia-specific MIT Living Wage Virginia data as well as Virginia’s current 2021 minimum wage
To what extent does the job offer opportunities for advancement in Virginia? Quantified as: Intra-occupational wage growth calculated as the ratio of 75th percentile wages : 25th percentile wages (BLS data)
How much is this job forecasted to grow over the next 10 years? Quantified as: Projected % growth in base employment (BLS data, 2018 to 2028) scored and tiered relative to state average for that time period
To what extent does this job fuel Virginia’s larger state-wide economic development strategy? Quantified as: % of SOC employment within Virginia’s state-wide economic development plan’s priority industry clusters
Our methodology is not perfect - nor is that of any other state. But nonetheless it offers a strong perspective supported and quantified by the best available data sources in the state currently. Virginia has in fact already embarked on enhancements to be incorporated in future year methodological refreshes, which are outlined in detail in “Areas for Future Methodological Refinement” section of our full report.
The elephant in the room: In many states, workforce training dollars are disproportionately spent on training for jobs not backed by the data.
After finalizing Virginia’s scoring methodology and actually putting it into action, stakeholders identified an elephant in the room: a substantial number of occupations currently funded through our workforce system did not make the list. Some jobs like Certified Nursing Assistants (CNAs), heavy and tractor-trailer truck drivers, K12 teachers, where Virginia already is devoting significant dollars towards providing subsidized training for new entrants, did not score highly enough on one or more criteria. Ultimately our “solution” to this dilemma for the 2021-2022 methodology was simply to grandfather in jobs for which we have existing subsidized training programs in place for already.
But it begs discussion—why are many states, putting significant training dollars towards occupations that offer some combination of low entry-level wages, low wage growth over time, are not forecasted to grow much, and/or are not directly linked to a state’s economic development priorities? In addition, data reveals that many also have less than optimal working conditions, persistent part-time work offerings, precarious scheduling, less than ideal health or sick leave benefits, all factors which directly or indirectly contribute to generally higher than state average turnover rates in many of these occupations.
Some argue that simply the methodology is incomplete. Maybe there should be a new variable that somehow quantifies the degree of “social spillover effects” of every given occupation. Or perhaps taking into account the speed and cost of reskilling (prioritizing cheap, fast reskilling options) is the missing variable in the methodology. But others say it is in fact time to re-think how and where we spend workforce dollars. Many national thinkers are already leading the charge on this, including the Harvard Project on Workforce’s early explorations into reforms around Eligible Training Provider Lists and Aspen Institute’s Job Quality initiative.
Early innovators: Re-thinking reskilling and workforce training dollars
So, what is “the answer” to this dilemma? It’s hard, and complicated. In an ideal world, we’d see the market correcting for labor market shortages when they are driven by high turnover – whether it’s offering higher wages, better benefits, or other market-correctors. But in practice, especially when it comes to highly regulated industries or business model-constrained industries, it’s not always up to the free market. The wages of Certified Nursing Assistants are unlikely to increase substantially on their own absent federal changes to Medicare reimbursement rates. Daycare workers are unlikely to see higher wages when families are already at their maximum willingness to pay.
It’s unlikely in a state’s best interest to simply continue subsidizing the training of new entrants to these fields, fueling the revolving door of high turnover. But what is the alternative? We see a handful of innovative policy solutions out there already. To highlight a few:
Step Up to Quality: Ohio’s Child Care Quality Rating System. Ohio’s Step Up To Quality (SUTQ) is a five-star quality rating and improvement system administered by the Ohio Department of Education and the Ohio Department of Job and Family Services. SUTQ recognizes and promotes learning and development programs that meet quality program standards that exceed licensing health and safety regulations. The program standards are based on national research identifying standards which lead to improved outcomes for children. As childcare programs hit certain quality milestones, they ‘earn’ additional state subsidies in wages for their childcare workers. As a result, higher quality childcare centers are able to pay wages, in the range of $14 per hour instead of $9 per hour, which not only encourages retention of workers, but also promotes quality throughout the system.
Finger Lakes (FLX) Clinical Support Career Pathway Initiative. The FLX clinical support career pathway initiative is an ongoing collaboration between regional healthcare providers in the Finger Lakes region of Upstate New York and the local community college system to actively structure a functional career pathway that will progress nursing assistants and home health aides to available LPN roles and eventually RN. The purpose of the pathway is to ensure that providers and educators have designed structures to overcome barriers such as transportation, childcare and learning supports. The program provides a full wrap-around portfolio for each student addressing food and time insecurities, professional and social support networking, and other challenges that may create barriers to completion and upward mobility. Employer partners hire new recruits for nursing assistant roles and pay them while they train for their CNA licensure through the community college. To help address historically high turnover rates, once licensed, candidates receive an increase in wage that averages $1 an hour greater than non-program participants. Additionally, new graduates have access to advanced skill courses and are given priority for entry into a new LPN option. The third stage which is still in development, is access to a bridge program specially designed to support these healthcare workers in achieving a successful progression to a RN. This type of structured approach involves dozens of community partners, educators, and employers working together to help address the need for a region to produce and retain an adequate supply of clinical support workers but also ensure these workers have a viable path to higher earning opportunities within their field of practice.
Virginia’s G3 and FastForward programs already are a strong foundational start towards addressing the root causes and challenges endemic to occupations that may not be “High-Demand” by objective data criteria. G3’s stackable training options along identified career pathways, for example, as well as initial training courses that lead to an industry-recognized credential provides significantly more on-ramps and off-ramps for students, coupled with coaching and financial assistance. FastForward programs seamlessly align to numerous G3 pathways. However, there is still much more white space in the years ahead to continue to innovate.
Pam Harder is the Senior Managing Director of Strategic Talent Initiatives at Virginia Economic Development Partnership (VEDP), the state economic development agency of Virginia. She leads innovative investments in higher education, workforce, and economic development across the Commonwealth of Virginia. She was the architect of the Commonwealth’s recent $1.1B higher education investment, Virginia’s Tech Talent Investment Program. Pam was also instrumental in the design, incubation, and launch of the created Virginia Office of Education Economics. Pam was born & raised in Reston, Virginia. She holds BA in Economics from Stanford University, a Master of Public Policy (MPP) from Harvard Kennedy School, and a Master of Business Administration (MBA) from Harvard Business School.