Workforce Development

A changing economy requires a renewed focus on lifelong learning

July 5, 2017  • Alastair Fitzpayne & Ethan Pollack

Technology and increased global competition have changed the nature of work, making it less stable and secure than in previous generations. The announced merger of Amazon and Whole Foods provides the most recent example, and has raised concerns that many of Whole Foods’ 90,000 employees could be automated out of their jobs. With recent advances in the field of artificial intelligence, technology is capable of performing more and more tasks that were previously only performed by humans, changing the skills necessary to find and hold jobs and threatening to disrupt key areas of the workforce. While no one can predict the future, and technology will present both opportunities and challenges, building and maintaining a globally competitive workforce will require business, government, and workers to develop new partnerships and programs.

The Trump Administration’s recent focus on workforce development and apprenticeships, in particular, is certainly laudable, but the impact is likely to be modest. The Department of Labor now provides only 450,000 registered apprenticeships. The President’s proposal to add $100 million would not expand overall workforce development funding, because it pays for the increase by taking money from other key workforce development programs.

We will need bolder solutions if we are to meet the challenges that less stable work and automation will bring to our labor force. One area that policymakers need to examine is the outdated American approach to education and training. Most Americans spend roughly the first quarter of their lives in school receiving general education rather than any specific work-based skills training. And when the transition to the workforce occurs, workers are then expected to learn on-the-job, either through employer-provided training or on their own. Many will never receive formal education or training again.

The “learn and earn” model provided stability and security for many American workers when the economy was characterized by large corporations with hundreds of thousands of workers, strong labor unions, internal hiring, and clear career pathways. With workers spending most if not all of their careers at one firm, businesses had strong incentives to invest in their workforce. And while it is hard to imagine in today’s business climate, there were examples of companies that helped train workers they had just laid-off. As Rick Wartzman describes in The End of Loyalty, in the late 1950’s, General Electric provided laid-off veteran employees with 95 percent of their pay during a retraining period.

But as businesses employ more workers indirectly through subcontracting and franchise agreements, their relationships with their workers are becoming more project-based and temporary. As a consequence, businesses are less likely to make significant workforce training investments.

This trend is occurring at the very moment the economy demands a greater emphasis on career-long training and development. Worker productivity is increasingly dependent on the ability of workers to adapt to new technologies, making it essential for them to learn new applied skills over time. But even core skills that do not require knowledge of specific technologies will be subject to change: for example, complex problem-solving, persuasion, and emotional intelligence are projected to become more important, while physical strength and dexterity will become less important. A World Economic Forum report found that by 2020, more than one third of the core skill sets of most occupations will include skills that are not considered crucial to today’s workforce.

A number of prominent voices are calling for a transition to a lifelong learning education model. New York Times columnist Tom Friedman writes, “The notion that we can go to college for four years and then spend that knowledge for the next 30 is over… if you want to be a lifelong employee anywhere today, you have to be a lifelong learner.” A recent National Academies of Sciences, Engineering, and Medicine report noted, “If workers take on a larger variety of jobs over their career, or if skills requirements shift (whether due to technology or other economic factors), they will need to learn a more diverse set of skills over time.” The Economist recently called lifetime learning “an economic imperative,” while Sen. Ben Sasse (R-NE) has spoken passionately about the need to create “a society of lifelong learners… a culture in which people in their 40s and 50s, who see their industry disintermediated and their jobs evaporate, get retrained and have the will and the chutzpah and the tools and the social network to get another job.”

The urgency around lifetime learning is, in part, driven by automation’s expected impact on the workforce. A recent McKinsey Global Institute report found that over half of all the work activities in four significant industries – accommodations and food service, manufacturing, transportation and warehousing, and retail – could be automated using existing technologies. There are currently 47 million people in those industries alone, accounting for 38 percent of the employed workforce. Those most at risk, such as cashiers, fast food workers, cab drivers, salespersons and store clerks, are generally supporting low-income families. Our system, which relies on employers to provide training, will be of little help to these workers.

One policy option is to create Lifelong Learning Accounts, which workers could use for training and education over the course of their careers. The accounts would be tax-advantaged, and employers – or contracting firms, in the case of an independent contracting relationship – would be able to match worker contributions. Workers could use these funds at any time during their career to invest in training, either to help them advance or to change jobs in response to displacement. Since these accounts belong to the workers, they would be portable from job to job.

To ensure that Lifelong Learning Accounts don’t disproportionately benefit high-income workers, the tax benefits should be targeted to low- and middle-income workers. Further, because workers with low incomes face acute challenges to saving given the everyday costs of health care, housing, and education, the government should consider making direct contributions on their behalf, and could use the Earned Income Tax Credit as a model for how to structure contributions.

To avoid the complexity around creating another account that Americans would need to manage, Lifelong Learning Accounts could simply build off of the tax advantaged savings vehicles already in place, such as 529 accounts that currently help over 12 million Americans save for college.

Lifelong Learning Accounts would provide a number of benefits:

  • A better-trained workforce. Workers would have an incentive to save money to invest in additional education and training over their careers. Low-income workers would be given an account automatically to which the government could make contributions. With additional resources, workers would be able to better afford and access opportunities to upgrade their skills.
  • Improving unemployed workers’ ability to find new jobs. Job loss can be traumatic, especially when it comes in the context of a wave of outsourcing or automation that affects all similar jobs nearby. The Lifelong Learning Account would give a laid-off worker additional resources to use during their period of unemployment to accumulate new skills, making them better able to quickly find a new job. Turning disruption into opportunity for re-skilling would benefit workers and the broader economy.
  • More flexibility to shift jobs or careers. Currently, a worker’s career path is partially dependent on the training they receive from their employer. But employers are generally only willing to train workers for the job they have. This creates a lock-in effect, making it difficult for workers to transition to different occupations or industries. Providing workers the tools to more easily move between occupations and industries will help workers find jobs that better leverage their strengths, and are potentially more satisfying.

Other countries are adopting policies that provide lifelong learning to their workers. Singapore recently established and funded “individual learnings accounts” for each citizen over the age of twenty-five to spend on training programs from a list of 500 approved providers. In 2015, France established individual training accounts which workers can use to pay for 24 hours of training per year over eight years in a wide variety of programs. Businesses fund this benefit with a 1 percent tax on payrolls. This year, the U.K. introduced a new “apprenticeship levy,” in which large businesses (over £3M in payroll) contribute 0.5 percent of their payroll expenses to fund workforce training.

States are also experimenting with lifetime learning concepts. Maine and Washington have established their own lifelong learning accounts, and legislation has been introduced in a number of other states.

This idea has a history of bipartisanship in Washington D.C. In prior Congresses, Sens. Cantwell (D-WA) and Snowe (R-ME), and Reps. Emanuel (D-IL), Ramstad (R-MN), Larson (D-CT), Polis (D-CO), Roskam (R-IL), and Paulsen (R-MN) have proposed legislation to create tax-advantaged lifelong learning accounts.

In a world where workers are receiving less training, and where the next wave of automation threatens massive job disruptions, the need to help workers access lifelong learning opportunities is critical. Options like Lifelong Learning Accounts could help workers better manage their economic future by incentivizing workers, businesses, and government to co-invest in the development of worker skills over the course of their careers. The economy and the nation will be better for it.

Alastair Fitzpayne is the Executive Director and Ethan Pollack is the Associate Director for Research and Policy at the Future of Work Initiative.