Employment and Jobs

Developing Better Data on How Local and Regional Labor Markets Are Changing

June 24, 2019  • Alastair Fitzpayne & Ethan Pollack

This blog post is an excerpt from the Future of Work Initiative’s report Automation and a Changing Economy, released April 2019. The report is divided into two parts. Part I: The Case for Action, explores the impacts and history of automation, why this time may be different, and why action must be taken to maximize opportunity, minimize disruption, and ensure that the gains of automation are broadly shared. Part II: Policies for Shared Prosperity proposes 22 policy solutions to ensure that our increasingly automated economy is also one that promotes greater opportunity and broadly shared prosperity for all. Throughout the year, the Future of Work Initiative will republish many of these policy solutions.

Labor market data help workers, students, employers, workforce investment boards, and state agencies make informed decisions. Detailed data on local and regional economies is often nonexistent or inaccessible. Better data would benefit local, state and national stakeholders by improving understanding of how economic forces like automation are affecting local and regional economies.

State governments can be particularly important actors, both in collecting and using better data. Colorado, for instance, has worked with the Markle Foundation’s Skillful Initiative (in partnership with Microsoft and LinkedIn) to develop a more effective and transparent skills-based labor market, including with better tracking of skill needs and workforce capacities. By working with employers and educational institutions to make skills a common language and currency for job postings and education and training programs, the state hopes to make it easier for workers to show what skills they have, learn what skills employers are looking for, learn which programs will help them acquire those skills, and better match with jobs. Last February, 20 Governors helped launch the Skillful State Network in an effort to scale the model. But achieving that level of transparency—and linking the theory up with actual hiring decisions in practice—can be quite difficult without the underlying data and information on skill needs and gaps.

The Workforce Information Advisory Council (WIAC), which advises the U.S. Secretary of Labor on how to improve national and state workforce information systems, has published a draft report recommending specific actions to help all stakeholders better prepare for a changing economy. The following proposals are inspired by their recommendations:

  • Enrich state UI wage records: States should include additional data elements in UI wage records, such as occupational title (using standardized occupational codes), hours worked, and work sites, to provide a more accurate picture of career pathways. DOL should work with states to establish strategies and processes to promote the enhancement of wage records, and provide one-time resources to upgrade states’ data collection systems and train employers on them. Louisiana, Oregon, Washington, and Alaska currently collect additional data elements, such as hours and occupational title.
  • Increase funding for state labor market information systems: The federal government provides funds to state agencies to produce, disseminate, and analyze state and local labor force statistics, including the identification of “in-demand occupations and industries,” but these funds have been cut by 45 percent since 2002. In accordance with the WIAC recommendations, federal policymakers should double the amount of funding for state agencies. In addition, state policymakers should invest more heavily in their own labor market information systems.

Though unlocking and enriching existing public datasets and creating new datasets and metrics are important long-term policy goals, much of these efforts could take years to develop. This is particularly concerning given existing labor market frictions that are leaving millions of Americans out of employment while open jobs sit unfilled. Though the official unemployment rate is quite low, and the number of job openings in the U.S. reached an all-time high of 7.3 million at the end of 2018, the employment to population ratio remains well below its pre-recession level

Many private sector entities have rich proprietary datasets which could provide a complement to public data. Companies such as LinkedIn, Burning Glass, Monster, and others track workers and their skills, companies and their job openings, schools and their programming, wage rates and more. Though these data may be narrower in scope than public administrative data, they do offer the possibility of answering timely labor market questions that available public data currently cannot. For instance, LinkedIn’s Economic Graph tracks city-level skills shortages and surpluses by measuring the skills that appear in job postings on their site, the share of LinkedIn members in that city who have that skill listed in their profiles, and hiring rates of workers with and without that skill.

This presents an important opportunity for public-private partnership. Federal and state policymakers should explore partnerships with private data companies to develop current-state analyses and future looking projections, and these businesses should share their knowledge and expertise to inform development and use of new public data efforts.