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Philly Fed president: Helping workers isn't social service; it's an economic investment

What if people thought about workforce development as an investment in the economy rather than a social service for the disadvantaged? How would that change the situation for workers? For businesses? For society?

Philly Fed chief Patrick Harker (center) discussed apprenticeships Thursday in Austin, Texas. In June, he visited with apprentices at the Philly shipyard.
Philly Fed chief Patrick Harker (center) discussed apprenticeships Thursday in Austin, Texas. In June, he visited with apprentices at the Philly shipyard.Read moreED HILLE / Staff Photographer

These days, economic pundits and finance folks hang on Patrick T. Harker's every word, hoping for clues to when the Federal Reserve will raise the rate at which banks can borrow money from one another.

The rest of us just go to work. Whether that work works to sustain a family, build a career, and enrich a nation's economy is another issue altogether.

Which was Harker's point in remarks made Thursday morning at the Investing in America's Workforce Capstone Conference in Austin, Texas. As president and chief executive officer of the Federal Reserve Bank of Philadelphia, Harker is part of the Federal Reserve system that sets U.S. monetary policy.

Harker also has spearheaded the Fed's look into the nation's workforce, including job quality, skills gaps, and barriers to employment.

"While we're essentially at the point of maximum employment — in its simplest terms, if you want a job, you can get one relatively easily — that doesn't mean it's a good job, or that it pays a living wage, or that it comes with the benefits that can be truly family-sustaining," Harker said in remarks delivered at the conference.

"This situation doesn't actually keep people from work, but it does affect their ability to move up the economic ladder. And that's not just a problem for individuals, families and communities, but for the economy as a whole," he said.

On the one hand, Harker said, employers are identifying skills gaps and labor shortages. Even as employers automate, they need more workers with tech skills.

But, he said, the labor force isn't getting enough education, and what it is getting isn't good enough. There are other barriers, too, though: addiction, incarceration, the cost of child care, and something as simple as being able to catch a bus on time to get to work.

"We have to stop looking at workforce development as just a social service," he said. Instead, the public sector needs to see it as "an investment in the economy."

"Investors," he said, "succeed when the company they're backing does well. The U.S. economy succeeds when we back programs that move people out of poverty and into stable, sustainable employment."

That investment, Harker said, looks like improved early-childhood education and apprentice programs.

He used the occasion to release a 37-page report, written in Philadelphia by Noelle St. Clair, who came to the Fed system as a community-development specialist from a Philadelphia-area organization, Uplift Solutions, a nonprofit loosely affiliated with Brown's Super Stores, a chain of ShopRite supermarkets in and around Philadelphia.

Uplift Solutions is working on just the kind of program Harker suggests — moving people with criminal records into jobs at supermarkets, starting with low-wage jobs that lead to more opportunity later.

The report was produced in conjunction with the John J. Heldrich Center for Workforce Development at Rutgers University in New Brunswick. Here are some of its findings:

  1. Employers should be more open to more types of credentials — boot camps, certifications, "digital badging," as opposed to traditional education and degree attainment.

  2. Employers should improve low-level job quality, such as consistent, predictable scheduling and more benefits, which will provide a more stable work environment.

  3. Employers should also look, in conjunction with workforce developers in the public sector and in philanthropy, to creating career ladders that predictably move people from the lowest rungs to higher positions by offering their current employees a clear path to advancement through additional training and "stackable credentials."

  4. Society should invest in early-childhood education — not just for the children, but for their parents, who will be better able to stay employed if they know their children are safe and learning.

  5. Investing in workers isn't only a matter of training. Workers need stable, affordable housing; access to transportation; and high-quality child care. Additional support services should be provided to those dealing with addiction or a transition from incarceration.

  6. Increase apprenticeships and other work-based training models, in which employees can "earn and learn" while employers provide "customized training" to enable them to precisely gain workers in hard-to-fill fields where they anticipate vacancies as baby boomers retire.

  7. Banks and financial institutions can help. In the past, banks typically used their required community-redevelopment act funds for real estate lending. However, a change in regulations allows bank to lend for workforce-development purposes. So, for example, a bank could now help a nonprofit or other organization finance the purchase of expensive machinery needed for training.