What’s next for skills-based hiring?

What do tech layoffs and an economic slowdown mean for skills-based hiring, apprenticeships, and nondegree on-ramps to good jobs? Also, JFF’s Michael Collins on rhetoric vs. reality with racial economic equity, and an update on tax breaks for education benefits.

As 2023 begins, perhaps the biggest question for workforce education is whether an economic slowdown will prompt companies to pull back on their efforts to create paths to good jobs for more Americans.

A widely shared worry is that the cooling labor market, led by layoffs in tech, could dampen enthusiasm for skills-based hiring, apprenticeships, and other alternatives to traditional college.

While the turbulence of the last few years has led to many unexpected results, a drop in college enrollments shouldn’t have been a surprise, at least outside of bubbles of wishful thinking.

Early on in the pandemic, many college leaders said they were bracing for steep declines due to disruptions to the lives of students, particularly those who attend community colleges. Overall college enrollments had been falling steadily for roughly nine years before the pandemic. And the hard times probably aren’t over for most colleges.

The Great Resignation was harder to foresee. Wages rose for entry-level roles across some industries (with most of those gains largely eaten by inflation). Millions of Americans looked for more stable careers, leading to a wave of job-switching and a modest spike in worker power.

Companies scrambled for hires as a record 4.5M employees voluntarily left their jobs in November 2021. The turnover among frontline workers in retail, hospitality, and healthcare quickly became a crisis, with some large companies seeing most of their new hires quitting in just 90 days.

The unprecedented job market prodded some employers to get more creative about hiring and retaining workers, including those without four-year degrees. But experts say attempts by corporations to diversify hiring pipelines, while welcome, have fallen well short of a sea change.

Most of the layoffs so far have been at Big Tech companies, notes Michael Collins, a vice president at JFF. And he says the evidence suggests those corporations have not made significant strides in hiring Black workers, regardless of commitments they made after George Floyd was murdered.

“Black tech workers continue to be underrepresented in the industry at all levels,” says Collins, who is leading a racial economic equity initiative from JFF and contributed to a recent landscape scan on investments in racial economic equity.

In an interview with Work Shift, Collins said the recent wave of layoffs is a continuation of what Black workers have historically faced. Their employment opportunities improve in a tight labor market. But because Black employees often are the last to be hired, he says they tend to be the first to be fired in an economic downturn.

“Cases where DEI efforts and Black tech talent took direct hits are unfortunate examples of the emptiness of some of the commitments to DEI,” says Collins. “Those statements were more about branding and photo opportunities than they were about structural changes in employer recruitment, hiring, advancement, workplace climate, and other equitable talent practices.”

Layoffs and the Long Play

Collins was careful to separate the hiring practices of Big Tech companies from the bigger job of opening more doors to good jobs in technology. And he says the long-term outlook for careers in tech remains strong.

“The current layoffs should not be confused with tech not being a strong pathway for economic advancement for Black learners and workers,” he says. “Technology is important across all industry sectors, and there are employment opportunities in tech-adjacent industries.”

In the short term, however, some observers are worried about what hiring headwinds might mean for apprenticeships and other on-ramps to tech jobs.

Job postings in a broad category of software development began to slow in May, Elyse Ashburn reports for Work Shift, citing data from Lightcast. And many apprenticeships and tech bootcamps are focused on those roles.

For example, Apprenti, a large and well-established U.S. tech apprenticeship provider, has seen a steep decline in corporate agreements to bring in apprentices. The nonprofit says two-thirds of the commitments that were in place in August evaporated by October, which was before many of the major layoffs began.

Layoffs and hiring freezes are particularly challenging for job seekers who are new to tech or who have noncollege credentials, says Lili Gangas, chief technology community officer at the Kapor Center.

“It’s going to be very difficult for the talent that has to compete against more experience,” Gangas tells Ashburn.

Collins also weighed in on noncollege paths. While there is a great need for alternatives to the four-year degree, he says the learn-to-work ecosystem must do more to help Black and Latino learners make smart decisions about their education and training options.

“I worry that some of the advocacy for short-term skilling and credentialing strategies is not grounded in employment and earnings data, which puts workers of color at risk of investing in pathways and credentials that may not pay off,” he says.

The experts Ashburn interviewed agreed with Collins that efforts to expand hiring opportunities in tech to more job seekers are a longer-term play. This year may be a setback, but they predict that interest in apprenticeships and other on-ramps to tech jobs will continue among companies and learners, as well as state and federal agencies.

The Kicker: “This tech shortage isn’t going away,” says Jennifer Carlson, Apprenti’s co-founder and executive director.

Taxing Education Benefits

Predicting what might happen in the U.S. Congress is particularly fraught right now. But advocates continue to back proposed legislation to encourage companies to spend more on the education of their workers.

Remember the two bills filed in 2021 to raise the $5,250 cap on tax breaks for companies offering worker education benefits? A cosigner of the U.S. House version said this week he “has no doubt we’ll be reintroducing it” this year.

“To keep productivity high, we’ve got to keep people motivated, stimulated, activated and developing new skills that enhance the skill sets they have,” said Rep. Danny Davis, an Illinois Democrat. “That’s why it’s worthwhile to do it.”

Like the U.S. Senate version, the bill originally filed by Rep. Jason Smith, a Republican from Missouri, would raise the cap to $12K. That figure could change each year, since the bill would index the cap to inflation.

Davis predicted rare bipartisan support for the legislation — he called it a “no-brainer” — since it would not only incentivize companies to invest more in employee training, but also reduce education costs for learners. Plus, the cost of inaction is too high, he said: “In an era of tremendous technological changes, if people aren’t able to [access education], then they’ll be left behind.” — Margaret Moffett

Open Tabs

Skills-Based Hiring

Utah will seek to eliminate bachelor’s degree requirements in hiring for state government positions, Spencer Cox, Utah’s Republican governor, announced last month. Cox said the skills-based hiring initiative, which follows similar moves by governors of Maryland and Colorado, will broaden access to qualified talent while creating opportunities for apprenticeships and on-the-job training.

Short-Term Credentials

Oregon’s 17 community colleges are expanding short-term programs and offering free and discounted courses through a $200M state investment in job training and education, reports Meerah Powell for Oregon Public Broadcasting. The career-focused fund has allocated $15M so far. For example, Clackamas Community College is using the money to discount courses in more than 90 career and technical programs.

Staffing Woes

Community colleges face a labor shortage, having lost 13% of their employees nationally during the pandemic, reports Sara Weissman for Inside Higher Ed, citing recent data from EAB. Four-year institutions have recouped most of their staffing declines, but community colleges have lagged in their recovery. The sector is reporting losses among IT, student success, and dining hall workers, as well as executive leaders.

German Model

The private sector in Germany covers roughly 75% of the costs for apprenticeship programs, according to a report from the U.S. Department of Commerce’s National Institute of Standards and Technology. Standardization makes it easy for German employers to offer apprenticeships. And nationally recognized skills standards help create a clear path for apprentices to additional schooling or certifications.

Learner Records

Despite strong interest and growth, the use of digital credentials and learning and employer records (LERs) at scale is still in the early stages, according to a report from the Brookings Institution. But the gradual adoption process presents an opportunity for governments, education providers, and employers to better align their systems around advancing ethical and equitable access to education and lifelong learning.

Federal Policy

The U.S. Department of Education this week announced a planned second round of negotiated rulemaking under the Biden administration, Doug Lederman of Inside Higher Ed reports. The eight regulatory topics the department said it would explore with sessions this spring include distance education, accreditation, and third-party servicers. The previous rulemaking session focused on for-profit colleges.

Virtual Reality

The Indiana Alliance of Boys & Girls Clubs is using virtual reality for career exploration at sites across the state, Nadia Tamez-Robledo reports for EdSurge. The simulations are designed to feel like games and has helped the clubs reconnect with teens, including students who are dealing with learning loss and mental health issues from the pandemic.

Perils of Careerism

Careerism is a primary obstacle to college students believing that each course offers something worthwhile, and it can close students off from learning things that don’t obviously help their career prospects, Jonathan Malesic, an author and university writing instructor, writes in The New York Times. He argues that schools and parents need to convince students that college has more to offer than job training.

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