Workforce Issues

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Workforce Issues

• David Penn, Ph.D., Associate Professor and
  Director
• Business and Economic Research Center
• Jennings A. Jones College of Business
• Middle Tennessee State University
• dpenn_at_mtsu.edu
• 615-904-8571

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Presented to Tennessee state legislative staff
January 28, 2009, as part of five information
sessions on public issues affecting life in
Tennessee Hosted by the University of Tennessee
Institute for Public Service at the request of
members of the General Assembly, the open forums
provided an opportunity for attendees and subject
matter experts to discuss local government,
education, workforce development, and healthcare,
with the intent to understand matters that may
have ramifications for public policy during the
2009 legislative session.
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Major Workforce Questions

• What is the outlook for Tennessee?
• How will declining employment affect the demand
  for education and training?
• What characteristics do employers desire in a
  worker?

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Workforce Issues

• Short-term
• Retraining workers who lost jobs
• Addressing shortages in particular occupations
• Long-term
• Building and sustaining Tennessees human capital
• Managing the wave of baby boomer retirements

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Unemployment Rate

• 7.9 in December, highest since 1986
• Well below 30-year high of 12 in 1982
• Compare with the recent low of 4.5 in 2007.

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Total Employment

• Total employment down about 100,000 YTY, a
  decline of 3.5 (Dec.)
• Percent job loss exceeds that of 1982.

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Outlook for Unemployment

• More job losses expected during the next 1-2
  years
• Obama stimulus plan expected to reduce job losses
  compared with no stimulus
• Romer study stimulus expected to bring the
  national unemployment rate back down to 7 by the
  end of 2010

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Paths for U.S. Unemployment Rate
Source The Job Impact of the American Recovery
and Reinvestment Plan, Christina Romer and Jared
Bernstein, 2009.
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How Will Rising Unemployment Affect the Demand
for Education and Training?

• Job losses increase the number of workers seeking
  training and education.
• Enrollment in higher education typically rises
  during a recession
• Unemployed workers returning to school, and
• Current students staying in school.

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Rising Enrollment

• MTSU headcount enrollment rose rapidly when
  unemployment increased in 2002 and 2008.
• Spring 2009 enrollment is up 3.4 from 2008.

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What Do Employers Need?

• Recent study by MTSUs Business and Economic
  Research Center (BERC) for south and central
  Tennessee
• Number one problem identified by employers
  quality and quantity of labor
• Top three support institutions
• Community colleges and technology centers
• Economic development boards
• Higher education institutions

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What Do Employers Need?

• SWOT analysis
• Strengths geographic location, motivated
  workforce
• Weaknesses lack of basic skills and soft skills,
  lack of skilled workforce
• Opportunities exports, location advantages
• Threats increased fuel costs, foreign competition

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What Do Employers Need?

• We asked employers to compare regional
  performance with employer needs.
• Largest gaps
• Workforce quality
• Transportation costs
• Higher education and training
• Availability of broadband

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Education and Training Bottlenecks

• Nursing
• Not enough nurses
• Not enough slots to train new nurses
• Not enough instructors for nursing programs
• Allied health
• Also experiencing shortages
• NCAC increasing the number of scholarships for
  allied health

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What Do Employers Desire?

• For seven of ten businesses, a high-performance
  workforce is the most important avenue to future
  business success.
• Business Attitudes Toward Education in
  Tennessee, CBER-UTK July 2008

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What Do Employers Desire?

• Most employers desire a minimum of high school
  diploma.
• Currently, 21 of Tennessee unemployed do not
  have a high school diploma (age 25-65).
• Mismatch exists between supply and demand.

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Jobs and the Knowledge Economy

• United States has a comparative advantage in
  knowledge-intensive products and services.
• Knowledge-intensive products and services require
  higher levels of education and training.
• Under-investing in human capital causes us to
  miss opportunities for job and income creation.

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Unemployment and Workforce Issues

• Rising joblessness increases the demand for
  training and education as workers seek to update
  skills.
• Education and training are part of Tennessees
  human capital.
• More good-paying jobs in the future will require
  higher levels of education and training.