Economic Development Strategies Using Skilled Labor Information

Steve Anderson – ACT, Workforce Development

2007 Michigan WorkKeys Conference

Topics

• Why is skilled labor availability important?

• How can skilled labor be measured and reported?

• How is skilled labor information being used?

• How does skilled labor information benefit recruitment and retention programs?

• Developing a strategic economic development plan using skilled labor information.

Why is the availability ofskilled labor important?

Surveys of executives and site selection consultants indicate that the availability of

skilled labor is one of the most important factors in site selection

Factors 2006 Ranking

• Labor costs 95.0%

• Highway accessibility 90.9

• Corporate tax rates 90.8

• State and local incentives 88.6

• Telecommunications services 88.3

• Tax exemptions 86.7

• Occupancy or construction costs 85.5

• Availability of skilled labor 85.1

• Energy availability and costs 82.4

• High-speed internet access 82.1 Source: Area Development Magazine Annual Corporate Survey

Why is the availability ofskilled labor important?

Why are skills important?

Higher Skills

Higher Wages

Stronger Economy

National Career Readiness Certificate

Bronze Silver Gold

Automotive Body

Repairers Butchers & Meat Cutters

Cooks, Cafeteria Furniture Finishers

Home Health Aides Housekeeping

Supervisors Janitorial Supervisors

Painting & Coating Workers

Refuse Material Collectors

Accounting Clerks

Auto Master Mechanics

Billing Clerks

Licensed Practical Nurses

Machine Operators

Machinists

Medical Laboratory Technicians

Payroll Clerks

Pipe Fitters

Production Inspectors

Computer Programmers

Electricians

Environmental Engineering Techs

Instrumentation Technicians

Librarians

Semiconductor Processors

Training & Development Specialists

Vocational Education Teachers

Wholesale & Retail Buyers

$26,000 $34,000 $49,000

Median Annual Salaries

• $660M Capital

Investment

• 350 - 550 Jobs

• $60K Annual Salary

• Sites in 18 states

considered

• Finalists

• Clay, NY • Devens, MA

Example:

BioPharma Project

Where did the company decide to locate?

The winner is

The company perceived that the NY site did not have the skilled labor supply.

• Government Data

• Laborshed Surveys

• Labor Skills Measurement

How can skilled laborbe measured & reported?

Government Labor Data

Example: Davenport – Moline – Rock Island MSA

Civilian Labor Force 211,500

Employment 203,000

Unemployment 8,500

Unemployment Rate 4.0%

High School Graduation Rate 88.7%

College Graduation Rate 24.6%

Information based on geo-political boundaries

• Size of the laborshed

• Business-center defined

• Unemployment

• Underemployment

• Sampling surveys

- Self-assessments of skills

- Willingness to change jobs

- Desired wages

- Commuting thresholds

But what about skilled labor information?

What does a Laborshed Survey Measure?

What are the elements of a goodLabor Skills Assessment System?

1. Measurable skills standards

2. Levels of competency

3. All levels of workers

4. Related to job performance

5. Measures across industries

6. Training by competency levels

7. Individual development plans

8. Extensive test delivery network

9. Proven track record

“In the 1950’s, ACT created a nationally recognized, standardized resource for

college entrance. Now, we’re doing the same thing for the workforce.”

- Richard L. Ferguson, CEO and Chairman of ACT

Is there a need for a national standard?

1955 2005

Ready for College, Ready for Work

Findings:

The same basic skills are needed for work and college

www.act.org/path/policy/reports

How can the skills of workers bemeasured and developed?

Foundational Skills

• Reading for Info

• Applied Math

• Locating Info

• Applied Tech

• Business Writing

• Teamwork

• Observation

• Writing

• Listening

Skill Analysis• Profiling

• Occupational Profiles

Training• Online

• Workbook

• Classroom

Personal Skills

• Talent

• Fit

• Performance

TM

National Career Readiness Certificate

WorkKeys Skills• Reading for Information• Applied Mathematics• Locating Information

Three levels of performance• Bronze (Level 3 or higher)• Silver (Level 4 or higher)• Gold (Level 5 or higher)

Provides benefits to individuals, businesses, and economic development programs

National Career Readiness System

National Career Readiness

System

National Career Readiness Certificates

Talent Bank

Job Bank

Skills Training

Registry & Database

STATE CRC

REGIONAL CRC's)

PENDING STATE CRC

WorkKeys-PoweredCareer Readiness Certificates

• Expansions

• Recruitment

• Plant Closings & Major Layoffs

How can skilled labor availability be part of economic development?

How is WorkKeys usedfor Local Expansions?

• Recruitment of new workers

• Advancement of employees

• Certificate program

Hiring Testing

Costs

- 64%

O-T-J Training

Costs

- 50%

Turnover

- 35%

This facility beat out several U.S. and international locations for a $130 million expansion

Indiana WorkKeys Program

Largest state certificate program based on WorkKeys

• Over 1,000 job profiles• Over 35,000 readiness certificates

awarded

Uses• Hiring for existing and new facilities• Attraction of businesses• Education programs• Apprenticeship programs• DOC Re-entry programs

“Raising everyone up one level”

Subaru of Indiana, Inc. – Lafayette, IN

• $230M expansion project with Toyota

• 1000+ job openings

• High hourly wages & benefits

• Projected 10,000 applicants

• Decision factor: Database of 6000+ WorkKeys assessed job applicants

• Tecumseh Area Partnership & Indiana DWD• WIRED recipient for REACH program

How is WorkKeys usedfor Local Expansions?

• Administer WorkKeys assessments

• Identify training programs

• Identify potential local employers

Displaced Individuals

How can WorkKeys be usedfor Plant Closings?

How can WorkKeys be usedfor Plant Closings?

• Administer WorkKeys assessments

• Develop a composite of the displaced workforce

• Determine industry & company targets from Occupational Profiles

• Market to target companies

Attraction of new business

Were the perceptions of theBioPharm company correct?

NCRC Eligibles - FY'04-06

0%

10%

20%

30%

40%

50%

Gold Silver Bronze Not Qualif ied

National Career Readiness Certificate Level

% o

f Tot

al

Central NY

Massachusetts

Maybe, maybe not.

How do the skills of the workers in the Region compare to National?

NCRC Eligibles FY 2003-06

0%

10%

20%

30%

40%

50%

60%

Gold Silver Bronze Not Qualified

National Career Readiness Certificate Level

% o

f Tot

al

Region A

National

1. Identify / engage regional workforce development stakeholders

3. Develop a regional CRC marketing program

4. Focus on engaging the business sector (MOUs):“Help your community while helping your company”

5. Identity resources for developing capacity

6. Provide training resources

7. Execute the plan / evaluate / update

2. Develop well-defined, realistic goals

Developing a Regional Program: West Michigan Approach

How can the skills data be used?

• Obtain NCRC skills data for specified geographic region

• Combine with the Laborshed Study to provide an estimate of the availability of skilled workers in the laborshed

• Compare against National and other communities

• Align data with specific company skill standards, from WorkKeys Occupational Profiles or Occupational Opportunities

Economic Development Strategies Using Skilled Labor

Information

Steve Anderson – ACT, Workforce Development

Questions?