Originally published in Governing, May 2019
In the midst of record low unemployment, many states are nonetheless struggling with ongoing skills gaps — shortages of workers with the right skills for in-demand jobs.
At the start of 2019, according to the Department of Labor, as many as 7.3 million jobs remained unfilled. These included a substantial number of “middle-skill” jobs requiring some schooling beyond high school but not a four-year degree. They were in fields such as health care, IT, welding and truck driving. The American Trucking Associations, for instance, reported a shortage of 50,000 drivers in 2017.
One reason these gaps exist is underinvestment in career and technical education. Of the more than $139 billion in annual federal student aid spending for higher education, just $19 billion goes to career and tech ed. Students generally can’t use federal Pell Grants to fund short-term, non-college-credit training programs, such as for welding certifications and commercial drivers’ licenses. Federal dollars under programs such as the Workforce Innovation and Opportunity Act are typically limited to the lowest-income workers.
Two states, however, have programs that show how valuable occupational credentials can be. Already, these initiatives are generating big returns by raising workers’ wages, closing skills gaps and driving economic development — and at a price much cheaper than “free college,” another higher-ed funding idea that’s gained popularity in recent years.
In Virginia, the state’s New Economy Workforce Credential Grant Program covers two-thirds of the cost of a credentialing program, up to $3,000 per student. It’s a pay-for-performance model, so community colleges and other training providers don’t get paid until a student completes a class and obtains an approved credential aligned with the state’s annual “hot jobs” list. So far, about 8,000 Virginians have earned credentials through the program since its launch in 2017.
In Iowa, the Gap Tuition Assistance Program pays tuition, books and fees for lower-income students pursuing credentials from approved programs. In 2018, about 2,400 students applied, and 1,000 were accepted. The program boasts an 89 percent completion rate.
Both programs aim to reach workers who don’t qualify for federal aid. “Back in the days when a welding class was going to cost an individual $4,000, someone who was struggling to make ends meet would not come to us,” says Elizabeth Creamer, vice president of the Community College Workforce Alliance in central Virginia. “Now they can.”
Funding credential attainment has been a smart investment in these states — for workers, for businesses and for the public purse. “These are great programs for moving somebody who could be a public burden or isn’t really on track for a good career into getting the skills they need in a high-demand area,” says Jeremy Varner, administrator of the Division of Community Colleges and Workforce Preparation for the Iowa Board of Education. “It’s giving folks economic opportunity they otherwise wouldn’t have and at the same time meeting the very profound industry labor market needs that exist.”
In Iowa, which allocates about $2 million to the program annually, workers who earned a credential and found a job in a new industry increased their wages an average of 37 percent, according to the state’s analysis. Workers who moved from agriculture to manufacturing raised their wages by as much as 138 percent.
In Virginia, Creamer says her graduates see average wage increases of between 20 and 45 percent as they go on to good-paying jobs at regional powerhouses such as Amazon, Altria and DuPont. Results like these are one reason Virginia is growing its investment from $4.5 million in 2017 to a projected $13.5 million by 2020. The program has also encouraged the state’s community colleges to build better partnerships with local businesses so they can produce the talent companies need. “We’re not just training and hoping someone gets a job,” says Creamer. “We know they will.”