Published Aug 26, 2020 by Peter Beard
In the new innovation-based economy, talent and skills are king. Today’s economy is undergoing a fundamental transformation where the skills needed by a workforce to remain competitive and successful are rapidly changing and emerging to keep pace with these dynamic and swift changes. As the “half-life” of skills shrinks, continuous investment in talent and skill development will become more crucial, timely – and challenging. We need, therefore, an approach to talent finance fit for our time, not one for past economies and labor markets.
Current conversations around funding center on government programs and services, like federal and state funding for higher education and workforce development programs. The current model focuses on preparing students to enter the workforce through college pathways or on helping adults overcome barriers to re-entering the workforce in jobs similar to their previous ones. This approach separates work from learning and increases the time it takes for students to become workers while increasing training costs for employers. It also doesn’t address the dislocation of existing workers due to automation technologies that are entering and disrupting the workplace.
According to the U.S. Chamber of Commerce Foundation, the federal government spends nearly $30 billion in Pell grants and finances more than $100 million in loans each year. In addition, $18 billion is spent on workforce programs that fail to reach the majority of their targeted workers or provide them with training for skills employers actually need. While employers have been major investors in the training of their workforce, there has also been a leveling off or decline in these training investments.
As talent rises in importance in this new economy, employers and workers, states and regions will increasingly compete in areas like innovation, agility and resilience to constant and disruptive changes, and an approach to talent finance that perpetuates the status quo will not be sufficient. Employers, workers and governments will need to redefine their roles and responsibilities in terms of making investment and managing and sharing risk.
As we look to the future, what our innovation-based economy needs is an agile and responsive public-private approach to the financing of talent that strikes the appropriate balance between the roles of employers, workers and government. It should also promote the continuous investment in skills development while managing the risks related to employment and income. It also needs to be scalable to work for employers large and small, because half of the workforce is employed by small and mid-sized employers. Ultimately, a talent finance approach should reflect a set of guiding principles and close the economic and opportunity gaps that exist today.
The U.S. Chamber of Commerce Foundation is launching a new initiative to build an innovative talent finance approach that fits the modern, changing economy and nature of work. The Chamber and several partners, including the Greater Houston Partnership, the Federal Reserve Bank of Atlanta, and WorkingNation, are exploring this new public-private approach to talent finance – one that would support an economy that competes on talent and expands opportunity and inclusion in the new economy.
The Chamber Foundation and its partners will release a background paper describing the framework for developing this new public-private approach on Sept. 22. It will hold a series of topical forums in September and October to gather feedback on the paper and build awareness of the opportunities and potential for testing innovative partnerships in regional markets. Forum participants will include representatives from the Chamber community and financial services sector; experts from the fields of finance and lending, data and technology, and HR and accounting; and representatives of prominent think tanks and foundations exploring employer-led investment strategies and tools.
The Chamber hopes to enable and proliferate new pathways to opportunity with products that are equity-based and drive outcomes that truly are accessible to all.
“We think that talent financing is going to be a critical piece to closing that opportunity gap,” said Jason A. Tyszko, vice president of the Center of Education and Workforce at the U.S. Chamber of Commerce Foundation, during a recent Chamber talent finance discussion.
“Now is the time to invest,” Tyszko said. “This is the conversation of our time.”
Join the movement and register for Talent Finance forum sessions here.