An IT company approached the state of Indiana a few years ago with a mammoth proposal — one that would absorb every software engineering student the state’s universities and colleges would graduate. Not some of them, all of them. As a state official at the time, I found the proposal transformative but the ability to deliver on that type of commitment daunting. Our analysis brought home five important considerations that apply to state and local governments, site selectors, and businesses even more today.
Every community, small or large, that has witnessed the closure of a major employer knows the pain of the scramble that follows: find a replacement or the jobs will migrate elsewhere. Communities should have a strategic workforce plan that realistically addresses training and retraining needs. Successful communities assess their available talent and look to capitalize on compatible skill-based opportunities.
Employers continue to find pockets of specialized labor in different parts of the country. The upper Midwest maintains a manufacturing tradition despite downturns. Financial services congregate in the Northeast, IT on the West Coast, and so on. These are broad generalizations that are not universal or predictive, but they speak to a more basic question about how easy or difficult finding talent in a particular place may be. Communities that leverage these existing strengths will be more successful at attracting and retaining talent and subsequently attracting similar or related businesses.
The cost of that labor is an important factor in considering availability of labor. Is employment at-will the norm? Are right-to-work laws in place? What does current wage data for specific job descriptions in a particular county reveal? How do these trends compare to the national average? To other parts of a state? Are other employers drawing from the same talent pool?
Jobs are certainly mobile but the workforce itself may be adaptable in place. Think of it as workforce elasticity. Some workers will move readily; others will be reluctant to do so. The upshot: geographic areas of the country retain some of the character of the workforce that would more readily describe the workforce of a prior generation but with an overlay of modern skills. This characteristic emphasizes the need for problem-solving skills, integrating IT and systems learning into existing skills, leadership skills, customer service skills, and life-long learning and retraining.
Communities should have a strategic workforce plan that realistically addresses training and retraining needs.
Training Options Matter
In the IT company example cited, the availability of informatics graduates was critical. Despite the availability of college graduates from around the country, companies will continue to evaluate the number and size of colleges and universities proximate to a proposed site. Local community colleges and vocational training programs likewise factor into the regional pipeline of talent. Partnering with universities and colleges is the new normal. The strength or weakness of these partnerships will impact a location decision positively or negatively.
The availability of alternative training programs continues to expand. These include in-house programs, skill certification programs, and for-profit options. These programs offer speed and reliability. Studies highlight apprenticeships as a work-based model to learn new skills while putting those skills to use. Skill-based learning and training has a beneficial impact on wage growth.
Specialized programs for in-demand skills — master electricians, IT specialists, truck drivers, among others — have surfaced as viable options when supply is limited. Skill-based credentialing will supplement traditional university degree credentials and will grow in importance as a site selection factor. This type of credentialing will ensure a better fit for employers and improve the quality of the talent pool.
State and Local Programs Matter
Virtually every state has a program that promises worker training assistance. The Quick Start program in Georgia has been recognized as a model for customized job training. Effective training programs share several common characteristics: speed, flexibility, and results. Trainees are prepared on day one. Effective programs provide a pool of talent that helps businesses streamline the hiring process. The availability of these and similar programs can directly impact a site selection. Our business clients evaluate the costs, timeline, flexibility, and ease of use of these programs.
Specialized programs for in-demand skills have surfaced as viable options when supply is limited.
Training Incentives Matter
Training programs traditionally qualified as non-financial incentives. Increasingly, communities have realized that workforce training tends to have a long-term impact. The training programs help create clusters of expertise, with larger congregations of specific skill sets that targeted industries find attractive. Because of costs associated with these programs, states and localities are more likely to expect businesses to target specific skills for training and to include historically disadvantaged workers among the recipients of the training.
Corporate surveys routinely rank skilled labor availability as a top priority when researching locations. As a result, states and localities highlight the benefits of their respective programs. The trend is for more detailed and data-driven analysis. Businesses focus more on specific skills and specialized talent availability. States and local economic development organizations often partner with universities and colleges for degree programs in targeted areas. These partnerships will continue to develop and be refined as greater and greater specialization develops.
For businesses, labor availability may be a top priority, but costs remain important. States and localities with lower-cost training programs will have an advantage.
Nontraditional amenities must be included in an overall basket of incentives.
Quality of Life Matters
Corporate surveys also routinely rank quality of life among the top considerations in site selection. Quality of life is generally a complementary feature of labor availability. Successful communities understand that talent attraction and retention is essential for business attraction and that nontraditional amenities must be included in an overall basket of incentives.
While these factors have been important in recent negotiations, COVID-19 has magnified the significance of each of these elements in site selection. Our clients scrutinize the details closely before making decisions. Successful communities will be prepared to address these factors directly during negotiations with prospective companies and site selectors.