Rethinking Retraining

“When I graduated, I was 56. I was surprised that there were people who were not worried about my age and who believed I was still a valuable member of the workforce. You start to worry when you get close to retirement whether anybody wants to hire you…I was made to feel valued there regardless of what my age was or where I came from. It gave me back my self-confidence after losing my job.” —Darlene Mickelson In 2008, after 34 years of working at Philips Advance Transformer, Darlene Mickelson was laid off. The factory, tucked away in the small town of Boscobel, in southwest Wisconsin, had produced lighting components for Philips Electronics for many years. When it shut its doors and outsourced production to Mexico, Darlene, who worked as a tool crib attendant, was one of 188 people who lost their jobs. Around the same time, Darlene’s 30-year-old daughter, Jessie, also lost her job, at the S&S Cycle factory in nearby Viola. With the labor market deteriorating, they enrolled together in an accounting degree program at Southwest Wisconsin Technical College, in nearby Fennimore. “It was really, really hard to do,” Darlene recounted. “I had had a few college courses over the years, but it was hard to go from on the job every day, earning a living, to going back to school.” But Southwest Tech convinced her of the possibilities, and she graduated in 2011 and took a job two days later. Today, Darlene works at the Grant County Economic Development Corporation, where she uses her new skills to manage the organization’s payroll and tax reporting, among other tasks. Listen: Author Willy Shih joins Harvard Business School professors Bill Kerr and Joe Fuller on the Managing the Future of Work podcast to talk about the plight of older workers coping with the changing nature of jobs. The conventional wisdom on retraining older workers is they are too old or set in their ways to learn new things and update their skills. We don’t agree. We think this is a narrow view that overlooks the significant value these people can bring to the economy. As a recent report from the White House Council of Economic Advisers suggests, investment in skill development in the United States is largely “front-loaded” during the first 25 years of life, after which public contributions to formal education are substantially smaller. Yet we live in a time when both demographics and the very nature of work are undergoing a dramatic shift. Rapid technological change, automation, globalization, and offshoring all serve to shrink industries and spawn new ones at what feels like an ever-quickening pace. The booming job market and the evolving nature of work are altering the skills American employers need in their employees, and we believe that reskilling should play a vital role in meeting these needs. We should not ignore the tremendous value that older workers can bring. And with life-spans increasing across the globe, many people need or want to continue to work to help fund their eventual retirement or just to stay active. Unfortunately, we tend to conflate proposals for retraining older workers with the ways in which we prepare young high school graduates for direct entry into the workforce. Apprenticeships or technical high school programs in fields like computers and software or specialized skills like aviation may be a natural path for non-college-bound students, but older workers who have been in the workforce for many years may need a different approach. They have been out of school for a long time and tend to have more daily life commitments to work around. For these reasons and others, stuffing them into programs designed for younger workers sometimes just doesn’t make sense. However, there are local or regional programs in different areas of the United States that have a proven track record in retraining older workers. In order to identify the common denominators that contribute to their success, we conducted structured interviews across seven states, some by phone and some in person, during late 2017 and the first half of 2018. We talked to people in community and technical colleges, large and small businesses, nonprofits that specialize in retraining, and regional economic development agencies. While many of these organizations serve all age groups, most focus on recent high school graduates. Therefore, we identified older workers who had successfully gone through retraining and categorized common features of their programs. While there were many parallels to programs that served young people, we identified features that stood out as particularly important to people over 50. For comparison, we also talked to businesses and individuals in Germany and Denmark, and to Dansk Metal, the Danish trade union. Here is what we found. Shorter Work-Based Programs Older workers who are suddenly displaced often have little interest in extended programs. The people we talked to often had family responsibilities and were focused on quickly replacing their lost income streams. Dennis Rohrer, co-owner of American Metal Works LLC, an advanced machining facility located in Paintsville, Kentucky, that serves the aerospace, automotive, medical device, and defense sectors and works with Big Sandy Community and Technical College to provide hands-on training for students, said that in his experience older workers “are willing to take a 16-week course” — but that’s about it. Older students also vastly prefer learning in a work setting rather than in a classroom. On-the-job programs can take different forms (for example, spending time at a partner employer’s workplace for a few days every week, or every day for several weeks) and provide a multitude of benefits. Hands-on training both boosts student engagement and provides immediate feedback to the school on needed skills. It helps students cement their understanding of what they learn in class. Crucially, students — many of whom are struggling financially — get paid. Finally, work-based learning can offer an on-ramp to a job at the host company, often translating into employment upon program completion. Scott Bowen worked in the Kentucky coal mining industry for 15 years before he was laid off in February 2016. Initially, he said, he was worried: “When you go through training, am I going to find a job? Can I do this? Can I learn it? Can I go into this new environment after being around coal for all them years?” But a 12-week course introduced him to computer numerical control (CNC) machining concepts for mills and lathes, as well as G-code, a programming language for CNC tools. He also learned how to use SolidWorks, a popular tool for computer-aided design and engineering, and was able to practice what he learned daily at American Metal Works, which gradually built his confidence that he could successfully make such a dramatic change. “You get to learn every day and learn this new trade,” he recounted. “You just keep growing and growing.” The company hired him during his training. Stackable Credentials The most successful retraining programs, as measured by completion rates, incorporate “stackable” credentials. These are short-term, industry-recognized credentials offered by certificate or nondegree programs that allow workers to balance the demands of the training program with work or family responsibilities. This learning strategy focuses on building core capabilities and then layering on additional skills in steps. This can take the form of a series of short programs, each focused on a particular skill set, that can be taken sporadically over months or years. The beginning of the sequence is focused on an industry-recognized credential so students can find work quickly. Once they start working, they can return to school to pursue training at the next level. “I often compare what we do in community and technical colleges to a freeway,” explained Marshall “Sonny” White, the former president of Midlands Technical College, in Columbia, South Carolina. “You get on at a particular point, you’re on that freeway for a while, then you’re off, and then you’re back on again — because it’s all about lifelong learning.” This is consistent with a “just in time” approach to training, available when an individual needs it throughout his or her career, not just at the beginning. “We understand that the community and technical colleges are not like the normal four-year institutions, where most of the students will come in at age 18 or 19 and stay four, five, or six years,” White said. “Our students are much older, and adult learners are coming at various stages in their careers for various purposes.” Several states have mandated stackable credential programs. In response to a 2007 law, Ohio’s board of regents and department of education have developed a system of pre-college and college-level stackable certificates. Virginia’s New Economy Workforce Credential Grant Fund and Program, created in 2016, requires participating institutions to offer a “non-credit workforce credential.” Similarly, the Kentucky Community and Technical College System broke down technical degree programs into modules that allow students to take steps toward certificates and degrees. For example, a program in industrial electronics offered by the Alabama Community College System is spread over five semesters. The first semester covers fundamentals (such as DC and AC electrical basics, schematics, and math); subsequent semesters build on this knowledge with courses on motor controls, advanced industrial controls, and industrial robotics. In addition to the technical courses, there are ones on public speaking, English composition, workplace essentials, and a social and behavioral science elective. Each semester by itself qualifies the student for a certificate, and upon completing all five, the student receives an associate’s degree in industrial electronics. Wraparound Support Several of the people we spoke with used the term “wraparound services.” They had borrowed it from the health care industry, where service providers work together to identify and provide patients with the formal and informal support that help make a treatment program more successful. Many students face multiple personal financial challenges. Some are unable to pay their tuition and transportation expenses; some need money for food, rent, and other basic living costs. We saw retraining programs address these challenges with food banks, emergency funds, counseling, and staffers at the schools. Former Midlands president Sonny White recalled a 50-year-old single mother who was trying to go back to school but was short of financial resources and had a host of transportation issues. “I remember taking her back and forth myself to her home a number of times because she had to walk over a mile to get to a bus that only ran infrequently to bring her to the college,” he said. The financial difficulties faced by students are episodic and small, rather than chronic. Many students work to make ends meet while they attend school; some hold down two or three jobs. “For these students, it’s not a matter of $60,000 a year; it’s a matter of a few hundred dollars sometimes that makes all the difference in the world,” White said. The staff at Midlands said that financial challenges were the biggest cause of students dropping out. Pell Grants, the largest source of federal student aid, have historically only been available for traditional bachelor’s and associate’s degrees. The Aim Higher Act, a bipartisan bill introduced in the House of Representatives this past July, would allow the use of Pell Grants in certificate and other alternative credentialing programs. “In my estimation, that is great for the adult learner and for businesses,” White said. An increasing number of schools also have emergency funds available for students. Jason Wood, the president of Southwest Technical College, described his school’s comprehensive approach. “We have emergency funds students can access when they’re out of gas for their car or they couldn’t make their electric payment on their house or whatever type of emergency might come up,” he said. “The process to receive funds is simple, without a lot of red tape. We do the best we can to help the students get through their emergency and back in class. We’ve found the students who receive the help tend to be more successful, and their affinity for the college grows. We haven’t seen the abuses associated with a recurring reliance on emergency funds.” Remarkably, at Southwest Wisconsin Tech these funds partially come from the generosity of the college’s own employees: More than 90% of them donated to the foundation last year. The way the funds were allocated differed: Southwest issues emergency grants, while Midlands makes interest-free “loans” whose repayment is optional. Midlands plows any repayments back into its emergency fund. White said that recipients of loans consistently try to “return the funds and help someone else.” Southwest Tech also provides clothing so students have appropriate attire for job interviews; a full-time, licensed mental health counselor dedicated to helping students; and an on-campus food bank for students. “We believe you can’t learn well if you can’t eat,” Wood said. If more community colleges in the United States had wraparound services, the lackluster graduation rate for all of their students, not just for older learners (roughly 40% within six years, according to the National Student Clearinghouse), undoubtedly would be higher. “You can only stand tall if you have a little bit of support,” Darlene Mickelson commented as she reflected on her retraining experience. Match Supply with Demand Some schools add a “supply limiter” feature to match the supply of graduates with the actual demand by employers, which prevents saturating the market with qualified applicants and leaving some students without jobs. Obviously, this requires very good knowledge of the current needs of local employers. Jason Wood explained how Southwest Tech finds ways to limit enrollment. “We have an electrical power distribution program, which has had over a hundred people on the waiting list,” he said. “We only accept 20 to 24 students every year, because industry is telling us that if we flood the market, there’s going to be people they are unable to hire. We could admit everyone and get the tuition and FTE [full-time equivalent] revenue, but we have that commitment with industry to train only the numbers they need.” To balance supply and demand, Southwest Tech guides students to programs that match their interests, capabilities, and, where appropriate, availability. For oversubscribed areas like nursing, it uses part-time school options to get students started while the waitlist for the full-time program comes down. Ultimately, these matching efforts have contributed greatly to Southwest Tech’s extraordinary 97% job placement rate in 2017. Convince Candidates of Their Potential Older students in retraining programs often underestimate what they are capable of — a challenge that Rusty Justice encountered. He established Bit Source, a software development start-up, with the primary goal of retraining coal miners in his hometown of Pikeville, Kentucky, in the heart of Appalachia. He ran an ad to attract miners displaced by the industry’s contraction, and in less than two weeks, 950 applications had poured in. After narrowing the pool to 60 applicants, Rusty and his cofounder selected the final 11. On the first day of work, one of the new hires didn’t show up. When Rusty called him, the man explained, “I’m just a dumb old coal miner. I can’t do this. I can’t be a computer coder.” “If he can’t believe he can do it, he certainly can’t do it,” Rusty said. “So the first takeaway is you’ve got to convince people to do it while you’re training them to do it. So we started what we call ‘reimagination training.’ And it was just thinking about how we think about ourselves.” A hallmark of effective programs is building trainees’ confidence, which program leaders achieve by a combination of high expectations and individualized coaching. Many participants told us about the trepidation and self-doubt they felt prior to and during the early stages of retraining. Guy Burham, a graduate of Per Scholas, a nonprofit that provides free training in IT careers, said to himself early on, “There is no way I can possibly get this done.” But he found that Per Scholas gave him a level of confidence he didn’t know “existed within himself.” Beyond coaching students, some of the best programs proactively recruit a broad range of students and convince them that they are candidates for retraining. “You can’t just build facilities and say, ‘We’ve got all the programs,’ and they’ll come,” Sonny White said. “For a large part of the population, that won’t happen. You’ve got to go out physically and find them in the community through the churches, through other community organizations, bring them together, explain it to them, put your arms around them.” Federal Programs Can Provide Ingredients, but the Design Must Be Local The United States has tried to address the needs of retraining with a series of legislative acts that go back decades, including the Comprehensive Employment and Training Act of 1973, the Job Training Partnership Act of 1982, and the Workforce Investment Act (WIA) of 1998. The WIA established state and local workforce investment systems and provided a range of grants and programs. In 2014 it was replaced by the Workforce Innovation and Opportunity Act (WIOA), which was an attempt at reform and required states to align programs to fit the needs of employers. It was also meant to be evidence based and data driven, requiring common performance indicators with negotiated performance targets. It targeted the needs of the unemployed and gave local governments a fair amount of flexibility with regard to fund allocation. Unfortunately, the broad range of core and additional support services currently doesn’t help all displaced workers make it through retraining programs. While almost everyone we spoke with took advantage of some aspect of WIOA, it didn’t seem to be enough. So what’s missing? Talking with congressional staff in Washington led us closer to an answer. We asked people on Capitol Hill whether retraining displaced workers is a public good and should receive public funding, or a private good that should be the responsibility of either employers or employees. While there seems to be general agreement across both sides of the aisle that there is a mismatch between the skill set of our current workforce and the skills employers need, there is no consensus on how to fix the problem and who should be held accountable. “Whose responsibility is it?” asked Karishma Merchant, a senior education policy advisor to Senator Tim Kaine, Democrat of Virginia. “Should the federal government be giving tax credits for apprenticeship programs? Or should it be the responsibility of the employer, who needs those folks? I think my boss has come in saying, ‘It needs to be a partnership between both.’ Why don’t we have community colleges and employers working together to set a curriculum up?” The key to designing effective programs is to understand local needs and connect them to federal and other support. While federal programs can provide the ingredients, a local leader on the ground needs to match the resources to the needs of employers and retrainee candidates in their area. Grassroots Leadership We found that successful programs — whether they are in rural Wisconsin or Appalachia, Mississippi or South Carolina — are run by community leaders who work from the bottom up. These people possess a deep civic spirit and take personal initiative to create new opportunities to find, and then help, displaced workers. They know how to draw from WIOA funds or tap local resources. But even more important, they assemble a complete program and tailor it to the specific needs of people in their communities. This is often a difficult and unrewarding job. The people we met admitted to feeling frustrated — even to the point of wondering, some days, why they continue to do the job. But they are motivated by the desperate need they see among their neighbors, and they work together across political lines to build what they see as a vital future for their communities. Also vital to the success of the retraining programs we observed were the people who chased after the newly displaced, trying to give them hope and put them on the path to develop new skills. Southwest Tech has a rapid response team, led by a career services manager, a success coach, and a worker who has experienced a layoff, pursued education, and found new employment — someone like Darlene Mickelson. They sometimes bring along someone from their financial aid team who can reach out to other community organizations. When notified of a business closure, they go in quickly to make presentations that offer some direction and hope to individuals being laid off. “There has to be an opportunity for people. They have to know there’s hope,” Darlene told us. “This person made it,” she said, pointing to herself. “We had to help them to believe, ‘I can too!’” The world of work is changing rapidly, and careers will increasingly face disruptions brought on by technological change and globalization. As an executive at Eastman Kodak, one of us (Willy) watched this happen in Rochester, New York, with the collapse of the photographic film industry. It happened in Utica, New York, with the departure of GE; in Pittsburgh with the decline of the steel industry; in the Carolinas with the demise of furniture and textiles manufacturing. We also have seen it happen in the coal mining, telecommunications, automotive, and other industries that have sent millions of jobs offshore. Highly trained people with specialized skills have been thrown out of work too. And it’s not over. The emergence of new automation and artificial intelligence technologies promises wrenching changes that will become more frequent and will touch a wider range of professions. Whole industries will change dramatically or even disappear over very short periods of time — and it won’t be limited to manufacturing. We should expect shocks in the service industries as well. As a nation we are going to require a more flexible workforce — one that can continuously learn and adapt in the face of change. Effective retraining programs are crucial to filling this need. The Big Idea Editor’s note: This article was researched and written while Howard Rudnick and Colleen Tapen were students at Harvard Business School. The opinions expressed do not reflect the views of their current employers.

Rethinking Retraining

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