Workers, employers, educators, and government officials all need access to more timely and more consistent middle-skills labor market data.
Economic growth and full employment require well-functioning labor markets—ones that enable workers to acquire skills that are in demand and employers to hire workers with necessary skills. Accurate and detailed information is essential to the functioning of a labor market that will make this possible.
To find a decent job in today’s economy, most workers need some level of specialized knowledge and skills, but it is not easy to figure out what specializations are in demand now and are likely to be needed in the future. Choosing poorly has long-term career consequences.
Unfortunately, the information needed to make good decisions, particularly concerning middle-skills jobs, either does not exist or is difficult to find. Neither Congress nor the executive branch has adequately fulfilled its responsibility to collect, organize, and make available reliable labor market information. A coordinated and adequately funded federal program to make this information available could provide enormous benefits to middle-skills workers and to employers as well as to a variety of other constituencies including students, educators, career and guidance counselors, state and federal policy makers, and researchers, all of whom play a role in creating an efficient labor market.
The needed information includes:
- Occupational descriptions, including tasks performed and knowledge, skills, abilities, and training required.
- Occupational demand and supply, current and projected, at the local, state, and national levels.
- Employment outcomes of individual education and training programs and particular career pathways.
- Extent of the match between existing talent pool and occupational and career options.
The existing crazy quilt
There already exists an information infrastructure composed of several federal agencies, numerous state programs, and a variety of commercial and nonprofit data vendors. The federal government is the primary provider of information, and it alone has the fiscal, technical, and intellectual capacities, the legal authority, the imperative for objectivity, and the public trust to gather, analyze, and disseminate reliable, useful data that are consistent over time. The current federal information effort is extensive, but idiosyncratic and without apparent logic.
The Bureau of Labor Statistics (BLS) in the Department of Labor and the Census Bureau in the Department of Commerce have the most extensive responsibilities. BLS has primary responsibility for data on jobs and labor markets, and the Census Bureau covers data on workers. Much of BLS’s data are generated in cooperation with state agencies.
The Employment and Training Administration (ETA), the Department of Labor’s workforce development agency, provides workforce information grants to states. Each state receives a formula grant to prepare occupational employment projections, analyze and otherwise add value to data generated through the federal-state cooperative system, and prepare additional useful datasets. ETA also offers several online information tools, including detailed occupational descriptions and occupational competency models.
The Department of Education’s National Center for Education Statistics (NCES) collects and disseminates detailed information from the nation’s postsecondary institutions and gives grants to state education agencies to build longitudinal data systems that track student progress from secondary and postsecondary school into the labor market.
The Commerce Department’s Bureau of Economic Analysis (BEA) provides detailed data on jobs, proprietorships, earnings, and inter-area price differences. The National Science Foundation’s National Center for Science and Engineering Statistics (NCSES) produces annual statistical reports on the science and engineering workforce.
A growing number of for-profit and nonprofit vendors offer access to information not found in federal agencies. Database categories include job openings, personal profiles and resumes, student achievement (transcripts), formal assessments of personal knowledge and skills, informal assessments of firms, and industry-recognized certification programs.
The US Chamber of Commerce Foundation’s Talent Pipeline Management (TPM) Initiative is creating regional employer collaboratives to better manage employers’ skill needs, in part through pooling data to ascertain future talent needs for critical jobs and identify and assess the sources of current workers.
An opportunity for action
Concern about the nation’s need for talented workers and questions about the adequacy of training programs led Congress to pass the Workforce Innovation and Opportunity Act of 2014 (WIOA) to replace the Workforce Investment Act of 1998 as the primary federal effort to promote workforce development. In 2014, the White House also released Vice President Biden’s report on reforming the federal workforce development effort, Ready to Work: Job-Driven Training and American Opportunity.
WIOA and the Biden report want to enhance the workforce development system’s capacity to respond to the existence of “in-demand” occupations. To ensure data availability, WIOA requires the secretary of labor to work through BLS and ETA and with the states to create and maintain a workforce and labor market information system to “enumerate, estimate, and project employment opportunities and conditions at national, state, and local levels in a timely manner.”
WIOA says a key goal is meeting the information needs of all labor market participants—including jobseekers, students, employers, workforce investment boards, and state and local educational agencies. Mandated data topics include employment and unemployment, occupational supply and demand, occupational skill trends, job vacancies, and mass layoffs.
WIOA gives the labor secretary directions regarding the design and operation of the information system. The secretary is to prepare a two-year plan for the system; eliminate data gaps and duplication; and solicit input and cooperation from other federal agencies and a 14-member, user-dominated Workforce Information Advisory Council.
Transforming data into useful information
Neither middle-skills workers nor their employers are social scientists with the ability to explore disparate data sources to ferret out useful information. The government has devoted substantial resources to collecting data, but these data are dispersed across numerous agencies, and most data are not in a form useful to those who most need them. A relatively modest investment could significantly enhance the value of these data troves by merging them and presenting the information in a user-friendly format. They can begin by identifying what already exists and what additional work could make it more useful.
Occupational descriptions. Federal occupational information products are based on the Standard Occupational Classification (SOC) System. Last updated in 2010, the SOC contains 840 detailed occupations grouped successively into 23 major occupation groups. It is scheduled for revision in 2018 and every 10 years after that.
BLS offers three independent sources of information based, to some extent, on the SOC:
- Occupational Outlook Handbook, which includes detailed information on 580 occupations;
- National Compensation Survey of employers, which collects wage data by occupation and competency level; and
- Occupational Requirements Survey, which collects detailed occupational information—including physical demands, environmental conditions, and vocational preparation requirements.
The ETA has two sources of its own:
- Occupational Information Network (O*NET), which covers 1,110 occupations; and
- Competency Model Clearinghouse, which has competency pyramids for 26 occupational groups, each constructed in cooperation with industry.
Although all of these activities generate extensive data, there are significant weaknesses that make the whole less than the sum of the parts. The lack of consistency and complementarity across the five information products is not helpful to users. Once-a-decade updates of the SOC do not keep up with a rapidly changing occupational structure, and O*NET, the largest and most detailed product, is not current because of insufficient funding. It updates only about 100 occupations annually. In addition, the government does not regularly evaluate the impact of its various occupational information tools.
Characteristics of labor markets. BLS, Census, BEA, and state governments provide a substantial amount of information on local, state, and national economic conditions that present an important context for labor market decisions. Topics include jobs, unemployment, labor force participation, and the socioeconomic characteristics of workers.
Federal data describing general regional economic conditions are good, for the most part. Model-based data products reflect initiative and innovation. However, the current employment estimates from BLS have reliability problems. Also, several members of Congress—citing privacy—regularly seek to terminate the Census Bureau’s American Community Survey (ACS), the replacement for the decennial “long form” and a source of relevant data.
The BLS Occupational Employment Statistics (OES) program annually produces employment and wage estimates for over 800 occupations at the national, state, and metropolitan levels. Due to limitations on sample size, OES estimates are based on data collected over a three-year period, so it is not as timely as its annual schedule indicates.
BLS is exploring adjustments to OES methods. Most desirable is adding an occupation field to the unemployment insurance employee wage record collected by states from employers. This would obviate the need for an OES job title to be available for each worker.
Near-term, BLS is making information technology investments to model one-year OES estimates from the existing sample. It also is testing “autocoding” employer records to SOC occupations to reduce the paperwork burden on employers. If BLS is able to significantly reduce that burden, it could expand the OES sample size with existing funds and, in combination with modeling, generate even more reliable one-year estimates.
Detailed workforce characteristics by occupation are available through the Census Bureau’s ACS and Current Population Survey (CPS). Traditionally, postsecondary educational attainment is measured in terms of degrees. Data have not been available on the attainment of nondegree credentials such as industry-recognized certifications, state occupational licenses, and community college certificates, but it is these nondegree credentials that are particularly germane to middle-skills jobs.
To address this data gap, NCES organized the Interagency Working Group on Expanded Measures of Enrollment and Attainment, which has resulted in the CPS adding a nondegree credential question and NCES conducting a detailed household Adult Training and Education Survey. The new data should help middle-skills labor market participants assess the value of nondegree credentials for employability, earnings, and career advancement.
Middle-skills labor market participants make decisions on the basis of perceptions about near-term occupational demand relative to supply. The relevant data are flow measures—which concern changes in individual worker and job status such as job openings; job hires, separations, and turnover; school-to-job movements; and worker job-to-job movements—and stock measures—which cover overall demand and supply, such as the number of jobs in an occupation (filled and open) compared with the number of qualified persons available. Wage-level changes are a corollary indicator, waxing and waning in response to shifts in demand relative to supply.
Although the United States does not have a reliable system of near-term occupational demand and supply indicators, several components of such a system are available and others could be added with proper investment.
Information on flow measures is typical of the grab bag state of labor market data. Private vendors conduct automated analysis of the text of online job openings to provide estimates of openings by occupation, industry, and geography. Although this is a creative new approach to mining real-time information, the results suffer from deficiencies in coverage, quality, compatibility, and comparability. The BLS Job Openings and Turnover Survey estimates job openings by industry, but only at the national level and not by occupation. State agencies generate short-term projections of average annual openings for detailed occupations.
For information on hiring, separation, and turnover, one can glean some information from LinkedIn’s database on occupational status, entry, and exit. The Census Bureau’s Longitudinal Employer-Household Dynamics program links establishment and employee records from each state’s unemployment insurance system. The BLS Employment Projections Program estimates average annual replacement rates by occupation. The US Chamber of Commerce Foundation’s TPM Initiative has created an occupational demand planning tool kit for use by its regional employer collaboratives.
Information on school-to-career transition is available from the NCES Integrated Postsecondary Data System (IPEDS), which reports the number of students and degree and certificate recipients by field of study by year. But it includes only full-time students at one point in time, not the flow of all students through each institution. With assistance from NCES, nearly every state is building a longitudinal data system that tracks students from prekindergarten into K-12, postsecondary training, and the workforce. However, most systems cannot track former students who move out of state. The National Student Clearinghouse Research Center provides access to enrollment and completion data from more than 3,600 postsecondary institutions, enrolling 98% of all students. The Association for Career and Technical Education has created a new Certification Data Exchange Project (CDEP) “to expand and improve data exchange between industry certification organizations and state longitudinal data systems … that will allow states and educational institutions to gain access to data on industry-recognized certifications earned by students.” The multi-partner Credential Transparency Initiative is launching an open, voluntary nationwide credential registry that will provide access to detailed, standardized information on individual degree and nondegree credential programs. TPM regional collaboratives are conducting talent flow analyses to identify educational institutions that provide qualified and valued employees.
Resources for stock analysis are similarly diffuse. The ACS provides estimates of employment for 526 detailed occupations by industry. OES estimates three-year average employment and wages by occupation for the nation, states, and metropolitan areas. National estimates are by industry. Development of an annual OES time series would identify shifts in the demand-supply equilibrium by occupation. The Occupational Outlook Handbook includes a series of national occupational tables by industry. Coverage includes the self-employed. State agencies generate short-term employment projections for detailed occupations. Census publishes Nonemployer Statistics, annual estimates of proprietors without employees, by industry and geography. At present, there is no reliable set of estimates of the supply of persons qualified to work in various occupations. Moreover, the development of reliable occupational demand-supply models is in its infancy.
The Chamber Foundation’s TPM Initiative provides its regional employer collaboratives with a guide to talent flow analysis—identifying and evaluating the sources of current employees in key occupations, with sources including education and training programs and prior employers. BLS and the state agencies produce 10-year employment projections by occupation, emphasizing that the projections are not forecasts. BLS says its prior efforts correctly projected the direction of change for two-thirds of occupations, more accurately projected employment for large-sized occupations than small-sized ones, and was fairly accurate in projecting the distribution of employment among occupations. BLS and the states regularly make improvements in their methodologies and recently created a working group to coordinate their efforts, but there is no easy answer. The group will have to develop a slow, steady program to test various approaches.
The apparent disorder and lack of coordination in federal programs stems from inertia, inadequate market assessment, and lack of leadership.
Career pathways. Labor market participants want to understand and compare the trajectories that one can follow from training through steps up the career ladder. Two IT advances are allowing researchers to understand the nature and results of various career pathway patterns by occupation. Census is building a Job-to-Job Flows Tool that enables researchers to trace worker trajectories across jobs and changes in labor force status, with information regarding industry, earnings, and location. In addition, academic researchers are analyzing large volumes of personal career histories available on LinkedIn and in resume banks, but this type of research is in its infancy.
The NCES Statewide Longitudinal Data System (SLDS) Program allows labor market participants to see the employment outcomes of individual educational institutions and programs. However, three issues impede this effort—difficulty obtaining employment information when someone moves out of state, the absence of an occupation field on the wage record, and insufficient data on nondegree credentials.
Each of these issues is being addressed. Data on employment of out-migrating workers are being sought through Census, ETA, Department of Health and Human Services, and NSRC resources. BLS is examining the desirability and feasibility of adding an occupation field to the unemployment insurance wage record. The CDEP aims to develop a nationwide system providing access to data on industry-recognized certifications that can be added to SLDS.
Tools for individuals. Advances in information technology offer the possibility of providing customized guidance to students, workers, educators, and employers regarding the extent of fit between an individual’s knowledge, skills, and abilities (KSAs) and those required for a particular occupation or job. Nearly one-quarter of job applicants now take a skills test, often administered by a predictive analytics firm. On the basis of the test results, the firm then provides guidance to the employer regarding the applicant’s likely fitness for the job. With access to test results, researchers could analyze the large volumes of data to create career guides and design more useful career testing.
Optimizing the government investment
The annual federal spending of $800 million on labor market information might sound significant, but it amounts to less than $2.50 per capita. Compare this with the $450 billion that US employers spent on training in 2013 or the $17 billion that the federal government spent in FY2014 on employment and training programs. Average training expenditure per worker is $3,300. Timely, reliable, and detailed data and analysis could help ensure that this investment is spent wisely. Better coordination and a little more funding could make this possible.
The federal labor market data effort is not fulfilling its potential and the problem begins with lack of resources. Congress needs to recognize the enormous leverage that this effort could produce through guiding private and government training and education programs. The funding shortfall is repeated for state programs. Annual funding for BLS grants to state agencies has been stuck at about $72 million for many years, and ETA state workforce information grant funding has been flat at $32 million. Too little money to begin with, and utility of these grants is eroding with inflation.
The apparent disorder and lack of coordination in federal programs stems from inertia, inadequate market assessment, and lack of leadership. Agencies often are bound by legacy methods for collecting and producing data, particularly surveys. They have paid too little attention to understanding the nature and needs of their customers, on the one hand, and measuring—and adequately explaining to Congress—the value of their programs to well-functioning labor markets, on the other. Since 2001, no secretary of labor has taken seriously the charge to create a nationwide workforce data system through interagency collaboration, and Congress has not provided oversight on this mandate’s implementation.
WIOA’s detailed, thoughtful specifications for improving data collection provide the legal and organizational basis for addressing these problems. Administration officials can take a number of steps. The secretary of labor can develop and regularly update a two-year labor market information plan with a clear vision, roadmap, and rationale, and then direct BLS and ETA to:
- coordinate and collaborate on data-related activities;
- better understand data uses, issues, and opportunities;
- measure the performance and impact of their products and services;
- work with other statistical agency heads, including Census, NCES, and the National Science Foundation, to reduce data duplication and address gaps; and
- brief congressional staff on the value of labor market information to diverse stakeholders.
The White House policy offices should work together to support a coherent strategy and make the case for adequate congressional appropriations. The Federal Committee on Statistical Methodology should create a study group to develop principles and practices for use of advanced IT data methods and third-party services.
Under the authority and directive provided by WIOA, the secretary of labor—through BLS, ETA, Census, NCES, the Office of Management and Budget, other federal agencies, and employer associations—should facilitate implementation of the following program priorities:
- Create a strategy for regularly updating details in occupational descriptions, including emerging and receding occupations, changes in KSAs, and changes in educational requirements.
- Align and integrate the government’s suite of occupational information tools in a way that meets labor market participant needs.
- Encourage employers to adopt a standard template for on-line job postings that would allow for more productive text analysis for the purposes of understanding occupational KSAs and educational requirements.
Characteristics of labor markets
- Improve occupational statistics through modeling the annual OES time series, autocoding OES responses to reduce costs and expand the sample size, and adding occupations to the unemployment insurance wage record.
- Actively support a mandatory-response ACS.
- Continue efforts to collect nondegree credential attainment data.
- Develop useful occupational supply-demand models at all levels of geography.
- Continue to improve short-term and long-term national and state occupational projections.
- Expand IPEDS to include nontraditional students.
- Monitor and support regional employer collaborative efforts to trace supply and demand trends.
- Support the Credential Transparency Initiative.
Employment outcomes and career pathways
- Pursue technically and legally viable methods to track the employment outcomes of out-of-state movers.
- Support the Certification Data Exchange Project.
- Monitor and support regional employer collaborative efforts to trace education-employment trajectories.
- Enhance researcher capacity to analyze job-to-job and career trajectories.
- Convene a national conference to explore the potential of analyzing the results of personal assessment tests to inform workforce development processes.
The development of a robust, fully employed middle-skills workforce requires that students, workers, employers, educators and trainers, and policy makers be able to make labor market decisions on the basis of current, reliable, detailed information.
At present, such information is not readily available to a sufficient degree. However, significant advances in information technology and widespread interest by government agencies, advocates, researchers, and vendors suggest that the way and the will exist to address this situation. Remarkable opportunities are available to enhance the workings of US labor markets through modest investments to improve workforce data resources.
Andrew Reamer is a research professor at George Washington University.