Report

American Enterprise Institute

Key Points

Sector strategies are programs or processes that shrink the gap between the supply and demand for labor by aligning education and training along a demand-driven career pathway.

While often referenced in workforce development circles, sector strategies tend to lack defined elements for replication and guidelines for implementation and measurement, leading to inconsistent results.

The Austin Metro Area Master Community Workforce Plan in Austin, Texas, has leveraged strong local leadership, innovative data collection strategies, cross-sector partnerships, and employer engagement to deploy sector strategies in a regional context.

The Austin experience helps highlight the practical steps to consider when setting and implementing regional upskilling goals.

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The majority of research and writing for this report took place from August 2019 to February 2020. Since the time of our writing, the employment landscape in the United States has changed dramatically, with COVID-19 significantly altering the economic outlook of communities, employers, and workers across the country. A booming 3 percent unemployment economy has, almost overnight, transformed into a historic recession, with some outlets projecting unemployment rates greater than 30 percent in the near future. On April 2, the Department of Labor reported over 6.6 million initial weekly unemployment claims—the highest number of such claims in a single week in US history.

Despite these changes and the ongoing uncertainty, we believe the insights in this report are a valuable resource for federal, state, and local leaders as they seek to support workers and, in the near future, rebuild local economies. The efforts of community leaders, and the local workforce board in particular in Austin, Texas, provide an example of the importance of cross-sector collaboration, the creation and maintenance of talent pipelines, and the utilization of real-time data in establishing a framework upon which an effective workforce response can be built.

Introduction

Over the decades, public policy efforts to assist economically disadvantaged and marginalized populations have often centered on services that quickly provide these populations with jobs and earnings. The resultant workforce development programs have tended to adopt a short-term focus on easing economic distress without paying attention to building skills through work experience and training.

Recent years, however, have seen a considerable shift in many workforce leaders’ perspectives. New calls for “demand-driven,” “regional economic development,” and—the most recent—“sector strategies” approaches seek to reorient the workforce development field toward a recognition that employers and labor demand should drive efforts to improve the quality of labor supply.1 In this framework, employers identify the competencies and skills needed by workers in various jobs, and employment and training programs adapt to meet these competency and skill needs. When properly executed, workers benefit—and public investments in these workers support rising wages and the flourishing of the broader community through sustainable growth, an expanded tax base, and reduced dependence on public programs.

But these efforts also raise the question of what it means to implement a sector strategies approach. Like many concepts in the workforce development field, “you know it when you see it,” but defining and understanding the components of effective sector strategies are often left for state, regional, and local policymakers and staff to work through.

This report uses a current example of a sector strategies approach—the Austin Metro Area Master Community Workforce Plan—to isolate and describe the steps and practices used to realize desired outcomes. We propose a working definition for sector strategies and initiate a discussion around the public workforce system’s role in convening and interacting with the private sector. We also describe the preliminary outcomes from Austin’s efforts and what this initiative means for public policy and practice.

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Notes