Stephanie Wells, Indiana Fiscal Policy Institute
For close to a decade, policy makers in Indiana have been concerned about a growing skills gap in the workforce. This is realized in the data — a recent national study from the Georgetown University Center on Education finds that economic opportunity will increasingly favor workers with higher levels of education and training.
The report forecasts the number of good jobs for workers ages 25–64 and finds that 85% of good jobs will go to workers with some form of postsecondary education and training by 2031. However, only about one-third of Indiana’s graduates earn a 2- or 4-year college degree.
However, we are not just dealing with a skills gap – Indiana also has too few workers. According to the U.S. Chamber of Commerce, Indiana has 72 available workers for every 100 open jobs. While the state continues to enjoy a low unemployment rate, (3.8% in June 2024), we have a low labor force participation rate. Labor force participation has been on a downward trend nationally for decades due to an aging population and other factors. According to the St. Louis Federal Reserve, Indiana’s labor force participation rate was at or exceeded 65% for most of the past 40 years, with participation peaking at more than 70% in 1995. Indiana’s June labor force participation rate was 62.4%, slightly below the national rate of 62.6%.
This low participation rate means that in June there were 162,110 potential workers sitting on the sidelines who have indicated a willingness to work. Many of these adults have barriers to employment such as lack of affordable childcare and lack of transportation.
The combination of a growing skills gap and low labor force participation will continue to be a critical challenge to growing Indiana’s economy. Policy makers are wise to consider it a primary area of concern.
Multiple programs, disparate information
To meet this growing challenge, in recent years Indiana has created a variety of programs and initiatives to meet the needs of the Indiana labor market. These programs are housed at a variety of state agencies — the Governor’s Workforce Cabinet, the Indiana Department of Education, the Indiana Department of Workforce Development, the Indiana Commission for Higher Education, the Indiana Economic Development Corporation, and the Indiana Family and Social Services Administration all oversee education and workforce programs. These programs, in different ways, are intended to create more skilled workers to meet the needs of an evolving and thriving economy.
The task of creating new workforce programming is continuing as we speak — policy makers are currently working to overhaul high school graduation requirements, create youth apprenticeships, and implement a statewide career coaching system. Other discussions center around talent attraction, talent retention, skills training, and increasing labor force participation through addressing barriers to work.
Many of these initiatives likely have merit. Extensive time and resources are being utilized to make these programs succeed. However, the decentralization of this work without a core connective strategy puts the state at risk of creating inefficiencies, duplication of effort, and conflicting administrative policies. The system is likely to create confusion for workforce development stakeholders – including employers, students, parents, and adult jobseekers.
Information on talent development resources should be easily available – not housed on a variety of different government agency websites. A “front door” for information on workforce programming is key to helping minimize confusion and duplication of effort. The state recently launched an online workforce hub that may be used for this purpose.
Central talent strategy
To minimize stakeholder confusion and to ensure a common purpose, it is critical that the state create a comprehensive central statewide talent development strategy that cuts across all relevant agencies and programs. Importantly, the strategy should include a list of priorities and goals that are tied to metrics that can be collected across all relevant workforce development agencies. The strategy should address the needs of K-12 students, adults, and employers and address opportunities for continuing skills development throughout an individual’s work life. The strategy should allow for local flexibility, to meet the needs of regional labor markets and communities.
Of significant importance is that strategic goals must be tracked, measured, and reported on a regular basis. To date, the Indiana Legislative Services Agency has provided some evaluation of state workforce programs, but more ongoing analysis is critical.
Without a strategy tied to outcomes, it is impossible to determine whether these programs are working. Are these programs creating more economic opportunities for Hoosiers? Are the programs meeting the needs of employers? Are the programs operating efficiently and not duplicating effort? What policies need to be improved? What programs need to be scaled? What programs need to be modified?
The answers to these questions are critical to ensure that Indiana’s talent development policy is meeting the needs of the 21st century economy.
Stephanie Wells is president of the Indiana Fiscal Policy Institute. She is the founder of Wells Strategy + Solutions, which provides clients with assistance on workforce development, economic development, policy solutions, research and data analysis, along with logic and data modeling. Previously she was vice president of workforce development for the Indiana Manufacturers Association. This commentary is republished with permission from Indiana Capital Chronicle.