AUSTIN, Texas -- Training workers and placing them in jobs should be viewed as an investment in the future of the economy, not a cost to be borne by taxpayers and charities, Federal Reserve Bank of Philadelphia President Patrick Harker said Thursday.
Mr. Harker unveiled a Fed report on workforce-development strategies during a speech here Thursday morning.
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In an interview before the speech, he said businesses, governments, nonprofits and schools need to rethink how they view training programs aimed at preparing the unemployed and underemployed for in-demand jobs.
"We need to stop thinking of workforce development as a social service," Mr. Harker said. "And start thinking of it as investment for your business, your community and the country."
Improving workforce development is consistent with the Fed's mandate to maximize employment, he said. Better training and placement systems will improve the well-being of low-income and less-educated workers by allowing them to find better-paying employment. And moving those Americans into more productive jobs will help employers address a shortage of workers with needed skills -- ranging from welders to medical technicians.
The ultimate result is a more robust economy, Mr. Harker said.
"We cannot afford as an economy, given how tight the labor market is right now, to leave anybody on the sidelines," he said, "if we want the kind of growth we've come to expect in this country -- more than 2%."
In his speech, Mr. Harker said the economy is "essentially at the point of maximum employment...if you want a job, you can get one relatively easily."
But he added "that doesn't mean it's a good job, or that it pays a living wage, or that it comes with the benefits that can be truly family-sustaining."
The Fed report presents more than a dozen strategies for improving workforce development and pushing more investment in the area. The impetus for the research was a change last year to a Fed regulation to allow banks to include workforce development as meeting a mandate to invest in the communities where branches are located.
To develop the report, the Fed's 12 regional banks convened 52 listening secessions this year in 32 states and Puerto Rico.
One of the key messages from those meetings, Mr. Harker said, was that people involved in this work-including employers, governments and charities, need to start thinking like investors who look at long-term outcomes, rather than lenders that look at short-term risks.
Employers should look at their workers as assets to be invested in, rather a labor cost, to be limited or decreased, he said "If employers do that, our experts believe their behavior might also change," Mr. Harker said.
Among the strategies is to promote better training for existing workers to allow those already in the company to obtain the skills to fill higher-level roles.
It also called on employers to embrace apprenticeship programs and other work-based training that allow workers to earn a wage while they learn. Low-income workers often can't take time off for education, leaving them stuck in low-skilled jobs.
The report also called for governments and charities funding workforce-development to consider different approaches. Mr. Harker said too often training efforts aren't designed to lead trainees to in-demand jobs.
The report suggested instead of simply paying for training and job placement services up front, funders should tie payments to the outcomes achieved, but not dictate how the training is delivered. That can incentivize training organizations to tailor methods to the local industries and worker shortages.
Mr. Harker didn't address monetary policy in his speech.
Write to Eric Morath at email@example.com
(END) Dow Jones Newswires
October 05, 2017 11:33 ET (15:33 GMT)