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Introduction

 

A. What are state sector strategies, and how do state sector strategies differ from regional sector initiatives?

 

Sector initiatives

Sector initiatives (also called sector partnerships) are regional, employer-driven partnerships of industry, education and training, and other stakeholders that focus on the workforce needs of key industries in a regional labor market. Sector initiatives rely on workforce intermediaries (or conveners) to engage employers and other key stakeholders; to develop expertise in the industry of focus; and to coordinate information and resources to develop and implement effective, coordinated responses.

What’s different about the sector initiative approach?

Sector initiatives are considered highly responsive to industry demand when compared to traditional job-matching and training services because they are:

  • Problem-oriented, not program-oriented;
  • Address needs interdependently, not independently; and
  • Work with industries collectively, not as individual firms.

Sector initiatives meet the skill, recruitment, and retention needs of employers and the training, employment, and career advancement needs of workers. By meeting the needs of regional industry on behalf of a region’s jobseekers and workers, sector initiatives strengthen a region’s overall economic vitality. Sector initiatives:

  • Address the needs of employers by focusing intensively on the workforce needs of a specific industry sector over a sustained period, often concentrating on a specific occupation or set of occupations within that industry;
  • Address the needs of workers by creating formal career paths to good jobs, reducing barriers to employment, and sustaining or increasing middle-class jobs;
  • Bolster regional economic competitiveness by engaging economic development experts in workforce issues and aligning education, economic, and workforce development planning;
  • Engage a broader array of key stakeholders through partnerships organized by workforce intermediaries; and
  • Promote systemic change that achieves ongoing benefits for the industry, workers, and community.

Over a dozen states are finding ways to support their development, and hundreds of communities are using the approach to grow local industries and skilled workers. Many believe the model has reached a “tipping point” across the country. They are not just another “program” or “flavor of the month”. If designed and implemented effectively, sector initiatives are a “new way of doing business.”

State sector strategies

State sector strategies are state policies that promote and support the development of regional sector initiatives. States can use a variety of policy tools to incent and support sector initiatives in critical industries across their regions. State sector strategies provide a framework to do so. States also play a role in developing and implementing statewide sector initiatives for industries that play a key role in all their regions, such as the health care industry.

This State Sector Strategy Toolkit is intended to help states to design and implement statewide sector policy frameworks that support and position their regions to develop sector initiatives. Although many states are implementing sector strategies, they are not easy to establish and sustain. For sector strategies to succeed, state systems must agree that regional, skills-based economic competitiveness is the right approach, and then must align policies and funding streams across education, workforce, and economic development systems, and at all levels of government. Just as regional sector initiatives require an intermediary to convene stakeholders and activities, state sector strategies require leadership to help coordinate policies toward common goals. Governors are in a pivotal position to provide the leadership needed to bring systems together.

Several excellent resources provide additional information:

Also Known As...

There are a variety of terms often used interchangeably to discuss the concept of sector initiatives or strategies. They can include industry partnerships, industry training consortiums, skill panels, regional industry strategies, regional cluster strategies, and likely many others. What connects them conceptually? For the purposes of this toolkit, they share these characteristics: regional, partnership-based, target a critical industry, and focus on the skilled workforce needs of the targeted industry.

Sometimes the concept of “industry clusters” (as defined and popularized by Michael Porter) is discussed in connection with sector initiatives. An industry cluster is a group of firms related by shared products, markets, suppliers and other economic connections. The term “cluster” is an economic development term. Clusters can address workforce issues, but unlike sector initiatives, workforce is not always the central element. For more information on how sector strategies and industry clusters inter-relate, see How Clusters and Sectors Inter-Relate.

B. Why are state sector strategies important?

In response to rapid advances in technology and market globalization, the U.S. economy is becoming increasingly knowledge centered, technology based, and innovation driven. These changes present new challenges to employers, workers, and communities.

While employers confront growing shortages of adequately prepared workers (even in a down economy); low-skilled workers lack the skills to secure better jobs and the resources to obtain higher-level skills. American industries increasingly need workers with higher skill levels and credentials, yet the percentage of the labor force with four-year college degrees is leveling off and the number of workers with two-year degrees and vocational certificates will fall short of the economy’s predicted needs. For local communities, tax breaks and infrastructure development are no longer the keys to attracting and retaining employers; businesses are now looking closely at the supply of skilled workers and the educational institutions that can provide additional, industry-relevant skills. Currently, the education, workforce, and economic development systems are not well coordinated to adequately address these needs. Key issues include:

Single-Employer Focus

Traditionally, local workforce and economic development systems have focused on the needs of single employers rather than industries. This makes it challenging to develop a deep understanding of a particular industry and its needs, as well as to develop solutions at scale. Because different employers within the same industry have similar skill needs and draw on the same labor pool, sector partnerships offer the opportunity to better understand industry-wide needs and more efficiently spread the costs of new program development across multiple firms.

Arbitrary Boundaries

The misalignment between the labor markets in which business operates and the geo-political boundaries of education, workforce and economic development systems complicates how the private sector may work with public systems. Labor markets cross city and county lines, workforce area boundaries, and community college districts. Jobseekers and workers cross them too. Navigating which one-stop center, college or economic development agency is technically set up to serve an employer or jobseeker is not only complicated, it can be a deterrent altogether. Sector partnerships bring multiple systems and areas together so that employers and jobseekers are served efficiently.

Lack of Meaningful Employer Engagement

The Workforce Investment Act (WIA) of 1998 attempted to promote employer engagement by adopting a “demand-driven” focus, which led to important improvements such as offering business services at one-stop centers and appointing employers as members of state and local workforce investment boards (WIBs). Similarly, many community colleges have appointed industry advisory boards to guide program development. Unfortunately, the percentage of employers using WIA one-stop centers remains small, and most states have no formal mechanism for aligning K–12 and postsecondary curricula with industry skill needs. Without a way to maintain an ongoing dialogue with industry, government programs cannot adequately understand industry needs, facilitate learning between related businesses, or formulate effective workforce solutions. Subsequently, employers look elsewhere to address their workforce needs, and public systems lose out on opportunities to connect workers to good jobs and keep strong industries in their regions.

Lack of Coordination Among Key Stakeholders

In most states, there is no single entity with responsibility for bringing the different systems—and other key stakeholders—together to address industry and worker needs. For public systems, funding streams focus on specific categories of individuals (e.g., welfare recipients, unemployed workers) or single firms, making it difficult to focus on the larger challenges confronting regional economies. Further, cultural differences between systems – including terminology, different definitions of customers, and divergent performance measures – can be daunting obstacles to collaboration. As a result, regions miss out on opportunities to leverage resources and coordinate information that could lead to a deeper understanding of industries and their needs. Sector partnerships bring together information and resources to maximize impacts and take projects to scale, taking programs from small victories to big wins for all partners.

Limited Focus on Job Quality

Finally, there is no formal mechanism to push the education, economic, and workforce systems to work with regional industries that yield high numbers of good jobs—jobs that pay family-supporting wages, offer benefits such as healthcare, and provide opportunities for advancement. Performance measures and funding requirements often value job attachment over job quality or long term employment. Knowing that high-quality jobs can lead to better financial outcomes for workers and longer job tenures, sector partnerships offer a way to focus public resources on the training that moves workers into industries with good jobs.

Sector strategies have emerged as a response to these shortcomings of the current system.

Source: State Sector Strategies: Regional Solutions to Worker and Employer Needs Issue Brief

C. Are State Sector Strategies Successful?

Simply put, the sector partnership model is growing because it shows success to employers, workers, and public systems responsible for making shrinking dollars go further. A recent evaluation of the impact of sector initiatives on workers shows:

  • Participants in skills training sector initiatives earned more per hour, worked more hours, and experienced decreases in poverty from 64% to 35%;
  • Participants in skills training sector initiatives had higher quality jobs, indicated by an increase in employer-offered health insurance plans from 49% to 73% and an increase in paid sick leave from 35% to 58%;
  • 83% of participants claimed that participation in the sector initiative prepared them well for work in the targeted sector, and 78% claimed that their participation improved their chances for obtaining a job in the targeted sector.
  • Studies also indicate that sector initiatives are effective mechanisms for employers to stay competitive. A third party evaluation of sector initiatives in the State of Massachusetts showed that 41% of the employers surveyed reported that participating in the sector initiative led to a reduction in turnover; 19% reported a reduction in rework; 23% reported a reduction in customer complaints; and 100% of companies reported that partnerships with other companies and public institutions were valuable. In an assessment of a sample of sector initiatives in Washington State, a 100% decrease in a persistent vacancy rate for invasive cardiovascular technicians (from over 50% to 0% in two years) in regional hospitals is attributed to the work of a Healthcare Careers Skill Panel. The Washington State Workforce Education and Training Coordinating Board has competitively funded (and supported with technical assistance) the start-up of regional sector partnerships (called “Skill Panels”) in critical industries since 2000.

For more links to evaluation studies and the latest evaluation frameworks used by states implementing sector strategies, go to the evaluation module.

 
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