 But good morning to everyone. Thank you so much for coming out on this strangely brisk and wet morning, just two days after a 90 degree blistering August day, August light day. OK, so we'll go ahead and get started. So again, thank you so much for joining us. My name is Mary Alice McCarthy, and I'm on the Education Policy Team here at New America. For those of you who are not familiar with us, New America is a non-profit, non-partisan think tank and civic enterprise dedicated to the renewal of American politics, prosperity, and purpose in the digital age. The hashtag for this morning's event is hashtag skills race. So please tweet early and often. Thank you. And so what I want to do this morning is just get us started with some kind of a roadmap of what we're doing and some introductions and also just some general context setting. So let me sort of want to get at that question of, why are we here? Why did we put this event together? Why did we put this incredibly esteemed panel together? And what are we hoping to get out of this conversation today? So I'd start by saying that I don't think it's an exaggeration to say that skills are on everyone's minds these days, whether it's workers worrying about becoming obsolete or employers worrying about how they're going to find the right workers with the right skills to help them compete, a student deciding on a college major or a policymaker trying to figure out how to build the human capital of their citizens and their country. There's a lot of interest and a lot of anxiety around skills. And despite the fact that more people than ever are going to college and educational content is more ubiquitous and more accessible than it has ever been with the internet and all these new delivery methods that are popping up, MOOCs and Khan Academy and boot camps, it strangely seems to be getting even harder to connect education, jobs, and economic opportunity. So that's why we keep hearing this steady drumbeat from employers about the difficulties that they're having finding workers with the right skills. And we're hearing about graduates who are struggling to find jobs when they get out of college. According to the Federal Reserve Bank of New York, recent college graduates are in fact taking longer to find a job and are earning less money and are more likely to be underemployed than previous generations. So it seems like our traditional ways of doing business, whether it's in higher education or our job training programs or just the practice of recruiting and hiring and training workers are falling short. And so of course that means that we need some new ways of thinking and doing. And that's what we're here to discuss today. So we're going to kick off our discussion by hearing from Dr. Simon Field, the Directorate of Skills and Education at the Organization for Economic Cooperation and Development. Simon has led the OECD's work in the area of vocational education and training, what they call VETS over there for some time, leading reviews of more than 30 countries and looking at their policies and their systems. He is the lead author of the OECD's two main publications on education and training policy, both of which are outside. So you're welcome to grab one. And has conducted many individual country reviews. So Simon has a very large picture. Now I don't know if it's comforting or even more anxiety provoking to know that we are not the only country struggling with the skills challenge. I do think it's fair to say that policymakers around the world are grappling with this challenge of how to help their people keep up in the skills race. So Simon will give us a global context and share what he has learned after looking at the education and training systems of more than 30 countries. Then we'll come back to the United States and we'll learn about some of the new and innovative approaches to tackling the skills challenge that are happening here. It's not as if we're standing still in the United States. There are many, many efforts underway to tackle this problem. So as we move our way down the panel, we'll continue getting more and more specific about strategies for building skills and aligning education with the needs of the economy and employers. We'll hear first from Dr. Holly Zanzel of the Lumina Foundation. Holly is a strategy director at Lumina and has been leading the foundation of work in the area of credentials for the last few years. Credentials, of course, are crucial for helping people identify, document, and communicate their skills. But she has extensive experience working across the education pipeline with service in the K-12 system, community colleges, higher education governance in the states of Washington and Oregon. So Holly's gonna share some of the foundation's existing and upcoming work and just what they've been learning along the way. Next we'll hear from Todd Green, Vice President for Research at the Federal Reserve Bank of Atlanta. Todd provides leadership, strategic direction and oversight for the Community and Economic Development Department at the bank in Atlanta. And before joining the Atlanta Fed, he was at Georgia Institute of Technology, where he also headed up a center that oversees our research and programs related to applied economic development. So Todd's gonna share with us how the Federal Reserve System is getting involved in the area of skills and workforce development. It's a sort of a new player on the landscape that we're all very happy to see. And we're gonna hear about their efforts to better connect job seekers, training providers and employers. And then we'll hear from Dr. Byron August. Dr. Byron August, pardon me, Byron has tremendous experience in the areas of skills and economic development until just a few months ago, he was the Deputy Assistant to the President for Economic Policy and the Deputy Director of the National Economic Council. And it's from that perch that he led much of the administration's work in the area of training, education and employer engagement. Before that, he had a long career as a principal and a director at McKinsey and Company. So he also has a wealth of international experience and private sector experience to bring to bear to these questions. Byron has just launched a new enterprise called Opportunity at Work, very exciting, and is pioneering some new strategies for tackling the skills challenge with some very innovative approaches to working closely with employers. So we're gonna hear about that. I'm also very happy to say that Opportunity at Work and Byron and his team have their headquarters right here at New America, so we're very excited about that. So we're gonna hear from each of our panelists and then we're gonna have a little bit of discussion up here and then we're gonna open it up to all of you for your questions as well. Great, so Simon, I'm gonna start with you. You've seen it all. You've been all around the world and you've looked at all of these different countries and their systems. So what can you tell us about what you've learned from all of this analysis? What are the big trends? What's working? What's not? And how is the United States stacking up? And we are used to being number one, but there's no pressure there. Ha ha ha. That's a challenge. Thanks very much, Mary Ellis, and it's a great pleasure to be back here again at the New America Foundation with such distinguished colleagues and a distinguished audience too. As Mary Ellis has said, we spent a lot of time over the last seven or eight years going around the world, looking at all sorts of different skills, systems, and writing reports about them. Developed countries, for sure, in Europe and North America, Australia, Korea, but also increasingly we've been looking at some of the big emerging economies. We've been to China and South Africa, Vietnam, Mexico, and Chile, just for example. Now, we've also undertaken quite a lot of work on the United States, two studies of state level, a career in technical education in Texas and South Carolina several years ago, a national review of post-secondary, CTE, entitled Skills Beyond School, it's sitting out there in the corridor, and more recently a study focused on low-skilled adults, and that was linked to the OECD survey of adult skills, and it was entitled Time for the US to Reskill, and there's also copies of that report out there. Now, I'm gonna come back to the US in a moment, and Mary Ellis has very difficult questions, but you've also asked me about the big global trends, and the first thing we've seen, if you look around the world, is something of an emerging global disillusion with what you might call the college for all, or the university for all model of education development. And the idea of college for all, university for all, is always politically popular, and it's often promoted by formidably effective higher education lobbies, but increasingly countries are realizing that it doesn't always yield particularly effective models of career preparation. I mean, just to give you one example, I could give you a numbers. If you see the figures for Korea, you see that 70% of young people go to college programs, that's a lot. It's actually probably higher than any other country in the world. But don't imagine those are all Samsung engineers. Some of that, for example, is training young people to be baristas in coffee shops, Starbucks and the like. That's two years in junior college, and I've tasted the coffee and it's okay, but honestly, I don't know that it takes two years to do that. Hairdressing is another example, that's junior college in Korea. So that's the sort of thing you get when 70% of the cohort go to college. Now the second thing we've seen around the world is an intense focus on the development and upgrading vocational education. Was completely neglected 20 years ago, often in favor of the college for all model, and now it's central. And you see that not only in the increased attention to the issue in the richer countries, but also in the development paths of emerging economies. I mean, for example, in Indonesia, at the moment around one quarter of young people complete high school, only one quarter. But the aim is to increase that to 90% in the next five years. A hugely ambitious target in a country of 200 million people. Mainly through a massive expansion of vocational high schools. So there's a huge amount of attention being given to the reform scaling up of vocational education. And third, the big challenge everywhere is the need to bridge the gap between the world of learning and the world of work. And you find this gap everywhere, certainly in the United States, but you also find it everywhere from Chile to China. It's truly global. And it's widely recognized that these two silos, the education and training silo and the employment silo, don't always communicate very well. Overcoming that gap means strengthening a partnership with employers. And we're gonna be hearing some more about that later on this morning. And using that partnership to develop a curricula that reflect the needs of industry, means a teaching workforce abreast of industry requirements, as well as having academic qualifications. And it also means work-based learning, that touchstone of employer partnership, and I'll come back to that. And that brings me to a fourth issue, thinking of work-based learning. So many countries are pursuing what is often put to us in the form of the question of, can we have a German style apprenticeship system, please? And it pops up all the time, all over the place. And for example, we're working with Costa Rica at the moment, we're just about to publish a review of that in Costa Rica. And they're pursuing that very issue in new legislation before the parliament in Costa Rica. And often for all the undoubted strengths of the dual apprenticeship system that you find in Europe, its success depends heavily on a set of institutions which just don't exist in many countries. So often we have to be cautious and the world is littered with not terribly successful attempts to introduce the dual system of apprenticeship. Now, turning to the US, it has a very distinctive skills system. It's particularly distinctive in terms of the relative paucity of CTE vet at high school level. The career preparation that does take place there is typically in the form of modules, a couple of modules that an individual might take, very different from the kind of job specific training that takes place in dedicated vocational high schools and dedicated vocational tracks in many parts of the world. In fact, one might even say most parts of the world. Now in the US, that relative absence at high school level is balanced by an exceptionally dynamic and diverse post-secondary sector of career preparation. You know all about this, the certificates, the associate degrees, the community colleges, the independent providers, the professional and industry examinations. Now, so what are the really big challenges for the US? This was Mary Alice's other question to me. And there are lots of course, but I'm just gonna mention two. The first one is very, very simple. It's getting basic schooling right in terms of the foundation skills of numeracy and literacy and more broadly. We know that the basic skills of adults depend primarily on what they've learned in early life and that later remediation of weak basic skills is really, really, really hard. It's also well understood that the United States does not perform well on the international comparative tasks like PISA and the Survey of Adult Skills. But there is a related point to that, which is not so widely understood. If you look at the workforces, the adult workforces in emerging economies, and let's take China as an example, the workforce is mostly pretty low skilled in fact and poorly educated. That's adults on average. But if you look at young people, the position is very different. In China now three quarters of young people complete high school, but that's a recent phenomenon. So what does that mean? That means that 20 years from now, the Chinese workforce will be much higher skilled than it is today as better educated young people gradually replace older workers. So if you think that countries like China pose a competitive challenge today for the United States, then just wait 20 years, then you will really see something. Now, if you look at developed countries, how are they placed to respond to this? Well, the Survey of Adult Skills allows us to compare younger and older adults, and what you find is really very interesting. Many developed countries have invested a lot in improvements in schooling so that in some places, the young, like in China, they're all so much better skilled than their parents. So that again, as young, better skilled young people enter the workforce, average skills will improve. You'd find that for example, just to take two notable examples in countries like Poland or Korea, is outstanding examples, but also in many other developed countries. But the United States stands out alongside the United Kingdom as places where the basic skills of young people are little different from the skills of their parents. The simple passage of time therefore won't change anything much, and that will mean that the workforce skills, at least basic skills of numeracy and literacy in the United States will fall progressively further behind those of other developed countries, just at the moment in history when dramatically increased competition will come from the emerging economies. And that is a devastating challenge for the United States. It means improvements to basic schooling just have to come. They just have to. But I want to end on a more optimistic note in respect of a second challenge. There are innovations out there that can help. Work-based learning is a key tool in most strong vocational systems. That's because workplaces are great places to learn the hard skills with all the latest technology, and they're great places to learn the soft skills because workplaces are where you have to work with people. But they're also, in addition to those qualities, a key to the partnerships with employers which underpin effective career preparation. And it's not always easy to get employers to offer work placements, that's often the challenge. Particularly where there's not much history of doing so, like here in the US, and that's a big challenge. Now there is a funding model that could help, and interestingly it's been implemented in Sweden and Barbados, two countries that you don't normally see bracketed together. What they've both done is set up funds for training, and those funds are only obtainable by training providers working in partnership with employers. So partnership is built into eligibility for funding rather than something that has to be awkwardly bolted on at the end. It's a very different from funding models which support training providers directly, or provides support via the student, or through the employer, all on their own. And it's interesting to see how it can promote partnership and work-based learning in very different contexts. Sweden and Barbados, where there hasn't been much history of partnership, and it might just work in the US. Thank you. All right, thank you very much. Lots of food for thought there. So Holly, the Lumina Foundation has been tackling the challenge of increasing educational attainment for over a decade now, with your big goal has generated a lot of fantastic work around improving access and completion and quality and higher ed. And now the foundation is moving into some new areas, so can you tell us a little bit about where you've come and what you've learned along the way and where the foundation is headed? Great. Well I'd like to begin today in describing how and why Lumina is changing by sharing with you a cartoon. There's four students and they're sitting around a poker table. One student is holding a college degree card. The second student is holding a card that says industry awarded certification card. The third student is holding a degree plus a certification card. And the fourth is holding a card that says non-credit alternative certificate. The caption reads, who has the best hand? It's hard to know. This oversimplifies, of course, the situation because there's a lot of missing information in the cartoon. But there's an increasing number of credentials in the US and some folks are beginning to call what we have here at Tower of Babel, made up of certifications, certificates, apprenticeships, degrees, associate, bachelor, master's, doctoral, micro-credentials, digital badges and I have no doubt in the next several years there will be more different types of credentials than emerged. And these are being awarded, interestingly, from multiple providers. No longer the colleges and universities that have been the traditional providers of credentials, but now from industries and from emerging third-party organizations. There are now some 4,000 personnel certification bodies in the United States, but there's no system for validating their credibility or their quality. There are fewer than 10% in fact of the certification bodies that are reviewed or accredited by a third party at all. And over the past 30 years there's been an increase of more than 800% in the number of certificates awarded by higher education institutions and those many providers I've just mentioned of education and training. While this diversity of credentials and providers is not necessarily a bad thing, and we could argue that this diversity is actually a really good thing, there's a big problem and that is that there's no common system to connect these credentials and this is creating some major challenges for students, for employers, and for the institutions themselves. Here's a realistic scenario of the challenges for one employer. This is an HR office that's trying to choose among three candidates. There's a job core grad with a certificate from the Home Builders Institute. There's also an applicant who's a returning military vet with construction experience. And the third applicant is a graduate from a community college construction technology program. Here's where it's really difficult to determine who brings the best knowledge and skills, are they all bringing it, and it's just difficult to determine what the knowledge and skills are. A new idea has been emerging as we all begin to understand this changing landscape and the new idea is to see whether or not we can develop some applications, an app that would let the employer in this case enter in their skill requirements and a tool that would match based on hiring for competencies. Sort of like a LinkedIn meets up with match.com and that's how some folks are representing the idea. Well, this is the context driving learning and driving Lumina's new work. Lumina Foundation has really long work toward one goal. We call it goal 2025 and that is that 60% of Americans would hold a college degree, certificate, or other high quality credential by 2025. In pursuing this goal, and all of our work is really centered on this, we're committed not only to increasing the number of credentials earned, but also to ensuring the quality of those credentials. In other words, the credential has to match the actual learning or it isn't gonna be meaningful to hold that piece of paper. And as some people said, we don't care about that, we might as well just issue the pieces of paper and then let employers try to figure out who has the knowledge and the skills. Five years ago after Lumina developed our goal, our 2025 goal, we started down the road of looking especially at what does high quality mean in degrees. We thought that was a good place to start because it was clear that there wasn't even clear understanding of what is the difference in a bachelor's degree and a master's degree. And so we began working very closely with higher education institutions to determine what are the differences and provide a tool that would be a framework for looking at the curriculum, particularly of higher ed institutions. That resulted in the creation of something called the DQP, the degree qualifications profile. The beta version was actually issued in January 2011 and we received a lot of feedback from folks on ways to improve it after many colleges and universities experimented with it over about a four year period. We officially issued the DQP just last October and we're doing what we can to help scale it up because the evidence tells us that it can be very helpful for institutions to use this baseline set of reference points for what college graduates should know and be able to do regardless of their fields of study. Well as we were going down that road and we were receiving feedback on the DQP over the past several years, we started to get some questions like this from folks. Where are certificates in the DQP? And shouldn't they count? And more recently, where are the badges? And how do degrees relate to industry awarded credentials? So the light bulb went on for a lot of us at Lumen Foundation and no doubt lots of other people that we need bridges. We need a translation booth, a translation platform among credentials of value that are out there in the credentialing marketplace. And this is the idea that has emerged and is really impacting our foundation and our future work. That's a high priority for us increasingly and we know for many. It is about the learning and how learning is represented in credentials and do we have a system in the United States that we can count when folks start receiving various kinds of credentials? So the takeaway from us is that we need an interstate highway of credentials and we need smooth on and off ramps and we all need to understand the rules for navigating credentialing highway. For students, for employers, for workforce agencies, for governmental regulatory offices and no doubt for many others. So the work we're doing at Lumen is now focusing on four activities. Number one, we're calling for a national dialogue in the problems of credentialing. We think the time's come for everybody to talk about the issues that I've just mentioned. The second activity, we're calling for a translation platform that can connect, try to connect all these different credentials and toward that end, we've commissioned a group of folks and they're here in the audience, the Corporation for Skilled Workforce and CLASP working with a group of folks to create a draft of what we're now calling connecting credentials, a beta credentials framework. That's really a proposition or an idea for building a system that would enable us to communicate about and connect all these different diverse credentials or to put it another way, to try to build this new interstate highway system of credentials. The design of this framework has been informed by a variety of other frameworks in other countries, most notably Australia, Germany, Ontario and Canada and Wales. It's also been informed by the DQP because we learned a lot about learning outcomes as we worked on the degree qualifications profile. And it's also been informed by a new framework that has recently been produced by the National Network of Business and Industry Associations, which is a common employability skills framework. So we don't think in the United States, all these frameworks are gonna go away, they're not, they serve an important purpose, particularly for different industries that have competencies to speak to those industries, but we do need to have a way of connecting them so that students especially have a prayer of a chance of understanding the world that they're gonna be entering. The beta framework, as we're calling it, is gonna be public literally in two weeks. And then it's gonna be open to experimentation to see if it is possible to align credentials through a lens of competencies and what value we'll do so deliver for various stakeholders. And this is a big question. We don't know if something like a translation platform, a new kind of a framework is gonna help, but we think it's worth exploring and we think we need to do something that will help to connect the different kinds of credentials we have there. So number one and two in terms of activities are the Call for National Dialogue and the development of this beta credential framework. Activity three is another new idea, the development of a prototype credential registry which would provide a centralized database of information on credentials in the United States, including their required competencies, learning competencies, labor market value, transfer value, cost to attain and quality. And actually there's 29 different descriptors of them that have been developed in the planning period but I'm not gonna tell you all 29. This online venue however, we think would allow for the exchange of information about credentials and the organizations that issue them so that students, employers and others can ensure the credentials quality. Regarding the timeline for this, there's been planning for this idea of a registry for the last year and a half to two years and the building of a prototype is we think ready to start probably in July. So things are moving really quickly and we think the time has come to have something that we can look at to say would a tool like this help us in the United States as we try to move through this credentialing chasm that we find ourselves in. The fourth and the last activity that I'll mention is a new website called the Connecting Credentials website. It's gonna be live soon, we think in two weeks, crossing our fingers, and it will support the national, the evolving national dialogue and credentialing. It's gonna house the framework that I just mentioned, it's gonna be providing a link to many, many other related efforts and resources, some of whom I know some of you here are involved in, which brings us to really my last point. Lumina Foundation is not alone in this, we wouldn't wanna be alone in this. We're calling for this national dialogue now with more than 40 co-sponsoring organizations and the number is really growing weekly. We're committed to helping the students in that cartoon poker table game understand what credentials have value and we're here to do what we can to help employers trying to understand what the applicants have when they bring their credentials to the table. So that's the latest from Lumina Foundation and why we're so excited to be part of this conversation. Great, thank you so much, all right. Okay, so now we'll move on to Todd, Todd Green. I think it's fair to say that when most people think of the Federal Reserve, they don't think of the words workforce development right after that or skills. So can you share with us why the Federal Reserve system has gotten involved in these workforce development initiatives? Sure, thank you so much for this opportunity to be here and definitely to the audience, thank you for being here too. I will say that the Federal Reserve, as you've indicated, is not typically associated with workforce development and it's something that we've been thinking about very intently, only for the last few years here. So what I thought I'd like to do with my time is spend a bit of it to explain a little bit about the context about why the Fed is engaged in this topic and maybe provide a few examples across the system of some of the work that we're doing, then focus a little bit on a project that we have in Atlanta ongoing that I think will be interesting to the audience and then maybe just share a couple of some of the resources and things that I might direct you to. But the first thing that I have to say and for those of you who've been to any Federal Reserve presentation, thank you for your custom hearing this, I don't get to have a cartoon. I have to say the views that I express are my own, they do not represent Cherry Allens, my president Dennis Lockhart or anyone in the Federal Reserve system. So they are my own views. So, so much for the cartoon. So if you think about the Fed, I think most people are familiar with the fact that the Federal Reserve has a function, we're responsible for a portion of regulating the financial services sector in terms of bank regulation and supervision. We also are engaged in the payments process also processing cash for the Treasury, for example, and for those of you who are expecting me to be able to bring some presents from our vault, it's not gonna happen today. But then the other important component, and I think this is the one that's primarily in the news quite a bit, is our responsibility around monetary policy. And I do want to make sure that I distinguish that from fiscal policy, which is what the administration in Congress are largely responsible for. And under our monetary policy responsibility or obligation, there are two components to that. One has to do with stable prices. And I think most typically people associate that with manipulations around the interest rate and our responsibility around the Fed funds rate, for example. But the other kind of component that is really important with monetary policy has to do with full employment. So that is the other or maximum employment. So that's the other kind of aspect that's really important. So I think most people, we're not that far removed from our financial crisis, our economic crisis that we had a little while ago. And that really is the genesis for the work that the Fed and why we first became engaged in workforce development as a critical issue. So back during the crisis, if you recall, the Federal Reserve was invested a number of, we deployed a number of tools to try to address this unusually high rate of unemployment and many of our traditional tools were not working. So how many people remember quantitative easing? So in all of the various different terminology that was associated with many of the programs, but we still had a challenge in helping to get that unemployment rate down. So our leadership asked us to take a look at what's happening on the ground, what is happening in communities. How is this really a structural issue with our economy or is this a typical cyclical issue? Because that of course is going to impact the type of tool that we use to address these types of issues. So my colleagues and I across the system undertook about nearly 40 meetings, local meetings with local communities where we brought together a range of representatives from the business community to the education community to the economic developers chamber people, et cetera, to help to get a better handle on what was going on there. So one interesting byproduct that we discovered when we convened these meetings was that the causes of unemployment in each of these markets may have been unique, but one almost universal element was that when we brought these people, these individuals together, there wasn't a lot of communication. So even though the superintendent may have been there and the technical college or the vocational college president may have been in attendance at these meetings, it became very obvious in many cases that there were not a lot of relationships that meaningful relationships or the workforce board. So there were a lot of aha moments. For example, someone may have said, oh, well we have this program, we're addressing this, and then the website might say, okay, well I didn't know that that was happening. So there was a lot of misinformation that occurred even in very small communities around this. So we looked and said, perhaps here's an opportunity for the Fed because we have the ability to convene a diverse group of stakeholders, perhaps there is an opportunity for us to make a difference. We also identified that there, even though we have numerous organizations who are doing incredible work, like Lumina and OECD and lots of others who are working class in this workforce development space, there still was a lack of an ability to process those types of that information in a way that was meaningful to local policies, local practices, or at a state level. So how can we help to interpret that or actually bring some of these concepts in a way that can be consumed and absorbed at the local level? So that really was the genesis of some of our work. So to share a little bit of some of the things that we've been doing as a system, and I'm just gonna give a few examples. Today, all 12 reserve banks are engaged in workforce development that was not necessarily the case just a few years ago, but a few examples included, we looked at unemployment and we recognized that black unemployment is typically always twice the rate of white unemployment and even that is true, typically in periods of high unemployment, but one important aspect of this last recession was that individuals who had higher levels of education did not experience very high levels of unemployment. So typically if you had a bachelor's degree, for example, your unemployment rate on average did not go above 4% and I know there are people who say, well, but my college student didn't have well, so that was the typical case, but when we looked at unemployment for blacks, well, we did see that it was double the case for black college graduates and that seemed to be a little strange to us given the skill premium associated with employment, so that led us to have a conversation with some historically black college and university presidents and so there when we pursued that discussion, we realized that there were a lot of opportunities, there were lack of alignment, for example, with their curriculum or there were lack of relationships with state economic development associations, so there was, in some cases, training was or education was not necessarily aligned with the modern needs of where that state was headed, so the Fed brought together over 30 historically college, black college and university presidents with experts to have a meaningful discussion so they can begin to think about how some of those issues manifest themselves and how they may begin to address changes. That's just one example. I do wanna share that currently we have the Boston Fed, many of you may be familiar with a working cities challenge which is primarily looking at some older industrial cities and how they may be thinking about new collaboratives to address workforce, primarily workforce and employment related issues. The Philadelphia Fed is engaged heavily in looking at cities undergoing restructuring and what workforce means, so for example, some of what's happening in Atlantic City. The Kansas City Fed has been engaged in a lot of work around community colleges in Oklahoma and also in New Mexico. And in the San Francisco Fed, they've been looking at some issues around the formerly incarcerated. I'd like to just briefly share a project that the Atlanta Fed has been heavily engaged in and that is beginning to address in Atlanta this workforce alignment issue, so we all know, all of us in this room know that funding for workforce has gone down over the last 30 years significantly. And the need for that, particularly when we think about how dynamic our economy is, is really increasing. So that really means that we have to think about how we are using our resources locally and at a state more effectively and efficiently. So in Atlanta, we did have a sense that we had some challenges. We felt like from a casual observer might glean that there are some frictions in our workforce development system. So for example, we at the Fed have a, we engage companies as part of our economic intelligence process, preparing in preparation for the FOMC. And we heard there that those companies had challenges in identifying workers who had the skill sets that they needed. So even though we had high rates of unemployment, so we felt like what's really happening here and in taking a look at our workforce development infrastructure in Metro Atlanta, we recognize that we have five workforce investment boards. We have over 500 locations where workforce development is provided. We have over 200 workforce development providers in Metro Atlanta and that really causes confusion about how to access those services both from the employer standpoint but also from the job seeker standpoint. So how can we begin to using the Fed as a neutral convener? How can we begin to align some of those resources? And I joke about the fact that in Atlanta, it's not, you just can't call everyone into a room together and say, okay, you all work together. It doesn't work that way. With all of the jurisdictions that we have, we have over 10 counties that represent the core area, many of whom are led by people with different political persuasions. And then in some cases, some people, like the mayor of Atlanta kind of looks like me, and then people in, or the heads of some of the suburban communities kind of look kind of like you, so. So these are real issues in communities and these are barriers or impediments to helping to make our workforce development system more effective. So the Fed has helped to catalyze an initiative called the Metro Atlanta Exchange for Workforce Solutions. And this is an opportunity for us to first understand what do we have in our region? Are there areas of duplication? Are there places of inefficiency? How might we catalyze opportunities for these entities to work together? Because employers are telling us, we don't care about these five whips. We have one labor market, and how can we do a better job of making sure that we get individuals connected there? And then the other distinction that I think is really important to make in Atlanta is that we have among the highest levels of income inequality and the lowest levels of economic mobility. So how can we begin to position our workforce development system to address some of those issues? So I'll just leave you with two really important or at least I'll just share in the interest of time, one important finding that we came out of our work. When we surveyed the over 200 workforce development providers in Metro Atlanta, and these are entities that have workforce development as a primary responsibility, less than one third of them had a relationship with one employer. So now let me repeat that. For those of you, I mean, this was very confounding to me. So I'm a workforce development provider in Metro Atlanta, and less than one third of those providers had a relationship with, and the test level was one employer. So we certainly have learned that there are opportunities to connect the employer community in a meaningful way with our workforce development community. I'll just leave with you a few resources that I think will be informative to your work. There's no way that I can tell you all of the reports as well as all of the areas in which we, the Fed, the 12 Reserve Banks and the Board of Governors are engaged, but we do have a site called fedcommunities.org, and there you'll find a tab that brings together a lot of the workforce development work. There also is another site called the Human Capital Compendium, so if you just do humancapitalcompendium.org or you'll be able to understand all of the work that all of the 12 Reserve Banks have undertaken over the last 10 years or so in this space. And then lastly, we have a book that will come out that I've had the privilege of co-editing with Carl Van Horne from the Holdridge Center for Workforce at Rutgers. That will come out in August at the beginning of August on transforming workforce development policies for the 21st century. So I'm looking forward to our conversation. Great, thank you so much, Todd. That was a lot of great information. I imagine a lot of new information for a lot of people, for me it certainly was. So Byron, you've been working on these issues of education employment and employer engagement many different levels from the very highest levels of federal policymaking to corporate strategy as well. But it seems like in your new initiative with the opportunity at work, you're tackling this issue from a really different vantage point. So can you tell us about your new work, both sort of what it is and also how you got there? Yeah, I'm happy to talk about the opportunity at work and what we're doing and what we're doing with many partners, some of whom are in this room, some on the stage. But I think that the first thing I'd like to do is make just a few assertions about where we stand here, which if people disagree, we can debate them. First of all, I think you can't really understand this problem properly unless you think about it as a market failure of the labor market. A market failure as a market. You can't just see it as there's a series of government programs or a series of educational institutions that are kind of failing to deliver. You have to think about the market characteristics and I think once you think about that, you will get to the point where you realize that actually the demand side, the way employers behave, is actually a very critical part of solving this problem as it is typically in any market failure. There's something with the demand side, the market characteristics, the flow of information and whatnot and so we've already alluded to that but I think we need to sort of really hone in on that. Second assertion is this is really, this is a macroeconomic scale issue not for the United States and in fact I would assert that it's maybe the largest barrier to accelerated economic growth and dynamism in the United States, not just 20 years from now which I certainly agree with but even today and to just give a sense of that when you consider that two thirds of our gross domestic product is in wages, is in the returns from labor, when you consider that the labor market is not a spot market for ditch digging, it's not primarily a minimum wage market, the vast majority of that value comes from human capital and yet our institutions of optimizing returns on human capital are extremely underdeveloped. I mean there are institutions of maximizing return on invested capital of machines and of software of equipment that companies can own, the entire S&P 500 and most of the rest of the economy is devoted and has been for 30 years to optimizing returns on that piece of our national economic assets but that is probably a third or a fourth of the value of human capital if you think about the balance sheet of the United States. So if you really, we don't measure this very well so you don't normally talk about it in this way but when you look at the desire to accelerate economic growth, to improve productivity and innovation and certainly when you look at wages, this is the core question and it's not the only problem we need to solve but without solving it, we can't actually make traction so I think that's, I believe that to be the case. Third, with respect to sort of the thinking about the labor market and thinking about the market for skills and how we've been investing, we've mostly been moving in the wrong direction for a number of years now. I think it's a very promising moment in that this conversation, I think, would illustrate both the tremendous journey we have to travel to get to where we need to go but also it's promising. I find it very promising and hopeful that institutions from Lumina and other foundations to the Federal Reserve are now getting in to really try to go after this issue and I would say that in my time at the White House, certainly this administration and to some extent Congress has really sort of stepped up its game in focusing on this issue and there's a tremendous amount of experimentation and really good things happening in states, communities and the like but we have been disinvesting in this sector. I mean, if you look at, take a 30, 40 year view, there's a 90% decline in real terms of investment in what international bodies would be called active labor market policy. So we've been placing all of our chips on formal higher education to solve this problem and really doing very little to improve the kind of investments in adult learning and particularly ways of helping people to be more successful in the labor market. Employers, I would say 30 years ago, played a far more constructive role in this system than they do today. Employers in fact played an extremely important role. They hired reams of people from straight out of high school, straight out of college and they taught them how to work. They provided that system. Apprenticeships, which has been mentioned, it's never been as big in the US as maybe we'd like it to be but it was falling for the last 10 years, last year partly due to a concerted effort in the administration, partly due to recovering economy and a realization of the value of apprenticeships. Registered apprenticeships have risen for the first time in 10 years but you're still only talking about 400,000 people in the United States. It's a labor market of 150 million people and in general employers have played a much lesser role in providing basic skills development and technical skills. There's a strong bias now towards hiring people who've already done the job in some context who have three to five years of experience. The various on ramps have declined a lot and you can see this at the macro level, voluntary job mobility in this country. That is to say quitting your job to go get a better job that has declined by 28% since the year 2000. Now, I want you to think about that figure for a moment. So it's declined by more than a quarter and this is historically the way more than half of wage growth typically happens by people moving from one job to another. In other words, reallocating their human capital to a higher and better use. Think about what the stock market does. It's meant to reallocate financial capital to higher and better use in the economy. The equivalent in the labor market is being able to move to other employment. You're doing a great job. Your employers will even give you a little bit of a raise but you can get 20% more someplace else. That action, which is critical to people realizing the value of their human capital has fallen by over a quarter since 2000. This is a big part of the wage stagnation story in the United States and it is a big part of the sort of declining economic dynamism that we're experiencing, people feeling stuck. And it relates very much to the question of the value of different credentials and the like and the indicators because on the employer side, there is a confusion, I guess, about how to hire on what basis to hire. But that confusion usually boils down into employers using very simple heuristics. So a four-year college degree, specific kind of resume experiences, a very limited number of these credentials that a given employer would recognize and all of that screened through software. So there's not even the sort of the dialogue, the human dialogue about, well, maybe this actually could be a good fit but hadn't thought about it that way. No, those people aren't getting through to that stage of the job discussion. So when you wanna understand this paradox of the skills gap where employers are saying that they can't find the skills they need and yet you have all these people working to try to get skills and can't sort of make the progress, it's because that market isn't working. And so I think that is a sort of fundamental issue that we're grappling with. And so fourth assertion that besides more ambitious policy, we need to have changes in business practices in order for us to solve this problem. So in other words, the correspondence to sort of more aligned kind of educational outcomes or job training, employers have to not only be willing to work with schools and training institutions to define the skills they need, they have to be willing to hire in fact based on skills and they have to be willing to hire and to engage, for example, in the work-based learning based on measures of readiness for that work-based learning. So in other words, it can't all be based on a formal set of degrees and a formal set of past experiences. One way to think about it is you have to be willing to hire based on readiness, based on mastery, whether that comes through a four-year program, a community college, on the job someplace else, or in the military, whatever. And the currency has to be competency as opposed to specific degrees. I think there's huge value in getting the degrees right, but there's also a risk in overemphasizing specific degrees. I'll give one example of this because I think it's a big part of the problem too. Burning Glass, which is a labor market analytics company, showed in 2014 less than 20% of administrative assistants, so secretaries, have four-year college degrees. But 65% of new job postings for administrative assistants require a four-year college degree. Not prefer, require. So that means 80% of current administrative assistants, no matter how good they are at their job, no matter how much on top of their game they are professionally, cannot even apply for two-thirds of the jobs in their field. And this is happening in a lot of different sectors, and it is part of what is creating this just tremendous stickiness in the market. And so whatever our solution is, we've got to be able to address that sort of problem directly. Of course, it also affects dramatically young people trying to enter the market. Anyone who is trying to make a transition is going to find their skills undervalued if it's not just a straight shot from what they've been doing. That applies to women who've been out of the workforce for, let's say, a dozen years and are trying to come back. Their skills, which are often quite high, are undervalued. It certainly applies to people who've acquired their skills on the job and can't represent a credential. So some of the work that Lumina and others are doing on allowing that on-the-job work to actually be reflected in some kind of credential could be quite important. But we actually need, therefore, to have an industry-driven collective action, which leads to the last assertion I make is that there are tremendous work going on about on-convening. And convening, you've described it in the context of the Federal Reserve. And that is very important to bring together employers, educational institutions, and the like. But I think we need to go further. And the premise of opportunity at work is, first of all, that we need to tackle the demand side. Second, that we need to engage employers. But third, that we need an operating system. We need to move beyond convening to an operating system. And I think, Holly, the way you described this interstate highway and the on-ramps and off-ramps, that speaks to it. I spent 12 years working in the high tech field when I was at McKinsey. And for our friends out in Silicon Valley, the analogy of an operating system resonates. Not everybody thinks about it a lot. But what does an operating system do? First of all, it creates very low-cost, standard interfaces between the user, the application developer, and the underlying processor. I mean, imagine you have all these apps on your iPhone. If everyone who developed an app for an iPhone also had to develop its own operating system to communicate directly to the underlying hardware, you'd have a lot fewer apps on your iPhone. It would be extremely expensive and the like. But today, if you start a new training program, say you start a coding bootcamp to teach coding skills that are in high demand, you have to figure out the entire stack. You not only have to figure out how to teach this, you also have to develop your own employer, your own business development to explain to employers sort of what these things are. It's sort of very expensive. And as a result, you're going to see whether for-profits, non-profits, we have these wonderful little islands of functionality. We have these great initiatives. We have these great applications. We have these great partnerships in various places and they don't scale and they don't spread. It's too expensive, it's too cumbersome, and the translation is too hard, as Holly talked about, and the flow of information is not there. And also, then, the final thing an operating system does is the flow of resources. It is very sensitive to where the demand is at the time. If you have five applications up, but you're using one of these more intensively, the processing power is going to flow in that direction automatically. That's another thing we don't have in our system. We don't have a way of saying where there is demand, resources should flow. And so these are the pieces. Opportunity at Work, which started all of two months ago, is starting with information technology jobs, which are 12% of open jobs in the country. We have 21 communities with a bit of a waiting list, and several hundred employers already signed up to essentially try to do three things. First, to have the employers be able to hire based on competence, readiness, mastery, rather than sort of specific kind of history and resume and the like. So that's number one. Second, to have a set of institutions and to use this convening also to get a supply response very rapidly for employers. So in other words, if you're willing to hire in this way, regardless of whether someone had the foresight to get a computer science degree when they were in college, but they have learned how to do it, the cities are able to bring their educational assets. They're able to bring in coding boot camps. They're able to actually go out and find through hiring on ramps people who already have these skills but don't have the resume. It's quite interesting. There are tens of thousands of people who could actually do pretty high level IT work in this country. They can't get an interview with an IT company because they don't have, or by the way, very importantly, IT occupations cut across all industries. And that's very important for what we're doing because we really see it as the tip of the spear to creating what could be described as an American-skilled system where you have, where you actually can hire based on readiness. So if you can do the job, you can get the job where if you have the motivation and aptitude for training, to succeed at training that's actually for higher value work that's in demand, that you can get those resources, public, private, non-profit. And third, that we're applying technology to accelerate learning, not just to automate tasks. There's a technology fatalism out there right now that says that, well, technology means that jobs are going to be killed because they can be used to automate work. And of course they can be used to automate work. And the reason they are primarily, it's primarily used to automate work is because automation is something that's invested in capital. It's something that a company can control and realize a return from. But there's phenomenal technologies that are coming along line to optimize returns on human capital. There's technology for accelerated learning. It's phenomenal. There's technology for actually skills assessment that can be very granular to understand here's where I need to be and here's where I am. And so you can figure out the fastest path to that. And there's technology that can help with kind of counseling and guidance and matching in the market. There's even technology that can help improve some of the fundamental skills of sort of deferred gratification and the like. I mean, it's really quite amazing what's going on, but the deployment of that technology, there's not a business model for it. And the fundamental reason there's not a business model for it, except at the very highest end of the labor market, is because if you have somebody who doesn't have a college degree and who maybe hasn't had such a sterling sort of professional career has been unemployed for a while and you turns out they have the aptitude to be a great computer programmer and you train them to be a great computer programmer. And they are, they've now mastered it. They probably can't get a job doing that anyway today, right? Because I mean, you might be able to hustle startups who are a little bit better about this, but they can't get a job at like a state farm. They can't get a job at sort of standard kind of IT departments because they're all going to be screened out sort of based on their past credentials. Once you break through that, right? Once you break through so that actually hiring, that is to say the demand signal, the $7 trillion of payroll that drives the economy, once that is accessible based on what you can actually do, then business model for training people can be highly effective. All sorts of new training approaches can emerge and they don't have to emerge just on the basis of one-to-one bilateral connections between community colleges and employers because we'll never get there from here at that pace. You need an operating system, you need the demand side and you need to have people who can do the job be able to get the job and that's how we're gonna be able to unlock all of the great work that we absolutely do need to do on the education side and the job training side. So that's what Opportunia works about. Great, thank you. All right, so as we can see, yeah, lots happening, incredible innovation, lots of work on new intermediaries, new models, new currencies. I'm gonna just pose two questions to the panel and then we'll go to the audience and I wanna start by coming back to a very scary point that Simon made about basic schooling in the United States. This idea that our foundational numeracy and literacy skills don't seem to be advancing and that we seem to be having trouble there. And I wanna relate that back to another point you made about the relative lack of vocational education in the United States at the high school level and I think, and the relative neglect of this area in general in many countries. I think a lot of people in the United States and probably in other countries would say that if we want to sort of increase core academic skills, these foundational math and literacy skills, we need to do more academic training and less vocational training and that this is sort of a trade off. So I wanna ask you a question and we see a similar emphasis on this at the post-secondary level with a great emphasis on general education requirements to get a degree and less emphasis on technical education but that goes to other kinds of credentials. So if we do more vocational education or applied education, are we at risk of falling even further behind? And how would you respond and how would anyone else respond to a policymaker who takes your point about basic schooling here in the United States and says yes and we're gonna cut vocational education altogether? Thanks. I think the, I think if you look at the evidence on how core academic skills are developed, a lot of it is very early on in schooling. It's in elementary school and indeed in early childhood as well as in the early years of secondary schooling. In other words long before questions of whether there might be more vocational training should take place become particularly pressing. So I don't see that as too concerning a trade-off. I mean clearly if you're looking at high schools there is a question of how much math are you going to do or are you going to do more CTE modules? There it is an issue but I think at the high school level that is not the level at which the United States is going to succeed or fail in terms of raising its literacy and numeracy level. I mean there is an implied question there about is the U.S. right to not have too much vocational training at high school level? And I don't have a, I'm not arguing that the United States should have vocational tracks and vocational high schools. It does have a very well-developed post-secondary sector which may be able to compensate. I mean I think that's an arguable point. I know there are some people who say we must go down the apprenticeship route in U.S. high schools but I'm not totally convinced of that. Did anybody else want to respond? I would just say that I wish the words education and training could just be one word because it is about the learning, it is about the knowledge and skills and how you apply it. And there's more and more understanding of the application side of learning whether it's occurring in K-12 and or it's occurring in post-secondary education. And there's been a lot of thought about how you develop those foundational skills, communications, problem solving, math literacy, et cetera. And there's a growing body of folks even on the math issue because that's where so many students in the United States, they hit the dead end and they're not gonna go on partly because of algebra calculus issues. And we've had conversations with math faculty saying, does everybody really need to have calculus and algebra is at the path of everybody when you have 50% of students who get stuck in development or education, they're never gonna come out that black hole. And so that's an issue. And they're saying, well, not everybody needs that. Some disciplines need it, but not everybody does but everyone needs some sort of quantitative literacy and that could be gained by a statistics-based pathway which is getting to be more and more important and quantitative reasoning. So there are groups around the country that are developing new curricula, new pedagogy to go with that to open up that big firestorm around, does everybody need algebra and calculus? And there are community colleges and four institutions that are beginning to think about new pathways. I think that's the issue was whether or not we can open up new pathways, new on-ramps, et cetera, hopefully not off-ramps but on-ramps for students to make their way and make their way better. Is this an improvement in many, many disciplines? So the challenge for disciplines is to determine what is the learning that is required to move into certain pathways? And even in the STEM discussions, there's some very interesting conversations about STEM. 20 years ago, everyone understood what STEM meant in terms of engineering and the hard sciences and math but it doesn't mean that much so anymore because STEM has invaded so many other fields which is what Byron was talking about. It's in all different areas. And so the students are probably gonna work in something very quantitative or science-like. But they may not call it STEM. We may need another word other than STEM. So I don't personally think that our words are serving us so well as we understand the changing demands I work for. So I would just put that out as a challenge to us all. I think it's completely false dichotomy between, it is just to say that while we need more academic and therefore not vocational, on the English language art side, if you look at the complexity of a technical manual for automotive repair, look at the complexity of that text. And in fact, the creators of the Common Core did look at the complexity of that text. And these are, every bit is complex as sort of the novels that are being read in sort of advanced, in terms of the actual sort of decoding complexity, the close reading complexity. And so it's just not the case that in today's economy, far less the economy of 20 years from now, that true vocational education for middle-class jobs will require some sort of lesser kind of academic preparation than we would consider for the academic route. And in math, it's even more the case. I mean, part of the reason that the US students do so poorly in math, it's the applied, it's the application, that's where they fall down in the pizza in places like that. And you see that in adult learning too. And that's exactly what's needed. Not everybody needs calculus, but everybody needs algebra, and everybody going forward is going to need statistics if they wanna earn a middle-class living. And I'll just add very briefly here. I certainly agree with the panelists, particularly about the economy, the false dichotomy that's been created. And the concern that I have is that the way this has manifested itself in a public discourse with our policymakers, with our legislators in particular, but also our local policymakers, is that it isn't either or, and we've got to change that discussion because we need both. So in order, our country has been made great because of both, and in order for us to continue our role in terms of leadership and developing new products, et cetera, and we need to have a range of individuals who possess a lot of different skill sets. Can I add, just as long as we're on false dichotomies, there's another one that's between kind of this core skill, sort of typically math and reading and writing and creativity. They're often contrasted, oh, can you be sort of creative and innovative? Or do you have to just really grind it out on the math and the reading? But in fact, it really is the combination of those two that's where so much of the economic opportunity is. There's a company called Infor. It's an enterprise software company based in New York City. Enterprise software, I worked in the field for many years. It's really primarily dominated by very techy people that are thinking about just the sort of the hard returns on their products. But what Infor has discovered is that it's actually humans who operate these things even inside companies. And so therefore, aesthetics, ease of use, beauty, like the user interface is incredibly important. So they've been hiring art students and design students from New York institutions and teaching them how to code. Just people who don't know anything about programming but who know a lot about design and teaching. And these are great jobs. This company is growing like a weed. And I can give you a lot of other examples of where that sort of interface comes together. And so, it's particularly relevant to the fact that on paper, they don't look like people you would hire for these jobs. So you have to break out of this sort of, this kind of very narrow view that we tend to have. But I think it also applies. It relates to what we need in our basic education. Great, well, it seems like a good time to bring in the audience. Yeah, do we have some questions from the audience or are we going to jump in with a piece of paper and then we'll... Yeah, I don't know that... Oh, here it comes. Okay, how about that? I'm Robert Chereta, President of International Investor. But I'm actually here in my capacity today as the Director of the Asian American Chamber of Commerce. We're holding something this summer on higher education and recruiting. But first, I want to say, great discussion. Very nuanced, sophisticated and good new thinking, I think, on these subjects. But I wonder if we need to go a step further in terms of some of our government policy. And I wonder if our OECD person could chime in on this. You, sir, on the far end, and I'm sorry, I came in late so I didn't hear your full introduction. But you brought up some excellent points about how we need to work on the demand side a little bit. We have a tax policy that seems to amortize real estate and capital expenditures, expense the firing of employees if some sort of compensation is involved. In other words, we seem to incentivize our corporate and private sector to let people go, not necessarily to bring new people in. Do we need to do more in that respect? And I wonder from the OECD, do you see other examples of countries that do a better job of that around the world? Thank you. Who, Simon? Well, I'll say that I think it's a very tricky issue, but I think in aggregate, I think it is absolutely true that our tax policy favors investments in capital, for example, over hiring. And I think it is, so I don't even think it's a level playing field. I think it's a level playing field that's tilted more towards capital investments and there's other aspects that make kind of a capital investment on the margin more attractive than investments in jobs. I actually would love to hear OECD comments about Simon's comments about training and policies to promote training. I think you can make a very strong economic case that given the positive externalities of training, given that a worker can kind of walk out the door and take that training that a company has given to her and use it, valuably someplace else, that suggests that there is potentially some role for tax policy or incentives for training. The tricky thing is how to distinguish between training that is very specific to an employer and therefore they would have done anyway versus training that is really kind of broadly valuable. So it's a tough tax design problem, but I think the idea that this is something we ought to be thinking about incentives for is a very legitimate idea. Just on this whole area, there's tax breaks and different forms of incentives for training. This is a very complex and convoluted area but a couple of points. I mean, tax breaks for training for employers, I mean, that's one possibility. There's also tax breaks for individuals to invest in their own human capital. Sometimes the issues are partly in terms of equity, whether those are some of the objections that very often those sort of systems don't seem to be providing to encouraging training amongst those who have the least initial human capital and therefore need it most. So it often needs to be augmented with different systems of grant support. The other element in all this, which is the possibility of skills levies which are used very extensively in not so much in developed countries these days, or there are one or two of them, but certainly in developing countries and if you go to Latin America, for example, it's a very big part feature of the skills scene. But again, they don't work terribly well typically because you have a huge amount of dead weight because it in effect the incentives go to support those who would have done the thing anyway. And therefore it's a very costly way of achieving some of these things. So a little bit of skepticism on these points. Okay, I'm Jeff here in the second row and then we'll go to you for a second. Thank you, I saw them. I saw them need a mic. I'm Jeff Stroll, I'm the Director of Research at the Georgetown University Center on Education and the Workforce. I have a two-part question that really comes into how we integrate skills in hiring in our economy. So when I start with Simon, the US model is a combination of that academic and vocational skills with the idea that it imbues flexibility in the economy. In the United States we have between seven and 11 job changes across the life cycle. Many of the European countries, Germany in particular has one or two in that career cycle. So we kind of believe with little proof regretfully that the vocational side allows you to learn on the job to move with the punches of the globalized economy. We certainly see huge differences in unemployment rates between the European countries. You have a much higher baseline unemployment rate than we have in the United States. So we look at the vocational education aligned at the institutions of corporatism in Europe. There's some suggestions that it's breaking down. And so I'm wondering what you think about that and how you think that a reliance on vocational education might hinder macroeconomic flexibility with globalization. We know the Italian unions are getting beaten up with outsourcing. Many of my bike clothes are designed in Switzerland but made in Bulgaria. So there's a lot of problems. And the other side of this to the US side of the house, traditionally what we've done in the United States is done our matching in the labor market and utilize training on the job to take the academic skill into the worker but the employers have disinvested in the training. And so now maybe what we have are a lot of complainers just a lot of employers complaining and taking advantage of a slack labor market. We know if we look at the job ads there's about a 20 percentage point difference in what they're asking for in a job ad and what the incumbents have. And so do we really have a case where they're taking advantage of a slack labor market in increased frictional unemployment, the underwater welder in California not being able to move because they have an underwater house to move to, and that was an unintended joke there, needs to move to Florida where the job is. So a lot of people would think, well, they started this skill shortage and we don't see the big stack of resumes that the employers say, well, gee, a thousand people has applied to this job and nobody had the skill set, right? A lot of people would believe from the economics, classical economics, raised the wages. So we have two different models and both of them are breaking down. Where is it that we can bring vocational education in to help it and where is it potentially going to harm? Who wants to tackle that one first? Well, I will say, I guess, going backwards on your questions, you know, the whole kind of debate about the skills gap, I think is a curious one in that on the one hand, I think both of the sort of the headline positions are kind of missing a lot of the point. So the employers are saying that they can't find the skills so higher education and job training must be doing something wrong. Colleges don't know the skills that we need for our business. Well, how the heck would they know? Do you know the skills they need to be a professor? It's not actually their business. It's your business, your market is changing. You're in the marketplace all the time. If employers can't reflect back to higher education and training, the changing skills that are needed, higher education and training is not going to know those skills and it's more than just sort of knowing them. It's also, you know, the professors need to be retrained. I mean, there's a whole lot that needs to happen in order for higher education and training to actually be able to deliver what businesses are required. It's a completely unreasonable request given the level of engagement that businesses have today. And in fact, it's not historically been the way it worked. Historically for many years, as you say, Jeff, it was really businesses. They did the match based on what they saw as potential and then they imparted the skills. They trained them basically on the job. So that position is clearly wrong. On the other hand, you get economists who in many other contexts would find it quite easy to see why there would be a market failure because of, you know, imperfect information, information asymmetries, you know, the lemon problem, the sort of the kind of loss aversion. You don't want to, the risk of having a bad hire is so high that you will take even sort of, you know, lightly correlated indicators like college degrees and say, well, we better only fish in that pond. All of these things are kind of natural results of the structure of the labor market and they, each of them resulted major market failures and we have practically all of the characteristics of a failed market. So to simply say that, oh, you just see wages rising, you know, just like, you know, in the market for lima beans, I mean, that's just not the case. And even the lima bean market might not work well given agricultural subsidies and whatnot. But so in other words, it is true that it's being driven a lot by employer behavior, but it's being driven by individual employer behavior that is, and by the way, behavior of individuals within employers, right? A recruiter in the HR department has a very strong incentive to be more risk-averse than the company is actual, that's even optimal for his or her own company, right? And a company has an incentive to cherry pick far more than would be optimal for the economy. So you have these layers of collective action problems and employers don't have departments of collective action, right? So that's why we need to sort of take a different approach to this and find a way to bridge the information gap on the one hand that government and higher education institutions have, they're never going to know, you know, exactly what skills are needed in the market. And if they knew today, they wouldn't know a year from now. So they have a fundamental problem. Employers, on the other hand, absolutely have a collective action problem and no department of collective action. So we've got to find a way to bridge that to really have an American skill system. Okay, I'm going to make a moderator executive decision. We're at the end of the time, I want to get in one more question. So I'll let Jeff follow up with Simon afterwards. So can we, you have the microphone? Yeah. I'm Ben Woldowski with the Rockefeller Institute. Soonie, I'll be brief. I'm interested in whether greater use of testing by employers might be a way to help, at least in part, address the market failure you've talked about. I'm looking at some of the favorite tweets on the skills gap, a hashtag. And many people, including myself, tweeted the quote about how the currency should be competencies rather than degrees. So if you look at testing as just one example of an output measure, it's pretty level playing field. I think of the tests, for example, that I believe stock brokers have to take. Doesn't matter what your background is, what you came from, where you came from, specialized course, private course, community college course, four-year degree, followed by self-study, you have this bar you have to get over. I wonder whether, what your views are and whether that could be any kind of useful component. I'll just dump in here and I'll be quick. This is not necessarily my area, but we do know that testing is fraught with all sorts of challenges. And in many cases it impacts certain ethnic minorities, certain populations in many ways that cannot necessarily be explained. So I'd be reluctant to go full on with that kind of rubric. Having said that, I do think that it makes sense for us to be able to judge what are the tasks necessary to complete that job and then how do we measure for that? So to the points that have just been made by the other panelists, we have these ridiculous sets of qualifications that are expected for, in my district, bank tellers. It just, it makes no sense. But I do, I wanna just add that to the point, the previous point that I do think that the slack in the labor market is contributing a lot to this issue and I think that it'll be interesting to see how it goes away when that diminishes. If I could just add, I was on a meeting yesterday with mostly large employers. Some of those large employers are already doing testing and my son was a nurse and when he became an ICU nurse, he went to a very large hospital and one of the first things he did was give him a math test. They weren't gonna trust that he had developed the proper math skills at the BSN program that he was in at the time. So it's underway, this is gonna be an issue. Not all employers are gonna be able to develop their own tests and students won't know the rules of the game. And how to prepare for them. So this is one of the challenges I think we all have ahead. I think there's huge value in the results of this competency being embodied in credentials. So I certainly don't mean to say that credentials aren't important, but that credentials should be reflective of competency. That's what's gonna make them valuable and have the currency. And I think there's a lot of bad ways to do testing. I think there's a lot of better ways to do testing and we ought to think about that. I think it should be much more transparent and kind of collective rather than individual. But the final most important point, building on what Holly just said, companies are using testing, but they're mainly using it as an additional screen above and beyond the other screens they're using. What you really want is to have assessments that are aligned to competencies that could be a replacement for these other screens. And when you do that, you actually get to a place that's actually much more level playing field much more open for sort of populations that have not been well represented. And there's lots of examples of when you do that and take away these other screens, you actually get a much more representative sort of sample of talent because talent is far more equally distributed than opportunity is, right? And so degrees today are fundamentally a measure not just of talent but of opportunity. And if we could have measures of kind of talent and readiness and grit and all of that, and that be the direct input into hiring, we do much better, both in terms of productivity and in terms of inclusiveness. Anything on the testing? Just one little point. I mean, it's always struck me that there is an obvious market failure in the labor market which is that it's very difficult to observe competencies and it's extremely hard to measure them. You could, particularly in advance of people starting at work. And that's why we have credentials because in effect they're supposed to be a signal of competence. They may or may not work in that respect. But while we all want to be competence based, it's actually really hard to actually see a competence being measured. That's a really hard process. I mean, I've seen it being done, say, in a very sophisticated way for cooks in Switzerland. And it takes days. I'd like to sample that. All right. Okay, well, I want to thank our panelists. This was a fantastic discussion. Thank you so much. Thank you all very much. Thank you.