How should we talk about workforce investment? With Rachel Lipson.

A conversation about the ways we pitch workforce programs.

Rachel Lipson just published a thoughtful new paper about transitioning workforce development to a research and development mindset, treating it as a public good as opposed to the more individualized, worker-by-worker approach that she says has driven current public policy.

I think that implicit in that premise is that current leaders just don’t get the value of helping workers climb socioeconomic rungs—in terms of business, economics, or politics. Unpacking that made for a fascinating conversation when Rachel and I talked last week.

Rachel first showed up on my radar, as I suspect she did for many of you, as a co-founder of the Harvard Project on Workforce. Its research definitely has refined my thinking on federal workforce spending. Rachel is now a scholar in residence at the Project on Workforce and a research fellow at the Mossavar-Rahmani Center for Business and Government. She was a down-the-street colleague during my good jobs work at the Department of Labor in the Biden Administration, during which she served as a senior policy advisor at the Commerce Department on the CHIPS and Science Act focused on expanding American semiconductor manufacturing.

Below, we talk through how Rachel found the premise of her paper, how she thinks it escapes some of the framing traps of our current underfunded federal programs, and how job quality fits into all of this.

This interview has been edited for length and clarity.

Rachel Lipson wrote “America’s Missing Productivity Strategy: An R&D Approach to Workforce Development,” a paper on reframing workforce development to fill jobs in critical industries.

Nick: I found your paper really interesting based on everything I’ve been writing about lately. Tell me about how you ended up where you ended up.

Rachel Lipson: I started working on this paper the month I came out of government—so kind of a reflective time making sense of the last two years I had spent at Commerce being inside the the belly of the beast for the first time as someone whose background prior to that had been mostly as a researcher observing these systems from the outside. In some ways, you can think about this paper as a little bit of my own personal attempt to make sense of [that experience] or be a bridge between everything I had read and heard in the world of economics and my real-life experience of how does federal funding actually work.

I think [a key influence is] being in the CHIPS program office the last few years, where we work right next to the R&D office. I’ve been thinking a lot about the parallels or the differences between how we think about workforce development and human capital development more broadly, then how we approach research and development as public policy objectives, and how dramatically different both the approaches are.

The more that I thought about that question, the more I thought that this was a quite an interesting paradigm. If you actually think about it, we have basically built broad consensus about R&D being a public good that benefits everyone in the economy that is meriting of public investment.

That struck me as pretty different than how we’ve approached workforce development and I thought there could be something pretty interesting if we took if we took that frame and and put it in the human capital sphere—kind of flipping the whole thing upside down, basically. I feel like with workforce development we’re always starting from the individual worker and how do we help them achieve their trajectory.

Nick: I think one of the things I found very interesting about the paper—which I definitely don’t disagree with—is that you identified that workforce has primarily been framed in terms of social policy, that this is an anti-poverty effort. Why do you think that has not necessarily resonated with some of the folks who this work needs to resonate with?

Rachel: We think of this as something that’s going to help poor people, not necessarily ourselves. You put some very limited amounts of funds into it. The results have kind of looked mixed. People pull out from that what they want to see and say, “This isn’t really working that well. Why should we put more money into it?”

It becomes a lot harder to make the case for more money when the evaluations have been pretty mixed on showing results. Meanwhile, the amount of money that you put in is so small that it’s hard to expect a lot of miracles with tiny amounts of money per worker. You get stuck in a loop of very fragmented, underfunded system.

But I think there’s an important kind of mentality, which is “This is something that benefits everyone” [as opposed to] “This something over here for a small group of of disadvantaged workers that aren’t me or aren’t my kids.” I think what’s compelling about the public goods framing is it reinforces that actually we don’t have enough people in key jobs that power the entire U.S. economy.

Nick: I think the “anti-poverty” framing has definitely been a detriment for certain policymakers and business leaders who just don’t identify with those needs. Not that long ago, there was talk on the Hill worried about these job training programs becoming “welfare” and not wanting to spend more on supportive services because of it.

Earlier this year, the Hill was talking about “easier-to-train” populations that don’t require supportive services. But I also gather some folks on the Hill may see themselves more in the background of those “easier-to-train” populations than lower-income people.

So it sounds like what you’re trying to say is that maybe we need a framing that’s more relatable to those policymakers?

Rachel: I think that we need programs that work and deliver good wages and also have real jobs attached to them, right? And if we have that, we’re going to have better outcomes for everyone.

I also think we absolutely need supportive services. If we have goals around specific populations, we’re also going to need targeted policies that help them access training and good jobs.

But [the question is what happens when] we build an entire system around populations and eligibility requirements and use that as the starting point? Versus what would it take to design a system that helps connect Americans across society into pathways that don’t require a college, and help them get access to good jobs in industries that are growing and also important to U.S. competitiveness. I think that starting point is kind of different.

We’ve spent so much time talking about all of these huge massive social problems like, “How do you help people adjust when they lose a job from trade?” “How do you help young people who have been out of school and out of work?" “How do you help someone’s who’s been long-term unemployed?” And then you [set up] job training and say, “Can it solve all these problems at once?” I worry that we’re setting ourselves up for failure there.

Nick: I’ve spent a lot of my time of late trying to think about this from the employer perspective. Like you, I’m sure, I’ve gone out and pitched workforce on the employer side of these issues quite a bit.

At the same time, my background was being raised by lower-income people who didn’t always have a whole lot of access to things. I’m always thinking about all those different little barriers in the ways people are being sorted by society.

It’s kind of weird to me, then, that we have to keep reframing this stuff over and over. It’s like we don’t see ourselves in the people in these programs and we maybe think that these people are kind of hard to invest in or not necessarily worth investing in—so we don’t invest in them.

Rachel: Look, I totally agree with you. There’s a whole moral question here about human dignity and which people are deserving of what and what they’re deserving of. And I think it’s an important question—I don’t know if the right word is “debate”—but it’s important for society that we grapple with that.

I’m trying to take workforce development a little bit out of that. The argument that I’m making in the paper [is] this is important for everyone essentially, and these key industries that underlie the entire U.S. economy can’t function because we have not done a good job of helping connect people who for various reasons are not pursuing a four-year college route into good jobs.

I also make the case about why I think workforce development is a public good and not a private good, which is key to that. In the past, traditional economics says, essentially, you’re an individual who makes a decision to acquire skills to raise your earnings and firms are going to invest in skills because they think that there’s going to be a return to higher productivity or lower turnover or whatever and the market is going to allocate that efficiently. The parties that are involved are basically going to accrue the benefits.

I lay out a number of reasons why I think that’s wrong. First, I think some of the challenges in some industries are not firm specific. There are systemic things going on and one employer alone is not going to be able to to solve the lack of people that are entering a pipeline for those fields.

Second, I think there’s very important externalities of having a workforce in some of these key occupations and industries. If you are a technician that is building electrical substations, that’s not just benefiting your employer. That’s going to accelerate like the upgrading of the grid that enables growth of the economy overall, whether it be data centers or batteries or other key industries. And if we don’t have enough people to do that, that hurts everyone.

I’m trying to make the case across a number of areas that put the moral part aside. There are many good reasons why we want to invest in helping people have access to upwardly mobile jobs and better livelihoods to their families. There’s also a whole other set of reasons why we put more money into building a system that actually works of getting people access to careers that don’t require them to go to college for four years. It’s going to be good for basically for everyone and hurts no one.

So tell me why that’s wrong.

Nick: I don’t think it’s wrong. My thinking on this stuff is “There are many different pathways to God,” for lack of a better way of putting it—however we can convince people to invest more in workforce development.

I’m curious from your perspective how you see job quality fitting into this. I’m hearing two things from manufacturers. One is, “We can’t find the talent we need off the street. They absolutely don’t have the training we need.”

But I’m also hearing, “We’re struggling to get people recruited into these jobs” because workers have perceptions that these are bad jobs based on things like the hours and the predictability and things that typically filter into job quality. How does your pitch and approach to getting people to invest in workforce fit within that?

Rachel: In the paper, one of the things we lay out is, from a starting point, we should have some priorities and say that not all occupations are created equal.

I talk a lot in the paper about some ideas of how I think we should align with our overall innovation agenda as a country, whether it be through the through [National Science Foundation’s] Critical Technologies List or [the Department of Defense] or at the state level when states lay out their economic development priorities. Say that, “These are areas we’re trying to grow and invest in.” These would be natural areas where you could say, “What would it actually take?”, then align what we’re doing in terms of where we’re putting our limited resources that we have for workforce training towards industries, sectors, and jobs that we’re trying to grow.

But then I also think that basically we should put in second criteria that’s job quality criteria, which is it doesn’t make sense to publicly subsidize jobs that don’t pay well.

That doesn’t answer this broader structural question about what’s going on in manufacturing wages or my daughter’s daycare or other really important jobs that aren’t paying enough.

I don’t know that we should put it on [workforce programs] to solve all of the problems of the economy and why we have low wage work. But I think if we’re going to be training folks and asking them to spend time and human capital and public money, we should prioritize the things that pay better.

Card subject to change.

Thanks to Rachel for a great conversation. This really turned into one of my favorite newsletters. The interview articulated something I didn’t even realize I was feeling about where we are on policymaking on these issues in Washington.

Speaking of Washington, nothing is working here, and the spiritual “Gon’ Fishin’” sign is dangling from the statue atop the Capitol dome. On Friday, I’m answering your questions about what all this means, updating how this affects the workforce community as I hear it, and catching you up on any other big developments. I’m also going to take another pass at something I have been thinking about in the recent apprenticeship numbers.

See you soon.