Our Current Workforce System Challenges
With a gross metropolitan product of almost $1.5 trillion – roughly the size of the second and third largest metropolitan economies in the US combined – the New York Metropolitan Area is home to one of the most vibrant economies in the world. We know that one of the key factors driving this economic growth is New York City's most valuable resource: its human capital. Yet, despite this picture of economic success, many families would tell a very different story.
The unbalanced economic recovery that followed the Great Recession underscored structural weaknesses in the labor market that need to be rectified if the City is to prosper over the long term.
- Nearly a million working New Yorkers – almost a quarter of the total labor force –earn less than $20,000 per year. Because these workers rarely possess the qualifications they need to advance to middle-class jobs, many of these individuals have no escape from poverty.
- This surplus of low-skill workers with no means of getting ahead has also eroded labor standards, often resulting in working conditions that are both detrimental to workers and bad for business.
At the same time, employers that offer higher-quality jobs in industries such as healthcare, technology, and modern manufacturing are facing a shortage of skilled workers.
- The net effect of this divide – unskilled New Yorkers struggling with stagnating wages and adverse work conditions on one hand, and employers grappling with a shortage of skilled labor to drive productivity on the other – is a significant missed opportunity to strengthen our labor market as well as grow our economy.
New York City's workforce system is currently not configured to address these challenges
- Over the past 20 years, the workforce system has shifted away from job training to focus almost exclusively on job placement without any strategic focus on high-value economic sectors. The system has moved too far in this direction without adapting its practices to changing market conditions.
- Currently, roughly two-thirds of the $500 million spent annually on workforce services is allocated to programs that connect jobseekers to entry-level positions with low wages and limited advancement prospects.
- By contrast, only about seven percent of this budget supports training programs that can provide skills that lead to career-track jobs with opportunities for advancement.
Without a doubt, the workforce system's fragmentation poses a significant barrier to addressing these challenges.
- For decades, City agencies have maintained disparate goals and processes, leading to uncoordinated program offerings and confusion among jobseekers and employers.
- We have also failed to meaningfully connect the City's economic development investments and spending to potential employment and career advancement opportunities.