Testimony of
Ed Reinfurt, Vice President
The Business Council of New York State, Inc.
before The Legislative Commission on SkillsDevelopment and Career Education regarding: Preparing for The Transition to the New Workforce Development System

Tuesday, May 25, 1999

Thank you for the opportunity to share our views on workforce development with you Assemblyman Robach, Schimminger and other members of the legislature.

As I am sure you know, The Business Council is New York State's largest and most broad-based employer group, representing about 4,500 member companies, associations and chambers of commerce. The Council's mission is to create an economic renaissance for New York State and its people and having a well-prepared workforce is key to our success in this area.

Few issues are more important to New York employers than the need to establish an effective program to enhance the skills of existing and new workers. A survey done last year by The Business Council showed that 44 percent of responding firms said they find a "moderate or severe gap" between newly hired workers' skills and the employer needs.

A working group of Business Council members met late last summer and fall and agreed that any workforce development system in New York State, to succeed for employers, must include the following key components: It should be employer driven, locally delivered, easy to access, and well funded.

New York State is in an era of intense economic competition driven by increasingly rapid technological change, competition from other states and the globalization of markets. We must continue our tax cutting policies to bring us in line with other states, but there is one area which we have not yet addressed to a sufficient degree -- and that is upgrade training for the currently employed and re-training for the dislocated that matches the needs of the employers in any given region of the state.

State policy and national policy has traditionally focused on the supply side -- trying to improve the skills of the long-term unemployed. It has largely ignored the demand side, or what it takes for business to thrive, grow and create jobs. Maximizing the potential of the Workforce Investment Act and creating linkages with economic development that address the training needs of business and industry in a systematic widespread way must become a state priority.

Manufacturing has been and continues to be a bedrock industry in New York State. And the good news is that manufacturing jobs are once again on the increase. They are a good example of how radically jobs have changed, but are by no means the only sector that has undergone tremendous technological transformation. It is no longer possible for an un-educated and unskilled person to get a job with upward mobility in any sector of New York 's economy. And manufacturing jobs could be increasing even faster if there were enough workers to fill them. The new jobs require a much higher set of math and other technical skills than in the past. For instance, headlines in the Rochester Democrat and Chronicle in the spring of 1996 proclaimed -- "Millions lost for lack of workers." A shortage of skilled technology workers on Long Island has businesses there planning to conduct a national advertising campaign to find workers.

The National Association of Manufacturers and Grant Thornton LLP recently released the results of a skills and competitiveness survey of 4,500 manufacturers. The results clearly point to the needed for a concerted effort to upgrade skills both in the long term through improving K-12 education and more immediately through providing shorter term technical skills training. Here are just some of the findings:

A factor that adds to the difficulty of delivering training is that the growth in jobs is often among the smaller and medium-sized companies. They, in particular, require versatile educated workers and have great difficulty in accessing the only current employer specific job training program -- JOBS NOW.

A good way to address this issue of upgrading the skills of the labor pool in any given region in the state is through industry based training and the establishment of strategic training alliances that have an incumbent worker training focus (but should work in concert with the Workforce Investment Act). Such industry-based training would be most efficiently delivered through the networks that business and industry has created for itself -- chambers of commerce, business associations, Local Economic Development Corporations and Industrial Development agencies.

Theses entities are employer supported and driven organizations, they are the ones that are best suited to work together in any given labor market region and state-wide as well. With the training opportunities brought about by technology, geographic barriers no longer make sense. Any local, regional, or statewide association of businesses should be eligible to design and provide training programs. Such groups are the ones best able to identify the particular skills training needs of employers in their industry. They could take the lead in working with community organizations, local elected officials and the whole gamut of education providers to develop on-going short term skills upgrade training programs.

Any Workforce Investment Act funds that can be used for incumbent worker training should be maximized for that purpose. Improving the skills of incumbent workers, if not immediately, at least has the best potential for helping a company remain productive, remain in New York State, and ultimately be able to grow and indeed hire more workers.

We applaud what the Department of Labor is doing with its INVEST program. The department is now implementing an experimental program in Dutchess County to streamline and consolidate multiple funding programs. This is one of the most encouraging actions we've seen in recent years. Bringing specific employers job needs together with individuals possessing individual training accounts is the type of flexible but coordinated effort we have long sought. Still the money available for the incumbent worker represents the smallest pot of all the training funds.

With regard to Workforce Investment Act governance structures state wide and locally: they should have a majority of for-profit employers, as required by the federal legislation. No one knows better than the employer, the types of education, training and skills need for the job he is trying to fill. To make the workforce investment system work for anyone seeking employment, it must be employer-driven. It has not worked well in the past, because it wasn't employer-driven. History shows that providers too often have notions of what skills workers should have and what job-readiness means that do not match the requirements of employers. We hope that you will seize this opportunity to create a system of workforce development for New York State that is truly responsive to employer and, therefore, worker needs.

The Business Council also supports increasing (by $10 million annually) funding for community college contract courses. In some instances this type of employer-specific training is what best meets the needs of an individual employer. It has been a highly effective program whose funding has been cut over the years, but it should be brought up to $10 million to enable community colleges to meet the increased demand for such training.

In the last five years, New York has taken important steps to put its economy on the right track. Taxes have been cut. Regulations have been streamlined. And workers compensation and unemployment insurance rates have been reduced. Yet without a well-trained workforce, the capital investment and job creation and retention potential of these actions might never be realized.