Ladders of Opportunity

A Board of Governors' Initiative for Developing California's New Workforce
JULY 26, 2001

NEW OPPORTUNITIES, NEW SKILLS AND A NEW ECONOMY

Throughout the course of our state's history, motivation and hard work were often all most workers needed to prosper in California's economy. As recently as ten years ago, the vast majority of employers, in California and nationally, agreed that finding workers with a "good work ethic" and other positive personal traits was their chief human resources concern.1 Moreover, if the quality of a worker's skills and training was of relatively little importance at the time of his or her hiring, it was even less important to businesses afterwards. In 1991, only eight percent of U.S. employers offered entrylevel training to newly hired workers, according to the Paris-based Organization for Economic Cooperation and Development (OECD). By comparison, 72 percent of German employers provided such training as did 79 percent of Japanese firms. However, during the last decade, the perspective of American employers has radically changed. Faced with the challenge of succeeding in a highly competitive global economy business leaders increasingly value the inventory of skills prospective employees can bring to their workplace. These skills not only include proficiency with complex new technologies or industrial processes, but also the ability to learn and adapt to change in the future. As a result of this trend the relationship between education and earnings is growing even more pronounced, with higher wages now routinely linked to some form of postsecondary education and training.

The growth of California's new economy is also reflected in a far less stable relationship between workers and their employers. For example, the average tenure in jobs is steadily decreasing and is now down to three years.2 Part of this is explained by "job churning" as the number of business start-ups and failures soar. This phenomenon has been particularly prevalent in California.3 Additionally, many businesses, especially in high technology, have rejected maintaining a large, permanent workforce in favor of informal networks of subcontractors. By subcontracting, these businesses are not only able to use workers on an "as needed" basis, but also gain the benefit of the subcontractors' outside experience. However, while this approach has given firms added flexibility and promoted innovation, it has also undermined their ability to train and promote skilled workers from within their own ranks. As a result, many employers report continuing difficulty in locating high-skilled workers in a range of technical fields.

Clearly, California's success in the new economy will hinge on the ability of employers to secure the services of workers with greater knowledge, in greater numbers, and in more business sectors than ever before.

This challenge will become even more significant as other states attempt to replicate California's early success in fostering the growth of information technologies, biomedical research and the other industries of the new economy.

As new businesses, products, services and industrial processes emerge, California's workforce must rapidly adjust to new demands to remain competitive. This will require not only fundamental skills in reading and writing, or even the specialized skills unique to a specific occupation, but also the skills necessary to fully participate in a firm committed to innovation:

  • Effective oral communications;
  • Mathematical reasoning;
  • Critical thinking;
  • Problem-solving skills;
  • Interpersonal skills;
  • The ability to plan and organize; and
  • A commitment to continuous learning.4

Against this backdrop, Californians will require a higher level - and a broader range - of skills than ever before to take advantage of the new economy's many opportunities. Achieving that will require continuous training and greater individual responsibility for career progression than has ever been required before.

» View the entire Ladders of Opportunity: A Board of Governors’ Initiative For Developing California’s New Workforce (pdf)