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Talent Pipelines Hold Key To Stemming Decline In Texas Middle-Skill Jobs, Says Dallas Fed Report

For Immediate Release: Jan. 18, 2017

Collaboration Between Industry, Workforce Boards Needed to Address Shrinking Middle Class

DALLAS—The share of middle-skill jobs has declined over the past three decades, both in Texas and across the U.S., according to a new report. The result is a shrinking middle class and increase in the relative share of low- and high-wage earners—a trend known as “job polarization.”

The new report from the Federal Reserve Bank of Dallas and the Center for Public Policy Priorities—“Regional Talent Pipelines: Collaborating with Industry to Build Opportunities in Texas”—takes an in-depth look at how Texas communities are addressing this challenge by creating advancement opportunities for lower-skilled workers and helping jobseekers adapt to a changing labor market.

“The increase in job polarization means that the middle class is shrinking: It is harder to get into the middle class, stay there or move higher,” said report co-author Elizabeth Sobel Blum, senior community development advisor at the Dallas Fed.

The share of middle-skill jobs in the economy that require workers to perform repetitive and procedural tasks, such as those performed by assembly line workers or typists at an accounting office, are declining. Taking their place are new middle-skill jobs that generally do not require a bachelor’s degree but often do require education beyond a high school diploma—such as an associate’s degree, industry-recognized certification, apprenticeship program, on-the-job training or other workforce credential.

“It is now more important than ever to have training and education beyond a high school diploma in order to be on a pathway to earning a middle wage and beyond,” Sobel Blum said. “A four-year college degree is certainly important, and, in fact, educational attainment levels have increased in Texas; however, it’s not the only choice.”

The report draws upon survey results from the state’s 28 regional workforce boards to highlight how some are building talent pipelines for middle-skill jobs. The report includes examples of three regions—Houston, west central Texas and Dallas–Fort Worth—that are implementing promising development practices.

One opportunity for improvement identified in the report is to develop career pathways that are aligned with sector partnerships in each region’s strong industry clusters, especially those in which they have a regional competitive advantage. An earlier publication from the Dallas Fed, “At the Heart of Texas: Cities’ Industry Clusters Drive Growth,” identified such clusters in Texas’ eight largest metro areas.

The Regional Talent Pipelines report also provides recommendations for state policymakers for creating world-class regional talent pipelines across Texas.

“We see a real opportunity for state policymakers to make the development of sector partnerships and regional talent pipelines a strategic priority for the state,” said report co-author Garrett Groves, a scholar-in-residence at the Dallas Fed and economic opportunity program director for the Center for Public Policy Priorities.

Groves points to the state’s new 60x30TX Higher Education Plan as an avenue for linking educational attainment and workforce development. The plan calls for 60 percent of Texans ages 25–34 to earn a postsecondary certificate or degree by 2030.

“Business—and industry-led sector partnerships, in particular—can play a vital role in validating the labor market value of skills and credentials that our education system provides to students and jobseekers,” Groves said.

“The most successful boards are convening employers, educators, community-based organizations, economic developers and others to build career pathways to opportunity occupations and beyond,” said Sobel Blum. “These occupations are critical to strengthening the middle class because they pay a wage at or above the national median and require less than a four-year college degree.”

A related paper, “Engaging Workforce Development: A Framework for Meeting CRA Obligations,” discusses the Workforce Innovation and Opportunity Act and Community Reinvestment Act and how banks can partner with workforce development entities to achieve the goals of these regulations.

Experts Sound Off on Workforce Development Challenges

Workforce development experts see challenges and opportunities for lower-skilled workers and help job seekers trying to maximize their value in the changing labor market. For more information and case studies, see “Regional Talent Pipelines: Collaborating with Industry to Build Opportunities in Texas.”

“The nation’s public workforce system continues to embrace the idea of sector-based, industry-driven partnerships for talent development. This approach requires the building of strong regional partnerships, anchored by multiple employers from an industry sector, and key workforce, education and training providers working together to meet the needs of industry and workers. When done well, these partnerships grow strong and competitive local employers, while providing good jobs, good wages and a pathway to the middle class to workers who reside in these communities.”
—Eric Seleznow, deputy assistant secretary for employment and training administration, U.S. Department of Labor

“We’re not able to draw a lot of people to our region. We’re going to have to grow our own, and to do that, we must build our own talent pipeline.”
—Mary Ross, executive director of Workforce Solutions of West Central Texas

“Workforce boards are excellent agents for bringing together industry in a noncompetitive environment. DFW Regional Workforce Leadership Council (RWLC) continues to reinforce the convening of like-minded employers to expand the talent pipeline for all.”
—Laurie Bouillion Larrea, president of Workforce Solutions Greater Dallas

“In the past, industry didn’t want to share proprietary information on hiring and skillsets. But now these companies are seeing that their workforce challenges are bigger than any one company, and that by working together, everyone can win.”
—Allatia Harris, vice chancellor of strategic initiatives, San Jacinto Community College

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Media contacts:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
E-mail: jennifer.chamberlain@dal.frb.org

Oliver Bernstein
Center for Public Policy Priorities
Phone: (512) 823-2875
E-mail: bernstein@CPPP.org