September 19–20, 2012
Presented by the Federal Reserve Bank of Kansas City
Addressing Today's Unemployment Challenges: A Way Forward
Paul Osterman: So are those jobs really disappearing? Well, it's true. It's true that on net the fraction of the workforce which is middle-skilled is going to be smaller over time. But guess what? I'm going to retire. Many of you are going to retire. There's going to be huge replacement job demand for these middle-skill jobs. So let me give you some numbers in manufacturing.
The Bureau of Labor Statistics projects that going forward into 2018 there will be a net reduction of 350,000 manufacturing jobs—there will be fewer manufacturing jobs in this economy. But there will be, according to the BLS projections, 2 million manufacturing vacancies due to retirement, middle-skill...good middle-skill jobs. And that's true throughout, up and down the economy. So this polarization argument is right in one sense if you look at net, but it's not right if you look at hiring, and what we care about is hiring. So I want you to understand that when you read the newspaper and when you listen to those one-handed economists.
Community colleges are without question the prime training institution for the population I am talking about in this country. If you get a certificate or if you get a degree from a community college your rates of return are very high—there's a lot of research evidence on this in the Journal of Bizarre and Obscure Statistics and other sources. It's believable; it's true. There's a problem, which is a small fraction of people actually manage to get those certificates or degrees (I'll come back to that), but if you succeed in the community college system...you get a big payoff and they are serving the population we care about. So that's one model—a crucial model.
One source is that there are too many players with too many diverse interests. So you've got community colleges, you've got antipoverty programs, you've got the career and technical education community, you've got the community action agency, you've got the adult basic education community. You've got all these kinds of institutions, organizations, and bureaucracies who are, kind of, all about the same thing, but they have different interests, and they have different budget lines and all of the above, and they are not speaking with one voice. The world that we live in has changed and it changed radically. You all know that, right? The institutions that underwrote that world—unions, government programs, firms that have well-defined boundaries and long-term commitments to their workforce—those institutions have eroded. Not entirely gone away, but eroded and eroded radically.
In many ways we are creating...we are having a conversation about creating new labor market institutions for a new environment, right? This is not the first time this conversation has taken place in this country, right? In many ways we live in a world very much like what people lived in at the beginning of the Progressive Era, at the beginning of the 20th century. There was a sense at the beginning of that era after the Gilded Age, after the Industrial Revolution, after the, kind of, rampaging of the Morgans and the Rockefellers, there was a sense that somehow people had lost their moorings and that everything was out of control and that the market was just overriding all institutions and that there was no way to control and manage the economy. And what the Progressive Era was really about was creating a set of institutions, of which, by the way, the Federal Reserve System was one of them—a set of institutions to put a framework around what was a new environment, a different world, a new set of challenges. And I really think that's the world we live in now. We are talking about, we are engaged in a national conversation about what these new institutions should look like and how to build them. And so I'm not telling you I'm giving you the answers to what those new institutions should look like; I don't have an answer. I have some challenges and some issues, but I think that that's what we're about, and it is in many ways a kind of a positive thing.
So, that was dessert. Thank you.
Investing in Employees through Training and Development
Carol Tomé: So today we have a model that really gets at skills mastery and making sure that the associates are learning what they need to learn. So at our store support center in Atlanta we have what we call Home Depot University, and at Home Depot University we have a virtual training facility that has nine webinar rooms and two television studios. We have a team of 12 people that spend their days doing live, one-on-one and group training for associates around the country. You know, it's really cool to go into the virtual training facility and walk around. You can see the trainers, they've got their headsets on, and they are talking to associates that might be in Miami or in Seattle or in Guam. It's a very interactive, live facility. We also bring our merchants in and our vendors in and they'll do PK demonstrations (or product knowledge demonstrations), they'll showcase a new product; they'll bring it live to our associates who are out in the field.
Now, part of the development and investment that we're making in this team is creating an environment where they want to work. So if any of you have had the opportunity to go to the Google campus, it's a pretty cool place. I don't know if you've had the chance to go there (you're nodding your head), it's a pretty cool place. And so for our "dotcom" team we said, "Well we need to have a campus that rivals what they have" (at a reasonable cost, of course).
So we invested in a new space in Atlanta that we call the Tree House, and it's a very cool space. It's a space that's got neon-green, bright orange muted lighting, because these young people do not like overhead lights. There are no offices. The walls are either glass or whiteboards. There are playrooms. It's a very cool, happening place because the people that we're hiring to help us with the retail revolution, they want to work in an environment that fits with them, and we decided that we had to make that change.
The other aspect of investing in people is rewarding people, and we have a number of ways of rewarding or recognizing our people. One, our Living the Values Homer Award. And if you're in our stores and you see an associate who's got a badge on his or her apron, that's because they have been recognized by a peer or by a customer or by someone like me. And the way the badge program works is you get a series of badges, you then earn a bronze badge, which turns in then to a silver badge, a gold badge, a platinum badge, and we even now have a diamond badge that actually has a small diamond chip in it. These associates are associates who are giving great service and we are recognizing them for their service. So as long as your sales per hour are going up you're getting a return on investment, and that pays for itself.
What didn't pay for itself (in all candor) is we had some, I'll call it, "executive leadership programs," we would ship our executives off for training. That stuff does not pay; that does not pay; it just does not pay. The best teachers are existing executives, right? You can learn from your peers. So we cut all that stuff out. But the belly...the training for the associates who are taking care of the customers, for us anyway, it pays out.
A Futurist's View of the Future of Work
Glen Hiemstra: The baby boom echo known as Generation Y, or the millennial generation, which is bigger numerically than the baby boom generation, born, starting at about 1980 up until about the year 2000. It's a smaller percentage of a larger national population so it may not have quite the cultural impact, and yet it may because of the power of digital technology.
This is the first digital native population—the kids that grew up with computers. Most of us in this room, and there are a few of us who might be digital natives, most of us are digital immigrants in this room, which means that we might be in charge of computing technology and IT for our company, but it wasn't there when we were little kids. It's different if you're a three-year-old growing up with an iPad. Have you ever watched a three-year-old work with an iPad? And then the same kid get up and walk up to the big-screen TV and start going like this [motions] and get frustrated because it doesn't work; of course, it will work that way in just a couple more years. That's what it means to grow up as a digital native. And if you're a digital native what it really means is that you are a "person of the screen," and "people of the screen" do not accept old limitations about how work is supposed to be organized, about how learning is supposed to take place, about how almost anything is supposed to happen. If you are a digital native, life consists of being online. By 2025, as the digital native generation and the generation that follows them become the dominant workforce in the United States, the whole concept of online/offline will go away.
What is the nature of this economy that we're moving into—not the one that we have come through; not the 20th-century economy; not even the information technology economy. One of the best characterizations that I know of, of the economy of now and the future (at least the next 25 years or so) is this—we are in a knowledge-value economy. Now what that means is, it is what a product, or service, or a person knows that matters.
If you are providing a service—let us suppose the Federal Reserve Bank of Kansas City was putting on a conference on the future of the workforce. And meanwhile, the community college down the street was putting on a conference on the future of the workforce, and you were choosing which one to go to and they were both the same cost to you, either free or $10 or $25, or whatever it is. How would you choose? You would look at the agenda and you would say, "This conference looks smarter." This conference has smarter people in it. I'm going to get better information out of this conference. I'm going to be smarter by going to this conference than I am by going to this conference. You are making a choice based on the knowledge value that you perceive. The same thing is true in a good. You go to the telephone store, you look at an iPhone, you look at a different kind of phone, and you make a choice. The price is about the same, of course, you might have some biases about which manufacturers you like and so on, but basically you say, "I think I'll choose this one because I can see this one is smarter." There's better technology in it; the people who made it are smarter; the people who designed it are smarter. I can get smarter stuff out of it; it'll make me smarter if I buy this one instead of that one. Now it might only make you feel smarter, or make you think that you look smarter, but still you are making a choice based on perceived or real knowledge value. That is the nature of the economy.
And what does that mean for a person who is looking for work (for a worker), or what does it mean for a businessperson? It means that your ability to survive in the work world of tomorrow depends on your ability to acquire new knowledge on a regular basis, a continuous basis, and then to apply that knowledge more quickly and more effectively than anybody else.