Financial Giant Chief Unveils Plan to Tackle ‘Skills Gap’
WASHINGTON – Jamie Dimon, JPMorgan’s chairman and chief executive, announced a major initiative this month aimed at tackling the mismatch between the need of employers for skilled talent and the skills possessed by the available workforce.
Dimon unveiled the new five-year initiative, called “New Skills at Work,” focused on filling the skills gap in some of the largest urban areas in the world. The program will initially launch in Chicago, Dallas, Detroit, Houston, Los Angeles, Columbus, Miami, New York, San Francisco, and London.
Mayor Rahm Emanuel of Chicago joined Dimon for the announcement at the Aspen Institute in Washington, D.C., where they also discussed how to train workers for available jobs in the U.S.
“Addressing the skills gap can be one of our most powerful tools for reducing unemployment and creating more broadly shared prosperity,” Dimon told those in attendance.
Emanuel identified an education system that produces graduates unprepared for the available job opportunities as the main culprit driving the skills gap.
The Emanuel administration launched a job skills program, College to Careers, in 2011. The program pairs faculty and staff at community colleges in Chicago with industry leaders to design curriculums and facilities and offer internship and job opportunities. The program aims to train students for industry-specific jobs in fields such as health care, information technology, advanced manufacturing, and hospitality.
“We have about 100,000 jobs open in the Chicago area and a nine percent unemployment and we have seven community colleges, so we’ve aligned each community college with an industry that was growing in our area,” Emanuel said. “We then said to the industry ‘do the curriculum, do the training of the teachers and drive the school so that it is specifically focused on that sector.’”
According to the International Monetary Fund, the skills gap accounts for approximately one-third of the U.S. unemployment rate. By 2020, an estimated 63 percent of the projected 48 million job openings will require some sort of post-secondary school training.
A new Accenture study showed that many executives in different industries believe the workforce will not have the skills employers need in the next one to two years. For the research, Accenture surveyed 400 executives at large U.S. companies. For those companies who are anticipating a skills shortage, the biggest demand is for IT skills and engineering.
JPMorgan has already teamed up with a number of organizations, including Year Up and the Aspen Institute’s Forum for Community Solutions, which focuses on training the workforce.
Dimon will head the bank’s Global Workforce Advisory Council, which will advise on the new initiative, and Melody Barnes, former director of the White House Domestic Policy Council, will serve as co-chair.
The $250 million program is the largest private-sector effort to date focused on addressing skills gaps in job markets in the U.S. and globally.
The bank plans to commit $50 million annually, beginning in 2014, to research and training programs aimed at matching worker skills to employers' needs.
The Aspen Forum for Community Solutions will receive 5 million from JPMorgan to continue its work closing the skills gap among America’s youth. The program has provided grants through its Opportunity Youth Incentive Fund to 21 urban, rural, and tribal communities to improve access to education and employment for youth.
Specific grants and partnerships for individual cities will be announced in early 2014.
According to Economic Modeling Specialists International (EMSI), the metropolitan areas in Dallas, Houston, and Washington, D.C., will have particularly large mid-skill talent shortages in the next couple of years. These metro areas have a projected shortfall of about 5,000 middle-skill workers in engineering and technology, the skilled trades, and business and finance.
Although skills gaps may be hard to identify at the national level, by looking closely at particular regions and examining the industries that they specialize in, talent shortages begin to emerge. For instance, San Francisco’s economy is driven by technology and professional services. The most critical labor shortage among the occupation groups analyzed by EMSI for San Francisco are in mid-level technology and engineering technician occupations.
Dimon said the skills gap is a national issue that is best looked at from the local level. He said one of the main challenges is the lack of data about employer demand to inform workforce training programs. JPMorgan’s initiative will try to fill that void by producing “Workforce Readiness Gap Reports” in local markets to help drive more effective local workforce planning. This research will explore workforce deficiencies at the regional level and seek to identify holes in local job markets and the skills needed to fill these gaps.
“Part of this is to learn, to get the data and to get the detail, to figure out what works and then invest in what works,” Dimon said.
The announcement comes in the wake of unprecedented fines and regulatory scrutiny for JPMorgan. The financial giant recently reached a $13 billion settlement over its questionable mortgage practices before the financial crisis and is under investigation for hiring practices in China.