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Human Capital Policies for the Knowledge Economy

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At its most fundamental level, the knowledge-base of an economy can be defined as: ... 3. Implications of Knowledge Economy Under Conditions of Slower Economic ... – PowerPoint PPT presentation

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Title: Human Capital Policies for the Knowledge Economy


1
Human Capital Policies for the Knowledge Economy
  • Presentation prepared for
  • National Governors Association Conference
    Reaching New Heights Advancing Workforce Policy
    through Innovation and Reauthorization
  • Washington D.C., December 9 11, 2002

Graham S. Toft, Ph.D. Senior Fellow Hudson
Institute graham_at_hudson.org 317-549-4185
2
Outline
  • Recap The Knowledge Economy
  • Conditions Trends
  • Implications of the Knowledge Economy for
  • Workers
  • Employers
  • Educators
  • States and Localities
  • Key Ingredients of a Human Capital System for the
    Knowledge Economy
  • Six Bold Policies
  • What to do with WIA, TANF, Perkins Vocational and
    Applied Tech. Education Act, Adult Education and
    Family Literacy Act and Higher Education Act?

3
1. Recap The Knowledge Economy
  • Knowledge is the ingredient that underlies the
    competitiveness of regions, nations, sectors or
    firms. It refers to the cumulative stock of
    information and skills concerned with connecting
    new ideas with commercial values, developing new
    products and, therefore, doing business in a new
    way. At its most fundamental level, the
    knowledge-base of an economy can be defined as
  • The capacity and capability to create and
    innovate new ideas, thoughts, processes and
    products, and to translate these into economic
    value and wealth.
  • World Competitiveness Index

4
1. Recap The Knowledge Economy (cont.)
Some Attributes of the Knowledge Economy
  • High productivity low inflation.
  • Rapid technological change.
  • High capital-labor ratios (capital deepening).
  • Deregulation and market liberalization.
  • Global marketplace.
  • Sub-national regionalism.
  • Mobility of
  • Capital
  • Innovations / Ideas
  • Business
  • People

5
1. Recap The Knowledge Economy (cont.)
Some Attributes of the Knowledge Economy (cont.)
  • Churning
  • Business starts business failures.
  • Business in-migration out-migration.
  • Job gains job losses.
  • People come people go.
  • Theoretical Underpinnings
  • Joseph Schumpeter Wails of creative
    destruction.

6
1. Recap The Knowledge Economy (cont.)
Goals of Economic Development and Workforce
Development
  • Old Economy
  • Create jobs.
  • 80s any jobs shoot anything that flies,
    catch anything that falls.
  • 90s Quality jobs high skills, high pay.
  • Knowledge Economy
  • Create, attract, and retain talent in good and
    bad times.
  • Capitalize on sectoral and regional growth
    opportunities.

7
2. Conditions and Trends
Conditions
  • Global economic malaise slower growth than 90s
    likely.
  • Intense global competition impacting both
    domestic and international business many
    businesses are losing pricing power cost
    containment growth in wages and salaries slow to
    moderate.
  • Globally, a potential surplus of skilled and
    knowledge workers employers seek the best from
    wherever gradual equilibration of wage rates.

8
2. Conditions and Trends (cont.)
Trends
  • Significant aging of the population in developed
    countries Will older citizens work? How
    productive will they be?
  • High quality and global leadership of American
    higher education and research institutions likely
    to continue.
  • Good global supply of quality high end knowledge
    workers.
  • Quality and supply of qualified entry and middle
    level workers remains questionable within the US
    very variable career technical education system
    (public and private) have to live with it!

9
2. Conditions and Trends (cont.)
Trends
  • Changing ethnic and cultural composition of the
    American population.
  • Expectations of younger workers different from
    older generations Generation X, Generation Y,
    and Nexters.
  • May not be enough affordable traditional college
    to go around for the boomlet generation rising
    costs of traditional college.
  • Rapid expansion of e-learning significant
    implications for the traditional campus.
  • Adults learn on the run learning must be
    convenient, modular, affordable, credentialed and
    relate directly to wage and job advancement.

10
3. Implications of Knowledge Economy Under
Conditions of Slower Economic Growth
For Students/Workers/Learners
  • Lifelong learning continuously learn nibblets
    of knowledge, information, skills.
  • Save-Spend for learning throughout life.
  • Hire on with employers with commitment to
    learning e.g., tuition reimbursement a key
    fringe benefit.

11
3. Implications of Knowledge Economy Under
Conditions of Slower Economic Growth (cont.)
For Employers
  • Adopt a supply chain management approach to human
    capital retention critical in good and bad
    times.
  • Market organization as an employer of choice.
  • Hire for desired attributes target attitudes,
    outlook, work ethic (go for raw talent).
  • Then invest in workers and their work environment
    for retention offer the good worker a compelling
    case to stay with the organization.
  • Create internal pools of learning funds tied
    directly to employee benefits.

12
3. Implications of Knowledge Economy Under
Conditions of Slower Economic Growth (cont.)
For Employers (cont.)
  • Make sure information is available to employees
    about learning choices, e.g. contract with a
    learning exchange.
  • Business location influenced by where the quality
    workers are Businesses must shape the talent
    pool beyond their doors.
  • Collaborate selectively with other businesses on
    issues of common need, e.g. diversity training.
  • Learn how to develop long range human capital
    asset plans.
  • Design the work environment for high level
    productivity and job satisfaction, e.g. flexible
    work hours, cafeteria benefit plan, ways for
    working at home.

13
3. Implications of Knowledge Economy Under
Conditions of Slower Economic Growth (cont.)
For Educators and Trainers
  • Deliver skillettes wherever there are learners
    (modularize) at home, on the way home, at work
    etc.
  • Radically reconfigure senior high school.
  • Professor be nimble, Professor be quick.

14
3. Implications of Knowledge Economy Under
Conditions of Slower Economic Growth (cont.)
For State and Local Policy Makers
  • New mantra
  • We do learning right.
  • We do diversity right.
  • We placemaking right.
  • Yell louder and they will succeed will not
    work high stakes testing is forcing more young
    people out of high school dont define the
    problem away with education reform.

15
4. Key Ingredients of a Human Capital System for
the Knowledge Economy
  • A portable save-spend tax advantaged account for
    life.
  • Creative mixes of individual, employer, govt.
    dollars.
  • Viable learning paths for those not immediately
    college bound.
  • Highly accessible and affordable adult learning
    for incumbent workers and displaced workers to
    achieve credentials.
  • Subsidized labor market information, information
    on educational offerings, financial aid etc.
  • Integrated metro/regional development initiatives
    energizing workforce development, economic
    development, amenity development, national
    resource development.

16
5. Six Bold Policies
  • The Career Learning Account (CLA) established at
    birth, no later than enrollment in kindergarten
    (Modified Coverdell Education Savings Account)
    funded by personal, family, civic contributions
    and government assistance.
  • Youth Tuitionships guaranteed learning
    resources to the equivalent of year 12 at school,
    accessed from the CLA available for all
    state-approved programs, matched by employers,
    community foundations/CDCs for .
  • Adult Tuitionships Financial aid to incumbent
    and dislocated workers, accessed from the CLA
    available for all state-approved programs,
    matched by employers, community foundations/CDCs
    for .

17
5. Six Bold Policies (cont.)
  • ProCollege an alternative, comparable learning
    path to traditional college.
  • A Learn-ware Marketplace on the Internet.
  • Labor market information
  • Education and training information (include
    placements, pay, etc)
  • Self assessment tools
  • Financial aid information
  • Job search and matching
  • Linkages to e-learning
  • Regional Investment Boards (combines WIBs,
    Economic development Districts, Regional Planning
    Authorities, Small Business Development Centers,
    Technology Transfer Entities).

18
What To Do With What Weve Got?
  • Pool the resources from many categorical programs
    under education, workforce, economic development
    and small business development legislation.
  • Repackage funding for tuitionships, learn-ware
    site development, block grants to states/regions
    for locally planned and directed regional
    development initiatives.
  • Todays categorical grant structures lack the
    flexibility and spontaneity required for the
    knowledge economy.
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