Farm Systems

By Dirk Olin
If you’d told me in 2008 that I’d be celebrating the Labor Department’s announcement of an 8.6 percent unemployment rate, I’d have called you nuts. But now, after two years of mediocre job growth and joblessness at or above 9 percent (with even that figure being vastly underestimated), any progress seems to justify donning a party hat.
But my celebration is muted. For one thing, November’s non-farm payroll spike of 120,000, while mildly heartening, comes in at less than half of the roughly 300,000 new monthly jobs that historically have accompanied expansions. True, September and October payrolls were recalculated upward by 72,000. That implies some recovery from the early 2011 slump and, more importantly, forestalls fears of a double-dip recession. But at least two realities still counsel against exuberance: absolute numbers and the ongoing challenge of globalization.

First, while the United States enjoyed an almost 600,000 drop in the ranks of the officially unemployed, more than half of that came from job seekers crying “uncle.” The labor force participation rate dipped from 64.2 percent to 64 percent in October, bringing the absolute decline to more than two million since early 2009. Profound structural causes—deficiencies in vocational education compounded by the aging of our workforce—are more foundational to this dynamic than the fiscal or monetary policies that political candidates like to rail about. But exploring the public policy implications of those realities (the need for more government spending on training and a glidepath toward less government spending on retirees) is not likely to occur anytime before November 2012.

Second, no market is an island. This never has been truer than in our rabidly technological, increasingly mobile world. If China’s economy slows, if Germany’s Angela Merkel and France’s Nicholas Sarkozy (was a two-headed “Merkozy” foretold in the Book of Revelations?) cannot persuade 17 Eurozone members to sign away greater fiscal sovereignty, global sclerosis could return in a heartbeat.

Workforce managers in the states, of course, are hardly in a position to help renegotiate the Asian or European social contracts. What they can do is help address our own domestic skills crisis. We hear constantly that companies are unable to find the right workers for their openings, that schools aren’t adequately preparing students, and that the government is restricting entrance of many high-skill immigrants who could satisfy pressing needs that American workers can’t. The ManpowerGroup reports that 52 percent of U.S. employers they polled declared that talent shortages are preventing them from filling key positions.

Perhaps we’ve become too dependent on an educational system that simply hasn’t adapted—or been incented—to churn out job-ready candidates. If so, it’s time to deal with the hand we’ve been dealt.

Our friend Peter Cappelli of the Wharton School at the University of Pennsylvania argues that corporate America can help fertilize its recruitment fields without laying out the levels of investment needed for a European-style apprentice system. Prof. Cappelli encourages employers to make candidates complete quality control or other training courses at community colleges before they make a commitment to hire. He notes that tuition sharing can be used for parallel programs serving internal candidates, whom he observes were once promoted for openings much more frequently than they are today. And, short of medieval guilds, Cappelli contends that lower paying apprenticeships (think associate programs, such as those used by law and accounting firms) can serve both employers’ and employees’ interests in mutual self-investment.

Professional baseball does a much better job of nurturing young talent than does corporate America. It has to. Unlike, say, the National Football League, which can depend on the college system because talent in that discipline amounts to little more than proper stimulation of the pituitary gland, Major League Baseball must teach and develop a subtler set of skills that only starts to bear fruit after a few years. In most fields of endeavor, talent is not a tablet than can be dropped into a glass of water or a chemical solution that can be injected from a hypodermic needle.

As it happens, I recently found myself in the office of one CEO whose real world experience tracks closely with the view from a baseball dugout or Cappelli’s ivory tower. General Mills’ Ken Powell told me that his iconic company’s relatively old-school training programs are nothing less than a “competitive advantage” in the current labor market. As a long-suffering Cubs fan (that phrase is redundant), I left Powell’s office wishing he’d abandon his food conglomerate and take over the general manager’s office of my favorite baseball team.

You can’t build a winner without a farm system.

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