The U.S. Bureau of Labor Statistics report today shows that the economy added 98,000 new jobs last month, and the unemployment rate is down to 4.5%. But the real number we should be watching is the number of open jobs—unfilled vacancies in the job market—which the BLS will report next week. The number of open jobs hit a record 5.8 million last April and hasn’t dipped below 5.4 million ever since.
While both Republicans and Democrats identify job creation as our country’s top economic priority, the numbers prove that achieving job growth is not simply a matter of increasing the number of jobs. The bigger issue is whether people are equipped to perform the jobs that exist within our rapidly changing economy.
This is a complex problem, and its solution depends, to an extent, of course, on the federal government’s policies. But it also depends on the extent to which businesses and workers can adapt to long-term trends that are transforming entire industries, and even reshaping the nature of work itself.
The old model—created by manufacturing in the 1950s—in which employees do the same work day after day for their entire careers, is dead. Unlike any time in the past, virtually every industry—from transportation to manufacturing to food production—is now subject to rapid disruption. Competitors come from every corner of the world. Mobile apps have upended legacy businesses. Advanced artificial intelligence, 3D printing, and other bleeding-edge technologies are on the verge of changing—or possibly eliminating—entire classes of work.
As a result, a shortage of skilled labor is now one of the main reasons why available jobs aren’t being filled. Fully 40% of employers surveyed by McKinsey, for example, report entry-level job vacancies due to a dearth of qualified applicants.
In this environment, the only way for businesses and their employees to thrive is to embrace continuous learning—repeatedly building and honing new skills throughout one’s whole career.
Unfortunately, both employers and workers have not yet woken up to this reality. But they must, and fast. In our new economic reality, any company that fails to become a learning organization will ultimately be a dead company.
To position the American workforce for long-range success, executives must invest in learning, and re-training, at all levels of their companies—from the sales force and customer service reps to the marketing specialists, programmers, and finance team. Everyone, including leadership, needs to continually adapt.
The answer, however, isn’t simply to throw more money at employee learning programs. American companies already spend about $70 billion annually on corporate training. It’s far from clear whether those dollars are being spent well.
To make learning valuable, companies should start by looking at their entire operation with fresh eyes. Throw out past assumptions. Do not be blinded by previous success. Assess employees and the competition honestly. Think of a CEO at a major American automaker, for example. Honest self-assessment would start with acknowledging the threat posed by hyper-innovative upstarts such as Tesla (TSLA) and by mobility technologies such as Uber and Lyft. For many city dwellers, owning a car has become unnecessary. And with the average high-end automobile having seven times the coding of a Boeing 787 (BA), sophisticated technology is now at the heart of modern car manufacturing.
Next, companies should craft a blueprint detailing how to improve employee skills—aligning those skills with a strategy to meet changing market demands. For a car executive, that plan could involve developing a whole new learning system that builds the skills needed to make the cars of the future. Those skills go way beyond manufacturing, and include capabilities in data science, machine learning, mechatronic, and coding skills. In the case of Ford (F)—whose value as a company has just been eclipsed by Tesla—this means becoming a “mobility company” instead of an automotive company.
Third, all training programs should be subject to rigorous assessment. Today, very few organizations measure the impact of their learning initiatives. This is a huge oversight. Measurement should focus on finding “learning alpha.” That is, how much better the company performed because of new learning programs. Learning alpha can be measured in outputs. How much did assembly productivity improve? How many new leaders were identified? What innovations resulted from new capabilities? And, ultimately, how much revenue or profit growth can be attributed to new learning programs?
Not every initiative is going to work. Some will prove more effective than expected. Executives should be comfortable evolving, constantly refining learning approaches and offerings to maximize benefit.
Because the need for the economy to adapt is so great, companies, policymakers, and even universities should work together. Companies should establish new partnerships with universities and learning providers and develop online delivery models. Policymakers should explore financing programs to encourage employee participation.
Industry is in a disruptive revolution. In response, companies, workers, and policymakers alike must recognize continuous learning as a lynchpin of the modern economy. Learning must be woven into the corporate culture and embraced by workers. And it must guide policymakers’ efforts to advance the national jobs agenda and successfully retool the American economy for the century ahead.
Andre Dua is a director in McKinsey’s Public Sector practice.