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Fed’s Harker: “History Has Handed Us an Opportunity” for Systemic Change

For immediate release
Contact: Daneil Mazone, E-mail Media Relations, 215-574-7163

Baltimore — In a labor market with “very little slack left” and “employers who say they can’t find the right skills,” the time is ripe for employers and funders alike to rethink existing approaches to skills training, using evidence-based research to “disrupt norms,” said Patrick T. Harker today. Harker, president and CEO of the Federal Reserve Bank of Philadelphia, delivered the remarks in a speech announcing a report on the effects of automation on the labor market and a new financing model for workforce training.

Harker has been a vocal proponent of skills training and workforce development as a vehicle for inclusive economic growth.

The report, Automation and Regional Employment in the Third Federal Reserve District coauthored by Harker and Lei Ding, senior economic advisor at the Philadelphia Fed, analyzes the risks of automation and job opportunities for different demographic groups in the U.S. and 11 metropolitan areas in the Third Federal Reserve District.

The research found that one out of five jobs in the Philadelphia Fed’s District had a 95 percent chance or greater of automating and that the phenomenon would most likely affect already vulnerable participants in the economy such as women, people of color, younger people, and lower-skilled workers.

“The research shows us that automation and technology could increase the inequality we are seeing in our economy, but that doesn’t have to be the case,” Harker told the crowd at the Reinventing Our Communities conference, cosponsored by the Philadelphia and Richmond Feds. “Our research shows that we can make decisions to reinvent our workforce and economic development systems to make sure that more people can benefit from these changes.”

To deliver sustainable change, Harker said the sector would have to “disrupt norms,” particularly in the area of funding.

“[I]t would be impossible to ‘grant-make’ our way out of this. Likewise, we can’t solve the workforce dilemma through public programs alone.”

One option, he said, was a new financing model, recently created by the Philadelphia Fed, the Philadelphia workforce board, and a private-sector partner. This is an outcomes-based finance model in which the private sector will pay the bill once its business needs are met. Harker said a “major Philadelphia-based national tech employer” was the third partner in the trial model.

“If it’s successful, this will be the first program of its kind to have the private sector paying for outcomes delivered via public workforce funding.”

The cross-sector partnership is important, Harker said. “If we are to prosper locally and nationally, we need to create systems that promote regional growth and work for more communities.”

Read the speech.

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Daneil Mazone E-mail
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(215) 574-7163
(267) 535-1808 (cell)

Joey Lee E-mail
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