By Michele A. Carlin and Mike Madrid
May 30, 2023 – The face of America is changing, driven by a historic demographic transformation. Within the next two decades, the number of non-Hispanic Whites is expected to decline to less than half of the population, a shift driven by an increasing Latino population. Latinos make up one in five workers and have contributed an estimated three-quarters of the entire labor force expansion since 2009. But there’s another fact about this segment of the workforce that will have significant implications for America’s employers: Latinos rank lowest in educational achievement among racial and ethnic groups.
Only three quarters of Latinos have completed high school, compared with over 90% of their non-Latino peers. Despite improvements in the past decade, Latinos have college completion rates below all other groups. This educational underachievement means an increasing segment of the available labor pool is ill-equipped for today’s jobs, let alone those of the future, and the burden of preparing those workers will fall to employers. This is not a new development. According to College is Just the Beginning, in 2015 America’s employers spent $177 billion on formal post-secondary education, and a staggering $413 billion on informal, on-the-job training each year. The growing gap between workforce preparation and the jobs of the future will require a continued high level of investment.
How is this investment delivered? In addition to on-the-job training, most large employers offer educational assistance as part of a comprehensive employee benefits package. These programs provide tax-free financial aid equal, on average, to $5,250 for undergraduate degree and $10,500 for graduate programs. But despite their widespread adoption by employers, only a fraction of employees take advantage of them. A study by InStride and Bain & Company found that while 80% of employees expressed interest in attending school while working, only 40% knew their employer offered educational assistance and only 2% took advantage of the benefit. The reason? Poor communication, complex administration and requiring workers to pay tuition upfront and seek reimbursement after completion, something that is out of reach financially for most workers.
Traditional approaches to supporting the educational needs and aspirations of the emerging workforce may not be enough to close the education gap. Some more modernized programs seek to address the cash flow challenge of the traditional model by offering company-funded assistance instead of reimbursement. In addition to addressing the cash flow challenge, companies will need to create conditions that allow workers to take advantage of the financial support offered by traditional programs. This includes developing new, more flexible work arrangements that help employees integrate their learning journey into their personal lives. This is especially important for Latino workers, for whom family obligations are often primary. Employees may also need the help of dedicated resources to help them navigate the learning journey, so that the skills they are acquiring can be translated into jobs valued by both workers and employers.
Creating a work environment where learning is a core expectation, supported by the flexibility and financial resources needed for workers to succeed, will be key to creating talent strategies tailored to the changing American workforce.
Michele A. Carlin is Executive Vice President at HR Policy Association and Center On Executive Compensation; Mike Madrid is a founder of GrassrootsLab.