Economy

Workforce Quality

Workforce Quality

Virginia experiences both positive and negative trends in the quality of its workforce. It employs a higher percentage of people in science and engineering than any other state in the nation, and has been successful both in providing higher education opportunities to its population and in attracting highly educated workers from other states.  However, regional educational attainment varies considerably, suggesting that significant weaknesses exist.

Why is This Important?

Workforce quality is closely tied to labor productivity, making it a key determinant of economic growth and wages. In today's dynamic economy, jobs increasingly require education beyond a high school diploma. Education not only prepares individuals for the tasks required by a job, but also enhances an individual's ability to adapt to new working environments.

In recent years, knowledge-intensive industries have become a key contributor to the growth of the national economy and to U.S. exports abroad. Although this sector was hit unusually hard by the 2001 recession, skilled workers in knowledge-intensive industries generally experience lower rates of unemployment and faster wage growth than those in other sectors.

How is Virginia Doing?

The data reveals two opposing trends in the quality of Virginia's workforce. One view presents a remarkably well-educated labor force with a significant number of advanced degree holders. The other view shows a low level of educational attainment among large segments of the population in some geographic areas.

Virginia has an impressively high percentage of skilled workers, leading the nation in 2006 for workers in science and engineering (S&E) occupations (6.5 percent) – a figure which reflects Virginia's large knowledge-intensive sector. Maryland's workforce was similar to Virginia's with 5.5 percent in S&E occupations, while North Carolina (3.3%) and Tennessee (2.4%) were lower than the national average of 3.7 percent.

The percentage of Virginia's workforce with advanced degrees also demonstrates Virginia's commitment to education, as well as its ability to attract educated workers. In 2007, Virginia ranked fourth in the nation for the most master's degrees (9.8 percent), fifth for the most professional degrees (2.4 percent), and fourth for doctorates (1.5 percent) as a percent of the population age 25 and over. Nationally, 7.1 percent of the population had a master's degree, 1.9 percent had a professional degree and 1.1 percent a doctorate degree.

In comparing Virginia to its peers, Maryland ranked higher in all three degrees, with 10.7 percent having master's degrees, 2.9 percent professional degrees and 2.1 percent doctorate degrees. Virginia, however, ranked above both North Carolina (6.1 percent master's degrees, 1.5 percent professional degrees and 1.0 percent doctorate degrees) and Tennessee (5.2 percent master's degrees, 1.5 percent professional degrees and 0.9 percent doctorate degrees).  Massachusetts was the leading state nationally with 11.4 percent master's degrees, 2.6 professional degrees, and 2.1 percent doctorate degrees.

Worker productivity, defined as the real output per worker, is an alternate measure of workforce quality. Unlike educational attainment, which captures the inputs into workforce quality, worker productivity measures the average output of workers. High labor productivity typically results in higher standards of living.

Traditionally, Virginia's productivity mirrored the national average until the late 1990s, when the state started growing more rapidly. In 2007, Virginia's output-per-worker value ($87,382 adjusted in year 2000 dollars) was higher than the national average ($84,715). Virginia ranked 10th among all states, excluding the District of Columbia, an improvement from 13th in 2004. North Carolina ($82,634), Maryland ($87,331), and Tennessee ($75,677) all have a lower valued rate of productivity than Virginia. Delaware ($115,386) was the leading state in worker productivity in 2007.

These achievements in workforce quality, however, mask a serious weakness in Virginia's labor market. In 2007, 14.1 percent of Virginia adults lacked a high school diploma – the 23rd highest among the 50 states. Wyoming had the lowest percent at 8.8. The percent of Virginia's population without a diploma was lower than North Carolina (17.0 percent) and Tennessee (18.6 percent), but higher than Maryland ( 12.6 percent). The national average was 15.5 percent.

Within Virginia, rural regions have the highest percentage of people without diplomas. In 2000, the percent of adults with less than a high school diploma was above 30 in the Southside and Southwest regions and above 20 percent in the Eastern, Valley and West Central regions.

What Influences Workforce Quality?

The existence of a skilled workforce is an indicator of both the presence of industries that need them and a measure of a state's ability to educate or attract skilled workers. Thus, workforce quality can be improved both by investing in education and by creating a business-friendly environment that attracts knowledge-intensive businesses and the skilled workforce that these businesses employ.

Looked at another way, low educational attainment reflects in part the lower number of high quality employment opportunities in some regions of the state. Without employers who value educated workers, individuals have less reason to invest in education. Those who do obtain more education often migrate to higher-employment regions.

What is the State's Role?

States can create a high quality workforce by investing in education and skill training and creating educational and workforce systems that can adapt quickly to new skill requirements demanded by the market.  Virginia’s greatest contribution to workforce readiness is in the 50,000 to 60,000 degrees that are produced in its colleges and universities every year.  In addition to this, more than 17,000 career readiness certificates, which certify individual employability skills, have been awarded by community colleges and one-stop employment centers since the program began in 2004.

Virginia is also working to retrain workers through its Workforce Investment Act (WIA) program. WIA has successfully assisted older youth, adults, and dislocated workers in finding and retaining new jobs. According to the Virginia Workforce Council’s 2006 Annual Report, 78 percent of adults exiting the WIA program in 2006 were employed within three months and, of those, 83.1 percent still had a job after six months. Rates were similar for dislocated workers, with 82.8 percent of those exiting the program obtaining employment by the following quarter and 90.7 percent retaining a job after six months. These retention rates are higher than the national average of 81 percent for adults and 85.4 percent for dislocated workers.  However, economic conditions play an important role in explaining differences among geographic locations.

States can also indirectly improve their workforce quality by promoting an environment that attracts knowledge-intensive businesses. Once these businesses enter the market, they will then demand skilled workers, which in turn will induce more individuals to invest in their education and will attract skilled labor from other states.