3— Skills and the Economy: An Employer Context for Understanding the School-to-Work Transition

Robert Zemsky

Introduction

Today, two linked propositions frame many of the policies and much of the analyses focusing on the school-to-work transition: young workers need to possess more of the skills employers seek; and, if employers would only inform educators of the specific nature of those skills, schools could provide the requisite training and education. The role of public policy thus becomes one of convincing schools to listen to employers to negotiate with them, really—and to persuade employers that the resulting improvement in young people's job readiness would be worth the additional taxes (Reich, 1991; National Center on Education and the Economy, 1990).

Over the last five years the work of my colleagues and I at the National Center on the Educational Quality of the Workforce (EQW) has persuaded us that this scenario—for all its symmetry and appeal to the ideal of a better-educated work force—does not correspond to the conditions we found as we worked with and surveyed employers on issues regarding the school-to-work transition. Much of the experience with school-business partnerships, for example, testifies to just how difficult it is for employers to articulate what skills they will require in the future, much less for schools to see employers as customers (Miller, 1988, 1991; McDermott, 1989; Rachlin and Shapiro, 1989; Spring, 1987). And most of the statistical evidence suggests that what today's young workers face is job rationing and declining real wages either because there are insufficient opportunities to absorb the skills they bring with them to the labor market or because employers do not want to hire them.1

1  

The most successful presenters of this argument have been Robert Reich (1991) and the authors of America's Choice: High Skills or Low Wages (National Center on Education and the Economy, 1990).



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--> 3— Skills and the Economy: An Employer Context for Understanding the School-to-Work Transition Robert Zemsky Introduction Today, two linked propositions frame many of the policies and much of the analyses focusing on the school-to-work transition: young workers need to possess more of the skills employers seek; and, if employers would only inform educators of the specific nature of those skills, schools could provide the requisite training and education. The role of public policy thus becomes one of convincing schools to listen to employers to negotiate with them, really—and to persuade employers that the resulting improvement in young people's job readiness would be worth the additional taxes (Reich, 1991; National Center on Education and the Economy, 1990). Over the last five years the work of my colleagues and I at the National Center on the Educational Quality of the Workforce (EQW) has persuaded us that this scenario—for all its symmetry and appeal to the ideal of a better-educated work force—does not correspond to the conditions we found as we worked with and surveyed employers on issues regarding the school-to-work transition. Much of the experience with school-business partnerships, for example, testifies to just how difficult it is for employers to articulate what skills they will require in the future, much less for schools to see employers as customers (Miller, 1988, 1991; McDermott, 1989; Rachlin and Shapiro, 1989; Spring, 1987). And most of the statistical evidence suggests that what today's young workers face is job rationing and declining real wages either because there are insufficient opportunities to absorb the skills they bring with them to the labor market or because employers do not want to hire them.1 1   The most successful presenters of this argument have been Robert Reich (1991) and the authors of America's Choice: High Skills or Low Wages (National Center on Education and the Economy, 1990).

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--> The principal advantage enjoyed by young workers today is that there are fewer of them. At the beginning of the 1980s, there were more than 27 million young people aged 16 to 26 who were not enrolled in school and who either had or were seeking full-time employment. Ten years later that same youth cohort (16 to 26) numbered just 22 million. With fewer young people competing for jobs, their participation in the labor force actually increased slightly, from 69 percent in 1981 to 70 percent in 1991, while the proportion of those working full time increased from 75 to 79 percent over the same decade. (The discussion of youth labor market characteristics presented in this and succeeding paragraphs is drawn from an analysis of the Current Population Survey contained in Making Good Jobs for Young People a National Priority, a publication of the National Advisory Board of the National Center on the Educational Quality of the Workforce, 1995a). Offsetting this slight increase in employment, however, are three significant losses that substantially disadvantage this and succeeding generations of young people. In 1981, 19 percent of young workers in the United States were employed in full-time jobs in the manufacturing sector. Ten years later only 15 percent of youth worked full time in the same sector—a net loss of 1.65 million manufacturing jobs for young workers. At the same time, the proportion of full-time manufacturing jobs held by workers aged 16 to 26 fell from 23 percent in 1981 to 16 percent in 1991. Changes in the armed services tell much the same story. In 1987 the armed services enlisted almost 300,000 new recruits—for the most part, young people with high school degrees but little subsequent postsecondary education. By 1993, these annual accessions to the military had been reduced by one-third, which meant 100,000 fewer recruits each year. The number is expected to drop even further as the military continues to downsize. What will be lost by the end of the decade are almost 1 million good jobs for young people: jobs with good pay, excellent benefits, opportunities to acquire technical skills, and further educational benefits after service (Barley, 1994; Laurence, 1994). Not surprisingly, this decline in good jobs for young people has been accompanied by a general and persistent decline in the wages paid to them. Compared with their counterparts of a decade ago, young workers in the United States are more likely to have jobs for which they are paid less. When education, gender, race or ethnicity, and industry of employment are taken into account, young workers today earn, on average, more than 10 percent less in constant dollars than their counterparts a decade ago. For disadvantaged youth and those without high school credentials, the decline has been even more dramatic. The strategy of schools' negotiating with employers to yield more work-relevant courses of study, resulting in the production of more work-ready young graduates, has proven to be difficult to implement. It is the dream of every school reformer committed to devising more work-relevant and/or work-based curricula to sit across the table from a group of employers who are ready and willing to tell

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--> the schools what they need. Much of the initial logic behind the current concern with the school-to-work transition derives from this promise: "If only concerned employers will tell us what they need, we can make sure that our schools deliver." Skeptics have suggested that schools do not work that way that they are not customer centered, that they are more likely to draw on their own sense of what constitutes a good education than to ask what businesses need. Even more difficult, however, would be getting employers to the table, in part because they have given up on schools and in part because most employers do not know how to answer the question of what skills will they need in the future (Bailey, 1993; Doolittle and Ivry, 1993; Kazis, 1993b; Levy and Murnane, 1993; Osterman and Iannozzi, 1993; Stern, 1993). The idea of a negotiated compact between schools and employers has its roots in the school reform movement of the late 1970s and early 1980s. Reformers wanted schools to gain a better sense of their customers and wanted those customers to help spur the reform movement itself. Initially, it was an idea that was pitched almost exclusively to the nation's major employers, those with sufficient corporate clout to make schools pay attention. Most major cities developed business-school partnerships of one form or another, each designed to enable schools and teachers to gain a better understanding of what the business community needed and for what it was willing to pay.2 In practice, however, many of the business men and women brought to the table by these partnerships had little firsthand knowledge of the skills their enterprises needed and whether, in fact, their businesses were having trouble finding qualified young workers. Most of the business seats at the "bargaining table" 2   The causes underlying the declining fortunes of young workers are now the subject of a lively debate in the United States. On one side are those who argue that the problem lies with the preparation of young people for work—with their schooling and their antipathy to the discipline of work itself. These scholars and commentators would increase opportunities for young people largely through an aggressive agenda of school reform. Increase the skills and improve the attitudes young people bring with them to the labor market, they argue, and employment will follow. Within this agenda, probably the most radical proposal would have established a German-style apprenticeship system in the United States. Those of us who hold the alternative view argue that—whatever the problems inherent in the skills and attitudes of young people—the larger problem is one of demand, not supply. As the American economy has undergone restructuring and its firms have reengineered their enterprises, employers have learned to thrive with fewer of the kind of entry-level positions historically filled by young workers. The debate has, on occasion, become confounded with a more technical discussion of a secular shift in labor demand. The general consensus is that those with more skills have found it easier to find jobs paying higher wages than those with fewer skills. I have no quarrel with this consensus, except to note, as the text indicates, that on average all young people have lost ground in the pursuit of higher wages—those who have more skills have lost less ground than those who have fewer skills. This is also the point Sam Stringfield makes in a provocative analysis of schooling programs that enhance skills (Stringfield, 1995). For other research that parallels EQW's, see Mishel and Teixeira (1991).

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--> were occupied by chief executive officers, business's "first citizens" long since removed from the hurly-burly of meeting production schedules and hiring and training new workers. Their notions of education were more general than specific, more likely to stress broad academic competencies than narrow technical skills. What the schools derived from these partnerships was not information but help—help in setting higher standards for graduation, in taking on the tough tasks of school restructuring, and in making the case for increased public support. The downsizing of corporate America has been accompanied by an understandable lessening of business interest in the process, if not the progress, of school reform. There is less concern over the supply of future workers; there are also fewer of the professional staff members in large corporations who once regularly contributed to the operation of business-school partnerships. Yet identifying where and when these partnerships have persisted is an instructive exercise. As a general category, the most active partnerships today are in the form of private industry councils, established as part of the Jobs Training Partnership Act. When they work, they do so because employers are seen as customers with immediate needs for workers who know how to find and keep a job (Filipczak, 1993; National Commission for Employment Policy, 1993; DiMase and Boyle, 1991; Ketcham, 1990). Private industry councils have learned the tough lesson that the skills most needed concern comportment and the capacity to sell oneself in a buyer's market. Though on a substantially smaller scale, business-school partnerships have also come to play an important role in the establishment of charter schools—educational institutions that are publicly funded but operate as quasi-independent schools responsible to a local board. Some of the most successful charter schools have been those driven by business-dominated boards assembled to make sure that the schools serve local employers as well as students. The board does not negotiate curricula on behalf of the business community, but rather insists that those responsible for the curricula are "out in the community" learning what employers want—that is, performing the kind of market research on which most successful enterprises depend (Lynn and Wills, 1994; Bailey and Merrit, 1993; Finegold, 1993; Hamilton and Hamilton, 1993; Kazis, 1993a; William T. Grant Foundation, 1992; Glennan, 1991; Barton, 1990; Carnevale et al., 1990; Education Writers Association, 1990; Glover, 1983). It is important to note, however, that charter schools are the exception and not the rule. The reality that faces most young people, as well as most schools, is increasingly uncertain. The time between the conclusion of schooling and the securing of a permanent job is getting longer. The link between formal schooling and settled work is becoming more tenuous, while the possession of postsecondary credentials is becoming more essential.3 3   In their analysis of job churning, Diebold et al. (1994) concluded that jobs in the 1990s were neither more nor less stable than during earlier decades—except for young workers, who experienced increased churning.

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--> What schools are now discovering is that somehow they have come to matter less in the nation's economic calculus. They are more badgered than supported and are more likely to be blamed for what has gone wrong than to be assisted in implementing what might make it right. They are told that the students they graduate have not mastered basic problem-solving competencies, that too often they know little or nothing about the world of work, and that all too often they appear, particularly to would-be employers, as undisciplined and disinterested in work itself (Zemsky, 1994). Schools know they are being discounted, disconnected, and finally dismissed by more and more employers.4 What they sense, as well, is that the link between education and the nation's productivity is itself at risk, to the detriment of both school and community (Shanker, 1995). The EQW National Employer Survey In the spring of 1995 the EQW reported the results of the first analysis of the its National Employer Survey—findings that documented just how much employers discounted information about a job applicant's schooling when making hiring decisions. The survey was designed by EQW, a joint venture of the University of Pennsylvania's Institute for Research on Higher Education and the Wharton School. This first nationally representative survey to test the link between employers and schools queried the managers and owners of just over 4,000 establishments employing 20 workers or more about their employment, training, and hiring practices. To capture the underlying factors that yield increases in productivity, respondents were also asked about the basic nature of their businesses: annual sales, principal products and services, investments in new equipment and new facilities, costs of materials used in production, and the average wages and levels of education of their workers (Lynch and Black, 1996a, 1996b; National Center on the Educational Quality of the Workforce, 1996).5 The EQW survey represents the culmination of 5 years of research that asked one of the basic questions motivating the National Research Council Board on 4   EQW has received a great deal of correspondence from teachers, school administrators, and education officials expressing the difficulties in establishing successful links between education and the workplace. Two such letters stand out, sent by Alex May, technology supervisor for the Millville Public Schools in Millville, NJ, and by Edward Roeber, director of Student Assessment Programs for the Council of Chief State School Officers. EQW has also received correspondence from employers engaged in implementation of state and local school-to-work initiatives; one such employer is C. Arnold Decker, executive vice-president of the Sumter Cabinet Company in South Carolina, who has sought advice on facilitating partnerships with local schools. These three letters were received in response to EQW's policy statement, On Connecting School and Work (National Advisory Board of the National Center on the Educational Quality of the Workforce, 1995b), which discusses the discounting of schools by employers referenced here. 5   These and related EQW materials are available free of charge from the National Center on the Educational Quality of the Workforce (EQW, University of Pennsylvania, 4200 Pine St., 5A, Philadelphia, PA 19104-4090; 1-800-437-9799; e-mail; eqw-requests@irhe.upenn.edu).

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--> Testing and Assessment's interest in the school-to-work transition: What is it that employers want? In designing the research agenda, EQW assumed that the term ''labor market" was more than a convenient metaphor wrapped in economic jargon—that there were in fact buyers and sellers in the form of employers, on the one hand, and schools and their graduates on the other. Having conceived of the school-to-work transition as the sum of a set of employee-seeking and job-finding transactions, we at EQW saw our task as essentially one of market research that could tell us what the employer/consumer was looking for and what schools as suppliers might best do with that information. In other words, we wanted to identify how schools might change what they do in order to make employers more informed—and, in that sense, more reliable customers. Our focus was on the establishment rather than the firm because that is where most decisions to hire new workers occur. We wanted to know how hiring decisions were made, what type of information proved to be helpful, what skills as well as credentials employers considered to be important, and what kinds of training they provided for their employees. We wanted to know whether the most productive establishments within any given industry either hired or trained their workers differently than less productive competitors. Finally, to construct the necessary survey instruments and interview protocols, we wanted to know something about the attitudes employers had toward youth employment and the school-to-work transition. Our answers to these questions came in three basic bundles. How Employers Talk We began our investigation with focus groups of employers in seven cities across the United States: Portland and Eugene, Oregon; Phoenix, Arizona; Indianapolis, Indiana; Cleveland, Ohio; Atlanta, Georgia; and Ithaca, New York. Whenever possible, we conducted two sessions per city—one drawing together human resource professionals from larger firms and the other consisting of small-business owners. The discussions themselves were remarkably similar across the focus groups, and the problem on which each focus group stumbled was the same: employers acknowledged that they ought to, but simply did not, see themselves as benefiting from their community's investments in work-related education (Zemsky, 1994). The most discouraging discussions occurred when we asked about the employability of young people. In part, employers' laments incorporated the perennial concerns of older people about a generation that must inevitably replace them: young people lack discipline; they expect to be catered to; they don't want to do the dirty jobs; they don't respect authority. To these more or less traditional concerns were added worries about the quality of educational attainment: young people lack communication skills; they are neither numerate nor literate; they can't make change; they don't understand the importance of providing customer service (Zemsky, 1994).

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--> These complaints were more than a fashionable echoing of the media's current fascination with educational deficiencies. Almost everyone had a story to tell—dealing with honors students who couldn't spell; sifting through hundreds of job applications and résumés in search of potential candidates capable of making a reasonably neat and complete presentation of their skills and aptitudes; firing one young worker after another who did not measure up on the job. The owner of one fast-food franchise reported that the average tenure of a first-time young worker was less than 2 weeks; often the owner would make up to eight hires before finding a new worker who could last longer. This sense of "trial-and-error" hiring, rather than the successful screening of job applicants based on educational attainment, came to dominate the discussions. Most employers no longer expected high schools to supply their future workers. With the exception of fast-food franchises, businesses were finding the most likely pool of youth labor not among high school students but among college students, even college graduates. Put off by the young and saddened by their local high schools but without any interest in changing them, most employers with whom we talked had simply shifted their attention to the next age cohort, focusing on those in their mid-twenties or older. Given the surplus of younger people looking for work, employers had little trouble finding "older" young employees, frequently with 2 or more years of college. These individuals were depicted as the survivors—those with sufficient discipline, experience, skills, and motivation to be worth hiring. Establishing A Baseline The EQW National Employer Survey documented what the focus groups reported. The survey was designed by Lisa Lynch, who is currently chief economist with the U.S. Department of Labor, in collaboration with EQW co-directors Peter Cappelli and Robert Zemsky. It was administered by the U.S. Bureau of the Census as a telephone survey in the late summer and early fall of 1994. The survey's sampling frame was the Census Bureau's Standard Statistical Establishment List, one of the most comprehensive and up-to-date listings of establishments in the United States. The EQW National Employer Survey oversampled establishments in the manufacturing sector and those with more than 100 employees. Public-sector employers, not-for-profit institutions, and corporate headquarters were excluded from the sample. The survey also excluded establishments with less than 20 employees, largely because of the difficulties inherent in drawing a reliable sample of small establishments. While these employers represent 85 percent of all establishments, they employ less than 25 percent of all workers (Lynch and Black, 1996a). In all, 4,633 eligible establishments were contacted, of which 3,358 agreed to participate—a 72.5 percent response rate. Most refusals stemmed from the employer's reluctance to participate in a voluntary survey and to spend the requisite

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--> amount of time. There was no significant pattern to the refusals, except for manufacturing establishments with more than 1,000 employees. The target respondent in manufacturing establishments was the plant manager and in nonmanufacturing establishments the local site manager. Multiple respondents were allowed for each establishment, typically because the interviewer was told that information such as annual sales or investments in physical capital could be better obtained from another manager or office within the same establishment. Just over 12 percent of the surveys were not included in the analysis, principally because the Census Bureau was not able to complete the interviews prior to October 1, the cutoff date designated in the survey design. The completed survey rate was thus 64 percent, and the survey results reported below are based on weighted results drawn from the complete responses. It was intended that the EQW survey would provide a baseline for comparing employer attitudes, their estimation of employees' skills and proficiencies, investments in both formal and informal employee training, the type of information for which they looked when hiring new employees, and the collective as well as individual contributions that these characteristics appeared to make to an establishment's productivity. What we sought was a reality check—a counter-balance to the anecdotes that have become the almost exclusive source for estimates of how and when employers invest in the skills of their employees, the kinds of skills that will be required in the future, and the extent to which employers are likely to rely on schools to supply those skills. We begin by noting that the restructuring of the American economy has not led to a deskilling of work. Quite the contrary, as Table 3-1 shows, only 5 percent of the establishments reported any reduction in the skill requirements of their jobs, while 56 percent reported increased skill requirements. Employers' assessment of employee proficiency was more mixed. On average, establishments reported that just over 80 percent of their workers were fully proficient in their current jobs. That means that one out of every five workers was judged as being not fully proficient (see Table 3-2). Despite the richness of the data supplied by the EQW National Employer Survey, we were unable to construct a satisfactory model for identifying those attributes that either contributed to or subtracted TABLE 3-1 Percentage of Establishments That Have Increased, Decreased, or Not Changed Their Skill Requirements Change in Skill Requirements % Establishments Increased 57 Decreased 5 Remained the same 39 NOTE: Data derived from Question 14 on the EQW National Employer Survey: "In the last three years, have the skills required to perform production or support jobs (primary or frontline services or support jobs) at an acceptable level increased, decreased, or remained the same in your establishment?"

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--> TABLE 3-2 Percentage of Employees Proficient at Their Jobs Proficient Employeesa % Establishments 8 75% 32 > 75% and < 85% 21 > 85% and < 95% 27 > 95% 19 a Mean employee proficiency across establishments = 80% NOTE: Data derived from Question 37 on the EQW National Employer Survey: "What percentage of your workers would you regard as being fully proficient at their current jobs? from employer-supplied estimates of worker proficiency. We suspect that part of the answer lies in the high rates of turnover during the first year of employment reported by some firms. Another part of the answer may lie in the fact that the skill requirements for many current jobs are actually increasing—that workers were being required to "catch up" by acquiring new skills. The EQW survey provides two additional benchmarks for gauging employers' current estimates of the skills and capacities of their employees. Almost universally, employers reported that they invested in employee training—informally through on-the-job training or its equivalent (97 percent) and formally through structured training programs (81 percent). As expected, large establishments were more likely to provide formal training than smaller ones, but even then, three out of four of the smallest establishments (20 to 49 employees) reported that they provided some formal training (see Table 3-3). At the same time, there is little evidence that establishments were finding it necessary to make significant investments in either remedial or basic education—that employers either were having to fix what schools had gotten wrong or had to spend time or money bringing employees up to minimum skill standards (see Table 3-4). Indeed, we interpret the substantial investment that establishments were making in employee training to mean these employers had confidence in both the skills and the trainability of their work force. The general conclusions drawn from the EQW National Employer Survey were that work and the organization of work are becoming more complex, that most establishments report their jobs require increased skills, and that most employers are investing in the skills of their workers partly to make them proficient in their current jobs but not to provide remedial training or education. Education's Contribution To Establishment Productivity Another way to ask the "skills question" is to determine to what extent, if any, education contributes to establishment productivity. Here, I draw directly on the work of Lynch and Black (1996a), who used data from the EQW National

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--> TABLE 3-3 Establishments Offering Formal and Informal Training by Establishment Size No. of Employees % Firms Providing Formal Training % Firms Providing Informal Training All 81 97 20 to 49 75 96 50 to 99 82 99 100 to 249 90 98 250 to 999 90 99 More than 1,000 99 98 NOTE: Information on formal training derived from Question 18 of the EQW National Employer Survey: "Does your establishment pay for or provide any structured or formal training either on the job (by supervisors or outside contractors) or at a school or technical institute?" Information on informal training derived from Questions 19 and 32b of the EQW National Employer Survey. Question 19 (for establishments that do not provide formal training) is "Unstructured or informal training includes situations in which employees learn by observing others doing a job in an informal one-on-one situation. Does your establishment provide informal (in-plant) instruction by supervisors or coworkers?" Question 32b (for establishments that provide formal training) is "Unstructured or informal training includes situations in which employees learn by observing others doing the job or are shown how to do a job in an informal one-on-one situation. In addition to your formal training program, does your establishment provide informal (in-plant) instruction by supervisors and coworkers?" Employer Survey to estimate a standard Cobb Douglas production function. The output variable takes as its proxy the log of sales for calendar year 1993. The input variables/proxies are the 1993 book value of the capital stock; the total cost of goods and services used in the production of 1993 sales, including energy; total labor hours for 1993; and the average educational level of workers. The results of this unrestricted Cobb Douglas production function are reported separately for manufacturing and nonmanufacturing establishments in columns 1 and 3 of Table 3-5 (Lynch and Black, 1996a). TABLE 3-4 Relative Ranking of Amount of Time Establishments Spend on Various Types of Training Type of Training Ranka Training on the safe use of equipment and tools 1.7 Improving teamwork or problem-solving skills 1.5 Training in sales and customer service 1.5 Training to use computers and other new equipment 1.4 Remedial skills in literacy and arithmetic 0.4 a 0 = none; 1 = little; 2 = some; 3 = most. NOTE: Data derived from Question 28 on the EQW National Employer Survey: "Regarding your nonmanagerial and nonsupervisory employees, how much of their time in formal training is spent performing activities in the following categories?"

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--> TABLE 3-5 Restricted and Unrestricted Cobb Douglas Production Function   Dependent Variables         Manufacturing   Nonmanufacturing   Explanatory Variables Log (S)a Log (S/hours*ED)b Log (S) Log (S/hours*ED) Constant 0.341 1.06d -1.252 0.946d   (0.317) (7.335) (-0.659) (2.717) Log capital 0.25d — 0.36d —   (11.304)   (9.957)   Log (K/hours*ED)c — 0.25d — 0.35d     (11.311)   (9.959) Log materials 0.26d — 0.06d —   (11.812)   (2.958)   Log (materials/hours*ED) — 0.26d — 0.06d     (11.84)   (2.971) Log hours 0.47d — 0.628e —   (12.45)   (10.948)   Multiestablishment firm 0.13d 0.12d -0.05 -0.02   (2.257) (2.183) (-0.382) (-0.163) % Equipment < 1 year old -0.003 -0.003 0.005 0.005   (-1.331) (-1.288) (1.249) (1.327) % Equipment 1-4 years old 0.003d 0.003d -0.0003 -0.0004   (2.153) (2.178) (-0.155) (-0.181) Log average education 0.86d — 1.29e —   (2.028)   (1.793)   Log trained 1993 -0.12 -0.12 0.08 0.07   (-1.294) (-1.356) (0.39) (0.355) Log trained 1990 0.09 0.09 -0.11 -0.09   (0.994) (1.030) (-0.515) (-0.425) % workers < 1 year -0.003 -0.003e -0.008d -0.009d   (-1.61) (-1.692) (-2.692) (-2.875) Unionized -0.05 -0.06 0.35d 0.38d   (-0.793) (-0.952) (2.494) (2.722) Total quality management -0.02 -0.03 -0.01 -0.001   (-0.347) (-0.483) (-0.121) (-0.012) Benchmark 0.03 0.032 0.08 0.09   (0.539) (0.558) (0.621) (0.721) Above capacity 0.218d 0.21d 0.37e 0.36e   (2.114) (2.063) (1.816) (1.796) Below capacity -0.005 0.001 0.005 -0.009   (-0.10) (-0.011) (0.047) (-0.076) Export 0.10e 0.10e -0.05 -0.0   (1.845) (1.796) (-0.338) (-0.157) R & D -0.01 -0.01 -0.05 -0.04 Center (-0.200) (-0.133) (-0.334) (-0.265) Birth year of establishment 0.001 0.001 0.0004 0.0002   (1.26) (1.428) (0.164) (0.087)

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--> Sizing 0.0207 0.00471 19.3501 0.0001 0.284879 1.021 Computer use -0.00311 0.00285 1.1840 0.2765 -0.067406 0.997 Technical workers 0.00122 0.00712 0.0292 0.8644 0.013453 1.001 Clerical workers 0.00461 0.00816 0.3193 0.5720 0.046073 1.005 Frontline workers 0.00790 0.00569 1.9312 0.1646 0.137609 1.008 Change in skill requirements -0.0998 0.2003 0.2485 0.6181 -0.026322 0.905 Remedial skills training -0.1786 0.1328 1.8073 0.1788 -0.072714 0.836 New-hire orientation 0.5025 0.2431 4.2719 0.0387 0.113631 1.653 Tuition reimbursement -0.6155 0.2195 7.8629 0.0050 -0.165248 0.540 Education, technical -0.0460 0.0358 1.6476 0.1993 -0.074757 0.955 Education, frontline 0.00400 0.0503 0.0063 0.9366 0.004200 1.004 Education, clerical -0.0666 0.0689 0.9350 0.3336 -0.052236 0.936 Recruitment costs 0.0615 0.0165 13.9786 0.0002 0.238934 1.063 Internship programs 0.3043 0.2119 2.0628 0.1509 0.083635 1.356 Cooperative hiring -0.1232 0.2250 0.2997 0.5841 -0.029995 0.884 School screening -0.0596 0.0311 3.6684 0.0555 -0.113788 0.942 Job experience screening -0.0335 0.0424 0.6219 0.4303 -0.043169 0.967 Association of Predicted Probabilities and Observed Responses: Concordant = 77.1% Somers' D = 0.545 Discordant = 22.7% Gamma = 0.545 Tied = 0.2% Tau-a = 0.272 (108,800 pairs) c = 0.772

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--> and new-hire orientation in order to control for any effects on the outcome variable produced by these activities. Our interest was to examine whether using schooling criteria to screen potential employees is related to the employer's investment in substantive add-on training for new hires during their first year of employment—not training that initiates new employees, remedies deficits in basic skills, or reflects an employee's decision to continue his or her formal, school-based education. The logit model for the manufacturing sector indicates that establishments scoring high on the school-measures variable spend more on the training of new nonsupervisory workers (see Table 3-9). However, in the logistic model for the nonmanufacturing sector, the relationship between the school-measures index and training investment in new workers is positive but not significant. (See Table 3-10.) In addition, if the skill requirements to perform production and support jobs at an acceptable level have increased, these establishments also invest more in new-worker training. As in the manufacturing sector, establishments that offer more formal training on remedial skills and offer new-hire orientation also invest more in new-worker training. Taken in conjunction with earlier findings derived from the EQW National Employer Survey, the results of our analysis for the National School-to-Work Office suggest the existence of a kind of education and training nexus. That is, by and large it is the same set of establishments that use school measures to screen job applicants, that invest in the initial training of new employees, that provide tuition benefits so employees can enroll in work-related courses outside the firm, that report increased skill requirements for their jobs, and that are more likely to have nonmanagers and nonsupervisors using computers. Making Sense Of The Jumble What these results also suggest is that schools and the skills they teach are important—that for some employers a reliance on schools to train and certify skilled workers creates a competitive advantage—but that most employers now seek skilled workers elsewhere. Two stories from our focus groups and interviews with employers bracket the issue. Not surprisingly, during these sessions, school systems in general and high schools in particular were subject to the same kind of battering that youth received. There were stories of high schools that could not or would not respond to employers, that did not know how to work with businesses, that were dismissive of students who did not want to go to college, that used their vocational programs as dumping grounds, and that misled their students by not stressing that holding on to a job was serious business. When hiring a young worker, most employers did not bother asking for a high school transcript, simply because they ''wouldn't believe what the school was telling us." After more than 20 minutes of this sustained bashing, the human resources manager of a middle-sized manufacturing concern called the conversation to a

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--> halt, observing: "I am not a great fan of our local high schools. But what I want in a new worker no high school can supply—a 26 year old with three previous employers." In interviews with employers we frequently ask: "Exactly what do you want schools and colleges to produce? What are the critical skills you want them to have?" For the most part these are questions that employers cannot answer, queries that somehow seem wholly disconnected from the reality of running a business and hiring a work force. We are met with either a kind of embarrassed silence or a short awkward speech about the importance of standards as well as skills. However, one manager of a service bureau in which most workers were required to master computerized systems knew what he was looking for: someone who could read a manual and get started; someone who would not bluff, who would not be afraid to ask a question when he or she should; and, finally, someone with sufficient communication skills and respect for his or her elders to be able to go down the hall "and ask old John how it's done." What these anecdotes and data from the EQW National Employer Survey suggest is that the skills most employers want are the ability to complete tasks, to get the job done, and to be both self-motivated and trainable—in sum, to be a truly good learner. A minority of establishments still believe success in school certifies the presence of such skills. Most employers, not sharing this faith, would rather trust trial-and-error hiring of the young, reserving their best jobs for those who have successfully held a series of positions. School credentials are not important, but evidence that an applicant has successfully acquired job survival skills is. When the members of EQW's National Advisory Board—all of whom have been chief executive officers of large enterprises—reviewed the evidence presented here, they recalled an earlier EQW study conducted by Joan Wills of the Institute for Educational Leadership and Irene Lynn of the U.S. Department of Labor (Lynn and Wills, 1994). Their study included a survey of firms that participated in work-based learning programs, such as apprenticeships and internships. Among employers participating in these programs there was a well-spring of support for both the initiatives and the quality of the young workers they attracted. Most participating firms found their students to be productive and contributing employees. Although they often echoed the complaints of other employers about the high schools with which they worked—citing that too often the participating schools were not sufficiently organized or did not attach high priority to the program—a clear majority of employers also reported that they would take additional students later and would recommend the programs to other small-business owners. Such internships—whether for pay or credit—bring students into the world of work and into the kinds of plants, offices, stores, and service agencies where they are likely to spend their working lives. Internships have the added advantage of creating an informal effective communication channel through which

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--> TABLE 3-9 Logistic Analysis Predicting Whether an Establishment Spends More Than the Median on Training New Nonsupervisory Workers Relative to Total Labor Costs for the Manufacturing Sector Variable Parameter Estimate Standard Error Wald Chi Square Pr > Chi Square Standardized Estimate Odds Ratio Intercept -3.7098 1.4975 6.1374 0.0132 . . 20 to 49 employees 0.1978 0.3456 0.3277 0.5670 0.038095 1.219 50 to 99 employees 0.4063 0.2957 1.8877 0.1695 0.085646 1.501 100 to 249 employees 0.2478 0.2730 0.8239 0.3640 0.052102 1.281 250 to 1,000 employees 0.1358 0.2200 0.3812 0.5370 0.034702 1.145 Multiestablishment 0.3367 0.1791 3.5345 0.0601 0.088488 1.400 Textile/apparel -0.8948 0.3748 5.6998 0.0170 -0.139153 0.409 Lumber/paper -0.5958 0.3451 2.9808 0.0843 -0.106474 0.551 Printing/publishing -0.6487 0.3746 2.9986 0.0833 -0.106641 0.523 Chemicals/petroleum -0.5500 0.3933 1.9559 0.1620 -0.083470 0.577 Primary metals -0.6686 0.3539 3.5691 0.0589 -0.115396 0.512 Fabricated metals -0.9934 0.3658 7.3751 0.0066 -0.165810 0.370 Machinery/electrical -0.7835 0.3583 4.7818 0.0288 -0.136437 0.457 Transportation equipment -0.8531 0.3813 5.0058 0.0253 -0.129461 0.426 Miscellaneous manufacturing -0.7927 0.3447 5.2875 0.0215 -0.142828 0.453 Sizing -0.00036 0.00216 0.0284 0.8661 -0.008284 1.000 Computer use 0.00597 0.00281 4.5171 0.0336 0.100600 1.006

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--> Technical workers 0.0109 0.0116 0.8816 0.3478 0.060148 1.011 Clerical workers 0.00799 0.0110 0.5305 0.4664 0.050078 1.008 Frontline workers 0.0153 0.00745 4.2098 0.0402 0.177468 1.015 Change in skill requirements 0.0455 0.1754 0.0673 0.7953 0.012185 1.047 Remedial skills training 0.3292 0.1010 10.6160 0.0011 0.144788 1.390 New-hire orientation 0.9433 0.2347 16.1567 0.0001 0.204661 2.568 Tuition reimbursement 0.7016 0.2235 9.8562 0.0017 0.160894 2.017 Education, technical 0.0309 0.0349 0.7875 0.3749 0.045744 1.031 Education, frontline -0.0533 0.0929 0.3284 0.5666 -0.026183 0.948 Education, clerical 0.0437 0.0650 0.4526 0.5011 0.029685 1.045 Employed < 1 year 0.00298 0.00658 0.2055 0.6503 0.021926 1.003 Recruitment costs 0.0942 0.0229 16.9471 0.0001 0.255527 1.099 Internship programs -0.3051 0.1822 2.8033 0.0941 -0.084080 0.737 Cooperative hiring 0.4340 0.1823 5.6667 0.0173 0.101989 1.543 School screening 0.0714 0.0258 7.6277 0.0057 0.135674 1.074 Job experience screening -0.0358 0.0360 0.9867 0.3205 -0.044199 0.965 Association of Predicted Probabilities and Observed Responses: Concordant = 74.2% Somers' D = 0.487 Discordant = 25.5% Gamma = 0.488 Tied = 0.2% Tau-a = 0.243 (189,476 pairs) c = 0.744

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--> TABLE 3-10 Logistic Analysis Predicting Whether an Establishment Spends More Than the Median on Training New Nonsupervisory Workers Relative to Total Labor Costs for the Nonmanufacturing Sector Variable Parameter Estimate Standard Error Wald Chi Square Pr > Chi Square Standardized Estimate Odds Ratio Intercept -0.4188 1.3192 0.1008 0.7509 — — 20 to 49 employees 0.3741 0.3731 1.0052 0.3161 0.094301 1.454 50 to 99 employees 0.7644 0.3807 4.0310 0.0447 0.175903 2.148 100 to 249 employees 0.6063 0.3639 2.7765 0.0957 0.136044 1.834 250 to 1,000 employees 0.8106 0.3677 4.8599 0.0275 0.169062 2.249 Multiestablishment 0.1763 0.2127 0.6867 0.4073 0.046340 1.193 Construction -0.4781 0.4173 1.3122 0.2520 -0.089668 0.620 Transportation 0.5683 0.4480 1.6097 0.2045 0.090149 1.765 Communication 1.4174 0.5577 6.4586 0.0110 0.175257 4.127 Utilities 0.7605 0.4705 2.6123 0.1060 0.110002 2.139 Wholesale trade 0.3749 0.4237 0.7830 0.3762 0.069975 1.455 Retail trade 0.00211 0.4626 0.0000 0.9964 0.000345 1.002 Finance 1.4017 0.5146 7.4203 0.0064 0.204649 4.062 Insurance 0.9170 0.4929 3.4615 0.0628 0.131389 2.502 Hotels 0.5889 0.4436 1.7626 0.1843 0.098136 1.802 Business services 0.3444 0.4598 0.5609 0.4539 0.055028 1.411 Sizing 0.00302 0.00401 0.5685 0.4509 0.041544 1.003 Computer use 0.00168 0.00287 0.3426 0.5583 0.036435 1.002

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--> Clerical workers -0.0159 0.00837 3.6252 0.0569 -0.159249 0.984 Frontline workers -0.00575 0.00590 0.9504 0.3296 -0.100072 0.994 Change in skill requirements 0.3615 0.2012 3.2300 0.0723 0.095327 1.436 Remedial skills training 0.6998 0.1487 22.1425 0.0001 0.284943 2.013 New-hire orientation 1.1836 0.2613 20.5152 0.0001 0.267675 3.266 Tuition reimbursement 0.1638 0.2263 0.5238 0.4692 0.043962 1.178 Education, technical -0.0554 0.0376 2.1765 0.1401 -0.090042 0.946 Education, frontline -0.0796 0.0532 2.2336 0.1350 -0.083573 0.924 Education, clerical -0.00690 0.0702 0.0097 0.9217 -0.005412 0.993 Employed < 1 year 0.0130 0.00575 5.1294 0.0235 0.136349 1.013 Recruitment costs 0.0697 0.0202 11.9192 0.0006 0.270817 1.072 Internship programs -0.0260 0.2134 0.0148 0.9032 -0.007134 0.974 Cooperative hiring -0.0215 0.2247 0.0091 0.9239 -0.005226 0.979 School screening 0.0460 0.0317 2.0971 0.1476 0.087812 1.047 Job experience screening -0.0916 0.0437 4.3926 0.0361 -0.118112 0.912 Association of Predicted Probabilities and Observed Responses: Concordant = 80.1% Somers' D = 0.603 Discordant = 19.8% Gamma = 0.604 Tied = 0.1% Tau-a = 0.301 (108,500 pairs) c = 0.801

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--> employers learn about schools and their students and through which schools learn about the needs and practices of employers. Adopting the employer's perspective, I would refocus the Board on Testing and Assessment's interest in "The Knowledge Gap: Rhetoric vs. Evidence" (the title of a session at the board's March 1996 conference where this paper was first presented). I would expect the research community to certify that skills matter, principally by citing both the growing gap in wages between educated and uneducated workers and the contribution that years of schooling make to establishment productivity. I would then call attention to a different kind of "knowledge gap," the one that too often leads schools to claim that they "know best" and employers to discount what schools can in fact supply. The conclusion that the EQW National Advisory Board reached was that, more important than further research on the functioning of the youth labor market, there is a need for increased contact between schools and employers—the kind of contact that only effective internship programs can supply. What employers need to know is which schools are the best suppliers of good workers. What schools need to know is what kinds of experiences their graduates are having in the workplace. In moving regularly between school and work, successful interns provide practical answers to both sets of questions. What is envisioned is not so much a formal finding about whether or not a skills gap exists but rather a mechanism—a feedback loop, really—that allows both schools and employers to adjust continuously to the changing demand for skills in an increasingly complex and competitive economic environment. Acknowledgments As is so often the case, I owe a special debt to Maria Iannozzi and my colleagues at the National Center on the Educational Quality of the Workforce. The particular focus of the center's research on the school-to-work transition owes much to the energy, persistence, and insight of Nevzer Stacey. The work reported here was supported by the Educational Research and Development Center program, under agreement number R117Q00011-91, CFDA 84.117Q, as administered by the Office of Educational Research and Improvement, U.S. Department of Education. The findings and opinions expressed here do not necessarily reflect the position or policies of the Office of Educational Research and Improvement or the U.S. Department of Education.

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--> References Bailey, Thomas 1993 The School-to-Work Transition Process. Unpublished paper presented at the Youth Employment Policy Seminar, March 3-4. (For a summary, see pp. 14-16 in Paul Osterman and Maria Iannozzi, Youth Apprenticeships and School-to-Work Transition: Current Knowledge and Legislative Strategy, EQW Working Paper WP14, National Center on the Educational Quality of the Workforce, Philadelphia, PA.) Bailey, Thomas, and Donna Merrit 1993 The School-to-Work Transition and Youth Apprenticeship: Lessons from the U.S. Experience. New York: Manpower Demonstration Research Corp. Barley, Stephen 1994 Will Military Reductions Create Shortages of Trained Personnel and Harm the Career Prospects of American Youth? EQW Working Paper WP26. Philadelphia: National Center on the Educational Quality of the Workforce. Barton, Paul 1990 Skills Employers Need—Time to Measure Them? Policy information proposal. Princeton, NJ: Policy Information Center, Educational Testing Service . Carnevale, Anthony, Leila Gainer, and Ann Meltzer 1990 Workplace Basics: The Essential Skills Employers Want. San Francisco: Jossey-Bass. Diebold, Francis, David Neumark, and Daniel Polsky 1994 Job Stability in the United States. EQW Working Paper WP30. Philadelphia: National Center on the Educational Quality of the Workforce. DiMase, Richard, and Elizabeth Boyle 1991 Eastland invests in untapped resources. Personnel Journal 70(4):53-54. Doolittle, Fred, and Robert Ivry 1993 Programs for Out-of-School and Disadvantaged Youth. Unpublished paper presented at the Youth Employment Policy Seminar, March 3-4. (For a summary, see pp. 20-24 in Paul Osterman and Maria Iannozzi, Youth Apprenticeships and School-to-Work Transition: Current Knowledge and Legislative Strategy, EQW Working Paper WP14, National Center on the Educational Quality of the Workforce, Philadelphia, PA.) Education Writers Association 1990 Training for Work: What the U.S. Can Learn from Europe. Washington, DC: Education Writers Association. Filipczak, Bob 1993 Bridging the gap between school and work. Training 30(12):44-47. Finegold, David 1993 Making Apprenticeships Work. RAND Corporation Issue Paper. Washington, DC: Institute on Education and Training. Glennan, Thomas, with Lin Lui 1991 Collaborating to Improve Work-Related Education: Preliminary Lessons from the Field. Working draft, RAND Corporation. Washington, DC: Office of Educational Research and Improvement, U.S. Department of Education. Glover, Robert 1983 Collaboration in apprentice programs: Experience with in-school apprenticeship. Pp. 141-149 in 1984 Yearbook. American Vocational Association, Alexandria, VA. Hamilton, Stephen, and Mary Agnes Hamilton 1993 Toward a Youth Apprenticeship System: A Progress Report from the Youth Apprenticeship Demonstration Project in Broome County, New York. Ithaca, NY: Cornell Youth and Work Program, Cornell University.

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--> Kazis, Richard 1993a Improving the Transition from School to Work in the United States. Washington, DC: American Youth Policy Forum, Competitiveness Policy Council, Jobs for the Future. 1993b School-Based Policies. Unpublished paper presented at the Youth Employment Policy Seminar, March 3-4. (For a summary see pp. 16-20 in Paul Osterman and Maria Iannozzi, Youth Apprenticeships and School-to-Work Transition: Current Knowledge and Legislative Strategy, EQW Working Paper WP14, National Center on the Educational Quality of the Workforce, Philadelphia.) Ketcham, Allen 1990 Entrepreneurial training for the disadvantaged. Training and Development Journal 44(11):61-63. Laurence, Janice 1994 The Military: Purveyor of Fine Skills and Comportment for a Few Good Men. EQW Working Paper WP25. Philadelphia: National Center on the Educational Quality of the Workforce. Levy, Frank, and Richard Murnane 1993 The Demand for Youth Labor. Unpublished paper presented at the Youth Employment Policy Seminar, March 3-4. (For a summary see pp. 11-13 in Paul Osterman and Maria Iannozzi, Youth Apprenticeships and School-to-Work Transition: Current Knowledge and Legislative Strategy, EQW Working Paper WP14, National Center on the Educational Quality of the Workforce, Philadelphia.) Lynch, Lisa, and Sandra Black 1996a Beyond the Incidence of Training: Evidence from a National Employer Survey. EQW Working Paper WP35. Philadelphia: National Center on the Educational Quality of the Workforce. 1996b Employer-Provided Training in the Manufacturing Sector: First Results from the United States. EQW Working Paper WP34. Philadelphia: National Center on the Educational Quality of the Workforce. Lynn, Irene, and Joan Wills 1994 School Lessons, Work Lessons: Recruiting and Sustaining Employer Involvement in School-to-Work Programs. EQW Working Paper WP28. Philadelphia: National Center on the Educational Quality of the Workforce. McDermott, Kevin 1989 U.S. business goes back to school. D&B Reports 37(3):26-29. Miller, William 1988 Employers wrestle with "dumb" kids. Industry Week 237(1):47-52. 1991 The education of business. Industry Week 240(17):20-26. Mishel, Lawrence, and Ruy A. Teixeira 1991 The Myth of the Coming Labor Shortage: Jobs, Skills, and Incomes of America's Workforce 2000. Washington, DC: Economic Policy Institute. National Advisory Board of the National Center on the Educational Quality of the Workforce 1995a Making Good Jobs for Young People a National Priority. EQW Policy Statement PS01. Philadelphia: National Center on the Educational Quality of the Workforce. 1995b On Connecting School and Work. EQW Policy Statement PS02. Philadelphia: National Center on the Educational Quality of the Workforce. 1996 Survey Instrument for the EQW National Employer Survey, Phase 1. EQW Databook DB03. Philadelphia: National Center on the Educational Quality of the Workforce. National Center on Education and the Economy, Commission on the Skills of the American Workforce 1990 America's Choice: High Skills or Low Wages! Rochester, NY: National Center on Education and the Economy.

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--> National Commission for Employment Policy 1993 Private Industry Councils: Examining Their Mission Under the Job Training Partnership Act. Washington, DC: National Commission for Employment Policy. Osterman, Paul, and Maria Iannozzi 1993 Youth Apprenticeships and School-to-Work Transition: Current Knowledge and Legislative Strategy. EQW Working Paper WP14. Philadelphia: National Center on the Educational Quality of the Workforce. Rachlin, Jill, and Joseph Shapiro 1989 No pass, no drive. U.S. News and World Report 106(June 5):49-51. Reich, Robert 1991 The Work of Nations: Preparing Ourselves for 21st-Century Capitalism . New York: Knopf. Shanker, Albert 1995 Where we stand: Linking school and work (paid advertisement, National Federation of Teachers). New York Times April 23:E9. Spring, William 1987 Youth unemployment and the transition from school to work: Programs in Boston, Frankfurt, and London. New England Economic Review (March/April):3-16. Stern, David 1993 The Gains from Working While in School. Unpublished paper presented at the Youth Employment Policy Seminar, March 3-4. (For a summary, see pp. 13-14 in Paul Osterman and Maria Iannozzi, Youth Apprenticeships and School-to-Work Transition: Current Knowledge and Legislative Strategy, EQW Working Paper WP14, National Center on the Educational Quality of the Workforce, Philadelphia.) Stringfield, Sam 1995 Attempting to enhance students' learning through innovative programs: The case for schools evolving into high reliability organizations. School Effectiveness and School Improvement 6(1):67-96. William T. Grant Foundation 1992 Youth Apprenticeship in America: Guidelines for Building an Effective System. Washington, DC: William T. Grant Foundation Commission on Work, Family, and Citizenship. Zemsky, Robert 1994 What Employers Want: Employer Perspectives on Youth, the Youth Labor Market, and Prospects for a National System of Youth Apprenticeships . EQW Working Paper WP22. Philadelphia: National Center on the Educational Quality of the Workforce. Zemsky, Robert, Daniel Shapiro, Barbara Gelhard, and Maria Iannozzi 1996 The Education and Training Nexus: Employers' Use of Academic Screens and the Provision of New-Hire Training. EQW Working Paper WP38. Philadelphia: National Center on the Educational Quality of the Workforce.