Bill Kerr: Community colleges have long served as engines of opportunity and workforce development. They provided affordable education and training to a diverse population. But their links to employers and their relevance as skill providers have diminished. Enrollment is down, and student job prospects are limited. And although job openings vastly outnumber job seekers, fewer businesses look to two-year institutions to fill the essential middle-skills positions. What will it take to strengthen the ties between community colleges and employers?

Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host, Bill Kerr. Today I have the pleasure of hosting my Managing the Future of Work Project co-chair and podcast co-host Joe Fuller. Joe is the lead author of The Partnership Imperative, our project’s most recent report on the state of the community college and its collaboration with employers. We’ll talk about the challenges this relationship is experiencing, its consequences, and how it can be improved. Welcome back to the podcast, Joe.

Joe Fuller: Bill, I’m delighted to be here and to be on the opposite side of the mic.

Kerr: Why don’t we begin with a little bit of historical background. What role have community colleges played in economic and workforce development?

Fuller: The community college system in the U.S. grew up really along two parallel paths. In the states that had fairly significant and well-developed higher-ed institutions in the ’60s and ’70s, community colleges tended to show up often as a way for students to become ready for four-year college work as inexpensive ways to add transferable—or what we call “articulatable”—credit hours into achieving a four-year degree. And those systems, which kind of conveniently fit with “blue states,” certainly coastal states, are now associated with a heavy commitment to what are called “general education programs.” The other track was states that tended to focus on a career- and technical-education programs. They are often states that in the ’50s and ’60s were agriculturally oriented. They tend to be historically southern states or states that had less well-developed, particularly non-state higher-educational institutions, very motivated to attract employment. And so the first community was more about continuing to fuel the story of the American dream of people going to four-year colleges and then being hired into workforce or going on to post-graduate education. Whereas the second track, the more [career and technical education] CTE track, was more oriented toward providing skilled workers, particularly workers with specific certifications or credentials, into what would be traditionally defined as middle-skills jobs.

Kerr: And so as we think about this relationship to employers and providing worker-ready students that are graduating, it sounds like the first group would not have been targeting that at all. Whereas the second group developed in a way that particularly made that possible?

Fuller: To a degree. Historically there’s been a friendly but still arm’s-length relationship between employers and post-secondary educators, except in communities where you have, effectively, the “company town” phenomenon. So if you are in a semi-rural or rural location, and there’s a longstanding major employer, that company would be integral to influencing all the not-for-profit institutions in that community—if you think of a classic company town like Columbus, Indiana, where Cummins engine company is located. And also there’d be a very natural correlation between the local community college, which is Vincennes, and that local employer. But when you got to suburban areas, major metros, even in those more CT-oriented programs, it tended to be more the community college creating people with credentials to enter the spot market for labor. And the better community colleges really focused on trying to keep track of what major local employers wanted. Laggards were less attentive to that, with the predictable results, in terms of the outcomes for their graduates.

Kerr: It sounds like the efficacy with which that connection is being made has been lagging over time. And do you have any particular root causes between the growing gap between employers and educators in this dimension?

Fuller: I think there are several. First of all, as community colleges matured—I should, of course, say this with caution, working in an institution of higher education—but they got a lot of the viruses associated with higher ed. So, whether it was tenured faculty or broader social missions, there was that. Also, over the last, really, 25 years, we think about the advent of the internet and web-based tools as throwing open opportunities for people to find work. And that’s absolutely the case. But it has also very much enabled employers to go out, not just to post opportunities, but to find specific candidates, through services like LinkedIn, to approach. And that has meant that the last 25 years has been pretty good for employers, in terms of deepening and diversifying the pools they can access to fill open jobs and fill skills gaps. And so I would say that, in a business sense, community colleges have pretty steadily lost relative market share. They’re not as central to providing skilled labor as they were 40 years ago. And that’s also, of course, accounted for by the advent of many more and often very effective for-profit educational models. The for-profits have a very negative reputation in the United States, because there were some real abusive models that were called out and dealt with pretty aggressively by the Obama administration. But over half of for-profit education models are highly successful and are correlated with really good outcomes. So the landscape for skills acquisition has gotten more crowded, more diverse, and as a consequence, community colleges, they haven’t faded from the scene, they’ve just got a lot of company.

Kerr: So you have a rich area that you want to go and explore, with the motive of helping to close some of these gaps. So tell us a little about the data. What was missing about the relationship between community colleges and employers? And as a research program, how did the team go about filling those gaps?

Fuller: Well, what we found in looking at the research is that there was quite a lot of research about community colleges and their mission and their evolution. And there’s some outstanding work done, particularly by Josh Weiner and his team at the Aspen Institute, identifying models of success in the community college system. Every other year they give a much sought-after award and recognition to exemplary community colleges. But as we’ve often found, Bill, in previous research in the project, there wasn’t research that really correlated the way employers evaluated community colleges and community colleges evaluated employers and how both thought about the reciprocal relationship. We found, regularly, in our initial interviewing to frame up our research documents that community colleges would describe their relationship with businesses in ways that didn’t really correlate to the way businesses answered the same questions. So everything, in terms of the frequency and the nature and the robustness of the engagement to data-sharing and providing support for curriculum development and for students, very different descriptions. So, of course, the community college system is very large in the United States. There are technically over 1,400 institutions called community colleges. About 100 of those are actually private institutions. And a number of them are very, very small institutions. So there’s slightly less than 1,000 scale, if you will, community colleges. And they’ve not been surveyed very effectively in the past, because it’s really challenging to get their attention. These are not institutions with lots of slack resources. So we were really blessed by entering into relationship with the American Association of Community Colleges, which is the big industry group. And with their help, we were able to get almost 350 completed large surveys from community college senior managers—chancellors, presidents, people like that. We then at the same time did a nationally valid survey of U.S. employers of different sizes, and we correlated those results. And true enough, we found that there are still a lot of disconnects—and disconnects that are quite damaging to the ability of both employers to get a renewed, reinvigorated stream of qualified workers and damaging to the outcomes of the students being served by a lot of community colleges. So I can’t say we were thrilled with the results, but we thought we were able to identify some opportunities for both parties and governments, more broadly, to revisit things and improve results.

Kerr: I want to dwell on the report’s findings in a minute here. But before we go there, I’d like you to ground a little bit, what’s the typical community college student-to-become-employee look like? What’s their demographics? Where are they in terms of school and work and life?

Fuller: Well, there are several different variables. Community college students are more likely to be students of color. They’re more likely to be Pell Grant recipients—Pell Grants being awards, grants from administered by the Department of Education for enrollees in higher ed that do not meet certain income thresholds. I think interestingly, Bill, the most important thing to understand about community college students is an absolute majority are working learners. So that has profound implications for their ability to stay in their program, for what classes they can take, because very often they are planning their curriculum around when their work is, does their work provide support for them in terms of tuition support, flexibility in working hours, or are they guessing what shift that they’re going to have next month. And on top of that, of course, we can infer that a working learner is under sufficient economic pressure that they don’t have the alternative of just being a full-time student. So that means that their income is likely critical to the financial well-being of their households. So like a lot of people of lesser means or lower income level, as we’ve heard many times through many different pieces of research, they don’t have a lot of slack in their lives—whether it’s the ability to get a broken-down car repaired or the ability to deal with a subtle childcare-giving or senior-caregiving requirement or the adversity associated with losing their job or losing shifts on their jobs. So their grip on the educational experience is a bit precarious. And understanding that, and understanding that these are not just recent high school graduates—community college is the major portal for immigrants with skills that cannot be mapped directly into the U.S. certification or licensure system to make that transition—you’ll see, for example, dentists coming from a country like Venezuela, which has a massive out-migration of people now because of economic and political turmoil there, going to community college to get to be dental X-ray techs or dental hygienists, even, because they cannot get re-certified and re-licensed in the United States as a dentist, but they can short-circuit to a decent job by going to their local community college. So it’s a very diverse population every sense the word—age, ethnicity, gender—but they are workers, and they disproportionately skew to lower end of the income spectrum. So often education is a way out of that band, but also that band is sticky, because it’s very hard to sustain yourself economically while advancing your education.

Kerr: Let’s stay with the student-use cases just a little bit longer. And you gave the example of the immigrant worker trying to credential skills that she may already have, to some degree. If I remove that one, and instead think about the low-income native that is in a job that she doesn’t want—she’s going for another job, or that’s why we see her in the education—is she typically looking to advance further in the same industry, move out of the industry to another location? How does that desire for different types of employment then play into what the community college is tasked to help with?

Fuller: It’s hard to make a generalization that would be durable. I would say that most people are looking to significantly advance their income. And, therefore, more often than not, they’re looking at a credential that would lead to a significant, a new and expanded set of opportunities they would be plausible applicants for, or what I’ll call a “jump shift” inside their internal employer. They’re currently working as a customer service rep in a retail bank branch. They’re taking web-based marketing courses in the hope of jump-shifting into a product management job that may pay materially more, have a different cadence of work, location of work, et cetera. There’s a big, of course, difference between a worker that’s doing that speculatively and a worker that’s doing that as part of a pathway program that’s being supported by their employer. And, of course, our previous research shows the criticality of employers, providing that type of pathway program in helping workers who aspire to improve their circumstances, to know what’s relevant curriculum offered by what relevant credential provider or workforce provider. And is the employer supporting that—beyond just job-owning it and encouraging people—but getting into support on working hours, on tuition, on the other things that greatly enhance the prospect of successful completion.

Kerr: Tell us some of the two or three key findings, surprises, the things that would pop out for you from the study.

Fuller: Well, I think there were several, and some were pretty non-intuitive. Community colleges were refreshingly objective about some of their shortcomings. They understand that there are things that employers would prefer, if not expect, that they are only marginally good at, that they have opportunities to improve on. So they understand, for example, that the frequency and the quality of their dialogue with employers is often lacking. They understand that they often don’t understand what the employers are actually looking for. They’re eager to partner with employers, but often one of the phenomena we see regularly in this ecosystem is that the participants—in this case, community colleges, employers—they speak only somewhat mutually comprehensible languages. They don’t understand each other’s incentives very well. There are very strong attributions about the interest and objectives and, therefore, the flexibility and the willingness to engage with the other parties. So we also found that community colleges can be often pretty frustrated with employers, that employers come to them late, needing something now, wanting the curriculum to be highly customized to their specific needs, not offering any kind of job guarantee, usually not offering any kind of support, in terms of investment in the relevant infrastructure, training, providing docents or teaching assistants to help the community colleges. There’s something broken in the system. So once you get over the initial, I think, sincere desire to have a better relationship, you find community colleges frustrated that businesses are really expecting them to be like a spot supplier and not a business partner. Businesses have a separate series of issues. I think the biggest one is the fact that they’re more or less satisfied with their current relationships. They’re not bubbling all over how great it is, but they’re saying, “Community college is important. They play a perfectly adequate role in my system for getting talent.” So that loss of relevant stature, I think, is apparent. They also, when you prod them, say that community colleges are insufficiently responsive, they’re skeptical about the ability of community college staff to provide state-of-the-art training, that they’re often behind, that they don’t know what what’s really called for. But let’s get to the root of it. Community college can’t create a customized program for 50 people one time. It needs 50 people a semester. Community college, if you go to a business and say, “Oughtn’t a community college be able to predict what you are going to need two years from now in terms of skills?” that hiring manager or CHR would burst out laughing. They barely know what their company’s going to need. So why is it they assume that a community college can suddenly become clairvoyant on such things? Why is it they assume that the community college has, particularly in times when the normal public support for community college from state legislators has been falling, that they’re going to be able to find half a million dollars to buy some specific hardware that’s needed to train people up for a manufacturing job or a healthcare job or outfit a lab to create lab technicians? Now the thing I do want to convey, which is a source of great hope, is that there are some exemplary institutions out there that have created, often through the diligence of the community college, an ecosystem of customers, business customers, who have got a virtuous cycle going. But you only get that virtuous cycle when you start talking about the realities of both parties’ situations. And that’s really lacking too often much of the time.

Kerr: On this podcast, we’ve earlier hosted people from the Golden Triangle region and the particular relationship between their businesses and East Mississippi Community College, which is a very productive relationship. So, Joe, do you think prescriptively, what should employers and educators do to improve the partnership going forward?

Fuller: The first is, there has to be a bigger investment in a sustained dialogue and getting around this mutual incomprehensibility problem. We have to get a shared set of terms, particularly as they relate to skills, and community colleges need to be encouraging employers—and employers, ideally, will be receptive—to doing more collaboration across enterprises. We think of educational pipelines as being between pretty big educational institutions and pretty big employers, but a lot of community colleges serve small and medium employers. And it’s really hard to process data from 75 companies asking for somewhat overlapping skill sets using different terms. And employers are going to hire in single digits, annually. But if you can pool that and get more shared definitions of what’s being sought, more commitment to programs that provide the employer with a 75 percent finished product, and you add the last 25 percent you need of this worker—I can’t take them to your dream worker, but I can get many of you, if you will, the batter or the dough to go ahead and bake the product that you need in your workplace. A second one is that, funnily enough, if you talk to employers about the way they approach their management of suppliers of talent, they use a completely different language system than they use when you discuss suppliers of other goods and services. The whole supply-chain management, total-quality management movement that has done so much to improve the efficiency of companies and the effectiveness of products has just never been brought home to this space. So committing to those educators that they’re a supplier—we’re going to have data exchange, we’re going to give you feedback, we’re going to work with you on what we anticipate we’re going to need in the future, we’re going to get out of this spot-market mentality—and have the community college understand that it’s going to take that type of sustained dialogue and a willingness to, yes, take some risks, but also a willingness to work both with your state Department of Education and with larger major employers to figure out how to fund and equip getting ready for the future. That could be a major step forward, which gets us to an element of that, which bears calling out, which is much more data sharing. We don’t understand at any level, for example, what percentage of students from a given institution that take a program end up employed in that field of study. We don’t understand what they make. We don’t understand, employers do not provide community college feedback on, “Here are the three or four things that your students, we needed to remediate their understanding of before they could be productive. Let’s talk about how to get that into your curriculum.” So more commitment to shared metrics, shared information, apply supply-chain management principles. And I’m going to add a third party to the discussion, which is the federal government. One of the challenges that community colleges face is that the only real liquidity in the system comes from the Higher Education Act—what’s called Title IV of the Higher Education Act—which defines what you can take out a student loan to do, what you can take out a Pell Grant to do. And those rules that govern those disbursements are very antiquated. They were designed, the original design was 1964. But as an illustration, the definition of online learning in the current bill that’s in place was written in 1998. You have to take a certain number of hours in the program, that more than half the content in the program has to be supplied by an accredited institution, which is an institution of higher ed. And since that determines what people can go and borrow money to do, make bets on their future, the fact that artificially truncates their choices largely precludes employer-supplied training, which is a very important in asset-intensive businesses—that it does not provide ready articulation of work-based learning into course credit for degree completion. Until we really revisit that, we are going to... we can make a lot of progress, but we’re not going to develop community colleges into the engine of skills development for the vast majority of Americans that will not get a four-year degree.

Kerr: Joe, what are some of the state and local policy implications of this research?

Fuller: The state support for higher education, which includes both four-year institutions and community colleges, has been falling pretty consistently over the last 10 to 15 years. And it’s easy to say, well, we’ve just got to change that. But I think what states have to do is change the pattern of spending. A lot of the spending has been for capital infrastructure, buildings, for four-year institutions; it has been to make them more desirous locations to attract enrollees, as the student body, the available accessible body of matriculating students, shrinks. And as we get more variation in international enrollment in U.S. institutions, I think states also need to be thinking about programs where they can be providing tuition support. It could be in the form of performance bonds, it could be in the form of even income-sharing agreements, which we’ve discussed on the podcast, for residents. How do you provide incentives for local employers to support training, whether that comes in the form of tax credits or other mechanisms. In localities, the two things that really are deserving of attention are, first of all, a much greater emphasis on what’s called “dual enrollment.” When someone is in a high school, unless you’re really precocious, you’ll be like a 10th, 11th, or 12th grader, where you are beginning to take college-level courses as part of getting your diploma. One of the things we see often is that good-performing students either can’t access the quality or the nature of curriculum they’re interested in their high school, or they are essentially just biding time until they can graduate and move on. But if you can get them—particularly in CTE-oriented, ideally, with a clear line of path to jobs that are available in the locale—earlier, the more likelihood to graduate from high school, the more likely to get some post-secondary degree, the more likely to make it easier to transition from education to employment. Similarly, we’re beginning to get green shoots of spring, more experimentation in work-based learning, compensated work-based learning for high schoolers with programs like CareerWise. We’ve had its Founder, Noel Ginsburg, on the podcast. More innovation by large companies in trying to create work-based learning opportunities. And some interesting conversations that even we are having with big, municipal school systems about trying to make either some type of work-based learning—legitimate work-based learning, not scooping ice cream, not going on factory tours, but sustained work-based learning—compensated and/or dual enrollment integral to the way they design their high school curriculums. We get a lot of 18-year-olds at the local level, we’ve given them an academic experience of varying quality, we hand them a diploma, we hope, and then we say, “Best of luck to you, God bless.” But we haven’t—very, very seldom—provided any insight in what are the best opportunities for them, given them early opportunities to test hypotheses they have about what they’re interested in, let alone actual education or exposure to the workplace that will make that transition much easier. And we have a huge amount of wasted resource and time and, therefore, young people getting themselves off to a poor start, simply because of the absence of that, made worse by the absence of data, by the absence of encouraging the employers to get engaged, by the resistance of a lot of K–12 institutions to doing anything other than to up the funding for the current model.

Kerr: This is a place where the U.S. and Europe and elsewhere differ substantially, in terms of the education workforce development system and their integration. Are there any places with particular reference to community colleges that you would point someone to and say, “We can learn a lot from what they’re doing.”

Fuller: Bill, I think there are some really good models, but one of the things that makes them effective is, they rely on some of the basic principles of the apprenticeship-type systems and work-based learning-type systems in Europe, but they’ve applied them in the American context. And you can see these points of light out there, with these exemplary community colleges, usually dependent on a very active, often booster-ish business-community, educators that have absolutely embraced the challenge that what they’re trying to do is get more of their students on a path to gainful, sustained good-paying employment, and states that are supporting that. So we can look at Wake Tech, for example, down in Raleigh, North Carolina. The Research Triangle—we used to call it in that area of North Carolina—has brought a lot of healthcare and life sciences technology there, lots of financial services activities there. And Wake is an exemplary school, in terms of its dialogue with employers, its ability to get to understandings with employers, where they make joint investments, lots of work-based learning opportunities for those students. And it’s across industries, it’s over time, it’s multiple campuses. Another great example would be Valencia Community College in Orlando, Florida. They have a great relationship with Disney, which figures as a large employer in Orlando. But a good example of the type of innovation they’re bringing is, they’re working with Disney to help their employees get supported through an educational experience with Valencia that leads them, equips them, to leave Disney to go to a better-paying job for a third party. Macomb Community College in the Detroit area; Northern Virginia in the Washington, D.C.–Arlington, Virginia, area; Mesa; there’s a whole cluster of community colleges in the Houston area, and unsurprisingly, one in Dallas, because, of course, those two cities are constantly at war with each other trying to one-up each other. But both of those two systems have deep relationships with local employers. And you see some of the schools I’ve mentioned, by the way, have won the “Aspen Prize” as innovators in this space. One of the things that was revealed in our work is that too many community colleges have a superficial thematic sense of what those exemplars do; but at the execution level, they’re lacking. So you’ll say to a community college, “Are you in touch with people who have formally hired on your campus?” And 100 percent of community colleges would say. “Yes.” When you ask, “What does that mean?” “Oh, we invite them to our annual banquet, or we send them an email, they’re on our email list.” Often, by the way, one thing community colleges complain about—not to a specific individual, not to the CEO or the plant manager or the CHRO, but to the generic company address. And employers similarly are like, “Oh yes, we talked to the community college.” That doesn’t mean they say, “Here are the job categories we think are going to grow non-linearly in the next three years, and here are the skills required. It means, “Oh, they call up, and we answer the phone.” So on both sides, we need a real commitment to stepping up one’s game. And through this research and some other things that are underway, we’re hoping to put out much more specific and graphic descriptions of what we’re talking about so that schools are not saying, “Gee, we need to engage employers more,” but, “Here are three or four specific and practical things we can do that bring about that desirable outcome.”

Kerr: Joe, you began the podcast by describing the two different types of community colleges that were originally developed—one focused on preparation for four-year programs, the other on worker training. And as you look ahead, and with all the changes that have happened in the world, all the alternative ways that employers are connecting with potential applicants, and so on and so forth, what do you see as the optimal balance ahead in terms of worker training versus the academic preparation side?

Fuller: I think we can say several things. That the nature of work and the requirements of work, particularly in technical and so-called “hard skills,” is changing at a rate that’s really hard for traditional educators to keep pace with. And, therefore, both sides need to accommodate, recognize that. I think we will move more to a work-based learning model, where people toggle between the classroom, a co-op model—some people would call it between the classroom and the workplace—help overcome that. I think also we have to acknowledge that both the cost of the classic American dream model of I’m going to finish high school, go to a four-year degree, and then start my career, get a postgraduate education. That is a model that describes the likely pathways of a significant but minority percentage of the population on the order of 20 percent over time. Even for four-year colleges, the average six-year completion rate is about in the high 50 percentiles. So it’s hard for kids even to get through four-year programs. That same completion rate for a standard two-year associate’s degree program, which you get in the community college, the two-year completion rate is around 30 percent. So these kind of set piece, go study, and go to work? It’s really hard to operationalize in this environment. But you can’t have innovation unless you have flexibility and you have liquidity. And that brings me back to the need to fundamentally revisit the financing options for all this. If it’s going to be a strictly regulated, retrospective federal pot of money is the only money is available, we will not respond to this challenge. Those rules have to be relaxed. The states have to think about alternative funding mechanisms. Employers have to think about import in alternative-funding mechanisms. We need more risk capital involved and things like performance bonds to unstick this system. That, plus much better market innovation gives me some hope. But I must admit that I just assumed away a number of big, structural problems.

Kerr: Well, maybe one place that we can end on is recognizing you’ve got this cluster of work, and the community colleges dovetail very easily into your work on degree inflation, to your work on upward mobility and American job opportunities and so forth. So what do you see as a springboard coming out of this community college work that you’re going to tackle next?

Fuller: Well, I think there’s a very profound question facing the United States, and it’s one that I don’t think we really understand very well. And that is how many good jobs are there out there, really? That, we’ve operated the whole system on the notion that there are lots of good positions out there, we just don’t have enough people to fill them. That is definitely true in part. But when you start looking at the composition of actual job descriptions and job postings that are up there, a significant majority are not things we would say are jobs that are good, in the sense of offering good starting incomes and experiences that correlate with advancement. I think employers and educators and government entities in the United States are going to need to turn to a question of: What are we doing to sustain an economy that is creating jobs, not relying on cheap tricks like protectionism? And so I’d like to understand that and what that would mean, in terms of the role of business declaring much earlier, “Here are the types of skills we need now, we’re going to need in the future.” And I think there are some profound issues we’re going to get after in our project and hope that shapes some debate in years with even numbers—the next one being 2024, and maybe in election years thereafter.

Kerr: Well, we look forward to that research, Joe. But let me remind everybody of the current report’s name. It’s The Partnership Imperative. It’s free, it’s available on the Managing Future of Work website. Joe, thank you so much for joining us today.

Fuller: Bill, thanks for the great conversation.

Kerr: We hope you enjoy the Managing the Future of Work podcast. If you haven’t already, please subscribe and rate the show wherever you get your podcasts. You can find out more about the Managing the Future of Work Project at our website hbs.edu/managingthefutureofwork. While you’re there, sign up for our newsletter.