Can Lifelong Learning Close the Skills Gap?

By Eric Krell June 24, 2011

As a global skills gap widens, the concept of lifelong learning takes on a new, and more practical, meaning.

Conceived 10 years ago by the Council for Adult and Experiential Learning (CAEL), lifelong learning accounts (LiLAs) provide an affordable way for organizations to offer education and training benefits to employees. As developed by CAEL, LiLAs are employee-owned, employer-matched accounts used to finance education and training. Think of them as 401(k) retirement accounts whose funds are invested “to develop employee skills and reshape their career options throughout a lifetime,” noted Amy Sherman, associate vice president for policy and strategic alliances at Chicago-based CAEL, a national, nonprofit organization whose mission is to expand learning opportunities for adults.

This mission has taken on newfound importance in recent years as global organizations confront the increasingly difficult challenge of finding workers with the skills necessary to fill open positions. Despite the still-uncertain progress of LiLA legislation proposed at the federal level in the U.S., more states and individual organizations are embracing LiLAs as a practical tool for addressing skills gaps and achieving other workforce improvements.

The Skills Gap Grows

Manpower’s sixth annual Talent Shortage Survey, released in May 2011, indicates that 52 percent of U.S. employers have trouble filling “mission-critical positions,” up from 14 percent of U.S. employers in 2010. This represents more than a 300 percent increase in the number of U.S. employers having experienced difficulty finding qualified people during a period of high unemployment.

“The U.S. labor economy is stalling largely because we can’t create the skills, rather than we can’t create the jobs,” noted Edward Gordon, author of Winning the Global Talent Showdown: How Businesses and Communities Can Partner to Rebuild the Jobs Pipeline (Berrett-Koehler, 2009) and president of Chicago-based Imperial Consulting Corp.

This, Gordon added, helps explain why the United States can have 24 million citizens who are jobless or underemployed while more than 5 million job vacancies (advertised and unadvertised) linger.

The problem is not unemployment but a “broken employment infrastructure,” said Gordon, who said this problem should be addressed in two ways. Over the short term, companies should rekindle entry-level job training programs. Over the long term, Gordon said, businesses “need to participate in community partnerships to rebuild the broken talent creation system.”

Lifelong Learning in Action

LiLAs represent a tool that support both of the solutions Gordon advocates.

“For employers, LiLAs offer an affordable way to offer education benefits while developing employees to fill high-demand positions,” said Sherman, whose organization coordinates LiLA solutions among higher education institutions and public- and private-sector employers. “LiLAs also help employees save money to improve their skills and job marketability through ongoing learning. It is a win-win for employers and employees.”

IBM Vice President for Community Interest Robin Willner in the spring of 2011 told The New York Times that Big Blue began using LiLAs, or “personal learning accounts,” in 2008 to help prepare employees to thrive in a global economy in which they will have many types of jobs. Two years into the program, more than 2,000 IBMers have enrolled and taken classes at an accredited institution. IBM employees can contribute up to $1,000 in their personal learning accounts annually, and IBM matches the funds.

Fanni Munoz immigrated to the United States from Peru in 1998. Although she accepted a position as an administrative assistant at the University of California San Francisco (UCSF) Medical Center in 2000, she wanted to find a way to translate her master’s degree in psychology and 10 years of counseling experience into a better job match. After enrolling in English as a Second Language (ESL) and human resource classes through one of the country’s earliest LiLA programs, Munoz earned several promotions and now works as a client services analyst at the medical center.

UCSF Medical Center Director of Workforce Planning Jennifer Hermann has been asked by colleagues whether she fears employees jumping ship to competing organizations after they have gained skills and credentials through the LiLA program. “My response is ‘no,’ ” asserted Hermann. Instead, Hermann views the opportunity to match employees’ “hard-earned” money with company funds as too valuable a developmental and morale-building opportunity to pass up. Besides, she pointed out, LiLAs offer a highly affordable training and development approach as well as an employment solution that is much less expensive than the $50,000 to $75,000 recruitment costs associated with replacing a nurse or a pharmacist, for example.

The opportunities also translate to other benefits for employees and employers, according to a CAEL survey of 287 employers with LiLA programs: 78 percent of employers who track results indicated that LiLA participants are promoted more frequently than nonparticipants, and 55 percent of employers reported that these programs facilitate their succession planning efforts.

Legislative Update

These and other benefits explain why several versions of LiLA legislation, each of which would provide tax incentives to participating employers and employees, have been introduced in the U.S. Senate and the House of Representatives since 2007.

“Lifelong learning is increasingly essential in an economy in which workers often change job fields or need to upgrade their skills in order to keep or secure new employment,” noted Rep. Jared Polis, D-Colo., of Colorado’s second district. “This legislation exemplifies the kinds of public-private partnerships that can have a positive, long-term impact on our economy.”

On May 13, 2011, Polis and two congressional colleagues reintroduced the Lifelong Learning Accounts Act (now referred to as H.R 1869), which was first introduced in July 2010.

H.R. 1869, which was under review by the House Education and the Workforce Committee, would give employees a refundable tax credit of up to $750 for a $2,500 LiLA contribution. Employers would be eligible for a tax credit of up to 25 percent of their contributions to LiLA accounts. In addition, small businesses would be eligible for a federal tax credit of up to $500 for program start-up costs.

Some states have passed LiLA legislation (Illinois in 2006) or are considering LiLA bills ( Colorado, Wisconsin, Minnesota and California). Maine created a LiLA program, which it combined with an existing program, without legislative action in 2005.

LiLA Implementation

Like Maine, hundreds of organizations have moved ahead without waiting for the passage of federal LiLA legislation. CAEL has launched LiLA pilots in numerous industries and sectors in Chicago, Indiana, California and New York. A CAEL survey of its LiLA pilot programs finds that:

  • 89 percent of the employers responding were “very” or “somewhat” satisfied with the program.
  • 43 percent of employer reposndents reported seeing improved productivity with their LiLA employees.
  • 65 percent of employers indicated that the LiLA program made a "modest" or "significant" impadct on employee retention.

Sherman identified several key steps HR professionals should consider when setting up a LiLA or LiLA-type program. For example, consult with an attorney about the applicability of Section 127 of the Internal Revenue Code, which addresses how employer contributions to an education assistance plan are exempt from an employee’s income for individual tax purposes. Other recommendations:

  • Design program guidelines carefully.
  • Set up automatic payroll deductions for employees’ contributions to their LiLAs.
  • Establish a relationship with a bank or other fiduciary to handle accounts and contributions.
  • Set up a system for payment of education and training vendors.

In addition, rovide career and education counseling to help employees make informed decisions about what kind of education they should pursue to meet their career goals. Also, create a plan for marketing the program to employees.

The most effective LiLA plans represent a component of a larger talent-creation plan, one designed to close costly skills gaps while strengthening employee productivity and loyalty.

“We’re hoping that by investing in our employees,” Hermann stated, “they will actually fill some of the hard-to-fill positions we’re working so hard to recruit for.”

Eric Krell is a freelance writer based in Austin, Texas.

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