Workers need new skills to compete in today’s economy, some more urgently than others — but on whose dime?
Long gone are the days when a high school graduate walked into a manufacturing plant and learned skills on the job. Even college graduates without relevant internship or job experience can struggle in the job market. Amid globalization and the increasing use of technology, today’s employers hire workers who already possess the skills to hit the ground running.
Most recognize the need to provide greater training to help workers, but the group with the biggest funding gap for training isn’t the unemployed or low-skilled workers. Middle-skilled workers may be the most overlooked group when it comes to funding skills training. Who should provide this training and how can workers get access to it most effectively?
We need to first examine funding for skills training so the most vulnerable aren’t left behind. To start, it is useful to divide workers into four groups: the non-employed, lower-income entrants, higher-income entrants, and the already employed.
For the non-employed, public resources for job-skills training, while small compared with those from other developed countries, are greater than that of other worker groups combined. The federal government has long recognized that unemployed individuals often face the fewest resources and the greatest need to increase their skills, and it has partnered with state and local governments to provide public money, albeit to mixed success.
Lower-income entrants likewise lack resources to invest in their skills. While the amount that the federal government spends on such worker training is small and has been falling, the federal funds to help train these groups are being supplemented by private industry and local community funds to ensure that training is better aligned with local business needs.
Higher-income entrants, on the other hand, receive little public money directly for skills training, under the (mostly accurate) perception that they can afford such training on their own. Most skills training for this group comes through formal higher education.
Now for the most vulnerable group: for those who are already employed, public and corporate policy has been slow to realize the growing need to assist incumbent workers with lifetime learning—at least outside the most and least skilled. For highly-skilled workers, refresher training is already common, either self-initiated or provided by the firm. For less-skilled workers, generally those most at risk of losing their jobs due to a plant closing or firm shutdown, there is some federal money, distributed through the states, but the amounts are paltry compared to those for higher-skilled workers, even if research has shown that these small funding levels more than pay for themselves in worker success.
But for the vast number of workers in the middle, there is little recourse. The government provides little to no assistance for their skills training, their employers seldom offer skills development, and the workers themselves often face financial barriers. Meanwhile, those in middle-skill jobs in manufacturing and office support are particularly susceptible to automation or trade (or both).
This issue will only intensify as technology allows for greater substitution of worker skills. Any feasible solution for this group of workers is likely to involve greater financial assistance from both government and employers to subsidize workers’ own efforts. As economist Robert Lerman of American University argues, employers may be the best agents to lead worker training, but governments have a role in partially subsidizing this training. However, this comes with costs. He argues workers should expect lower wages or smaller raises temporarily while they’re undergoing training.
What kind of programs work? Community-driven efforts often meet with more success than top-down funding, as training can be customized to meet local and regional contexts for both firms and workers. A report about Tennessee’s Technology Centers details notable student success and a mix of financing: everything from private funds to the Tennessee lottery. The two-year post-secondary education centers show that flexible programs sensitive to worker and employer contexts lead to better results for both groups. A tightly knit, reliable group of student peers connected by a career-driven goal can also lead to better job placement rates. If existing evidence is any guide, the most successful strategies for the most vulnerable workers will be local, grassroots efforts rather than a one-size-fits-all mega-program.
(Top image: Courtesy Getty Images.)
Brad Hershbein is an economist at the W.E. Upjohn Institute for Employment Research. The opinions expressed in this article are his own and do not necessarily reflect the views of the Upjohn Institute.
All views expressed are those of the author.