The Great (Re)Training Robbery

October 3, 2014

Tags: GAO, Obama, Training
Posted in: #99Percent, Economy, Minimum Wage

Barack Obama told Americans every worker deserves to know “if you lose your job, your country will help you train for an even better one.” A nice sentiment,and politically safe; it’s just the wrong answer. Those “better jobs” don’t exist, and training doesn’t create jobs. Despite all that, every year the U.S. government spends billions of dollars on job training, with little impact. What’s the right answer?

In 2007 then-candidate Obama visited Janesville, Wisconsin, location of the oldest General Motors plant in America. Echoing his current promise to support unemployed Americans with job training, Obama proclaimed “I believe that, if our government is there to support you, this plant will be here for another hundred years.” However, two days before Christmas and just about a month before Obama’s inauguration, the plant closed forever, throwing 5,000 people out of work. This devastated the town, because most residents either worked in the plant or in a business that depended on people working in the plant. Congress paid for a $2 million retraining program, using state community colleges the way the government once used trade schools, a century ago, to teach new immigrants the skills they needed to work at GM.

This time around, however, those who finished their retraining programs for the most part simply became trained unemployed people, rather than untrained ones. Having a certificate in “heating and ventilation” or training in new welding techniques did not automatically lead to a job in those fields. There were already plenty of people out there with such certificates, never mind actual college degrees (the United States graduated 1,606,000 students with bachelor’s degrees in 2014.) Of those that completed some form of training, nearly 40 percent did not find work. And those in Janesville who did find work in some field saw their take-home pay drop by 36 percent. A look at Craigslist job ads for the town shows one ad for heating and ventilation work, with a demand for three years experience. Under “General Labor” the work is for janitors, newspaper delivery and things like light manufacturing at $8.50 an hour.

Obama’s calls for job training also belies the fact that the government already spends approximately $18 billion a year to administer 47 job training programs. The actual value of those programs remains unclear. The Government Accountability Office (GAO) found that only five programs assessed whether people who found jobs did so because of the program and not some other cause. In addition, the GAO learned that almost all training programs overlap with at least one other training program. “Federal job training sounds like something that should boost the economy,” writes the Cato Institute, “but five decades of experience indicate otherwise.”

The panacea myth of job training crosses party lines. The GAO reported that in 2003, under the George W. Bush administration, the government spent $13 billion on training, spread across 44 programs. Job training may again be on the GOP agenda, even if the parties differ on the details. Politically, some sort of job training just sounds good. The problem is that it won’t really help America’s 10.5 million unemployed.

So the $18 billion question is: if training is not the answer, what is?

Jobs. Jobs that pay a living wage. The 2008 recession wiped out primarily high and middle wage jobs, with the strongest employment growth in the recovery taking place in low wage employment, to the point where the United States has the highest number of workers in low wage jobs of all industrialized nations.

There are many possible paths to better-paying jobs in America whose spending power can spark a “virtuous cycle.” That would mean more employment leading to more spending and more demand, followed by more hiring. One kickstarter is simply higher wages in the jobs we do have. For example, recent Department of Labor studies show that the 13 states which raised their minimum wages added jobs (at higher wages of course) at a faster pace than those that did not. On a larger, albeit more contentious scale, are options such as a WPA-like program, changes to tax and import laws to promote domestic manufacturing, infrastructure grants and the like. There’s $18 billion to work with for a start.

No matter the path forward, the bottom line remains unchanged: Training does not create jobs. Jobs create the need for training. Anything else is just politics.

Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.