As the economy threatens to sink into a double-dip recession, pressure is growing for federal, state, and local governments to do something about the 16 million Americans who remain out of work. One solution popular with politicians of all stripes—and with both business and labor groups—has been job training programs to close the gap between employers’ needs and workers’ skills.
“Even though a lot of folks are looking for work, there are a lot of companies that are actually also looking for skilled workers; there’s a mismatch that we can close,” President Obama said in June in presenting a community college program to teach manufacturing skills. Meanwhile, Mayor Bloomberg has launched a series of job training initiatives, most recently as part of his new Young Men’s Initiative to aid black and Latino teens—a cause to which he gave $30 million of his own pocket money.
Yet as the economic woes continue, there’s an obvious question: Is there any point in training people for jobs at a time when even people with advanced degrees are increasingly having trouble finding work? Or do job training programs—a catchall term that can include everything from classes in proper job interview etiquette to actual training in advanced skills—only rearrange the deck chairs of who holds down the few available jobs?
It’s a question to which even those in field largely throw up their hands in ignorance. And at least some economists who’ve studied training programs and the job market warn that while job training can be invaluable to specific individuals who end up with a degree or job skills, it’s foolish to rely on it to improve the lot of poor Americans as a whole, especially in times of a stagnating economy.
“Training is at its most valuable when you have a growing economy and you have labor shortages. Employers are looking for people, and they can’t find them,” says labor economist Ross Eisenbrey, vice-president and policy director of the D.C.-based Economic Policy Institute. “If we get to the point where companies are laying off again, and employment is actually falling, on a macroeconomic level you can train all the people you want and it’s not going to really help very much.”
When job policy meant jobs
Job training was not always the multibillion-dollar industry that it is today. In the 1970s, the primary federal program to combat unemployment was the Comprehensive Employment and Training Act (CETA), which coupled job training with actual government-funded jobs. Established by President Nixon in 1973, by the latter part of the decade it was putting it put nearly 750,000 people to work in jobs in local governments and non-profit agencies, while providing another 1 million summer jobs for youth.
All that ended in 1982, when CETA was eliminated in one of President Reagan’s first moves to rein in “big government.” Yet with the U.S. in the midst of a recession and facing double-digit unemployment, Reagan couldn’t abandon jobs programs altogether. And so was born the Job Training Partnership Act—penned by then-freshman Senator Dan Quayle—which devoted more than $1 billion a year in block grants to states to set up their own job training programs.
JTPA later evolved into the Clinton-era Workforce Investment Act (WIA), which remains in place today as the federal government’s main job-training funding stream. At the same time, the advent of welfare reform in 1996 led to an explosion of job-training and “job readiness” initiatives. New York City alone now spends almost $1 billion a year on job training and placement services, most of it funded through WIA, according to a 2007 study by the Center for an Urban Future.
The result has been a panoply of different training initiatives, ranging from the Human Resources Administration’s much-criticized Back to Work program that focuses on pressing welfare recipients to apply for jobs as quickly as possible, to more intensive programs run by private non-profits, to the Workforce1 centers run by several institutions under a contract with the city Department of Small Business Services.
The Workforce1 centers in particular are designed to serve all comers, whether teenagers seeking their first jobs or laid-off workers looking to start a new career. Employers are brought in to do presentations and conduct interviews on-site. For job seekers, the centers provide a place to polish resumes and get advice about what jobs are available; for employers, it’s effectively a pre-screening service to weed out applicants with no hope of getting hired.
“You put a call out, and a week later you get 10,000 resumes,” says SBS Assistant Commissioner of Policy and Planning Matthew White. “We’re basically saving them time and money on the recruitment front.”
First, training. Then …?
All of these programs can point to numbers showing how many people they’ve successfully placed in jobs. HRA says its Back to Work program is on pace to place 85,000 people in jobs in 2011, while White says the Workforce1 centers are on track toward a target of 35,000 placements, double their figure from four years ago.
Much of the debate around these programs has been over the quality of the jobs their graduates obtain, and whether those new hires are sticking long-term. But a deeper question remains: If no new jobs are being created—and the most recent figures show that the number of jobs in New York City isn’t even keeping up with the rise in population—then are the training programs merely getting people jobs at the expense of other applicants, who end up taking their place on the unemployment line?
“That’s not a question we can answer,” says HRA spokesperson Connie Ress. White notes hopefully that since SBS not only helps companies save on recruitment costs but with other needs—the Workforce1 Centers each include a small satellite office to provide business owners with financial and legal assistance—”we hope there are some savings or productivity increases that can lead to job creation.”
In addition to greasing the hiring wheels, the notion that training people for jobs helps encourage more employment relies on the “skills mismatch” hypothesis cited by Obama. As jobs become more technically demanding, the theory goes, the needs of employers are increasingly outpacing the skills of potential employees. As a result, businesses don’t hire as many workers as they might otherwise, because it’s too hard to find skilled labor.
“All the evidence now is that all jobs are requiring higher level skills,” says Evelyn Ganzglass, director of workforce development for the D.C.-based Center for Law and Social Policy. “So to have employment that has family-sustaining wages, you need to have more skills than a lot of these people have.” Hard economic times are actually the best time to focus on skills training, she says: If there are no jobs to fill, why not have people learning skills for such time as when the jobs return?
Yet evidence for the skills mismatch theory remains sketchy at best. It relies on the assumption that if skills go up, so will employment; as a recent report by the Congressional Joint Economic Committee noted, “Workers with only a high-school diploma make up a much larger share of the unemployed and long-term unemployed.” It doesn’t necessarily follow, however, that providing more people with advanced degrees will provide them all with the levels of employment currently enjoyed by college graduates, especially in an economy where average salaries for college graduates were already falling even before the economic downturn. And while anecdotal reports abound of companies seeking in vain for web programmers, with employment currently down across all sectors and job titles, it’s hard to see where significant numbers of people would be hired if only they could obtain specialized skills.
“There is the economic argument, which isn’t entirely crazy, that if you create more of a prepared workforce, then jobs will grow around them,” says New York City Coalition Against Hunger director Joel Berg. But, he adds, he hasn’t seen any proof that that’s what’s happening with city job training programs. When he hears HRA’s job placement numbers, he says, “My unanswered question from them, obviously, is who was in those jobs beforehand?”
Berg applauds Bloomberg’s attempts to increase employment for black and Latino youth, but worries about training people for jobs that don’t exist—or merely swapping in one worker for another. “No doubt they’re going to have individual success stories,” he says. “But I’m always interested in the aggregate.”
A different approach
To assuage such concerns, efforts are increasingly turning toward the “career ladder” model. Career ladders target growth sectors, providing training that funnels workers directly into paying jobs. The basic premise: Even if there are few jobs overall, by targeting areas of the economy that are growing, government programs can help prepare unemployed workers for slots that would otherwise go unfilled.
Initial indications are that such “sector-based” training can be productive at placing people in good jobs. A 2009 study found that participants in programs that targeted growth industries saw their earnings rise by 18% over those of a control group in the first two years, and even more than that in later years.
Yet sector-based training has its limits. One is most programs’ miniscule size: The two nursing career ladders run by the city Health and Hospitals Corporation are expected to produce a grand total of 57 graduates this year. At the same time, say labor economists, the number of people looking for work far outstrips the available jobs, even in underserved industries—and that designation can change in a heartbeat. “A year or two ago we needed a lot more nurses than we need now,” notes Eisenbrey. “The problem wasn’t so much that we hadn’t trained enough nurses as that a lot of them had left nursing. And many of them came back in—some people have said it was because their spouses were unemployed and so they had to go back into work as nurses.”
Eisenbrey says it’s still a good idea for a state like New York to invest in nursing programs, given that that’s where any future jobs are likely to be. “But when you’ve got a million people unemployed in a state, that’s not going to solve your problem.”
None of which is to deny the benefit to individuals of providing them with an improved shot at a job, even if it only ends up displacing another job seeker. “Given how this society treats families and neighborhoods as disposable items, it’s really valuable for a lot of individuals to have the assistance that those programs provide,” says James Parrott of the Fiscal Policy Institute. That said, “the overwhelming priority at this point should be job creation,” he says. “All of these things we’re doing on the supply side to help get people to the employer’s door are essential, but sort of miss the boat, because there’s such a need for more employment demand.”
Direct job creation programs, though, have been few and far between since the demise of CETA. (Though job training programs, it should be noted, do provide employment for job trainers.) Gov. Cuomo has focused his jobs efforts on supplying funds to new regional economic development councils, which will in turn hand out subsidies and tax breaks for developers, something that has a poor track record of creating high-wage jobs in significant numbers. And on the federal level, recent reports have indicated that there’s little backing among White House economists for attempting even such relatively weak job-creation measures as subsidies for companies that hire new workers.
At the same time, argues Eisenbrey, the U.S. has been encouraging increases in the labor force, creating even more competition for the jobs that do exist. “We could put more people to work by closing down some of the temporary nonimmigrant labor programs that we have, without spending a nickel, than we’re doing with these job training programs,” says Eisenbrey. The J1 visa program, he notes, brings 150,000 workers to the U.S. each year to work in retail, restaurants, and hotels. “They don’t pay Social Security taxes, so the workers are cheaper. They don’t pay unemployment insurance taxes or Medicare taxes. So in some ways the government is subsidizing the import of these foreign workers. That’s kind of crazy.”
Parrott says that even if they can’t reduce unemployment by themselves, training and education programs can provide valuable life skills to participants. And career ladder programs, he notes, can be used to train employers in how to treat and retain employees as well. “Employers, they’re not born with that,” he says.
“I don’t want to ever say anything to indicate that job placement and training and job coaching programs are not valuable,” says Parrott. “They’re absolutely necessary. But they’re not sufficient.”