$18 billion in job training = lots of trained unemployed people
President Barack Obama told Americans in his July 19 weekly address that every worker deserves to know that āif you lose your job, your country will help you train for an even better one.ā A nice sentiment — and politically safe. It’s just the wrong answer. Those ābetter jobsā don’t exist, and training doesnāt create jobs. Despite all that, every year the U.S. government spends billions of dollars on job training, with little impact.
In 2007, then-candidate Obama visited Janesville, Wis., location of the oldest operating General Motors plant in America. Echoing his current promise to support unemployed Americans through job training, Obama proclaimed, āI believe that, if our government is there to support you, this plant will be here for another hundred years.ā However, two days before Christmas and just about a month before Obamaās inauguration, the plant stopped production of SUVs, which made up the bulk of what was built there, 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, many laid-off workers who finished their retraining programs became trained unemployed people rather than untrained ones. Having a certificate in āheating and ventilationā or skills 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. Of those who completed some form of training, nearly 40 percent of them did not find work. And those in Janesville who did find work in some field saw their take-home pay drop by 36 percent on average. A look at Craigslist job ads for the town shows one ad for heating and ventilation work, with a requirement of three years of experience. Under āGeneral Labor,ā the openings were for janitors, newspaper delivery and things like light manufacturing at $8.50 an hour.
Obama’s new call 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 found that only five programs assessed whether people who found jobs did so because of the program and not for some other reason. In addition, the GAO learned that almost all training programs overlap with at least one other training program. āFederal job training sounds like something that should boost the economy,ā writes the Cato Institute’s Chris Edwards and Daniel J. Murphy in a 2011 report, ābut five decades of experience indicate otherwise.ā
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 9.5 million unemployed.
So the $18 billion question is: If job 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 the United States where consumer spending alone has the power to spark a āvirtuous cycle.ā 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 that 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 the $18 billion being spent on job training that could be repurposed 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.
PHOTO:Ā U.S. President Barack Obama signs the Presidential Memorandum – Job-Driven Training for Workers after he addresses employees of General Electric’s Waukesha Gas Engines facility in Waukesha, Wisconsin, January 30, 2014. REUTERS/Larry Downing