$18 billion in job training = lots of trained unemployed people

By Peter Van Buren
July 23, 2014

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President Barack Obama told Americans in his July 19 weekly address that every worker deserves to know that “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.

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, “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 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 “heating and ventilation” 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 “General Labor,” 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. “Federal job training sounds like something that should boost the economy,” writes the Cato Institute’s Chris Edwards and Daniel J. Murphy in a 2011 report, “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 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 “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 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: 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

11 comments

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frack these liars! every day a new article to mollycoddle. these sun of beaches know very well its not abt the job only but whole careers sidelined and potential sidetracked so their kind can only progress. racist bigots communist bustards.
training= keeping unemployed people out of market on minimal pay just like going to grad school and staying away from job market for pennies.

Posted by karmaiscoming13 | Report as abusive

scamsters galore!

Posted by karmaiscoming13 | Report as abusive

Amen, PVB. Thank you.

What a great picture! Such a happy, politically correct group of what appears to be 5 and 5. Just a coincidence I’m sure.

Posted by SaveRMiddle | Report as abusive

Well said sir. It’s a shame corporate America can’t see that they have created their own undoing. The Chinese and the Indians will not allow them to move into their markets, now that the USCA has created them for them.

Posted by tmc | Report as abusive

Bingo. Training is a waste of money unless there are skilled jobs in the country, not in China, India, or the Philippines or wherever they are being outsourced to. A trained unemployed person will be less happy than an unemployed person having no skills. The latter understands they have no skills. The Unemployed skilled person wonders why.

Posted by ArghONaught | Report as abusive

The author believes increasing minimum wages increases employment.

Posted by mtdallas | Report as abusive

It used to be that schools taught the basics, and then you learned how to do your job ON the job. The company paid you to learn the particular skills you needed, and they cashed in on the benefits of this because you stayed there for 30 years. In the new new economy (or is that the new new new economy, I can’t keep track), employer has no loyalty to you, you have no loyalty to the employer, and employer whines that they can’t find the skilled workers they need. Community Colleges are tasked with trying to get everyone trained for every possible skill that might be needed out there, the unemployed scramble to keep up, and the employers go ahead and move the job overseas or pay some H1B visa worker a fraction of what they’d pay an American (and they DO train the H1B’s because of course there isn’t actually anyone possessing the precise set of skills they are looking for). In a world with an essentially unlimited amount of labor available and so-called “free trade” agreements in place, absurdities like today’s American employment situation are par for the course. Could someone remind me again — what exactly was the great global economy supposed to bring us?

Posted by Sanity-Monger | Report as abusive

Disabled vet. here no job or V.A. so I created
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Posted by abeez1234 | Report as abusive

Globalism makes us poor. Microsoft is laying off at least 6,000 jobs, HP is laying off 50,000 jobs over 3 years, and IBM is laying off 13,000 jobs. Tell me again why we need STEM graduates when the STEM jobs are going overseas to countries who allow their people to get paid pennies on the dollar compared to US wages?

Okay, here’s some hard numbers. Since 30 hours per week makes a full-time job where I live, 29 hours is all I’ll get part-time at any job. In order to have a living wage on that 29-hour part-time job, I’d have to be paid over $37.00 per hour (rent, utils, meds, gas, food, car insurance, cable, phone, internet, etc). That’s the equivalent of making $56,000 per year. Yes, $37.00 per hour is ridiculous for low-skill part-time jobs, but so is the fact that gas prices are over 2x higher than in 2005, and though capacity is back to normal, the price stays high (along with the price of everything that depends on gas transportation). Living prices have doubled since 2005, and even rent has increased (for no discernible reason). Without a full-time, living-wage job with benefits, people can’t live, even on 4 part-time jobs. And especially not people with medical bills, as I have.

I have a BS in Computer Science, and an MS in Applied Information Technology, but I couldn’t get a job in my field for 10 years (2002 – 2012). I gave up and tried to become a nurse (and failed), then I tried to become an X-Ray technician (I wasn’t selected to be seated this year). There aren’t enough full-time, living-wage jobs for people like me, much less kids coming out of college. Corporations are NOT training people, either. They want hires to hit the ground running, which promotes the passing around of a small group of experts who are very cross-trained, but not allowing the training of new recruits.

In short, the current economic model is failing. We are two steps short of complete economic slavery right now (getting rid of the rest of the living-wage full-time jobs, and then getting rid of all the guns). A huge number of people are already on welfare, which is economic slavery of a sort – they have no way out of welfare, because the existing jobs simply don’t pay enough to live on. This must stop. President Obama needs to haul in the heads of every major corporation and give them the same talk that FDR gave corporate leaders back in the Depression – loosen the purse strings, or you will have a revolution on your hands (and rebels don’t look kindly on people milking the establishment). Once a revolution begins here, America is gone forever, to be replaced by dictatorship after dictatorship. That’s very, very bad for business.

Is that over the top? Not if you realize that corporations are run by people who are actively breaking their Pledge of Allegiance, which they took as kids. We weren’t just saying that for nothing, you know. Corporations who undermine the economic security of the US are endangering the political and military security of the US, and as such are enemies of the US – a clear and present danger to the nation. Congress and the President are sworn to defend the US against such people, including Microsoft, Apple, HP, IBM, and many other corporations who seek to become totally global (and beyond any nation’s laws). They had better act soon, or people will revolt because they can’t feed their families. Expanding welfare will not save the US – only full-time, living-wage jobs.

Posted by I_Am_The_Answer | Report as abusive

I_Am_The_Answer, All somewhat true except the expectation that americans will revolt. Simple political organization and self education would allow for the political control necessary to dictate policy that would have the corporations putting country before pure profit. Not that they wouldn’t be profitable at all, but just that they would be reasonably profitable. Yet, there is not enough organization on the part of american citizens to control the government, thus corporations do. How can we expect a revolution of great violence and effort from the people who cannot simply vote to get leaders who would do the right things for the country. It’s not going to happen.

Posted by brotherkenny4 | Report as abusive

its so disgraceful that the common good of this nation is meaningless to the Beltway insiders.

Posted by rikfre | Report as abusive