A Better Model for Worker Training

Hammond is right to emphasize the importance of active labor-market policies, and training in particular, to firms and industries as well as workers themselves. But his emphasis on expanding Trade Adjustment Assistance is far too kind to a program—and policy model—that tends to fail even those it does cover. Data consistently show that government-led training programs fail to impart relevant skills or yield long-term gains for workers.

Rather than funnel money through government programs, America should invest in workforce training by establishing an open-ended grant for employer-based training comparable to the generous support offered to students on college campuses. An American designated with the status of “student” and spending time at an institution accredited as a “college” can expect to receive approximately $10,000 in annual taxpayer support to study—well, just about anything. Yet that same American, if trying to learn how to do a new job in a workplace, gets nothing. This despite, for a wide range of jobs, the workplace offering a far more effective learning environment.

Instead, we should establish a “trainee” status for any worker employed full-time by a firm that provides a balanced mix of on-the-job experience and substantive training, whether in the workplace or through a firm-sponsored community-college program. Just as college administrators can expect about $10,000 for each “student” enrolled, employers should receive a comparable amount for each “trainee” on staff. The prospect of hiring and internally training inexperienced workers would instantly become an attractive opportunity rather than a risky burden. Firms doing this at scale would find themselves with a cost advantage.

With such a program in place, the prospect of reshoring a factory absent a well-prepared workforce would be less daunting. And rather than the government attempting to discern what skills might be useful and how to teach them, the end “customer”—the employer—would be in the driver’s seat. In many cases, employers would work with community colleges to develop programs rather than attempt to run them in-house. But whereas today’s community college has as its mission the attraction and enrollment of individual students, most of whom will not graduate, under the new system the community college’s focus would have to be delivering what employers actually need.

Such a system would also be far more responsive than the existing higher-education framework to the needs of workers. The “campus” model of education presumes predominantly young people with few other attachments or commitments dedicating their time to classroom learning. Certainly, there is a need and a place for that in our society. But the far more pressing need is to help the person trying to connect or reconnect to the labor market. A campus might in some cases be an attractive option, or a necessity. But in most, it is the workplace that is both wanted and needed.

Both the anti-business contingent on the Left and the anti-government contingent on the Right will surely object to the idea that public funds should be given to corporations. But firms will not sufficiently invest of their own accord in the training of their workers for the simple reason that it is the workers who ultimately capture the value of their skills in the form of higher productivity and wages (which we should want!), so public funds are needed. Government agencies have neither the capacity nor the incentives to train as well as employers will, so corporations are needed to0. Active labor market policy should bring those forces together.