Around the World In…

December 5th, 2011 at 8:12 am

…7 days.  Well, not quite the world, but a lot of road work this week, so posting could be spotty.

I started off this past weekend in NYC to be on set with host Chris Hayes on his MSNBC show “Up.”  Full disclosure, I’m a contributor to the station and I’ve known and admired Chris for a long time, but the man (and his smart staff) has put together a show that combines substance, wonkery, and progressive politics/economics in a way that’s actually fun–and not just a little fun–a lot fun.  Plus the show is long enough that he can dive pretty deeply into the topics.

Give it a look and tell me if you disagree, but I predict Chris is going to reach a lot of people with exactly what we need right now: great information presented in a way that goes down easily.

Today, I’m in Tampa talking worker training (see pic below—and yes, it’s tough work but someone’s got to do it).

I’ve always been a healthy skeptic of much of what passes for working training in the US.  As this GAO report reveals, there are almost 50 government programs costing about $20 billion that provide some aspect of the service, with lots of duplication and not enough careful evaluation re impacts.

But there is both a rationale for worker training and a way to do it right.

The rationale starts with the basic production function: economic output is a function of inputs, including not just the quantity of said inputs, but the quality as well.  If you accept that, and I suspect you do, then you recognize that improving workers’ skills makes sense.

It also, of course, helps them as there’s a reliable gradient between education levels and both earnings and unemployment (see nice figure from BLS–good graphic of relationship between education, unemployment, and earnings).

OK—now for the caveats.  As my Bubbi said, “Eat first, then we talk.”  By which I mean demand must precede supply.  Without jobs, the best training programs in the world leave their recipients all dressed up with nowhere to go.  And need I say, distribution–who benefits from growth–matters as well.  There are tons of skilled workers who by dint of their weak bargaining power simply never see the fruits of their labor.

Second, as noted, if you’re not evaluating the impact of your training programs, you have no idea whether or not you’re just wasting money.  Even if you can show us that your clients get jobs, you’ve got to ask whether they would have got them anyway, even without the program.

For that you need randomized experiments, as rare as they are valuable in economics.  And here, we learn about a strain of work in the training field that looks to me to have finally hit real paydirt.

It’s called sectoral training, and yes, it’s incredibly obvious, and how come we didn’t figure this out long ago, and aren’t you social scientists goofy, and so on.  But it starts from the premise that the trainers—and community colleges can play a key role here—must work closely with local employers to identify pockets of unmet and future labor demand.  This is a more expensive model than the standard one, and it’s tougher to scale up, but it looks like it works far better than the old stuff.

Economist Harry Holzer’s work is a great place to start if you want to learn more about this approach.  In this piece, he reviews three of these types of programs, all of which underwent rigorous randomized testing—meaning one group got the “treatment” and another with similar characteristics did not.

These sectoral strategies were found to raise earnings significantly—Harry cites gains of around $4,000, or 30%.  The gains can fade over time, but even so, the benefits remain multiples of the costs.

Harry’s come up with his own idea for a national version of the sectoral work, that goes well beyond the usual classroom approach—see link above.  I particularly like ideas that simply help disadvantaged workers make ends meet while they’re in an apprenticeship or training program, like helping them with child care or housing costs.  That’s not a traditional skills approach, but getting beyond tradition is very much what’s needed here.

[If we must discuss economic policy, let’s do it here:]

Print Friendly, PDF & Email

5 comments in reply to "Around the World In…"

  1. Bill says:

    Whatever happened to employers providing on-the-job training? And if employers are having to invest less in the training of their workers, aren’t they also less compelled to retain their workers? Are there longitudinal results showing stable, higher-wage career development — not just jobs that pay a few grand more for a couple years?

  2. PeonInChief says:

    My problem with most of what passes for worker training is that what most people need is a university degree, and often advanced training after that, while what passes for worker training enables people to operate cash registers and gives them “soft skills,” which may make middle class people feel better but doesn’t get people jobs that will actually pay a living wage.

  3. vicki says:

    Yes, Chris Hayes has a show that is worth putting off anything else to watch. And that includes sleeping in.

    2 hours each weekend morning of smart people. Really smart people having important *discussions!* Invigorating and refreshing.

    If we can grab the other 5 mornings, I think we’re on to something!


  4. Jake Lopata says:

    Thought you might like this Jared:

    New York State Governor Andrew Cuomo released “…Comprehensive plans to create jobs and grow the economy.”

    Includes 8.92% tax on income $2 million and up. One of your favorite ideas; “New York Works INFRASTRUCTURE FUND” which includes updating educational facilities.

  5. Jake Lopata says:

    Correction, tax on income $2 million and up is 8.82%