Sunday, July 27, 2014

Unemployed don't need job training, they need jobs

Peter Van Buren's view is pretty controversial. Then again, anything that refutes accepted wisdom usually is controversial.

On Van Buren's side though is economics: supply and demand. Giving unemployed people job skills or even training in trades is like working only on the (labor) supply side, while ignoring whether those skills or trades are demanded by employers.

"So the $18 billion question is: If job training is not the answer, what is?" asks Van Buren.

The obvious answers, grounded in tested economics, will make self-styled "free-marketers" uncomfortable [emphasis mine]:

Jobs. Jobs that pay a living wage. The 2008 recession wiped out primarily high- and middle-wage jobs, with the strongestemployment 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.

Nevertheless, I imagine that Democrats and Republicans wouldn't be willing to give up the promising-sounding idea of jobs training. Therefore my suggestion is for the government to pay for job training only when it is tied to a real job offer at a real company. I mean, first a company must say, "I promise, before the government spends a cent on training, to hire x  number of workers who have mastered a, b and c  skills."  That might work. Then the government would have to hold them to it. 

But I doubt that many companies would go for it; they'd want to retain right of refusal.

By Peter Van Buren
July 23, 2014 | Reuters

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