If You Build It…

Peter Van Buren kvetches about federal job training programs:

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.

$18 billion is a lot of money. If you divided it among 1 million people it would be $18,000 each.

The key problem is that the jobs just don’t exist. Here’s Mr. Van Buren’s prescription:

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.

I remain somewhat skeptical about increasing the minimum wage—I’d need to be confident the increase was helping more people than it hurt. As I’ve said before I have no hostility to a WPA-type program. That seems to be a non-starter in Congress.

Other proposals I’ve made from time to time: apprenticeship programs, wage subsidies. I’ve just thought of another one: train to suit. Let’s say there’s a job available and there are candidates who are missing some qualification or other. Get an agreement that you’ll train them to suit the requirements.

What we’ll undoubtedly do is persist in useless job training program whose most important results are the jobs of the people administering it.

7 comments… add one

  • TastyBits

    Mr. Van Buren and others fail to understand today’s problem or how the economy works regarding money. His proposal is the same as a stimulus package or lower Fed rates. The economy expands through credit credit creation, and none of these schemes do anything about that.

    (1) repeal Dodd-Frank
    (2) lower bank capital requirements
    (3) lower bank asset standards
    (4) guarantee Fannie and Freddie will not fail

    The economy will take off. Otherwise, wait until the debt is worked off. A capitalist would realize that losing a few dollars today would be better than losing the potential dollars through years of lost opportunity.

  • TastyBits

    This is from the previous post, but it is also about jobs.

    … It is now a globalized world in which most factors of production are portable. We need to get used to it.

    Hopefully, I am not too off base with this screed.

    In my opinion, environmental concerns are the only factors that globalization may have an advantage. Mechanical labor is always cheaper than the cheapest manual labor, and this is true no matter the location. A robot can make something exactly the same every time. A human cannot.

    Throughout history production has mostly moved towards better building materials & techniques and the less labor intensive processes, but today, the labor process has devolved towards the more intense process.

    Robots would revolutionize manufacturing. An entire industry would need to be created to support these manufacturing lines, and this industry would require additional support.

    The much feared robot needs to be designed, manufactured, installed, maintained, and programmed (hardware). It also needs a product design (software) for whatever it is producing.

    The type of worker that is needed for these jobs is not today’s high school graduates. They are being schooled for the assembly line. The education system would need to be revolutionized to produce high school graduates for an actual high tech world.

    The education system would need to focus upon independent thinking and acquiring knowledge. Rote type learning would be tossed. The new work environment would be less rote. This would be done by the mechanical labor.

    There will still be plenty of manual jobs, and many of these will require highly skilled people. For less apt people, somebody will create dumbed-down software. Most of Windows is dumbed-down to allow more people to use it.

    If you do not know how to use a command prompt, you are one of the less apt people, and the world has been dumbed-down for you.

    The question is when and where. Somewhere, people will not get used to the world as it is, and those people will benefit greatly.

  • Ben Wolf

    The economy can expand through financial asset injection by banks (debt) or net financial asset injection by Congress. Banks are not unable to make loans, they are unwilling because the private sector is already heavily indebted and therefore sub-prime.

  • they are unwilling because the private sector is already heavily indebted and therefore sub-prime.

    and they are being furnished with incentives not to lend.

  • jan

    the United States has the highest number of workers in low-wage jobs of all industrialized nations.

    That’s kind of depressing…

    they are being furnished with incentives not to lend.

    …and so is this.

    The country seems stuck.

  • ...

    Jan, we are getting the country that the elites want.

  • the United States has the highest number of workers in low-wage jobs of all industrialized nations.

    That’s kind of depressing…

    There are several things that should be considered in his statement. First, I don’t know what he means by that and he provides no source or citation. Second, he must not consider China an industrialized country. China has more people in low-wage jobs than we have people.

    Third, of course we do. With the exception of China we are three times as large as the next largest industrialized country. If we had the same proportion of low-wage jobs as the next largest we’d have three times the number they did.

    Finally, over the last couple of decades we’ve imported a large number of low-wage workers, amounting to nearly 5% of the population. It stands to reason that if you import low-wage workers, the number of low-wage workers will rise.

    There’s a kernel of truth in what he’s saying there but I don’t know how much weight to place in it.

Leave a Comment