Republican candidate for president, Mitt Romney says an important objective is to retrain American workers to ensure that they have the education and skills to match the jobs of today’s economy.
President Barack Obama also supports worker training. In May 2009, the president issued a press release on job training saying, “So today I’m announcing new steps we are taking to do exactly that — to give people across America who have lost their jobs the chance to go back to school today to get retrained for the jobs and industries of tomorrow.”
One caveat in Romney’s support of retraining is that he says there are too many federal training programs with too much overlap and too many federal agencies involved. But if you examine lists of programs, they are mostly training programs administered at the federal level by the Employment and Training Administration of the United States Department of Labor. The training itself is provided at state and local levels of government, often in community colleges and often in cooperation with the employer community.
It is true there are multiple programs. This is because Congress passes legislation for different constituents, for example, programs for retraining dislocated workers, disadvantaged youth, veterans, native Americans, individuals on welfare or food stamps, disabled workers, displaced farm workers and workers in labor surplus areas. But the programs aren’t really very different. They provide the same types of services through the same network of state and local workforce agencies. But Congress likes to identify programs for separately identified blocks of constituents so it can be seen as particularly responsive to constituent advocates.
The big question is not this so called overlap in the training programs, but rather, do the programs work? Does training payoff for those who get training and for society that may be paying much of the costs?
One recent study of dislocated workers in Washington state in a retraining program from 2002 through 2008 says it does. A program called the Training Benefits Program allows dislocated workers – workers whose occupations are in decline and who need training to obtain a new job – to collect extended unemployment benefits for up to 52 weeks while enrolled in a retraining program. The workers in the program were excused from the usual requirement of the unemployment benefits program that they be available for work while receiving benefits, thus allowing them to pursue training.
One of the principal authors of the study, Ernst Stromsdorfer, an economist for the Washington State Employment Security Department and a labor economist whose specialty is empirical studies of employment and training programs says,
“For all my career, these studies have been hounded by the concern that they would not work during a recession. Our study, and another we are about to clear for public review, suggests that these programs, if properly designed and operated, can work in a recession environment.”
The authors of the report which included Toby Paterson and Jeff Zahir, in addition to Stromsdorfer, listed among the findings of the study that
- The present value of lifetime gains, less the costs of training, for all participants is an estimated average of $18,339
- The social rate of return on investment for all participants is 15.8 percent, and for participants who didn’t return to their former employers, 20 percent.
The social rate of return measures the return to taxpayers’ investment in the program. To put this into context the authors note that the private rate of return on equity capital is approximately 10 percent. The conclusion is that the Training Benefits Program is an efficient social investment in human capital.
It pays off for the government and the taxpayer.