The U.S. labor market may finally be picking up steam, but when it comes to our structural labor problems, big questions about stagnant wages and underemployed workers remain.
Will labor market tightening do anything to accelerate wage growth for middle- and lower-class workers? Will it ease the difficulties manufacturers and other skills-based employers face in finding an adequately trained workforce? Almost certainly not.
While today’s college-educated workers stand ready to step in to managerial and professional roles, those with only a high school degree or some college frequently frequently lack the skills to provide adequate value to employers. The result has been to accelerate the shift toward mechanization, further decreasing the opportunities for those who need them most.
Whatever answer policy-makers pursue will require big changes in how we think about providing services and training to those in need. Countless important battles are being fought at the state and local level over the future of K-12 education. Many more are being fought over higher education – the rise of student loan debt; the high drop-out rate, particularly for those in community college; the questionable value provided by many institutions and degrees.
But one crucial piece of the puzzle has been missing. As Tamar Jacoby pointed out in The Atlantic last week, the United States fails to provide worker training services for many roles in manufacturing and other traditional blue-collar services. Offering this sort of training used to be the role of unions. Their decline during the last half-century, combined with the push for college-for-all, has left the country with a skills gap.
Jacoby’s piece highlights the success of the German model, where the national government, labor and businesses have collaborated to create a series of standardized apprenticeship programs, beginning at age ten. They provide workers with a combination of traditional education; skills needed for a specific industry; and the further intangible skills learned through experience on the job.
Jacoby worries that such a model would never work here. She highlights as sticking points the Germans’ top-down, standardized approach and the coordination between business and labor. But a first question is whether the German approach would be either necessary or desirable.
America already is home to a plethora of local job-training programs – public, private and somewhere in between. For example, after moving its facilities to South Carolina, Boeing worked with local technical schools through the state’s ReadySC program to take work-ready locals and teach them skills to work in Boeing facilities. As the aerospace industry moves more jobs to the South, many of the incentive packages offered by states include provisions for worker training, including a $52 million facility in Alabama where workers are trained at state expense; $136 million in North Carolina; and $30 million from South Carolina.
Many partnerships between manufacturers and local job boards and state governments look to prepare high-school educated workers for positions in local plants. Some, such as the Wisconsin Regional Trading Partnership, go even further. The WRTP allows even those with only a 10th grade equivalency to access the program, which provides participants a 27 percent wage premium two years after graduation.
The Career Academies starts even younger, taking high school youth and putting them to work in local industry. Graduates receive an earnings premium of 11 percent over non-participants. Unfortunately, programs like these tend to be the “alternative” for at risk-students, rather than a path to be prized on its own merits.
These sorts of partnerships provide incentive for industry to see their workers as investments. Indeed, the German employers and educators Jacoby spoke with highlighted this as the most important aspect of the model. Being able to look, in their words, “beyond ROI” and see the longer-term benefits for the company is difficult in today’s corporate culture, but necessary if we want to close the skills gap.
To be sure, this piecemeal approach has flaws. Large areas are left unaddressed and the lack of national consensus allows the myth that college is the answer for all to persist. But it also allows experimentation, flexibility and local response to changing circumstances. Given the backdrop of rapid technological change, innovation in education is a key goal that tends to be stifled by top-down national programs.
The last thing the United States needs is to turn worker training into the adult version of K-12 education, where by most accounts we continue to train students in subpar ways for a world that no longer exists. Training programs need to stay nimble and businesses must have the right incentives to respond to changing circumstances.
It would be impractical and unwise to expect business to shoulder all of the burden of this kind of training, given the free-rider problems that inevitably crop up when workers take their skills to the competition. Rather than pursuing a German-style, top-down model, what we need is a bottom-up movement to take worker training seriously. We need to invest in our workforce, particularly those who have been hurt by the dramatic shifts in the need for skilled workers. Federal funds for worker training should flow to these programs, but the federal role should stop there.
Even if a national program were desirable, the political will to create one is close to nil. It is a large leap for conservatives to get on board with such an idea. However, many conservative politicians are looking for solutions for the poor and middle class, and redesigning our federal funding to support local programs such as those in Wisconsin or South Carolina would be a step in that direction.
Americans need to get past the idea that it’s college or bust. For too many twenty-somethings, the “bust” has left them at a competitive disadvantage in the international labor market, and without a clear path forward. The average annual salary for an aerospace machinist in Charleston, S.C. is $45,500, almost 200 percent of the poverty line for a family of four. As Boeing’s General Manager Jack Jones said in a 2013 interview:
It’s a prestige job. And you say you’re from Boeing or you work at Boeing, and there’s a prestige within the community.