Does job training work

The Job Training Charade
By Gordon Lafer
Cornell University Press, Ithaca, 320 pages

Even after a long economic boom, the United States continues to have many adults trapped in an unacceptably large low-wage labor market. In 2000 nearly 10 million full-time, year-round workers had incomes below $15,000. Everyone’s favorite solution to this challenge is an amalgam of policies and programs that fall under the rubric of education and training. From the War on Poverty onward, public policy has focused on the skill deficits of the poor. More recent concerns about competitiveness have also led policy-makers to emphasize upgrading the skills of so-called front-line workers.

Underlying all these efforts is the assumption that skills and qualifications are the principal barriers to higher earnings, and that the way to overcome these barriers is job training. But does this approach to economic advancement make sense? In The Job Training Charade, Gordon Lafer, a professor of labor studies at the University of Oregon, answers with an emphatic no.

Lafer lays out his case against job training in four steps. First, he argues that much of the economic problem facing poor people has nothing to do with a lack of skills. Second, he cites evaluation studies to show that job training programs work poorly, if at all, in raising earnings. Third, he says that other policies, such as unionization and stronger labor standards, do more to improve earnings at the bottom of the economic ladder than do increasing job skills. Finally, he concludes that the consensus behind the demonstrably failed policy of job training comes primarily from a desire to deflect pressure away from structural remedies and toward an alternative that is politically safe, if ineffective.

This book makes points that are well worth considering, but Lafer presents them in a polemical manner that undermines his own credibility. Consider, for example, his argument against the proposition that skill requirements for jobs have increased in the past two decades. He insists that jobs today require no more skill than they used to; he also claims that the supposed mismatch between the supply and demand for skills has little to do with what has happened to wages in the past two decades. Now Lafer may be right that the stagnation of average wages is better explained by the erosion of the minimum wage, the weakening of unions, and the increasing power of employers in the labor market overall. But there is no denying that there has been a change in the relative demand for skilled labor compared with unskilled labor across the economy. Overwhelmingly convincing case-study literature shows that firms offering good jobs are increasingly selective in whom they hire. It is also undeniably true that the relative wages of better-educated workers have increased at the same time that the supply of these workers has been growing. Only a shift in demand in favor of skill can explain this.

Lafer’s treatment of other developments in the job market is similarly one-sided. He dislikes new work systems (teams, quality programs, and the like) and argues that they are simply methods to speed up and intensify production at the expense of workers. In doing so, however, he ignores considerable evidence that employees actually prefer these new work systems to the old Tayloristic model of efficiency. He also picks and chooses from among the available evidence, dismissing the Saturn case because the union voted out the leaders who pioneered the model‹but not even acknowledging its many accomplishments from the employees’ perspective. Lafer’s certainly right that managers and employees have intrinsically conflicting interests along some dimensions. But in exclusively emphasizing this point he ignores other arenas where the two sides share a common agenda.

It would be easy to march through this book citing errors and omissions. But what about its core assertion that job training programs are not an effective way to attack low earnings and income inequality? Here, Lafer should be taken seriously, and his book offers an opportunity to think about the contours of effective public policy for economic mobility.

Lafer is right that the evaluation literature on the main federal training legislation, the Job Training Partnership Act (and by implication its successor, the Workforce Investment Act), is discouraging. National evaluators have unearthed few positive impacts from JTPA, and what few they found resulted in gains too small to make a fundamental difference in people’s lives. Welfare-to-work training efforts have posted a similarly mixed and, in the end, disheartening record in economic advancement. Still,it is important to recognize training programs that demonstrate what can be accomplished with adequate funding and good design. Examples include Project QUEST in San Antonio, Texas, and CET in San Jose, Calif., both of which combine high-quality training and strong relationships with the employer community.

In addition, JTPA and its cousins represent only a slice of the nation’s job-training system, more broadly conceived. Far more job training aimed at people in the middle and bottom of the earnings distribution takes place in community colleges, which have radically expanded their mission and their reach in recent years, than in free-standing job-training programs. Here the picture is brighter. Community colleges provide vocational training in both degree and non-degree (certificate) programs and enroll nearly half of all first-time freshmen nationally, as well as large numbers of adults. While there continue to be significant concerns about uneven quality control, barriers to access, and poor graduation rates at these institutions, on balance the return on investment in community college training is clearly positive.

Finally, despite their mixed performance, job-training programs have now been around long enough that the outlines of a best-practice model are emerging. One component is working closely with employers (or with consortia of employers) in identifying training needs and in designing curricula. The best programs are also typically, though not always, long-term in nature, making greater investments in trainees than does the usual quick-and-dirty effort. Well-designed programs also work to overcome barriers confronting trainees. Some provide child-care support and emergency financial assistance. Effective programs also work around the bureaucratic obstacles to enrollment and remedial education that community colleges and other institutions sometimes erect.

It is certainly true that the typical local extension of the federal training system (currently called a Regional Employment Board) has neither the resources nor the incentives to follow these best-practice models. Resources are constrained, regulations (such as those forbidding the payment of stipends) are an obstacle, and incentives to push welfare clients immediately into work are perverse. In some parts of the country, the best efforts are led by employers’ associations, unions, and community groups. Only occasionally does a creative regional employment board–Boston’s Private Industry Council is one of them–initiate an effort along these lines. But to say that it is necessary to move beyond business as usual in job training is not to say that training itself is useless.

Well-designed training efforts are worthwhile components of an attack on the low-wage labor market. But Lafer is right that an exclusive emphasis on training is not enough to improve the economic lot of today’s low-wage workers. That’s because training programs simply take the structure of the labor market as it is and try to fit people into it. We also need think about changing the labor market itself.

America has a long tradition of raising standards at the bottom of the labor market by means of child-labor legislation, minimum wages, and safety standards. Since the 1980s, these standards have eroded. Despite legislation passed in 1996 that boosted the minimum legal pay to $5.15 in 1997, the real value of the minimum wage today is 19 percent lower than it was in 1981. A large body of economic research documents that this erosion has contributed to the decline of earnings at the bottom. Unions, another bulwark of labor standards, have declined in membership, and therefore clout, during the same period. (Union organizing in the low-wage labor market provides some bright spots in this dismal picture. Building cleaners represented by the Service Employees International Union, supermarket checkout clerks represented by the Food and Commercial Workers, and hotel maids represented by the Hotel and Restaurant Employees Union are all better off than their nonunion colleagues.)

Lafer notwithstanding, improving skills represents one important component of an attack on low-wage employment. But this strategy can be successful only if real investments are made in thoughtfully designed education-and-training efforts. And it will result in broad improvement in the economic prospects of those at the bottom of the labor market only if combined with efforts to raise labor standards and strengthen the bargaining power of poor Americans.

Paul Osterman is Nanyang professor of human resources and management at MIT’s Sloan School of Management.