The New York Times focused on a Department of Labor study that calls into question the efficacy of job retraining programs. Here is the salient graf:
Tens of thousands of laid-off workers like Mr. Hutchins have turned to retraining as a lifeline. Yet for all the popularity of these government-financed programs, there are questions about whether they actually work, even as President Obama's stimulus plan directs $1.4 billion more to retraining and other services for people who have lost their jobs.
In Michigan, where the unemployment rate in May was 14.1 percent, the nation's highest, 78,000 people are enrolled in the state's No Worker Left Behind program and 7,800 are on the waiting list. At the Michigan Works job center here, where Mr. Hutchins applied for retraining money, the wait to attend an orientation session is up to two months.
Nonetheless, a little-noticed study the Labor Department released several months ago found that the benefits of the biggest federal job training program were "small or nonexistent" for laid-off workers. It showed little difference in earnings and the chances of being rehired between laid-off people who had been retrained and those who had not.
In interviews, the authors of the study and other economists cited several reasons that retraining might not be effective. Many workers who have lost their jobs are older and had spent their lives working in one industry. In need of a job right away, many pick relatively short training programs, which often have marginal benefits. Job retraining is also ineffective without job creation, a point made by several economists who have long cautioned against placing too much stock in it. Finally, workers trying to pick a new field cannot predict the future of the labor market, especially in a time of economic upheaval.
The reason I find this especially interesting is because back in 2001 I, along with hundreds of my co-workers, entered the life worker retraining. When the factory shutters you have four basic options:
1- Retire
2- Technical Diploma
3- Two-Year Degree
4- Find a New Job
In my experience, only a fraction chose option one. This makes since most working people are doing so because they can't afford to retire. A decent bloc chose option four, but the majority at least dipped their toes into the retraining waters.
Retraining looks very attractive to the newly unemployed. Not only can you learn a new trade or get an education, but you can also extend your unemployment benefits throughout retraining, in some cases up to two years.
The workers that tended to be most successful were those who entered technical training. This includes mechanics, truck drivers, nurses, and to some extent IT professionals. In most cases the pay rate was comparable to the previous jobs and the market in these fields was pretty competitive.
Where the biggest drop came was in those who headed to college. Some of the older workers had not entered a classroom in decades and a large overall percentage lacked even basic computer literacy. The majority dropped out without completing a semester and many others switched majors a few times before giving up. Very few of us, and mainly the younger bloc, completed the two-year degree.
Now that I have provided some background, let me get down to the nitty gritty.
First, retraining assumes an open labor market for the retrained workers. The jobs once available to these workers are drying up, many never to return. We need to provide grants for community colleges and technical schools who offer innovative curriculum such as alternative energy.
Second, retraining isn't a catch-all. Some people are better suited for certain fields. Instead of sending people out blindly into the retraining market into the hands of sometimes ill-equipped unemployment workers and community college advisers, there needs to be a resource to guide workers in the right direction. There should also be a greater availability of remedial courses for those who need basic skills but do not plan to enter full retraining.
Third, we need to adjust the unemployment system to extend benefits for those actively seeking work but unable to attend retraining. As it stands, a worker can be forced to sign up for courses he has no interest in completing just to gain a benefit extension. I don't believe this is widespread nor to I necessarily blame these folks for making the best of a flawed system. A simple extension option could prevent this.
Fourth, health coverage should be provided to workers during retraining. You get laid off with a family of four and your COBRA is going to cost more than your mortgage. It is hard to focus on education when the medical bills become overwhelming. Hopefully the upcoming health care reform will make this point moot, but I felt it worth mentioning.
Like the Labor report and the Times article, I concede that worker retraining is flawed. But it is necessary and can be fixed with a few adjustments. In the short-term this may be costly, but if it actually makes retraining a priority rather than a talking point everyone wins. We just can't go about it half-heartedly in the current job market or the negative results will worsen.
