The False Promises of Worker Retraining

The False Promises of Worker Retraining

Despite assurances from policymakers that retraining is the key to success, such programs have consistently failed to equip workers with the preparation they need to secure jobs.

hen Travis Busch graduated from high school in Jefferson, Iowa, in 1999, he followed many of his classmates on the well-plotted and well-trod path to college. Busch took classes at Iowa Central Community College during the day and worked part-time at night on the floor of a local factory that made stock tanks for horse and cattle farms. But after a year and a half in college, he dropped out to work full time.

“I didn’t want to go to college in the first place,” he said. “I was already making money. I didn’t see why I needed it.”

Fast-forward to January 2017. The factory where Busch worked was sold to a company that moved its operations to Kentucky and laid off the workers in Iowa. Before he lost his job, Busch met with local workforce officials who presented him three options: apply for an apprenticeship, go back to college, or try his luck on the job market with only a high-school diploma

“I had a long conversation with my wife and decided that I didn’t want just a job, but I wanted a career,” Busch said. “I wanted to go somewhere where I wouldn’t have that feeling they are going to lay me off. I wanted job security.”

For Busch that job security would come from installing and repairing heating and air-conditioning systems. But on the day he went to sign up for the HVAC program at Des Moines Area Community College, the coordinator he was scheduled to meet with wasn’t there. Instead he bumped into the head of the tool and die program, Charlie Peffers, who took Busch on a tour of the college’s labs. “He showed me the machines and really sold the program,” Busch said.

What ultimately persuaded Busch to give the tool and die program a try were Peffers’s comments about the job outlook for his graduates, who make parts for a variety of industrial machines. Most second-year students in the program were already working part-time. Companies came to campus every other week to recruit students, offering full-time jobs that started around $40,000 a year. And some students graduated with multiple job offers.

* * *

Busch, who began classes in the tool and die program this fall, is the type of worker that politicians love to trot out when they talk about how job retraining is the answer to putting Americans back to work. But in many ways, Busch is one of the lucky ones. A relatively small chunk of the Americans who missed the conventional on-ramp to higher education and a career out of high school are now getting a second chance at a well-paying job through retraining.

Worker retraining is a classic chicken-or-egg dilemma. Employers don’t want to expand or relocate without the availability of an already-skilled workforce. Workers who have been laid off through corporate downsizing or because their jobs were shipped to a foreign country don’t want to dedicate the time and effort needed to go through retraining without the pledge of a sure-fire job with the same or a better paycheck.

So when you plug real people into the easy fixes designed by policy wonks, the situation suddenly becomes more complicated: Older workers who haven’t seen the inside of a classroom for decades are frightened by going back to school. Men don’t want to train for the jobs that are left in town, particularly in health care, because of the stigma of being employed in occupations traditionally filled by women—a phenomena that Lawrence Katz, a Harvard University labor economist, has frequently called an “identity mismatch,” rather than a skills mismatch. And in a country founded by people on the move, unemployed workers are unwilling to relocate to find work.

No wonder President Trump was able to tap into the nostalgia of unemployed and underemployed workers in working-class communities during last year’s presidential election with promises to bring back jobs in the coal mines, the textile plants, and the steel mills. Such blue-collar workers, most of them lacking a college degree, are these days being hit particularly hard by job losses on two fronts. The first is a wave of automation that has caused nearly nine in 10 manufacturing jobs to disappear since 2000, according to an analysis by Ball State University. Second is trade. A paper published last year by three economists concluded that Chinese imports alone eliminated some 2.4 million jobs in the U.S. since the beginning of the century.

For many dislocated workers—or employees who were terminated and are unlikely to return to that job or even that industry—it’s often easier to collect unemployment or other cash benefits that come along with training and then either remain jobless or patch together work that doesn’t require learning a new skill or acquiring a college degree. But that’s not a recipe for sustainable careers or even long-term work. As a result of the 2008 recession, the U.S. shed 1.6 million manufacturing jobs requiring just a high-school diploma; only 200,000 returned.

The fastest-growing jobs in the country require training and education beyond high school. Between now and 2024, according to Georgetown University’s Center on Education and the Workforce, the United States will be home to some 16 million openings for middle-skill jobs—those that require more education than a high-school diploma but typically not a bachelor’s degree. Some 40 percent of them pay more than $55,000 a year; another 14 percent pay more than $80,000. The National Skills Coalition has found that these jobs in sectors such as computer technology, health care, construction, and high-skill manufacturing account for 53 percent of the labor market, but only 43 percent of middle-skill workers are sufficiently trained.

“The U.S. faces a serious skills gap,” said Secretary of Labor Alexander Acosta in June when announcing the administration’s executive actions to expand training opportunities, mostly through apprenticeships. Referring to the discrepancy between what employers need and what skills workers have, he pointed out that the U.S. has 6 million jobs—1 million in the health-care sector alone—the most since the Labor Department started keeping track since last decade.

But even as members of the administration pay lip service to job training, it has joined other politicians in making cuts to the programs. Dollars delivered to the states through the federal government’s primary workforce-retraining program have been slashed by 22 percent since 2009, and in his first budget earlier this year, President Trump proposed further cuts. Despite decades of investments by the federal government in a patchwork of job-retraining efforts, most have been found to be ineffective according to numerous studies over the years, and it remains unclear to experts whether the programs are even up to the task of preparing workers for the new economy.

Take the program aimed at workers whose jobs have moved overseas: the Labor Department’s Trade Adjustment Assistance fund. It has been around since the early 1960s, and in recent years has paid upwards of $11,500 per eligible person for training. But a 2012 assessment of the program found that, four years after completing training, only 37 percent of its employed participants were working in their targeted industries. Women and younger workers were more likely than other workers to undertake training through the fund, and the incomes of older participants, in particular, never caught back up to their earlier wages.

The trade-assistance program is just one of 47 federal job-training programs across nine agencies that the Government Accountability Office identified in a 2011 report. Most were tiny and mainly served the unemployed struggling to find work. The Workforce Innovation and Opportunity Act signed by President Obama in 2014 was a bipartisan attempt aimed at consolidating the hodgepodge of programs.

Still, federal retraining programs remain rooted in the industrial era in which they were created and have largely failed to evolve with the global information-based economy in which technical know-how trumps muscle.

“In previous decades, we’d have down cycles where workers were laid off and then they’d be called back,” said Mary Alice McCarthy, the director of the Center on Education & Skills at the left-leaning think tank New America. “Now there is a restructuring in most industries where people aren’t ever going to be called back or ever find jobs in that industry again—and we don’t have training systems that allow for that.”

Workforce-development officials and labor economists describe four main trends in the job market that make the road from unemployment to retraining more treacherous now than it was even a decade ago. These trends, according to observers, have turned the government programs to support dislocated workers into relics of the past.

First, entire occupations and industries are expanding and contracting at an alarming pace, and the skills needed to keep up in almost any job are churning at an increasingly faster rate. As a result, there is often a gap between the jobs employers need to fill at a given moment and the skills of available workers. Both employers and trainers are partly to blame for this mismatch. Companies typically are reluctant to reveal their hiring plans too far in advance of filling the actual openings because they don’t want to tip off competitors. Meanwhile, colleges can take months, even years, to design and advertise new programs; the requirements for a degree take another two years, further delaying graduates’ entry into the workforce.

The federal government has called for better cooperation between industry and community colleges in designing programs that prioritize what it refers to as “demand-driven training,” so that dislocated workers aren’t learning skills that are outdated by the time they graduate. Some schools, like Des Moines Area Community College, have expanded their non-credit programs to get new classes up and running more quickly than in the past and teach students just enough to start a career. The college now offers 15 non-credit certificate programs enrolling roughly 450 students; the classes cost as little as $89 and as much as $1,000-plus a pop. Some 85 percent complete the programs, compared to just 39 percent of community-college students nationwide who graduate within six years.

Unlike the associate’s-degree programs offered by Des Moines, the goal of these weeks-long boot camps isn’t to teach students everything they need to know to be great in a job, said Michael Hoffman, the college’s executive director of continuing education. “They need a job tomorrow, not two years from now,” Hoffman said.  “So we ask employers what a base program would be to get them the skills to secure an interview.”

As an example, Hoffman pointed to a local hospital that was struggling to hire food-service employees. It partnered with the college to design a semester-long culinary program that teaches students just enough to get a job at the hospital. Once on the job, graduates of the program can retroactively apply to receive credits for the classes they completed that count toward further education if they wish to pursue it. “Our programs are very fluid because we want to get students into the job market as soon as possible,” said Kay Maher, who helps students enroll in workforce-training programs at the college.

States themselves are often an obstacle in getting displaced workers back on the job. The second major development in retraining displaced workers for new careers is that states have increasingly added onerous licensing requirements for many jobs to ensure safety or quality of services. A study by the Brooking Institution’s Hamilton Project estimated that, because such requirements discourage people from pursuing some careers, the rules have resulted in 2.85 million fewer jobs nationwide. The study found that around 30 percent of American workers need a license to perform their jobs; in the early 1950s, less than 5 percent did. About 800 occupations—from emergency medical technicians to cosmetologists to interior designers—are licensed by at least one state.

Third, as Hoffman alluded, speed matters when it comes to enrolling into training programs workers who were recently laid off. A significant delay—a wait of a year or more—often permanently hinders a worker’s chances at finding a new career and limits his or her lifetime earnings. Retraining is most successful when workers actually start it before they leave their old job. “If you wait until they are out of a job, the emotion of losing a job comes into play; they start to get accustomed to not working, they get rusty,” said Jane Oates, who was an assistant secretary in the Labor Department during the Obama administration.

Indeed, the analysis of the Trade Adjustment Assistance program conducted for the Labor Department in 2012 found that those who enrolled in training within 13 weeks of applying for unemployment benefits ended up working significantly more weeks, and earned more, than workers who entered training a year or more after a job loss.

The fourth major development is that the pathway to retraining these days almost always runs through a college campus. Even most manufacturing jobs now demand some sort of education after high school. But many of the workers who require retraining dropped out of college, if they went at all. Perhaps the biggest hurdle in retraining displaced workers is that some of them have little interest in going back to school.

For a few, a rejection of higher education might seem rational. After all, why would someone in his 50s who hasn’t been in a classroom in decades dedicate a few years to train for a new job surrounded by people half his age and then start on the bottom rung of the career ladder? So for many of these displaced workers, it is just easier to opt out of the workforce altogether, particularly for men. The share of American men in their prime working years (25 to 54-years-old) but not employed has jumped sharply in the last four decades. Today, one in five of them isn’t in the labor pool at all. “We can’t build an economy with that many people not participating at all,” Oates said.

* * *

As automation and foreign trade have accelerated the pace of decline in manufacturing across the country, community colleges have become a key cog in the wheel of programs that retrain workers. Some 34 percent of the roughly $114 billion the federal government spends annually on workforce development and education goes to higher education, with much of it flowing to two-year colleges.

In Iowa, Des Moines Area Community College has long been seen as a leader in workforce development and worker retraining. That was put to the test a decade ago, when the Whirlpool Corporation bought Maytag, which was headquartered in Newton, 35 miles east of Des Moines and where the college has one of its six campuses (and that was built on land donated by Maytag). At its peak Maytag employed one out of every five people in Newton, more than 3,000 in all. But in 2007, after the purchase of Maytag, Whirlpool announced it was pulling all of its operations out of Newton.

“This was a company town,” recalled Kim Didier, who at the time headed up the Newton Development Corporation, an organization responsible for attracting businesses to Newton, and who had previously worked for Maytag herself. “The biggest obstacle we had to overcome in retraining was that there was this culture in workers, a hierarchy developed from years of working at Maytag. So when we started putting out ideas and plans to support entrepreneurship, for example, or get people back in school, we often heard from displaced workers, ‘We can do that?’”

When workforce-development experts are asked where government-retraining programs have worked well recently, many point to Newton as one of the success stories. In the aftermath of the Maytag layoffs, local officials sketched out a revitalization plan, and within a year had attracted more than 1,200 jobs in advanced manufacturing and high-tech industries, including positions in a large factory that makes wind towers and turbines. (In 2012, then-President Obama paid a visit to Newton to speak about job creation.)

At the same time, Des Moines Area Community College officials discovered how best to serve large swaths of students of different generations and with varying education experiences. “We learned most of all to be flexible,” said Joe DeHart, provost of the Newton campus, “because higher education is usually seen as being inflexible to the needs of students.” The college experimented with multiple start dates for programs instead of forcing laid-off workers to wait for the beginning of traditional semesters in September and January. It also created some cohort-based courses to mimic a typical work-week in which students attended classes every day instead of only two or three times a week.

The goal was to ease the anxiety that the word “retraining” triggers in many workers who suddenly lose a job or are depressed by the prospect of figuring out a new career. When Jenny Michael was laid off from Maytag she was nervous about trading in what had been a decade-long secretarial career for a plan to return to the classroom in pursuit of a two-year degree in business administration. “I hadn’t been in school since I graduated from high school in 1977,” Michael said. In a mantra repeated often by her co-workers, she added: “I thought I’d spend my career at Maytag.” She’d been happy assuming it’d be a job for life.

Nearly 50 years old at the time, Michael was one of the oldest people in her classes, and at times felt out of place. She had no idea how to study. She struggled through her first few weeks. Then she started to get a handle on how to study. “My husband is an engineer, and he told me that I didn’t need to know the whole book,” she said.

Slowly, Michael gained the confidence she needed. “I put so much pressure on myself,” said Michael, who had two children, one in college and one in high school at the time. “I was expecting them to do well, so I needed to do well, too.” Six months before she graduated, she lined up a job at a new company that made towers for wind turbines. Two other jobs have followed since, and now she is back at Des Moines Area Community College—this time as an employee working in the financial-aid office. “I’m glad I made the decision” to go back to school, Michael said, “because that piece of paper matters so much in terms of having a career now.”

* * *

After completing the degree in the tool and die program next year, Travis Busch is looking forward to finally having a career and “making some real money.” Peffers, the program’s head, describes Busch as an exemplary student who has quickly risen to the top of his class. But if not for a random encounter on the day he visited the college, it’s very possible Busch would have been enrolled in the HVAC program, if he was in school at all. Who knows what retraining would’ve led to.

And that’s the dilemma facing many workers as they consider whether to enroll in retraining programs: They don’t always know what they’re best equipped to do and so pick new careers that might be familiar to them, rather than something that is a good match. The Labor Department’s study of the trade-adjustment program found that job trainees who received career assessments were more likely to get a job after training than those who didn’t because they made better-informed choices about the training options that were most beneficial.

The update to the Workforce Investment Act passed by Congress and signed by President Obama in 2014 prioritizes programs that help workers understand the connection between continuing education and work. It authorizes the use of federal funds, for instance, to pay for instruction in math and literacy skills when training for a specific occupation, something that wasn’t allowed before as basic education and training were seen, and in many cases still are seen, as two separate services by Washington policymakers.

“Retraining is held up as some sort of savior to displaced workers,” said Didier, the former head of the Newton Development Corporation, who now works at Des Moines Area Community College where she helps the college link up with businesses that have training needs. “But without a specific job at the other end, no one is going to waste their time retraining just to retrain.” Because when it comes to learning and work, the most important thing is work itself.

This article is part of the “What Makes a Worker?” project, which is supported by a grant from Lumina Foundation.

 

About The Author

Chase Norlin

Chase Norlin is the CEO of Transmosis, an organization founded by Silicon Valley Technology Entrepreneurs dedicated to the research and application of technology to strengthen the American workforce. Transmosis is a nationally recognized Workforce Intermediary focused on enabling companies to build a pipeline of skilled labor by helping individuals address skill gaps through state and federal training dollars. Norlin was previously the founder and CEO of Emerge Digital Group (EDG), named the 8th fastest growing company in America and the #1 fastest growing company in Silicon Valley by Inc. Magazine based on revenue growth. EDG was a holding company for a portfolio of digital marketing businesses that Norlin founded and grew to $50mm in revenue in three years. A veteran of the Internet industry, Norlin founded one of the Internet’s first online photo sharing ventures and founded the first online video sharing company.

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