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Are Government-Sponsored Job Training Programs Working?

Leonard Gilroy
July 6, 2009, 1:11pm

A column by Christine Vestal at Stateline.org today notes that states are pushing job training programs as a major strategy for reducing unemployment during the ongoing recession:

Since 1998, so-called One-Stop employment agencies like the one here in west-central Maryland have acted as all-purpose training and job placement centers for the nation’s unemployed. But since December 2007 when this recession began, the more than 2,000 agencies across the country have seen job openings plummet, while nearly twice as many jobless workers — many laid off for the first time — have walked through their doors seeking help.

Funded by the U.S. Department of Labor, states distribute the money and set policies for local workforce boards made up of business leaders, educational institutions, and economic development and social service agencies. [...]

Instead of sending discouraged workers out to pound the pavement, states are using existing federal and state resources, boosted by $4 billion in stimulus funds, to help prepare workers for the kind of jobs expected to open up when the economy improves. A new Obama administration program also aims to help low-income workers use federal grants to attend universities and community colleges so they can land better jobs than they had before the recession.

However, a separate column by Michael Luo in today's New York Times casts doubt regarding the effectiveness of government-sponsored job training programs, citing the findings of a recent U.S. Department of Labor study:

Tens of thousands of laid-off workers like [laid-off Michigan autoworker Mike] 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.

It's hard to believe that we're going to see a new era of fiscal responsibility in Washington D.C. anytime soon when policymakers receive a report calling into fundmental question their own federal job training program, and yet they still appropriate over $4 billion of taxpayer money to states to do the same thing. Not to mention the fatal conceit of claiming to know the unknowable regarding "the kind of jobs expected to open up when the economy improves." It's always important to remember that there is no crystal ball in D.C., just a lot of opaque black boxes.


Leonard Gilroy is Director of Government Reform


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