Tuesday, July 22, 2014

What you need to know about the White House's new job training initiative

This afternoon President Obama and Vice President Biden are traveling to Oakdale, Pennsylvania where they'll be announcing a couple of initiatives related to job training and efforts to close the "skills gap" that prevents people from getting access to high paying jobs. I had the opportunity to join several other journalists Tuesday afternoon to hear from several senior administration officials about the ideas they'll be announcing.

Conceptually, the administration is working on some very large ideas about how to rethink the nature of job training in the United States and the way businesses relate to certain aspects of the school system. In practical terms, though, we're looking at a very modest initiative since the administration is looking for something it can do without congressional action — and in this area that turns out to mean they can't do very much.

What is the administration doing?

The announcement relates to two separate initiatives. One is a $500 million set of competitive grants to community colleges to do jobs-based training initiatives. That means initiatives that are grounded in specific guidance from local employers about skill needs, and that are evaluated on the basis of their success at placing graduates in paid work. Senior administration officials who briefed journalists on the program Tuesday afternoon characterized current practice as too often "train and pray" rather than "train and place." The idea here is to change that.

The money comes as the fourth and final tranche of funding dispersed from a $2 billion program called the Trade Adjustment Assistance and Community College and Career Training competitive grant program.

The other, smaller, initiative is $100 million in competitive grants to help bolster apprenticeship programs. This money comes from a kind of Labor Department slush fund that's generated by fees employers pay the government when they hire skilled immigrants on H1-B visas. Many people give Germany's large and robust apprenticeship initiatives credit for that country's low youth unemployment rate and existing apprenticeship programs in the United States are pretty successful. They're just really small. We have 375,000 apprentices in America—Germany has fifteen times as many in a smaller country. The grants are meant to serve two purposes. One is to scale up existing successful apprenticeship programs with room to grow. The other is to start apprenticeship programs in new fields where they don't much exist. Today's American apprenticeships are largely in the skilled trades, but the White House wants to see new programs in IT and health care and other growing fields.

Is this a big deal?

Not really. One should never sneer at $600 million, and with luck these grants will make a difference in some people's lives. But $600 million is a drop in the bucket compared to the over $18 billion the country currently spends on famously un-rationalized and un-evaluated job training programs. That's to say nothing of the larger education spending context.

Implicit the thinking behind these initiatives is that a fairly large amount of what federal job training programs and state- and locally-financed community colleges are doing is misguided. But the administration isn't overhauling those initiatives, it's nudging them slightly.

Of course it's no mystery where the administration is focused on micro-initiatives rather than big overhauls. Senior administration officials were at pains to note that they do have legislative ideas, but the problem with legislative ideas is that for them to be implemented you need to get congress to pass the bills. Given the level of gridlock in congress there's a priority placed on identifying things that can be done through executive action, and it just happens to be the case that what can be done through executive action on this front is relatively modest.

Is the skills-gap real?

This is a very contested issue about which people often get overheated. It is unquestionably true that when you talk to business owners and business managers in America, one of the main things that they say is that it is too hard to hire workers who have the skills that they want. Indeed, as an editor with some managerial responsibilities I wish there were hundreds or thousands of people kicking around Washington, DC with exactly the journalistic skills I value. If nothing else, it would make it a lot cheaper and faster to staff up.

Earnings

But it's far from clear that this is a legitimate source of macroeconomic woes. If the country where facing a massive economy-wide skills shortage you'd expect to see wages rising rapidly and putting a lot of pressure on inflation. You do see something like that happening for the specific case of software engineers where a combination of incoming VC money and limited supply of skilled workers is driving up pay. But you don't see it happening across the board by any means.

That said, while the "skills gap" isn't the root of today's high unemployment it is true that a more skilled workforce is always a nice thing to have. The economy really will grow quite a bit faster over the long term if we get better at matching people who want higher paying jobs with skills employers are looking for.

The bottom line

The senior administration officials repeated emphasized the idea that training, skills, and apprenticeships aren't a "partisan issue." There's obviously something to that. But there's the larger reality that everything is a partisan issue — especially when the president tries to make a big deal out of it — so there's very little chance that we're going to get a big picture overhaul of job training in the United States. The president and his team aren't going to just sit around all day doing nothing, so on job training this is what they've come up with. The fact of the matter, however, is that if you want the kind of change that would make a big difference you would need legislation.

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