Wednesday, January 25, 2012

Shifting the Liability for Job Training

I think President Obama delivered a fine speech last night. I am particularly impressed with his remarks regarding higher education and unemployment. For the past three years, I have tried to be a particularly aggressive and passionate critic of the current administration’s policies and rhetoric regarding education policy. And more than that, for the past five years or so I’ve tried to direct that aggression towards certain common beliefs among American society as a whole. Maybe I haven’t been paying attention, but it seems to me that President Obama has changed course on the topic overnight, so that he is no longer peddling the easy answers that we’re used to or defending the status quo, but rather offering challenging and innovative alternatives.

After discussing the topics of renewed manufacturing and tax incentives to prevent outsourcing, the president changed direction slightly and said “I also hear from many business leaders who want to hire in the United States but can’t find workers with the right skills.”

Call me jaded, but I’ve never been particularly persuaded by that argument. It seems to me that if a business leader wants to hire within the United States, he can do so. If that is his earnest desire, but his prospective employees lack the necessary skills, it is at least theoretically possible for the business to take it upon itself to provide Americans with the requisite training. To my surprise, that was precisely what the president went on to propose.

He first presented the anecdote of a worker who was laid off, but at a time when a local community college and a new manufacturing plant had formed a partnership whereby the company helped to design the curriculum that would lead directly to the jobs that were now needed, and then paid the tuition for the laid off worker and hired her to operate the plant.

The president continued: “I want every American looking for work to have the same opportunity as Jackie did. Join me in a national commitment to train two million Americans with skills that will lead directly to a job.”

What an extraordinary, and yet extraordinarily simple concept! Prior to this, the only recommendations I’ve ever heard from the administration have been, give students more Pell grants, more Stafford loans, keep down the interests rates – all so that people who have not yet entered the job market have to take on a little bit less of a financial burden before they ever have a shot at being decently employed.

Could this new initiative actually signal the beginning of the end of this current climate, in which training is accepted as exclusively the responsibility of the worker and not the employer? Could this mean that in the near future, young people and laid off laborers won’t be asked to pick a vocation, pay hand over fist for the skills associated with it, and then simply gamble on the possibility that it will be available to them after two-to-four years?

Now, I’m sure I may seem glib in that I seem to be advocating for saving workers from the fruitless sacrifice of money and time by asking employers to do exactly the same. Some manufacturers can afford the risk, but not all can. In the latest issue of the Atlantic, Adam Davidson writes an article on American manufacturing, using Standard Motor Products in Greenville, S.C. as a case study. He explains that industrial profit margins in general, and Standard’s in particular, are remarkably slim, meaning that hiring more unskilled workers or paying them higher wages can put the entire business at legitimate risk. Furthermore, in order to be a Level 2 worker at a Standard plant, one needs to know programming languages and high-level mathematics. Consequently, “the gap between Level 1 and Level 2 is so wide that it doesn’t make financial sense for Standard to spend years training someone who might not be able to pick up the skills or might take that training to a competing factory.”

Given that reality, it certainly seems unfair to ask a company to bite the bullet and risk its own survival on doing the right thing for American workers. But it’s no less unfair to demand an untenable investment from a company than it is to demand if from an individual worker. They too risk their economic survival in taking out loans or removing themselves from the workforce for a period of years in order to acquire skills that, while necessary, may or may not actually lead to employment. No matter how lean its profit margins are, a company with stock valued at $400 million has more financial resources than a twenty-two year-old single mother working as an unskilled laborer.

There are ways around the sever risk involved in both providing and acquiring high-level training. Companies must first recognize that as their operations become more complex, training costs escalate as an element of initial overhead. It is unreasonable to expect that with greater automation and output, workers will be more and more capable to perform their functions before they even arrive at your door. Worker skills are an investment in the future of the company and the industry. Of course, they are also an investment in the future of the worker, but no man should be asked to make a substantial financial investment before he has even held a job.

So how about treating collegiate level training as an initial expense by the company, and a retroactive financial obligation for the worker? That is, a company can promise to hire from a pool of young applicants, then send pay their tuition upfront to the associated university, and subsequently deduct the cost of the education from each such worker’s pay over the course of their employment. Some might be averse to such an arrangement because it sounds like indentured servitude. But that’s the system that we already have; the only difference would be that the worker would be indentured to an employer rather than a bank. Also, for some there would be the added difference of actually being employed under the proposed system, as opposed to highly trained and still out of work.

The interests of both employer and employee can be protected. If a worker wishes to take their new skills to another plant, they can remain under contract to repay the cost of their training to their initial employer. By contrast, if a company fires the employee without cause, it wouldn’t be unreasonable to necessitate that they release the worker from that financial obligation in whole or in part.

Sacrifice is often necessary if one is to make it in this world, but there is no cause for one person or one organization to have to take on unbearable strain for the mere privilege of being employed or employing another. That has been the situation for too long – with people at every level of society, from government, to business, to private citizenry insisting that each new job seeker simply get an education whatever the expense and then hope for the best. It is high time that we rediscover what it means to share the burden. For the first time that I can remember, I think that with regard to education there may actually be some support within the government for that noble idea.

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