Job Training

For state and local policymakers, the issue of job training requires a significant amount of rethinking. In 2005-06, total expenditures for job training and placement services in North Carolina exceeded $476 million, including federal and local grants. The state budget of 2008-09 included more than $49.2 million's worth of appropriations for job training and placement programs. Government training and placement programs in this state span 13 state departments and divisions and include 27 programs. Those numbers don't include spending on postsecondary education, degree-based training, and receipt-based adult education through the state's community colleges and universities.

Despite vast sums of public monies being spent on such programs, the benefits are difficult to quantify. The problem is not specific to North Carolina, however. Over the years, economic research in job training has so consistently found government-training programs to be wasteful, inefficient, and sometimes even counterproductive, that the focus of recent research has been to understand why they are so ineffective. In stark contrast, the benefits of private and company-sponsored job training are demonstrably positive and significant.

Government Programs Fail

Most government training programs provided specifically to disadvantaged or other targeted populations fail to provide significant, long-term benefits. The Government Accountability Office studied 61 job-training programs in 38 states. Its conclusion was that those programs helped program beneficiaries find only "dead-end jobs." The GAO did not find that the poor in those programs received either the education or the training necessary to advance.

One study of the Job Training Partnership Act (JTPA) found that the program had no statistically significant effect on either the average earnings of young females or their employment, and even had a large (7.9 percent) negative effect on the earnings of young males.

In North Carolina, these programs have also provided little benefit. The most recently obtainable outcome data for North Carolina's programs continue to show only modest benefits. Only about one-fourth (29 percent) of JTPA clients entered employment as a result of being in the program, and 26 percent were still employed after 90 days. That same proportion of Employment Security Commission (ESC) job office clients were placed in jobs. About two-fifths (41 percent) of Vocational Rehabilitation clients found employment after completing the program.

State agencies have ceased publishing those outcome data, however. It's not too much to speculate that the reason could be that their demonstrable benefits — especially weighed against their exorbitant costs — are so slight.

Why don't these well-intentioned programs work? Many analysts believe that government training programs, regardless of their design, are doomed to failure because they lack the incentives that a private-sector trainer — or a public college competing for students, for that matter — has to place trainees in jobs successfully.

Private and company-sponsored training is fundamentally enhanced by ownership in the training process by both trainee and trainer. Private providers are also more likely than government to keep up with the latest occupational trends and needs.

A large source of private job training is on-the-job training. For example, an estimated 31 percent of workers received formal professional and technical training from their current employer, and 28 percent received informal professional and technical training from their current employer.

The returns to on-the-job training are rather obvious. Employers ensure that employees learn the skills that are necessary to accomplish tasks in their jobs, and employees gain not only those skills but also the assurance of job stability, since an employer would not invest in a resource he intended to jettison. Employers and employees exit the process with more useful resources now and in the future.

Skills, regardless of where or how they are acquired, show the strongest correlation with economic success. If one wants to improve the employment and earnings potential of workers while getting the best return on postsecondary education and training expenditures, the key is to match occupational choices with an appropriate provider of job training, which is, more likely than not, an employer rather than a school or training center.

Studies show that many workers learn their most valuable skills on the job, and are thus best served simply by having good job opportunities available rather than access to government-run training programs.

Even charitable providers of training for the "hard to employ" prove to have greater placement results than government training and placement programs. Often, these charitable programs start by addressing "soft skills," which are those life skills that make a person employable at any job: timeliness, proper attire, good hygiene, good work ethic, respect for others, a good attitude toward superiors and colleagues, good communication skills, sobriety, etc.

Why that fundamental approach works is because poverty in America is mostly self-inflicted, owing to poor decisions and behaviors, especially a weak work ethic. Those programs are aimed at adults already having made many of those poor choices, however.

To help prevent the next generation of adults from making poverty-inducing choices, the state's education system should allow concerned educators to augment their curricula to meet localized needs, including teaching personal responsibility, the importance of soft skills, and other such ideas where there is particular community need or parental interest.

More charter schools, competition among area schools, and school choice would be vital to this effort.

Recommendations

1. State leaders should consolidate state training programs as much as possible to reduce redundancy and increase oversight. Employees and contractors should be compensated according to performance, such as by paying them a percentage of the income their clients subsequently earn. Those eligible for training should have the option of converting some of their aid into cash to subsidize private employment at a (low) training wage.

2. All North Carolinians should be allowed to save money tax free in an educational savings account (ESA) for future post-secondary education and training investments, including retraining after a job loss.

3. The state cap on charter schools should be lifted to allow educational innovation and competition to flourish, and school districts should contribute to school choice and competition through open-enrollment policies and the end of forced busing, allowing voluntary busing to district schools of the parents' choice.