Monday, April 21, 2014

The Skills-Education-Employment Dodge

What sounds like a bit of good news was announced announced Wednesday:
Emphasizing skills training as key to a growing middle class, President Barack Obama on Wednesday announced $600 million in competitive grants to spur creation of targeted training and apprenticeship programs to help people land good-paying jobs.
The programs look like good news; $500 million for a competition involving colleges and businesses to see who can create innovative job training programs and another $100 million for expanding existing apprenticeship programs...all without having to involve Congress, as it uses money already allocated for spending. It's all being presented as a couple of mid-to-long term actions that will help fight poverty:
...9 out of 10 apprentices end up in jobs that pay average starting salaries of above $50,000 a year.
It's also evidence of positive forward motion in a tough political environment, which we've had precious little of, thanks to a recalcitrant Congress chock full of Republicans and Dems who no longer really represent the majority of US citizens. I should be happy because actions like this could make a positive impact in people's lives; it's hard to argue against increased funding for any sort of expansion of education that can widen a individual's sphere of opportunity. This is especially important considering that it's been tougher to get an education as of late::
...between 2007 and 2013, there was no meaningful departure from the long term trend, but that by 2014, enrollment was substantially below the long-run trend. This drop in enrollment rates is worrisome, particularly to the extent that it is due to students being forced to drop out of school, or never enter, either because the lack of decent work in the weak recovery meant they could not put themselves through school or because their parents were unable to help them pay for school due to their own income or wealth losses during the Great Recession and its aftermath.
Yes, ever-increasing costs (.pdf) are a huge barrier to getting an education or training, and the bulk of those costs are borne by individuals, either out-of-pocket or in the form of taxes.0 But something's nagging at me, keeping me from seeing this news as an entirely good thing. I look at the announcement of these programs and think, "good, but where are these newly-skilled people going to work?"
(please join me below the fold)
The problem with all this is emphasis on education and vocational training is that education really doesn't solve the core problem, which is employment and underemployment1 at wages that are stagnant2 and/or insufficient to live on. The productivity gains of the past few decades are not being passed along to the workers who are at least partially responsible for making the gains happen.3
The current conventional wisdom, however, identifies some vague references to weak educational achievement or a 'skills gap' as being a barrier to Americans' financial security and their ability to compete in a global labor market.4 This so-called skills gap is largely a myth unsupported by evidence:
• The ratio of unfilled jobs to unemployed workers today is quite low by historical standards. There are always unfilled jobs, because workers leave and employers have not yet had time or opportunity to hire replacements. This is a frictional, not structural, phenomenon. There are very few, if any, jobs today that remain unfilled because employers cannot find workers with the needed skills. • Today’s long term unemployed have skills comparable to those of recently laid-off workers “who quickly find new jobs.” The long-term unemployed face a shortage of demand for their labor, not skill requirements beyond their education and training.
•  If there really were a skills shortage, we would expect to see wages increasing in job categories where skills are allegedly in short supply. But such wages are not increasing.
At best, programs like the ones announced Wednesday allow individuals to be on par with their similarly-skilled counterparts already in the labor market when competing for a job. Train and educate as many people as you can (or cannot) afford to; it's not going to make one whit of difference if either the jobs aren't there or the jobs don't pay well enough to maintain a fair standard of living.5 If the jobs were there, we wouldn't be seeing:
...260,000 Americans with bachelor’s degrees earning the federal minimum wage of $7.25 an hour or less in 2013, according to the Bureau of Labor Statistics’ newest annual snapshot of minimum wage workers. Another 200,000 associate’s degree holders also worked for that wage. These figures are sure to understate the total number of people with higher education degrees who are working minimum wage jobs because data does not factor in state minimum wage laws that are higher than the federal floor. That means that likely thousands of workers in the 21 states with higher minimum pay rates are likely also degree-holders.
Or that, overall:
The long-term unemployment rate is between 2.9 and 4.3 times as high now as it was six years ago for all age, education, occupation, industry, gender, and racial and ethnic groups. Today’s long-term unemployment crisis is not at all confined to unlucky or inflexible workers who happen to be looking for work in specific occupations or industries where jobs aren’t available. Long-term unemployment is elevated in every group, in every occupation, in every industry, at all levels of education.
At worst, this competition among workers is another rationale given for reduced wages, especially in the middle wage tier which is vocational training's sweet spot, jobs-wise:
Mid-wage occupations, paying between $13.83 and $21.136 per hour, made up about 60 percent of the job losses during the recession. But those mid-wage jobs have made up just 27 percent of the jobs gained during the recovery. [...] That's put downward pressure on wages: "[M]any middle-class workers have lost their jobs and, if they have been able to secure new employment at all, find themselves earning far lower wages post-recession," the San Francisco Fed notes.
The counter-intuitive result of funding educational opportunity only may very well be less work and lower wages for everyone, not more and higher. This is especially worrisome, considering how the jobs covered under "training and apprenticeship" are not really the ones being created right now:
The result is a growth in occupations that are hard to automate, which tend to either be very menial and low-paying (such as janitorial labor) or high-paying but requiring considerable skills (like computer programming). So as the middle of the distribution gets carved out, the low and top ends grow.7
Given all this data - and it's not all new data; we've known this information for a while - why are we still being led to believe that un-, under-, and ungainful employment are education problems that requires 'reforming' the public school system and spending millions on job training programs? It smells more like a dodge and a distraction from making the real reforms needed in taxation, regulation, and the labor market. Tweaking funding for education or blaming an near-imaginary skills gap or closing public schools and opening charter schools is not going to solve the problems we're facing, regardless of how well they play on television and certain intellectual circles. A skills gap is one of those zombie lies that is easily accepted by the economic and business elite, while a 'failed education system that doesn't prepare students for jobs' plays well to the conservative free market and anti-government set. Of course, provision of more funding for education and training is an easy sell to academics and most of us lefties, who highly value education anyway...but feeling good aside, putting the emphasis on a near-imaginary skills gap is a distraction and a misdirection of blame:
The point is that influential people move in circles in which repeating the skills-gap story — or, better yet, writing about skill gaps in media outlets like Politico — is a badge of seriousness, an assertion of tribal identity. And the zombie shambles on. Unfortunately, the skills myth — like the myth of a looming debt crisis — is having dire effects on real-world policy. Instead of focusing on the way disastrously wrongheaded fiscal policy and inadequate action by the Federal Reserve have crippled the economy and demanding action, important people piously wring their hands about the failings of American workers.
Moreover, by blaming workers for their own plight, the skills myth shifts attention away from the spectacle of soaring profits and bonuses even as employment and wages stagnate. Of course, that may be another reason corporate executives like the myth so much.
Moreover, as nice as increasing funding for educational initiatives like the ones announced Wednesday will not have the desired impact; policies like those aren't effective without other changes to government policies and private sector behavior that keeps this from happening:
It’s as if companies had been using the last two recessions as an excuse to make their workforce more flexible, using people only when absolutely needed, on irregular schedules, and keeping them on stand-by the rest of the time. This is a powerful tool in bringing payroll expenses down. It makes the company look awesome on paper. It wreaks havoc on the lives and incomes of workers and is terrible for the overall economy.
But those things are hard-hard-hard to turn around, considering that our current state is the result of economic policy changes starting back in the late 1970's and early 80's. We no longer seem to understand the social utility of having vibrant unions or the value of having economically patriotic policies in place that benefit the majority of US citizens. We've almost never as a country have been truly united, but it seems as if we entirely lost our way as a single nation.

--------------footnotes/comments/more links-------------
0used to be that a company would find and hire a good person first and then put him or her through some form of paid training...whatever happened to the practice of companies paying to train their employees?
1 see here and here and this chart here for a little more on underemployment.
2 stagnant/decreasing since the 70's, but recessions have their effects.
3 The other part being robots and better technology...which falls short as an explanation, given that other countries such as Germany had similar tech improvements and didn't hulk-smash their middle and working classes like the US has. It's more due to the decline of unions and unwillingness to pay for a decent standard of civilization.
4international comparisons don't work; comparing Singapore to the entire US is like comparing Massachusetts' test scores to those of all of Russia...not to mention that globally-average test results for American students may not matter all that much anyway.
5put into perspective, $21.13 is around $44K/year...the President's mention of jobs that are 'above $50K/year' is roughly $24-25 dollars an hour...not exactly the same, but not so different as to be dissimilar.
6which is not the same as saying education level is irrelevant; people with post-secondary education make more money overall and are unemployed less than those who don't have a degree. It does, and you will fare better as an individual in the cutthroat job market if you have the education and skills that your peers don't.
7 those high-paying-high-skill jobs - saying this based on personal experience - tend to be outsourced overseas; 70% of the software dev people I work with are not located in the US.