Can We Move Money From The Winners Of Trade To The Losers?

In a Planet Money podcast “Job Retraining Day”, the speaker visits a city in Pennsylvania, Erie, after GE downsized a factory and 1,500 workers lost their jobs. GE was able to prove that these jobs were lost to trade, so they were eligible for the Trade Adjustment Program (TAA), who will work with the individuals to find a new job that is in high demand, and pay for your schooling, relocation, and money to look for a job. A couple cases were discussed in which some individuals had logistical issues enrolling, TAA faced budget cuts, (which I’m not sold as reasons on a larger scale) but one reason was valid- that many individuals were 60 years old trying to retrain, and don’t even want to be there but have no choice.

I’m going to be 61 years old, how many people are going to hire me at 61?

The podcast concluded here that if this is the best we can do, it’s not working. And the stats show it-a 2012 evaluation of TAA found that while 85% of those who went through TAA received a certificate or degree, only 37% were working in that field 4 years later.

The NYT did a piece in 2010, After Training, Scambling for Employment, and there has been very mixed cases of whether the approach works.

  • Critics argue that programs rarely provide specialized skills and are too modest to enable new careers. Many have done training but still remained unemployed as each opening were mobbed by too many applicants.
  • A program in Michigan in 2007 trained technicians and mechanics, but 41% of people were still looking for work after 6 months. It’s possible that forecasting demand is tricky, and counselors might not have a good gauge on what industries are hiring.
  • As part of a Obama stimulus package in 2008, grants were sent for these training programs, increasing the number of laid-off workers in job training. The Labor Department reported that 85% of these workers in 2007 and 2008 gained jobs within a year of completion. However, it is not tracked what percentage of them are in the field of study, and there was some doubt on the report’s reliability.
  • A program tied directly to the needs of local industries in South Bronx, Boston, and Milkwaukee showed graduates earning 29% more than similar workers who did not receive training.

Time in Does Job Retraining Work? and The Atlantic in Job Training Helps, Just Not with Unemployment react to the NYT article and ultimately argue that job retraining was never a quick fix, but it does point us in the right direction towards filling the market demand when they arise. Training also helps on a psychological level, where someone is actively participating in training instead of feeling pessimistic about their skills.

A Slate article in 2011, Does Job Retraining Work? comes to a similar conclusion.The author’s main point is that job retraining cannot tackle cyclical unemployment, when the demand isn’t in the economy (2008 recession), but has the most potential for structural unemployment, caused by shifts in demand for job skills (technology). The question is if the goal of retraining is it to lower the unemployment rate or to better prepare workers for the evolving economy.

The argument that there is too many applicants, or that job retraining isn’t a quick fix to unemployment don’t connect with the many studies that point to a skills gap in the current economy. The NYT argument that the programs arent specialized enough to mold a new career seems a valid reason why that gap exists. So how do we better match the skills from job training to the job opening?

A 2017 article from the NYT, The Retraining Paradox, touches on this point exactly and provides a solution by looking into a certification program at Great Bay Community College. The program has developed a relationship with two local companies who have worked to help develop the program’s curriculum and updates it based on their needs. It then guarantees an interview to all the graduates of this program. According to the director, over half the program’s graduates have been hired by five local manufacturers. Policy experts are now seeing the importance of working with firms to make sure that the demand of the industry is exactly what the workers are training on.

So although job retraining is not the perfect solution that fixes all of the problems of the skill gap, I think an improvement in the goals of the program and a close relationship with local businesses will certainly show better results. Instead of sending laid off workers back to learn generic skills, programs should understand the specific skillset needed in the industry, taking into account factors such as age and talent to pair these workers with companies that have openings.

There are still those cases that fall through the cracks, such as those from the Planet Money podcast if you recall: people who find it too difficult to get on a program or those who are too old and dont actually believe they’re going to get hired. The NYT raises another one to think about, that retraining also takes a huge emotional and intellectual effort: from declining job prospects, the looming fear and distrust of what the future holds, these all take an emotional toll and it takes optimism to get through. And for those who don’t want to? For those too old? Well, they get attracted to the pitch of “I’m going to bring back our jobs” that we are all too familiar with.

Product Management | UC Berkeley ’16 Economics & Public Policy | Personal @