unemployment

New York Times Not Super Enthused About the Skills Gap Argument

/ The Old Crank

The New York Times Editorial Board has come down hard—and I mean really hard—on the idea that our stubbornly high unemployment rate can be blamed on a skills gap (the notion that good jobs are going unfilled due to a lack of qualified applicants). The Times calls this a “corporate fiction” designed as excuse to keep wages down and get the government to pay for training corporate America doesn’t want to pay for:

If a business really needed workers, it would pay up. That is not happening, which calls into question the existence of a skills gap as well as the urgency on the part of employers to fill their openings. Research from the National Bureau of Economic Research found that “recruiting intensity” — that is, business efforts to fill job openings — has been low in this recovery. Employers may be posting openings, but they are not trying all that hard to fill them, say, by increasing job ads or offering better pay packages.

Corporate executives have valuable perspectives on the economy, but they also have an interest in promoting the notion of a skills gap. They want schools and, by extension, the government to take on more of the costs of training workers that used to be covered by companies as part of on-the-job employee development. They also want more immigration, both low and high skilled, because immigrants may be willing to work for less than their American counterparts.

This editorial appeared in the Times on Saturday. What’s interesting about this is that we are just five days away from a Senate hearing on reauthorizing the Workforce Investment Act, which is the major piece of legislation that authorizes government spending on workforce training. I’ll be interested to see how some of my colleagues in the workforce development field respond to this.

Educating and Training for Adults Largely Ignored in 2013 State of the Union Address

/ The Old Crank

Last night I was reviewing the President’s 2013 State of the Union address alongside my my notes on last year’s address. The thing I remember most strongly about last year’s speech was the President’s reference to a “maze of confusing training programs” which, at the time, (tweeting on behalf of D.C. LEARNs), I thought might be interpreted as a vague endorsement of the proposal then being floated by House Republicans to consolidate Workforce Investment Act (WIA) job training programs:

2012 SOTU Tweet

Sure enough, when House Republicans released their WIA reauthorization bill last spring, (H.R. 4297, the Workforce Investment Improvement Act of 2012), they used this quote in their fact sheet. In retrospect, I think the quote was taken entirely out of context (it seems clear when you read the President’s entire speech that he was talking about consolidating information about federal job training programs, not the programs themselves) but the House Committee on Education and the Workforce used the President’s words time and time again throughout the spring to support their arguments.

But hey, at least the President talked about job training and adult skills last year. Jobs were, in fact, explicitly linked to a proposal to support more job training. The President said that he had been hearing from business leaders “who want to hire in the United States but can’t find workers with the right skills.”  He then issued this call to action:

Join me in a national commitment to train 2 million Americans with skills that will lead directly to a job. My administration has already lined up more companies that want to help.  Model partnerships between businesses like Siemens and community colleges in places like Charlotte, and Orlando, and Louisville are up and running.  Now you need to give more community colleges the resources they need to become community career centers -– places that teach people skills that businesses are looking for right now, from data management to high-tech manufacturing. (my emphasis)

And I want to cut through the maze of confusing training programs, so that from now on, people like Jackie have one program, one website, and one place to go for all the information and help that they need.  It is time to turn our unemployment system into a reemployment system that puts people to work.

But on Tuesday night the President barely mentioned adult skills. And when he did, it was to introduce other education proposals:

These initiatives in manufacturing, energy, infrastructure, and housing will help entrepreneurs and small business owners expand and create new jobs. But none of it will matter unless we also equip our citizens with the skills and training to fill those jobs. And that has to start at the earliest possible age.

Study after study shows that the sooner a child begins learning, the better he or she does down the road. But today, fewer than 3 in 10 four year-olds are enrolled in a high-quality preschool program. Most middle-class parents can’t afford a few hundred bucks a week for private preschool. And for poor kids who need help the most, this lack of access to preschool education can shadow them for the rest of their lives.

Tonight, I propose working with states to make high-quality preschool available to every child in America. Every dollar we invest in high-quality early education can save more than seven dollars later on – by boosting graduation rates, reducing teen pregnancy, even reducing violent crime. In states that make it a priority to educate our youngest children, like Georgia or Oklahoma, studies show students grow up more likely to read and do math at grade level, graduate high school, hold a job, and form more stable families of their own. So let’s do what works, and make sure none of our children start the race of life already behind. Let’s give our kids that chance.

Let’s also make sure that a high school diploma puts our kids on a path to a good job. Right now, countries like Germany focus on graduating their high school students with the equivalent of a technical degree from one of our community colleges, so that they’re ready for a job. At schools like P-Tech in Brooklyn, a collaboration between New York Public Schools, the City University of New York, and IBM, students will graduate with a high school diploma and an associate degree in computers or engineering.

In 2012, preparing Americans for unfilled jobs required job training and community colleges and partnerships with businesses to retrain workers for new jobs. Last night, by contrast, when the President said that we must “equip our citizens with the skills and training to fill [new] jobs,” he immediately pivoted to his preschool proposal, and retraining adults is never mentioned. He then goes on to discuss the need to ensure that high school diplomas “puts our kids on a path to a good job.”

In other words, in 2012, preparing citizens for new jobs was linked to job training for adults; this year, it was linked to preschool and high school education. Adult training or re-training was never actually discussed at all. (It was only mentioned again as a segue into his discussion of immigration reform.)

No one I know in the field of adult education or job training is opposed to the idea of improving high school education or improving access to high-quality pre-school, (although, if we are serious about preparing kids for success in school, our strategy should include efforts to improve the skills of parents/caregivers), but I’ve never understood how improving preschool education is going to help us fill the jobs that are available now.

And it can’t help but make one wonder about the adminstrations’s engagement/commitment to WIA reauthorization. Perhaps after House Republicans appropriated his remarks on job training last year, he decided it was best not to get into the subject again last night. Or maybe it’s just a case of not having the time to hit on every priority, and/or wanting to keep the speech fresh. Hopefully it’s not a sign that adult education and training has slipped a further down the administration’s list of priorities.

Is There a Better Case for Skills Than the Skills Gap?

/ The Old Crank / 1 Comment

Yesterday, Dean Baker of the Center for Economic Policy and Research posted an article that references an interesting policy brief put out by the Boston Fed on the relationship between unemployment and job vacancies. [1] Both Baker’s article and the brief are more than a little bit wonky, but worth reading, especially if you are confused—as I often am—about whether the oft-cited “skills mismatch” argument helps or hurts our case for greater public investments in job training and adult education.

Also known as structural unemployment, the skills mismatch argument, in a nutshell, attributes our current high unemployment numbers to workers not having the skills that employers need. Baker and others think this explanation for our current unemployment problem is way off base, and he kvetches about this on a regular basis on the CEPR Blog and his own blog, Beat the Press. As he and fellow critics argue, if we were truly suffering from structural unemployment, you’d expect to see big wage increases for those who do have the skills employers need—but that hasn’t happened. Moreover, the increase in unemployment during the recession has been pretty uniform across most occupations and industries, and on workers at all education and skill levels. (In the world that I work in, people often cite the lower unemployment rate for highly educated workers over less educated workers as further evidence of the skills mismatch, but this is actually always the case, and thus tells us nothing about whether or not the economy has a structural unemployment problem.)

Critics of the skills mismatch theory argue that the rise in unemployment is actually due to an aggregate drop in demand across the economy. (Best example of this is the collapse of the housing bubble, which depressed demand for new housing, plus had ripple effects across the economy, as people who lost value in their homes reduced their spending, which leads to businesses contracting and laying off workers.) Their argument is pretty convincing, at least when looking at the economy as a whole.

Getting back to Baker’s post yesterday, apparently Team Structural Unemployment has recently been highlighting an outward shift in something called the Beveridge Curve as a point in their favor. Baker’s post and the Boston Fed brief do a good job shooting down this argument, which I won’t go into here since you can read what they have to say for yourself.

The point is, every time I read an argument claiming a major structural unemployment problem—at least at the macro level—it seems to be pretty deftly shot down by critics.

Nonetheless, I don’t see why the lack of evidence for structural unemployment should diminish the case for job training and adult education as an investment. I suppose that there is a danger that overzealous arguments dismissing the skills gap might suggest to some that there is no point in providing job training or adult education at all, but I don’t think that’s a significant worry. At a city or regional level, I don’t know why some unemployment couldn’t still  be the result of a structural change even if that’s not the case for the country overall. For example, I know when manufacturing abandoned northern New England in the 1990s, new higher-skilled jobs did appear—even if not enough to replace all the lost manufacturing jobs—and these jobs required higher reading and writing skills. And in the comments section to Baker’s post, Bob Spencer argues that while it does appear that the economy is not generating enough jobs (especially good jobs), we do have a “structural” problem that existed pre-recession, noting low graduation rates in Virginia, where he lives. He suggests that there is a shortage of both jobs and a “quality” workforce.

I think that’s about right. On a macro level the numbers aren’t there to support the argument that there is a large-scale structural unemployment problem—at least no more than was the case pre-recession. There was—and is—a lack of economic opportunity for low-skilled workers—one that can be addressed in part by investing in adult education and training. But if the jobs aren’t there, no amount of training will fix that, which suggests that, at best, there are limits to “educating our way” to prosperity, as the Secretary of Education likes to say.

Which is why I wouldn’t mind pivoting away from the skills mismatch argument as a key message in our advocacy. Not because it’s wrong—as I explain above, I don’t see why skill deficits couldn’t still be a factor in certain parts of the country in some situations—but because it’s troubling to me that this argument may play into the hands of those who stand in the way of policies that would benefit low-skilled, low-income adults every bit as much as education and training do, and shift too much of the burden of solving our unemployment problem on the unemployed themselves. As Jared Bernstein, another structural unemployment critic, writes here: “a failure to discern structural impacts from cyclical ones…. allows policy makers to nudge aside weak demand as a key diagnosis and instead blame the unemployed for not having the skills employers need.”

The problem I have with the skills gap argument is twofold: First, claiming—incorrectly—that our unemployment is structural works against the notion of using government spending to generate more demand in the economy. After all, if unemployment is largely due to a skills deficit, and not demand, than increasing demand through government spending won’t do much good. But flat or reduced government spending not only limits potential job growth in the economy, it limits federal spending available for things like… more job training and adult education. In other words, a widespread belief in structural unemployment contributes to the lack of support for increasing government spending, and increasing spending on federal job training and adult education programs is what we are advocating for in the first place.

Secondly, the widespread belief in the skills gap is a distraction from other policies that would make more of the jobs that are available now into good jobs (those that pay a living wage, provide health benefits, etc.). (I would argue, in fact, that a low-skilled worker without a high-school diploma, making minimum wage and receiving no health benefits, might be way better off in the short-term with an immediate wage boost and health insurance than with enrollment in a GED class, even if improving their skills/credentials is likely to increase their long-term economic prospects. More importantly—the economic stability that would likely result from that wage/benefit increase would likely put that person in a better position in the long-term to take advantage of and succeed in additional education/training.)

There is no doubt that there are large numbers of people who would benefit from adult education and occupational skills training, but that was true before the recession caused the drop in demand that is largely responsible for the high levels of unemployment we have today. In other words, the recession doesn’t seem to have exacerbated the structural employment issues that existed pre-recession.

We also know that there is actually a larger set of interconnected povery-reducing policies beyond education and training that impact the lives of low-income, low-skilled adults—and that support overall economic growth as well. Putting aside the skills gap argument, and talking about the need for job training and adult education in terms of increasing economic opportunity and improving the quality of our workforce might be a better way capture all of these interconnecting issues while still being responsive to employer needs.

POSTSCRIPT:

A few months ago, Bernstein suggested a possible way to make the case for skills that doesn’t rely on the notion of a skills deficit:

I still think we’d have a better economy/society with higher levels of educational attainment…I’m quite certain, in fact.  It’s wrong to think that the jobs of the future all will demand wicked high skill sets—we’re going to need lots of home health aides, cashiers, security guards, equipment technicians, child care workers, along with high-end engineers. But to have smarter, better educated people in all of those jobs makes all the sense in the world.  We want our child care workers and home health aides to be highly trained—not as Ph.Ds in robotics, but in their fields.

In other words, it doesn’t necessarily require a skills mismatch economy to make the case for higher skills.

[1] “What Can We Learn by Disaggregating the Unemployment-Vacancy Relationship?” by Rand Ghayad and William Dickens. While issued by the Boston Fed, it’s worth noting that this paper does “not necessarily reflect the official position of the Federal Reserve Bank of Boston or the Federal Reserve System.”

Why Hasn’t Prison Education Led to Better Employment Outcomes in D.C.?

/ The Old Crank

(Updated Below)

According to the Council for Court Excellence (CCE), an estimated 60,000 people in the District of Columbia have criminal records (this is roughly one in every ten persons), and about 8,000 of them return to the city each year after serving their sentences. Unfortunately, half of these individuals will end up back behind bars within three years of getting out.

Reducing recidivism improves public safety and strengthens communities, and is therefore a worthy policy goal. And the research tells us that one of the best ways to accomplish this is to provide inmates with access to education and training while they are in prison.

But it appears that education and training for incarcerated D.C. residents isn’t going to be enough unless we significantly reduce barriers to employment once people are out of prison.

Las year, CCE released a report on the employment challenges facing previously incarcerated D.C. residents after they are released. The report was based on the results of a survey of 550  formerly incarcerated individuals. Among the key findings: there was little or no difference in employment rates for those who earned a GED or job certificate before or after prison and those who did not:

The unemployment rate among survey respondents was about the same after incarceration as it had been prior to incarceration, even among those who used their time in prison productively to increase their skills. Over 30% indicated that they received a GED or higher in prison and 35% indicated receiving a job training certificate of some kind. CCE’s sample showed little or no difference in the unemployment rate for those who had earned a GED or job certificate in or after prison compared with those who had not. (my emphasis)

This finding is at odds with the findings of another recent recidivism study from another jurisdiction, conducted by Jake Cronin, a policy analyst with the Institute of Public Policy in the Truman School of Public Affairs at the University of Missouri.

Cronin studied Missouri Department of Corrections data and found that inmates who earned their GED in Missouri prisons were significantly more likely to find a job after release from prison than those who did not.

But Cronin also noted that recidivism rates went down most dramatically for those inmates had earned a GED and acquired a full-time job after release.

“Employment proves to be the strongest predictor of not returning to prison that we found,” Cronin said. “Those who have a full-time job are much less likely to return to prison than similar inmates who are unemployed. Recidivism rates were nearly cut in half for former inmates with a full-time job compared to similar inmates who are unemployed.”

It makes sense to me that education plus sustained employment has the most lasting impact on reducing recidivism. But in Missouri, at least, attaining an educational credential appears to increase the likelihood of employment, whereas in Washington it may have no effect at all. So the question is whether there are other significant barriers to employment for formerly incarcerated individuals here in the District—other than education—that may not be as prominent in Missouri. And if there are, what do we do about them?

I’ll concede that the biggest barrier to employment for many people these days is the lack of jobs to begin with. I’ll also concede that part of the problem may be that the jobs that do become available in the District may, on average, require more specialized training or post-secondary education than the jobs that are available in Missouri. (I don’t know that for certain, but it seems reasonable.) Nonetheless, there are also policies that can be put in place to make it easier for those returning from prison to find a job, and to encourage employers to hire them.

For their part, the Council for Court Excellence (CCE) believes that barriers to employment unrelated to education do exist, and in their report, they made several recommendations to address them, including, among other things, liability protection for employers and a “certificate of good standing” indicating that an individual has completed his or her sentence and is in good standing with conditions of release.

These two recommendations are the centerpiece of recent bill, the D.C. Re-entry Facilitation Amendment Act, introduced by D.C. Council Chair Phil Mendelson on July 10th.

UPDATE 9/27/12: My original headline (Why Hasn’t Prison Education Reduced D.C. Recidivism Rates?) was all wrong—I was making a point about employment outcomes, not recidivism rates—and was updated accordingly.