Chip Taylor

Job training for dislocated workers

Interesting article from the Minneapolis Fed:

Take two aspirin, and find a new job in the morning.

Historically, that's been the advice to workers facing layoffs. Grab your bootstraps. Pound the pavement. Good luck. Let us know where you land.

But as globalization continues apace, so has society's anxiety over the job dislocation commonly associated with it. In eastern Wisconsin's Fox Valley area, for example, workers have long relied on good-paying manufacturing jobs—making paper, machinery and metalware—that often didn't require more than a high school diploma. The recent recession has hit the area, and individuals, hard. Workers are still trying to figure out what hit them.

A generation ago people in the Fox Valley “would get out of high school, get a job, join the union, and you made your $16 to $20 an hour,” said James Golembeski, director of the Bay Area Workforce Development Board in Green Bay. “That reality is gone.”

Layoffs are “very traumatic” for workers, Golembeski said, and many are having trouble adjusting to new realities of employment. After being laid off, some workers will “sit on unemployment waiting for the world to snap back to normal.” It rarely does, and many workers find themselves ill-equipped to compete for new jobs that come close to replacing their old salaries. Golembeski's office coordinates various services for dislocated workers, including those hit by a mass layoff last year at a factory that made pots and pans. Many laid off workers had grade-school level math and reading skills and “had never seen a computer,” he said. They weren't unique, either. Workers in relatively high-paying manufacturing jobs are often skilled at the particular job they do, but many “haven't read a book in 20 years,” according to Golembeski.

Is this gut-punch a fatal blow for such workers, and to the regional, state and national economies that they collectively underpin? While the immediate effect of layoffs on individual households is surely great, most economists argue that such job dislocations are actually a backdoor wellspring of economic growth. Layoffs allow the economy to reallocate resources (including labor) from mature, declining firms and industries to growing, healthy ones. This job churn—the many jobs lost, and new ones found—ultimately makes the U.S. economy more competitive and, in turn, prosperous.

But that claim rests on a matter that doesn't get a lot of attention: our ability to rechannel dislocated workers—those permanently laid
off—to new job opportunities that are advantageous for both new employer and dislocated worker.

Read the rest.

HT: Economist's View where Mark Thoma summarizes the policy implications:

I beleive we owe it to those who are hurt, through no fault of their own, by the economic system we have chosen as it continues its never ending march toward greater efficiency. However, a fair reading of the evidence suggests that existing retraining programs have not had a large positive impact, certainly not as large as hoped. However, rather than conclude that these programs will not work, we can build upon the parts that do work, avoid repeating mistakes, and continue to try to find how best to help those who are negatively affected by the dispassionate and inevitable forces of globalization.