Monday, July 19, 2010

Job training in a recession

The NYT offers up this piece on the relative lack of success of participants in federal job training programs during the current recession.

On the plus side, they do cite the recent study by my friends at Impaq, which does a very good job with the available data.

On the negative side, there is the odd claim that training programs work better for younger workers, which is the opposite of what is generally found in the literature, though it is not clear whether younger here refers to late teens and early 20s, or 20s and 30s. The literature is devoid of examples of programs for the younger of those two groups that pass cost-benefit tests.

I also found the article long on human interest stories and short on hard thinking about the underlying issues of institutional design. And, as is common in newspaper articles (and TV news), demonstrably false statements by politicians, bureaucrats and activists are printed with little or no questioning, as with this bit:
“These programs are really working,” said the assistant secretary of labor, Jane Oates. “These are folks who clearly want to go back to work and we’re able to help them get back to work. The investment in job training is one that’s not only going to pay off in the short term, it’s going to help us be more competitive in the long term.”
Also not directly mentioned in the article is that administrative chaos in the WIA program that resulted from the huge budget dump in the stimulus. When a program that does not do all that well anyway is in a situation of having to run around spending money any way it can (because of course you can never just send it back), one should not expect overmuch.

Finally, and more generally, a recession is an excellent time for training, as the opportunity cost is relatively low. The trick, of course, is taking training that will pay off when the recession is over. As noted in the article, there is a long history of mismatch between the training provided by government programs and that demanded by the market. But it is not clear that individuals do that much better on their own. This type of decision is something workers make only a couple of times in their lives and often with quite limited information.

Designing a better system is a worthy goal indeed, but not an easy one.

Full disclosure: I was paid to review the Impaq study by the US Department of Labor

Hat tip: Ken Troske

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