President Trump plans to propose a revamp of all federal job training programs in his State of the Union speech early next year, a move meant to help displaced workers update their skills for a fast-changing digital economy.
Trump has promised better times for the “forgotten men and women” of America, with his main policies, up till now, focused on bringing back manufacturing jobs that have long been offshored to China and other countries. That approach is controversial, though. Tariffs and other protectionist measures are Trump’s preferred method of luring more manufacturing jobs to the United States, but many economists argue they’ll harm U.S. consumers by raising prices, without doing much to boost employment.
A different approach is to help struggling workers get the skills needed to fill one of the nearly 7 million open jobs employers say they have trouble filling right now. While there are 6 million unemployed Americans, many lack the skills needed for the jobs that are open. Workers who used to man an assembly line, for instance, aren’t necessarily qualified to perform a skilled trade in the booming construction industry or do cybersecurity, jobs in more demand now.
The federal government runs about 40 worker training programs under 15 different agencies, costing taxpayers around $17 billion per year. Yet few of those are considered effective and hardly any are designed to measure their own success. One program, for instance, is supposed to help workers who lose their jobs due to offshoring. Several others are meant to help veterans.
Policies designed by ‘a goofball’
The government has policies that go back decades “that I would say were designed by a goofball, but that would be giving too much to goofballs,” Kevin Hassett, chair of the White House Council of Economic Advisers, said at an Oct. 10 conference sponsored by the center-right American Action Forum. “We have 40-something different training programs and none of them are really accountable.”
Most federal education and training money is targeted at people 22 and under. But faster change in the workforce means more people need to change careers when they’re older. Companies can provide training, but they’re often reluctant to, because competitors can poach newly trained workers, undercutting the investment.
Hassett outlined a plan to transfer most federal training programs to a single agency, such as the Department of Labor. To receive funding, a program would have to generate analytics showing that it works. The changes would require Congress to pass new legislation—far from assured. Trump plans to outline new proposals in his 2019 State of the Union address, expected in mid-January.
Hassett’s CEA will soon produce a report analyzing what works in the current system, along with suggested improvements. “The what’s-working part is going to be the shortest section of anything we’ve done at CEA,” Hassett joked at the conference. As for proposals, the forthcoming report will likely recommend adoption of some programs from other countries, such as Canada and Germany, that emphasize apprenticeships, ways to protect jobs during recessions and even prizes for companies that help the most unemployed workers find a job. The government could also help workers learn what skills are in demand, and where, a basic matching service in short supply at a national level.
Agencies housing the current programs could push back on the idea of consolidation, as could key members of Congress with oversight of the current programs. There will also be questions about throwing out the good with the bad.
“The proliferation of these programs is not quite as crazy as it sounds,” Georgetown University professor Harry Holzer, former chief economist at the Department of Labor, tells Yahoo Finance. “Part of the reason to have multiple programs is to make sure different populations have better access to workforce services. The question is whether there are duplications of fixed administrative costs in setting up these many programs.”
President Obama signed a 2014 law that pushed some federal retraining dollars to the state and local level, where some analysts think they’re more effective at matching workers with actual jobs offered by local employers. That was a rare bipartisan effort during Obama’s second term, when Congress was controlled by Republicans. Trump could be facing a similar bipartisan challenge if Democrats win at least one chamber of Congress—most likely the House—in the upcoming midterm elections, as many analysts think they will.
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Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman