Faced with a weak employment picture and economic turmoil, there are far worse policies for national or state policymakers to propose than increased job training.
For example, some politicians are currently flirting with the long-discredited idea that trade protectionism builds economic capacity, or at least works as a temporary shield against foreign competition while a domestic industry retools to compete. No, raising tariffs or imposing import quotas are recipes for economic decline. They invariably destroy more jobs across the board than they protect.
Another idea worse than boosting government job training is the increasing and worrying practice of handing taxpayers’ money out directly to politically connected companies in the form of tax credits or cash payments. It’s understandable why some believe incentives are an inevitable price of “doing business” in the modern public sector, given their ubiquitousness, but sober reflection reveals a different conclusion about how best to make North Carolina’s economy more attractive.
But to say that job training isn’t as bad a policy response as these is, admittedly, to offer the approach faint praise. It’s deserved. As with incentives, it may seem plausible to the political class that if folks find themselves out of work due to international trade or dynamic economic change, the government should step in to retrain these displaced workers for the job opportunities of the future. Plausibility is, however, no substitute for viability.
We now have decades of experience with taxpayer-funded training programs. The results are underwhelming, to say the least, as this summary from the Locke Foundation’s Agenda 2002 briefing book explains. One problem is that to say that “government should step in to retrain workers for the job opportunities of the future” ignores the knowledge problem. That is, policymakers don’t actually know which workers to train for which jobs. No one has or could have that kind of information in a handy central location.
Workers and employers have to work this out on their own — sometimes confidently investing in skills they know will have immediate and profitable application, other times groping around for the right fit or going down dead ends. They will make mistakes, but not all the same ones at the same time. And they will learn from their mistakes, and from others’ mistakes. Government training efforts have a history of turning out “graduates” who don’t find jobs in the intended field, or whose skills turn out to be outdated or a poor fit for what the market for labor demands.
If policymakers really feel they must act in this area, I’d make a suggestion: let’s rethink how we are spending existing tax dollars for post-secondary education and training. Rather than doling out huge subsidies — in the tens of thousands of dollars per person over several years — to assist the disproportionately affluent share of high-school graduates headed to a state college or university (many of whom never graduate, anyway), let’s offer each high-school graduate a fixed amount of money, which their parents can have supplemented during their childhood through tax-deductible savings. They can spend this money on college, purchase the skills training they wish, or simply bank it in case they need retraining later in life.
We need to stop thinking about economy as if it is a car, up on blocks, that a mechanic can tinker with until it “runs right.” There is no dipstick to check to see if government is training enough of one profession or overfilling another. The dipsticks in this picture are elsewhere.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.