With as much buzz as there is in Michigan and nationwide about workforce development, one might assume there were unprecedented problems afoot and that public budgets are being grown or diverted to innovative solutions. As seen above, it is unclear that either is true, despite the political attention devoted to the issue. Nevertheless, it behooves Michiganders to be aware of the landscape of skills training in our state. To review, the report argues that:
- Federal and state programs offer little by way of direct skills training.
- The notable exception to this finding is state-funded education through public high school CTE programs and community colleges. But neither of these institutions have strong incentives to meet current labor demands with the workforce training they provide.
- There is an array of for-profit training centers, union and industry-supported apprenticeship programs, and a few nonprofit efforts targeted at skill-based technical training.
Taken altogether, this report finds that, despite all the rhetoric and rebranding for new state programs and initiatives, not much new is going on, at least not yet, and at least not with regards to specific skills training.
This report is not aimed at ascertaining the prevalence or effectiveness of other employment-related programs for basic skills, job preparedness or career exploration or guidance. If there is a lack in any of these areas, secondary public schools seem best positioned to address these for youth and local nonprofits can fill the gap for adult workers, as they appear to be doing already, to some extent.[*]
In fact, basic economic principles would suggest that local knowledge and action could be key. State-level data on labor needs, skilled labor supply, up-and-coming industries, not to mention housing availability, transportation opportunities and other local amenities — all of interest to employees — simply cannot replace the cost-benefit assessment of a would-be skilled worker. Local knowledge of these conditions matter, and this is why seemingly small community initiatives in church basements, rec centers, even town and city halls might prove the missing link between citizens who lack basic skills or awareness of career options and the multitude of existing skills training opportunities, many short in duration and low in cost.
On net, this report concludes that it is less important what the state does to meet the demand for skills that may be insufficiently available in the state workforce and more important what they do not do. For instance, the state should not continue to encourage a one-size-fits-all career path for high school students, but instead open up the opportunities students can pursue while still meeting the diploma requirements from the state.
Government-provided skills training, the limited amount that does exist, does not appear to have changed much, even in light of this perceived skilled labor shortage. Most of the training programs operated by the state are through decades-old, traditional means: via public school districts and community colleges. There’s little reason to believe that these existing bureaucracies can respond in a way that would meet the perceived skill gap in a timely fashion. Private training centers, unions and industry associations have better aligned incentives and could better respond to changes in related industries using local knowledge on supply and demand of skilled labor if prices were less influenced by state subsidies.
This, of course, pushes back against the politically popular view that the state needs to step in to help businesses get the skilled workers they apparently need. In the end, state support for workforce development is an indirect form of business subsidies. It would make much more economic sense and be more efficient if businesses pay for training they require of their own workers, or, more simply, raise wages for their high-demand needs. They are the primary beneficiaries of the increased productivity this training could provide, the newly-trained, skilled employee the second beneficiary and taxpayers a distant third.
[*] Note that, if these general skills are sufficiently obtained, businesses will face a lower-cost of specific skill training and potentially higher benefit, if it results in higher retention as well, increasing their willingness to train workers.