Saturday, July 22, 2017

Trump’s Apprenticeships Are Based on a Problem That Doesn’t Exist

And apprenticeships give businesses cheap or free labor.

By Mark Thoma
June 19, 2017

Last week the Trump administration announced “a workforce training initiative focused on skill-based apprenticeship education” with a goal of creating one million apprenticeships over the next two years. The motivation behind the initiative was explained by Ivanka Trump: “The reality is that there are still Americans seeking employment despite low unemployment rates, and companies are struggling to fill vacancies for positions that require varying levels of skills and training. So the Trump administration is committed to working very closely to close the skills gap."

But is a “skills gap” really a problem in the US? If a skills gap exists, then the demand for workers exceeds the supply. That is, at the wage the industry is offering, there are job openings that cannot be filled.

One solution to this problem is for firms to increase wages to attract more workers. If there aren’t enough workers with adequate training in the local area to fill the open positions, then the higher wage offer will attract qualified workers from other regions of the country to move and take the jobs.


something they have been reluctant to do even as more and more of the income share has gone to business owners rather than workers.

Rising wages would allow workers to reclaim some of the income they have lost. So firm owners would prefer to fix the problem in another way. If the supply of qualified workers can be increased sufficiently through government supported retraining programs and increased immigration, then the upward pressure on wages will disappear.

I would not be opposed to solving a skills gap problem – if it actually existed – in part through a temporary increase in immigration. But that shouldn’t happen until there is a sustained and rapid increase in wages, evidence that there truly is a problematic shortage of US workers.

I am also not opposed to job assistance programs, but the question is the effectiveness of these programs and whether they should be paid for by the government or by individual firms. On the effectiveness, if the problem is really that skilled workers are available to take these jobs but they are mismatched occupationally and geographically, as it appears to be, then programs that help to match workers with jobs and subsidize moving expenses can be helpful. It will still require employers to increase their wage offers to make it worthwhile for people to relocate or change jobs, but government-supported programs that aid the matching process still have a role to play. Unfortunately, to help pay for his apprenticeship program, Trump has proposed large cuts to Labor Department programs that have successfully helped workers find jobs.


No comments:

Post a Comment