When industry-based training is a public good.

January 17, 2012

A Response to the New York Times by Andy Van Kleunen 

A January 8th New York Times cover story—“Private Sector Gets Jobs Skills; Public Gets Bill”—argues that when government-funded training programs are created to meet the workforce needs of a specific company, taxpayers are unfairly bearing what should be the firm’s own cost of doing business. And when that company later shuts down or leaves town, taxpayers are left holding that training bill with nothing to show for their investment.
Is that true? The Times makes a sound point: Blindly subsidizing corporations to make hires or provide training that they otherwise could provide themselves can be an inefficient use of limited public funds. But properly structured, industry-connected skill investments can nevertheless constitute a local public good.
We rarely question whether to make public investments in a community’s infrastructure—rail lines, roads, electrical grids, broadband—to make it easier to attract or keep an industry in an area. If an individual firm shuts down or decides to leave, that modernized infrastructure remains. It has lasting value to the community and its economic development.
Similarly, investments in human capital—that is, local workers’ skills—can attract and retain local firms and add lasting value to a community as well. Even if a firm leaves, the skills remain. Local workers have new credentials and real work experience that will help them in their careers, and the community has a more highly skilled workforce that can attract other firms within that industry. As the Times article stated, “Workers who have spent months, or even years, hunting for jobs view a training spot as a stroke of good fortune.” An interviewed worker confirms that all the training he received—even from companies that have left—has helped him in future jobs.
Shared training strategies that meet the needs of multiple firms in a local industry increase the likelihood of local economic development returns. Sector partnerships—in which a range of companies and stakeholders work together to develop regional, industry-wide training efforts—can ensure a community is better positioned to support the growth of that industry, regardless of isolated individual firm decisions.
Despite high unemployment, jobs are going unfilled across our nation due in part to a lack of skilled workers matched to open positions. As the Times article implies, that doesn’t mean we should throw training dollars at any company willing to take them. But, to counter the Times, it also doesn’t mean we can’t be making smart public investments in skills with industry as a strong partner. The answer is not for states and the federal government to stop investing. The answer is to invest better. Sector partnerships are one way to ensure that workers, businesses and taxpayers are all getting a return on those investments.