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Many policymakers think there’s a “skills gap” — meaning state residents don’t have the skills employers need — and conclude that government should spend more taxpayer money on workforce development programs to close the gap.
But what do such programs look like today? We decided to find out, and got some help from Sarah Estelle, an associate professor of economics at Hope College and experienced labor economist.
She looked at workforce development programs throughout Michigan. State and local governments run many of them. Others are run by school districts, community colleges, universities, trade associations, labor association, for-profit companies and nonprofits.
Her research suggests that state and local governments actually provide very little skills training. Most of the programs run by or funded by the state are job-matching or career counseling services. They might help some people find a job, but they do little to train workers for high-skilled jobs, which is how these programs are typically sold to the public.
Instead, nearly all taxpayer-funded skills training happens where it has happened for decades: career and technical centers run by school districts and at community colleges. Unfortunately, the data we have can’t tell us if they are successful.
The most effective workforce development efforts that happen in Michigan appear to come from the private sector. Some business associations and labor unions provide robust training opportunities that give workers tangible skills.
Based on this research, our new study recommends that taxpayers be skeptical of the government’s ability to provide the skills training the labor market needs. Instead, it argues, the private sector should take care of this problem. In brief, businesses can raise wages for skills in short supply and pay to train workers when needed. Since businesses benefit the most from highly skilled workers, they should bear the brunt of training costs — not taxpayers.
