News

04.27.11

Workers (and business) unite!

EARLY next month Barack Obama plans to speak about jobs. There are not enough of them, and frustration on that subject got a boost this month when Rick Perry, the governor of Texas, entered the Republican presidential race. Mr Perry's best selling point is that, since June 2009, Texas has created 40% of America's net new jobs.

As published in The Economist


Can training programmes reshape America’s workforce?

EARLY next month Barack Obama plans to speak about jobs. There are not enough of them, and frustration on that subject got a boost this month when Rick Perry, the governor of Texas, entered the Republican presidential race. Mr Perry's best selling point is that, since June 2009, Texas has created 40% of America's net new jobs. Democrats have been quick to query the statistic, but the fervour of their attacks suggest that this is a sore spot. It should be. The national unemployment rate stands at 9.1%, and conditions are significantly worse for young people, Latinos and blacks.

Mr Obama will propose new ideas, such as an “infrastructure bank” to put people to work upgrading railway lines and roads. He will also reiterate his commitment to workforce training, which helps people polish their skills, or acquire new ones, through specialised training schemes, mostly at community colleges, designed in collaboration with the private sector and local officials. These receive federal funding—last year's health-care reform sets aside about $2 billion in funding for community colleges—and Mr Obama reckons that they could help half a million people to earn new credentials.

This may look like meddling, and close to tacit industrial policy, but it is practical. Many companies actually have slots available, but cannot find people qualified to fill them. And around the country, states and cities have been leading the way. North Carolina, for example, uses part of its share of a 1998 tobacco settlement between the states and four big cigarette companies to finance programmes for people who want to find new work in the state's busy biotechnology industry. In other states, community colleges have launched courses to train people to work on wind power. An executive in west Texas explains that when the oil price is high, it's hard to get the guys off the rigs; but when the price is low, many prefer the cleaner, cooler job of a wind technician.

Probably the most notable statewide workforce-development initiative comes from Louisiana. Its FastStart programme, launched in 2008, helps companies recruit and train workers—free for the employers, subject to eligibility requirements and as long as they commit to creating a modest number of net new jobs. Business Facilities, a trade publication, calls it the “gold standard” for workforce training. And companies like it. When Gardner Denver, a medical-device manufacturer, announced in April 2009 that it would move its operations from Sheboygan, Wisconsin, to the small Louisiana town of Monroe, it was convinced in part by a package of incentives, including FastStart, property-tax exemptions and $8.7m to help pay for relocation. The move created 200 new positions in the state.

States like Louisiana may benefit particularly from such efforts. One state publication explains that FastStart “has removed uncertainty about workforce quality”: that is, it has helped companies get over their hang-ups about the South. But the Gardner Denver example has a downside: Louisiana's net new jobs were net losses to Wisconsin. If every state were equally generous with its incentives, it might inspire a race to the bottom.

On the other hand, it would also be unneighbourly to begrudge the South the jobs: the region still has some catching up to do. In any case, the idea has broader applications. Karen Elzey, the director of the Aspen Institute's Skills for America's Future initiative—one of the efforts that Mr Obama is boosting—explains that her group is focused on working with companies and community colleges to develop skills among workers who are already in an area, rather than looking at possible relocations. She cites the example of Pacific Gas & Electric (PG&E), a California-based natural-gas and electricity utility.

Steve Kline, the company's chief sustainability officer, explains that several years ago the utility realised that almost half the company's workers were near retirement age—and might not be replaceable through the normal channels. PG&E has a large vehicle fleet, for example, and it needs mechanics who can work on hybrid cars as well as the traditional sort.

And so PG&E struck up a partnership. The PowerPathway programme, started in 2008, offers a variety of career paths at a number of community colleges. The curriculum and funding are collaborative, and to date around 200 students have completed training. About half have been hired by PG&E, and the others are qualified to work elsewhere in the industry. These may be small programmes, and somewhat labour-intensive; but the newly hired workers are not complaining.