February 02, 2021

America’s recession reveals failures in retraining provisions

America’s recession reveals failures in retraining provisions

Approximately 10.7 million Americans are out of work, nearly twice as many as before the start of the Covid-19 pandemic, and many of the jobs that have been lost will never return. 

The US’s labor and education leaders say the country is ill equipped to help the unemployed accumulate new skills and prepare for new careers, which could have knock-on effects for innovation and growth and deepen economic polarization. Racial justice is also an issue, as Black and Latino workers have been more likely to lose their jobs in the pandemic than white workers.

Peter Siminski and Emil Temnyalov have written for IZA World of Labor about how “From a human capital perspective … the [coronavirus] crisis presents a unique economic opportunity to retrain and upskill the labor force.” They note that “[e]conomists have long observed that investment in human capital (education, skills) tends to increase during recessions, because well-paying alternatives for how to spend our time are scarce. In the current recession, the opportunities for training are even greater,” they believe. “Even those workers who remain employed but have little to do can use the downtime to invest in training.” 

The US, however, invests less in workforce development as a portion of GDP than many other developed nations (just 0.11%) and has historically been poor at helping people whose jobs have been displaced by such issues as offshoring, automation, and recessions.

Reporting on the situation in Wired, Caroline Preston writes that the appropriate information on training in the US is uncoordinated, limited, and inaccessible, while there is “an overlapping and sometimes confusing array of job training programs scattered around the country.” Weak labor policies and a thin social safety net are also impeding people’s transitions into new careers.

Professor of Public Policy at Harvard, David Deming, and other experts say that governments, businesses, and education groups, which have so far struggled with weak collaboration, can do more to prepare for the expected demand for training exacerbated by the pandemic. Steps include improving collaboration between labor and education agencies, investing in community colleges, and increasing corporate transparency about hiring and companies’ investment in employees and training.

While colleges and job training groups may not yet have seen a flood of displaced workers, likely due to concerns about safety, online learning quality, and lack of clarity about which jobs will recover from the crisis, Siminski and Temnyalov say that the opportunity to upskill should not be left to individual workers: “Employers, industry associations, professional associations, unions, education and training providers as well as governments all have a stake in identifying and developing the most valuable training opportunities for the post-Covid economy.”

They go on to say that “[t]he most efficient strategies may be those which focus on relatively short courses, perhaps six months—while labor demand remains very low during the Covid-19 crisis, as does the opportunity cost of the workers’ time.” 

Find more IZA World of Labor content on unemployment and economic instability.