Worker skills and employer needs are often misaligned. Young people, for instance, may leave high school or college with a sturdy grounding in math and English, but ill-equipped to manage a customer database, take a patient’s vital signs, or handle a piece of machinery. In a way, this is predictable: Schools, secondary and post-secondary alike, are typically geared towards imparting broad academic knowledge applicable to a wide range of professions, but not necessarily job-specific skills.
What can policymakers do to change this? In a recent paper, Oren Cass of the Manhattan Institute proposes that governments should more heavily subsidize on-the-job training, especially for young people (including those in high school and recent graduates) on non-four-year college pathways. To this end, he proposes a $10,000 per trainee grant program that would be paid to private employers. Cass reasons that businesses are the logical place to train workers, as they know the skills needed for their jobs. Yet, apart from subsidies, they are often reluctant to bear the training costs because they risk losing their investment when workers leave.
As envisioned by Cass, the program would allow employers to spend their grant funds flexibly. The training doesn’t necessarily have to occur “in house”; the organization may wish to spend its grant to enroll workers in community college courses, trade-union apprenticeships, or training programs done in concert with other employers. Among other policy details, he suggests that subsidized trainees be employed at least part-time and that limits be placed on the duration of the training period. The proposal suggests guardrails to ensure that highly educated “trainees” aren’t being subsidized (e.g., law associates). Last, high-school students would also be eligible to participate if they are employed at least part time and taking courses through their high school, career-technical center, or community college.
All this sounds promising, but the age-old question of how to pay for it still looms. On this front, Cass bravely suggests that governments should reduce expenditures on higher education to free dollars for worker-training grants. (Colleges, however, would recover funds if employers select them as training providers.) As support, he cites the large skew in outlays dedicated to higher education—about $150 billion per year in federal and state spending—in comparison to the relatively small allocations for job training. Though apt to ruffle feathers in higher education, Cass concludes: “A rebalancing is in order. Shifting funding…may appear unappealing at first, but is best understood as a reallocation from one training provider to another.”
The Cass plan dovetails nicely with our ownthat Ohio make greater investments in employer-led training. Should state legislators run with the idea, this paper is a must read as it adds more fodder for thinking about policy design and implementation.
Source: Oren Cass,, Manhattan Institute (2019).