Many U.S. employers are afraid that if they invest in worker training, other companies will simply poach their talented workers. European countries have avoided this problem through soft obligations to train or financial incentives through which companies receive support for their training efforts.
As part of the MIT Task Force on the Work of the Future's recent series of research briefs, MIT professors Paul Osterman and Kathleen Thelen highlight the critical role skills, education, and workforce training play in providing pathways to employment for low- and moderate-skilled workers and young adults. The briefs explore the highly fragmented U.S. workforce training system and comparable programs in Europe, in which the private sector is significantly engaged in both the classroom and the workplace.
In the brief, "Skill Training for Adults," Osterman, professor of human resources and management at the MIT Sloan School of Management, shares findings from a new original survey describing how working adults obtain their job skills. He identifies significant inequalities and disparities in the job market that an effective training policy can address. Thelen, the Ford Professor of Political Science at MIT, teamed with Christian Lyhne Ibsen, associate professor at Michigan State University School of Human Resources and Labor Relations, for the brief, "Growing Apart: Efficiency and Equality in the German and Danish VET Systems." They explore examples of Europe's vocational education and training (VET) systems and compare recent developments in Germany and Denmark, two of the most successful systems of firm-sponsored VET.
Osterman and Thelen speak here on their recent work.
Q: In your brief, you share findings from a survey about how adults obtain their job skills. What does the survey tell us about how skills are acquired and the role of the public and private sectors in training for these skills?
Osterman: The survey you refer to was executed in January 2020, and provides the most complete data available on training provided to adults by their employers and on training that people undertake on their own. Overall, 56 percent of adults received formal employer training in the year prior to the survey and 19 percent sought out skills training on their own.
Whether these rates are high or low is somewhat in the eyes of the beholder, but what is clearly unacceptable is that the rates for non-whites are well below those of whites, and the training obtained by those with less than a college degree is below that of people with a four-year degree. Additionally, people who received employer training were more likely than others to seek out training on their own, and so the disparities were reinforced.
Q: What are the critical elements of the European training model? What are some key lessons the United States can learn from Europe's vocational education and training systems?
Thelen: Vocational training in many European countries takes place within companies, typically accompanied by a compulsory school-based component offering more theoretical content. Trainees thus acquire skills that are very close to labor-market needs - and apprenticeships sometimes segue directly into employment. At the same time, however, employers who take apprentices are not allowed to train narrowly for their own needs alone. Rather, they are required to train broadly and to standards and occupational profiles decided nationally by committees composed of representatives of business, unions, and the state. These systems are also subject to monitoring and oversight to enforce nationally defined standards in terms of both the content and the quality of training. Such systems ensure smooth school-to-work transitions, while also providing trainees with skills that are certified and portable across the labor market.
Many U.S. employers are afraid that if they invest in worker training, other companies will simply poach their talented workers. European countries have avoided this problem through soft obligations to train or financial incentives through which companies receive support for their training efforts. In Europe, such solutions are sometimes established at the industry level through business associations that collect levies from their members. In the U.S., one could envision the state playing a stronger role in establishing and financing collective training funds to support firms that invest in training workers.
U.S. companies could also learn from their European peers when it comes to providing input to educational providers about what skills they need. State or local governments could establish forums to bring together educational providers, employers, and trade unions to make sure that local skills demands are met and that trainees acquire the skills they need to secure stable, well-paid employment.
Q: What are some key examples of creative skill-training initiatives that have been successful in the United States, and what policies should we consider to scale these programs?
Osterman: A central argument in my brief is that successful best-practice training models exist. In many respects, we know what works, and hence the issue is how to go to scale. In terms of what works, we know that people who obtain a degree or certificate from community colleges experience significant earnings gains. We also have good models of job training programs such as Project QUEST in San Antonio and JVS in Boston. The core characteristics of these training programs is that they have relationships with employers such that they know what is needed to fill jobs, and they provide support services to trainees for transportation costs, childcare, etc., so that they can complete the training and succeed.
The core challenge is how to diffuse these models at scale. Too many community college enrollees fail to complete their programs, and the job-training programs I describe are small relative to the size of their labor markets. Additionally, many employers do not take either community colleges or high-quality training programs seriously as a source of employees. In the brief, I argue that, in part, the problem is resources: public support for community colleges and training programs has fallen or stagnated in recent years. In part, the challenge is organizational reform, notably encouraging community colleges to adopt best practices and expanding quality training programs and weeding out weak ones. But the deepest challenge is building regional compacts of employers, governments, community colleges, and community groups that come together with a shared commitment to build a real skill development system in their region. I describe good starts in several regions around the country.
