Federal Job Training Programs

The New York Times worries that “federal funds to train the jobless are drying up.” It’s not until the end of the article that the Times bothers to quote an economist who says that “Traditionally, we have found that job training has not been very effective for people who have lost their job recently.”

A Cato essay on federal job training programs by Chris Edwards and Daniel J. Murphy – a former special assistant in the Department of Labor's Employment and Training Administration – explains that they aren’t very effective, are riddled with waste, and “don't fill any critical need that private markets can't fill”:

[T]he Department of Labor's spending on employment and training not only lacks in effectiveness, but it is also dwarfed by the private sector's investment in workplace training. According to the American Society for Training and Development, U.S. organizations spent $126 billion on employee learning and development in 2009.

Private training is likely to be more effective than government-sponsored training for a number of reasons. Business-led training is dictated by the real-world needs of workplaces and industries. It is driven by on-the-ground demand rather than by policy choices in Washington. Also, business managers are responsible for workplace results and the bottom line, and so they will adjust training decisions based on real economic needs. By contrast, civil servants are a few steps removed from the realities of production and competition in the marketplace. Private decisionmakers will dispose of ineffectual training approaches quickly, but federal programs favoring a failed approach may last for decades.