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Can retraining give the unemployed a second chance?

Even with 14 million Americans looking for work jobs are going unfilled. The Bureau of Labor Statistics puts the number of openings at 3.2 million, yet companies sometimes struggle to find candidates that fit.
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Bill Pitt works 20 hours a week repairing computer gear at NextStep Recycling in Eugene, Ore. The 62-year-old was forced out of his first career in the tire industry because of health problems. He was retrained in the Experience Works program, a federally funded job training program. Paul Carter / THE REGISTER-GUARD
/ Source: Business Week

Andrew Bricknell, 50, has lived in and around Detroit his whole life. Raised in Dearborn, Mich., where his father was a tool-and-die maker for Ford, Bricknell never doubted what industry he’d go into when he grew up — only which end of it.

As a kid, Bricknell showed an aptitude for art. “I wouldn’t say I was an artist, but I could visualize and draw things,” he says. So rather than put cars together, he went to work helping design them.

When he first started, Bricknell, who has a broad, friendly face and the sincerity of a thoughtful teenager, worked on actual drafting boards. Some were big enough to fit life-size molds of car roofs and hoods, and he would crawl around on the paper to trace the shapes. He bounced happily from shop to shop, adapting when the work moved onto computers in the late 1980s. All it took to get a new job then, Bricknell says, was a phone call, and the job usually came with a raise. In his best year he made nearly $100,000. He met his wife, a General Motors engineer, at a bar across from the GM Technical Center. They had two sons.

In 2001 the automotive trim division where Bricknell was working was sold from one manufacturing conglomerate, Textron, to another, Collins & Aikman. He and his co-workers lost their overtime pay, then their sick days, and much of their vacation time. In 2003 he was laid off. “That was the first time I have ever been out of work in my life,” he says. He found sporadic design jobs over the next few years, but more positions were outsourced, the Big Three were retrenching, and the efficiency of new software meant fewer designers were needed.

Now Bricknell drives a school bus. When school’s out he works odd jobs; last summer he built and delivered Port-a-Potties for $10 an hour. This summer, though, he didn’t work. He’s been busy moving into a new place — he and his wife divorced in July — and dealing with depression.

But in the last couple of months, for the first time in nearly a decade, Bricknell has been getting calls about jobs. A headhunter said there were openings at GM and other places — so many that they were having a hard time filling them. The trouble is that while Bricknell was driving a bus, car design migrated onto more sophisticated platforms. New employers had openings for people like Andrew Bricknell, but they weren’t retraining them.

So in late August, Bricknell was deep into an intensive, monthlong course on CATIA, one of two design programs used by the big automakers. Sitting in a community college classroom at a desktop computer, he adjusted the dimensions of brackets and bumpers, trying to get proficient enough to pass the employment application tests. The 64-hour course costs $800, all of which is picked up by the Labor Dept. When Bricknell is ready, a job placement specialist will go over his résumé and give him interview pointers.

Over three-fourths of the program’s grads have gotten design jobs, but Bricknell is falling behind. “I haven’t sat down in front of a tube for five years,” he says. He comes in on mornings when there are no classes to try to catch up. “I just would like to get back to work. I mean, driving a school bus is fun, but it doesn’t pay.”

Even with 14 million Americans looking for work — and at least 2.6 million wanting work but not actively searching — jobs are going unfilled. The Bureau of Labor Statistics puts the total number of openings at 3.2 million, and despite the flood of applicants, companies sometimes struggle to find candidates that fit.

In surveys by Gallup and the McKinsey Global Institute, corporate CEOs and small business owners report difficulties finding workers with the right skills. Silicon Valley companies fight over software engineers; Union Health Service and the Harvard hospital system complain it’s hard to find nurses and technicians; manufacturers like Caterpillar and Westinghouse can’t hire enough welders and machinists to keep their state-of-the-art lathes running. Estimates of the size of the mismatch vary widely, but a May International Monetary Fund paper put it at a quarter of the 9.1 percent unemployment rate. Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, has suggested it accounts for a full third of the unemployment rate.

This is the “skills gap,” and as the jobless rate remains stubbornly high, it’s one of the few things policymakers from both parties think they can actually fix. Everyone from President Obama to Mitt Romney to researchers at McKinsey and Harvard’s School of Education suggest the same solution: training. Even if there are arguments about how it should be funded, training enjoys a measure of bipartisan support because, in theory at least, it helps citizens help themselves. A welder, say, with decades on the job learns to be a Web designer or a computer support technician. His brief interaction with the government leaves him more productive and turns him from a drain on revenue to a source of it. What’s not to like?

This is how job retraining has been sold in the past, often attached to free-trade bills. (NAFTA instituted a special training program, since phased out, for workers who lost their jobs to Mexico or Canada.) The U.S. spends far less than other developed countries on its national job training system. Even so, in an atmosphere where spending cuts rule, Republicans and Democrats in the Senate have introduced a bill that would renew funding for the Workforce Investment Act, through which most federal job-training money is disbursed. One of the bill’s co-sponsors, Sen. Patty Murray of Washington, says the focus is on “bringing local communities together with their employers, with the folks in education, with economic development people, people involved in labor — all into one place to say, ‘Let’s have a comprehensive plan to train workers for the jobs that are right here.’”

Yet despite decades of research on job training programs, there’s sharp disagreement over results — whether training actually makes it easier for those out of work to find a job or leads to higher pay. Most training is short-term, and courses vary widely in quality. James J. Heckman, a University of Chicago economics professor and Nobel laureate, has criticized training for being a waste of public money that would be better spent educating the young. Training, he writes in an e-mail, is a “total failure … Its return is ZERO.”

Other critics argue that it’s merely a way to appear to take on the unemployment rate without actually reckoning with the ways that larger forces, such as globalization and technology, are pushing down wages and sending jobs overseas. Gordon Lafer, a political scientist at the University of Oregon and author of The Job Training Charade, dismisses the faith the Obama Administration and others invest in job training. “It works as a charade because it takes the blame off of Big Business by saying the problem is the worker’s own fault,” says Lafer. “You don’t have the right skills, you don’t have the right education, you don’t have the right attitude.”

The response to this, from the teachers, companies, and politicians who run and support training programs — and from some of the job seekers who put their faith in them — is that the case for training is only partly about the current bleak employment picture. It’s also about preparing for the sort of jobs the economy will add when it finally recovers and equipping students with skills that are rarely, if ever, taught in today’s classrooms.

The vast majority of Americans trying to find gainful work today don’t have the luxury of going back to school. Job training offers at least the possibility of a better future. For far too many unemployed workers, it may be the last chance they’ve got.

Changing focus
Like many of his classmates, David Horne was looking to start a second career last summer when he enrolled at the Machinist Training Institute, a program run by a Detroit nonprofit called Focus: Hope. Horne’s first career was as a drug dealer; it ended when he was sentenced to 2½ to 5½ for selling cocaine in Altoona, Pa., where he could charge three times the going rate in his native Detroit.

When Horne got out of prison in March 2010, he was about to turn 29 and came home to Michigan knowing only that he didn’t want to go back to jail. The temp agencies didn’t return his calls. Neither did McDonald’s or Arby’s. One day a stranger overhead him talking to a friend about his problems on a city bus. The man had been through MTI and gave Horne the business card of one of its staff.

Founded by a Catholic priest and a suburban housewife after the 1967 Detroit riots, Focus: Hope originally concentrated on fighting discrimination and urban malnutrition. In 1981 the nonprofit added a program to train students for Detroit’s skilled machinist jobs — steady, middle-class work that had traditionally been out of reach for inner-city black men and women. In 1999 Focus: Hope expanded into information technology: It now offers six-month to year-and-a-half-long courses in PC support and network and server maintenance. More recently it has added nursing assistant courses and classes in home and business weatherization. In all, Focus: Hope has trained 11,000 people, 2,500 in MTI.

In 2011 Focus: Hope received $5.86 million in Workforce Investment Act funds for its various training programs, along with more than $600,000 in donations from such institutions as the Society of Manufacturing Engineers. MTI’s share of the budget, for 200 students a year (many of whom do not graduate), is $1.2 million.

Where the jobs are
Health-care and computer support are fields projected by the Bureau of Labor Statistics to grow 22 percent and 30 percent over the next decade. Manufacturing is projected to shrink 9 percent. Still, Focus: Hope’s machinist training program has managed to find jobs for 64 of its 92 graduates over the past three years. Some of this is due to the paradoxical good fortune of being in Detroit. Despite the city’s well-publicized economic struggles, there’s a sudden and acute local demand for labor from automakers — after their collective near-death experience, they’re starting to hire in earnest — and a nascent local defense contracting sector.

All these trends are fragile. Another recession, or sharp cuts in the Pentagon budget, could reverse them. But some economists see a similar phenomenon emerging for skilled manufacturing workers nationwide. Anthony P. Carnevale, an economist and head of Georgetown University’s Center on Education and the Workforce, estimates that even as the American manufacturing sector shrinks by a million jobs over the next decade, it will see a shortage of labor, as 2 million manufacturing workers retire and few are trained to take their place. These are what he calls “orphan jobs” — everyone thinks of manufacturing as a dying industry, so few people bother to go into it.

The current MTI class, due to graduate in February 2012, is split between older students such as 45-year-old Paul Sneed, recently laid off as a customer service rep for Verizon Communications, and others such as 20-year-old Gerald Bowler, who went to a local community college to play basketball, dropped out, and now works at a KFC. On a Monday afternoon in late August, the 15 students were learning how to calculate the correct spindle speed from the diameter and material of the piece they were trying to cut on a lathe. With one exception, every student was African-American, and all were male. All wore the program’s matching blue smocks, with their plastic safety goggles folded beside their notebooks on the long tables where they sat facing the blackboard. Some were taking the class for the first time; Sneed was on his second try. Previously, he had failed a key test: making a ball-peen hammer on a manual lathe.

Tech know-how needed
It was very early in the course — just the second class — and the students were quietly attentive. Two teachers, including Gholam Nezhad, an Iranian-American Focus: Hope alum with multiple engineering degrees, barked out numbers for them to work on in teams. Outside the classroom, spread around MTI’s shop floor, are the metalworking lathes and mills that the students practice on. There are manual ones that the class first learns on, with their levers, wheels and gears. Then, just a few feet away, are the cutting-edge CNC (computer numerical control) versions widely used today: bulky boxes with digital displays that wouldn’t look out of place in a biochemical lab. Seeing them side by side is like looking at John Henry’s hammer next to a steam-powered drill. A profession that once mostly required a steady hand now demands workers have the level of literacy, numeracy and computer proficiency necessary to program a robot.

Even when he was cutting class in high school and all his other grades slipped, David Horne, the ex-drug dealer, excelled at math. At MTI, he found that the algebra, trigonometry and the assignments to write whole CNC programs out by hand were easier for him than for many of his classmates. But Horne still needed help. Focus: Hope gave him free bus tickets to get to class, free eyeglasses and a credit union open to students regardless of their credit score. The organization also offers subsidized child care and expedited access to health insurance and food stamps. For those who don’t yet have the necessary reading or math skills, there are crash courses. When graduates start looking for jobs, counselors work with them on their résumés. They bus them to job fairs. They even give them interview clothes.

The organization finds scholarships for students to cover much of the $5,200 tuition; Horne had to come up with only $800, which he still owes, and says he wouldn’t have had to pay that if he hadn’t missed one of his scholarship deadlines. “They literally go through everything that they can to try to get you back together,” he says.

Horne graduated last November, valedictorian of his class. Three months later he had a job as a machinist at Tranor Industries, a small manufacturer of car parts and dies. He started at $10 an hour, the same wage Andrew Bricknell got making Port-a-Potties. The job came with benefits, though, and Horne often worked 55- and 60-hour weeks. At the beginning of September, he got a dollar-an-hour raise.

Positive feedback
Tranor’s president, Chris Woodall, has hired three MTI graduates. One didn’t work out — “a personality thing; that happens, unfortunately” — but he plans to hire more. “I will tell you,” he says, “they were as well-prepared for an interview and in their business skills as any applicants I’ve ever seen.”

By necessity, Michigan has become the nation’s job training laboratory. For a stretch ending in May 2010, the state had the highest jobless rate in the country for 49 straight months. Four years ago then-Gov. Jennifer Granholm launched No Worker Left Behind, an initiative that put underpaid and unemployed workers through community college or industry-certified training programs — so long as the classes led to what the state deemed an “in-demand job.” The program bundled federal funds, drawing widely from the mishmash of training programs — WIA mostly, but also Trade Adjustment Assistance (which targets those who lose their jobs from offshoring), grants for welfare recipients and others. “What we said is that we would pay for two years of community college or certified retraining,” says Granholm, “but we would not pay for people to go back and get a degree in political science or French.” She uses those examples, she adds, because those were her undergraduate degrees.

Michigan’s statewide efforts have built on the success of individual programs such as Focus: Hope, and relied on the state’s network of community colleges to do most of the training. Perhaps the most successful among these is Macomb Community College, where Andrew Bricknell is taking his design course. The white, working-class residents of Macomb County, just north of Detroit, inspired pollster Stanley B. Greenberg’s early 1980s coinage of the term “Reagan Democrats.”

The county is home to both a GM transmission plant and the GM Technical Center, the company’s main design and engineering complex. Because of its location, the college has long had a symbiotic relationship not only with GM — Macomb Community College President James Jacobs estimates that 40 percent of the designers there studied at Macomb — but with most of the local manufacturing sector, providing companies with graduates while drawing on them for funding, faculty, and even state-of-the-art equipment. Haas Automation, the country’s largest machine tool maker, supplies the college with CNC mills and lathes. All of the Big Three have outsourced training for their own employees to the college over the years, collaborating to design curricula and tests. Macomb has a deep familiarity with the workforce needs of those companies and connections with the people who do the hiring.

Matching needs
The result is an informal system that quickly matches workers with the labor needs of companies. Last year, a Port Huron, Mich., company, GMA Cover, won a Pentagon contract to provide parachutes, but it lacked workers who knew how to do the specialized sewing required to make them. Macomb helped train 40 previously unemployed workers with money from the Labor Dept.; 36 of them were hired.

Senator Murray’s WIA reauthorization is an attempt to introduce Macomb-style coordination — a feedback loop of educational institutions, employers, and government officials — into the federal funding structure.

The term for this is “sector-based training,” and it remains to be seen whether it is replicable outside Macomb. Despite the signs of success in Macomb and places like it, the track record of job-training programs is not particularly distinguished. For one thing, the most effective programs aren’t cheap. The many services that places like Macomb and Focus: Hope provide cost money and take time to be properly deployed. Since the mid-1990s, economists at the research firm Mathematica have been studying Job Corps, the nation’s biggest and most comprehensive training program for disadvantaged youth. The findings: The program reduced arrest rates and slightly increased participant incomes, but in most cases the income gains disappeared several years after graduation. At $16,500 per participant, the program is five times more expensive than the average WIA program.

The most exhaustive training study to date was authored by three economists: Carolyn Heinrich of the University of Texas at Austin, Peter Mueser of the University of Missouri, and Kenneth R. Troske of the University of Kentucky. They examined 160,000 participants who entered WIA programs from July 2003 to June 2005 — a much healthier economic climate than today’s — along with a comparison group of 3 million. What they found was that among poor workers who used training to gain a foothold at the low end of the wage scale, there were gains. Employment rates were higher among the trained than the comparison group, and pay was better by a couple of thousand dollars a year. For displaced workers, however, the study found that “gains from participation are, at best, very modest.”

Relocating vs. retraining
The problem for a displaced worker, the data suggest, is that the job he has lost is often better than any he can find, even with training. The best strategy may be not to retrain but to relocate — to where the skills gap benefits him. For a middle-aged worker with a family and a mortgage, though, training is the path of less resistance. “You don’t have a really long work horizon if you’re 55,” says Heinrich.

One model for what a national training system might look like — and how it could be integrated into a national curriculum — is Germany. There, 53 percent of high school students opt for something called the “dual system,” splitting their time between classroom coursework and apprenticeships in German companies. The system isn’t limited to manufacturing; it extends to white-collar jobs such as finance and insurance, too. The classroom component is structured around the job track the student has chosen. Employers help design the curriculum and cover two-thirds of the program’s €41 billion cost.

Murray emphasizes that that’s not her vision. “Some countries decide when you’re born what you’re going to be, but we’re never going to do that,” she says. Others, however, believe an apprenticeship system of some kind would be a corrective to a U.S. education system that tends to focus on credentials more than hard job skills and to equate postsecondary education with college for all.

Robert B. Schwartz is a professor at Harvard’s Graduate School of Education and a leading proponent of a dual-style education system, though one not as strictly tiered as Germany’s. Today, he notes, 44 percent of those who enroll in four-year colleges in the U.S. haven’t gotten degrees after six years — for financial reasons or because they’re not sure why they’re in college. At the same time, of the 47 million jobs that the country is expected to create by 2018, only a third will require a bachelor’s degree or higher, while 30 percent will instead require an associate’s degree or industry certification. An educational system tailored to that, Schwartz argues, would be a broad continuum of options without a sharp division between training and education.

A different strategy
Granholm agrees. “Germany gives people the opportunity to learn with their hands; a lot of people learn better that way. It doesn’t mean that it’s less valuable,” she says. “A one-size-fits-all education system is not a system that’s responding to the diversity of its citizens or the needs of the business community.”

Such a strategy could help rising generations but still doesn’t reckon with the limits of the country’s existing training infrastructure. What training can do is help the previously unemployable get jobs and cushion the fall when an experienced worker can no longer find a use for aging skills. But for the most part it does not make people prosperous. Most unemployed workers can’t afford the time and resources that a bachelor’s or even an associate’s degree requires, so they opt for shorter programs with quicker, smaller payoffs. And the amount of money it would cost for the government to change that dynamic would be prohibitive. “You can’t take five years to get a two-year degree if you have a wife and family and two kids and a car,” says Georgetown’s Carnevale. “They’ve got to go fast. They can’t afford it — and we can’t afford it.”

A week later, Andrew Bricknell is getting better at CATIA, but it’s not helping his confidence. Still, despite all the time off and the odd jobs, even now he thinks of himself as a designer and can’t imagine doing anything else: “I love doing it, it’s the only thing I’ve ever done since high school. It’s hard to say, ‘I’m going to go work on a construction site, or be a welder, or make cars.’ ”

“I guess you have to convince somebody that you have the talent, and they have to spend some time and nurture it, but it seems like everybody, they’re all into this lean engineering now. They don’t want to spend time with anyone to get them up to speed,” he says. “They want you up to speed when you walk in the door.”