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May 19, 2009

Should The Unemployed Go Back To School?

By George Leef

The last time President Obama gave a speech dealing with education (his address to Congress on February 24), he misrepresented government data to make his case that the country needs to put a significantly higher percentage of people through college. (I wrote about his fudging of the figures here)

For that reason, Americans would be wise to look skeptically on his policy pronouncements regarding education. Last week the president gave another speech this time extolling college and especially community college programs as a good path for unemployed people who want to prepare for new and better jobs. He gave a couple of nice anecdotes about people who had greatly improved their lives by taking vocational training courses and he wants to make it easy for unemployed workers to get federal money for education and career training.

In one case, a woman in Maine who had lost her job as a receptionist decided to take courses in nursing, and now makes a good living as a registered nurse. Without question, that's a success story, but it's never a good idea to make government policy on the basis of some individual success stories. That's because policy changes usually have hidden costs. To get a few success stories, we often have a greater number of failure stories.

Before looking at the president's proposed changes, we should examine the broad vision he articulated. Here are his key sentences. "Now is the time to put a new foundation for growth in place - to rebuild our economy, to retrain our workforce, and re-equip the American people. And now is the time to change unemployment from a period of 'wait and see' to a chance for our workers to train and seek the next opportunity..."

That sounds quite uplifting. It sounds obvious and simple. But is it realistic?

I think not. Unemployed workers usually don't just "wait and see," and choosing a vocational training course to go into a different line of work might not work out as well as it did for the woman in Maine.

While people are employed, they accumulate knowledge and experience in their work. If they're laid off or terminated, they ordinarily start looking for new work that is similar to that which they had been doing. They don't just "wait and see." They try to capitalize on their experience, which is one of the most important factors potential employers consider.

Sometimes it's true that an individual has little hope of finding work in his old industry, particularly if it's one in long-term decline. Many of today's unemployed, however, are out of work because they worked in an industry that is experiencing a cyclical contraction, such as housing construction. Those industries will start growing again and the laid-off workers probably don't want to have left the queue when it happens.

It's also worth noting that people fresh out of a vocational training program will be trying to get into a field in which they've had formal training, but lack experience. Assuming they land a job, they'll be starting at the bottom of the ladder. Sometimes that's the best thing to do, but often not.

Time is another consideration. According to the most recent Bureau of Labor Statistics data, the median duration of unemployment is 12.5 weeks and the mean duration of unemployment is 21.4 weeks. Therefore, most workers will find new employment well before they could complete a vocational training program at a community college or even one of the many private vocational training schools that are widely available across the nation.

Finally, there are many job opportunities in growing fields that people can get into with only on-the-job training. The Bureau of Labor Statistics publishes a report on the fastest growing occupations - the same report President Obama used misleadingly to create the impression that there is a dire need to put more people through college. That BLS report shows that a majority of the jobs in its 30 fastest growing occupations are open to people without formal education credentials.

They aren't jobs most of us would regard as excellent. A job such as health care aide won't interest a Wall Street financier who's unemployed, but it might be appealing to many others. The point is that you don't necessarily have to go through college or a training program in order to find work.

For those reasons, I believe that the president's idea that the unemployed should go back to school is by and large poor advice.

Just what does the president want to do? Mainly, he wants to make it easier for unemployed workers to qualify for Pell Grants so they can afford enroll in the educational and training programs he thinks are so essential.

The government's budget is already an ocean of red ink and most politicians are inclined to say, "What's the harm in a little more spending when we're investing in improved future productivity?" But that's only looking at the upside; there is also a downside, namely the possibility that federal money for college will lure people into formal education when they'd be better off looking hard for a job they can do immediately.

The most sensible point in the president's speech was that many states have a rule that if an individual who is collecting unemployment benefits enrolls in an educational program, he loses eligibility for those benefits. In instances where it does make sense for a person to consider retraining, loss of benefits would be a strong disincentive. The states probably should reconsider those rules, but all the president can do is to suggest that. Federalism has fallen on hard times, but we aren't yet at the point where the White House can unilaterally rewrite state laws.

Like all presidents, Barack Obama wants people to believe he's doing something to deal with conspicuous national problems. With unemployment now approaching 9 percent, it's a conspicuous problem. Pushing for unemployed people to use government dollars to go to college may sound like a good approach, but I think the costs will exceed the benefits.

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George Leef is Director of Research at the John W. Pope Center for Higher Education Policy.



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