Retraining Workers for Productive Employment

Retraining Workers for Productive Employment By: Rita Phetmixay And Andrew Ives

What are the salient characteristics of workers losing jobs in manufacturing in recent years?

The salient characteristics of workers losing jobs in manufacturing in recent years are: • Pillowtex Worker Demographics • 40-50 percent of unemployed workers had not completed high school • Mean age of those unemployed:46 years old • Average tenure at Pillowtex: 17 years • 93 percent could not afford health insurance • • 59% female, 41 % male • • Approximately 500 non English speaking; predominately Hispanic • • Weekly wages ranged from $220 to $1140, averaging $458 • • Unemployment benefits range from $73 to$408, averaging $275 weekly • • Difference of UI benefits and prior wages $178 weekly • • 42% have a relative who also worked at Pillowtex • • 73% interested in Community College offerings • • 30% willingness to consider relocation: 70% unwillingness • • Average indebtedness, excluding mortgages, ranged by age groups from $1,900 to $ 9,070 • • By the first week of August, 43% reported being behind in rent or mortgage payments with over • 10% receiving eviction/foreclosure notices • • 93% indicated they couldn’t afford/get health insurance • • 73% were concerned about getting prescriptions: average cost $209

At a more qualitative and psychological level, the Centralina Workforce Development Board observed that many Pillowtex workers: • Had a reluctance/inability to confront reality and consider life options. • Were intimidated by the idea of returning to the classroom and did not take initiative to seek training. • Were not eager to attend school. • Had little or no computer skills, rendering them ineffective in a job search

HOWEVER… • In recent years the textile industry as a whole had faced: • declining employment • changes in automation and technology • new supply chain issues and vigorous price competition. • Management mistakes, including: • excessive debt leverage • mismanaged systems and poor inventory control • ~made the finances of many firms problematic. • Trade policy, which liberalized commerce in textiles, facilitated vigorous price • competition from global producers with lower costs of production. • All of this combined to characterize an industry in trouble.

In some cases… Many workers who have lost their jobs are older and had spent their lives working in one industry. In need of a job right away, many pick relatively short training programs, which often have marginal benefits. Workers trying to pick a new field cannot predict the future of the labor market, especially in a time of economic mayhem.

Technology is what drives the American factory today. • Advanced manufacturing becomes more widely used • Leads to: • -extensive use of computers, • high-precision and information technologies—and pushing the need for a • high-performance workforce. • While community and technical college programs can produce the kind of • graduates industry needs to fill these positions, they currently face challenges. • Those challenges include: • Low enrollment; • Tight operating budgets; • Little public knowledge about careers in manufacturing or the careers • are considered undesirable; • Inadequate math and science backgrounds of students enrolled in community colleges.

Differences Between Older and Younger Displaced Workers’ Characteristics • Older displaced workers are: • More skilled (thus, have different incentives to invest in new skills) • More labor market experience • Better educated • Have accumulated more tenure • with their prior employers • ~than younger displaced workers This evidence on skill is consistent with the differences in older and younger displaced workers' pre-displacement earnings. The higher skill levels of the older displaced workers suggests that they may be more effective learners than our sample of younger displaced workers.

What are the government programs in place to assist these workers in their transition to new jobs?

2 different kinds of programs to assist workers in their transitions to their new jobs: • Workforce Investment Act (WIA) • The Trade Adjustment Assistance • Reform Act (TAA)

Workforce Investment Act The WIA offers three levels of services: Their basic services stem from their outreach and include assistance searching for and being placed in a job, as well as information about the labor market. Their more intensive services include a comprehensive assessment, the creation of individual employment plans with and for an individual, counseling, and career planning. They also offer training services that help people find job opportunities in their community. The training can be for occupational and skills training.

The Trade Adjustment Assistance Reform Act (TAA) • Offers two years of training programs including English as a second language classes. • Assistance with the Job search as well as a job search allowance • A relocation benefit if it is necessary for an individual to relocating for a new job. • Up to 104 weeks of weekly income Trade Readjustment Assistance during training. It offers the same amount as Unemployment Insurance. • Health Coverage Tax Credit subsidizes 65% of health insurance premiums in qualified health plans. • Alternative Trade Adjustment Assistance benefits workers over 50 years old, who otherwise qualify for TAA benefits, and who obtain new employment within 26 weeks, with a wage subsidy to bridge the salary gap between their old and new jobs.

How effective is community-college training in preparing these workers for new employment? Is there a difference in re-employment rates between those who attend community college and those who do not? (If so, why might this be? If not, why not?)

Rowan-Cabarrus Community College Rowan-Cabarrus Community College invited 3350 workers that showed interest in the worker retraining services. Most were much older than the normal student body and they participated in ESL and obtained GEDs, some even completed nurses’ aid training. Around 1600 were former Pillowtex workers who were interested in retraining. Only 604 were enrolled in curriculum courses and between 400-600 mainly enrolled in short term courses.

Continuing Education for Displaced Workers Younger workers looked for retraining in greater numbers, while older workers tended to have more experience and skills from on the job training. The results of the study yielded that there would be significant payoffs if students received a degree. However, a small number of courses may only increase earnings by a small amount if any increase is made at all. Many graduates experienced a 7-10 percent or 4-5 percent increase in earnings based on the courses taken. Younger and older workers typically receive the same increase in pay from their class work.

Problems for the College Retraining System • The college training system that fuels manufacturing has run into many problems in recent times as people have not been able to adequately fill the number of positions available. • The problems include- • Dwindling enrollment • A shortening of the college budget to fund these types of technological manufacturing courses • Little public knowledge about the courses and the positions available, and the poor science and math background of Community College students.

Job Retraining or Job Creation • Many critics cite the problem that job retraining is useless unless there is some type of job creation. • The fact is many workers that have lost jobs have worked in one industry their whole lives and their work has been shipped off to places where it can be done cheaper. • This creates two problems • Jobs are lost not just moved. • The workers have little chance to be rehired given their skills as most of the other industry jobs are moved soon thereafter. It has not been determined yet which path would be the best to employ workers, but both sides to the argument have legitimate arguments.

The Unpredictable Nature Many workers have been confused by what the best field would be to enter in. Some have been retrained to find their jobs that they thought would be available to be full of other formerly unemployed people or that the market was smaller than expected. In Michigan of the retrained workers 60 percent had not found a job or had found one in an unrelated field. Some workers may have gone in for technological repair and found themselves driving a school bus or taxi. Many skilled workers end up being forced to accept unskilled labor as a result of rapid changes in the market since their entry into school.

Success? There is little correlation between the workers that have been retrained and not retrained. Some have slight increases in pay while others still are unable to find new jobs in their field. The benefits vary from the courses taken and the age and experience of the workers. Many unemployed workers are as successful finding new jobs but at a lower pay.

References http://www.unc.edu/courses/2009fall/econ/051/001/beatty_longman_tran.pdf http://wdr.doleta.gov/research/FullText_Documents/Workforce%20Investment%20Act%20Non-Experimental%20Net%20Impact%20Evaluation%20-%20Final%20Report.pdf http://harrisschool.uchicago.edu/about/publications/working-papers/pdf/wp_04_12.pdf http://science.house.gov/press/PRArticle.aspx?NewsID=1893 http://www.nytimes.com/2009/07/06/us/06retrain.html

Retraining Workers for Productive Employment