Peter Morici: Accelerating worker training is vital for a stronger economy
The US economy has seen a remarkable recovery from the covid shutdowns, but needs better skills training for frontline workers to achieve robust growth.
The economy is still running below potential as despite the abundance of job vacancies, several million adults who left the workforce during the pandemic have not returned.
Signs of help being sought abound. Many are for jobs that pay $20 an hour or less, and most of the missing are workers with only a high school diploma or less.
Economic theory suggests that some of the benefits of President Joe Biden’s Build Back Better program and similar progressive proposals could make work more attractive.
However, a recent Harvard study of low-wage workers indicates that what matters most are hours and pay, predictable work schedules and proximity to home.
Even before the pandemic, employment was growing slowly for workers with only a high school diploma or less. Labor shortages and non-market pressures to pay higher wages were prompting employers to implement artificial intelligence to replace employees where they could.
The Affordable Care Act requires companies with more than 50 workers to provide health insurance to those employed more than 29 hours per week, and federal regulations require overtime pay for those working more than 40 hours. Employers respond by cutting jobs, and workers work irregular hours and are pressured into taking two or three jobs to earn a living wage. The terribly exhausted lives of front-line workers translate into high turnover.
It’s time for a big deal.
Raise the federal minimum wage to $15 an hour and eliminate the ACA and overtime pay requirements. Impose an hourly employer tax on all wages not associated with an employer health insurance plan and use receipts to provide Medicaid enrollment for uncovered workers. Together, these measures would encourage employers to replace many part-time jobs with full-time ones.
Many companies have set up programs to retrain retail workers for positions that require more digital skills. And companies like Amazon, Disney and Walmart are creating career paths for low-wage workers — even with eventual departures for better jobs elsewhere, they’ll have less turnover.
It’s great for larger companies with the benefits of scale and strong opportunities to move workers between career ladders. A small stand-alone restaurant chain doesn’t have the kind of HR expertise and scope for internal opportunities to mount aggressive programs.
The integration of business retraining efforts into Ministry of Labor apprenticeship programs makes sense. These connect companies with young people seeking training with positions that typically pay $15 an hour and then promise employment at much better pay once the training is complete.
The Biden administration has mobilized additional funds to increase the number and range of learning opportunities and youth participation. To go further, it is time to consolidate large corporate training programs into cooperatives with smaller institutions to create attractive career paths.
Small businesses won’t keep workers permanently – they’ll move on to corporate partners after a few years. However, by engaging workers in training that provides a next step, small businesses could further reduce employee turnover, provide more stable work for employees, and lower labor costs.