Trump's Big Budget Mistake: Not Investing in Skills
Michael was laid off from his manufacturing job in South Carolina and spent months interviewing for a new job, with no luck. Then the Greenville County Workforce Development office in South Carolina connected Michael to a program that trained him in 3D design software — a skill that employers in the region were looking for — and funding for on-the-job training with a local employer. Because of that training, Michael was hired by Advance Manufacturing Systems, a small business that didn’t have the capacity to train someone by themselves.
The key ingredient to his success? A program funded by the federal government to help connect those who want to work with the right skills training. This is not an isolated story. So why does the Trump budget slash funds for programs like these?
The new White House budget proposes, among a number of other cuts, a $2.5 billion reduction in funding for the Department of Labor — including up to a 21 percent budget cut for training programs. The proposal is based on the view that these programs hardly ever work and so aren’t worth the money we put into them.
One person who certainly ought to know better is Trump’s new Office of Management and Budget Director, former Congressman Mick Mulvaney, who is responsible for putting this budget together. Mulvaney’s home state of South Carolina runs some of the country’s best workforce programs, which use federal funding to train people like Michael. In and beyond South Carolina, workforce programs have helped tens of millions of Americans prepare for and find work since the recession.
For working families who use these programs, the new skills they provide pay off quite literally. One evaluation found that those participating in federally funded adult training programs out-earned those who didn’t by more than $2,000 per year.
And the payoff spreads well beyond the participants. In fact, return on investment for federal workforce spending can be remarkably high. In Idaho, for instance, adult training programs returned $4 per dollar spent; for dislocated worker programs (those who are often hardest to employ), it was nearly $5. These returns go right into the communities where the programs are located, usually in less than a year.
Moreover, these returns stand the test of time. In Texas, five-year returns are $1.17 per dollar to taxpayers; $1.63 to participants; and $1.52 to communities. For especially at-risk populations, the returns are astronomical: YouthBuild’s program for youthful offenders improves recidivism rates, community safety, and education outcomes. Every dollar invested yields a stunning return of $10.80.
At a time when technology is changing the skills needed for employment more often than Apple pushes iPhone updates, we should be developing and promoting these workforce programs more than ever. Instead, they’re on the chopping block.
Some programs certainly have room for improvement. But we know enough about which programs do well to replicate the successful ones. The problem is accomplishing that requires resources. Yet federal investment in workforce training has been declining for the last three decades. For every person in the labor force in 1984, the government was investing $110 in its key workforce programs; today that’s down 25 percent, to $82 per person. Trump’s budget could cut that to as little as $65.
No one else is picking up the slack. State budgets have been stretched thin, and employers have reduced their training budgets. Between 1996 and 2008 alone, employers cut training by half. At the same time, the gap between the skills workers have and what employers need has been widening, not narrowing.
This is where the tragic irony comes in. President Trump has rightly talked about creating new jobs throughout the country. But employers won’t “hire American” if there aren’t skilled Americans for hire. We also need to make sure that Americans have the skills needed to get those jobs and succeed in them.
As it stands now, Trump’s budget agenda won’t do much for the 45-year-old who is only prepared for the job he lost a few years ago — or for the community college student who wonders whether her education will pay off in the job market. Without opportunities to build skills for available jobs, they’ll just get left behind all over again.
Michael’s story shouldn’t be relegated to the rare books aisle. If the administration truly wants to defend and protect America’s future, investing in skills is the best bet.
Rachael Stephens is the economic program fellow at Third Way, a Washington-based public policy think tank founded in 2005. Stephens recently completed her Master’s in Public Policy at the John F. Kennedy School of Government at Harvard University.