The Problem
Job loss at any stage of one’s career presents an array of challenges, but for long-tenured workers, who often have made significant career investments—earning high salaries and accruing benefits—the impact is particularly acute. Earnings losses can persist for the rest of their lives.
The Proposal
The U.S. Department of Labor, leveraging existing workforce development systems and One-Stop Career Centers nationwide, should create a program that provides training grants—covering tuition, books, and training-related costs—to high-tenure displaced workers. Grantees would meet with One-Stop staff prior to receiving the grant to ensure that program choices are sound; they would also meet with staff throughout the training program.
Abstract
High-tenured displaced workers often experience significant earnings losses that persist for the rest of their working lives. A well-targeted training initiative has the potential to substantially reduce permanent earnings losses for those displaced workers who have the academic preparation, work experience, and interest to complete high-return retraining, with a rate of return on par with, if not larger than, that reported for formal schooling of young people. Current governmental training programs do not provide adequate resources to finance the long-term training needed by displaced workers to meaningfully offset their losses, nor do they provide the right incentives to get longer-term retraining. This paper presents five comprehensive reforms targeted specifically at retraining displaced workers experiencing significant earnings loss: (1) establish a Displaced Worker Training (DWT) Program to provide sizeable grants for longer-term training; (2) use honest brokers to assess and counsel grantees; (3) provide incentives and performance standards for participants and institutions; (4) evaluate training programs and disseminate best practices; and (5) shore up community colleges’ capacity to provide high-quality training, especially during tough economic times.
