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Is Retraining the Unemployed Actually a Good Idea?

Obama, Romney, and Ryan all endorse retraining for the jobless—but are they right?

| Mon Oct. 15, 2012 6:03 AM EDT

The GM Janesville assembly plant, which closed in 2008, stands vacant with security guarding it in Janesville, Wisconsin.

This story first appeared on the ProPublica website.

In February 2008, six days before he would win the Wisconsin presidential primary, Barack Obama traveled to a General Motors plant in Janesville, Wisconsin, for a major economic address. Janesville is a community of 63,000 on a bend in the Rock River near the Illinois line, three-fourths of the way up Interstate 90 from Chicago to Madison. On the sides of downtown buildings, pastel murals by area artists show scenes from the city's past, hinting at its muscular civic spirit and outsized role in US industry. "History. Vision. Sweat." is lettered across one mural's bottom edge. The small city has been catapulted into public view as the hometown of this year's Republican vice presidential nominee, Rep. Paul Ryan. But long before, it was the home of Parker Pen. And for nearly a century, the soul of the local economy had been the Janesville Assembly Plant, where GM had started out making tractors and, in 1923, begun to build cars. The oldest operating automotive facility in the United States, it was even four years ago a storied site for a campaign speech.

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"Through hard times and good, great challenges and great change," the Illinois senator intoned, "the promise of Janesville has been the promise of America." The day before, the General Motors Company had announced for 2007 the largest annual loss ever recorded by an automaker. Rumors of closing were filtering through the plant. But on this clear, 17-degree Wisconsin morning, Obama sounded confident. From a podium with a plaque that said, "People working together," he spoke of a clean-energy economy and a growing middle class, of prosperity as a tide lifting every boat. "I believe that, if our government is there to support you…," he told the workers gathered around him near the medium-duty truck line on the second floor, "this plant will be here for another hundred years."

Ten months later, two days before Christmas and four weeks before Obama's inauguration, the Janesville Assembly Plant shut down. Its nearly 3,000 employees who lost jobs that year were among more than 5,000 casualties of mass layoffs that cascaded through town, washing away jobs at companies that supplied parts and services to GM, and then hitting businesses unrelated to the auto industry that could not withstand the worst economic crisis since the Great Depression. Beyond these mass layoffs were jobs scattered at restaurants and stores, nail salons and daycare centers that folded under the weight of the sinking local economy. Unlike in Flint, Michigan; Erie, Pennsylvania; or other neon names of the nation's Rust Belt, the sudden evaporation of work was stunning and alien to Janesville. Four years later, in the midst of another election season, this proud manufacturing town has become a proving ground for a significant question as jobs, or their scarcity, are a fulcrum for Obama's chances of a second term, and Ryan's and Mitt Romney's chances at a first: When the economy has knocked so many people out of the middle class, can job-retraining bring them back?

The idea of teaching laid-off workers new skills for new kinds of jobs is a rare economic policy on which the major political parties agree. Retraining has emerged as a mantra for the Obama White House, and two-year colleges its antidote of choice. Four years to the day after he spoke in Janesville, the president announced his 2013 budget at a community college in Washington's Virginia suburbs. And at the first presidential debate this fall, he reprised the theme: "When it comes to community colleges," he said, "we are seeing great work done out there all over the country because we have the opportunity to train people for jobs that exist right now."

Sharing the Denver stage with the president that night, Romney, the Republican presidential nominee, made much the same point. Federal money must, he said, "go to the workers so they can create their own pathways to get in the training they need for jobs that will really help them." This enthusiasm for retraining is matched by his running mate, Ryan, the chairman of the House Budget Committee and the chief architect of a conservative vision for the nation's fiscal future. Ryan grew up in Janesville and has represented it in Congress for 14 years.

When I saw Ryan last fall at a "listening session" with constituents, 10 months before he would become part of the GOP ticket, he told me that helping people get better job skills was an important government role. The point has now become part of his stump speech, and it was on his mind when he was back in Janesville near the end of August, standing in shirtsleeves and khakis near center court of the gym in the high school he graduated from a quarter-century ago. "You know, we've been hit pretty hard here," he told his relatives and neighbors and a couple-thousand others who squeezed onto risers for a rally just before their local star left for the Republican National Convention. "You know, we used to always say, 'As GM goes, so goes Janesville.'…But we are a hardy people, and we will recover from this. I've got a lot of friends who lost their job at the plant. One of my buddies, he went to Blackhawk Tech. Afterwards, he got an HVAC contracting degree. And now…he's got a great career, and he's happy…That's the kind of thing we need to do: Pick ourselves up, help people who need, give them the job-training skills they [have to] have."

Blackhawk Tech as the New Plant Gate

This unlikely bipartisanship fits with an abiding cultural belief, since America's founding, of this as a land that offers its people a chance at personal reinvention. And it keeps faith with a deep-etched understanding in the United States of education as the key to upward mobility. But does job retraining actually work? The answer, especially in the context of the recent recession, has not been well understood. Janesville is a singularly useful place to look for clues. The reason? Since General Motors set off the cascade that knocked thousands of people out of work, it is a community that, in many ways, has been doing everything right.

"You know, we used to always say, ‘As GM goes, so goes Janesville.'… But we are a hardy people, and we will recover from this."

Blackhawk Technical College, which Ryan talked up, is a small two-year college in Janesville that is exactly the kind of place federal officials and other policy specialists have in mind to help unemployed people get back to work. Celebrating its 100th anniversary this year, Blackhawk Tech is part of a network of 16 such colleges in Wisconsin that was the first system of state-supported trade schools in the United States, created to transform farm boys into labor for the early 20th century's industrial boom. It is like a community college but, instead of preparing some students to go on to universities, it offers only vocational programs, teaching its students to be welders, IT specialists, and medical lab technicians, and to go into advanced manufacturing—precisely the skills that Obama has been touting for retraining programs. As the president and others urge two-year colleges to become partners with local businesses, to try to navigate laid-off workers into fields in which jobs are most likely to exist, Blackhawk already has been doing that for years.

In the months after the big layoffs, the school had the largest surge in students in the Wisconsin technical colleges' history. State Sen. Tim Cullen, running in 2010 for his old seat in the Wisconsin Legislature that he had vacated years earlier, realized that, with GM's gates padlocked, he could no longer spend the final weeks of his campaign as he always had, shaking hands with plant workers at shift changes; he considered where he could now find masses of voters—and drove to the college. "I realized the new plant gate," he told me, "is Blackhawk Tech."

In contrast to some two-year colleges around the country, which tend to treat older, dislocated workers as afterthoughts, Blackhawk was welcoming and nimble. Trying to allay the anxiety of workers coming back to school, the college held a community picnic for families with games for the children and a chance for the adults to talk with deans and instructors over hamburgers and hot dogs. It added 88 class sections, hired extra instructors, borrowed financial aid officers from other schools and, when it ran out of classrooms, added Saturday sessions. Most remarkable, the college managed to extract from Congress a $2 million earmark specifically to train some of its dislocated workers.

But even under such favorable circumstances, I wondered, how easily can a vocational college teach laid-off people a new identity, as well as new skills? What does it take for a campus to absorb droves of worried, angry factory workers who were out of school, in most cases, for a few decades and may not have liked school as kids? Most fundamentally, does retraining succeed in an environment in which work remains scarce—at least in places like Janesville, where, despite intense economic development efforts the past few years, the number of jobs remains about as low as at any time since the recent recession began?

These were questions that drew me to Wisconsin a year before a native son would bound onto the Republican presidential ticket. They led me to the kitchen tables and back decks of people struggling to regain their footing, to Blackhawk's classrooms and counselors' offices, to the United Auto Workers hall and the local job-placement agency. Finally, they led me into a Wisconsin agency, two blocks from the state capitol in Madison, in a quest for unemployment claims and wage records to bore into the most central question of all: How are laid-off people who went to Blackhawk to retrain faring at finding new work? What kind of pay are they getting?

In the end, I found certain successes. But from the many people I've met and from an analysis of the state records, most of what I discovered was sobering. It suggests that, even if the US economy as a whole is gradually reviving, the bruises to individual workers and individual communities can be deeper than job training can readily heal. "Retraining, yes," Chris Pody, who directs Blackhawk's Career Center, which helps students choose what to study and learn how best to look for jobs, told me the first time we met. "But the question has been—and hasn't been answered—for what?"

Bob Borremans runs the Rock County Job Center in Janesville, which is the county seat. The warren of offices and cubicles that occupies a former K-Mart is part of the Southwest Wisconsin Workforce Development Board, a regional funnel for the federal job-hunting and job-training money that flows through every state and into communities around the country. With a white beard and a sly sense of humor, Borremans has a doctorate and the kind of independence of thought that can come with being within sight of retirement. For nearly two decades, he was a senior administrator at Blackhawk and, in his job now, has been instrumental in virtually every initiative in the past few years to try to bring jobs and assistance to town. "Looking back on it, we may have trained too many people, because there weren't enough jobs," Borremans told me one day. "People are experiencing a double whammy. They lost their jobs. They went to school to get skills, and they still can't get jobs."

"Great Training Robbery" or Path to the Future

Whether job retraining can be counted on to lift shell-shocked, displaced workers back into the middle class is a question that matters beyond one small college in one small Wisconsin city. It matters because of the central place of jobs in this year's elections, as our economy remains wobbly and our politics polarized—perhaps nowhere more so than in Wisconsin where a bold conservative, Scott Walker, this spring became the first governor in US history to withstand a recall election. And it matters because of how many Americans have been out of work for a long time. Even as the nation's overall unemployment rate has fallen lately, the proportion of laid-off workers unable to find a job for six months or longer remains stuck at 40 percent—far higher than at any other time since World War II, when the government began keeping track. All told, 5 million Americans fit this definition of the "long-term unemployed." The recent recession stole the greatest number of US jobs—more than 2 million—from manufacturing, the kind of often-well-paid work that is most of what Janesville has lost.

"People are experiencing a double whammy. They lost their jobs. They went to school to get skills, and they still can't get jobs."

Of these lingering casualties of the recession, many are embracing the bipartisan portrayal of retraining as a path out of unemployment. Neither the government nor policy researchers nor education associations keep tabs on how many laid-off people have enrolled in community or technical colleges. But recent surveys suggest that, three years after the recession's official end, about one-third of those who became unemployed have pursued some form of retraining—at two-year colleges and elsewhere—in hopes of a new job.

This is not exactly a new idea. Federal support for job training was a tenet of the War on Poverty of the 1960s. And in the early 1980s, the Job Training Partnership Act became the first federal training program to expand from helping the underclass to helping people of any class who were out of a job. Debate used to swirl in academic and policy circles over whether training really helps laid-off people find work. In 1970, the sociologist Ivar Berg argued in his classic book, Education and Jobs: The Great Training Robbery, that it did not. Today, amid the upbeat political rhetoric, that side of the debate has virtually disappeared. And it has disappeared even though the evidence of whether job training helps dislocated workers is at best murky.

The recent research literature on the effects of sending the unemployed back to school is thin and mixed. Some studies have found that retraining translates into somewhat better pay and greater chances of a job, mostly if laid-off people prepare to enter certain technical and health care fields. On the other hand, the biggest study of the largest federal source of training subsidies for dislocated workers, the Workforce Investment Act, found a few years ago that the unemployed WIA participants who retrained were, for a while, worse off than similar people who hadn't gone back to school. Although they caught up after a few years, they never pulled far ahead, according to the study commissioned by the US Labor Department and carried out by academic researchers. In any case, no studies had looked at this question using data since the recession began. That is the black hole I wanted to try, in a modest way, to fill in.

The state of Wisconsin didn't make it easy. The agency in Madison, the Department of Workforce Development, keeps the two main ingredients I needed: records of unemployment claims, to show who had lost jobs, and the kind of wage records kept by every state of every worker's earnings for every quarter of the year. I asked for these records for Janesville and nearby communities from which Blackhawk Technical College draws most of its students.

At first, I was quoted a huge price for the data. But as luck would have it, an enterprising economic analyst inside the agency already had asked for the very records I wanted; we became allies, and because the agency couldn't charge one of its own employees, the price tag for me went away. But other roadblocks proved formidable. After a few months, we were told we could have the data, but more delays ensued. There was a mysteriously frozen computer account, a mysteriously disappearing memo of understanding between two parts of the agency, repeated rounds of legal reviews, and on and on. Through this all, I was checking for advice with the few researchers around the country who do this kind of work, and they had their own tales of having tried—and often failed—to pry loose the same kinds of records from other states. The study of WIA, for instance, was designed to include data from all 50 states, but just a dozen agreed to participate. So the surprise, it turned out, was not that getting the records from Wisconsin was hard. It was that we got them in the end.

I then carried out an analysis with a lot of help from two good labor economists: Kevin Hollenbeck, senior economist at the Upjohn Institute for Employment Research in Kalamazoo, Michigan, and Laura Dresser, associate director of the Center on Wisconsin Strategy at the University of Wisconsin-Madison. Blackhawk helped, too, providing records of their students and academic information about them. And what we discovered did not resemble the upbeat rhetoric about retraining spoken by the president—or by Romney and Ryan.

We found that 1,740 dislocated workers had started classes at Blackhawk between the summers of 2008 and 2010, after the plant closed. Getting a job after retraining, we found, has been quite a problem. Of these people, 541 earned at least some money in every season. Another 532 were working more sporadically. The rest—nearly 40 percent—didn't earn anything at all. Then, we looked at wages. Compared with before the recession, the earnings of those with at least some work dropped, on average, by 36 percent.

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