Can Education and Training Save

Low-wage Workers in the U.S.?

Annette Bernhardt

Brennan Center for Justice at NYU School of Law

Featured Speaker

The 15th Annual Meeting of the Society for the Advancement of

Socio-Economics, Aix-en-Provence, France, June 2003

Growing inequality in the U.S.

Change in wage percentiles for U.S. men, 1973-2002

10th percentile30th percentile

50th percentile

70th percentile

90th percentile

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1973

1975

1980

1985

1990

1995

2000

2002

Inde

x (1

973=

1)

U.S. compared to OECD

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

p90/

p10

rati

o fo

r fu

ll-ti

me

wor

kers

Sweden

Belgium Ita

ly

German

y

Netherl

ands

France UK

Irelan

dUS

Earnings inequality, mid-1990s

The growing low-wage trap

60s/70s cohort

Not stuck inlow-wage job

87.9%

Stuck in low-wage job

12.1%

80s/90s cohort

Not stuck in low-wage job

72.4%

Stuck inlow-wage job

27.6%

Central question:

• In an era of increasing international flows of workers, capital, and goods, how do you design an education and training system that restores and expands opportunity?

• An especially big challenge for the U.S., which has weak labor, education, and training systems, and much less of a commitment to providing public goods

The inequality of employer-provided training

0

5

10

15

20

25

Firstquartile

Secondquartile

Thirdquartile

Fourthquartile

Worker's earnings

Average hours of formal training provided by U.S. employers in six-month period, 1995

The inequality of education

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Publiceducation &

training(WIA)

2-yearcolleges,

public

2-yearcolleges,private

4-yearcolleges,

public

4-yearcolleges,private

Expenditures per student in the U.S.

(1995 for education, 2001 for public training)

Rediscovering training-for-work

• “Contract training” by community colleges Attempt to make training relevant to employers,

and hopefully, open access to jobs

But usually no requirements on job quality, employee retention, or advancement opportunities

And colleges have no control over who gets training

At its worst, this strategy supports growing externalization of training by employers

Rediscovering career paths

• Building “career ladders” Attempt to create structures that allow workers

to escape low-wage trap

But most often done without regard to inherent structural constraints on upward mobility

In the low-wage industries that are often targeted by these programs, there are many more bad jobs than good ones

Regional training partnerships

• Partnerships of employers, unions, training institutions, the public sector, and community groups

• Solve industry problems that single firms can’t solve by themselves

Modernization, technology upgrading, global competitiveness Training and retention of new workforce Affordable health benefits Flexibility and coordination of worker flows across firms

• Solutions improve both job quality and skills of workforce

The new intermediaries

Wisconsin RegionalTraining Partnership

Employers &

Unions

CommunityBased

Organizations

Workforce DevelopmentFunders

Certified TrainingProviders

Limitations of the model

• Usually needs unions, and industries where quality products/services matter or where there are regulatory hooks

• Less viable for inherently low-road industries, such as retail, restaurants, building services, mass-market call centers, movie theaters, etc.

Upshot: Need two-pronged approach

1. Shut off the low road: (Re)create the legal structures that set the ground rules for

what employers can and cannot do – i.e. wage floors, right to organize, “pay or play” health insurance, displaced worker protections

2. Pave the high road: At a regional/industry level, create intermediary

institutions that simultaneously address issues of productivity and workforce training

• Education and training play an enabling role, but are ultimately not the key drivers