U.S. Department of Labor's Employment and Training Administration
The assistant Secretary of Labor for Employment and Training, Emily Stover DeRocco, has recently summarized this years employment and training budget to help workers better contribute to the global economy. To meet these goals, roughly $3.4 billion has been requested for Career Advancement Accounts. The purpose of these accounts is to triple the amount of new, transitioning, or current workers who are already receiving education and training to further their skills. Workers can receive up to $3,000 annually to go to community colleges for education and training. According to DeRocco, "This budget positions the workforce investment system to act as a catalyst for competitiveness in the 21st century. Collaborative efforts underway on regions across the country illustrate the power of the public workforce system to implement talent development strategies that support sustained economic growth and job creation in the global economy."
3 comments:
I think that DeRocco has a very clever idea. Setting aside money to help those already educating themselves in a particular field, educate themselves more is a noble cause. But in playing devil's advocate, I have a few issues with this idea. First of all, where is this money coming from? Surely there is not a wonderful donor out there that is willing to put up $3.4 billion into these accounts. So that must mean that this money is going to come out of the taxes that government has placed on the citizens of this nation. We will ultimately be paying more taxes, and some lucky individual will recieve money from it to go to school. With a need for nearly three billion dollars, taxes would have to increase, increasing prices, and lowering the supply because suppliers can't make as much product as they were. The other thing I thought about when reading this was if this account gave more money to those educating themselves, the students will become better at what they do (which ultimately is what we want), but wouldn't that increase the competition for jobs, rather than increase the job positions. There will be more people trying to get the same job resulting in a surplus of workers. So would this really cause economic growth, or would it cause a market disequilibrium? This is a prime example of opportunity costs. The opportunity cost for educating one worker against the increase in taxes that will result from educating that worker is the issue at hand. DeRocco needs to find the equilibrium point.
In this case, U.S. Department of Labor wants to increase people’s productivity and competitiveness to raise the speed of economic growth. The government is going to achieve this goal by more investments in human capital. There is no doubt that this move is good for the global economy in a view of macroeconomic. However, on second thoughts, I come to think about this problem in a microeconomic way. When there are more well-educated people in a specific labor market, the supply curve will shift right. It will result in a less market price and a higher equilibrium quantity. In other words, this situation will benefit more people but with less interest per capita. Moreover, more total profits will be gained by this situation in this market. By this notion, it is good for individuals too.
This is an interesting proposal, but it seems like something that is already being taken care of by other government programs and even employers themselves. The training for these workers is more general training, which is beneficial to the workers by raising their expected wages post-training over what they would be if the workers were otherwise untrained, but college aid programs like the Pell Grant program help essentially pay for this type of training already. Of course, this program is not as helpful for those businesses that require more specialized training for their employees, as the monies are limited to public education of workers, which cannot provide the types of training a lot of employees need.
But, this program can help reduce the explicit costs of job training and can increase the benefits a person could receive post-training (in the form of higher wages). The amount might be enough to pull more people who would have not otherwise done so to attend college and invest in their human capital, knowing that their expected benefits now outweigh the total costs (explicit and implicit) of going through the training. Overall, I agree with the program, but only if it is utilized by the right people.
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