Article by Robert I. Lerman.
Efforts to limit the spread of COVID-19 have shut down much of American production, led to massive layoffs and reduced hiring, and endangered many American businesses. The scale of the lost output, revenues, and wages is unprecedented.
Replacing workers’ lost incomes through unemployment insurance (UI) and offering concessionary loans to businesses suffering extraordinary revenue losses are needed but have little impact on the declining production of goods and services.
They’re a stopgap, not the solution.
What can be done, especially for businesses and workers not lucky enough to generate production, sales, and incomes through remote operations?
It might sound counterintuitive, but now—during the COVID-19 crisis—is the best time for investing in skills.
We could reverse years of underinvestment
America hasn’t been training enough workers for a long time. The result has been a serious mismatch between job requirements and worker capabilities. Too few workers qualify for the jobs available in information technology, advanced manufacturing, logistics, and certain health fields.
Part of the problem is that many workers lack the basic math and reading skills necessary to increase productivity and earn good wages. The latest data document low and stagnant levels of literacy, numeracy, and digital problem-solving; 27 percent of employed workers were unable to solve a problem with common decimals and fractions. In the service sector, where job losses are enormous, 74 percent of employees have low numeracy skills.
We can make a dent in these long-term problems by investing in skills during today’s shutdown. Because they can’t go to work, many workers have the time to become active learners; training will not displace other production.
Using dollars from the new economic stimulus, the US government could support a program to upgrade the skills of American workers, especially those experiencing sudden unemployment. At a time when production of goods and services is dropping off dramatically, the program would increase the supply of human capital.
What would it take?
What kinds of skill development should be subsidized? How can we ensure government funds genuinely enhance skills and competencies?
1. Financial support to increase generic skills in math, reading, and language
Workers receiving UI or unemployment assistance would qualify for incentive payments to increase their generic skills and for funding to help them access necessary e-learning tools, educational videos, and mentoring. The financial incentives to workers would be performance based and aim to replace a higher share of lost earnings than the 50 percent level often provided by UI.
State agencies administering UI would invite recipients to participate in a learning program (in math, reading, digital skills, or language) in return for a supplement to their weekly payments. State and local education agencies would receive federal funding to mount online programs to raise reading and math skills.
UI recipients receiving a 50 percent replacement rate could top up their payments to 80–85 percent of prior earnings. The relevant agency would pay the supplements monthly or biweekly so long as recipients demonstrate active participation and progress toward goals. Well-educated unemployed people would be invited to learn mentoring skills and subsequently receive payments to help workers increase their generic skills.
2. Funding for virtual apprenticeships and other in-demand occupational skills
Even in today’s shrinking economy, some employers need and are willing to hire qualified workers. Qualified workers in many health fields are in short supply, or soon will be as health systems become overwhelmed with an influx of COVID-19 patients.
The government could fund virtual apprenticeships to deliver competent workers. UI recipients, others not working, and low-wage workers could apply to participate. Federal grants from the Office of Apprenticeship would go to intermediaries and employer sponsors to mount online learning.
Virtual apprenticeships show promise for several occupations, including medical coding, medical transcription, pharmacy techs, cyber technicians, software development, and even insurance sales brokers. Competency-based occupational frameworks to ease program design and judge how well participants attain necessary skills are already available for several of these fields.
During the pandemic, training more health workers to operate and monitor ventilators would ensure hospitals have the capacity to care for infected patients. However, hospitals too taxed to take on the training could be assisted by having the government fund other health facilities that have adequate supply to train apprentices to learn the necessary skills.
When the crisis has passed, employers willing to commit to rehiring workers would receive aid for helping unemployed workers learn digital and maintenance skills that enhance their value in advanced manufacturing and other industries.
These two initiatives can harness existing approaches to bridge the gap between now and our uncertain future. As our founding father, Benjamin Franklin, reputedly said, “by failing to prepare, you are preparing to fail.” We can start building America’s future now.