1
Introduction

Is the American system of work-related education and training strong enough to meet the challenges posed by an increasingly competitive world economy? How do federal programs, particularly those supporting postsecondary training, contribute to developing the skills of the nation's work force, and how can they be improved?

Historically, local decision makers have determined education and training activities in the United States. States and localities have been primarily responsible for funding and organizing school-based preparation for work. Employers have determined how much work-based training takes place and which of their employees have received it. Individuals have chosen their own training, with little guidance, in a wide variety of institutional settings. Only ''second-chance'' opportunities for the disadvantaged, including the unemployed and those on welfare, have been the special responsibility of the federal government. Nevertheless, the federal government has developed an array of programs supporting preparation for employment (see Chapter 2).

Among the largest of these programs are the grants and loans administered by the U.S. Department of Education under the Higher Education Act. These grants and loans provide over $20 billion annually in assistance to students in postsecondary programs (College Board, 1993).1 Between one-fourth and one-third of this total goes to students in vocational programs that do not lead to baccalaureate degrees. These grants and loans are the largest single source of federal funding for postsecondary vocational training, although they were not designed with the needs of vocational students



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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy 1 Introduction Is the American system of work-related education and training strong enough to meet the challenges posed by an increasingly competitive world economy? How do federal programs, particularly those supporting postsecondary training, contribute to developing the skills of the nation's work force, and how can they be improved? Historically, local decision makers have determined education and training activities in the United States. States and localities have been primarily responsible for funding and organizing school-based preparation for work. Employers have determined how much work-based training takes place and which of their employees have received it. Individuals have chosen their own training, with little guidance, in a wide variety of institutional settings. Only ''second-chance'' opportunities for the disadvantaged, including the unemployed and those on welfare, have been the special responsibility of the federal government. Nevertheless, the federal government has developed an array of programs supporting preparation for employment (see Chapter 2). Among the largest of these programs are the grants and loans administered by the U.S. Department of Education under the Higher Education Act. These grants and loans provide over $20 billion annually in assistance to students in postsecondary programs (College Board, 1993).1 Between one-fourth and one-third of this total goes to students in vocational programs that do not lead to baccalaureate degrees. These grants and loans are the largest single source of federal funding for postsecondary vocational training, although they were not designed with the needs of vocational students

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy and schools in mind and were not originally envisioned as a major source of funds for work-related training. High default rates on student loans among vocational students brought not just the loan programs but all of student aid into disrepute in the 1980s. Student aid problems and concern about the number of federal programs aimed at job training led the U.S. Department of Education to ask the National Academy of Sciences to establish a committee to look at postsecondary education and training for the workplace. The committee was asked to help the federal government assess the implications of multiple federal approaches to the provision of postsecondary vocational education and job training; to consider policy alternatives, ranging from increased coordination of existing programs through reallocation of resources to formulating entirely new approaches; and to make recommendations for a coherent and efficient federal policy on postsecondary preparation for work. THE COMMITTEE'S CHARGE: POSTSECONDARY TRAINING The charge to the committee to look at postsecondary preparation for work has directed our analysis toward those components of work-related education and training occurring after high school rather than focusing on high schools themselves, which have received so much national attention in recent years. While high schools are the building block for what comes after and cannot be neatly divorced from subsequent preparation for work, their operation lies largely beyond our purview. (We want to acknowledge, however, that there are important questions about how high schools should be involved in preparing young people for work that warrant more attention than we have given them. In addition, the apparent failure of secondary education to provide adequate preparation for large numbers of people has important consequences for postsecondary education and training, in particular focusing it more on remediation than we wish were the case. Thus, our failure to speak extensively about secondary school issues does not mean that we think our current system is operating as it should.) In the education world, postsecondary has a fairly clear and limited meaning, but the definition becomes fuzzy when extended to the employment arena. The U.S. Department of Education, in its Institutions of Postsecondary Education Data Survey (IPEDS), defines postsecondary education as "the provision of formal instructional programs whose curriculum is designed primarily for students who have completed the requirements for a high school diploma or its equivalent. This is to include programs whose purpose is academic, vocational and continuing professional education, and to exclude avocational and adult basic education programs" (U.S. Department of Education, 1988:2-2).

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy Postsecondary education takes place in 2-year and 4-year public and private nonprofit colleges and universities, in proprietary profit-making trade schools whose programs may last from a few months to several years, and in public vocational-technical schools that offer post-high school programs of 2 years or less. Federal student aid programs use essentially the IPEDS definition to determine eligibility, with some restrictions as to the length of the program, its credit status, and the full-time or part-time enrollment status of the student. However, institutions that clearly fall within this definition of postsecondary, such as community colleges, also offer programs (such as adult basic education) that are excluded from the definition. Postsecondary education can be academic or vocational. The Carl D. Perkins Vocational and Applied Technology Education Act of 1990, which provides federal funds to states for distribution to school districts, schools, community colleges, and technical institutes, defines vocational education as "organized educational programs offering a sequence of courses which are directly related to the preparation of individuals in paid or unpaid employment in current or emerging occupations requiring other than a baccalaureate or advanced degree." The term vocational education can apply to both high school and post-high school programs. This frequently leads to ambiguity in discussions of vocational education. The closer one gets to education that is occupation oriented, the greater is the problem of distinguishing between education and training. Education has the connotation of being longer term in nature, and emphasizing the development of cognitive skills (although job- or occupation-specific preparation may be offered as well), leading to a credential such as an associate, bachelor's, or graduate degree. It is typically thought to take place in schools and colleges. Training connotes a shorter-term program that emphasizes the specific skills needed in a particular job or occupation (although these skills have cognitive as well as technical dimensions). Such programs may lead to a certificate, diploma, or technical associate's degree, but they do not necessarily carry with them any formal credential or academic credit. Training takes place not only in schools and colleges, but in many other settings as well; for example, community-based organizations and workplaces. Accepting the distinction between education and training, this report focuses on training: preparation for work that takes place in programs other than those leading to transfer-oriented associate, baccalaureate, or advanced degrees. Persons who undergo job training can be broadly categorized into four groups: (1) those who seek initial preparation for employment, largely young people who have not yet been employed in full-time jobs and, to a lesser extent, women entering the work force for the first time; (2) employed individuals who desire continuing education and training to upgrade their skills and increase their job mobility; (3) those who have been or are

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy about to be displaced from their jobs and who need to be retrained in preparation for entering a new line of work; (4) people who have "fall[en] out of a 'normal' developmental progression that should lead to eventual self-sufficiency through employment" and who need some combination of social skills and resources, basic academic skills, or job-related skills in order to obtain a job (Bailey, 1987:165). The latter group is the traditional target of the so-called second-chance employment and training programs designed to improve the fundamental workplace competencies of the unemployed. In this volume, we refer to the four kinds of training sought by these different groups as qualifying training, skills improvement training, retraining, and second-chance training. Federal programs cover all four types of training, ranging from financial aid that subsidizes qualifying training and (to a much lesser degree) skills improvement training to the Job Training Partnership Act (JTPA) that offers retraining for dislocated workers and second-chance training for the disadvantaged. To carry out effectively the U.S. Department of Education's mandate to review the multiple programs supported by the federal government, only some of which are postsecondary programs in the narrow sense, and to make recommendations for a coherent and efficient federal policy on postsecondary preparation for work, the committee has adopted a broad definition of postsecondary training. For the purpose of this study, therefore, postsecondary training refers to organized activities, supplied by schools, employers, or other agencies and organizations, designed to prepare individuals with high school diplomas or who are older than the typical high school student so that they can obtain or advance in jobs that do not require a baccalaureate or advanced degree. Who Gets Postsecondary Training? More than 50 percent of Americans obtain postsecondary training as we define it, which is, roughly, training after high school not leading to a 4-year degree. As of March 1991, only 21 percent of the U.S. population aged 25 and over had attended 4 or more years of college, and 22 percent had finished less than 12 years of schooling (Bureau of the Census, 1992a). In between these categories, 18 percent had completed 1-3 years of college and 39 percent had completed 4 years of high school. Since the "1-3 years of college" category includes only enrollment in what the Bureau of the Census calls "regular schools" (colleges and universities granting degrees), it excludes much of the proprietary trade school sector and thus underestimates the proportion of the population that should appropriately be counted in the post-high school, sub-baccalaureate group. It also excludes individuals whose highest formal educational credential is a high school diploma

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy but who have received training for work in nonschool settings. As an upper bound, the group for whom postsecondary training is potentially important encompasses the three-fifths of the population sandwiched between the highly educated one-fifth at the top of the qualifications ladder and the high school dropouts at the bottom. This is a heterogeneous group, composed of individuals who started but never finished baccalaureate degrees, those who earned formal postsecondary training credentials, and high school graduates who may or may not have participated in formal training that did not occur in "regular schools." When adults without high school diplomas are added in, about four-fifths of the adult population are included. Despite rising levels of educational attainment, college completion remains the exception, even among young people. The proportion of high school graduates proceeding directly to work after high school fell throughout the 1980s; postsecondary schooling rates increased over the same period (Haggstrom et al., 1991:29). Nevertheless, the proportion of 25- to 29-year-olds who have completed 4 or more years of college has remained virtually unchanged, at 23 percent, since 1980 and is actually lower than it was in the mid- 1970s (Bureau of the Census, 1992a:97). Postsecondary Training for What Jobs? The 1991 survey by the Bureau of Labor Statistics (BLS) (1992) of how workers were trained for their jobs provides data on the incidence of postsecondary training and identifies the occupations for which this training is especially important. At the same time, it illustrates the fluidity of occupational training in the United States, especially in middle-level positions where people enter similar jobs through different training routes.2 Table 1.1 indicates that, in 1991, 57 percent of workers aged 16 and over reported that they needed specific skills or training to obtain their current or last job. Schools were the single most-frequently cited source of this training (reported by one-third of workers), followed by informal, on-the-job training (27 percent of workers). Since workers could report more than one source of training, the proportion of people who reported needing training of some kind (57 percent) is less than the sum of the proportions who reported needing training of various specific types. Schools providing postsecondary training were important sources of qualifying training for technicians and related personnel. Individuals who depended on school-based postsecondary training to qualify for their jobs were most apt to be working as inhalation therapists, stenographers, dental hygienists, licensed practical nurses, physicians' assistants, funeral directors, boilermakers, radiological technicians, electrical and electronic technicians, and administrators in protective services.

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy TABLE 1.1 Sources of Qualifying Training by Occupational Group for Workers (in percent), 1991     School Training     Occupational Group Workers Who Needed Training High School Vocational Education Post-high School Vocational Education Junior College or Technical Institute 4-year or Longer Program Total, all occupations 57 4 3 8 20 Executive, administrative, and managerial 72 3 2 9 36 Professional specialty 92 1 3 10 69 Technicians and related support 86 5 8 24 28 Sales occupations 43 1 1 4 11 Administrative support 55 11 3 10 9 Private household occupations 10 2 — 1 1 Service workers, except private household 37 2 4 6 3 Farming, forestry, and fishing 28 2 1 2 5 Precision production, craft, and repair 62 6 4 9 4 Machine operators, assemblers, and inspectors 38 3 1 3 1 Transportation and material moving 42 1 1 2 — Handlers, equipment cleaners, and laborers 20 1 — 1 1 NOTES: — indicates value too small to display or data not available. Because some workers took more than one type of training, individual items may not sum to totals. SOURCE: Bureau of Labor of Statistics (1992). Company training was cited most often by public transportation attendants; structural metal workers; aircraft and aircraft engine mechanics; tool and die makers; elevator installers and repairers; police, detectives, and their supervisors; locomotive operators; insurance salespersons; supervisors of guards; and electrical power installers and repairers. Informal, on-the-job training was especially important for administrators of protective services; surveyors and mapping scientists; printing machine operators; camera, watch, and musical instrument repairers; supervisors in agricultural occupations; construction inspectors; data processing equipment repairers; industrial engineers; statistical clerks; and personnel and labor relations managers.

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy Occupational Group Formal Company Training Informal On-the-Job Armed Forces Correspondence Course(s) Friends, Relatives, or Other NonworkRelated Training Total, all occupations 12 27 2 1 7 Executive, administrative, and managerial 17 37 3 2 9 Professional specialty 11 25 2 1 8 Technicians and related support 17 31 5 1 8 Sales occupations 13 26 1 1 7 Administrative support 10 30 1 1 4 Private household occupations 1 3 — — 4 Service workers, except private household 9 18 2 — 7 Farming, forestry, and fishing 2 17 1 — 12 Precision production, craft, and repair 19 36 5 2 12 Machine operators, assemblers, and inspectors 8 25 1 — 5 Transportation and material moving 11 24 1 — 10 Handlers, equipment cleaners, and laborers 3 14 — 0 4 The BLS survey asked workers if they had had any training to improve their skills since obtaining their present jobs. About 41 percent of workers received such training. Workers relied less on schools for this skills improvement training than for qualifying training. However, their use of formal company programs and informal, on-the-job training (16 percent and 15 percent, respectively) was only marginally higher than their use of schools for upgrading their skills (13 percent). These patterns vary by occupational type. Table 1.2 shows that workers most apt to participate in skills improvement training are found in the same occupations as those most likely to get qualifying training: executive, administrative, and managerial; professional specialty; and technicians and related support.

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy TABLE 1.2 Sources of Skills Improvement Training by Occupational Group for Workers (in percent), 1991 Occupational Group Workers Who Took Training School Formal Company Program Informal On-the-Job Training Other Total, all occupations 41 13 16 15 7 Executive, administrative, and managerial 53 18 25 18 12 Professional specialty 67 34 20 17 15 Technicians and related support 59 20 26 22 9 Sales occupations 35 7 16 15 6 Administrative support 40 12 16 16 4 Private household occupations 6 2 0 1 3 Service workers, except private household 29 7 9 13 5 Farming, forestry, and fishing 21 7 3 7 7 Precision production, craft, and repair 38 9 17 16 4 Machine operators, assemblers, and inspectors 25 4 8 15 2 Transportation and material moving 25 2 10 11 3 Handlers, equipment cleaners, and laborers 15 1 5 9 1 NOTE: Because some workers took more than one type of training, individual items may not sum to totals. SOURCE: Bureau of Labor Statistics (1992). Postsecondary Training and the Labor Market The labor market environment in which individuals and firms operate conditions and influences their decisions to undertake or provide training. Individuals elect to pursue training from a variety of training providers when they believe the training will benefit them. Their assessment depends on what is being offered; the costs to them of the training, net of scholarships or other subsidies; their ability to obtain loans to fund training; and the information they have about providers and opportunities. Their assessment of benefits and costs is also affected by other social and economic policies, such as the availability of and conditions of eligibility for welfare and income support benefits for the unemployed or underemployed. An equally broad but different set of considerations influences the decisions of firms about whether and how much training to support, because

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy employer-sponsored training represents a joint decision by employer and employee. Much of the value of employer-provided training hinges on the continuing relation between employer and employee. No employer wants to train a worker if that worker is likely to leave soon with skills that he or she can use elsewhere (unless the worker agrees to work at relatively low pay).3 And no worker will willingly accept low wages for training if he or she has little or no job security. The American labor market is distinguished among industrialized nations by a high degree of mobility among workers, particularly young workers, who switch employers frequently in their search for the right "fit" (Organisation for Economic Co-operation and Development, 1993:Chapter 4). This mobility is widely thought to discourage employers from providing training, since their investment in an employee can be lost if the worker takes the skills learned to another firm. There are, to be sure, important benefits from having a highly mobile work force. Among other things, there is much to be said in favor of young people moving around from employer to employer to find the job that most suits them, just as there is much to be said for consumers shifting their purchases until they find the right product. But the committee detected growing concern about the costs posed by a labor market that discourages firms from training in an increasingly competitive global economy, as our discussion in the next section and subsequent chapters indicates. Any labor market system involves a host of structures and policies in addition to explicit training policies that impinge on individuals' and firms' training decisions. Training may be more prevalent in the presence, for example, of labor relations policies that encourage employee participation in firm decision-making or of high minimum wage requirements that make it difficult for firms to adopt low-wage, low-skill production strategies. Job mobility can be influenced by public policies and/or social mores that limit the wage gains from job-hopping or that impose costs on firms who hire employees trained by others. It is clear that the United States has a labor market system that differs in important respects from those overseas (see Chapter 4). What is not yet clear is whether the differences should be viewed as strengths or as weaknesses. Those who study labor markets are giving increasing attention to the impacts and implications of diverse institutional arrangements.4 The tradeoffs from different approaches are complex, however, and there is no consensus that any particular set of institutional arrangements is best. Whether and how to reform broader labor market institutions and policies in the United States was beyond the committee's scope. While we allude from time to time to these broader concerns, we focus primarily on a narrower question: given current labor market realities, how can the federal government improve its diverse set of postsecondary training programs? Thinking about how to rationalize and improve this one part of our labor

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy market system proved to be a formidable undertaking by itself. We hope we have provided a foundation on which more extended investigations into the nation's employment and training policies can be built. Postsecondary Training and the American Economy Fears about the future of the American economy have become widespread in the 20 years since 1973, when productivity growth in the United States decelerated. Growth of labor productivity between 1973 and 1979 averaged only 0.9 percent per year, less than one-half of its previous, long-term level. The years 1980 to 1990 saw only a slight revival at 1.2 percent per year. Slow productivity growth meant a slow growth in earnings adjusted for inflation and threatened the hopes of many for a rising standard of living. Older workers do not have the same prospects for income growth as they would have had several decades ago: whereas a 40-year-old man working full time in 1948 saw his earnings nearly double in the succeeding 25 years, a 40-year-old man working full time in 1973 actually saw his earnings drop 4 percent by 1989. Younger workers fared worse: the earnings of young (25 to 34 years old), male, high school graduates working full time in 1989 were 15 percent lower than those of their counterparts 10 years earlier (Murnane and Levy, 1992). Total compensation (including fringe benefits) shows the same pattern of rapid pre-1973 growth and slow post-1973 growth seen in the data on earnings (U.S. President, 1992:95; Levy and Michel, 1991:8). While the United States still has the highest level of labor productivity in the world, its advantage has narrowed as its rate of growth in output per employee has lagged behind that in such countries as Japan, Germany, France, Italy, and the United Kingdom. The nation has come to fear for its ability to compete economically. These fears have coincided with a rising concern about the quality of the nation's schools. The influential study, A Nation at Risk, was published by the Secretary of Education in 1983 (National Commission on Excellence in Education, 1983) and sparked a heated controversy over whether the nation would have an adequately trained work force to meet the global challenges of the twenty-first century. The link between economic competitiveness and the quality of the work force has been controversial, however. Debate has raged over whether changes in the nature of work require more or less skill on the part of workers. Is the workplace being "upskilled" or "deskilled"? Does the nation need to increase its investment in its human resources, or might we improve education and training only to find that we have ''too many smart workers for too many dumb jobs" (Carnevale, 1992:28)? Although the committee's focus is not on these questions per se, we are very aware that they do raise serious analytical and policy issues.

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy The upskilling-deskilling debate is largely an issue of ''whether new technology, especially computer-based technology, has led to a reduction or an increase in skills required at the lower and middle levels of the employment hierarchy" (Bailey, 1989:2). After a quarter-century when the economy demanded increased skills, and a generation of workers trained with the help of the G.I. Bill enjoyed steadily increasing real earnings, pessimism set in during the mid-1970s. Case studies found evidence of deskilling in clerical occupations, computer programming, and manufacturing at the same time that an increasing proportion of the work force was employed as professionals or managers. The fact that the wage premium paid by employers for college graduates fell seemed to bear out the hypothesis that the United States was increasing its supply of highly skilled workers more rapidly than employer demand. Researchers also proposed life-cycle theories of technological change to explain why a need for advanced skills could be found among people working with new technologies while skill levels fell as a technology matured. Occupational projections suggested that low-skilled occupations would add the largest number of new jobs to the economy and that low-skilled occupations would grow faster than high-skilled ones. But another turnaround began in the mid-1980s as the wage premium paid to more highly educated workers rose sharply. Case studies and occupational projections now suggested that there was not a "proliferation of powerless, low-skilled workers" and that, in many instances, skill demands were increasing. Bailey attributes the changing perspectives on how technology affects skill requirements to a too narrow definition of jobs and tasks, a simplistic approach to the effects of technology, and an unwarranted tendency to assume that similar technological changes have similar effects no matter the historical context in which they are introduced. Defining jobs as a series of well-defined tasks caused researchers to underestimate the effects of technology. While certain tasks might be simplified by new technology, jobs could be reorganized in ways that, taken as a whole, result in a greater demand for skills as a result of technological change. Some analysts allege that the strategies that firms must use to cope with the new global environment—more decentralized and flexible forms of organization; team approaches to work and other forms of workplace experimentation; new, closer, and more responsive relationships between suppliers and customers—can have major implications for the skills needs of their workers and thus their human resource strategies. Bailey's research on four industry sectors (apparel, textiles, business services, and financial services) and a review of recent occupational trends and projections suggest that the required level of skills in the workplace is increasing. Studies done by Kochan and Osterman (1991), Mishel and Teixeira (1991), and Murphy and

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy Welch (1993) confirm this picture of a generally rising demand for skills in the economy. The wage premium for educated workers has been growing; part of the explanation appears to be that new technologies are more complementary with skilled than unskilled labor. Berman et al. (1993) report that U.S. manufacturing firms that invest more in computer technologies and research and development also show larger increases in demand for educated workers. Immigration and imports have also played a role in the shifting demand toward educated workers. Apparently, immigrants and the low-skill labor embodied in import production are better substitutes for low-skill than high-skill workers. Still, the increasing proportion of jobs at the bottom of the wage scale and the apparent ability of employers to adjust to the low skills of workers show that the economy can generate low-skill jobs without causing insurmountable problems for employers. Workers, however, cannot make a decent living in this manner. Some argue that America's competitive position in the world and ability to provide a satisfactory standard of living to its citizens depend on shifting to "high-performance workplaces" that utilize skilled workers more extensively than in the past. The Commission on the Skills of the American Workforce (1990) identified (and titled its report) America's Choice: High Skills or Low Wages! and argued that "America is headed off an economic cliff" unless it develops a skilled work force for reorganized, high-performance workplaces (p. 8). Others use different descriptive terms to make essentially the same argument. Osterman (1988), for example, contrasts the "industrial" and ''salaried" models of organizing work, observing that the industrial model "is under increasing attack and most of the innovations in human resource policy in the past decade can be read as efforts to move away from and transform this system'' (p. 69). Porter (1990) argues that the United States is at a critical point, with important choices to be made about improving its human resources and a growing need for companies to "begin investing more in their employees and viewing them as assets" (p. 726). Kochan and Osterman (1991:2) summarize the argument for transforming work and the work force: Debates over the development of human resources have taken on added importance in recent years with the growing recognition that our competitiveness and standards of living depend so greatly on our ability to gain competitive advantage through high-quality human resources. In a world where firms in advanced industrial economies find it difficult to compete on the basis of low labor costs, United States firms must find other sources of sustainable competitive advantage such as technological superiority, product innovation, quality of goods and services, etc. All of these alternatives to cost competition are thought to depend on having a high-quality labor force and organizational policies that allow human potential to be fully

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy realized. This approach rests on the premise that higher skills and better utilization of human resources within the firm pay off in higher productivity, product quality, or other measures of economic performance. The U.S. Office of Technology Assessment (OTA) (1990:115) shares a similar view of the changing organizational patterns in United States industry, which it captured in a series of contrasts between old and new models (see Table 1.3). But, while many believe that it is desirable to move toward high-skilled, high-wage jobs and high-performance workplaces, it is not clear that American firms are moving rapidly in this direction. Osterman (1988) argues that both objective constraints and managerial ideology are more likely to lead most firms to a stalemate and little change rather than to a transformed workplace. Bailey (1989) finds some evidence of change in the four industries he examined, including a growing demand for workers with 2-year college degrees; but Mishel and Teixeira (1991) claim that Bailey's conclusions, based on a relatively small and selective sample, are too optimistic about the extent to which a substantial transformation of the content of jobs is taking place. Kochan and Osterman (1991:43) conducted eight case studies in a sample of United States plants in high-technology industries and found that "only two of the eight could be described as being deeply committed to human resource development." The authors of America's Choice (Commission on the Skills of the American Workforce, 1990) and the head of a major business group involved in studying training issues (Carnevale, 1992:30) assert that only 5 or 1 percent, respectively, of American workplaces have been transformed along lines of the high-skills model. A new national survey across a representative range of American industries (Osterman, 1993:5) found that "thirty-five percent of private sector establishments with fifty or more employees have achieved substantial use of flexible work organization." The BLS training surveys (1985, 1992) appear to support this mixed picture. There is some evidence that workers are getting more training, particularly skills improvement training. In 1991, 41 percent of workers reported having received training to improve their skills, compared to 35 percent in 1983. But the percentage of workers reporting qualifying training was only slightly higher, at 57 percent in 1991 compared to 55 percent in 1983. Perhaps the most dramatic change between the two surveys occurred in employer-sponsored training. Employers sponsored significantly more skills improvement training in 1991 (for 16 percent of workers) compared to that in 1983 (11 percent). These findings would be consistent with a movement within firms to jobs that require more highly skilled workers. At the same time, the 1991 survey also reveals that the United States is far from an economic structure in which most jobs require and most workers receive significant amounts of training. Barely half of all workers reported

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy TABLE 1.3 Changing Organizational Patterns in U.S. Industry Old model: mass production, 1950s and 1960s New model: flexible decentralizations, 1980s and beyond Overall Strategy Low cost through vertical integration, mass production, scale economies, long production runs Low cost with no sacrifice of quality, coupled with substantial flexibility, through partial vertical disintegration, greater reliance on purchased components and services Centralized corporate planning; rigid managerial hierarchies Decentralization of decision making; flatter hierarchies International sales primarily through exporting and direct investment Multimode international operations, including minority joint ventures and nonequity strategic alliances Product Design and Development Internal and hierarchical; in the extreme, a linear pipeline from central corporate research laboratory to development to manufacturing engineering Decentralized, with carefully managed division of responsibility among R&D and engineering groups; simultaneous product and process development where possible; greater reliance on suppliers and contract engineering firms Breakthrough innovation the ideal goal Incremental innovation and continuous improvement valued Production Fixed or hard automation Flexible automation Cost control focuses on direct labor With direct costs low, reductions of indirect cost become critical Outside purchases based on arm's-length, price-based competition; many suppliers Outside purchasing based on price, quality, delivery, technology; fewer suppliers Off-line or end-of-line quality Real-time, on-line quality control Fragmentation of individual tasks, each specified in detail; many job classifications Selective use of work groups; multiskilling, job rotation; few jobs classifications Shop-floor authority vested in first-line supervisors; sharp separation between labor and management Delegation, within limits, of shop-floor responsibility and authority to individuals and groups; blurring of boundaries between labor and management encouraged

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy Old model: mass production, 1950s and 1960s New model: flexible decentralization, 1980s and beyond Hiring and Human Relations Practices Work force mostly full time, semi-skilled Smaller core of full-time employees, supplemented with contingent (part-time, temporary, and contract) workers who can be easily brought in or let go, as a major source of flexibility Minimal qualifications acceptable Careful screening of prospective employees for basic and social skills and trainability Layoffs and turnover a primary source of flexibility; workers, in the extreme, viewed as a variable cost Core work force viewed as an investment; management attention to quality-of-working-life as a means of reducing turnover Job Ladders Internal labor market; advancement through the ranks via seniority and informal, on-the-job training Limited internal market; entry or advancement may depend on credentials earned outside the workplace Governing Metaphors Supervisors as policemen, organization as army Supervisors as coaches or trainers, organization as athletic team. (The Japanese metaphor: organization as family) Training Minimal for production workers, except for informal, on-the-job training Short training sessions as needed for core work force, sometimes motivational, sometimes intended to improve quality control practices or smooth the way for new technology Specialized training (including apprenticeships) for grey-collar craft and technical workers Broader skills sought for both blue-and grey-collar workers   SOURCE: U.S. Office of Technology Assessment (1990:115).

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy receiving any kind of qualifying training, and only two-fifths took training to improve their skills. While this book analyzes training policies, creating a future of skilled jobs for skilled people requires paying attention to employer demand and to the pattern of developing technology as well. Simply increasing the skills of workers will not ensure a more prosperous future for American society. As suggested in the last section, it is not enough to focus on the supply side of the labor market: the nation will need to consider diverse policies that affect the level and composition of labor demand as well. These include human resource development strategies by firms (Kochan and Osterman, 1991); differential investment in physical capital or intangible assets such as research and development; organizational development, such as supplier relationships for firms; macroeconomic growth policies; and efforts to increase national savings and reduce the deficit. That both demand and supply affect outcomes does not, however, reduce the imperative to assess seriously weaknesses in the training of the work force and to try to improve the way the United States trains its workers. The following chapters show that postsecondary preparation is not all that it could or should be. Inadequate work force skills can impede firms' efforts to adopt advanced technologies and transform themselves structurally so that they can use these technologies most effectively (Levy and Murnane, 1992:1373). Without adequate skills among the work force, the economy will be slow to move along a high-growth, high-wage path, regardless of changes elsewhere in the economic system. Even if the high-wage, high-skill future that most analysts want to see develop in the United States is more a dream than a reality, better training will, at the minimum, raise the wages and enrich the lives of those workers who learn those skills. America needs to ensure, therefore, that its institutions and programs for postsecondary training function as well as possible. STRUCTURE OF THE REPORT Although postsecondary training is not primarily a federal responsibility, the multibillion-dollar expenditures of the federal government on postsecondary training can influence the direction and efficiency of skill formation throughout the country. At present, however, there is too little thinking about how federal programs affect the training system, and too little attention is being paid to whether the various parts accomplish what they are supposed to. The remainder of this volume lays out how federal expenditures affect postsecondary training and offers suggestions for improvement. Chapter 2 describes how postsecondary training is provided in the United States and the kinds of postsecondary training current federal programs

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Preparing for the Workplace: Charting a Course for Federal Postsecondary Training Policy were designed to support. It shows how the existing array of federal programs developed one at a time, over several decades, to meet the needs of particular subsets of the population. Chapter 3 examines how well postsecondary training is being carried out, in order to pave the way for a discussion of whether the federal government needs to do more in the future to shape the overall contours of the system or to provide more postsecondary training directly. The evidence shows that, in a number of ways, this system does not operate well. Individuals and society will be better off if ways can be found to make it work better. Chapter 4 describes several key features of training in four other countries. Chapter 5 presents the committee's general conclusions about whether a change in the federal approach to postsecondary training is needed. If change is needed, what kinds of activities are most appropriately undertaken at the federal level and how can the federal government most effectively exercise its influence, given the limits on national policy in a system largely determined by state and local officials and private firms? We discuss these issues in Chapter 5, which sets the stage for the presentation of our more specific views on desirable changes in federal policies and programs in Chapters 6 through 8. NOTES 1.   Federal assistance provided to students through grants and loans is greater than federal expenditures on grant and loan programs because the loan programs to date mostly involve government guarantees and interest subsidies rather than the direct provision of loan capital. Capital comes largely from banks, though some schools and state agencies also put up capital for federally guaranteed loans. In fiscal 1992, $15.6 billion was lent to students in the various loan programs authorized by the Higher Education Act; federal expenditures on loans in that year amounted to $7.3 billion. Changes in the loan programs enacted in 1993 will shift the source of capital in the future. By academic year 1998-1999 60 percent of loan volume will come in the form of direct federal loans rather than federally guaranteed private loans. 2.   This observation needs to be qualified, in terms of the BLS surveys, by the fact that the job classifications used are frequently imprecise. "Accountants," for example, can mean anything from bookkeepers to professional certified public accountants. Nevertheless, it remains true that pathways to many jobs in the United States are remarkably diverse. For example, among electrical and electronic technicians, only 63 percent reported having received their qualifying training in schools (about two-thirds in vocational schools or community or technical colleges, but some in high schools and some in 4-year colleges). Twenty percent cited company training, 31 percent on-the-job training, and 16 percent training in the armed forces (Bureau of Labor Statistics, 1992:54). (Percentages do not add to 100 because workers could report more than one source of training.) 3.   This is in part the problem of general versus firm-specific skills, first explored by Becker (1964). General skills are valuable not only to the employer providing the training, but to other employers as well. Specific skills are of value only to the employer who gives the training. Firms will be reluctant to provide general skills training if they believe that trained workers can move easily to other employers. Moreover, if job mobility is high, firms may also be reluctant to provide even specific skills training because of the fear that the employee will leave before the employer recoups the training investment. 4.   One such effort is Freeman (1994).